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Determinants of Sustainable Development in Developing Countries: A

comparative Analysis

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Proceedings of IAC in Dresden 2018

Teaching, Learning and E-learning (IAC-TLEl 2018)

and
Management, Economics and Marketing (IAC-MEM 2018)

Dresden, Germany
Wednesday - Thursday, December 12 - 13, 2018

ISBN 978-80-88203-09-4

Czech Technical University in Prague

 Determinants of Sustainable Development in Developing
Countries: A comparative Analysis
Akeel ALMAGTOMEa, Heider BEKHEET b
a
University of Kufa, Faculty of Administration and Economics, Department of Accounting, Najaf,
Iraq,[email protected]
b
University of Kufa, Faculty of Administration and Economics, Department of Economics, Najaf, Iraq,
[email protected]

Abstract

This paper aims to examine the cultural determinants of the sustainable development in developing countries using a
cross country analysis. This work utilizes Hofstede’s cultural value theory to explore the impact of national culture on the
sustainable development practices. The annual reports of sample consist of 96 companies were collected and analyzed for the
financial year ended in 2015, the sample companies cover three countries are Australia (38), Germany (37), and Iraq (21). The
results reveal that the cultural determinants have a significant impact on the sustainable development practices in developing
countries. The study indicates that sustainability reporting scores as a measure of sustainability development increase in societies
with high individualism, low masculinity, low power distance, low uncertainty avoidance, and high indulgence characteristics.
The comparative analysis also shows that there is a big gap in the SRS between Iraqi companies and other companies in Australia
and Germany results mainly from cultural, political and security differences. Our results increase the understanding of
sustainable development practices in developing countries and state the future trends of sustainable development practices for
the stakeholders. The findings also contribute to a greater understanding of observed variations in CSR between developing and
developed countries.

Keywords: sustainable development, national culture, sustainability reporting, accounting system, annual reports

1. INTRODUCTION

Sustainable development occupies a prominent place in the strategies of most countries of the world, especially in
developed countries. However, in recent years, many developing countries have begun to develop long-term
sustainable development plans that will stimulate their companies to improve sustainability indicators and prepare
periodic sustainability reports. Although disclosure of sustainability indicators is not binding on companies, many of
them seek to respond to sustainable development requirements locally and globally. In the last three decades the
sustainable development practices have received more attention by researchers, organizers, and policy setters
throughout the world. The debates surrounding the sustainable development have been increasing recently both in
term of the aspects of sustainable development activities and sustainability performance that include environmental,
social and economic inidcators. Although sustainable development practices received considerable attention over the
last three decades, the disparity in the level of corporate commitment to enhancing sustainability is still high at the
country level. Moreover, despite clear progress in developing sustainable business models and strategic planning
and broadening corporate reporting to include nonfinancial information, a firm commitment to sustainability
remains questionable in the long term. The literature on the determinants of sustainable development shows a
variety of approaches adopted to explain the trend towards sustainable development activities in developing
countries eg. Kelly & Alam (2008), Vachon, (2010), Salvioni and Astori (2013), and Boeva et al, (2017). In this
context, Michelon and Parbonetti (2012) examine the relationship between sustainability reporting and certain board
characteristics, which include leadership, composition, and structure of the board based on stakeholder theory of the

144
sample of European and US companies. The results revealed that understanding the impact of the Board's
composition on disclosure of sustainability requires overcoming the traditional distinction between independent and
internal managers, and instead focusing on specific features of the board. Boava, et al. (2017) tested the relationship
between corporate governance practices and sustainable development activities. They found that there is a global
trend for changes in corporate governance practices and the way the board is managed because of the established
sustainable development policy. This means that the development of corporate governance is seen as a measure to
the extent that any company can support the national strategy for sustainable development. However, few works
were done to explore the reasons for differences in sustainability performance between the developing and
developed countries and what are consequences of these differences on the companies.
As a result, examining societal values or culture would be helpful in identifying countries that would have
different perceptions of a company’s stockholders and their influences on the corporate sustainability reporting CSR
practices. Therefore, this study seeks to explore the impact of cultural differences on the sustainable development
practices in developing countries by investigating the relationship between the sustainability reporting scores as a
proxy of sustainable development practices and the cultural determinant of each country involved in this study.
Unlike most prior researches, this paper applies Hofstede’s cultural value theory to investigate cultural effects on
sustainable development practices. Therefore, comparative analysis includes the annual reports of 96 companies
from three countries are Australia, Germany (developed countries) and Iraq (developing country) in order to find
out the role of cultural determinants in improving the sustainable development practices. The study contributes to a
greater understanding of observed variations in CSR between developing and developed countries. In addition, the
outcomes can be useful to the managers of multinational corporations when preparing corporate sustainability
reporting.

2. Literature Review

2.1. Sustainable development

Sustainable development is a platform for growth and development using available resources in a way that
allows them to be renewed or sustained to serve future generations. Examples of sustainable development include
reliance on renewable energy, recycling and reducing the use of industrial pollutants. The idea of sustainable
development is based on the development of the means of production that meet the needs of organizations at present
without compromising the ability of future generations to meet their needs. Through its series of successive
publications since 2000, scientific reporting initiatives seek to promote sustainable development in all countries in
order to protect the natural environment from damage and eradicate poverty. Sustainable development is often
defined as a three-dimensional approach includes economic, social and environmental dimensions (Boeva et al,
2017).
The current research on the sustainable development focuses on the incentives of sustainability activities and
the internal and external factors affecting the firm’s attitude towards the sustainable development. Shaltiger et al.
(2012) stated that there are two reasons why stakeholders' interests relate to sustainability activities of the company.
The first is that the basic feature of business is sustainability, which is reflected through the creation of economic
value through voluntary social and environmental activities. Creating the value of sustainability activities for
stakeholder groups will create economic value by supporting sustainable development efforts. The common example
of the relationship between value creation and stakeholder theory is that creating value for stakeholders can be done
through high quality products, creating new jobs, paying taxes, or in the form of benefits for financial institutions. In
the context of sustainability, this idea also applies through the production of environmentally friendly products,
which may encourage the worker to feel proud of the company. By reducing the amount of pollution, the company
can obtain qualified and motivated workers and a supportive local community.
On the other hand, Chan et al. (2014) tested the relationship between corporate social responsibility and
corporate governance by analyzing the disclosure of CSR in the annual reports of listed 222 companies. They found
that the company that discloses more CSR information has a higher corporate governance rating, larger size, belongs
to a sensitive industry, and has a high leverage ratio. This finding is consistent with previous research indicating a
positive relationship between the quality of corporate governance and corporate social responsibility disclosures.
Thus, corporate governance features are a determinant of the level of sustainability reporting and reflect the
company's propensity to support the sustainable development strategy. Quality management has also been identified
as one of the common tools for sustainable development activities. The Director integrates quality management
within the framework of a sustainable sustainability strategy to improve the value of stakeholders. Siva et al. (2016)
Analysis of the relationship between quality management and sustainable development. It identifies four themes

145
used by previous publications to support complementary between quality management and the sustainable
development strategy. These topics are;
• Using integrated management systems to support sustainable development.
• Utilizing Quality Management in the application of environmental management systems and sustainability
management.
• Supporting integration of sustainability considerations in daily work.
• Supporting stakeholder management and customer focus.

2.2. The cultural determinants of sustainability performance

Evidently, the environment in which the company operates has a significant impact on sustainable development
practices and reporting. National culture is an important element in understanding how the beliefs, norms and values
of social systems affect the behavior of groups in their interactions within and across systems (Almagtome, 2014).
The national culture of each country is an important determinant in shaping the extent and level of the sustainability
performance of the company. Therefore, corporate sustainability reports have been subject to a large volume of
cultural research over the past decades e g. (Once and Almagtome 2015, Haniffa and Cooke 2005, Almagtome et al,
2017). Due to the cultural specificity of most developing countries, the level of commitment of their companies to
sustainable development policies is expected to be affected, which is reflected in the accelerated or delayed
implementation of these policies. The effects of national culture are widespread and lie behind the institutional
arrangements of the countries; all companies operate within different cultural contexts commensurate with the
environment in which they operate. The cultural value theory Hofstede notes that all the values and beliefs held by
members of society affect their judgments and decision-making, which in turn affects the behavior of individuals,
groups and institutions within society. This theory was developed by Professor Geert Hofstad in 1980 by conducting
one of the most comprehensive studies on how values in the workplace are influenced by culture. In his work as
Human Resources Manager at IBM, Hofstede surveyed about 100,000 managers, employees and supervisors at IBM
in 40 countries during 1967-1973 to identify behavioral patterns across cultures. Hofstede originally determines four
dimensions that represent the values of people at work concerning the country in which they work.
The influences of national culture are pervasive and underlie nation’s institutional arrangements; all
organizations exist within cultural contexts. In this context, Hofstede’s cultural value theory states that all values and
beliefs held by members of a society influence their judgments and decision-making, that in turn affect the behavior
of individuals, groups, and institutions within the society. This theory was developed by Professor Geert Hofstede in
1980 through conducting one of the most comprehensive studies of how values in the workplace are influenced by
culture. In his work as a human resource manager at IBM, Hofstede surveyed about 100,000 managers, employees
and supervisors at IBM within 40 countries during 1967-1973 to identify the behavioral patterns across cultures.
Hofstede originally identifies four dimensions that represent the people’s values at work related to the country in
which they work.
The fifth, long-term orientation (LTO) was added in 1991, based on a study by Michael Harris Bond in 1988,
and adopted by Hofstad. In 2010, this dimension was modified by Minkov and described as a realistic action against
a standard (PRA). In 2010, Bulgarian researcher Michael Minkov produced the sixth dimension using the latest
global value survey data from representative samples of national populations. This new dimension is called an
indulgence versus restriction (IND). In addition, Minkov has renewed the fifth dimension (long-term orientation),
and has been modified to the country's fifth dimension and extends to 93 countries. Accordingly, the country scores
used in this study are the results of Minkoff's research published in Hofstede and Minkoff (2010) for the fifth (long
versus short-term) dimensions and the sixth (feeding versus restriction) rather than grades. Published in Hofstede
1980. We also refer to the fifth dimension as Pragmatic vs. Criterion (PRA). The following is a brief description of
each of Hofstede's cultural values, which were identified in this study as determinants of sustainable development in
developing countries.
• Power Distance (PDI). The distance of power is the extent to which less powerful members of society accept
and expect the unequal distribution of power (Hofstad, 2001). People in countries where major powers are
established accept a hierarchical system in which everyone has a place that needs no other justification. On the
other hand, in countries with low power for distance, people seek to balance the forces and demand the
justification for inequality of power. When the power distance is large, managers are expected to keep the data
and not disclose it to maintain power inequality, leading to greater confidentiality. Thus, the distance of power
is presumed, positively to confidentiality, where the low level of information helps the secondary stakeholders
in the company maintain the status quo of power relations.

146
• Individualism versus Collectivism (IDV). The second dimension is individualism (IDV), which refers to
the extent to which an individual expects personal freedom versus the acceptance of responsibility towards the
family or tribal or national groups (ie, collective). Gray (1988) points out that secrecy is consistent with
collective preference, in contrast to individuality, and individual communities are expected to be less secretive
than collective societies, where people share common beliefs and perhaps information and require a broad and
collective disclosure. Communities. Analysis by van der Lan Smith et al. (2005) indicates that a high degree of
IDV can relate to both stakeholders and guide the community to shareholders. Then, it suggests a negative
relationship between secrecy and individuality. In other words, a positive relationship between individuality and
transparency is expected.
• Masculinity versus Femininity (MAS). The masculinity represents a preference for society to achieve it,
heroism, assertion, and material success. In contrast, femininity means preference for relationships, humility,
attention to the weak and quality of life. Although Gray (1988) argues that transparency is more likely in the
case of "quality of life" and that the most caring communities (ie, women's communities) tend to be more open,
especially for socially relevant information, masculinity is likely to be associated with confidentiality of
sustainability disclosure.
• Uncertainty Avoidance (UAI). Uncertainty Avoidance is the extent to which society avoids risk and creates
security by emphasizing technology, buildings, laws, rules and religion. Vulnerable weak, vulnerability
communities maintain a more relaxed atmosphere where practice is more important than principles, and it is
easy to tolerate regression. Gray (1988) points out that preference for confidentiality is consistent with avoiding
the strong uncertainty caused by the need to restrict disclosure of information to avoid conflict, competition and
security. Therefore, avoiding uncertainty is presumed to be positively related to confidentiality, since secrecy
helps to maintain security, which in turn means a negative relationship between UAI and sustainability
reporting.
• Long term orientation (LOT). LTO points to a more forward-looking perspective than a historical one.
This future trend is linked to saving and perseverance. Conversely, short-term orientation means focusing on the
social situation and being reformed in the present and the past. Borker (2013: 173) shows that the low long-term
assets ratio is well suited to provide short-term financial results with clear disclosure available immediately to
investor decision-making, and therefore assumes a positive relationship between LTO Hofstede and
confidentiality. Thus, the short-term trend is likely to be consistent with transparency, so SRS is likely to be
negatively associated with LTO.
• Indulgence (IND). Indulgence stands in the direction of allowing a relatively free satisfaction of the basic
and natural human desires related to the enjoyment of life and enjoyment. Its opposite pole, self-restraint,
reflects the conviction that such saturation needs to be restrained and regulated by strict social norms (Hofstad
et al., 2010). Burker (2013) proposes a direct and inverse relationship between the dimension and identity of
Hofstede. In addition, a high proportion of national income is linked to the values of professionalism, flexibility
and optimism, so tolerance is likely to be consistent with transparency. Thus, SRS is likely to be positively
associated with IND.
On the other hand, many studies have attempted to investigate the impact of the country by adopting a
comparative framework in the study of sustainability performance indicators using various sustainability guidelines
e g. Bahr and Friedman (2001), Newson and Deegan (2002), Van der Laan Smith et al. (2005), Once and
Almagtome (2014), Almagtome, (2015). These studies generally focus on CSR and indicate that CSD varies from
country to country, but few studies have attempted to explain the underlying causes of observed differences in CSD.
In this context, Bahr and Friedman (2001) explore the role of cultural and institutional factors in stimulating the
production of compulsory and voluntary disclosure by comparing the environmental disclosure of Canadian and US
companies. They show that Canadian culture and institutional infrastructure are more suitable for producing an
environmental detection than their counterparts in the United States, because the collective nature of Canadian
society has resulted in a higher level of voluntary environmental disclosure. Matthews and Reynolds (2001) examine
a possible classification of the Commission on Sustainable Development based on the Hofstede dimensions, with the
application of the Gray Classification (1988) classification methodology. It shows that differences in CSD levels
between the North and the United States are related to Hofstede (1983). In addition, Newson and Deegan (2002)
explore the social disclosure policies of multinational companies in Australia, Singapore and South Korea. It
indicates that the country of origin and the operating industries appear to have a significant impact on sustainability
practices.
Van der Lan Smith et al. (2005), CSD is also investigated jointly with three dimensions of Hofstede:
Masculinity (MAS), Power Distance (PDI) and Individuality (IDV). The application of the second dimension was
based on Gannon (2001), which combines PDI and IDV into a classification table for general types of cultures. Van
der Lan Smith et al. (2005) Build a forecasting model for countries of origin, with CSD as a predictor to explain
differences in CSD between Norway / Denmark and US companies. Simnett et al. (2009) Examining the

147
determinants of sustainability reporting. They focus on companies, industry and factors related to the country. The
only country-specific factor applied is the distinction between the attitudes of stakeholders and shareholders, to
which the legal system is used. They conclude that this approach partially identifies options that have been taken
while ensuring sustainability reports. Similarly, Vachon (2010) points out that two of Hofstad's national cultural
dimensions are associated with a higher degree of sustainable practices by corporations. In particular, the high
degree of the individual is linked to the nation and avoid the uncertainty of vegetative companies, environmental
innovation, fair business practices, and corporate social participation. Finally, Orij (2010) investigates whether the
levels of corporate social disclosure relate to national cultures. The sample consisted of 600 large companies from
22 countries and constructed a scale for general types of cultures (Gannon, 2001); both derived from the national
cultural dimensions of Hofstad. The results suggest that levels of corporate social disclosure are likely to be affected
by national cultures.
In addition, Socio-political instability may have several effects on the level of sustainability reporting due to
the its effects on the economic growth in the country. Asteriou and price (2001) indicate that it creates uncertainty
regarding the political and legal environment and disrupts market activities and labour relations, with a direct
adverse effect on productivity. Political instability increases uncertainty about government changes, especially in
countries where the degree of political polarization is relatively high. In this context, there are an ample literature
documenting the negative effects of political instability on a wide range of macroeconomic variables including
economic growth (see Younis et al., 2008, Aisen and Veiga, 2010, and Kouba and Grochová 2011). In Iraq as a
developing country, the impact of the fighting on the economic growth in Iraq has also been recognized. As such,
Iraq still scores much higher on the overall human development rating issued by the UN than the other major
conflict states. Iraq's global ranking is 121st out of 188 countries (medium human development) versus 149th for
Syria (Low Human Development), 168th for Yemen, and 169th for Afghanistan (Cordesman, 2017:9). The recent
fighting against ISIS has consumed the financial resources of Iraq, which in turn negatively affect the economy as a
whole. Therefore, it is expected that the political instability and fighting against ISIS will have a negative effect of
sustainability reporting level.

3. Data and Method

This cross country study uses a comparative analysis of the sustainable development practices as a proxy of
the sustainability performance level. The content analysis was adopted to determine the degree to which the
companies disclose a high quality of sustainability performance using a scoring system based on the GRI
guidelines. The sustainability reporting index comprises 79 indicators items measuring environmental, social and
economic disclosure level (GRI, 2006). The rating is based on a score ranged from 0 to 1 for each performance
indicator disclosed in the annual report. The content analysis method was adopted in this work because it allows
corporate environmental disclosure to be systematically classified and compared; which is useful for determining
trends and extent of disclosures. Furthermore, this method is one of the most systematic, objective and quantitative
methods of data analysis technique employed in other prior research studies involving corporate environmental
disclosure practices (Wiseman, 1982; Deegan and Rankin, 1996; Patten, 2002; Cormier and Magnan 2003; and Al-
Tuwaijri et al. 2004). It is also one of the most common or dominant research technique used to study, measure and
analyze corporate environmental disclosure in corporate annual reports. The two-part study is designed in this paper
to examine the relationship between Hofstede’s cultural determinants and sustainability reporting level in the first
part, as well as examining the impact of cultural determinants on the SRS level by comparing the SRS levels among
three different countries, Iraq as an example of developing country and Australia and Germany as developed
countries in the second part.
The sample of this paper includes 96 companies working in highly environmentally sensitive industries. These
companies belong to three different societies are Australia, Germany and Iraq, and accordingly the sample
companies were randomly selected from these countries as follows:
• Australia 38 companies
• Germany 37 companies
• Iraq 21 companies

The data of the study stem from to two sources, the first source is the annual reports the sample companies in
order to identify the level of Sustainability Reporting in these reports. The second source of data is the National
Cultural Values Scores, these scores were extracted from Hofstede (1988), and Hofstede (2010) studies.

148
 Fig. 1. National cultural values

Figure1 shows the scores of National Cultural Values of the sample countries, which include the scores of
Power Distance (PDI), Individualism (IDV), Masculinity (MAS), Uncertainty Avoidance (UAI), Long Term
Orientation (LTO), and Indulgence (IND) of the three countries are Australia, Germany, and Iraq respectively.

4. Results and Discussions

Table 1 indicates the descriptive statistics of the study variables, this table shows the mean, standard deviation,
minimum and maximum of the main variable of the study, which include SRS, PDI, IDV, MAS, UAI, LTO, and
IND. The table also shows that, the mean of the sustainability reporting scores disclosed by Australian companies is
31.13, the mean of German companies 29.91, while the mean of Iraq companies was 6.42. Therefore, the different
means between Iraqi companies on one hand, and other companies from Australia and Germany suggest that the
sustainability information disclosed by companies operating in different societies may significantly differ.

Table 1: Statistics of the sample

Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
SRS 3 6.00 31.00 22.3333 14.15392
PDI 3 35.00 95.00 55.3333 34.35598
IDV 3 30.00 90.00 62.3333 30.27100
MAS 3 61.00 70.00 65.6667 4.50925
UAI 3 51.00 85.00 67.0000 17.08801
LTO 3 21.00 83.00 43.0000 34.69870
IND 3 17.00 71.00 42.6667 27.09859
AUS 38 2.00 71.00 31.1316 17.38308
GER 37 8.00 76.00 29.9189 18.16648
IRQ 21 2.00 15.00 6.4286 3.15549
Valid N (listwise) 3

SRS = Sustainability Reporting Scores

PDI = Power Distance Scores
IDV = Individualism Scores

149
MAS = Masculinity Scores
UAI = Uncertainty Avoidance Scores
LTO = Long Term Orientation Scores
IND = Indulgence Scores
AUS = SRS of Australian companies
GER = SRS of German companies
IRQ = SRS of Iraqi companies

The first part of this study seeks to find out the relationship between the cultural determinants on the sustainable
development practices by examining the relationships between SRS and six national cultural values. Table 2 shows
the Pearson correlation coefficients of dependent variable (SRS) and independent variables (National Cultural
Values).

Table 2: Pearson Correlation Coefficients

Correlations
SRS PDI IDV MAS UAI LT IN
O D
SRS Pearson Correlation 1 - .938 -.851 - .41 .84
.999 .926 7 0
*

Sig. (2-tailed) .032 .226 .352 .246 .72 .36

6 5
N 3 3 3 3 3 3 3
PDI Pearson Correlation - 1 - .824 .906 - -
.999 .919 .46 .81
*
2 2
Sig. (2-tailed) .032 .257 .383 .278 .69 .39
4 7
N 3 3 3 3 3 3 3
IDV Pearson Correlation .938 - 1 -.980 - .07 .97
.919 .999 6 6
*

Sig. (2-tailed) .226 .257 .126 .021 .95 .14

1 0
N 3 3 3 3 3 3 3
MAS Pearson Correlation - .824 - 1 .986 .12 -
.851 .980 1 1.0
00*
Sig. (2-tailed) .352 .383 .126 .105 .92 .01
3 4
N 3 3 3 3 3 3 3
UAI Pearson Correlation - .906 - .986 1 - -
.926 .999 .04 .98
*
4 3
Sig. (2-tailed) .246 .278 .021 .105 .97 .11
2 9

150
 N 3 3 3 3 3 3 3
LTO Pearson Correlation .417 - .076 .121 - 1 -
.462 .044 .14
3
Sig. (2-tailed) .726 .694 .951 .923 .972 .90
9
N 3 3 3 3 3 3 3
IND Pearson Correlation .840 - .976 - - - 1
.812 1.000 .983 .14
*
3
Sig. (2-tailed) .365 .397 .140 .014 .119 .90
9
N 3 3 3 3 3 3 3
*. Correlation is significant at the 0.05 level (2-tailed).
**. Correlation is significant at the 0.01 level (2-tailed).

The Pearson correlation results as depicted in table 3 shows that SRS has a significant correlation with PDI(r.-
.999), IDV(r..938), MAS(r.-.851), UAI(r.-.926), and IND(r..840), while the correlation was insignificant with
LTO(r..417) at 0.05% level of significance with a two–tailed test.
The summary of correlation results is as the following:
Power Distance PDI: there is a negative relationship between SRS and levels of Power Distance. This means that
the societies with high power distance, usually present a higher degree of acceptance of poor working conditions and
polluted environment. Accordingly, the society’s pressure on companies to disclose sustainability information would
be lower than the pressure in societies with lower power distance.
Individualism IDV: there is a positive relationship between SRS and levels of Individualism. This implies that
firms in countries with a high degree of Individualism would be willing to disclose more sustainability information
than those in country's lower degree of individualism.
Masculinity MAS: there is a negative relationship between SRS and levels of Masculinity. This means that the
companies in countries with higher level of masculinity tend to disclose less social information than those in
countries with lower levels of masculinity.
Uncertainty Avoidance AUI: there is a negative relationship between SRS and levels of Uncertainty Avoidance.
This means that the higher level of uncertainty avoidance in a country is associated with a lower degree of
sustainable development practices by corporations in that country.
Long Term Orientation LOT: there is there is no relationship between the level of long-term orientation and
corporate Sustainability reporting.
Indulgence IND: there is a positive relationship between SRS and levels of Indulgence. This implies that firms in
countries with a high degree of indulgence would be willing to disclose more environmental information than those
in restrained countries. The justification of this outcome stems from the tendency of indulgent societies enjoy life
and have fun and related to optimism. They are expected to be more transparent than other societies, where people
share the common beliefs and possibly information and require extensive disclosure relative to restraint societies.
The companies in those societies would face higher social pressure to disclose sustainability information compared
to other companies.
The second part of our analysis examines the impact of cultural determinants of Iraq on the level of
sustainability performnce, this would be done by comparing the sustainability performance results of companies
working in developed countries (Australia and Germany) with the results of Iraqi companies (for more information
about SRS results of sample companies see appendix 1). This comparison reveals the SRS differences among the
sample countries that could be attributed to the cultural values of Iraqi society. Figure 2 shows the mean of SRS
disclosed by companies in Australia, Germany, and Iraq respectively.

151
 Fig. 2. Sustainability Reporting Scores by Countries

In order to identify whether there are significant differences between those three countries or not, the One-Way
ANOVA test is used, and the averages of sustainability reporting scores are compared.
Table 3: Results of One-Way Anova Test

ANOVA

Sum of df Mean Square F Sig.

Squares
Between Groups 9560.248 2 4780.124 19.112 .000
Within Groups 23260.242 93 250.110
Total 32820.490 95

Table 3 states the results of One-Way Anova test for country differences. These results indicate that there is a
significant difference in the mean of SRS between the three countries, F (19,112) = 7.463, p < .05.
Evidently, the companies that operate in developed countries such as Australia, and Germany would have more
environmental obligations than other companies in Iraq. The basic reason of the result is the cultural characteristics
of Iraq society, and the continuing political crisis in Iraq has a negative impact on the sustainable development of
the Iraqi economy and supporting the sustainability policies. This political crisis is exacerbated by Iraq’s deepening
economic crisis due to low oil prices and the costs of the war against ISIS. Therefore, the defeating of ISIS will save
a money to the Iraqi budget during the coming few years, which in turn will contribute in supporting the political
stability in the long term. But, Iraq’s situation cannot wait for long-term stability, it needs to immediately
accomplish major, comprehensive development projects in order to finally establish a stable and viable Iraqi state.
To achieve these objectives the Iraqi government needs to be ready take brave steps towards solving the political
problem, supporting the private sector, and providing jobs for jobless people. Consequently, the efforts of Iraqi
governmental agencies and intuitions could be utilized to support the societal needs for transparency, sustainable
development.

5. Conclusions

The study was designed to examine the impact of the cultural determinants on the level of sustainable
development in developing countries. To this end, two-part study had been done, the first part is dedicated to
investigating whether sustainability performance levels relate to national cultural values based on Hofstede’s

152
individualism, masculinity, power distance, uncertainty avoidance, long term-orientation, and indulgence
dimensions. Whereas, the second part examines the impact of the cultural determinants on the level of sustainability
performance through investigating the differences between sustainability reporting scores disclosed by companies
working in stable and developed countries (Australia and Germany) and Iraq as developing and instable country.
The paper depends on a sample consists of 96 companies from 3 countries are Australia 38, Germany 37, and Iraq
21. The annual reports of sample companies were collected and analyzed to identify the levels of sustainability
performance using a sustainability reporting checklist comprises 79 items based on GRI guidelines.
The results indicate that five of Hofstede’s Cultural dimensions are related to sustainability reporting scores SRS. In
particular, a nation’s high degree of individualism and Indulgence were both related to a high degree of
sustainability reporting, while a nation’s high degree of Power Distance, Masculinity, and Uncertainty Avoidance
are related to low degree of SRS. The findings also show that there is no relationship between the level of Long
Term Orientation and Sustainability Reporting Scores. These results imply that the level of sustainability reporting
as a measure of sustainable development will increase in countries with high individualism, high indulgence, low
power distance, low masculinity, and low uncertainty avoidance. In addition, the results reveal that there is a
significant difference between Sustainability Reporting Scores of Iraqi companies, and those working in Australia
and Germany stem from the effect of the political instability in Iraq. The comparison between instable state like Iraq
and developed and stable states like Australia and Germany uncover the negative impact of the cultural
determinants, political crisis and the armed conflict in Iraq which require from the authorities in Iraq to take urgent
remedial actions. Such actions may include, societal reconciliation, political problem solving, improving the living
conditions, and solving the economic crisis by supporting the private sector.

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Appendix A. Sample Companies

The following table contains sample companies and sustainability reporting scores of the study:
No Company name Country SRS No Company name Country SRS
1 Orica Limited AUS 52 49 Progress-Werk Oberkirch Ag GER 10
2 Wesfarmers Limited AUS 35 50 Basf Se GER 59
3 Woolworths Limited AUS 2 51 Lanxess Ag GER 76
4 Coca-Cola Amatil Limited AUS 9 52 Wacker Chemie Ag GER 54
5 Metcash Limited AUS 19 53 K+S Aktiengesellschaft GER 39
6 Bhp Billiton Limited AUS 61 54 Symrise Ag GER 13
7 Rio Tinto Limited AUS 71 55 Fuchs Petrolub Ag GER 20
8 Newcrest Mining Limited AUS 30 56 H&R Ag GER 44
9 Fortescue Metal Group Limited AUS 47 57 Hansa Group Ag GER 23
10 Arrium Limited AUS 34 58 Simona Ag GER 8
11 Bluescope Steel Limited AUS 21 59 Uzin Utz Ag GER 13
12 Whitehaven Coal Limited AUS 19 60 Nabaltec Ag GER 22
Washington H Soul Pattinson &
13 AUS 28 61 Nanogate Ag GER 13
Company Limited
14 Sims Metal Management Limited AUS 61 62 Metro Ag GER 27
15 Alumina Limited AUS 38 63 Sudzucker Ag GER 25
16 Oz Minerals Limited AUS 31 64 Kws Saat Ag GER 13
17 New Hope Corporation Limited AUS 18 65 Thyssenkrupp Ag GER 56
18 Iluka Resources Limited AUS 19 66 Salzgitter Ag GER 25
19 Paladin Energy Ltd. AUS 60 67 Aurubis Ag GER 48
20 Atlas Iron Limited AUS 11 68 Skw Stahl-Metallurgie Holding GER 10
Energy Resources Of Australia
21 AUS 46 69 Envitec Biogas Ag GER 21
Limited
22 Mount Gibson Iron Limited AUS 39 70 Pearl Gold Ag GER 11
23 Evolution Mining Limited AUS 23 71 Linde Ag GER 26
24 Origin Energy Limited AUS 32 72 Cropenergies Ag GER 23
25 Woodside Petroleum Limited AUS 35 73 Verbio Vereinigte Bioenergie Ag GER 23
26 Santos Ltd AUS 43 74 Petrotec Ag GER 12
27 Caltex Australia Limited AUS 35 75 Youbisheng Green Paper Ag GER 19
28 Beach Energy Limited AUS 19 76 Al-Mansour Pharmaceutical Industries IRQ 4
29 Awe Limited AUS 18 77 AL- Kindi Of Veterinary Vaccines (IKLV) IRQ 7
30 Linc Energy Ltd AUS 24 78 Iraqi Carpets And Upholstery (IITC) IRQ 4
31 Karoon Gas Australia Limited AUS 18 79 Modern Chemical Industries (Imci) IRQ 4
32 Nexus Energy Limited AUS 15 80 Modern Paints Industries (Impi) IRQ 15
33 Dart Energy Limited AUS 16 81 Modern Sewing (Imos) IRQ 6
National Company For Chemical And
34 Aurora Oil & Gas Limited AUS 13 82 IRQ 9
Plastic Industries
35 Senex Energy Limited AUS 14 83 Ready Made Clothes (Irmc) IRQ 6
36 Roc Oil Company Limited AUS 62 84 Baghdad Soft Drinks (Ibsd) IRQ 5
37 Horizon Oil Limited AUS 15 85 Iraqi Date Processing And Marketing Co. IRQ 2
38 Amcor Limited AUS 50 86 North Soft Drinks (Insd) IRQ 4
39 Volkswagen Ag GER 60 87 Al-Hilal Industrial Co. IRQ 6
40 Daimler Ag GER 44 88 Al -Khazer For Construction Materials IRQ 11

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 (IKHC)
Bayerische Motoren Werke Ag -
41 GER 34 89 Electronic Industries Co. IRQ 10
Bmw
42 Audi Ag GER 35 90 Fallujah For Construction Materials (IFCM) IRQ 5
43 Porsche Automobil Holding Se GER 36 91 Iraqi Engineering Works (IIEW) IRQ 4
44 Continental Ag GER 57 92 Modern Constrcution Materials Industry IRQ 4
45 Leoni Ag GER 30 93 Metal Industries And Motorcycles (IMIB) IRQ 6
46 Elringklinger Ag GER 36 94 Baghdad For Packing Materials (IBPM) IRQ 4
47 Grammer Ag GER 14 95 Iraqi Cartoon Manufacturing Co. IRQ 9
48 Renk Ag GER 18 96 National Household Furniture Industry IRQ 10

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