Coercive media pressures on Indonesian companies' labour communication

Abstract

This study examines links between media pressures and Indonesian Stock Exchange (IDX) listed companies' Labour Practices and Decent Work Disclosures (LPDWD). The results show that there are 95 labour-related articles found in Kompas from 1 July 2006 to 30 June 2007. The level of annual report disclosures in 2007 ranges from just under 1% to 100% of companies communicating labour-related information. Correlation analysis reveals that the link between media exposure and firms' communication is significant and positive. The most apparent effect of media is on employee benefit issues. This finding supports the premise of coercive isomorphism. There are, however, major differences between individual LPDWD media exposure items and company reporting. The media intensively highlights Injury Rates and contract employment issues whereas Indonesian companies focus their labour disclosures more on training and Employee Diversity information. This implies that companies in this developing nation window-dress their annual reports to avoid communicating controversial issues especially where they do not perform well. Despite media exposure, it is the government that has greater influence on companies' labour disclosures, pushing companies to continue adopting certain practices and disclose particular issues which contribute to strengthening the Indonesian economy.