Corporate digital responsibility (CDR) in Germany: background and first empirical evidence from DAX 30 companies in 2020

CDR is related to the concept of Corporate Social Responsibility (CSR) that emerged in reaction to the sustainability discussion in society (for a summary e.g., Liang and Renneboog 2017). Today, many companies voluntarily address sustainable development goals in various areas, and sustainability reports are well established around the world as an instrument for providing information on corresponding activities to the stakeholders (e.g., Cikanek and Landis 2019; Littkemann et al. 2018; Lackmann 2010). Likewise, ethical challenges caused by the digital transformation are the new context factor that forces companies to adopt quickly (see Fig. 2): CDR is a new management concept to assume responsibility in the digital economy voluntarily by changing management and production systems as well as adopting the governance system (e.g., Lankoski and Smith 2021; Hildebrandt and Landhäußer (ed) 2017).

Emerging CDR-initiatives in practice are an interdisciplinary field of research and can be researched from different perspectives. Initially, ethical aspects of the digital transformation were addressed predominantly in philosophy and political, legal, and social science (e.g., Sun 2020; Schliesky 2019; Filipovic 2015). However, the Digital Transformation Initiative launched by the World Economic Forum (WEF) in 2015 accelerated economic research on moral problems caused by digitalisation. The broad field of economic research on CDR can be systemized according to the chosen research perspective. Four research perspectives vary (see Fig. 3) because of the basic research conception, the research goal, and the research characteristics (the topic, the falsifiability of statements, and the intended impact).

Since CDR in practice is in an early stage, researchers are still working on a final definition (see Fig. 3, research perspective 1). First definitions of CDR were found by connecting digital transformation to the concept of sustainability e.g., how digitalisation can help to decarbonize the global economy (World Economic Forum 2015). Later, trials were influenced by an instrumental-economic perspective on CDR assuming an economic motivation for CDR-activities. Some papers use the term CDR to describe how companies can gain competitive advantages by building reputation in the digital economy (e.g., Wirtz 2021; Wirtz et al. 2021; Porter and Kramer 2006). Other parts of the literature started to define the term by addressing stakeholder needs resulting from digital transformation (e.g., Lobschat et al. 2021). Finally, some researchers propose a more content-related definition of CDR by connecting the threats of digital transformation to the Environmental, Social, and Governance (ESG-) factors (e.g., Herden et al. 2021). These ESG-factors are used by institutional investors for sustainable decision making in financial markets (e.g., Gillan et al. 2021). Accordingly, implementing a respective CDR-initiative is expected to be rewarded by reduced financing costs (e.g., Kiron and Unruh 2018). Considering these ongoing discussions on the term CDR in literature, this article will use an activity-based definition: CDR is a management concept that comprises all activities to address the challenges of digitalisation towards all stakeholder groups.

Research perspectives on CDR beyond basic definitions are clearly linked to the interdisciplinary field of business ethics because of the ethical problems of digital transformation behind CDR-initiatives. According to Küpper et al. (2020), two basic concepts can be used for research on CDR-related topics in business ethics: philosophical and analytical. The philosophical concept is linked to the research concept of CDR-philosophy (see Fig. 3, research perspective 4) and refers to the methods of ethics for the development of norms in the digital age (e.g., Müller and Andersen 2021; Spiekermann 2019; Thorun et al. 2018; more general Aaken and Schreck 2015). The analytical concept can be used to analyse moral problems caused by digital transformation in firms and is connected to CDR-theory and CDR-policy (see Fig. 3, research perspective 2 und 3). According to this more integrative analytical concept, CDR could be researched empirically, theoretically, and normatively (Küpper et al. 2020).

Because of its origins in practice, a substantial part of current CDR-publications presents descriptive empirical information by addressing companies’ needs for practical help (e.g., Dörr 2021; Brink and Esselmann 2020; Esselmann et al. (ed) 2020; Esselmann and Brink 2016). This part of the literature predominantly instrumentalises CDR for economic success and offers practical guidance by mostly neglecting normative reflections [critically on this instrumental-economic perspective Aalen and Schreck (2015); for a multi-objective theory of the firm Pies et al. (2021)]. But compared to the numerous publications in the field of CSR, there is still a vast lack of research activities. Using the basic CDR-model presented in Fig. 2, the recent management literature can be systematized by the type of discussed solutions: one part of the literature is working on guidance for the adaptation of the management systems and focuses on the value/goal system and CDR-strategies [e.g., Kollmann 2022; Eversheds Sutherlands (ed) 2022; PWC (ed) 2020]. Accordingly, many companies from different industries are working on the development of CDR-initiatives by referring to this hands-on guidance from management research (e.g., Herden et al. 2021; Dörr 2021). The second part of literature is developing concrete measures for the successful implementation of CDR in companies. Adjustments to the company's management systems accelerate further changes in the governance system and the production processes (see Fig. 2). In some industries concrete measures along the value chain are already being discussed (e.g., Esposito and Ricci (2021) on CDR in museums; Jones and Comfort (2021) on CDR in the hospitality industry; Wirtz et al. (2021) on CDR in the service industry; Altmeppen and Filipović (2019) on CDR in multimedia; Kohlmann (2019) for Internet of Things applications). However, no generally accepted standards have yet emerged for the concrete design of CDR-measures in literature (e.g., Lobschat et al. 2021; Kempkes et al. 2021). Theoretical normative research on CDR-philosophy (see Fig. 3, research perspective 4) is not presented sufficiently, and corporations are still missing grounded recommendations for the specific design of CDR-initiatives (see Fig. 3, research perspective 3).

In addition to the more descriptive management literature, some empirical research projects on the explanation of CDR were initiated (see Fig. 3, research perspective 2). Because of the early stage of the research programme, current studies are characterized by an explorative research design, and rely on qualitative research methods. Since a critical objective of CDR-activities can be the privacy of consumer data, some first studies were initiated to understand the attitudes of consumers towards the challenges of digitalisation (e.g., Kettner and Thoroun 2021; Deutschland sicher im Netz e.V. (ed) 2020). Other empirical studies focus on the understanding of the current role of CDR in corporate management: Wirtz et al. (2021) present the results of semi-structured interviews conducted with seven international experts in the service industry. Based on the results, a data and life-cycle oriented perspective on CDR was developed. Herden et al. (2021) try to give an initial overview of relevant topics that need to be addressed by corporations in their CDR-strategy. The authors carried out an online survey among 509 US-based companies. Esselmann et al. (2021) conducted a detailed online survey on the relevance of CDR in German corporate management (n = 50). Based on the results, additional expert interviews were carried out. Many managers confirmed the necessity of a CDR-strategy in general and currently focus on developing CDR-measures along the value chain. Finally, corporate representatives in this recent survey pointed out to the key role of governmental initiatives for the further enhancement of CDR.

So far, the idea of corporate digital responsibility has not been implemented legally through legislative reforms and rulings. In contrast, shareholder value orientation and the existing legal framework in many countries led companies to neglect their fundamental responsibilities in the digital economy (e.g., Sun 2020). Hence, until now the concept of corporate digital responsibility has remained weak around the world.

In Germany, the emergence of CDR in practice was closely monitored by politicians, and the government quickly took a leading role by enhancing a self-regulation initiative by German companies. The Corporate Digital Responsibility action group was launched by the Ministry of Justice and Consumer Protection in May 2018 (for details Möslein 2020). Representatives from politics and business were invited to work together on guidelines and recommendations for corporate responsibility in the digital age. The action group refers to the analysis of different scenarios and the method of case study analysis (e.g., Pelters 2021; Möslein 2020). Moreover, the expert group agreed on the release of the German CDR-code in June 2021 (for further details Merbecks 2022). This code is introduced as a guideline for signatory companies. In line with the origins of the CSR-concept, signatory companies are not fulfilling any binding legal obligations up-to now.

The framework developed by the German action group on CDR is quite similar to the CDR-principles launched by the private ETHOS foundation in Switzerland in response to the needs of institutional investors (Ethos 2020). Both soft-law instruments offer basic orientation for the design of a CDR-strategy. Therefore, three categories of principles are derived: basic principles, ICT-oriented principles, and stakeholder-orientated principles (see Fig. 4, on the left). Although the German CDR-code is more predominant according to the number of principles (see Fig. 4), the Swiss CDR-code is more focused and offers detailed guidance for the specification of the principles (see Fig. 4). Besides the nine principles, the German CDR-code introduces five specific fields of action: data handling, education, climate and resource protection, employee involvement and inclusion (CDR-Initiative 2021).

The impact of self-regulation approaches on corporate responsibility in the digital economy depends on many factors and CDR can be addressed by firms in many ways: first, internal CDR-initiatives can be released (e.g., Wirtz et al. 2021). Second, information on internal measures can be shared on social media channels and via the company's website to address the needs of stakeholders (e.g., Okazaki et al. 2020). Third, institutional investors can be addressed when taking digital responsible behaviour into account in sustainability-oriented decision-making in financial markets. Like well-established sustainability reporting on CSR (e.g., Bergmann et al. 2021; Littkemann et al. 2018), information on CDR-initiatives is supposed to be disclosed in nonfinancial reports.

Nonfinancial reports are published voluntarily or by legal requirements. As a result from the implementation of the European Non-Financial Reporting Directive (NFRD) in 2017, German listed companies that meet certain size criteria are legally bound to prepare nonfinancial reports according to German General Accepted Accounting Standards (GAAP) in addition to their financial reports (e.g., Kajüter 2017; for a worldwide overview of mandatory nonfinancial reports e.g., Haji et al. 2022). The extension of International Financial Reporting Standards (IFRS) that are compulsory for many German companies as well by sustainability reporting standards is currently compiled (e.g., Christ et al. 2022; Sellhorn and Wagner 2022).

Mandatory nonfinancial reporting is codified in sections 289b–e and sections 315b–c Commercial Code (Handelsgesetzbuch). Since the list of topics addressed by mandatory nonfinancial reports is not conclusively regulated (e.g., Kajüter 2017; Hinze 2016), essential information on CDR can be given there in systematic and standardized manner as well. However, disclosure activities on nonfinancial topics are currently narrowed by the strong twofold principle of materiality (Nietsch 2022; for details e.g., Müller-Burmeister 2019): disclosure on CDR is required, if the business model of the company is supposed to harm stakeholders (inside-out perspective) and context factors are supposed to display consequences to the firm (outside-in perspective). If CDR is relevant to the company, nonfinancial reporting on CDR must comprise three areas (section 289c (3) HGB): information on the CDR-concept, information on the results achieved by CDR-measures and information on risks related to CDR. For further clarification and standardisation, the German action group on CDR promised the publication of more detailed CDR-reporting standards (CDR-Initiative 2021). The launched German CDR-code only offers a comprehensive framework for reporting on CDR: “By signing the Code, we further commit … to improve the effectiveness of our measures continuously, and to report in line with the signed requirements”.

So far, little research is done to describe CDR-related reporting by German firms. Pelster et al. (2020) conducted a more general qualitative study by analysing reporting on digital transformation. Lischka (2020) has analysed annual reports of DAX 30 companies in 2017 and presented a list of CDR-related topics addressed in their reports. However, the research method used is not explained in detail. Recently, a qualitative study on CDR-reporting in Germany was conducted by Merbecks (2021). In line with the explorative research goal, the author opted for a case study approach, and information given on CDR in nonfinancial reports by signatory companies to the CDR-code in 2020 was described and analysed. Hence, a theoretical research perspective on CDR was chosen (see Fig. 3, research perspective 2). According to the results signatory companies do not rely on a general accepted standard and format for nonfinancial reporting on CDR. Moreover, the information given is not easily accessible for stakeholders. Based on these first findings, this article extends qualitative research on CDR-reporting to exchange listed large German companies. This is in line with corresponding research activities on CSR reporting (e.g., Gawenko et al. 2020).

To facilitate the structured identification of relevant research questions, this article recommends relying on the conceptual framework as sketched in Fig. 5. The underlying basic economic model of corporate communication, is not ignoring that CDR can and should be embedded in the more general philosophical debate on the ethics of digital responsibility.

Based on the conceptual framework, a structured identification of five fields of CDR-related research is performed (see Fig. 5):

Recent economic papers focus on describing the current state of existing internal CDR-initiatives and some of them offer guidance for improvements (see Fig. 5, field 1). The research methods used are typically surveys and expert interviews. Since many authors do not explicitly name their normative fundamentals, more theoretical research projects using the methods and instruments from analytical business ethics should be initiated. A substantial normative theory on CDR could address management’s open questions on the design of meaningful CDR-initiatives. However, this descriptive part of the literature is not explaining why companies opt for CDR-related activities. Like in the field of CSR, the motivation for companies to develop a CDR-strategy and to invest into corresponding CDR-measures can be explained by taking an instrumental-economic perspective on reduced costs or increased reputation (e.g., Orlitzky and Benjamin 2016; critically on this perspective in business ethics Aaken and Schreck 2015). Prior accounting research documents that companies publish corporate reports to legitimize their operations (for the legitimacy theory, e.g., Suchman 1995) and to manage the variety of stakeholders (for the stakeholder theory, e.g., Donaldson and Preston 1995). Hence, the second CDR-related field of research could focus on disclosed information (see Fig. 5, field 2). Research field 2 will be addressed in this article by conducting a descriptive empirical study on how German large, listed companies report on their CDR-initiatives in mandatory reports in 2020. The research question derived is: how do companies report on their CDR-initiatives in Germany?

The findings of this analysis can be used to conduct further research projects (see Fig. 5): first, insights into the processing of disclosed information could be addressed (research field 3). Second, feedback reactions from financial markets could be analysed in detail (research field 4). Finally, after understanding how and why companies disclose information on CDR, the institutional framework for CDR-related disclosure can be reviewed (research field 5). This reflection on the design of regulations should take into consideration results from normative research in business ethics as well as results from CDR-related research in other disciplines. The results of the study presented in this article are a first step into a critical evaluation of the German soft law on CDR. This will support cross-sectoral research since the shift to hard-law regulation on CDR is already discussed in legal sciences (e.g., Möslein 2020).

First, a qualitative content analysis of nonfinancial reports of selected German listed companies is performed by using the software MAXQDA. Over the last years, there has been an increase in the verbal content within the reports of companies. Using a qualitative research methodology allows for an in-depth analysis of the narratives surrounding CDR in nonfinancial reports and is in line with other studies in current accounting research (e.g., Al-Shaer et al. 2022). The intended systematic review on disclosed information on CDR-initiatives is quite similar to Gawenko et al. (2020) which present the results of a content analysis on CSR-reporting by German DAX 30 companies. Furthermore, Lee et al. (2018) analysed the relationship between reported text patterns and the financial performance of largest US companies. Lewis and Young (2019) also used a similar approach to investigate narratives by performing an automated analysis.

Second, a quantitative analysis of the results is carried out. Hence, the data collected are exported from MAQDA to MS Excel. This facilitates the presentation of results and their interpretation.

The qualitative content analysis conducted in this study follows the structured process recommended by Mayring (2020) and Mayring (2015). Accordingly, the first step is defining the material that will be analysed. Since German exchange listed companies must fulfil strong nonfinancial reporting standards, the population for this study consists of all corporations listed in Germany by the end of March 2021. There are 438 domestic organizations listed across the multiple exchanges in Germany (Trading Economics 2021). However, in this research project a sample of the DAX 30 companies is chosen (as of 31st March 2021). The DAX 30 index is formed by the thirty largest companies in Germany in terms of market capitalization and liquidity (see Fig. 6 for descriptive statistics of the sample).

As emphasized above, only large listed German companies are required to present nonfinancial reports according to the transformed European NFRD. Furthermore, larger corporations are supposed to be more interested in reputation building due to the expected decline in financing costs (e.g., Orlitzky 2001), and the origins of corporate responsibility go back to the role of large corporations in the industrial revolution (e.g., Carrol 2009). Lastly, many larger companies already have digitalised their business models and became aware on ethical challenges caused by digital transformation (e.g., Wirtz 2021; Wirtz et al. 2021; Pelster et al. 2020). Thus, DAX 30 companies are expected to be the first movers in the third phase of digitalisation.

Mandatory nonfinancial information by German large companies can be disclosed in different formats (see Nothelfer and Burgemeister 2019 for a comprehensive overview). Thus, these formats can be used for disclosure on CDR-initiatives as well (Lobschat et al. 2021; Lischka 2020). In this article data on CDR-initiatives in DAX 30 companies have been collected by referring to all formats.

As pointed out by Mayring (2015), the development of categories used for data collection is in the centre of a qualitative content analysis. Hence, a valid system of categories and sub-categories has been derived next by referring to the given literature review. This technique is stricter than the one used by Lischka (2020) and refers to studies conducted in the related field of CSR research (e.g., Andrade et al. 2020; Georgiana-Loredana 2017). The category system used for the collected data on CDR-initiatives consists of four main categories derived from German GAAP regulation on nonfinancial reporting: the CDR-concept, the CDR-measures, results from CDR-related activities, and risks concerning CDR (see Fig. 7). This category system was designed by Merbecks (2021) when analysing the signatory companies to the German CDR-code by using the case-study method. In line with Mayring (2015) the four categories are elaborated into further sub-categories (see Fig. 7).

Since multiple studies on related topics, particularly on CSR policies and disclosure, have relied on the MAXQDA software, the content analysis is performed using this software. For instance, El-Bassiouny and El-Bassiouny (2019) have analysed CSR policies and disclosures by DAX 30 companies in Germany, the United States and Egypt utilizing MAXQDA. Moreover, Bergman et al. (2019) have used MAXQDA for the analysis of textual data in reporting. Referring to Mayring (2015), the categories were defined and coded as a next step. After running a pre-test, the final codes relevant to CDR-initiatives in companies were fed into the MAXQDA code system.

In line with the process recommended by Mayring (2015), the document analysis is done next. Therefore, relevant reports for the DAX 30 companies were put into the document system of MAXQDA. After this, the “Text Search & Autocode” option available in MAXQDA was used to identify passages relevant to each of the codes developed for the analysis. These searches were conducted using keywords that are relevant to the code. Such search results led to the identification of passages and sentences that corresponded to the specific codes, finally highlighting them in the reports. The colour codes and highlights can be edited manually to include supplementary information that had been omitted, or to remove extra information included because of the auto-code process. This procedure was repeated for all codes, resulting in the identification of passages and texts that correspond to the category system.

For presenting the findings, results from MAXQDA were exported to MS Excel. The description of deliverables and their critical reflection are the last steps in a content analysis according to the guidelines of Mayring (2015).