✏️ THESIS

Innovative Activity and Its Disclosure in Sustainability Reports: A Study of Select ICT
Companies in the Philippine Stock Exchange

Presented to the Department of Decision Sciences and Innovation

Ramon V. del Rosario - College of Business
De La Salle University - Manila
Term 2, A.Y. 2024-2025

In partial Fulfillment
of the Course Requirements in
Thesis 1 (THSBUS1 K46)

Submitted by:
Ballega, Katrina Ysabelle M.
Mercado, Lorenzo Luis S.
Pangilinan, Raphael Maria C.
Tan, Lance Martin Alexander L.

Adviser:
Dr. Jessica Jaye S. Ranieses

March 19, 2025

 TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION​ 1

1.1 Background of the Study​ 1

1.2 Research Questions​ 4

1.3 Research Objectives​ 5

1.4 Significance of the Study​ 6

1.5 Scope and Limitations of the Study​ 8

CHAPTER 2: REVIEW OF RELATED LITERATURE​ 12

2.1 Introduction​ 12

2.2 Sustainability Reporting​ 12

2.3 The Philippine ICT Industry​ 19

2.4 Innovative Activity​ 22

2.5 Disclosure of Innovation​ 24

2.6 Company Size​ 27

2.7 The Link Between Innovative Activity and Disclosure of Innovation​ 30

2.8 The Moderating Link of Company Size on Disclosure of Innovation​ 32

2.9 Synthesis​ 34

2.10 Research Gaps​ 40

2.11 Literature Map​ 41

CHAPTER 3: FRAMEWORKS OF THE STUDY​ 43

3.1 Theoretical Framework​ 43

3.2 Conceptual Framework​ 47

3.3 Operational Framework​ 50

3.4 Hypothesis Testing​ 51

3.5 Assumptions of the Study​ 51

3.6 Operational Definition of Terms​ 53

CHAPTER 4: RESEARCH METHODOLOGY​ 54

4.1 Research Locale​ 54

4.2 Research Design​ 55

4.3 Research Sampling Design​ 56

4.4 Methods of Data Collection​ 61

4.5 Data Sources​ 61

4.6 Research Instrument​ 62

4.7 Statistical Treatment of Data​ 68

REFERENCES​ 73
 LIST OF TABLES

Table 1. Operational Framework​ 50

Table 2. Summary of Selected Companies​ 60

Table 3. Predefined Keywords for Disclosure of Innovation Analysis​ 64

Table 4. 2023 PLDT Sustainability Report Scoring Table​ 66

 LIST OF FIGURES

Figure 1. Literature Map​ 42

Figure 2. Signaling Theory Framework​ 46

Figure 3. Conceptual Framework​ 48

 CHAPTER 1: INTRODUCTION

1.1 Background of the Study

Recent decades have witnessed a rapid evolution when it comes to technology and

innovation, contributing to society’s ease of living and leaving a profound impact on various

areas of society, the economy, and even culture (United Nations Conference on Trade and

Development [UNCTAD], 2019). Transitioning from a physical to a more digitally-inclined

lifestyle, companies are continuously adapting and innovating to keep up with the growing

market demands. This is particularly evident in the Information and Technology (ICT)

industry, wherein companies within this sector focus on technological innovation, digital

transformation, business model innovation, innovation ecosystem, and sustainable

development innovation (Zhu et al., 2023). As explained by Maneejuk and Yamaka (2020),

telecommunications technology alongside innovation work together in contributing to

different factors such as economic growth and globalization, as well as better connection and

exchange. The two can also help the country achieve certain goals such as gaining

competitive advantage over other nations through a much wider approach to information and

knowledge.

According to Mehta (2025), technology drives innovation and sustainability across

various industries. For instance, companies like Eco Wave Power, founded by Inna

Braverman, demonstrate how innovative technologies can produce electrical power from

wave energy, promoting eco-friendly energy sources. Similarly, Carbon Recycling

International, led by Lotte Rosenberg, transforms carbon dioxide into clean e-methanol,

illustrating how innovation can convert waste into renewable resources while reducing

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greenhouse gas emissions. These global examples highlight the transformative potential of

technological innovation in achieving sustainability goals—a potential that Philippine ICT

companies are increasingly exploring in their own operations. This type of innovation

processes Carbon Dioxide to generate clean e-methanol, highlighting how the progress of

innovation turns waste into renewable and useful commodities. This type of method creates

renewable fuels and mitigates greenhouse gas emissions.

Moreover, technological advancements are also present in the context of education

and workforce development. The study by Dr. Roopa and Dr. Rajesh (2024) stated that the

blending and combination of both education and ICT has modernized learning methods in the

classroom with the presence of different resources such as digital smart boards and remote

learning platform that cultivate dynamic education encounters for students resulting in to

better learning achievements and intellectual growth.

According to Diaz, Chen, Harley, Matus, Moon, Murthy, Clark (2016), innovation in

technology contributes a big factor to sustainable development. Innovation as well

contributes to Sustainable Development Goal 9 (SDG) and also contributes to other

Sustainable Development Goals (SDG). Technology is also an area of expertise and brings

together a diverse set of practices, instruments, and different ways to meet target results and

fulfill human needs. While UNCTAD (2019) recognizes the value of innovation and its

positive contribution to the United Nations’ Sustainable Development Goals for the year

2030, the organization, however, also puts emphasis on the counterintuitive effects of

innovation in meeting the aforementioned Goals. As explained by UNCTAD (2019),

innovation may disrupt labor markets, widen socioeconomic disparities, and bring ethical and

privacy concerns. Innovation can bring both positive and negative implications to the

economy, society, and environment. Therefore, it is only crucial for companies to

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communicate their approaches and activities on innovation effectively.

The article by J. Liu, Y. Liu, and Ye (2023) stated that mandated reporting of

information disclosure and innovation benefits Strategic Innovation and R&D through the

regulatory shift from the Shanghai Stock Exchange (SSE). Aside from this, it was also

disclosed that businesses which are mandated to reveal such information in the business will

result in higher R&D Investments. The mandated reporting of information in China is

necessary for the companies in industries with strong competition as well as firms with

financial difficulties. Despite mandatory information disclosure leading to lower profitability

ratio, it can make in terms of strengthening innovation resulting in better outcomes evident in

innovation output. This also gives out strategic contributions such as giving a wider

perspective of how this mandation leads to more R&D Investments. Aside from this, the

research also shows significant impact towards driving innovation and giving guidance to

those in charge of formulating disclosure regulations within sectors.

Similarly, in the Philippines, all types of corporations, which include non-stock and

stock that are publicly listed, are required to present a statement on sustainability annually

together with other reports (SEC, 2019). As financial and disclosure regulations evolve, the

Philippine Stock Exchange (PSE) also went through changes in the previous years,

demonstrating the effect of national obstacles, hurdles economically, and worldwide financial

developments (Asean Exchanges, 2025). Through December of 2024, the stock market worth

of the Philippine Stock Exchange (PSE) had risen to PHP 20.0 trillion in 2024 which showed

a rise from PHP 16.7 trillion in 2023. Based on the article, the Philippine Stock Exchange

(PSE) has an overall market value at 317,485.59 Million US Dollars, with 283 overall count

of listed companies, and a monthly assessment of sharing patterns at 1,960.68 million US

dollars.

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 As society is now acknowledging the significance of sustainability, many companies

are taking the initiative to set sustainable goals and approaches. Notably, major companies

from all over the world are issuing sustainability reports (Winston, 2021). Sustainability

reporting is a process in which firms generate a comprehensive review with regard to the

accomplishments of the businesses in reaching certain objectives related to environmental,

social, and governance (Monika & Kramer, 2024). According to Miranda-Quibot, Aquino,

Trespalacio, Cruz (2020), ICT firms such as Globe and PLDT published sustainability

reports and there has been an increase in sustainability reporting. Aside from this, the study

also analyzed the sustainability practices of Globe and PLDT through GRI standards and

observations showed that the two companies give emphasis on social concerns over economic

aspects and are dedicated to supporting employees, continuous learning, and social

responsibility. The study also showed that PLDT disclosed more about sustainability

compared to Globe with the use of additional indicators.

1.2 Research Questions

Main Problem:

​ This research aims to primarily address the following research question:

“To what extent do innovative activities of ICT companies listed in the Philippine

Stock Exchange influence the level and quality of innovation disclosure in their sustainability

reports, and how does company size moderate this relationship?”

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Sub Problems:​

​ This paper also seeks to answer the following research questions:

1.​ What types and levels of innovation activities do ICT companies listed on the

Philippine Stock Exchange engage in, and how are these activities measured?

2.​ How do these companies disclose innovation in their sustainability reports, and what

trends or patterns can be identified in their disclosure practices?

3.​ To what extent does the level of innovation activity (as measured by R&D spending,

patent counts, and technology investments) influence the comprehensiveness of

innovation disclosures in sustainability reports?

4.​ In what ways does company size affect both the innovation activities and disclosure

practices of ICT companies on the Philippine Stock Exchange?

5.​ What are the implications of innovation disclosure practices for stakeholder

engagement and investment decisions concerning ICT companies listed on the

Philippine Stock Exchange?

1.3 Research Objectives

In line with the research questions, this study aims to meet the following research

objectives:

1.​ To explore how ICT companies listed on the Philippine Stock Exchange share

information about their innovative activities in their sustainability reports.

2.​ To understand how disclosing innovation in sustainability reports influences

investment decisions and stock performance of publicly listed companies in the

Philippines.

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 3.​ To determine whether a company’s size affects the way ICT companies disclose their

innovative activities in sustainability reports.

1.4 Significance of the Study

In relation to the objectives of the study, it is expected that the results and findings

from this research will be beneficial to the following parties:

ICT Companies in the Philippine Stock Exchange

Through this research, ICT companies in the Philippines will gain a better

understanding of the importance of innovation as well as its disclosure to various

stakeholders. Understanding the positive implications of innovation disclosure on the

companies’ transparency and credibility will allow the ICT companies to communicate their

innovative activities to stakeholders more effectively, attracting capital providers that could

boost their growth. Additionally, this research will help the ICT companies better align their

reports according to sustainability standards.

Investors & Stakeholders

With a more explicit disclosure of innovation activities on the companies’

sustainability reports, investors are able to better assess the performance and standing of the

business. This enables investors to make smarter decisions on their investments by further

allowing them to evaluate the potential risks and returns. Moreover, other stakeholders, such

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as employees and suppliers, will have a better grasp of the companies’ commitment to

innovation and sustainability.

Government Agencies

The results of the study would benefit government agencies like the SEC in

determining the gaps in the existing reporting practices. This would help regulators in the

development of clearer policies and standards with regard to sustainability reporting,

encouraging the companies to be more transparent with their innovative activities. Having

improved and standardized disclosure practices would ultimately enhance corporate

governance by increasing the companies’ accountability in their innovation-related claims.

Consumers

​ This study will also benefit consumers since these individuals also look forward to

businesses that adapt to sustainability nowadays, and it will help correspond to their values.

Aside from this, the study can also help consumers make wise decisions regarding the brand

they choose within their expectations. Having more knowledge about the innovative activities

through the companies’ sustainability reports can also help consumers recognize businesses

that practice sustainability for the benefit of the environment and can also help businesses

conduct certain adjustments that lead to Sustainability, which is preferred by a lot of

Consumers.

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Future Researchers

​ Future researchers can also gain an impact from this type of research in such a way

that they will be able to gain more understanding of sustainability, technology, and

innovation. These factors have been known in the industry nowadays as there are a lot of

Technology Businesses all over the world, and a lot of them adapt to sustainability and

innovation. This study can also help future researchers improve these factors in the long run

and can help anticipate issues that may arise in the future.

1.5 Scope and Limitations of the Study

This study examines the relationship between innovative activities and their

disclosure in sustainability reports among selected Information and Communication

Technology (ICT) companies listed on the Philippine Stock Exchange (PSE). It focuses on

how companies such as Globe Telecom, PLDT, Converge ICT, and other publicly traded ICT

firms disclose their innovation efforts and whether these disclosures influence investment

decisions and stock performance. The study also explores whether company size plays a role

in the extent and impact of innovation disclosure. The choice of sustainability reports

covering 2019 to 2023 for examining the practices of ICT companies listed on the Philippine

Stock Exchange is particularly justified by crucial developments in local sustainability

policies and business conditions during these years. Notably, in 2019, the Philippine

Securities and Exchange Commission (SEC) introduced Memorandum Circular No. 4, which

mandated that all publicly listed companies begin publishing sustainability reports starting in

2020 (SEC, 2019). This regulation marked a significant shift towards transparency,

compelling companies to formally disclose their environmental, social, and governance

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(ESG) initiatives, aligning with international reporting standards. Additionally, the

COVID-19 pandemic, starting in 2020, substantially impacted corporate strategies and

heightened awareness around sustainable and responsible business operations. According to

He and Harris (2020), the pandemic encouraged businesses to embed sustainability deeper

into their core practices as they sought resilience and long-term stability amidst global

uncertainty. This specific timeframe was selected to capture recent disclosure practices while

also including the period during and following the COVID-19 pandemic, which significantly

impacted business operations and reporting practices. Thus, reviewing sustainability reports

from this period (2019–2023) captures how Philippine ICT companies adapted to both

regulatory demands and unprecedented operational challenges, providing a comprehensive

perspective on the evolution of their sustainability and innovation disclosures.

By analyzing sustainability reports from 2019 to 2023, this research employs content

analysis and multiple linear regression models to assess patterns in disclosure practices and

their correlation with financial performance. However, the study has limitations. Since it only

covers a specific timeframe, it may not fully capture long-term trends in innovation reporting.

It is also limited to ICT firms, meaning the findings may not apply to companies in other

industries. The research relies on publicly available sustainability reports, which can vary in

depth and quality, potentially affecting the accuracy of the analysis. Additionally, while the

study measures the frequency of innovation disclosures, it does not assess their strategic

effectiveness or how they are perceived by investors. External factors such as changing

market conditions, government regulations, and global economic shifts may also influence

investment decisions, making it difficult to isolate the exact impact of innovation disclosure.

Some companies may not have published sustainability reports for certain years, particularly

in 2020 due to disruptions caused by the COVID-19 pandemic, leading to potential data gaps.

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 Further, one significant limitation of this study pertains to potential endogeneity

issues. These arise when determining whether more robust financial performance leads

companies to disclose more due to greater available resources, or if more extensive

disclosures by themselves contribute to improved financial performance. There is an inherent

challenge in determining whether companies with more robust financial performance disclose

more due to greater available resources, or if more extensive disclosures by themselves

contribute to improved financial performance. Regulatory changes introduce another layer of

endogeneity. Changes in disclosure requirements or compliance standards can both influence

and be influenced by industry dynamics.

While acknowledging the potential influence of regulatory changes on disclosure

practices, it is important to clarify that this study does not explicitly analyze the direct impact

of regulatory changes on company disclosure and performance. The complexity of these

dynamics, including the timing and specific implications of regulatory interventions, lies

outside the primary scope of our current research. Our focus remains on examining the direct

relationships between company financial performance and their disclosure practices without

delving into the regulatory factors that may also play a role.

The study also acknowledges that while the sample size of 10 companies is designed

to provide insights into the practices of leading companies in high-impact ICT sectors, it may

not capture the full diversity of the ICT industry on the PSE. The findings should, therefore,

be interpreted with an understanding that they primarily apply to similarly situated large-scale

enterprises within the industry. Future research could expand this scope to include a broader

range of companies, enhancing generalizability.

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 Despite these limitations, the study provides valuable insights into how innovation

disclosure in sustainability reports affects investor behavior and financial outcomes for ICT

companies in the Philippines.

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 CHAPTER 2: REVIEW OF RELATED LITERATURE

2.1 Introduction

Innovation disclosure in sustainability reports has become an important aspect of

corporate transparency and accountability. As companies work toward improving their

sustainability efforts, effectively communicating their innovations can strengthen investor

confidence, enhance corporate reputation, and influence financial performance. Recent

research has examined the connection between sustainability reporting and innovation,

particularly in industries driven by technological advancements. Businesses that provide clear

and detailed disclosures about their innovative activities not only meet regulatory

requirements but also gain a competitive edge by attracting investors and engaging

stakeholders. This literature review summarizes and highlights how companies report

innovation, the role of corporate governance in shaping disclosure practices, and the

influence of sustainability reporting on financial performance.

2.2 Sustainability Reporting

There are many existing frameworks that serve as a guide to sustainability reporting.

Among these, the most prominent frameworks include the Global Reporting Initiative (GRI),

Integrated Reporting (IR), Sustainability Accounting Standards Board (SASB), and Task

Force on Climate-related Financial Disclosures (TCFD) (Securities and Exchange

Commission [SEC], 2019). The GRI primarily focuses on the economic, environmental,

social, and governance (EESG) aspects of sustainability disclosure. On the other hand, IR

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places emphasis on value creation, which is examined using the six capitals, specifically,

financial, manufactured, intellectual, human, social, and natural capitals. SASB Standards

look into industry-specific sustainability metrics, while TCFD is designed to address

climate-related concerns.

In the Philippines, mandatory sustainability reporting was implemented by the SEC

through Memorandum Circular No. 4, Series of 2019 (SEC, 2019). According to the

memorandum, the SEC is requiring publicly listed companies (PLCs) to include a

sustainability report along with their Annual Report or SEC Form 17-A. In line with that, the

SEC also provided a sustainability reporting template, which is based on the GRI framework.

However, the SEC also stated in the memorandum that PLCs that have their own

sustainability reporting templates may choose to submit this instead as long as it aligns with

any of the other global standards, notably, the GRI, IR, SASB, and TCFD. Moreover, the

SEC also promotes voluntary disclosure using the other sustainability frameworks.

While companies may adopt varying frameworks in their sustainability reporting,

disclosure of innovation-related activities are still likely to appear in specific sections of the

report. With that, the following subsections discuss where innovation is likely to be disclosed

in each of the four major sustainability frameworks.

Global Reporting Initiative (GRI)

With the Global Reporting Initiative (2021), innovative activities are typically

disclosed in the Economic Performance, Indirect Economic Impacts, and Energy sections of

the framework as these discuss innovation-relevant information much like technology

investments, R&D spending, business expansion, and sustainable and energy-efficient

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innovations. Companies report R&D investments under Economic Performance, while

innovative sustainable products and services are often highlighted in Indirect Economic

Impacts. Energy-efficient innovations are disclosed in the Energy section.

Integrated Reporting (IR)

On the other hand, the Integrated Reporting (IR) framework addresses innovation

primarily through the intellectual capital component of its six capitals model: financial,

manufactured, intellectual, human, social, and natural (Integrated Reporting, 2021).

Companies report on knowledge-based assets, patents, R&D activities, and technological

advancements that create value over time.

Sustainability Accounting Standards Board (SASB)

SASB standards incorporate innovation disclosures within industry-specific metrics.

Information on innovation activity would generally appear in the Business Model and

Innovation dimension of the framework (SASB, 2017). For companies belonging in the ICT

industry, these would typically include product design and lifecycle management, which

encompass technological innovation and design for resource efficiency.

Task Force on Climate-related Financial Disclosures (TCFD)

As for the TCFD framework, while focused primarily on climate-related financial

disclosures, the framework includes innovation within its Strategy and Metrics & Targets

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core components (TCFD, 2021). Under the Strategy pillar, the resilience of a company’s

business strategy under actual and potential climate-related risks is analyzed. On the other

hand, the Metrics & Targets pillar specifies the metrics that helps the company in assessing

the opportunities and strategies that would alleviate climate-related risks. In relation to

innovative activity, climate-related opportunities through innovative products, services, and

technologies are reported in these sections.

Qureshi et al. (2017) investigated the impact of corporate sustainability reporting on

firm value in developing countries. Their research highlighted how sustainability disclosures

contribute to better market performance and investor confidence. They found that companies

that actively disclose their sustainability efforts tend to gain more trust from shareholders, as

transparency reinforces a positive reputation and aligns with investor expectations for

long-term growth. The study emphasized that firms integrating sustainability into their

reporting framework can differentiate themselves in competitive markets, leading to greater

financial stability. The researchers also identified challenges related to the lack of

standardized sustainability reporting frameworks in developing economies. While

sustainability disclosures generally correlate with higher firm value, inconsistencies in

reporting standards create disparities in how investors interpret such disclosures. The study

suggests that improving corporate governance mechanisms and establishing standardized

sustainability reporting guidelines could help enhance the credibility and impact of

sustainability disclosures in emerging markets.

In relation, Michelon et al. (2020) examined how corporate boards influence

sustainability disclosures, particularly those related to innovation. Their findings suggest that

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companies with active, independent, and diverse boards are more likely to provide

transparent and comprehensive innovation-related reporting. Firms with strong governance

structures prioritize sustainability reporting as they recognize its importance in enhancing

investor confidence and corporate accountability. The study also highlighted that companies

with board members who possess expertise in sustainability and innovation tend to adopt

more proactive disclosure strategies. The researchers pointed out that governance factors,

such as board diversity and executive leadership does play a crucial role in shaping how firms

communicate their innovation activities in sustainability reports. Companies with engaged

boards are more likely to integrate sustainability into their overall corporate strategy, ensuring

that innovation disclosures go beyond regulatory requirements to reflect their strategic vision.

The study also underscores the role of corporate leadership in fostering sustainable

innovation and promoting greater transparency in corporate reporting.

Zhou, Saeed, and Agyemang (2024) examined the role of sustainability disclosure in

financial performance, particularly in the energy sector of Belt and Road Initiative (BRI)

countries. Their findings indicate that sustainability disclosures positively impact financial

performance by attracting socially responsible investors and improving access to capital2.

Companies that actively disclose their environmental and social governance (ESG) initiatives

often experience lower capital costs and better credit ratings. The study suggests that

improved sustainability transparency fosters better stakeholder engagement and a more

favorable corporate reputation, ultimately driving financial success. Despite these positive

effects, the researchers also acknowledged challenges in sustainability reporting, particularly

the complexity of compliance for firms in the energy sector. While larger corporations benefit

from sustainability disclosures, smaller firms often face resource limitations that hinder the

production of high-quality sustainability reports. The study recommends policy interventions

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to incentivize sustainability reporting and facilitate the transition toward standardized ESG

disclosure practices.

Amin, Kadri, and Ahmad (2024) explored how sustainability reporting influences

firm value, with a focus on publicly listed companies in Malaysia. Their study found that

firms with comprehensive sustainability reports tend to have higher market valuations, as

such disclosures signal transparency and ethical business practices to investors. The research

highlights that sustainability reporting not only enhances corporate reputation but also

strengthens risk management by addressing environmental and social risks proactively.

Companies that consistently disclose their sustainability efforts are more likely to attract

long-term investors who prioritize ESG factors. Moreover, Alsayegh, Abdul Rahman, and

Homayoun (2023) analyzed how corporate sustainability performance affects companies

value through investment efficiency. Their study found that companies prioritizing

sustainability tend to allocate resources more efficiently, leading to better financial

performance. Companies that embrace sustainability experience operational improvements

such as reduced waste, optimized energy consumption, and cost savings, all of which

contribute to greater profitability. The researchers emphasized that integrating sustainability

into investment decisions enhances long-term value and resilience in volatile markets. The

study also acknowledged that certain industries with high capital expenditures face barriers to

sustainability integration. Some companies prioritize short-term financial goals over

long-term sustainability benefits due to resource constraints. The researchers suggest that

government policies and financial incentives could encourage companies to adopt sustainable

investment practices, helping bridge the gap between immediate financial pressures and

long-term sustainability goals.

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 However, Amin, Kadri, and Ahmad (2024) also pointed out that sustainability

reporting remains inconsistent across different industries, which affects the comparability of

disclosures. Some firms provide only minimal sustainability information to meet regulatory

requirements rather than using reports as tools for meaningful stakeholder engagement. The

authors suggest that regulatory bodies should enforce stricter guidelines to ensure that

sustainability reporting accurately reflects a company's commitment to responsible business

practices.

Younis (2023) examined how sustainability reports influence firm value in Saudi

Arabia, emphasizing the role of disclosure quality in shaping investor perceptions. The study

found that firms with well-structured and transparent sustainability reports tend to experience

higher stock prices and lower financial volatility. Investors value sustainability disclosures as

they provide insights into a company's environmental and social initiatives, risk management

strategies, and long-term business vision. Additionally, the study noted that sustainability

reporting fosters stronger relationships with regulatory bodies and enhances corporate

accountability.

Nonetheless, the study highlighted challenges faced by companies in Saudi Arabia in

adopting global sustainability reporting standards due to regulatory gaps and industry-specific

requirements. Companies with limited expertise in ESG reporting often struggle to meet

investor expectations, which can negatively affect their market valuation. The study

recommends that regulatory agencies establish clearer sustainability reporting guidelines and

encourage firms to adopt international best practices to improve disclosure quality.

Doe and Smith (2024) investigated how sustainability reporting enhances firm value

by strengthening reputational capital and investor confidence. Their study found that

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companies with high-quality sustainability disclosures gain a competitive advantage, as

stakeholders perceive them as responsible and forward-thinking. Sustainability reporting is

particularly beneficial for firms seeking international investments, as global investors

increasingly consider ESG criteria when evaluating companies. The study concluded that

integrating sustainability into a company’s core strategy leads to improved financial

performance and long-term growth.

Despite these benefits, the researchers warned against "greenwashing," where

companies exaggerate or misrepresent their sustainability efforts in reports. Greenwashing

can erode investor trust and harm brand reputation, potentially leading to financial losses.

The study recommends that sustainability disclosures undergo independent audits to enhance

credibility and prevent misleading reporting practices.

2.3 The Philippine ICT Industry

According to Ibrahim (2022), ICT also profited the Philippine economy where in the

article stated the enhanced standings of the Philippines in the ASEAN jumping from 83rd

place to the 71st place. The outcomes of the digital economy also showed progress standing

at 17th place in the certain sector. With regards to the sector that involves people, the

Philippines stands at 34th place for how individuals respond to technology and digital

engagement. The Philippines however executed at a balanced pace pertaining to Future

technologies standing at 62nd place, something that presented the readiness for emerging

technology evolution. In line with this, the Philippine ICT Industry is anticipated to rise from

33.59 billion US dollars to 94.69 billion US dollars in 2034, manifesting an annualized

expansion rate of 12.20% throughout the nine years (2025 - 2034) predicted duration

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(Dhapte, 2025).. Furthermore, the market potential for the Philippine ICT industry occurred

at 29.94 US dollars in 2024. The increase in outgoings of technology infrastructure services

and system software services, as well as enhancing internet connectivity, public sector

actions, as well as the rise of the growing need for digital solutions, are the ones shaping the

market envisioned to drive the ICT industry in the country.

The article by Serafica and Oren (2022) stated that the online environment is

accelerating with it supporting the GDP of the Philippines at 9.6% from 7.8% in 2020. Online

businesses fuel economic progress, however the Philippines is outpaced by area-based

counterparts when it comes to the amount of online enterprises and funding values.

Broadband is the one contributing to digital transformation as cyberspace adaptation climbing

particularly in the aftermath of COVID-19 pandemic. However, there are inconsistencies

being experienced by sectors having Information technology - business process management

using the cyberspace net the most, and having good access to a good cyberspace connection

can result into better innovation, industry development, and equal access to internet. Being

able to promote a competitive landscape in telecom networks and internet-based resources is

necessary which is why the authorities need to work on getting through policy hurdles and

implementation issues in order to promote online growth and provide more availability to

internet-based prospects.

The country as well exhibited capability in various aspects such as advanced

technology exports, web-based shopping, and ICT services exports (Ibrahim, 2011). The

research as well indicated that the country needs to put in effort for health, mobile software

growth, and full electronic payment systems for the benefit of the country’s digital economy

outcomes. The article also mentioned characteristics where the country needs to work on such

as SDG goals mainly on learning, well-being, public health, and gender equality as the

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country stands the lowest in SDG contribution at 105. Aside from this, the Philippines also

stands 99th in sub-pillars business with how companies adapt to technology and 99th in

inclusion with regards to dealing with digital differences towards gender, disability, and

economic background.

Since ICT also plays a big role in the Philippines, it should also have continuous

development and improvements, such as enhancing and strengthening the ICT system in

places at risk of being left out, like outlying and peripheral areas (Albert et al., 2021). In

order for the people in those types of areas to have the knowledge and develop the certain

expertise to utilize ICTs and benefit from the advantages it can give out, the researchers

advocate for capitalizing on the improvement and assessment of technological skills.

According to Treceñe (2021), the digital transformation strategies of the Philippines from

1992-2022 showed the advancement of ICT infrastructures towards enterprises, education,

technology, and public sector. It also showed its emphasis on modernizing government

services for more enhanced responsibility and security towards all community members. The

article also stated that in order for ICT to be successful, the government should work on

giving priority to women in terms of leadership and prioritizing digital education as well in

public schools. The strategies should also align with digital education, cost-effective

connectivity, and ICT resources and maintaining the flow of different initiatives. The

Philippine government has also utilized multiple approaches such as the Philippine Digital

Transformation Strategy (PDTS) to create a trustworthy, effective, and responsive digital

government framework. The government also had prior actions such as Philippine Digital

Strategy during 2011 to 2016 and e-Government master plan in 2012. These actions are being

implemented by the Philippine Digital Transformation Strategy (PDTS) in order to enhance

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public administration. Moreover, Albert et al. (2021) also encourage the public sector to

support online proficiency and cybersecurity to boost internet access and feel safe.

As discussed in the study by Tomario and Mutiarin (2018) stated that it is crucial for

public sector action in order to develop ICT resources, enhance the skills of the teachers, and

ensure that all schools have proper technological opportunities. Developing ICT towards

education is important with regards to the career of the Filipino students and their

competitiveness to satisfy different standards in the industry and contributing to the economic

growth of the Philippines. The study also emphasized that technology also has a big

connection with education regarding how it is utilized into an academic approach. There are

also various obstacles which lead to delays in the development such as lack of resources,

insufficient skills for educators, and ineffective ICT integration.

2.4 Innovative Activity

Philippine firms are engaging in different types of innovation to adapt to changing

consumer needs and emerging global trends. Some companies focus on developing entirely

new products and services, while others improve existing offerings to enhance functionality

and performance. Many businesses also innovate by refining their processes, optimizing

operations, and integrating digital technologies to cut costs and increase efficiency. However,

despite recognizing the benefits of innovation, firms in the country still encounter several

obstacles. According to Quimba, Albert, and Llanto (2017), one of the biggest challenges is

the high cost of research and development (R&D), which limits the ability of smaller

businesses to keep pace with larger, more established corporations. Additionally, inadequate

22
government support and regulatory constraints further slow down innovation, making it

difficult for firms to scale their initiatives effectively.

Beyond traditional technological advancements, sustainable innovation is becoming

an essential focus for businesses aiming to balance profitability with environmental

responsibility. Companies are increasingly incorporating Green IT solutions into their

operations, particularly in industries with high digital infrastructure demands. Research by

Hernandez and Ona (2015) highlights how firms in the Philippine Business Process

Outsourcing (BPO) sector are shifting towards energy-efficient cloud computing, smart data

centers, and other eco-friendly digital solutions to reduce their environmental footprint. The

study found that businesses are not only adopting these technologies to comply with

regulations but also to improve cost efficiency and build a reputation for corporate social

responsibility (CSR). However, many organizations still struggle with the transition, as

implementing sustainable technologies often requires a significant initial investment and a

change in company culture, both of which can be challenging for firms with limited financial

resources.

The broader digital innovation ecosystem in the Philippines is also undergoing rapid

transformation, driven by advancements in artificial intelligence (AI), automation, and digital

infrastructure. According to the Tech for Good Institute (2024), the country is making strides

in expanding access to digital technologies and equipping the workforce with the necessary

skills to support innovation. However, gaps remain in terms of funding for tech startups, the

slow adoption of AI policies, and challenges in digital infrastructure development. Without

addressing these issues, businesses may struggle to keep up with global advancements in

technology, limiting their ability to remain competitive in the long term.

23
 In addition to the challenges faced by businesses, barriers to innovation also exist

within the Philippine services sector, where organizations often hesitate to embrace change

due to financial constraints and operational risks. A study by the Philippine Institute for

Development Studies (PIDS) (2024) found that many service-based firms primarily engage in

organizational innovation, improving their internal processes rather than investing in entirely

new technologies. While these companies recognize the importance of innovation, limited

access to funding for research and development remains a significant roadblock. The study

emphasizes the need for continuous skills development and workforce training to help

businesses adapt to technological advancements and foster a culture of innovation.

2.5 Disclosure of Innovation

Bronzetti et al. (2023) explored how companies communicate their innovative

activities through sustainability reports. Their study found that companies strategically

highlight innovation as a way to enhance transparency and engage stakeholders. Companies

that invest significantly in research and development tend to provide more detailed

disclosures, as they recognize that showcasing innovation contributes to their corporate

image. The study also noted that industries driven by technology, such as information and

communication technology (ICT) and energy, are more inclined to include innovation-related

disclosures in their sustainability reports. This practice helps attract environmentally

conscious investors and signals a commitment to sustainable business practices.

Moreover, the study emphasized that companies offering clear and structured

innovation disclosures benefit from stronger investor trust and a better market position. Firms

that publicly report on their sustainability-driven innovations demonstrate their commitment

24
to long-term environmental and social responsibility. The research also suggested that

integrating innovation disclosures into sustainability reports aligns companies with corporate

governance best practices, ultimately strengthening financial performance and the brand

credibility.

​ According to Saidi and Žaldokas (2020), disclosure of innovation by companies can

also have negative effects, which is one of the main reasons why the American Inventors

Protection created an act that will end up making businesses copyright use after 18 months of

documenting and registering instead of when present in the market already. The research also

stated that businesses' higher innovation disclosure steers businesses to different merchants

causing the root of debt to decline, as well as enabling their entry to debt and stock markets.

The documentation of the research also aids in favor of the insight that public-information

arrangements by means of patent and confidential data in monetary connections are

considered alternatives and also shows that innovation disclosure enhances competition

within financing markets.

Furthermore, the adoption of standards and frameworks for reporting practices

influences disclosure for innovation (Laskar, 2024). Frameworks, like the GRI G4

Framework, sets standardized guidelines for companies to follow in their reporting, allowing

company disclosures to be more structured and comparable. In addition, as observed from the

Bombay Stock Exchange, other factors, such as firm size, board composition, sustainability

committees, and profitability, also influence innovation reporting. This implies that strong

governance structures lead to greater transparency and innovation disclosures.

25
 Major Philippine ICT companies such as Globe Telecom, PLDT, and Converge ICT

have demonstrated varying approaches to innovation disclosure in their reports, reflecting

their commitment to transparency and stakeholder engagement.​

Globe Telecom

Globe Telecom offers comprehensive information about its technology innovations

and sustainability activities in its 2023 Integrated Report. Updates on parental leave data and

environmental impact measurements are among changes from the disclosures made the year

before that are highlighted in the report. Stakeholders can evaluate the company's success in

combining innovation and corporate responsibility due to this transparency. (Globe Telecom,

2023).

PLDT

PLDT's approach to innovation disclosure is evident through its dedicated section on

acquisitions, partnerships, and other significant developments. The company actively updates

stakeholders on its strategic investments, such as the US$40 million investment in Voyager

Innovations from the International Finance Corporation (IFC). These disclosures highlights

PLDT's focus on enhancing its technological capabilities and market position.​(PLDT, 2023).

Converge ICT

26
 Converge ICT emphasizes innovation in its annual reports by showcasing product

innovations aimed at supporting small and medium-sized businesses. For instance, the

company introduced flexiBIZ, a product designed to aid the recovery of small businesses by

offering flexible and affordable internet solutions. Such disclosures highlight Converge's

commitment to leveraging technology for business growth and community support.

(Converge ICT, 2021).

2.6 Company Size

In the Philippines, studies have shown that company size directly influences the

extent of innovation activities. A survey by the Philippine Institute for Development Studies

(PIDS) (2021) found that larger firms in the ICT sector are more likely to invest in both

product and process innovations, taking advantage of their established market presence and

financial stability. These companies can afford to experiment with emerging technologies,

such as artificial intelligence (AI), big data analytics, and cloud computing, to enhance

efficiency and customer experience. Meanwhile, smaller firms often focus on incremental

improvements, refining their existing products and services rather than introducing

groundbreaking innovations (PIDS, 2021). The study further highlights that while half of the

ICT firms in the country report engaging in innovation activities, larger firms are

significantly more likely to implement simultaneous product and process innovations

compared to SMEs (PIDS, 2021).

The disparity between large corporations and SMEs in terms of innovation adoption is

also evident in other sectors, such as manufacturing and agriculture. According to Quimba,

Albert, and Llanto (2017), larger agricultural firms in the Philippines report greater benefits

27
from innovation, particularly in expanding their product range and improving quality

standards. In contrast, smaller agricultural enterprises tend to experience minimal gains from

innovation, as they often lack the financial capacity to implement advanced processes and

technologies. This pattern is consistent with findings from global studies, which suggest that

economies of scale provide larger firms with a competitive advantage in driving innovation,

whereas smaller businesses struggle with cost constraints and operational risks (Bronzetti,

Rija, Sicoli, & Ippolito, 2023).

Despite these challenges, SMEs remain an essential component of the Philippine

economy and innovation ecosystem. Many small businesses are adopting lean innovation

strategies, leveraging digital tools, partnerships, and government incentives to overcome

resource limitations. Programs aimed at supporting SME innovation, such as the Philippine

Innovation Act (RA 11293), provide funding, tax incentives, and technical assistance to help

small firms integrate new technologies and improve competitiveness (PIDS, 2021). However,

access to these resources is still limited, and many SMEs struggle to navigate bureaucratic

processes to obtain government support. Simpson and Tamayo (2020) argue that smaller

firms often lack the financial flexibility to invest in long-term innovation projects, making

them more reliant on external funding and partnerships to develop new technologies. Their

research also found that SMEs that invest in open innovation and collaborative research tend

to perform better than those that rely solely on internal R&D.

In a study by Younis and Sundarakani (2020), the findings show the positive

relationship between company size and their environmental, economic, and social

performance. This implies that large firms are able to achieve better sustainable outcomes as

compared to smaller companies. Due to large companies generally having more resources

28
and well-structured frameworks, they are more likely to incorporate sustainability into their

processes effectively.

Furthermore, the company size influences the type of innovation strategies that firms

adopt (Cheah, Sweet, & Fernando, 2023). It was found that SMEs are likely to prioritize

process innovation. Given their limited resources, they look into innovations that make the

company processes more cost-saving and efficient. On the other hand, marketing innovation

is more suited for larger companies. Bigger firms possess the financial resources and the

market to invest in customer engagement, marketing, and large-scale marketing campaigns

that would benefit the company. Additionally, social innovation would depend on the

company size as well. Generally, larger companies have the capability to implement CSR

programs, sustainable initiatives, and long-term innovation projects, while smaller companies

do not have the capacity for these types of social innovation investments.

Science and technology-based innovation strategies, whether sourced internally or

externally, also correlate to a firm’s size (Parrilli & Radicic, 2020). Micro and small firms

typically have internal innovation drivers, developing technologies in-house rather than

opting for external collaborations. This may be owing to the fact that smaller companies have

limited resources to conduct such collaborations. Whereas, medium-sized companies utilize

both internal and external innovation approaches, investing in both internal R&D and

external partnerships. Interestingly, large firms are found to struggle with external innovation

drivers due to their selectiveness in collaborating with external entities.

29
2.7 The Link Between Innovative Activity and Disclosure of Innovation

Research has shown that many firms in the Philippines actively engage in innovation

but are reluctant to disclose their advancements in public sustainability or corporate reports.

A study by the Philippine Institute for Development Studies (PIDS) (2017) found that

although around 43% of firms in the country participate in innovation activities, very few

apply for intellectual property (IP) protections, such as patents and trademarks. Instead,

companies prefer to keep their product and process innovations as trade secrets, fearing that

full disclosure may allow competitors to replicate their technologies (Quimba, Albert, &

Llanto, 2017).

There are several reasons why firms may choose to limit the disclosure of their

innovative activities. Firstly, the process of obtaining intellectual property rights is often

resource-intensive, requiring legal expertise, financial investment, and extensive

documentation. This can be a deterrent, particularly for small and medium-sized enterprises

(SMEs), which often lack the resources to navigate complex patent and copyright laws.

Secondly, some firms are concerned that disclosing too much information about their

innovations may weaken their competitive advantage. By keeping their advancements

confidential, companies ensure that their competitors do not gain insights into their research

and development (R&D) strategies. Additionally, some businesses lack awareness of the

benefits of formal disclosure, which could provide legal protections and enhance their brand

credibility (PIDS, 2017).

However, a lack of disclosure can also have drawbacks. Firms that are transparent

about their innovation activities tend to attract investors, strengthen their credibility, and build

customer trust. According to Bronzetti, Rija, Sicoli, and Ippolito (2023), companies that

30
publicly report their technological advancements in sustainability reports are perceived as

more trustworthy and forward-thinking. This can translate into higher market valuations,

improved investor relations, and better opportunities for industry collaboration. Moreover,

Simpson and Tamayo (2020) argue that proper disclosure reduces information asymmetry

between companies and investors, making businesses more attractive for capital funding.

Investors prefer companies that provide detailed innovation disclosures, as transparency

signals strong governance, long-term strategic vision, and accountability.

Despite these benefits, firms must strike a balance between transparency and

protection. While disclosing innovation can enhance corporate image and attract investors,

excessive disclosure may expose firms to intellectual property risks and competitive threats.

The optimal strategy depends on industry dynamics, company size, and the nature of the

innovation itself. Firms must evaluate whether formal intellectual property protections, such

as patents, copyrights, or trade secrets, are necessary before publicly sharing details of their

innovations.

Furthermore, the companies’ adoption of innovative technologies like blockchain and

cloud based-solutions leads to transparency and disclosure in reports (Tian, Qiu, & Wang,

2024). Blockchain possesses key features, such as cryptography, decentralization, and

transparency, increasing the integrity and trustworthiness of sustainability reporting practices.

On the other hand, cloud-based solutions contribute to more reliable disclosure processes by

minimizing manual errors and improving data accuracy.

When it comes to SMEs in the Philippines, these businesses typically do not engage

in sustainability reporting practices (Monika & Kramer, 2024). Apart from sustainability

reporting being a relatively new concept in the country, there are also no specific guidelines

31
on sustainability reporting for SMEs. This poses a challenge for such enterprises in the

disclosure of their business practices, including innovative activities. On top of that, publicly

listed companies are also facing difficulties in sustainability reporting. The lack of experts as

well as local data and statistics make it difficult and overwhelming for companies to comply

with the sustainability reporting standards (Garcia, 2023, as cited in Monika & Kramer,

2024). However, as recommended by Monika and Kramer (2024), this also provides the

opportunity for the Philippine government to establish a more robust framework or guideline

for sustainability reporting, especially for SMEs in the country.

Moreover, in a study by Crupi et al. (2021), findings show that companies with an

open innovation environment or involved in collaborative innovation are more likely to

disclose information regarding their innovative activities. This kind of company environment

reduces barriers and encourages communication and knowledge sharing of innovative

activities.

2.8 The Moderating Link of Company Size on Disclosure of Innovation

The size of the company directly contributes to the company’s capacity for innovation

disclosures. Bigger companies have more resources for disclosure of innovative activities,

given that they tend to have a more robust framework and a more established standard for

reporting (Bronzetti et al., 2023). Generally, larger firms have dedicated teams that oversee

reporting systems, having a more systematic and structured approach to communicating and

documenting their innovative efforts.

On the other hand, smaller firms or companies may not be as transparent as bigger

firms when it comes to reporting, given that they experience less pressure to disclose

32
information (Clayton, Rogerson, & Rampedi, 2015). Unlike with larger companies,

stakeholders typically demand less transparency from smaller firms, most especially in the

aspects of innovation and corporate responsibility. These small companies are perceived to

have a low level of public and economic risk, and with less strict regulatory requirements,

these firms could choose to disclose only minimal information regarding their activities.

However, Jia (2019) also points out that larger firms tend to be more conservative in

disclosing information on their reports to control market perception and avoid stock price

volatility. As larger companies have a more significant and influential market presence, they

are typically faced with more scrutiny from various stakeholders. Therefore, they may opt to

limit information disclosure on their innovation strategies in order to avoid unwanted

reactions from the market that could ultimately ruin the company. Exploratory-oriented firms,

particularly those with heavy investments in research and development, are often larger

companies. These highly exploratory firms have the tendency to adopt a more conservative

approach when it comes to information disclosure on their reports.

According to Gonźales-Benito (2016), collaboration also plays a big role in the

success of innovation whether small or large firms. Aside from this, the research also showed

how data gathering was done towards different types of Spanish businesses such as

manufacturing, construction, cultivation, service oriented industries. It measured two levels

of Innovation named Incremental and Radical as well as two levels of Collaboration named

Channel and Consulting Advice. Based on analysis and survey, it concluded that

Collaboration is the one that can help the business achieve greater heights and contribute to

Innovation as well. Aside from this, surveys also showed that Small businesses benefit from

Channel under Collaboration and Large businesses benefit from Consulting advice. It was

also proven that the two types of Collaboration vary whether the business is small or large,

33
and they also vary on how they will obtain further edge with regards to the two types of

collaboration. As a result, the best course of action is knowing and analyzing how innovation

benefits are based on the relation connecting how big or small the firm is and the

collaboration.

2.9 Synthesis

Overall, the articles discussed under this chapter provided a comprehensive

understanding of this study’s background, most specifically on this study’s identified

variables as well as the relationships between these variables.

Innovative Activity

While many companies are engaging in various innovative activities to enhance their

business processes, these companies are still faced with challenges. According to a study by

Quimba et al. (2017), challenges in innovation include the lack of government support, high

R&D costs, and regulatory constraints which have led to lower ability for smaller businesses.

Moreover, companies are also looking into eco-friendly solutions, allowing both profitability

and environmental responsibility for the business. Sustainable innovation is becoming more

relevant as companies are adopting Green IT solutions, including cloud computing, smart

data centers, and eco-friendly digital solutions in order to environmental impact as well as

operational costs (Hernandez & Ona, 2015). With challenges on-hand as well, it also hinders

certain technological advancement for start up businesses. Furthermore, service-based

companies put more focus on process innovation rather than radical innovation (PIDS, 2024).

34
They look into enhancing internal workflow as opposed to investing in disruptive

technologies. Aside from this, transformation and adaptation to new types of technology such

as artificial intelligence (AI) and digital infrastructure is happening nowadays and the country

is making efforts to adapt to the new technological advancement. However, even with the

country’s adoption of innovation and new technologies, there are still many gaps present,

especially with tech startup businesses (Tech for Good Institute, 2024). For instance, there is

a relatively slow adoption of policies regarding the use of AI, and there are also challenges in

the development of digital infrastructures.

Disclosure of Innovation

Relevant key findings include the role of innovation disclosure in companies’

performance and transparency. As explained by Qureshi et al. (2017), disclosure of

innovation contributes positively to corporate transparency and investor confidence.

Companies that disclose information on their innovative activities have enhanced reputation

among their stakeholders, allowing them to gain insights on the firm’s innovative strategies

and approaches that help them in their investment decisions. In addition, adopting

sustainability reporting frameworks, like the GRI Framework, improves disclosure practices

by companies (Laskar, 2024). These frameworks provide companies with clear and structured

guidelines in information disclosure for their reports. As a result, this improves stakeholder

engagement by enhancing the company’s credibility as well as boosting confidence with

regards to activities and innovation. Disclosure of Innovation shows the commitment of

companies transparency to stakeholders just like ICT companies Globe and PLDT. However,

disclosure of innovation can also have negative effects disclosing sensitive data about the

35
firm which is why there should be a balance between maintaining transparency but avoiding

issues that may arise along the way such as exposing factors that may avoid competitive

advantage for the business.

Company Size

The study by (Parrilli & Radicic, 2020) also talked about how the size of the business

contributes to how a company builds its plans and actions on innovation. Larger companies

work around a more organized and continuous innovation with more exclusive and

specialized research teams, specialists, and more assets to focus on better innovation

planning. Smaller firms however work around a much faster adaptive, transformational, and

flexible innovation to distinguish themselves in the industry with lesser funding and

employee resources. Smaller firms as well have simplified frameworks and systems which

authorizes them to make accelerated decision processes and quicker development cycles but

also experience limitations in resources that also hampers essential research and development

projects. In spite of having structured innovation processes, larger businesses can purposely

regulate information disclosure and secure a competitive edge and guide audience perception.

Smaller enterprises may have the advantage on innovation actions; they are more transparent

in showcasing their innovations for more fundings and capital but encounter obstacles in

sustainability disclosure as a result of finance and workforce limitations.

The Link Between Innovative Activity and Disclosure of Innovation

36
 Findings from Factors Influencing Innovation Disclosure Beyond Company Size also

gave profound insights through several articles such as the article by Crupi et al. (2021),

explaining that open innovation environments lead to teamwork, expertise exchange, and

integrity and results in more information with regards to innovation enterprises. This shows

as well how open innovation is different since it requires collaborating with outside parties to

increase innovation unlike regular closed innovation where businesses secure confidential

information. Aside from this, Open Innovation also promotes further report due to the fact

that working together with outside parties calls for more communication in order to achieve

more innovation action, this is to also draw more investors and collaborators, this also

compliments corporate responsibility efforts and being sustainable which guides businesses

to incorporate innovation information to sustainability documentation, this also helps

companies in making a name in the industry as well as standing above its competitors, and

cope with new technological advancements within the industry. The article by Tian, Qiu, &

Wang (2024) also highlights how Blockchain and cloud-based technologies has a progressive

impact in advancing innovation reporting and transparency by refining more openness, data

protection, ease of access, and streamlining reporting methods. Blockchain as well builds up

on innovation disclosure by permanent and open data management which lowers down risks

of data processing. This also builds on more integrity and proof on sharing such information

on innovation as well as complying with legal and investor requirements. This also results in

firms splitting information about innovation facts safely with shareholders lowering down

chances of false information. Block chain and cloud-based technologies can provide instant

data enabling more stakeholder engagement, making it also more budget-friendly regardless

of the size of the company. It also merges AI with data insights allowing companies to

evaluate data trends, foresee developments, and optimize report generation. ICT companies in

the Philippines such as Globe and PLDT utilize cloud solutions for technological

37
advancement and sustainability disclosure of information but blockchain technology is still

being developed however it has a lot of perspectives to benefit businesses. The article by

Quimba, Albert, & Llanto (2017) stated that firms deliberately control revealing innovation

information in order to protect intellectual property and in the same way maintaining

openness and transparency to enhance trust and shareholder assurance. Extreme disclosure of

innovation information and other business information may result in strategic threats,

unauthorized replication, and regulatory concerns. Other reasons include disclosure being

comparable to product debuts and industry fluctuations, enterprises leveraging confidential

methodologies are less transparent than those engaging in open collaboration, and businesses

waiting for proprietary rights to be officially secured. In the Philippine context, ICT

companies such as PLDT and Converge reveal certain innovation information and growth to

5G, artificial intelligence, and technological modernization but regulating information on

exclusive models, IT systems, and strategic innovations.

The Moderating Link of Company Size on Disclosure of Innovation

Relevant key findings on Company Size as a Determinant of Innovation Disclosure

also provided a deep understanding such as the article by (Bronzetti et al., 2023) showed the

effects of Innovation Disclosure and it could lead to factors such as more quality, better

company image, better communication and relationship with consumers. It was also

highlighted that ICT Companies often put money and effort into technological evolution and

advancement of the business model, power companies however focus on better energy

efficiency and change and environmental responsibility. Production companies however

focus on better operations and efficacy. Aside from those, it would also lead to lower

38
imbalance in information connecting organizations and partners, leads to better company

insights, motivates long-range investment and economic security. This would also result in

stronger effect on stakeholder connections and lead to incorporation of innovation reporting

into governance practices. However, there are challenges as well such as market competition

challenges and inconsistent reporting structures. The article also stated that firms who apply

innovation disclosure towards eco-friendly practices have a high chance of gaining

competitive advantage over their competitors. On the other hand, the article by Jia (2019)

stated that big companies put a limit on disclosure to be able to manage market attention. It

also corresponds that disclosure of information does not revolve all around transparency but a

key factor in controlling investor assumptions and having a continuous competitive edge.

Big companies also have certain capabilities to release their disclosures accurately by

disclosing more of the positive details and analysis and not disclosing the difficulties and

challenges being faced within the company in order to maintain a strong brand image.

Compliance standards also contribute to establishing disclosure guidelines with bigger

companies having tighter disclosure standards, the companies can operate with the

regulations on hand and meet with the bare minimum standards to regulate disclosure on

challenges. The conditions as well on the ICT companies in the Philippines, the approach of

the firm whether large or small is an aspect on innovation disclosure. Bigger companies

choose to disclose more information to gain more customers and demonstrate their dedication

to innovation and also control the scope of information shared to secure important data as

well as securing firm advantage. The research by (Clayton, Rogerson, & Rampedi, 2015)

reveals that smaller businesses experience a lower amount of compliance obligations in

comparison to larger companies, this is in line with the fact that bigger companies have more

competitive leverage and equity holder responsibility. With this, smaller companies have the

ability to limit disclosure without experiencing any legal consequences. However, smaller

39
companies have minimal financial and human capital which also restricts scope of disclosure

compared to large businesses like Globe and PLDT with expert regulatory teams and

enhanced data frameworks. Smaller companies also need to focus more on distribution of

assets and maximizing effectiveness and productivity which leads to their innovation report

to being limited and reduced information as well as preventing transparency on company

shortcomings and abiding by the necessary obligations. Larger companies also have more

expanded potential to embed innovation details towards sustainability frameworks as they do

not experience barriers and industry challenges unlike smaller companies.

2.10 Research Gaps

With all the related literature discussed in this chapter, the researchers identified some

gaps in academic research that this paper aims to fill. It was observed that existing studies

takes on the discussion of general corporate sustainability reporting. There is a lack of studies

exploring sustainability reporting in industry-specific areas. The group intends to address this

research gap by looking into sustainability reporting situated in the Philippines, specifically

with the companies classified under the ICT industry. On top of this industry playing a

significant and relevant role in modern society and lifestyle, ICT companies are among the

top performers in the Philippine Stock Exchange, with Converge ICT Solutions Inc. coming

up top during 2024 (Sy, 2024). Moreover, seeing as the industry is heavily related to

technology, the researchers aim to understand the companies’ behavior when it comes to

disclosure of innovative activities and practices.

The study aims to fill theoretical and practical gaps because based on research, the

studies pay more attention to corporate sustainability reporting and disregarding

40
industry-focused strategies. So with that, our research intents to address that gap by exploring

more about disclosure of sustainability information towards the ICT industry in the

philippines which is a field that remains unexamined. With the ICT industry also contributing

towards the industry and economy of the country, research on the sustainability reporting of

the ICT industry and how they disclose such information continues at a low level especially

in terms of environmental, social, and governance areas. This study will also focus on the

way ICT enterprises disclose their innovations with regards to technology and how it relates

to their sustainability goals and through this research concentrating on the ICT sector in

which the industry in flourishing with the PSE, it will offer certain perspectives towards

sustainability reporting particular to the sector and shall aid academic and sector specialists

identify the obstacles and possible prospects in the ICT industry.

2.11 Literature Map

The figure below summarizes and categorizes this chapter on review of related

literature as follows: introduction, variables, and links.

41
Figure 1. ​

Literature Map

42
 CHAPTER 3: FRAMEWORKS OF THE STUDY

3.1 Theoretical Framework

For this study, Signaling Theory (Spence, 1973) provides a useful explanation for the

relationship between Innovative Activity (IA) and Disclosure of Innovation (DOI), as well as

the moderating role of Company Size (CS). Signaling Theory suggests that companies

voluntarily share information to reduce uncertainty, attract investors, and differentiate

themselves from competitors. In the context of sustainability reporting, firms disclose their

innovative activities to show they are forward-thinking, financially stable, and committed to

long-term growth (Clarkson, Li, & Richardson, 2013). This theory is highly relevant to ICT

companies, as they operate in a fast-changing industry where innovation plays a key role in

success. By publicly disclosing their innovations, these companies send a strong signal to

investors, customers, and regulators that they are leaders in technological advancements.

Signaling Theory applies to the Philippine ICT sector, where firms disclose

innovations in 5G and AI to attract investors while managing competitive risks​. In the PSE,

such disclosures build investor confidence, aligning with SEC transparency guidelines, but

firms must balance openness with protecting proprietary information​

In this study, Innovative Activity (IA) is the independent variable, referring to how

much a company invests in research and development, new technology, and business

improvements. Signaling Theory suggests that firms with higher levels of innovation are

more likely to disclose these activities in sustainability reports to demonstrate their

competitive edge (Bronzetti, Rija, Sicoli, & Ippolito, 2023). This aligns with Hypothesis 1

(H1), which assumes that firms engaged in more innovation will disclose more about these

43
activities. Research has shown that companies that voluntarily share information about their

innovation efforts tend to gain higher investor trust, improved stock performance, and a

stronger reputation (Clarkson et al., 2013).

The dependent variable (DOI) in this study is the extent to which companies report

their innovation activities in sustainability disclosures. Since sustainability reporting is

largely voluntary, firms choose what and how much to disclose. Those with strong innovation

strategies may want to highlight their progress to attract investors and business partners,

reinforcing the idea that disclosure is a strategic decision rather than just a compliance

requirement (Bronzetti et al., 2023).

Beyond this direct relationship, Company Size (CS) serves as a moderating variable,

meaning it can influence the strength of the relationship between IA and DOI. Larger firms

generally have more resources, stricter regulatory oversight, and a bigger audience of

investors, making them more likely to disclose their innovation efforts (Cheah, Sweet, &

Fernando, 2023). In contrast, smaller firms may innovate just as much but choose not to

disclose as frequently, possibly due to lack of reporting infrastructure, lower investor

pressure, or competitive concerns (Clayton, Rogerson, & Rampedi, 2015). Hypothesis 2 (H2)

suggests that company size will moderate the relationship between IA and DOI, meaning

larger firms will be more likely to disclose their innovation activities than smaller ones.

In the Philippine information and communications technology (ICT) industry,

signaling theory, which studies how entities transfer information to affect perceptions, is

especially important. The government's commitment to improving broadband access across

the country, particularly in underserved areas, is demonstrated by the recent approval of the

$288-million Philippine Digital Infrastructure Project (PDIP), which was financed by a World

44
Bank loan. This project intends to build more than 700 new free Wi-Fi locations in addition

to finishing the nation's fiber backbone, greatly increasing internet access nationwide. Such

large investments send a clear message to potential investors about a stable and innovative

environment that supports ICT endeavors. A favorable environment is created for parties

looking to explore opportunities in the quickly changing Philippine digital ecosystem by this

combination of policy and investment (Trade.gov, 2024)

By using Signaling Theory, this study builds on a well-established explanation of why

companies choose to disclose information voluntarily. Innovation disclosure is not just about

regulatory compliance, it is a strategic decision that helps companies gain investor

confidence, improve their market position, and shape public perception. This framework is

particularly relevant to ICT companies in the Philippine Stock Exchange (PSE), as they

operate in a highly competitive and innovation-driven environment where reputation and

transparency matter. Understanding why and how companies disclose their innovative

activities provides valuable insights into corporate decision-making and the broader impact of

sustainability reporting in the business world.

45
Figure 2.​

Signaling Theory Framework

Additionally, this study integrates other theoretical perspectives such as the legitimacy

theory, stakeholder theory, and institutional theory. Legitimacy theory, stakeholder theory,

and institutional theory are commonly applied frameworks for understanding the motivations

behind management's decision to disclose sustainability information (Deegan, 2014, as cited

by Mahmud, 2020). Legitimacy Theory (Suchman, 1995) emphasizes that firms seek to

46
conform to social expectations and norms. Tong (2017) found that company size significantly

influences CSR and sustainability disclosures among firms listed on the UK's FTSE 100

Index and Malaysia’s FTSE KLCI, highlighting the pressures large companies face to

maintain legitimacy and a positive reputation through these disclosures (as cited in Fahmi,

Azmi, & Tuan Mat, 2022). Similarly, Reverte (2009) discovered that larger companies,

particularly those in environmentally sensitive industries, are more active in CSR disclosure

due to their greater impact on the environment and society, emphasizing the role of company

size in enhancing corporate legitimacy through increased stakeholder engagement and

approval (as cited in Fahmi, Azmi, & Tuan Mat, 2022). Stakeholder Theory (Freeman, 1984)

argues that organizations must manage their relationships with various stakeholder groups,

which can influence or are influenced by the company's operations. Disclosure of innovation

serves as a strategic tool to engage these stakeholders, including customers, employees,

suppliers, and regulators, by transparently sharing information about their innovation

activities. This openness is intended to build trust and foster support from stakeholders,

ensuring their backing in the company’s ventures and innovations.These theories collectively

explain why ICT companies might choose to disclose more about their innovative activities.

Signaling Theory elucidates the strategic aspect of disclosures aimed at reducing uncertainty

and attracting investors. In contrast, Legitimacy Theory highlights the need for companies to

align with societal values and norms to maintain their operational license. Stakeholder

Theory expands on this by emphasizing the practical necessity of maintaining positive

relationships with all groups that could impact the company's success.

3.2 Conceptual Framework

The conceptual framework below shows the different variables of this study,

illustrating the interactions between each variable. The innovative activity of a company is

47
identified as the independent variable of the research, while the disclosure of innovation on

reports serves as the dependent variable. Moreover, the company size acts as the moderating

variable, which affects the relationship between the innovative activity and the disclosure of

innovation. As a control variable, the companies used in this study will all fall under the ICT

industry to ensure unbiased results on the interactions between each variable. Overall, the

interlinkage between the variables shows two (2) hypotheses.

Figure 3.​

Conceptual Framework

The independent variable, innovative activity, is defined by the Department of

Science and Technology (DOST), as cited by PIDS (2017), as a company’s engagement in

product innovation, process innovation, innovation projects, and expenditures on

innovation-related activities. On the other hand, the dependent variable, disclosure of

innovation, is the extent to which firms communicate their innovative activities in their

corporate reports, and is measured by counting the number of times specific terms related to

48
innovation were mentioned in voluntary disclosure documents like sustainability reports

(Bronzetti et al., 2021). Generally, companies that adopt innovative technologies and have an

open innovation environment are likely to disclose information on their innovative activities

(Tian, Qiu, & Wang, 2024; Crupi et al., 2021).

H1: Innovative activity (IA) has a significant influence on the disclosure of innovation (DOI).

Furthermore, Younis and Sundarakani (2020) define and measure the company size as

the number of employees the firm has in total. As a moderating variable, the size of the

company is expected to have significant moderating influence on the relationship between a

company’s innovative activities and disclosure of innovation. Bronzetti et al. (2023) explains

that large firms generally have the capacity and external pressure to disclose information on

their innovative activities. On the other hand, smaller firms receive less pressure to share such

information (Clayton, Rogerson, & Rampedi, 2015).

H2: Company size (CS) has a significant moderating influence on the link between innovative

activity (IA) and the disclosure of innovation (DOI).

On the whole, findings from the previous chapter on review of related literature

support this study’s hypotheses: (1) companies’ innovative activities lead to their disclosure

49
in their sustainability reports, and (2) the size of the company affects the link between its

innovative activities and disclosure of innovation.

3.3 Operational Framework

As shown on Table 1, the following studies were referenced in understanding the

operational definitions of the variables utilized in this research, ensuring the variables are

measurable or quantifiable in the context of this study. The definitions for innovative activity

(independent variable), disclosure of innovation (dependent variable), company size

(moderating variable), and ICT industry (control variable) are identified with the

corresponding studies conducted by the following authors:

Table 1.​

Operational Framework

Variables Authors

Innovative Activity Philippine Institute for Development Studies (2017)

Disclosure of Innovation Bronzetti et al. (2021)

Company Size Younis and Sundarakani (2020)

ICT Industry Philippine Institute for Development Studies (2017)

50
3.4 Hypothesis Testing

​ To determine the relationship between the variables of innovative activity, disclosure

of innovation, and company size, the researchers came up with two ground arguments. The

two (2) sets of hypotheses that shall be examined in this research are arranged as enumerated

below:

Ho1: Innovative activity (IA) has no significant influence on the disclosure of

innovation (DOI).

Ha1: Innovative activity (IA) has a significant influence on the disclosure of

innovation (DOI).

Ho2: Company size (CS) has no significant moderating influence on the link between

innovative activity (IA) and the disclosure of innovation (DOI).

Ha2: Company size (CS) has a significant moderating influence on the link between

innovative activity (IA) and the disclosure of innovation (DOI).

3.5 Assumptions of the Study

The sustainability reports published by ICT companies accurately reflect their actual

innovation practices and disclosure strategies. The content analysis methodology employed in

this study will capture meaningful patterns in innovation disclosure that represent companies'

strategic communication choices. Secondary data from public financial reports provides a

valid basis for measuring innovative activity through R&D expenditures, patent counts, and

51
technology investments. The relationship between innovation activities and their disclosure

follows similar patterns in the Philippine context as observed in international studies, while

acknowledging potential cultural and regulatory differences. Stakeholders, including

investors, consider innovation disclosure when making investment decisions regarding ICT

companies in the Philippine Stock Exchange.

It is similarly understood that the analyzed corporate reports serve as true

representations of firms reporting behaviors, building a trustworthy benchmark for

understanding how innovation is conveyed to stakeholders. This type of presumption is

dependent on the idea that disclosures which are accessible to all are made to comply with

legal requirements and address investors demands as well as ensuring such transparency on

the businesses innovation initiatives. Moreover, content analysis is recognized as a

comprehensive research approach for examining innovation transparency and through the

assessment of the different types of elements in these reports, content analysis facilitates the

structured approach for detecting trends that reflects a company’s emphasis on innovation

practices.

The researchers of this study also came up with assumptions:

1.​ With proper innovation disclosure, it can lead to improved communication

2.​ Innovation disclosure is being considered by investors while making decisions related

to investments

3.​ The practices can also track the accuracy of company reports

4.​ ICT companies can also adapt to digital and technological advancements which they

can disclose in their sustainability reports

52
3.6 Operational Definition of Terms

1.​ Innovative Activity – This refers to a company's efforts in developing and

implementing new or significantly improved products, services, processes, or business

strategies. Innovation can take different forms, including technological advancements,

digital transformation, and the enhancement of existing business models. In this study,

innovative activity is measured by reviewing corporate reports and identifying the

frequency and nature of disclosed innovation-related initiatives. Companies that

consistently introduce new solutions, enhance operational efficiency, or adapt to

changing market demands demonstrate a high level of innovative activity (Philippine

Institute for Development Studies, 2017).

2.​ Disclosure of Innovation – This term refers to how openly and comprehensively

companies communicate their innovative efforts in official corporate reports, such as

sustainability reports, annual financial reports, and other public disclosures.

Transparency in innovation reporting allows stakeholders, including investors,

customers, and regulators, to assess a company's commitment to progress and

development. In this study, disclosure of innovation is analyzed by evaluating the

frequency of innovation-related information presented in sustainability reports. A

higher level of disclosure typically indicates a company's willingness to share its

progress in innovation, providing stakeholders with insights into its strategic direction

and future growth potential (Bronzetti et al., 2021).

3.​ Company Size – This is a measure of the overall scale of a business, commonly

determined by the total number of employees, annual revenue, or market

capitalization. Larger firms often have more extensive resources, allowing them to

invest in research and development, implement structured innovation processes, and

53
 publish detailed sustainability reports. On the other hand, smaller firms may face

limitations in resources, leading to fewer disclosures and a less formalized approach

to innovation reporting. In this study, the company size is assessed based on the total

number of employees, as this is a widely accepted indicator of organizational capacity

and operational scale (Younis & Sundarakani, 2020).

4.​ ICT Industry – The Information and Communication Technology (ICT) industry

consists of businesses engaged in telecommunications, software development, IT

services, digital solutions, and other technology-driven operations. This industry plays

a crucial role in shaping modern economies, driving digital transformation, and

fostering innovation. This study places focus on ICT companies as they are known for

their rapid technological advancements and continuous adaptation to market trends.

Given the sector’s reliance on research, development, and digital infrastructure, ICT

companies frequently engage in innovative activities and disclose their efforts in

sustainability and corporate reports (Philippine Institute for Development Studies,

2017).

CHAPTER 4: RESEARCH METHODOLOGY

4.1 Research Locale

This research primarily focuses on the listed enterprises on the Philippine Stock

Exchange as well as assessing the correlation between sustainability reporting innovation

disclosures and profitability across the field. The study also analyzes the sustainability reports

pertaining to these ICT enterprises from years 2019 - 2023 and applying factors such as

54
content analysis and multiple linear regression models to be able to examine the outcomes of

innovation disclosure.

Aside from this, the research also examines the rate of innovation-related reporting, as

well as the impact it gives on shareholders perspective, and the degree wherein the scale of

the enterprise determines transparency levels. The study is done through accessible

sustainability reports that are released to the public and financial performance data of ICT

companies.

However, despite the research being affected by certain factors such as time

limitations, field scope, dependence on public reports, and other external factors, the research

still presents a wide range of different perceptions and understanding on the importance of

innovation disclosures towards advancing organizational disclosure as well as leading the

way for shareholders options throughout the Philippine ICT Industry.

4.2 Research Design

This study follows a quantitative research approach and is based on secondary data

analysis to examine how ICT companies listed on the Philippine Stock Exchange disclose

their innovative activities in sustainability reports. The research aims to determine whether

there is a relationship between a company's level of innovation and how much information

they share in their reports.

The study is descriptive-correlational, meaning it focuses on identifying trends and

relationships between innovation and disclosure rather than manipulating any variables. The

main sources of data are publicly available sustainability reports, financial statements, and

company disclosures from 2019 to 2023. These documents will be analyzed to measure the

55
extent of innovation-related content and determine how company size affects disclosure

patterns.

Since the study does not involve surveys or interviews, data collection will be done

through content analysis, where specific keywords related to innovation are counted within

company reports. By using only secondary data, the study ensures that the findings are based

on actual corporate disclosures rather than subjective opinions. This approach provides a

structured and objective way to evaluate how ICT companies communicate their innovation

efforts, giving insights into corporate transparency and its role in attracting investors and

stakeholders.

4.3 Research Sampling Design

This study uses purposive sampling, which means selecting ICT companies listed on

the Philippine Stock Exchange (PSE) based on specific criteria. This type of sampling

strategy is particularly useful when you need to select subjects based on certain predefined

criteria which are expected to produce the most valuable data in relation to your research

objectives. Purposive sampling allows researchers to deliberately choose companies that are

most likely to provide the necessary data for exploring the relationships and impacts of

innovative activity and sustainability reporting. This is particularly important in fields like

ICT where the level of innovation and the practice of sustainability reporting can vary

significantly across companies.

Only ICT companies that have consistently published their sustainability reports and

financial statements over the past five years are included. This criterion ensures the

availability of sufficient data for a longitudinal analysis, which is crucial for understanding

56
trends and developments over time. This ensures that the study analyzes firms that actively

report their innovation-related activities.

The sample specifically targets companies within the telecommunications, software

development, IT services, and digital infrastructure sectors. These segments are chosen

because they represent areas within the ICT industry that are most likely to engage in

innovative practices and sustainability initiatives due to their high impact on and high

visibility in the market.

Inclusion Criteria: To address potential concerns about the representativeness of

these companies, the study will provide a contextual comparison between the selected firms

and other ICT companies on the PSE that do not meet the inclusion criteria. This comparison

will examine factors such as firm size, market capitalization, and financial performance to

identify any systematic differences that might exist.

Exclusion criteria: Firms excluded from the sample typically do not have available

or consistent sustainability reporting, or they operate in segments of the ICT industry less

involved in the high-impact areas identified. The rationale behind focusing on companies

within specific sub-sectors is to ensure that the findings are relevant to segments where

innovation and sustainability are most critical.

Companies such as Globe Telecom, PLDT, EasyCall Communications, PT&T, Xurpas

Inc., Apollo Global Capital, DFNN Inc., Transpacific Broadband Group International,

Philweb Corporation, and NOW Corporation are included in the study, as they have been

consistently recognized for their innovation efforts and sustainability reporting:

57
●​ Globe Telecom has been awarded as the Most Sustainability-Driven Network in the

Philippines and is the only Philippine telco listed in the S&P Global Corporate

Sustainability Assessment. The company actively invests in AI-driven network

optimization, renewable energy initiatives, and digital financial services.

●​ PLDT has consistently ranked in the FTSE4Good Sustainability Index, which

evaluates companies based on environmental, social, and governance (ESG) standard.

The company has also launched initiatives like the PLDT Innovation Lab, aimed at

developing 5G, AI, and smart city solutions.

●​ EasyCall Communications Philippines, Inc. has integrated cloud-based and AI-driven

solutions to support digital transformation. The company has made significant

investments in cybersecurity enhancements, renewable energy adoption, and

data-driven service improvements.

●​ Philippine Telegraph and Telephone Corporation (PT&T) has prioritized broadband

expansion, 5G research, and IT infrastructure upgrades in alignment with

sustainability goals. The company has been recognized for its contributions to digital

transformation in the Philippine business sector.

●​ Xurpas Inc. has invested in blockchain technology, digital transformation solutions,

and software development. The company’s sustainability efforts include cloud-based

services, AI-driven automation, and strengthening IT governance .

●​ Apollo Global Capital, Inc. has adopted sustainable mining technologies and digital

innovations to optimize resource management. The company has emphasized green

energy solutions and real-time digital monitoring systems in its sustainability reports.

●​ DFNN Inc. is a leader in fintech and software innovation, developing AI-powered

digital platforms and blockchain-based solutions for businesses. Its sustainability

58
 strategy includes enhancing cybersecurity, promoting digital financial inclusion, and

reducing carbon footprints in IT operations.

●​ Transpacific Broadband Group International, Inc. has been focusing on satellite

broadband technology, digital infrastructure modernization, and renewable energy

integration to support sustainable business practices.

●​ Philweb Corporation is a major player in digital gaming technology solutions in the

Philippines. The company has invested in cloud-based gaming platforms, digital

payment systems, and secure financial transactions as part of its sustainability

initiatives.

●​ NOW Corporation has emphasized fiber-optic expansion, 5G research, and

AI-powered automation in its innovation roadmap. It has been recognized for its

commitment to green technology adoption and digital transformation in the

Philippines.

The study will analyze sustainability reports from 2019 to 2023 to identify trends in

innovation disclosure. The final sample size will depend on how many ICT companies meet

the criteria of having complete and publicly available reports within this timeframe.

​ The following table summarizes the companies included in the study, along with their

company size, market capitalization and the availability of sustainable reports that will be

used:

59
Table 2.​

Summary of Selected Companies

Company Name Company Size Market Sustainability

(Number of Capitalization report
employees) ( in PHP) ( years)

Globe Telecom 8,500 + 310 billion 2019- 2023

PLDT 16,000+ 460 billion 2019-2023

EasyCall 200+ 1 billion 2019-2023

Communications

Philippine Telegraph 300+ 2 billion 2019-2023

& Telephone Corp.
(PT&T)

Xurpas Inc. 100+ 1.5 billion 2019-2023

Apollo Global 50+ 900 million 2019-2023

Capital

DFNN Inc. 150+ 3 billion 2019-2023

Transpacific 50+ 600 million 2019-2023

Broadband Group
Int’l

Philweb Corporation 100+ 1.2 billion 2019-2023

NOW corporation 200+ 1.1 billion 2019-2023

These PSE-listed ICT companies were selected based on the availability of their

reports from the years 2019 to 2023. Furthermore, this sample size of ten (10) companies,

together with their reports in the span of 5 years, allows a total of 50 observations from the

sustainability reports, which is sufficient for regression analysis.

60
4.4 Methods of Data Collection

The data for this research will be collected through the sustainability reports and the

financial reports of the ICT Companies in the Philippines under the Philippine Stock

Exchange (PSE). This works through analyzing public details and secondary data on

sustainability reporting of ICT companies of Globe Telecom, PLDT, EasyCall

Communications, PT&T, Xurpas Inc., Apollo Global Capital, DFNN Inc., Transpacific

Broadband Group International, Philweb Corporation, and NOW Corporation as these

companies play a big role in the industry with regards to innovation and disclosing details on

sustainability.

4.5 Data Sources

In many research studies, particularly those that involve primary data collection, the

selection and identification of respondents play a crucial role in ensuring that the findings

accurately represent the target population. However, this study does not rely on primary data

sources such as surveys, interviews, or focus group discussions. Instead, it exclusively

utilizes secondary data obtained from publicly available sustainability reports of Information

and Communication Technology (ICT) companies listed on the Philippine Stock Exchange

(PSE). Given this research design, it is important to clarify that there are no direct

respondents in this study.

Secondary data analysis is a widely accepted methodological approach in business

and sustainability research, particularly when investigating corporate disclosures, financial

statements, and governance practices (Johnston, 2017). The use of secondary data provides

several advantages, including cost efficiency, the ability to analyze long-term trends, and

61
access to large-scale, systematically collected data. By examining sustainability reports

published by ICT firms from 2020 to 2023, this study ensures objectivity in data collection

while minimizing biases that can arise from self-reported responses in surveys or interviews.

The choice to rely solely on secondary data is aligned with similar studies in corporate

disclosure research. For instance, Michelon et al. (2020) emphasized that sustainability

reporting and financial disclosures serve as reliable data sources when assessing corporate

governance, transparency, and innovation disclosure. By analyzing these publicly available

reports, this research ensures that all insights and conclusions are grounded in verifiable

corporate disclosures rather than subjective perceptions.

Furthermore, an organized, standardized method for assessing the level of innovation

disclosures in sustainability reports is made possible by secondary data analysis. Because this

study focuses on real, documented evidence from business reports, its credibility is increased

rather than diminished by the lack of direct respondents. This methodology guarantees that

the study's conclusions are solid and representative of actual business innovation disclosure

practices.

4.6 Research Instrument

This study will primarily employ the methods of financial data extraction and content

analysis as its research instrument. In measuring the study’s independent variable of

innovative activity (IA), the researchers will look into three indicators: (1) R&D

expenditures, (2) patent counts, and (3) technology investments from the companies’ annual

financial reports. In particular, the R&D expenditures will be accounted for its percentage

from a company’s total revenue. Patent counts refer to the number of patents that was granted

62
to the company for a specific year. The frequency of mentions of technology investments in

the annual financial reports shall also recorded and analyzed. To address variations in

document length, the study employs a normalization procedure where keyword frequencies

are adjusted relative to the total word count of each report. This adjustment allows for a more

equitable comparison of DOI across reports of varying lengths. All these indicators will be

considered in finding the value of each company’s innovative activity (IA) through the

Z-Score Normalization Method, wherein each of the indicators are converted in to z-scores to

allow comparability across the different unit of measurements. These z-scores are then

averaged to determine the level of innovative activity (IA) of a company during a specific

year.

On the other hand, content analysis will be used in determining the disclosure of

innovation (DOI) in sustainability reports. This systematic approach utilizes both quantitative

and qualitative analyses, which enables the researchers to identify themes, patterns, and word

frequencies from the text-based data. The dependent variable of disclosure of innovation

(DOI) is will be measured by analyzing the textual data in companies’ sustainability reports.

In order to quantify and measure the disclosure of innovation (DOI), similar to the

methods in the research conducted by Bronzetti et al. (2023) and to mitigate biases in

keyword selection and ensure comprehensive coverage, the study will implement a dynamic

keyword review process. This involves several key steps:

1.​ Initial Keyword List Development: The researchers begin with a

comprehensive list of predefined keywords based on previous research and

industry-specific terms relevant to the Philippine ICT sector. These keywords

are selected based on the previous research by Bronzetti et al. (2023) and

63
 further adjusted to fit the context of the Philippine ICT industry. The list of

keywords that serve as a guide for the study’s content analysis is categorized

based on their function and relevance, specifically into the categories of Core

Innovation Terms, ICT-Specific Terms, and Business & Reporting Terms. The

thirty (30) specific terms are shown in the table below:

Table 3.​

Predefined Keywords for Disclosure of Innovation Analysis

Business & Reporting

Core Innovation Terms ICT-Specific Terms
Terms

1 Innovation 11 Artificial Intelligence 21 Business reporting

(AI)

2 Innovation approach 12 Big Data 22 Sustainable business

3 Innovative platforms 13 Cybersecurity 23 IT governance

4 Innovative process 14 Blockchain 24 Digital sustainability

5 Research & 15 Internet of Things (IoT) 25 Web reporting

Development (R&D)

6 Patent/s 16 5G Technology 26 Informative system

7 Knowledge transfer 17 Software development 27 Networking

8 Intellectual Property 18 IT Infrastructure 28 Start-up

9 Smart technologies 19 Data privacy 29 Smart management

10 Digital transformation 20 Cloud computing 30 Social media

64
 2. Consultation with a Subject Matter Expert: To ensure the relevance and

comprehensiveness of the keyword list used for content analysis, the study will seek periodic

consultations with a subject matter expert in governance and sustainability reporting. This

expert, a professor with significant experience and knowledge in the field, will provide

crucial insights into the selection and refinement of keywords. Before the content analysis

begins, the initial consultation will aim to validate the preliminary list of keywords derived

from literature and prior research. The expert will assess each keyword for its relevance to

current trends in sustainability and innovation reporting within the ICT sector. The expert will

be engaged at key points throughout the study, particularly after a preliminary analysis of

data. This engagement ensures that any new terms or significant changes in industry

terminology or practices are captured and incorporated into the analysis. The expert will

review the findings from the preliminary data analysis to advise on potential gaps in the

keyword list or misinterpretations of terms based on their usage in the reports. Before

finalizing the research findings, the expert will provide a final review to ensure that the

analysis accurately reflects the innovation disclosure practices as intended by the reporting

entities.

In conducting the content analysis of the sustainability reports from the selected

companies in the Philippine ICT industry, the frequencies of each keyword listed in Table 2

are examined to determine the companies’ levels of disclosure of innovation. A

straightforward scoring system will be implemented wherein each sustainability report

receives a score corresponding to the number of times predefined keywords, as shown in

Table 2, appeared in the document. Moreover, variations and synonyms of the predefined

keywords are also considered. This specifically includes the keywords’ (1) singular and

65
plural forms, (2) common synonyms, and (3) abbreviations. As a general rule, the keywords

are considered valid as long as the term referred to a similar concept, while word variations

that changed the meaning significantly are to be excluded. Each sustainability report received

a Disclosure Score (DS), which is represented by the number of keyword occurrences. For

example, in PLDT’s 2023 Sustainability Report, the following keyword occurrences were

observed in Table 3, accumulating a total DS of 252 for that specific document.

Table 4.​

2023 PLDT Sustainability Report Scoring Table

Keywords Frequency

1 Innovation 50

2 Innovation approach 0

3 Innovative platforms 0

4 Innovative process 0

5 Research & Development (R&D) 0

6 Patent/s 0

7 Knowledge transfer 1

8 Intellectual Property 0

9 Smart technologies 1

10 Digital transformation 4

11 Artificial Intelligence (AI) 10

12 Big Data 0

13 Cybersecurity 75

14 Blockchain 0

15 Internet of Things (IoT) 3

16 5G Technology 16

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 17 Software development 0

18 IT Infrastructure 2

19 Data privacy 55

20 Cloud computing 7

21 Business reporting 0

22 Sustainable business 3

23 IT governance 0

24 Digital sustainability 0

25 Web reporting 0

26 Informative system 2

27 Networking 2

28 Start-up 11

29 Smart management 0

30 Social media 10

Disclosure Score 252

To ensure the scoring for each report is accurate, and the keywords adhere to the

given criteria, a manual examination of the sustainability reports is necessary. While text

analysis software is utilized to automatically identify keyword occurrences, manual

verification is needed in order to account for keyword variations.

67
4.7 Statistical Treatment of Data

The study will employ descriptive statistics and inferential statistical techniques to

analyze the data obtained from sustainability reports. The statistical treatment consists of the

following steps:

Descriptive Statistics​

​ Descriptive statistics will be used to summarize the characteristics of the data,

including the frequency and distribution of innovation-related terms across sustainability

reports. These statistics will provide insights into:

●​ The mean (average) number of innovation-related keywords found in the reports.

●​ The standard deviation, which will measure the variability in innovation disclosure

among different firms.

●​ The range and distribution of disclosure scores to identify patterns across companies

of varying sizes.

Z-Score Normalization Method

Given that innovative activity (IA) is composed of varying unit measurements, the

researchers adopted the use of z-scores in order to standardize the value of the three

indicators of innovative activity (IA), allowing the comparison across different scales. The

z-scores of each indicator was computed using the following general formula:

68
 𝑋𝑖−µ𝑋
𝑍𝐼𝐴 = σ𝑋
𝑖

Where:​

𝑍𝐼𝐴 is the z-score of the Innovative Activity (IA) indicator for company i during a specific
𝑖

year

𝑋𝑖 is the observed value of the IA indicator for company i during a specific year

µ𝑋​is the mean of the IA indicator across all companies during a specific year

σ𝑋​is the standard deviation of the IA indicator across all companies during a specific year

To ultimately determine the value of the innovative activity (IA) of a company for a

specific year, the average of the indicators’ z-scores were calculated with the following

formula:

𝑍𝑅&𝐷+𝑍𝑃𝑎𝑡𝑒𝑛𝑡+𝑍𝑇𝑒𝑐ℎ
𝑍𝐼𝐴 = 3

Content Analysis Scoring System​

​ As mentioned in 4.6 Research Instrument, a predefined list of innovation-related

keywords will be used to evaluate corporate disclosures. Each sustainability report will be

assigned a Disclosure Score (DS) based on the number of times innovation-related terms

appear. The formula for calculating the DS for each company is:

69
 𝑛
𝐷𝑆 = ∑ 𝐹𝑖
𝑖=1

Where:

𝐷𝑆 is the disclosure score for each company

𝐹𝑖​represents the frequency of occurrence of keyword iii

𝑛 is the total number of keywords in the predefined list

This scoring method provides a structured way to measure and compare innovation

disclosures across different companies.​

Correlation Analysis​

​ To examine the relationship between Innovative Activity (IA) and Disclosure of

Innovation (DOI), the study will use Pearson’s correlation coefficient (rrr). This statistical test

measures the strength and direction of the relationship between two continuous variables. The

correlation coefficient ranges from -1 to +1:

●​ A positive 𝑟 value indicates that higher levels of innovation activity correspond to

higher levels of innovation disclosure.

●​ A negative 𝑟 value suggests an inverse relationship.

●​ An 𝑟 value close to zero implies no significant correlation.

70
 The hypothesis for correlation analysis is as follows:

●​ 𝐻0​(null hypothesis): There is no significant correlation between innovation activity

and disclosure of innovation.

●​ 𝐻𝐴​(alternative hypothesis): There is a significant correlation between innovation

activity and disclosure of innovation.

Multiple Linear Regression Analysis with Lagged Variables​

​ To enhance the analytical depth and address panel feedback concerning the temporal

effects of innovation activities on disclosure practices, this study will incorporate lagged

variables in the regression analysis. This approach aims to capture the delayed impacts of

innovation activities on disclosure of innovation (DOI) and investor responses. The inclusion

of lagged variables is particularly relevant for understanding how past innovation activities

influence current market performance and stakeholder perceptions, which may not be

immediately apparent.

The regression model will be expanded to include lagged variables of the innovative

activity indicators. This will help in examining the influence of past innovation activities on

current levels of innovation disclosure and market reactions. The revised model is formulated

as follows:

DOI_t = β0 + β1*IA_t + β2*CS_t + β3*(IA_t * CS_t) + β4*IA_t−1 +

β5*CS_t−1 + β6*(IA_t−1 * CS_t−1) + ε_t

Where:

71
DOI_t = Disclosure of Innovation in year t

IA_t = Innovative Activity in year t

CS_t = Company Size in year t

IA_t−1 = Innovative Activity in the previous year t−1

CS_t−1 = Company Size in the previous year t−1

β0, β1, ..., β6 = Coefficients to be estimated

ε_t = Error term

Robustness Checks and Validity​

​ To ensure the validity and reliability of the results, the study will conduct:

●​ Multicollinearity tests (Variance Inflation Factor, VIF) to check if independent

variables are highly correlated.

●​ Heteroskedasticity tests (Breusch-Pagan test) to determine whether the variability of

errors is constant.

●​ Residual analysis to confirm that the assumptions of normality and homoscedasticity

are met.

By applying these statistical techniques, this study aims to provide a comprehensive

analysis of how ICT companies in the Philippine Stock Exchange disclose their innovation

activities and the role company size plays in shaping disclosure practices.

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 CHAPTER 5: RESULTS AND ANALYSIS

5.1 Description of Data Collection Protocol

5.2 Results and Discussions

Descriptive Statistics

Z-Score Normalization Method

Content Analysis Scoring System

Correlation Analysis

Multiple Linear Regression Analysis with Lagged Variables

Robustness Checks and Validity

5.3 Findings

Descriptive Statistics

Z-Score Normalization Method

Content Analysis Scoring System

Correlation Analysis

Multiple Linear Regression Analysis with Lagged Variables

Robustness Checks and Validity

73
 CHAPTER 6: CONCLUSIONS AND RECOMMENDATIONS

6.1 Conclusion

6.2 Implications to Business/Management

6.3 Recommendations

74
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85
📎 PAPER GUIDE
Content Analysis: Thesis Content Analysis
Report Compilation: THESIS ANNUAL AND SUSTAINABILITY REPORTS

Industry: Information and Communication Technology

Companies:
1.​ PLDT 2023 Sustainability Report​
2022 Sustainability Report
2021 Sustainability Report
2020 Sustainability Report
2019 Sustainability Report

2.​ Globe Telecom 2023 Integrated Report

2022 Integrated Report
2021 Integrated Report
2020 Integrated Report
2019 Integrated Report

3.​ EasyCall Communications 2023 Sustainability Report (Annex D)

Philippines, Inc. 2022 Sustainability Report (Annex D)
2021 Sustainability Report (Annex D)
2020 Sustainability Report (Annex D)
2019 Sustainability Report (Annex D)

4.​ Philippine Telegraph and Telephone 2023 Annual & Sustainability Report
Corporation (PT&T) 2022 Annual & Sustainability Report
2021 Annual & Sustainability Report
2020 Annual & Sustainability Report
2019 Annual & Sustainability Report

5.​ Xurpas Inc. 2023 Annual & Sustainability Report (Item

14)
2022 Annual & Sustainability Report (Item
14)
2021 Annual & Sustainability Report (Item
14)
2020 Annual & Sustainability Report (Item
14)
2019 Annual & Sustainability Report (Item
14)

6.​ Apollo Global Capital, Inc. 2023 Sustainability Report (Annex A)

2022 Sustainability Report (Annex A)
2021 Sustainability Report (Annex A)
2020 Sustainability Report (Annex A)
2019 Sustainability Report (Annex A)

7.​ DFNN, Inc. 2023 Sustainability Report

2022 Sustainability Report
2021 Sustainability Report
2020 Sustainability Report
2019 Sustainability Report
 8.​ Transpacific Broadband Group 2023 Sustainability Report (Annex A)
International, Inc. 2022 Sustainability Report (Annex A)
2021 Sustainability Report (Annex A)
2020 Sustainability Report (Annex A)
2019 Sustainability Report (Annex A)

9.​ Philweb Corporation 2023 Sustainability Report

2022 Sustainability Report
2021 Sustainability Report
2020 Sustainability Report
2019 Sustainability Report

10.​NOW Corporation 2023 Sustainability Report (Annex C)

2022 Sustainability Report (Annex C)
2021 Sustainability Report (Annex C)
2020 Sustainability Report (Annex C)
2019 Sustainability Report (Annex C)

Variables:
Variable Quantification/Measurement

Innovative Activity R&D Expenditures, Patent Counts, and Tech Mentions from
(Independent Variable) annual financial reports

Disclosure of Innovation Keyword frequency from annual sustainability reports

(Dependent Variable)

Company Size Number of company employees

(Moderating Variable)

ICT Industry Nature of business

(Control Variable)

Research Questions:

1.​ Do Information and Communication Technology (ICT) companies listed in the

Philippine stock exchange disclose innovative activity on their sustainability reports?
2.​ What is the impact of sustainability report disclosure of innovative activity on
investment decisions and stock performance of publicly listed companies in the
Philippines?
3.​ Does the company size moderate the relationship between the ICT companies’
innovative activity and disclosure of innovation on their sustainability reports?

RRL References List (Categorized):

 2.2 Sustainability Reporting Qureshi et al. (2017)​
Michelon et al. (2020)​
Zhou et al. (2024)​
Amin et al. (2024)​
Alsayegh et al. (2023)​
Younis (2023) ​
Doe and Smith (2024)
SEC (2019)
GRI (2021)
IR (2021)
SASB (2017)
TCFD (2021)

2.3 The Philippine ICT Industry Dhapte (2025)​

Albert et al. (2021)
Ibrahim (2022)
Treceñe (2021)
Tomaro & Mutiarin (2018)
Serafica & Oren (2022)

2.4 Innovative Activity Quimba et al. (2017)​

Hernandez & Ona (2015)​
Tech for Good Institute (2024)​
PIDS (2024)

2.5 Disclosure of Innovation Bronzetti et al. (2023)

Saidi & Žaldokas (2020)​
Laskar (2024)
Globe Telecom (2023​
PLDT (2023)
Converge ICT (2021)

2.6 Company Size PIDS (2021)​

Younis & Sundarakani (2020)
Cheah et al. (2023)​
Parrilli & Radicic (2020)

2.7 The Link Between Innovative Activity PIDS (2017)

and Disclosure of Innovation Quimba et al. (2017)​
Bronzetti et al. (2023)​
Simpson & Tamayo (2020)​
Tian et al. (2024)​
Crupi et al. (2021)
Monika & Kramer (2024)

2.8 The Moderating Link of Company Bronzetti et al. (2023)​

Size on Disclosure of Innovation Clayton et al. (2015)​
Jia (2019)​
Gonźales-Benito (2016)

Total of 31 or 34
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📌 DEFENSE REVIEWER
 DEFENSE REVIEWER

THESIS TITLE Innovative Activity and Its Disclosure in Sustainability Reports: A Study
of Select ICT Companies in the Philippine Stock Exchange

RESEARCH Main Problem:

QUESTIONS To what extent do innovative activities of ICT companies listed in the
Philippine Stock Exchange influence the level and quality of innovation
disclosure in their sustainability reports, and how does company size
moderate this relationship?

Sub Problems:
1.​ What types and levels of innovation activities do ICT companies
listed on the Philippine Stock Exchange engage in, and how are
these activities measured?
2.​ How do these companies disclose innovation in their
sustainability reports, and what trends or patterns can be
identified in their disclosure practices?
3.​ To what extent does the level of innovation activity (as measured
by R&D spending, patent counts, and technology investments)
influence the comprehensiveness of innovation disclosures in
sustainability reports?
4.​ In what ways does company size affect both the innovation
activities and disclosure practices of ICT companies on the
Philippine Stock Exchange?
5.​ What are the implications of innovation disclosure practices for
stakeholder engagement and investment decisions concerning
ICT companies listed on the Philippine Stock Exchange?