As a prelude to the discussion on theoretical perspective of CSR, this section focuses on the two distinct research approaches to CSR in the prior literature. Gray et al. (1995) hold the view that the research in the field of CSR poles apart due to the inherent nature and certain conundrums in CSR for which includes; the lack of agreed theoretical perspective to research; the absence of systematic reporting by organizations and CSR evokes doubt about its legitimacy.
Consequently, two polarized research approaches were emerged. In one extreme, the CSR was perceived as an supplement to the conventional accounting and was researched the subject with preoccupied assumptions and concepts in traditional accounting. In this stance, the attention was driven to the financial community and had less or nothing to offer to the societal perspective. On the other extreme, the core of CSR was social and environment perspective and examined the role of information in arena of organization-society concept. This aspect has given rise to many criticisms as to the advancement of CSR and the failure to theorize the organization-society relationship.
The latter approach detailed above has acted as an catalyst to place a theoretical framework to the empirical investigations on CSR. Many researches were carried out on the basis of as to reason of the existence of organization-society relationship. In this context, the researchers attempts to theorize the role of information in organization-society could broadly be divided into tree branches namely, decision-usefulness studies; economic theory studies and finally social and political theory studies.
Under decision-usefulness studies, CSR is perceived as an element of accounting information to the usefulness of decision. In this arena of studies the researchers attempt to investigate the value laden on the CSR when making decisions. This investigations are divided in to two sub branches as ranking studies and investigation on effects on the share price behaviour. In the former branch of studies, the financial community ( for instance bankers and analysts) are requested to rank the importance of accounting information as to value perceived by them. In this regard, the studies portrayed a moderate level of importance to them. Hence, could concluded that financial community had derived certain amount of value through CSR information. The latter branch of studies investigated the impact on CSR disclosures on the share prices.
The empirical studies in this concern is inconsistence or inconclusive according to Gray et al. (1995). Further, they criticized the studies carried out in decision-usefulness approach to investigating CSR. Yet, the literature on this branch had stirred the importance of non-financial and non-economic aspects in reporting and accountability of the organizations.
The criticism aimed at decision-usefulness studies evoked the emergence of economic theory studies on CSR. This encompasses the agency theory and positive accounting theory. These theories are based on the concept of self-interest and criticized for being unrealistically one-sided because its neglect the aspects beyond the boundary of interest of agent and principal. It was viewed under economic theory that the organizations are motivated to CSR in order to increase their wealth and therefore, unable contribute toward the development of the CSR. Moreover, as the financial community has many modes of deriving economic information, economic theory has little or nothing to contribute towards CSR. Hence, economic theory barely withstand against those criticisms.
These critics led to the development of social and political theory studies, which gives a great deal of insight in to the existence of CSR. These studies include legitimacy theory, stakeholder theory and political economic theory. Under legitimacy theory, the organization is considered as component of the society. As such, the organization should legitimise its existence through adherence to the societal expectations. This is derived through the concept that the organisation does not have an inherent right to exist, they do so by the sanction of the society. Hence, CSR disclosures are made to legitimise the existence of the organisation serve for the society.
Stakeholder theory asserts that an organisation has a wide range of stakeholders who exert their power to influences the organisation in varying degrees. Unlike legitimacy theory, the organisation is not focusing on the society as a whole, yet, it has narrowed down the concern based on the power the stakeholder who could influence on the organisation. Under political economic theory asserts that, political, societal and environment concerns should not be considered separately and in isolation of one another as those are interrelated to each other. CSR disclosures therefore need be dealt with both on legislative and societal grounds.
The concept of CSR has transformed from profit orientation of inward looking aspect to broader aspects of concerning the matters beyond the boundaries of an organization.
 Gray, R, Kouhy, R, and Lavers, S 1995, 'Corporate social and environmental reporting: A review of the literature and a longitudinal study of UK disclosure,' Accounting, Auditing & Accountability Journal, vol. 8, no. 2, pp. 47-77.
Ranasinghe, W A 2009, 'Corporate Social Reporting: A step beyond traditional financial reporting,' Accounting Panorama, vol. 1, no. 1, pp. 7-11.