Externalities and Internalities in Sustainability Reporting

Abstract

Most prior research on the topic of sustainability reporting has not investigated the micro elements of the managerial control processes (both formal and informal) necessary for sustainability reporting. Although institutional pressures and economic cost-benefit implications play a strong rule in motivating sustainability reporting, our research focuses strongly on the internal resource/based capabilities and processes necessary to evolve through various stages of sustainability reporting. We found that the regulatory, normative, and cognitive pressures motivate different rigor in the processes of reporting: 1) structuring responsibility for the report; 2) gathering data and assuring its accuracy; and coupling between reporting and society’s needs and expectations.

JEL Classification: M40, M46, M41