The authors in this study develop a theoretical framework in which the disclosure of Corporate Social Responsibility (CSR) activities is viewed as an organizational response to institutional complexity which exists between the demands of the central government and provincial governments in China. The study aims at revealing how firms with institutional linkage to the central government will respond to central government CSR guidelines and the influence of a local government with high priority given to GDP growth to CSR reporting, both in terms of speed and quality. Through examining the response of highly scrutinized firms in provinces where local government prioritized GDP growth, they also reveal and identify the specific form of decoupling responses.

To construct the framework, the authors observe the CSR reporting of publicly listed firms in China between 2008 and 2011, all of which are listed on the Shenzhen or Shanghai Stock exchange and were either independent reports or appendices of annual reports. Information related to firms was collected from the China Stock Market and Accounting Research Database, the firms’ annual reports and news media. Provincial-level data were from provincial governments and statistics yearbooks published by the Chinese Statistics Bureau. Around 2,000 firms were observed, of which 584 firms issued CSR reports.

The researchers found that firms located in provinces that gave high priority to GDP growth issued poorer-quality reports. Whereas large-sized firms with a central government linkage issued reports faster and of higher quality in provinces with low priority given to GDP growth, similar firms in provinces with high priority given to GDP growth exhibited a specific form of decoupling—issuing reports earlier but of lower quality. Consequently, on average, there was little difference in the timing of issuance in provinces where GDP was given high priority versus those without this priority.

This study is the first to identify the forces of resistance in the state hierarchy and contribute to CSR disclosure research by introducing a new theoretical framework that draws attention to the coexistence of conflicting government pressures. They also identify institutional complexity as the sources that produce a particular form of decoupling with a different form and associated attributes. That is to say, the combination of rapid adoption and poor-quality implementation is a unique form of decoupling to balance the competing expectations of institutional constituencies.