A Comparative Study of Integrated Thinking, Information Connectivity, and Value Creation Based on Integrated Reports of Japanese Companies

Abstract

This study examines three requirement conformities based on Japan’s excellent integrated reports to use stakeholder engagement for management: integrated thinking, value creation, and information connectivity. It aims to clarify how excellent corporate reports of Japanese companies address these three challenges. Further, I demonstrate that these three challenges can be easily addressed using a balanced scorecard (BSC). By introducing a BSC, synergy creation and portfolio management can be visualized and closely connected through strategic themes. In this study, as Japanese companies disclose the most integrated reports to the world, I consider how award-winning Japanese companies address the three issues. The three companies that have won the Outstanding Company Award thus far are Omron in 2017, MS & AD in 2018, and NSK in 2019. However, despite having won grand prizes for their excellent integrated reports in Japan, none of them succeeded in visualizing the causal relationship between financial and non-financial information. We assume that visualizing the first type of information connectivity (i.e., the causality between financial and non-financial information) is a major issue. The findings of the study are as follows. First, for integrated thinking, MS & AD was the only company that visualized synergy creation and portfolio management as corporate strategies. Omron made use of integrated thinking that emphasized portfolio management, whereas NSK was not explicit in creating synergies or portfolio management. Second, the excellent integrated reports of Japanese companies visualized implementing business strategies to address social issues. Third, after examining Japan’s excellent integrated reports, information connectivity was not visualized. Thus, we suggest that value creation and controlling value damage should be separated to visualize value creation on a strategic map. By visualizing the value creation process using the BSC when creating an integrated report, all three requirements can be satisfied.