Adapting integrated reporting through the stages of local rationalisation

In 2013, the International Integrated Reporting Council (IIRC) released the integrated reporting (IR) framework to become the corporate reporting norm. Ten years later, IR has not been diffused globally, with two notable exceptions – South Africa and Japan. IR in South Africa has been the subject of comprehensive research, but we know little about IR’s journey through the political and cultural dualism of Japan. We see adaptation as an essential step in institutionalising IR, and for this reason, we have examined the process of adapting IR in Japan by analysing the stages through which local actors have rationalised IR to solve local corporate governance and reporting problems. Our evidence from field observations, public documents, and interviews reveal five stages of political, cultural and professional rationalisations. These shape a mutual adaptation process. Through rationalisation, we unveil how the ambiguous global idea of IR has been transformed in Japan into a local solution and an institutionalised practice aligned with the local business culture. At the same time, local actors have adapted their reporting and communication practices to the ideology of IR. By embracing the notion of rationalisation, this study enriches the theory of how the powers and motivations of social actors mediate and shape adaptation. What emerges is compatibility between accounting innovation and the local context.