Factors affecting the diffusion of integrated reporting – a UK FTSE 100 perspective

Abstract

Purpose – This study seeks to investigate the likely adoption of integrated reporting (IR), in addition to highlighting the limitations of current reporting practices. In particular, the analysis in this study used the characteristics of diffusion of innovation theory to investigate how perceptions of IR as offering a relative advantage over existing practices; its compatibility to existing organisational values, past experiences and needs; and its perceived complexity impacted on the adoption and diffusion of IR. Design/methodology/approach – Methodology was based on a content analysis of 22 UK FTSE 100 annual and sustainability reports across industries. To build a phenomenological triangulation research approach, semi-structured interviews were conducted with ten senior managers to ascertain their perceptions of current SR practices and IR. Findings – The analysis in this study revealed that low/medium levels of linkages exist between the majority of reports in the sample, thus limiting their usefulness. Based on these findings, this study suggests that senior managers perceive IR as having a relative advantage over existing practice. Overall, the senior managers interviewed were supportive of IR and this research revealed that many companies are starting to integrate their reporting along IR guidelines. This study further identifies factors that are likely to impact on more widespread diffusion of IR. Research limitations/implications – The sample size to assess linkages between reports was based on a sample of company reports across industries to give a balanced view of reporting practices. This could be viewed as a limitation as it was not a representative sample of the population as a whole. Another limitation of this research study was the small sample of organisations that participated in the interview process, and the single country focus. Practical implications – This study has identified several factors that were likely to impact on wider spread diffusion of IR, which should be of interest to practitioners in this field as well as those considering the adoption of IR. Originality/value – As an emerging phenomenon, there are few empirical studies exploring IR practices and perceptions. To the best of the authors' knowledge, this is the first paper that provides some insights into IR from a UK perspective.