CSR reporting influenced by a Scandal - Does it matter if the company is directly- or indirectly involved?

Abstract: The purpose of this study is to investigate how and why companies are changing the nature of their CSR reporting in order to regain legitimacy, due to a scandal. The purpose is also to see if an indication of how media affects the reputation of the organisations’ can be found. Legitimacy theory. The authors’ have chosen a qualitative approach by using content analysis for investigating two companies’ news articles, press releases and CSR reports during the time from one year before a scandal until one year after the scandal. To be able to examine this relationship, a case study is chosen comprising of two companies. The chosen companies were both indirectly affected, as well as directly affected, by the scandal, through one of their subsidiaries. The empirical data have shows an increase in sustainability reporting after the scandal. However, the company indirectly affected by the scandal seem to be praised by the media, and the directly affected company seem to receive more negative attention after the scandal, by the media. The data also show different strategies the companies’ mostly use for regaining their legitimacy, such as explaining the occurrence, creating monitors and watchdogs and disassociation. The media influence the directly affected company more than the indirectly affected. However, since both companies increased their CSR report, it can be an indication for media influencing the companies to some extent, which can be seen as an institutional factor.