An Interpretive Paradigm of Perceptions on the Adoption of IFRS for SMEs, Corporate Social Responsibility Reporting and Integrated Reporting in MSMEs: a UK Perspective

Ramachandran, Vijay Kumar (2025) An Interpretive Paradigm of Perceptions on the Adoption of IFRS for SMEs, Corporate Social Responsibility Reporting and Integrated Reporting in MSMEs: a UK Perspective. Doctoral thesis, Birmingham City University.

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Abstract

Purpose

This thesis aims to evaluate whether the possible adoption of International Financial Reporting Standards (IFRS) for SMEs by the preparers of financial statements of MSMEs would provide greater transparency, accountability, and decision-usefulness, consequently enhancing the quality of financial reporting. The thesis also reviews the needs of external stakeholders and their contribution and acceptance of IFRS for SMEs. The thesis further explored the possible adoption from a sociological stance, examining the perceptions and opinions and thinking about whether a new reporting framework would justify the nuances faced by the MSME sector. It further explores and examines how Corporate Social Responsibility (CSR) and Integrated Reporting (IR) are undertaken, practised, and reported in micro, small, and medium-sized enterprises (MSMEs). The extant literature on CSR is mainly embedded in large businesses. Still, given the unique characteristics of the MSMEs, there is a growing demand within academia to advance research within this sector in the UK. The diffusion of the perceptions of CSR reporting and its practices in MSMEs will represent a significant strand in the literature to be explored from an economic, educational, motivational, and sociological perspective.

Design/methodology/approach

This thesis adopts an interpretive phenomenological approach to enable an in-depth study of owner/managers, financial managers and internal accountants' experiences of financial reporting, CSR practices and IR in MSMEs. To capture the participants’ perspective, 21 interviews were conducted in the UK, predominantly in the West Midlands and Greater London regions. Data collection primarily occurred after the COVID-19 pandemic when MSMEs prioritised survival rather than research participation.

The study responds to the calls on extant literature on CSR and IR in MSMEs and aims to establish that a motivational, educational, and sociological perspective drives these concepts. It explores their relevance from the views and opinions of owner/managers and internal stakeholders, their understanding of CSR concepts, perceptions of willingness to engage in CSR practices, willingness to use IR over annual reporting(AR), and teaching the multiple capital store to enhance the value creation model of MSMEs.

Originality

Recent literature on IFRS for SMEs is scant in the UK; CSR and IR have been widely debated, written about, and investigated since the 1950s. However, the research has been primarily directed at giant firms and corporations, except for MSMEs, which are under investigated.

Findings

This study has closed the gap by advancing the research in a UK context on the perceptions of adopting IFRS for SMEs, CSR, and integrated reporting for the MSMEs sector. The research establishes that MSMEs do not align with the model requirements of the IASB framework (using legitimacy) but base their rationale on economic terms. The study also provides evidence that the owner/managers do not perceive disclosure of IFRS for SMEs to users as helpful in making decisions. The exclusion of critical stakeholders in the MSME sector does not incentivise the request for compliance; furthermore, the provision of training in the form of expertise and knowledge would be welcome in the sector. The CSR agenda is rarely justified in economic terms; more awareness is needed to report them, and it is more about motivations and organisational and moral perspectives. Emotive capital within the MSME sector is significant due to its ownership structure. Network collaborations with the key MSME stakeholders are called for. Integrating owner/manager shared values and the need to provide educational training and resources to understand Integrated reporting to the MSME sector.

Practical and academic contributions

In the context of IFRS for SMEs within the MSME sector, it has rejected the IASB framework and calls for a simplified, standardised, specific template to be followed. It has enhanced understanding of a possible adoption with relevant reasons or why they would not embrace it. The thesis highlights the issues of MSME’s understanding of CSR and its contribution to the economy and individual businesses. It encourages governmental and regulatory promotion of the key contributory factors to the sector so that there is a better appreciation of the derived qualitative benefits. It provides recommendations and guidance for policymakers, implementers, practitioners, business owners/managers, and academia, and, therefore, it adds to previous research conducted in Europe and internationally.

The study responds to the calls on extant literature on CSR and IR in MSMEs and aims to establish that a motivational, educational, and sociological perspective drives these concepts. Their relevance is explored from the views and opinions of owner/managers and internal stakeholders, their understanding of CSR concepts, perceptions of willingness to engage in CSR practices, willingness to use IR over annual reporting(AR) and inculcating the multiple capitals store to enhance the value creation model of MSMEs. To do this, the research adopts a social phenomenological approach drawing from the words, experiences and observations of owners/managers and the relevant internal stakeholders through twenty in-depth interviews.

Item Type: Thesis (Doctoral)
Dates:
Date
Event
3 January 2025
Accepted
Uncontrolled Keywords: MSMEs, Financial reporting, CSR reporting, Integrated reporting
Subjects: CAH17 - business and management > CAH17-01 - business and management > CAH17-01-07 - finance
CAH17 - business and management > CAH17-01 - business and management > CAH17-01-08 - accounting
Divisions: Doctoral Research College > Doctoral Theses Collection
Faculty of Business, Law and Social Sciences > College of Accountancy, Finance and Economics
Depositing User: Louise Muldowney
Date Deposited: 24 Jan 2025 12:05
Last Modified: 24 Jan 2025 12:05
URI: https://www.open-access.bcu.ac.uk/id/eprint/16094

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