Table 1. Literature streams on... | Emerald Publishing

Table 1.

Literature streams on sustainability reporting

Theoretical approach	Theory features	Main findings
Legitimacy theory	This theory is based on the idea that a contract exists between organizations and society. Hence, organizations need to act according to socially acceptable behaviour (O’Donovan, 2002). The company’s survival depends on its ability to meet societal expectations and the sustainability report can be used as a tool in this regard (Cho et al., 2015). Legitimacy theory helps to explain why companies report non-financial information and what kind of information is disclosed following threats to the company’s legitimacy (Dumay et al., 2019)	Legitimacy issues affect the production and use of sustainability reports (O’Donovan, 2002; Kuruppu et al., 2019). In particular, the perception of managers about the usefulness of SR as a key communication tool increases when the company suffers a loss of legitimacy (Tilling and Tilt, 2010). In the wake of this, legitimacy theory is also used to explain the decoupling of internal practice from the symbolic and external use of reporting (Deegan, 2014)
Stakeholder theory	This theory highlights that companies need to consider not only the interests of shareholders but also the interests of a wide group of stakeholders (Freeman, 1984). Stakeholder theory and legitimacy theory are not separated but overlap; legitimacy theory is broader because it considers the whole society, while stakeholder theory adopts a micro-level perspective investigating how companies interact with groups of stakeholders (Dumay et al., 2019). Unlike the legitimacy theory, stakeholder theory helps to clarify managerial behaviour during SR activities (Dumay et al., 2019)	Stakeholder pressures and engagement decisively influence the development of sustainability reports (Brusca et al., 2018; De Villiers et al., 2014a; Gallego-Alvarez and Ortas, 2017). Some authors have highlighted how stakeholder engagement influences the materiality and relevance of the information to be disclosed (Manetti, 2011; Torelli et al., 2020). On the other hand, the sustainability report has been also considered as a tool that companies use to engage stakeholders (Herremans et al., 2016)
Institutional theory	This theory suggests that company activities, including the decision to start a SR process, are mostly influenced by institutional pressures (Higgins et al., 2018; Larrinaga, 2007). Consequently, institutional theory helps to explain the progressive alignment of the adoption, quality and extent of SR across organizations as a result of institutional isomorphisms (DiMaggio and Powell, 1983; Hahn and Kuhnen, 2013)	Institutional theory has been mainly used to explain the determinants of SR (De Villiers et al., 2014b; Hahn and Kuhnen, 2013). Several scholars confirmed that companies develop sustainability reports primarily for isomorphism issues (De Villiers and Alexander, 2014; Higgins et al., 2015)
Signalling theory	This theory helps to explain the behaviour of two parties in case of information asymmetry. On the one hand, the sender decides whether and how to communicate the information, and on the other, the receiver chooses how to interpret that information (Connelly et al., 2011). As it may be difficult for subjects outside the company to obtain reliable information on firms’ non-financial aspects, the company itself may proactively engage in the SR process with the aim of reducing information asymmetry and securing its legitimacy (Hahn and Kuhnen, 2013)	Signalling theory is used to study the motivations lying behind the development of sustainability reports (Thorne et al., 2014) and the degree of disclosure of non-financial information (Bini and Bellucci, 2020). According to this theory, firms tend to disclose non-financial information to avoid problems of adverse selection (Clarkson et al., 2011). Furthermore, some scholars found how the disclosure of non-financial information depends on the sustainability performance achieved. The higher the performance, the more companies disclose their outcomes and impacts (Clarkson et al., 2008), while companies with lower sustainability performances tend to only partly disclose their activities (Bini and Bellucci, 2020)
Actor-Network theory (ANT)	This theory tries to overcome the dualism between social and natural worlds, between human and non-human actors, claiming that everything is relational, as nothing exists outside the networks of relationships. This means that reality is never fixed or complete (Latour, 1987; Callon, 1986). ANT can be used to analyse human and non-human actors involved in SR (Barter and Bebbington, 2013)	Scholars have investigated how the sustainability report is placed within the network in which it is inserted. However, this theory has been used little in this field of research. Rowbottom and Locke (2016) traced the evolution of Integrated Reporting by highlighting the main actors involved in the network, their interests and concerns over reporting complexity. Caron and Turcotte (2009), instead, found that a sustainability report can be considered as an artifact of a compromise between Global Reporting Initiative (GRI) and companies. The latter tends to only partially adopt the GRI guidelines
Learning-based theory	This theory identifies learning as a cognitive change and evolution of the system of values, beliefs, ideas and actions (Gond and Herrbach, 2006). This process is called ‘double-loop learning’ (Argyris and Schon, 1978) in case of deep and radical changes in the way of thinking and approaching things	This theoretical approach is used to understand how SR can activate business learning processes. Adopting this theoretical approach, scholars have found that reporting can sometimes lead to relevant changes in terms of new objectives, structures and business values (Albrecht et al., 2007), while sometimes it can fail radically in terms of affecting business organization (Mitchell et al., 2012)

Theoretical approach	Theory features	Main findings
Legitimacy theory	This theory is based on the idea that a contract exists between organizations and society. Hence, organizations need to act according to socially acceptable behaviour (O’Donovan, 2002). The company’s survival depends on its ability to meet societal expectations and the sustainability report can be used as a tool in this regard (Cho et al., 2015). Legitimacy theory helps to explain why companies report non-financial information and what kind of information is disclosed following threats to the company’s legitimacy (Dumay et al., 2019)	Legitimacy issues affect the production and use of sustainability reports (O’Donovan, 2002; Kuruppu et al., 2019). In particular, the perception of managers about the usefulness of SR as a key communication tool increases when the company suffers a loss of legitimacy (Tilling and Tilt, 2010). In the wake of this, legitimacy theory is also used to explain the decoupling of internal practice from the symbolic and external use of reporting (Deegan, 2014)
Stakeholder theory	This theory highlights that companies need to consider not only the interests of shareholders but also the interests of a wide group of stakeholders (Freeman, 1984). Stakeholder theory and legitimacy theory are not separated but overlap; legitimacy theory is broader because it considers the whole society, while stakeholder theory adopts a micro-level perspective investigating how companies interact with groups of stakeholders (Dumay et al., 2019). Unlike the legitimacy theory, stakeholder theory helps to clarify managerial behaviour during SR activities (Dumay et al., 2019)	Stakeholder pressures and engagement decisively influence the development of sustainability reports (Brusca et al., 2018; De Villiers et al., 2014a; Gallego-Alvarez and Ortas, 2017). Some authors have highlighted how stakeholder engagement influences the materiality and relevance of the information to be disclosed (Manetti, 2011; Torelli et al., 2020). On the other hand, the sustainability report has been also considered as a tool that companies use to engage stakeholders (Herremans et al., 2016)
Institutional theory	This theory suggests that company activities, including the decision to start a SR process, are mostly influenced by institutional pressures (Higgins et al., 2018; Larrinaga, 2007). Consequently, institutional theory helps to explain the progressive alignment of the adoption, quality and extent of SR across organizations as a result of institutional isomorphisms (DiMaggio and Powell, 1983; Hahn and Kuhnen, 2013)	Institutional theory has been mainly used to explain the determinants of SR (De Villiers et al., 2014b; Hahn and Kuhnen, 2013). Several scholars confirmed that companies develop sustainability reports primarily for isomorphism issues (De Villiers and Alexander, 2014; Higgins et al., 2015)
Signalling theory	This theory helps to explain the behaviour of two parties in case of information asymmetry. On the one hand, the sender decides whether and how to communicate the information, and on the other, the receiver chooses how to interpret that information (Connelly et al., 2011). As it may be difficult for subjects outside the company to obtain reliable information on firms’ non-financial aspects, the company itself may proactively engage in the SR process with the aim of reducing information asymmetry and securing its legitimacy (Hahn and Kuhnen, 2013)	Signalling theory is used to study the motivations lying behind the development of sustainability reports (Thorne et al., 2014) and the degree of disclosure of non-financial information (Bini and Bellucci, 2020). According to this theory, firms tend to disclose non-financial information to avoid problems of adverse selection (Clarkson et al., 2011). Furthermore, some scholars found how the disclosure of non-financial information depends on the sustainability performance achieved. The higher the performance, the more companies disclose their outcomes and impacts (Clarkson et al., 2008), while companies with lower sustainability performances tend to only partly disclose their activities (Bini and Bellucci, 2020)
Actor-Network theory (ANT)	This theory tries to overcome the dualism between social and natural worlds, between human and non-human actors, claiming that everything is relational, as nothing exists outside the networks of relationships. This means that reality is never fixed or complete (Latour, 1987; Callon, 1986). ANT can be used to analyse human and non-human actors involved in SR (Barter and Bebbington, 2013)	Scholars have investigated how the sustainability report is placed within the network in which it is inserted. However, this theory has been used little in this field of research. Rowbottom and Locke (2016) traced the evolution of Integrated Reporting by highlighting the main actors involved in the network, their interests and concerns over reporting complexity. Caron and Turcotte (2009), instead, found that a sustainability report can be considered as an artifact of a compromise between Global Reporting Initiative (GRI) and companies. The latter tends to only partially adopt the GRI guidelines
Learning-based theory	This theory identifies learning as a cognitive change and evolution of the system of values, beliefs, ideas and actions (Gond and Herrbach, 2006). This process is called ‘double-loop learning’ (Argyris and Schon, 1978) in case of deep and radical changes in the way of thinking and approaching things	This theoretical approach is used to understand how SR can activate business learning processes. Adopting this theoretical approach, scholars have found that reporting can sometimes lead to relevant changes in terms of new objectives, structures and business values (Albrecht et al., 2007), while sometimes it can fail radically in terms of affecting business organization (Mitchell et al., 2012)

Source: Authors’ elaboration