Skip to main content
SpringerLink
Log in

Country Readiness in Adopting Integrated Reporting: A Diamond Theory Approach from an Asian Pacific Economy

  • Chapter
  • First Online:
Accounting for Sustainability: Asia Pacific Perspectives

Part of the book series: Eco-Efficiency in Industry and Science ((ECOE,volume 33))

Abstract

Different countries have exhibited dissimilar levels of adoption of IR. Yet, we still do not know why some countries enjoy more competitive advantage than others in IR adoption. The chapter addresses this gap by selecting Sri Lanka, a country which exhibits a high rate of adopting IR, to explain the national competitive advantage in its readiness for IR adoption. The chapter draws on its theoretical framing of Porter’s Diamond Theory. Ample availability of professional accountants, mounting stakeholder demands, a supportive accounting profession and intense competition among organizations aided by award schemes play a key role in propelling Sri Lanka towards a high adoption level of IR. Authors also identify the national culture of the country plays a key role in this process. In addition to its theoretical contributions, this chapter also sheds light on important implications for local and international institutions, policy makers, and various professions in identifying the requisite conditions for promoting new managerial tools and techniques such as IR or sustainability reporting (SR).

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Log in via an institution
eBook
USD 16.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 129.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info
Hardcover Book
USD 199.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    Diesel and Motor Engineering PLC (DIMO) is the Sri Lankan company that has taken part in the IIRC Pilot Project. DIMO has a long history dating back to 1939. It has evolved over the years as a corporate entity with a significant presence in the automotive industry and providing services in an array of engineering sectors.

  2. 2.

    Diffusion is the process by which an innovation is spread or disseminated through a social system over time (Rogers 1983). As per the temporal trend of diffusion the cumulative adoption path is “S- shaped” with primary, diffusion, condensing and saturation phases. The diffusion stage has a rapidly increasing number of adopters. For more details see Bjørnenak (1997)

  3. 3.

    Managerial technologies are those tools, devices and knowledge that mediate between inputs and outputs (Abrahamson 1991). Since IR combines the inputs, outputs and outcomes of the business models of an organization in terms of various forms of capitals, it falls within the definition of a managerial technology.

  4. 4.

    The formation of IIRC took place in 2010 with the initiation of Prince’s Accounting for Sustainability Project (A4s) and Global Reporting Initiative (GRI) . It was initially called the International Integrated Reporting Committee and its name was changed to the International Integrated Reporting Council in 2012.

  5. 5.

    DA, USJ introduced the first accounting degree program in the Sri Lankan University system in 1991.

  6. 6.

    In 2013 the villagers in Rathupaswela had been protesting against a water crisis they faced for a long period. They were demanding that the Rubber Gloves Factory in the area be shut down claiming that the factory waste was polluting the groundwater in the area. When the army was deployed to disperse the protesters, 3 people (including 2 schoolboys) were killed and 36 civilians were injured. This spurred a wide social and political crisis in the country, making the government of that time highly unpopular. Due to the widespread social unrest, the Human Rights Commission of Sri Lanka (HRCSL) conducted an investigation and held the army responsible for the shooting (Maduwage 2015).

References

  • Abeydeera S, Kearins K, Tregidga H (2016a) Does Buddhism enable a different sustainability ethic at work? J Corp Citizenship 6:109–130

    Article  Google Scholar 

  • Abeydeera S, Tregidga H, Kearins K (2016b) Sustainability reporting – more global than local? Meditari Acc Res 24(4):478–504

    Article  Google Scholar 

  • Abrahamson E (1991) Managerial fads and fashions: the diffusion and rejection of innovations. Acad Manag Rev 16(3):586–612

    Google Scholar 

  • ACCA and Net Balance Foundation (2011) Adoption of integrated reporting by the ASX 50. Available via: http://www.accaglobal.com/content/dam/acca/global/PDF-technical/sustainability-reporting/tech-tp-air2.pdf. Accessed 17 Aug 2014

  • Ali AH (2011) The power of social media in developing nations: new tools for closing the global digital divide and beyond. Harvard Hum Rights J 24:185–219

    Google Scholar 

  • Askary S (2006) Accounting professionalism – a cultural perspective of developing countries. Manag Audit J 21(1/2):102–111

    Article  Google Scholar 

  • Askary S, Yazdifar H, Askarany D (2008) Culture and accounting practices in Turkey. Int J Account Audit Perform Eval 5(1):66–88

    Google Scholar 

  • AT Kearney (2012) Competitive benchmarking: Sri Lanka knowledge services. AT Kearney, Korea

    Google Scholar 

  • Bandarage A (2015) Good governance in Sri Lanka. The world post. Available via: http://www.huffingtonpost.com/asoka-bandarage/good-governance-in-sri-lanka_b_7087768.html. Accessed 22 Nov 2015

  • Baron R (2014) The evolution of corporate reporting for integrated performance- background paper for the 30th round table on sustainable development. OECD, Paris

    Google Scholar 

  • Bellak CJ, Weiss A (1993) A note on the Austrian “diamond”. Manag Int Rev 33(2):109–118

    Google Scholar 

  • Bennett M, Schaltegger S, Zvezdov D (2013) Exploring corporate practices in management accounting for sustainability. Institute for Chartered Accountants of England and Wales, London

    Google Scholar 

  • Bjørnenak T (1997) Diffusion and accounting: the case of ABC in Norway. Manag Account Res 8(1):3–17

    Article  Google Scholar 

  • Bosch FAJ, Prooijen A (1992) The competitive advantage of European nations: the impact of national culture – a missing element in Porter’s analysis? Eur Manag J 10(2):173–177

    Article  Google Scholar 

  • Brown J, Dillard J (2014) Integrated reporting: on the need for broadening out and opening up. Account Audit Account J 27(7):1120–1156

    Article  Google Scholar 

  • Cartwright WR (1993) Multiple linked diamonds and the international competitiveness of export-dependent industries: the New Zealand experience. Manag Int Rev 33(2):55–70

    Google Scholar 

  • Central Bank of Sri Lanka (CBSL) (2014) Annual Report. CBSL, Colombo

    Google Scholar 

  • Cho CH (2009) Legitimation strategies used in response to environmental disaster: a French case study of total SA’s Erika and AZF incidents. Eur Account Rev 18(1):33–62

    Article  Google Scholar 

  • Clancy P, O’Malley E, O’Connell L, Egeraat CV (2001) Industry clusters in Ireland: an application of Porter’s model of national competitive advantage to three sectors. Eur Plan Stud 9(1):7–28

    Article  Google Scholar 

  • Curran P (2000) Competition in UK higher education: competitive advantage in the research assessment exercise and Porter’s diamond model. High Educ Q 54:386–410

    Article  Google Scholar 

  • De Silva KM (2014) A history of Sri Lanka. Vijitha Yapa, Colombo

    Google Scholar 

  • De Villiers C, Rinaldi L, Unerman J (2014) Integrated reporting: insights, gaps and an agenda for future research. Account Audit Account J 27(7):1042–1067

    Article  Google Scholar 

  • Deegan C (2000) Financial accounting theory. McGraw Hill, Sydney

    Google Scholar 

  • Deegan C (2002) The legitimizing effect of social and environmental disclosures: a theoretical foundation. Account Audit Account J 15(3):282–311

    Article  Google Scholar 

  • Deloitte (2012) Integrated reporting, navigating your way to a truly integrated report. 2nd ed. Available via: www.itweb.co.za. Accessed 23 Jan 2015

  • Department of Census and Statistics of Sri Lanka (2013) Sri Lanka labour force survey annual report – 2013. Department of Census and Statistics, Sri Lanka

    Google Scholar 

  • Dissanayake D, Tilt C, Xydias-Lobo M (2016) Sustainability reporting by public listed companies in Sri Lanka. J Clean Prod 129:169–182

    Article  Google Scholar 

  • Eccles RG, Armbrester K (2011) Two disruptive ideas combined: integrated reporting in the cloud. IESE Insight 8(First Quarter–2011):13–20

    Google Scholar 

  • Eccles RG, Krzus MP (2010) One report: integrated reporting for a sustainable strategy. Wiley, Hoboken

    Google Scholar 

  • Eccles RG, Saltzman D (2011) Achieving sustainability through integrated reporting. Stanf Soc Innov Rev. Summer–2011:56–61

    Google Scholar 

  • Eccles RG, Serafeim G (2011) Accelerating the adoption of integrated reporting. de Leo F, Vollbracht M CSR index 2011, Innovation Publishing, Zurich, 70–92

    Google Scholar 

  • Fernando S (2014) Global and local influences on Corporate Social Responsibility (CSR) performance and disclosures; evidence from Sri Lankan corporate sector. Keynote address at the Faculty of Management Studies and Commerce (FMSC) Research Session, University of Sri Jayewardenepura, Sri Lanka, 5–27 Second Semester – 2014

    Google Scholar 

  • Fernando S, Lawrence S, Kelly M, Arunachalam M (2015) CSR practices in Sri Lanka: an exploratory analysis. Soc Responsib J 11(4):868–892

    Article  Google Scholar 

  • Grant RM (1991) Porter’s competitive advantage of nations: an assessment. Strateg Manag J 12(7):535–548

    Article  Google Scholar 

  • Gray SJ (1988) Towards a theory of cultural influence on the development of accounting systems internationally. Abacus 24(1):1–15

    Article  Google Scholar 

  • Gray SJ, Vint HM (1995) The impact of culture on accounting disclosures: some international evidence. Asia Pac J Acc 2(1):33–43

    Google Scholar 

  • Gray R, Javard M, Power DM, Sinclair DC (2001) Social and environmental disclosure and corporate characteristics: a research note and extension. J Bus Finance Acc 28:327–356

    Article  Google Scholar 

  • Gunarathne N, Senaratne S (2017) Diffusion of integrated reporting in an emerging South Asian (SAARC) nation. Manag Audit J 32(4/5):524–548

    Article  Google Scholar 

  • Gunarathne N, Peiris S, Edirisooriya K, Jayasinghe R (2015) Environmental management accounting in Sri Lankan enterprises. Department of Accounting, University of Sri Jayewardenepura, Nugegoda

    Google Scholar 

  • Gunawardene N (2015) Social media and general elections 2015. Daily mirror. Available via: http://www.dailymirror.lk/85811/social-media-and-general-elecations-2015. Accessed 23 Nov 2015

  • Gunarathne ADN, Alahakoon Y (2016) Environmental management accounting practices and their diffusion: the Sri Lankan experience. NSBM J Manag 2(1):1–26

    Google Scholar 

  • Higgins C, Stubbs W, Love T (2014) Walking the talk(s): organisational narratives of integrated reporting. Account Audit Account J 27(7):1090–1119

    Article  Google Scholar 

  • Hodgetts RM (1993) Porter’s diamond framework in a Mexican context. Manag Int Rev 33(2):41–54

    Google Scholar 

  • Hofstede G (1980) Culture’s consequences: international differences in work-related values. Sage Publications, Beverly Hills

    Google Scholar 

  • IIRC (2013) The international <IR> framework. Available via: http://integratedreporting.org/wp-content/uploads/2013/12/13-12-08-THE-INTERNATIONAL-IR-FRAMEWORK-2-1.pdf. Accessed 10 Sept 2014

  • IIRC (2014) Pilot programme investor network. IIRC. Available via: http://integratedreporting.org/wp-content/uploads/2014/03/IIRC-Pilot-Programme-Investor-Network-backgrounder-March-2014.pdf. Accessed 23 Dec 2014

  • International Federation of Accountants (IFAC) (2014) Handbook of international education pronouncements. International Accounting Education Standards Board, IFAC, New York

    Google Scholar 

  • International Integrated Reporting Council (IIRC) (2011) Towards integrated reporting, communicating value in the 21st century. IIRC, New York

    Google Scholar 

  • IoDSA and King III (2009) King code of governance for South Africa 2009. Institute of Directors in Southern Africa and the King Committee on Governance. Available via: http://african.ipapercms.dk/IOD/KINGIII/kingiiireport/. Accessed 23 Feb 2014

  • Jayawardane VK (2000) Nobodies to somebodies: the rise of the colonial bourgeoisie in Sri Lanka. Social Scientist Association and Sanjiva Books, Colombo

    Google Scholar 

  • Jensen JC, Berg N (2012) Determinants of traditional sustainability reporting versus integrated reporting, an institutionalist approach. Bus Strateg Environ 21:299–316

    Article  Google Scholar 

  • Jensen M, Meckling W (1976) Theory of the firm: managerial behaviour agency cost and ownership structure. J Financ Econ 3(4):305–360

    Article  Google Scholar 

  • Kolk A, Van Tulder R (2010) International business, corporate social responsibility and sustainable development. Int Bus Rev 19(2):119–125

    Article  Google Scholar 

  • KPMG (2008) International survey of corporate responsibility reporting. Available via: https://www.kpmg.com/EU/en/Documents/KPMG_International_survey_Corporate_responsibility_Survey_Reporting_2008.pdf. Accessed 20 Dec 2014

  • KPMG (2015) Survey of integrated reports in Japan 2014. Available via: https://www.kpmg.com/jp/ja/knowledge/article/integrated-reporting-article/documents/integrated-reporting-20150628e.pdf. Accessed 22 Nov 2015

  • Lee K-H, Herold DM (2016) Cultural relevance in corporate sustainability management: a comparison between Korea and Japan. Asian J Sustain Soc Responsib:1–21

    Google Scholar 

  • Liyanarachchi GA (2009) Accounting in ancient Sri Lanka: some evidence of the accounting and auditing practices of Buddhist monasteries during 815–1017 AD. Account Hist 14(1–2):101–120

    Article  Google Scholar 

  • Liyanarachchi GA (2015) Antecedents of double-entry bookkeeping and Buddhist temple accounting. Account Hist 20(1):85–106

    Article  Google Scholar 

  • Lodhia S (2015) Exploring the transition to integrated reporting through a practice lens: an Australian customer owned bank perspective. J Bus Ethics 129:585–598

    Article  Google Scholar 

  • Maduwage S (2015) Water woes of Rathupaswala still continue. Daily mirror. Available via: http://www.dailymirror.lk/83401/water-woes-of-rathupaswala-still-continue. Accessed 10 Dec 2015

  • Ministry of Education (MOE) (2013) Education first – Sri Lanka. Policy and Planning Branch, Ministry of Education, Sri Lanka

    Google Scholar 

  • Montano JLA, Donoso JA, Hassall T, Joyce J (2001) Vocational skills in the accounting professional profile: the Chartered Institute of Management Accountants (CIMA) employers’ opinion. Acc Educ 10(3):299–313

    Article  Google Scholar 

  • Moon HC, Rugman AM, Verbeke A (1998) A generalized double diamond approach to the global competitiveness of Korea and Singapore. Int Bus Rev 7:135–150

    Article  Google Scholar 

  • Nanayakkara G (1988) Culture and management in Sri Lanka. Postgraduate Institute of Management, Sri Lanka

    Google Scholar 

  • Narada (2010) The Buddha and his teaching, 3rd edn. Buddhist Publication Society, Kandy

    Google Scholar 

  • Owen D (2006) Emerging issues in sustainability reporting. Bus Strateg Environ 15:217–218

    Article  Google Scholar 

  • Patten DM (1992) Intra-industry environmental disclosures in response to the Alaskan oil spill: a note on legitimacy theory. Acc Organ Soc 17(5):471–475

    Article  Google Scholar 

  • Payutto PA (1994) Dependent origination- Buddhist way of conditionality. Buddhamma Foundation, Thailand

    Google Scholar 

  • Perera MHB (1989) Towards a framework to analyse the impact of culture on accounting. Int J Account 4(1):42–56

    Google Scholar 

  • Porter ME (1990) The competitive advantage of nations. Free Press, New York

    Book  Google Scholar 

  • Post JE, Preston LE, Sachs S (2002) Redefining the corporation- stakeholder management and organizational wealth. Stanford University Press, Stanford

    Google Scholar 

  • Rogers EM (1983) The diffusion of innovations, 3rd edn. Free Press, New York

    Google Scholar 

  • Rugman AM, Cruz JRD (1993) The “double diamond” model of international competitiveness: the Canadian experience. Manag Int Rev 33(2):17–39

    Google Scholar 

  • Sardy M, Fetscherin M (2009) A double diamond comparison of the automotive industry of China, India, and South Korea. Compet Forum 7(1):6–16

    Google Scholar 

  • Schaltegger S, Zvezdov D (2015) Gatekeepers of sustainability information: exploring the roles of accountants. J Account Organ Chang 11(3):333–361

    Article  Google Scholar 

  • Senaratne S, Cooray S (2012) Dominance of professional accounting bodies and dependence of universities: the case of accounting education in Sri Lanka. In: Proceedings of the accounting and finance Australian and New Zealand AFAANZ annual conference-2012, Melbourne, no pagination July 2012

    Google Scholar 

  • Senaratne S, Gunarathne N (2017) Excellence perspective for management education from a global accountants’ hub in Asia. In: Baporikar N (ed) Management education for global leadership. IGI Global, Hershey, pp 158–180

    Google Scholar 

  • Senaratne S, Gunarathne ADN, Herath R, Bandara C (2015) Diffusion of integrated reporting in an emerging economy. In: Proceedings of the Environmental and Sustainability Management Accounting Network (EMAN) global conference – 2015. University of Sri Jayewardenepura, Colombo, 120–137, January 2015

    Google Scholar 

  • Seuring S, Muller M (2008) From a literature review to a conceptual framework for sustainable supply chain management. J Clean Prod 16(15):1699–1710

    Article  Google Scholar 

  • Simnett R, Huggins AL (2015) Integrated reporting and assurance: where can research add value? Sustain Acc Manag Policy J 6(1):29–53

    Google Scholar 

  • Sison AJG (2010) Corporate governance and ethics: an Aristotelian perspective. Edward Elgar Publishing, Cheltenham

    Google Scholar 

  • SLASSCOM (2015) Sri Lankan IT/BPM industry 2014 review. SLASSCOM, Colombo

    Google Scholar 

  • Sledge S (2005) Does Porter’s diamond hold in the global automotive industry? Adv Compet Res – ACR 13(1):22–32

    Google Scholar 

  • Stent W, Dowler T (2015) Early assessments of the gap between integrated reporting and current corporate reporting. Meditari Acc Res 23(1):92–117

    Article  Google Scholar 

  • Stubbs W, Higgins C (2014) Integrated reporting and internal mechanisms of change. Account Audit Account J 27(7):1068–1090

    Article  Google Scholar 

  • Tholons (2014) 2014 – tholons top 100 outsourcing destinations: regional overview. Available via: http://www.tholons.com/nl_pdf/Whitepaper_December_2013.pdf. Accessed 01 Dec 2015

  • Thoradeniya P, Lee J, Tan R, Ferreira A (2015) Sustainability reporting and the theory of planned behaviour. Account Audit Account J 28(7):1099–1137

    Article  Google Scholar 

  • University Grants Commission (UGC) (2013) Thirty fourth annual report- 2012. UGC, Sri Lanka

    Google Scholar 

  • Van Staden C, Wild S (2013) Integrated reporting: an initial analysis of early reporters. In: Proceedings of the Massey University Accounting Research Seminar. Massey University, Auckland

    Google Scholar 

  • Weeramantry CG (2002) Sustainable development: an ancient concept recently revived. Global judges symposium on sustainable development and the role of law. Johannesburg, South Africa, Available via: http://www.unep.org/delc/Portals/119/publications/Speeches/Weeramantry.pdf. Accessed 08 Dec 2015

  • Wijeratne AT (2006) A Buddhist’s view on sustainability – a heretic’s thoughts on the economy. Agra T. Wijeratne, Pannipitiya

    Google Scholar 

  • World Bank (2015) Report on the observance of standards and codes, accounting and auditing – Sri Lanka. World Bank, Washington, DC

    Google Scholar 

  • Zhaoa Z, Zhanga S, Zuo J (2011) A critical analysis of the photovoltaic power industry in China – from diamond model to gear model. Renew Sust Energ Rev 15(9):4963–4971

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Sri Jayewardenepura, Nugegoda, Sri Lanka

    A. D. Nuwan Gunarathne & Samanthi Senaratne

  2. Griffith University, Brisbane, Australia

    A. D. Nuwan Gunarathne

Authors
  1. A. D. Nuwan Gunarathne
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Samanthi Senaratne
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to A. D. Nuwan Gunarathne .

Editor information

Editors and Affiliations

  1. Griffith Business School, Griffith University, Brisbane, Australia

    Ki-Hoon Lee

  2. Centre for Sustainability Management, Leuphana University of Lüneburg, Lüneburg, Germany

    Stefan Schaltegger

Appendices

Appendices

1.1 Appendix 1: Linking sustainability performance to six capitals

figure a

* Intellectual capital (i.e. organizational knowledge-based intangibles, including intellectual property and organizational capital) can be mainly related to economic and social performance. It should also be noted the relationships given above are not mutually exclusive and hence there can be many other linkages among sustainability performance aspects to six capitals

1.2 Appendix 2: Eightfold path of Buddha’s way of emancipation

Division

Eightfold-path factors

Wisdom (panna)

1. Right view/understanding (Samma-Ditthi)

2. Right intention (Samma-Sankappa)

Ethical conduct/morality (sila)

3. Right speech (Samma-Vaca)

4. Right action (Samma-Kammanta)

5. Right livelihood (Samma-Ajiva)

Concentration/mental discipline (samadhi)

6. Right effort (Samma-Vayama)

7. Right mindfulness (Samma-Sati)

8. Right concentration (Samma-Samadhi)

  1. Source: Narada (2010)

Rights and permissions

Reprints and permissions

Copyright information

© 2018 Springer International Publishing AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Gunarathne, A.D.N., Senaratne, S. (2018). Country Readiness in Adopting Integrated Reporting: A Diamond Theory Approach from an Asian Pacific Economy. In: Lee, KH., Schaltegger, S. (eds) Accounting for Sustainability: Asia Pacific Perspectives. Eco-Efficiency in Industry and Science, vol 33. Springer, Cham. https://doi.org/10.1007/978-3-319-70899-7_3

Download citation

Publish with us

Policies and ethics

Search

Navigation