CSRD traditional and contextual influencing factors: the case of Saudi Arabia

Abstract

In today’s economy, one of the most appealing strategy requirements for company operations is corporate social responsibility. This paper reviews the existing bodies of literature related to the determinants of corporate social responsibility (CSR) with a focus on Saudi Arabia. This paper studies the literature of CSR and CSR disclosure (CSRD). The study expands knowledge on CSRD through analyzing the historical development of previous studies, research impact, theories utilized, research country/context, and methodologies and models used to capture CSRD. The analysis of the existing literature of CSRD in Saudi Arabia shows that there is a need for more research examining not only traditional determinants but also, and most importantly, contextual characteristics. This is the first known research that thoroughly examines the current Saudi CSRD literature and identifies contextual factors that should be examined in relation to CSRD. In summary, the study highlights a number of research areas, points out a number of gaps in the literature, and provides a comprehensive and interesting roadmap for future research. The research directions identified in this paper can be used as guidance for future CSRD studies of different emerging countries.

Keywords:

• Corporate social responsibility disclosure
• traditional CSRD influencing factors
• contextual CSRD influencing factors
• the kingdom of Saudi Arabia

REVIEWING EDITOR:

• Huifen (Helen) Cai, Middlesex University Business School, United Kingdom

SUBJECTS:

• Corporate Governance
• Corporate Social Responsibility
• Small Business Management

Introduction

In today’s economy, one of the most appealing strategy requirements for company operations is corporate social responsibility (CSR). Corporate Social Responsibility (CSR) refers to the method of reporting how firms interact with the environment, workers, community, and customers (Al-Saki et al., 2014; Nour et al., 2020; 2022).

Since CSR initiatives is thought to be crucial for companies, information about CSR efforts should be reported to stakeholders and the community. It gives stakeholders the ability to choose if the company is socially engaged or not, which would justify the company’s going concern (Nour et al., 2022). Firms employ voluntary disclosures like the CSRD to boost their public relations, enhance their public perception, and guard against public criticism (Nour et al., 2020).

Consequently, many studies investigated, and provided evidence on, the determinants of CSRD during the last two decades. However, this literature provided mixed findings and a lot of groups of determinants due to the differences between the scope of these studies (i.e. micro and macro factors) and the contexts of them (i.e. developed, developing, or emerging countries).

Thus, the main objectives and contributions provided by this study are to (1) give an in-depth review of the literature on the determinants of CSRD research, (2) explore the various facets of this literature, (3) point out any gaps in the literature, and (4) provide a thorough agenda for future research. Thus, this study could help academics, legislators, managers through providing a thorough understanding of the factors which drive the CSRD, particularly in Suadi Arabia context. Additionally, the current study contributes to the literature by emphasizing the contextual determinants of CSRD alongside its traditional determinants. That is, this is the first known research that thoroughly examines the current Saudi CSRD literature and identifies contextual factors that should be considered in relation to CSRD. Moreover, the research directions identified in this study can be used as guidance for future CSRD studies of different emerging countries.

Specifically, this study reviews the relevant CSR literature on CSRD, corporate governance (CG), and other related Determinants on macro and micro levels. Both domestic studies conducted in Saudi Arabia and worldwide research are included in this CSR review. Thus, this paper identifies factors influencing CSRD that are outlined in the respective literature. Further, it reviews the evolution of CSRD research in Saudi Arabia (i.e. trends of CSRD in Saudi-based research). These are under-researched areas in the CSRD literature. Thus, by offering a more thorough grasp of the state of CSRD research in Saudi Arabia, the links between CSRD and its determinants, and the identification of pertinent research gaps (opportunities), this review paper contributes to the body of literature.

Then, this study would provide answers to the following questions: (1) what are the traditional determinants of CSRD? (2) What are the contextual determinants of CSRD on Saudi Arabia context? (3) What are the future directions of the CSRD literature, especially in KSA?

Today, corporate social responsibility (CSR) is widely accepted in developed countries; it is not seen as a further policy tool that corporates use to disclose information; in other words, corporates in developed countries do not view CSR disclosure as a luxury or believe that it improves their reputation in the eyes of the public. However, corporates now view corporate social responsibility as a key component of their policies and strategies. On the other hand, corporates in developing and emerging countries, such KSA, remain in the early phases of incorporating CSR into their policies and strategies. Thus, exploring the contextual determinants of CSRD in a merging context, Suadi Arabia, would be an interesting research field and worthwhile.

Examining and determining the factors that influence CSRD in the Saudi Arabian context is motivated by several factors. First, the Kingdom of Saudi Arabia is a Gulf Cooperation Council member. It is one of the biggest oil exporters in the world and contributes 25% of the GDP of the Arab world and 44% of the Arab Market Capitalization (Alotaibi & Hussainey, 2016; Habbash, 2016). Second, several industries are located there, including cement, petrochemicals, customer services, refining, and healthcare. Saudi Arabian businesses have recently begun to focus far more on their annual reports’ CSR initiatives. Moreover, the CSRD is deemed mandatory by the Saudi Arabian Governance Code for corporations to provide. Consequently, this offers pertinent information to various stakeholders and benefits the community at large (Alotaibi & Hussainey, 2016).

Third, in 2007, Saudi Arabia adopted a Corporate Governance Code. Culturally, the country’s Islamic values had a considerable influence on the code, resulting in the integration of Islamic traits into the governance code (Albassam, 2014, Alotaibi & Hussainey, 2016). Fourth, the governance setting and regulatory environment in Saudi Arabia is emerging, distinct, and study worth. For instance, there is a concentration of governmental and family ownership in Saudi Arabian listed companies. That it is, over 70% of the listed companies are family-owned businesses and the Saudi government owns more than 30% of Saudi Arabian businesses. Finally, in 2016, the Saudi government released the 2030 Vision which involves significant institutional reforms that could affect, in turn, firms’ reporting behaviour. Consequently, it is worthwhile to investigate CSRD determinants in such an emerging institutional setting.

Vision 2030, which the Saudi Arabian government is implementing at a rapid rate to improve the nation’s economic and social standing, is a turning point in the country’s history. The government describes Vision 2030 as an integrated strategy to revive the economy and lessen its dependence on oil. Recognized as an agenda for economic progress, Vision 2030 has gained respect in all economic sectors. It describes the broad plans, guidelines, priorities, and aims for reviving the Kingdom. The goal of Vision 2030 is to completely restructure the economy, using the private sector as a catalyst for prosperity (Farghaly et al., 2023).

The paper is structured as follows. First, the methodology of this literature-review-based paper is clarified. Second, a review of empirical findings of political, social, and economic macro contextual factors and micro firm-level characteristics that influence CSRD is presented. We then provide a review that discusses prior CSR literature based on KSA and the theoretical perspective of these studies. Next, research designs used by prior CSR Saudi-based studies are discussed. We end with the limitations and directions for future research.

Research methodology

Regarding the diverse political, social, and economic conditions of countries all over the world, the present paper seeks to illustrate the significance of CSR and CSRD practices via a theoretical approach. The paper is based on available relevant literature on the topic. It includes CSRD-related research studies, electronic journals, articles, and media reports in print and/or available on the internet.

To search for reviewed articles, we used the most common keywords in the CSR literature to be used. Since this paper focus on the traditional and Suadi-related contextual determinants of CSRD, we also used the keywords which refer to these topics alongside the CSR literature keywords. Then, we used keywords such as ‘Corporate Social Responsibility’, ‘CSR’, ‘Corporate Social Responsibility Disclosure’, ‘CSRD’, Corporate Social Responsibility Disclosure Determinants’, and ‘Suadi Arabia’.

The literature review process necessitates a well-organized plan. Three steps made up the review plan that we developed: (1) Determine which CSR studies require a review, and then create the review methodology. (2) Sort the chosen research according to the themes they each explored. (3) Determine the gaps in the literature and, using the findings of the review, suggest the directions for future study.

The study first discusses the empirical elements influencing CSRD globally, which highlights the importance of this topic. Two viewpoints are used to explain this: (1) macro level, which include social, political, and economic factors; and (2) micro level, which consider the characteristics of individual firms. This serves to illustrate the findings of the literature in this area on a global basis. Consequently, we classify the reviewed articles conducted outside the Saudi context into two groups: macro level factors studies and macro level factors studies, as discussed next.

Next, the Saudi context of CSRD research is explored and thoroughly analyzed. The main aim of these analyses is to examine the current CSRD literature, identify relevant research gaps, and then recommend respective future directions. To meet the study’s objective, the following distinct facets of the reviewed Saudi-based studies are reviewed: developments in Saudi CSRD literature, theoretical perspectives or framework, and research design (sample characteristics, data source, CSRD instrument, and research methodology).

Empirical findings on factors affecting CSRD

The review of the relevant literature is divided into two categories: macro and micro factors that influence CSRD. Macro factors include political, social, and economic contexts, and micro aspects are companies’ characteristics.

Macro factors: political, social, and economic contexts

The combination of firms’ motivations, the institutional framework of the country, and social and political settings means that the economic effects of accounting systems might differ throughout countries. Legal regimes have historically produced a wide variety of accounting systems, which makes it challenging to compare financial reports meaningfully between countries due to these and other political and economic disparities.

Then, various political, social, and economic contexts in various countries may have an impact on many kinds of managerial choices, including reporting and disclosure decisions. Thus, it is frequently required to look beyond the level of the company and the market to a range of political, social, and economic variables that are outside the domain of the firm to gain a grounded understanding of CSR. For instance, more political changes in a context accompanied by legislations changes could effect the quantity and the quality of CSRD. Moreover, Social pressure plays an important role in commitment with CSR initiatives and voluntary disclosure. Finally, the economic growth and stability of the country could help motivate firms in CSR practices.

Prior research has linked CSR to political, social, and economic contexts. Further, previous research has suggested that a country’s political economy perspective influences firms’ disclosure (Gray et al., 1996; Guthrie & Parker, 1990; Healy & Palepu, 2001; Roberts, 1992). Gray et al. (1995) employed stakeholder, legitimacy, and political economy theories to interpret the findings of the reviewed studies. Gray et al. (1995) concluded that CSR is not a systematic practice because of the lack of regulation. They also noted that because different countries have distinct contextual pressures, CSRD differs based on the country of reporting. This observation is supported by Baughn et al. (2007), who studied CSR through the lens of institutional theory. Baughn et al. (2007) compared the CSR practices of fifteen Asian countries with those of other countries (such as the US, Australia, the Middle East, and Africa). They revealed significant regional variations in CSR findings. Specifically, they found a strong relationship between a country’s political, social, and economic contexts and CSR. Baughn et al. (2007) also stressed the importance of coercive institutional power, or regulations, to encourage CSR practices.

Nonetheless, Dobers and Halme (2009) discussed CSR in developing countries, particularly in South America and Africa, contributing to a greater understanding of what appropriate CSR practices can offer, governed by post-development theory. According to Dobers and Halme (2009), the lack of appropriate institutional frameworks and CSR initiatives may result in the misappropriation of substantial resources and, ultimately, state failure. Young and Marais (2012) studied the quality of CSRD based on institutional and legitimacy theories. Using a sample of 220 reports of Australian and French firms published in 2009, they examined CSR reporting, considering the impact of national institutions and industry characteristics. According to Young and Marais (2012), the existence of CSR governance in France contributes to improved communication of CSRD compared to Australia.

In the same way, Tilt (2016) argued that stakeholder, legitimacy, and accountability theories are widely used in developed countries to describe CSR practices. However, these theoretical stances struggle to consider all aspects of politics, culture, and economy (macro level). Thus, they fail to interpret CSR in a changing institutional environment such as those in developing countries (Frynas & Yamahaki, 2016). Tilt (2016) suggested that the role of political ideology and hegemony, the influence of cultural understandings, and the impact of historical economic contexts should be considered when examining a developing country’s CSRD. This discussion aligns with other research conducted in developing countries (Uzma, 2016; Yang et al., 2015). Jamali and Karam (2018) reviewed 453 research papers based in developing countries, published between 1990 and 2015, to identify how CSR is understood and practiced in developing countries. They revealed that CSR has become more prevalent in developing countries; however, there are gaps in the principles and application of CSR due to political and social factors (such as formal regulatory and informal cultural institutions that influence systems of governance).

Further, in the existing body of literature, some studies empirically examined the influence of political, social, and economic factors on the CSRD of developing countries. Analysing 681 annual reports of multinational enterprises operating in emerging markets between 2004 and 2011, Marano et al. (2017) examined the relationship between the condition of institutional voids (i.e. the absence or lack of institutions that improve CSR practices) and the use of CSRD. Their findings suggested that improving CSR institutional environments increases CSRD. They discovered that institutional pressures related to internationalization, listings on stock exchanges in developed economies, and enterprises’ expertise in comprehending their CSR policies were the main reasons why the studied firms were driven to enhance CSRD. Consistently, Ali et al. (2017) explored the similarities and differences between developed and developing countries in relation to CSRD determinants. By conducting a literature survey and reviewing 76 empirical research articles, the authors concluded that CSRD is pertinent to a country’s (developed and developing) political, societal, and cultural influences. However, CSRD in developed countries is more concerned with specific stakeholders (e.g. regulators, investors, and media); CSRD in developing countries is influenced more by external and powerful forces (e.g. international media and foreign investors). They added that firms of developing countries face less public pressure than do those of developed countries.

Previous literature has argued the role of government in promoting corporate reporting by providing relevant guidelines. Governments exert a coercive/regulative institutional pressure on firms to enhance certain social behaviours (Campbell, 2007; DiMaggio & Powell, 1983; Scott, 2008). CSRD can be also enhanced by providing respective regulations (Amran & Devi, 2008; Chauvey et al., 2015; Frost, 2007; Haji, 2013; Roberts, 1992; Sadou et al., 2017; Yang & Farley, 2016). For example, Amran and Devi (2008) investigated the influence of the Malaysian 2020 vision on Malaysian companies’ CSRD and found that the 2020 Vision motivated the sampled firms to engage in greater CSRD. Further, extending the argument made by Marano et al. (2017), Ortas et al. (2019) examined the role of national institutions on firms’ environmental, social, and governance (ESG) performance, analysing the ESG performance of 4,751 firms from 52 countries, adopting the institutional theory. Ortas et al. (2019) found that good CSR policies drive better ESG performance.

Further, Sharma (2019) evaluated the role of CSR in developing and developed countries. They focused on CSR principles and the role of CSR in a country’s development concluding that governments of developing countries use CSR campaigns to serve political and social aims. Consistent with the findings of Ali et al. (2017), the author reported that, in developed countries, firms control CSR campaigns and tend to focus on stakeholders’ needs in their CSR strategies. The findings of Sharma (2019) have some limitations that must be considered such as they show the general trends of CSR usage by governments and firms, regardless of country-specific contexts (e.g. economic, social, and political) that may play a significant role in clarifying the impact of CSR on a country’s development. Al‐Abdin et al. (2018) conducted a thorough literature study of the relevant Middle Eastern (ME) literature from 2003 to 2016 to investigate the status of CSR and its future directions. They revealed that CSR in ME is generally evolving, but in a slow manner, reflecting the different ME country-specific contexts (e.g. cultural, political, and economic). Al‐Abdin et al. (2018) noted that the differences between countries might play an important role in a country’s CSR development (e.g. Syria, Iran, Turkey, and Lebanon’s geopolitical impacts on CSR).

Prior studies have underlined the need to recognize the unique ways in which corporate social responsibility is impacted by national contexts. A significant limitation of some CSR research is that it is carried out in developing countries but adopts the methodology of CSR studies established in developed countries (Al‐Abdin et al., 2018; Marano et al., 2017; Ortas et al., 2019; Tilt, 2016). Researchers (Ali et al., 2017; Baughn et al., 2007; Dobers & Halme, 2009; Endrikat et al., 2020; Lu & Wang, 2021; Marano et al., 2017; Tilt, 2016; Uzma, 2016) have issued a warning that, due to political, cultural, and economic disparities, transferring research from developed to developing nations without appropriate adaptations may result in erroneous conclusions. According to Al-Abdin et al. (2018), Dobers and Halme (2009), Marano et al. (2017), Sharma (2019), Tilt (2016), and Uzma (2016), more research is required to fully understand the impact of regulations, stakeholders, politics, situations of crisis, culture, and individual behaviours on CSRD. As a result, the unique geographically related CSR characteristics result in many associated research gaps.

In the body of existing literature, the relationship between religion and CSR, as a cultural aspect, has been also explored. Islamic traits and CSR concepts are strongly related (Albassam & Ntim, 2017; Alhazmi, 2017; Goby & Nickerson, 2016; Khan et al., 2013; Sobhani et al., 2011). Baydoun and Willett (2000) proposed that the religion of Islam, as a cultural variable, affects the interpretation and disclosure of accounting measures and information, suggesting that CSR reports could be influenced by the beliefs of Islam. They state that corporate activities in Islamic societies entail a sense of social accountability and collectivism. In contrast, Western companies are traditionally driven by profit maximization (with a little consideration to social accountability) and individualistic economic rationalism (Baydoun & Willett, 2000).

Based on legitimacy theory, Haniffa and Cooke (2005) examined the influence of CG mechanisms and cultural variables (including religion) on CSRD in Malaysia. Using a mixed-method analysis, they found a significant relationship between CSRD and executive-dominated boards of directors, boards with a majority of Muslim members, boards with multiple directorship chairpersons, and foreign share ownership. In addition, Aribi and Gao (2010) examined the Islamic influence on CSRD between Islamic and conventional financial institutions. The results of their study indicate that the CSRD of Islamic financial institutions in the Gulf region is positively impacted by Islam. Aribi and Gao (2010) supported the findings in the research mentioned above, and their conclusions were consistent with more recent studies (e.g. Alhejaili, 2018; Hassan & Syafri Harahap, 2010; Raman & Bukair, 2013). Furthermore, Jamali and Sdiani (2013) investigated the beliefs of managers in Lebanese companies in order to study the connection between CSR and religion. Regarding CSR, they distinguished between two categories of religious drivers: intrinsic (i.e. based on personal experience) and extrinsic (i.e. based on shared responsibility). Jamali and Sdiani (2013) found social extrinsic religiosity with wider CSR perspectives maximized its benefits, while intrinsic religiosity was revealed to be narrower in relation to CSR, with limited appreciation of its advantages. However, Harun et al. (2020) found that Islamic banks in GCC countries had low CSRD, suggesting that such firms concentrate more on financial benefits than on religious and social norms.

In Saudi Arabia, very few studies have examined the impact of Islamic values on CSRD. Albassam and Ntim (2017) investigated the influence of Islamic values on CG voluntary disclosure in Saudi Arabia, using a sample of 75 listed firms for seven years. They found that companies with high practicing-religiosity (i.e. integrating more Islamic values in business) have higher voluntary CG disclosure.

There is also a scarcity in research on the impact of CSR on firm performance from an Islamic perspective. Al-Malkawi and Javaid (2018) provided insights regarding the effect of CSR (measured by Zakat) on firm financial performance based on stakeholder theory. They examined 107 Saudi-listed nonfinancial firms over 10 years. Al-Malkawi and Javaid (2018) revealed a strong association between Zakat and firm financial performance. In conclusion, studies investigating the impact of religion on CSRD are rare in the Saudi context. This raises a need for more institutional theory-based research on Saudi firms in this area (Albassam & Ntim, 2017; Jamali & Sdiani, 2013).

Micro factors: firm characteristics

Firm-specific factors shape companies’ identity, which in turn influences firms’ behaviour in dealing with internal (e.g. operations and employees) and external (e.g. customers, the environment, and community) issues. It has been suggested that these firm-level traits influence CSR and CSRD in distinct ways (Goodstein & Boeker, 1991; Michelon & Parbonetti, 2012; Yang & Farley, 2016).

The most frequently examined determinants are company size, profitability, leverage, industry type, corporate financial performance, the multiple listing of a firm, country of origin, and corporate governance variables such as board of directors’ attributes, audit committee attributes, and gender diversity. However, fewer studies investigate the effects of factors related to risk management committee and CSR committee.

Many empirical studies have demonstrated the importance of a company’s distinctive characteristics to CSR. For example, Gray et al. (1995) explored the literature of CSR and firm characteristics and found that factors such as industry type, country of reporting, company age, and the existence of a social responsibility committee influence CSR. However, Gray et al. (1995) also identified other firms’ factors that are irrelevant to CSR, such as company size and profitability, contradicting the findings of many other studies that revealed a positive association between firm size and CSRD (Cowen et al., 1987; Hackston & Milne, 1996; Patten, 1991), and profitability and corporate reporting (Al-Tuwaijri et al., 2004; Belkaoui & Karpik, 1989; Haniffa & Cooke, 2005; Jizi et al., 2014; Roberts, 1992). Adams (2002) investigated the impact of internal organizational factors on corporate social and ethical reporting. The author interviewed senior executives from seven large multicultural firms in the chemical and pharmaceutical sectors in the UK and Germany. Her findings indicated that firm size, country of origin, and culture affecting the extent, quality, quantity, and completeness of such disclosures. Adams (2002) also revealed that public pressure drives firms’ practice of reporting. In Australia, Chan et al. (2014) assessed factors affecting CSRD, informed by legitimacy and stakeholder theories. They revealed that firm size, industry type, and leverage have positive significant impact on Australian firms’ CSRD.

In Bangladesh, Muttakin et al. (2015) investigated the impact of board directors’ gender and nationality, firm size, and profitability on CSRD, informed by signalling theory. Their findings showed that larger and more profitable firms, with foreign directors on board, report more CSRD, while women on boards have a negative impact on CSRD. Ali et al. (2017) reviewed the similarities and differences between developed and developing countries in relation to CSRD determinants and found that firm size, industry type, and profitability influence CSRD.

Moreover, researchers have been motivated to investigate more factors that influence CSRD. CG factors, as company-specific characteristics, have been examined. For instance, Harjoto and Jo (2011) quantitatively examined the association between board independence and ownership structure and CSR using a large international sample consisting of 12,527 observations. This study revealed positive relationships between CSR and such CG aspects. Jizi et al. (2014) adopted agency theory to examine the impact of CG factors on CSRD in the US banking sector. They found that board size, board independence, and CEO duality are positively associated with CSRD. Harjoto and Jo (2011) and Jizi et al. (2014) suggested that the significance of CG factors in explaining CSR is related to management’s attempts to demonstrate higher accountability to stakeholders.

Further, Majumder et al. (2017) extensively reviewed 29 articles about the relationship between 12 CG factors and CSR. Their review covered developed and emerging countries. A meta-analysis tool was employed by Majumder et al. (2017) to statistically explain the contradictory findings of prior studies. They confirmed the positive relationship between board size, frequency of board meetings, and auditors’ credibility with CSR. Recent findings for Saudi companies also support prior research investigating CG and CSRD (Al-Janadi et al., 2013; Alhazmi, 2017; Alotaibi & Hussainey, 2016; Table 1). In addition to the abovementioned commonly used CG factors, there have been recent limited studies into two other CG factors influencing CSR: risk management committees (RMC; Musallam, 2018) and CSR committees (CSRC; Arena et al., 2015; Endrikat et al., 2020; Fuente et al., 2017; Gennari & Salvioni, 2019).

Table 1. Summary of previous empirical CSRD research based in KSA.

Authors	Period	Sample (sectors)	Methodology (content analysis: EQ versus UEQ)	Theory	Data source	CSRD index	CSRD average findings	Firm characteristics findings (impact sign)	Remarks
Macarulla and Talalweh (2012)	2008	138 observations (all sectors)	Quantitative (EQ)	Stakeholder, social responsibility, and legitimacy theories	Annual reports and firms’ websites	23 CSRD items derived from Western literature	16%	PROF (+) FSIZE (+) IND (+)	The authors examined only few firms’ websites in addition to annual reports for CSRD
Al-Janadi et al. (2013)	2006–2007	87 observations (all sectors)	Quantitative (UEQ)	Agency, resource dependence, and information asymmetry theories	Annual reports	9 CSRD items derived from Western literature	14.61%	BSIZE (+) BIND (+) BIG 4 (+) DUAL (+) GOV OWN (–)	The authors examined voluntary disclosures (including 9 CSRD), after the 2006 CGR was effective
Abdulhaq and Muhamed (2015)	2012–2013	326 observations (all sectors)	Quantitative (EQ)	Agency, political, stakeholder, and legitimacy theories	Annual reports and firms’ websites	44 CSRD items derived from studies based in emerging, Arab, and/or Islamic countries	36%	FSIZE (+) OWN CONC (+) IND (–)	The authors examined CSRD after the 2006 CGR was effective
Habbash (2016)	2007–2011	267 observations (nonfinancial sectors)	Quantitative (EQ)	Agency theory	Annual reports	17 CSRD items derived from ISO 26000	24%	GOV OWN (+) FAM OWN (+) FSIZE (+) FAGE (+) LEV (–)
Alotaibi and Hussainey (2016)	2013–2014	171 observations (nonfinancial sectors)	Quantitative and qualitative (EQ and UEQ)	Agency, signaling, legitimacy, and stakeholder theories	Annual reports	40 CSRD items derived from Western literature with 4 Saudi-specific related items	Quantity: 9.43% Quality: 0.33%	BSIZE (+) AC SIZE (+) BIND (–) RC SIZE (–) GOV OWN (–) MGM OWN (+) FSIZE (+) LEV (–) DIVI (–)	The authors examined CSRD after the 2012 CGR was effective
Al-Gamrh and Al-Dhamari (2016)	2008	93 observations (nonfinancial sectors)	Quantitative (EQ)	Signaling, agency, political cost, capital needs, and legitimacy theories	Annual reports	25 CSRD items derived from Western literature	15.4%	GOV OWN (+) FSIZE (+) FAGE (+)
Issa (2017)	2012–2014	109 observations (nonfinancial sectors)	Quantitative (UEQ)	Agency, signaling, stakeholder, stewardship, and resource-dependence theories	Annual reports	42 CSRD items derived from the GRI (G4) guidelines	11%	BIND (–) PROF (+) FSIZE (+) IND (+)
Mahjoub (2019)	2015–2017	267 observations (nonfinancial sectors)	Quantitative (UEQ)	Agency, resource-dependence, signaling, and legitimacy theories	Annual reports and CSR reports	37 CSRD items derived from the GRI and ISO 26000, with 2 items related to Saudi-specific issues	None	PROF (+) FSIZE (+) IND (+)	The author did not provide CSRD average, but advised that CSRD is increasing over time
Boshnak (2021)	2016–2018	210 observations (nonfinancial sectors)	Quantitative (EQ)	Stakeholder and legitimacy theories	Annual reports	31 CSRD items derived from the GRI (G4) guidelines	68%	FSIZE (+) LEV (+) IND (+) GOV OWN (+) FAM OWN (–)	The author examined CSRD considering the implementation of both the 2017 CGR and IFRS in 2017

Note: EQ: equal weighting; UEQ: unequal weighting; BSIZE: board size; BIND: board independent non-executive directors; BIG 4: big 4 audit firms; DUAL: CEO duality; IND: industry sectors; GOV OWN: government ownership; OWN CONC: ownership concentration; FAM OWN: family ownership; MGM OWN: managerial ownership; AC SIZE: audit committee size; RC: remuneration committee; FSIZE: firm size; PROF: profitability; LEV: leverage; DIVI; dividends.

Further, despite their paucity in the extant literature, company-specific factors, were investigated and found to affect CSR such as:

• influential (e.g. politicians) directorship (Alazzani et al., 2019; Michelon & Parbonetti, 2012; Yang & Farley, 2016)

• gender diversity (Bear et al., 2010; Issa & Fang, 2019; Lu & Wang, 2021; Post et al., 2011; Williams, 2003), and educational qualifications of female directors (e.g. Ananzeh, 2022)

• regulatory penalties (Ding et al., 2019; Martínez‐Ferrero et al., 2019)

• CSR awards (Anas et al., 2015; Arena et al., 2018; Sadou et al., 2017)

• Internationalization (i.e. the influence of operating in multiple countries) (Attig et al., 2016; Brammer et al., 2006; Marano et al., 2017).

However, justifications of such relationships are limited (Gray et al., 1995; Yang, 2014). Thus, studies based on a comprehensive theoretical framework such as institutional theory is required to investigate the role of firm-specific characteristics on CSRD from internal (i.e. mimetic pressure) and external (i.e. coercive and normative pressures) aspects (Ali et al., 2017). This provides a deeper understanding of CSRD macro and micro influencing factors, leading to the discovery of more methods to improve CSR.

Review of prior CSR literature based in KSA

In Saudi Arabia, CSR has only recently become a topic of interest to researchers. CSR has attracted the attention of diverse stakeholders (e.g. governments, companies, and researchers) not only because of increasing international interest in this field but also because of the economic, social, and environmental benefits that can be achieved. This has led to a growing number of studies examining the status of CSR and factors influencing CSRD in Saudi Arabia.

Developments in Saudi CSRD literature

The literature on CSRD based in KSA is limited (Alhejaili, 2018; Alotaibi & Hussainey, 2016; Issa, 2017; Mahjoub, 2019; Saeidi, 2019). In terms of language, very few CSR studies have been published in Arabic; the exceptions are Al-Zahrani (2010) and Elasrag et al. (2014). Arabic CSR publications offer a broad descriptive discussion about CSR concepts and its relationship with Islam and local developments. In contrast, English CSRD literature based in Saudi Arabia often involves a variety of studies empirically examining CSR and its relationship with CG and other firm-specific factors (Abdulhaq & Muhamed, 2015; Al-Gamrh & Al-Dhamari, 2016; Alhazmi, 2017; Al-Janadi et al., 2013; Boshnak, 2021; Habbash, 2016; Macarulla & Talalweh, 2012). This paper will review Saudi CSR literature published in both Arabic and English literature.

The review of Saudi CSR literature shows that CSRD is evolving. Researchers were motivated to fulfil the needs of local stakeholders and remain consistent with international CSR developments. Early CSR literature based in Saudi Arabia tends to explore CSR concepts, origins, and drivers (Ali & Al-Aali, 2012; Al-Zahrani, 2010; Macarulla & Talalweh, 2012; Mandurah et al., 2012). The exception is two recent studies that drew on more current literature to comprehensively investigate the origins of Saudi CSR: e.g. Islamic culture and stakeholders’ expectations (Saeidi, 2019) and analyse the drivers (e.g. firms’ reputation, ethical responsibility, and risk management) and barriers (e.g. lack of economic resources and employees’ competencies) of CSR in KSA (Pinto & Allui, 2020). However, more recent studies have shifted to exploring the status, practices, and performance of CSR (Elasrag et al., 2014; S. A. Khan et al., 2013; Nalband & Al-Amri, 2013).

For example, Alshareef and Sandhu (2015b), inspired by Western CSRD measurements, explored the qualitative measurements of CSRD. The quantity and quality of CSRD and its determinants were the next shift of focus in the Saudi CSRD literature (Alotaibi & Hussainey, 2016). Prior studies, albeit limited, have contributed to gaining a deeper understanding of the challenges, perceptions, practices, performance, measurements, and disclosure quality and quantity in relation to CSRD. Prior studies have revealed the pressing need for more studies to empirically investigate factors that influence CSRD in the context of Saudi Arabia motivating later researchers to examine factors influencing CSRD, including CG mechanisms (e.g. board characteristics and board committees features) and other firm-specific factors (e.g. firm size, firm age, and industry type) with relation to firm performance (Abdulhaq & Muhamed, 2015; Aldosari, 2017; Al-Gamrh & Al-Dhamari, 2016; Alhazmi, 2017; Al-Janadi et al., 2016; Al-Malkawi & Javaid, 2018; Alshareef & Sandhu, 2015a; Boshnak, 2021; Habbash, 2016; Issa, 2017; Mahjoub, 2019), with the exception of very limited studies that explored this matter earlier (i.e. the impact of CG factors on CSRD) (Al-Janadi et al., 2013). Further, previous research has shown different levels of CSRD (by average) in KSA influenced by several factors, such as sample features, measures, CSRD index, and time (Table 1). In particular, Macarulla and Talalweh (2012) found the average CSRD is 16%; Al-Janadi et al. (2013) 14.61%; Abdulhaq and Muhamed (2015) 36%; Al-Gamrh and Al-Dhamari (2016) 15.4%; Alotaibi and Hussainey (2016) 9.43%; Habbash (2016) 24%; Issa (2017) 11%; and Boshnak (2021) 68%.

Hence, prior studies conducted in Saudi Arabia switched from fundamental issues, such as the origins and status (i.e. descriptive analysis) of CSRD, to empirical exploration of determinants (i.e. CG and other firm-specific factors). A better knowledge of CSRD and its determinants has been achieved as a consequence of the growth of CSRD research in Saudi Arabia. Further, previous studies have contributed to the improvement of CSRD in Saudi Arabia. Some of these studies highlighted the importance of government-issued CSR guidelines that encourage firms to report more CSRD (Alhazmi, 2017; Alotaibi & Hussainey, 2016; Habbash, 2016; Issa, 2017; S. A. Khan et al., 2013; Nalband & Al-Amri, 2013). This has been fulfilled by the Saudi government through the release of the 2030 Vision in 2016 and revised CGR in 2017. Nevertheless, no previous research has looked at how the recent institutional reforms made by the Saudi government have affected CSRD by Saudi firms. Investigating the impact of the new institutional norms on CSRD is therefore necessary.

Theoretical perspectives of prior CSR Saudi-based studies

Previous studies in the Saudi CSR literature were drawn from diverse theoretical perspectives (Table 1). This includes agency, stakeholder, legitimacy, resource-dependence, and signalling theories, used to explore a CSR-related phenomenon (Abdulhaq & Muhamed, 2015; Alhazmi, 2017; Al-Janadi et al., 2013; Alotaibi & Hussainey, 2016; Boshnak, 2021; Habbash, 2016; Issa, 2017; Macarulla & Talalweh, 2012; Mahjoub, 2019). These local studies focused on accounting theoretical perspectives, such as the abovementioned theories, to examine CSRD-related topics. This is because of their high relevance to CSR and in accordance with the international interest and trend in investigating CSRD matters (e.g. factors impacting CSRD) using these theoretical lenses, which is consistent with the conclusion of Yang (2014). This global interest and the use of different theoretical perspectives have helped researchers discover more areas related to CSR in KSA, identifying a need for further empirical research that investigates more factors influencing CSRD (Alhazmi, 2017; Al-Janadi et al., 2016; Mahjoub, 2019). Further, institutional theory is rarely mentioned, except for a limited discussion in the Saudi CSR research (Alhazmi, 2017). This might be related to the absence of a study that examines institutional guidelines’ impact on the CSRD of Saudi firms addressed by this paper.

Research designs used by prior CSR saudi-based studies

Sample characteristics

Most Saudi CSR research considers nonfinancial sectors when examining CSR-related matters (Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2016; Al-Malkawi & Javaid, 2018; Alhazmi, 2017; Alotaibi & Hussainey, 2016; Boshnak, 2021; Habbash, 2016; Issa, 2017; Mahjoub, 2019; Table 1). This is because of a homogenous regulatory environment among these industries, while financial sectors have distinctive disclosure requirements as per Saudi market regulations (Al-Gamrh & Al-Dhamari, 2016; Alhazmi, 2017; Boshnak, 2021). However, very few studies have examined CSR in the banking sector in Saudi Arabia (Alhejaili, 2018), or private and non-profit sectors (Saeidi, 2019). Further, there are some CSR studies based in Saudi Arabia that examined specific industry sectors (Aldosari, 2017; Nalband & Al-Amri, 2013), or all (financial and nonfinancial) industry sectors (Abdulhaq & Muhamed, 2015; Al-Janadi et al., 2013; Macarulla & Talalweh, 2012).

In terms of sample size, a few prior studies have conducted their CSR investigations utilizing fewer than 150 observations by Saudi firms (Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2013; Alshareef & Sandhu, 2015a; Issa, 2017). Most investigated between 150 and 300 observations (Alotaibi & Hussainey, 2016; Boshnak, 2021; Habbash, 2016; Issa, 2017; Mahjoub, 2019). Very few Saudi CSR studies have examined more than 300 observations (Abdulhaq & Muhamed, 2015; Aldosari, 2017; Alhazmi, 2017; Al-Malkawi & Javaid, 2018).

Concerning the study period, few Saudi CSR studies have considered one-year observations (Al-Gamrh & Al-Dhamari, 2016; Macarulla & Talalweh, 2012). However, more studies covered a longer period of observations, ranging from two to four years (Abdulhaq & Muhamed, 2015; Al-Janadi et al., 2013; Alotaibi & Hussainey, 2016; Boshnak, 2021; Issa, 2017; Mahjoub, 2019). Further, some Saudi CSR studies have covered more than four years (Aldosari, 2017; Alhazmi, 2017; Al-Malkawi & Javaid, 2018; Habbash, 2016).

Therefore, research in CSR can vary in terms of sample features (industry, size, and period) depending on the examined phenomenon (Milne & Adler, 1999; Sekaran & Bougie, 2016). This is to provide more accurate results and insights reflecting the reality of the examined matter. For example, a shorter period of study can lead to inaccurate results because it may only reflect a special case that occurred within this period that cannot be generalized. Further, a longer study period may negatively affect the examined matter because this gives time for other unexamined factors to (interfere) have an impact, causing misleading results. Thus, the choice of sample and period should leave no significant space for other factors to interfere and jeopardize ROs (Milne & Adler, 1999; Sekaran & Bougie, 2016).

Data source

Except for some studies based on primary data, such as surveys and interviews to investigate CSR in KSA (Alhejaili, 2018; Ali & Al-Aali, 2012; Alshareef & Sandhu, 2015b; Mandurah et al., 2012; Nalband & Al-Amri, 2013; Saeidi, 2019), most Saudi CSR studies drew data from Saudi firms’ annual reports (Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2013; Alhazmi, 2017; Alotaibi & Hussainey, 2016; Boshnak, 2021; Habbash, 2016; Issa, 2017; Macarulla & Talalweh, 2012; Table 1). Very few studies used both annual and CSR reports (S. A. Khan et al., 2013; Mahjoub, 2019) or combined interviews and annual reports (Aldosari, 2017). This shortage of research is related to the limited availability of seperate CSR reports published by Saudi companies (Alhazmi, 2017; Alotaibi & Hussainey, 2016). However, no study has drawn on data from combined annual reports, CSR related reports, and CSRD on firms’ websites. This may risk studies’ results being incomplete.

CSRD instrument

Prior research varies in constructing the CSRD index in Saudi CSR literature. Some studies relied upon international CSR standards as a research instrument (index), for example, ISO 26000 (Habbash, 2016; Mahjoub, 2019) and GRI (Alhazmi, 2017; Boshnak, 2021; Issa, 2017; Mahjoub, 2019). Other studies adopted a customized CSRD index that mainly based on Western literature (Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2013; Alshareef & Sandhu, 2015b; Macarulla & Talalweh, 2012). These studies used a Western-based index of CSR that incorporates the main aspects of CSRD that must be included in any CSRD instrument, such as community-related CSR items (e.g. donations and education support). Thus, a Western-based CSRD instrument may ignore Saudi-specific CSRD-related issues because it generally considers the broad concepts of CSR that may be more appropriate to developed countries (Alotaibi & Hussainey, 2016). Only a few studies incorporated CSRD items related to Saudi culture into their research instrument (Alotaibi & Hussainey, 2016; Mahjoub, 2019).

Thus, there is a need in Saudi CSR literature for studies incorporating more Saudi-specific CSRD items (e.g. Hajj and Umrah supports, the Holy Quran-related donations, ongoing charities, and Saudization) to produce more reflective cultural CSR performance and to show how Saudi Arabia’s CSRD context differs from other countries’ CSR environment. Al‐Abdin et al. (2018), Ortas et al. (2019), and Sharma (2019) called for such contextual incorporation to reflect the country-specific experience of CSRD with consideration of cultural contexts.

Research methodology

CSR studies conducted in KSA vary in terms of research methodology (Table 1). Studies investigating concepts, stakeholders, practices, and performance of CSR in Saudi Arabia have preferred to employ qualitative methodology (Alhejaili, 2018; Ali & Al-Aali, 2012; Alshareef & Sandhu, 2015b; S. A. Khan et al., 2013; Mandurah et al., 2012; Nalband & Al-Amri, 2013; Pinto & Allui, 2020; Saeidi, 2019). However, most research conducted to examine factors affecting CSRD has utilized a quantitative approach (Abdulhaq & Muhamed, 2015; Al-Gamrh & Al-Dhamari, 2016; Alhazmi, 2017; Al-Janadi et al., 2013; 2016; Al-Malkawi & Javaid, 2018; Alotaibi & Hussainey, 2016; Boshnak, 2021; Habbash, 2016; Issa, 2017; Mahjoub, 2019).

Alshareef and Sandhu (2015a) constitute an exception, as they conducted a qualitative investigation to evaluate the significance of CSR integration into the CG structure of two Saudi firms by examining the effect of board diversity the companies. Further, a few studies have applied mixed approaches in analysing CSR (Nalband & Al-Amri, 2013) and CSRD (Aldosari, 2017). Such a mixed methodology is suitable when supporting a primary databased investigation (e.g. interviews) with a secondary type of data analysis (e.g. annual reports) in relation to improving stakeholders’ understanding of CSR concepts and awareness (Milne & Adler, 1999; Sekaran & Bougie, 2016). The limitations of quantitative and qualitative methodologies means that research into CSRD could benefit from a mixed-method approach combining the strengths of both methodologies.

Furthermore, according to Almars and Alharbi (2024) traditional statistical methods have been used in most quantitative CSRD research to analyse correlations between CSRD-influencing factors. Nevertheless, Almars and Alharbi (2024) proposed a deep machine learning framework based on long short-term memory (LSTM) for identifying and predicting CSRD patterns. They argue that organisations benefit from the long-term CSRD pattern prediction since it gives them an opportunity to decide on future CSR policies with knowledge and enhance their performance. Furthermore, by forecasting future trends, companies can establish quantifiable and practical CSRD goals based on past performance information. Consequently, future research could also benefit from new trends in utilization of Machine Learning techniques in analysing and predicting CSRD. Particularly, Almars and Alharbi (2024) called future research to extend their study by including more firm characteristics and more CSRD items to further improve the prediction accuracy.

Other Saudi empirical CSRD studies were excluded because of inconsistency in CSRD measurement with the included research (Alhazmi, 2017): CSRD by word count; Aldosari (2017): CSRD by pages, or CSRD index (Al-Malkawi & Javaid, 2018): only one item: (Zakat), in addition to some studies such as Albassam (2014); Alsaeed (2006); Naser and Nuseibeh (2003), which examined corporate disclosure in general, or focused on only environmental reporting (Alotaibi, 2020; Habbash, 2015).

Limitations and directions for future research

There are many recent calls in the literature for studies to investigate determinants of CSRD to better understand firms’ reporting behaviour in this regard (Al‐Abdin et al., 2018; Ali et al., 2017; Jamali & Karam, 2018; Ortas et al., 2019; Sharma, 2019; Tilt, 2016). To the best of the author’s knowledge, there is a lack of research on the following CSRD determinants: gender diversity, RMC, CSRC, and influential figures on boards (e.g. government representatives and royal family members), regulatory penalties, CSR awards, and internationalization. Exploring the relationships between firm-specific characteristics and CSRD will promote a richer understanding of CSRD in a unique country context, as argued by a growing number of studies (Al‐Abdin et al., 2018; Ali et al., 2017; Hahn & Kühnen, 2013; Jamali & Karam, 2018; Ortas et al., 2019; Sharma, 2019; Tilt, 2016).

Further, justifications of such influences are limited in the respective literature (Frynas & Yamahaki, 2016; Gray et al., 1995; Yang, 2014); thus, Future research must be guided by a theoretical framework that allows for the examination and comprehension of the factors that lead to variations in the reporting practices of firms (Jamali & Neville, 2011; Ntim & Soobaroyen, 2013; Yang & Farley, 2016). Therefore, to improve the understanding’s breadth and depth of CSRD, studies that comprehensively investigate the link between related institutional guidelines, resulting institutional pressures, moderating factors (mechanisms), and CSRD are required. Further, country-specific contexts—cultures, laws, environments, and many other variables unique to each country—may restrict the generalizability of research conducted in other countries (Endrikat et al., 2020; Lu & Wang, 2021; Marano et al., 2017; Tilt, 2016; Uzma, 2016; Young & Thyil, 2014). Therefore, findings from prior studies based in other countries may not be generalizable in the context of Saudi Arabia.

Regarding the few studies conducted in Saudi Arabia, prior research is limited by several factors, including the utilization of small sample size (Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2016; Alshareef & Sandhu, 2015a; Issa, 2017) and under-developed CSRD research instrument.

The research instruments used in prior studies either contained a small number of CSRD items or directly transplanted items from international CSRD indices (Alhazmi, 2017; Boshnak, 2021; Habbash, 2016; Issa, 2017). Few studies have developed a research instrument that reflects the Saudi-specific CSRD environment (Alotaibi & Hussainey, 2016; Mahjoub, 2019). Moreover, most prior research relied on annual reports as their only source of CSR data (Al-Gamrh & Al-Dhamari, 2016; Alhazmi, 2017; Al-Janadi et al., 2016; Alotaibi & Hussainey, 2016; Habbash, 2016; Issa, 2017); no prior study analysed firms’ annual reports, separate CSR reports, and websites when examining CSRD in KSA. Finally, prior studies (Abdulhaq & Muhamed, 2015; Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2016; Alotaibi & Hussainey, 2016; Alshareef & Sandhu, 2015a; Habbash, 2016; Issa, 2017) did not consider the 2030 Vision and the amended 2017 CGR in analysing CSRD.

Further, the majority of previous research lacks in-depth analysis of the findings within a theoretical framework. In the Saudi CSRD literature, research varied in measuring CSRD. Some researchers measured CSRD by pages (Aldosari, 2017), while others used word count (Alhazmi, 2017). Equal weighting is a commonly used coding method in content analysis to measure CSRD (e.g. 1 if a CSRD item is disclosed, 0 otherwise) (Abdulhaq & Muhamed, 2015; Al-Gamrh & Al-Dhamari, 2016; Al-Janadi et al., 2013; Boshnak, 2021; Habbash, 2016; Issa, 2017).

Therefore, cross-cultural CSRD research within developing economies (e.g. Muslim countries, Arabic countries, and Islamic countries versus non-Islamic countries) can be conducted in future studies. This will help to clarify the distinctions and commonalities of CSRD-related issues in emerging economies.

In this paper, Arabic and English literature related to Saudi CSRD are considered. It is found that very few Saudi CSRD studies were published in the Arabic literature (e.g. Al-Zahrani, 2010; Elasrag et al., 2014). Future research can enhance the Arabic literature of CSRD by publishing more Arabic respective studies. This will contribute to sharing CSRD-related experiences and insights from different cultures, which will ultimately enrich respective knowledge.

Additionally, it is found that annual reports, distinct CSR reports (such as environmental and sustainability reports), and/or company websites are the most popular sources of CSRD information. Future research could investigate the CSRD of businesses that have been posted on social media sites like Facebook, YouTube, and Twitter. These networks have recently developed into a fascinating source of corporate disclosures, despite the minimal data availability of these new information sources now. This will offer an improved understanding of the reporting practices of firms regarding CSRD.

In conclusion, the current CSRD studies conducted in different countries are examined in this paper. Then, limitations and gaps in the CSRD existing body of literature are identified with a focus on the case of Saudi Arabia. Finally, recommendations for future research are presented in this paper. This paper is conducted with a focus on the case of Saudi Arabia to show the significance of moving from the traditional method of examining CSRD (i.e. by applying Western methodologies) to a more sophisticated approach that takes the countries’ uniqueness (e.g. political, social, and economic contexts) into consideration.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Khalid Mujahid Alharbi

Dr. Alharbi, Khalid, M., Vice Dean for Academic Affairs, PhD, MAcc, and BSc in Accounting. Assistant Professor, Accounting Department, College of Business Administration (Yanbu), Taibah University, Al-Madinah Al-Munawarah, Saudi Arabia. Interested in trending accounting research areas including sustainability reporting, corporate governance, institutional changes and regulations, and CSR disclosures. Email: [email protected].

Ibrahim G. Mahgoub

Dr. Ibrahim G. Mahgoub, PhD, MBA, and BSc in Management. Associate Professor, Management Department, Management Department, CBA-(Yanbu), Taibah University, KSA. And Associate Professor, Management Department, CBA, Mansoura Uni., Egypt. Interested in trending Management research areas including HRM, sustainability, and Leadership. Email: [email protected].