A step-by-step method to classify corporate sustainability practices based on the Signaling Theory

Area of Science:

• Business & Management
• Corporate Social Responsibility
• Organizational Communication

Background:

• Signaling Theory explains how companies use disclosures to influence stakeholder perceptions and gain competitive advantages.
• Sustainability reports are key communication tools for signaling corporate responsibility initiatives.
• Understanding the nature of signals (camouflage, intent, necessity) is crucial for interpreting corporate disclosures.

Purpose of the Study:

• To propose a replicable, step-by-step method for classifying sustainability practices reported by companies into signal types.
• To provide a framework for analyzing the strategic communication embedded within corporate sustainability reports.
• To enhance the academic community's ability to critically assess corporate sustainability disclosures.

Main Methods:

• A qualitative, thematic analysis approach is employed to categorize reported sustainability practices.
• A detailed seven-step process is outlined for the classification of signals.
• The methodology focuses on analyzing the content of corporate sustainability reports.

Main Results:

• A validated, step-by-step method for classifying sustainability signals (camouflage, intent, necessity) from corporate reports is presented.
• The study highlights the challenges in identifying 'camouflage' signals due to potential researcher bias.
• The proposed method is designed for ease of replication by other researchers.

Conclusions:

• The developed method offers a structured way to analyze corporate signaling through sustainability reports.
• Accurate classification of signals, especially 'camouflage,' requires careful attention to minimize researcher bias.
• This research contributes to a deeper understanding of corporate communication strategies in sustainability.