Master’s Thesis:
Linking sustainability to management control: A review of the
literature
Frans de Vries (1582844) Supervisor: Dr. H.J. van Elten Co-assessor: drs. A. Rehman Abbasi
University of Groningen Faculty of Economics and Business
MSc Business Administration: Organizational & Management Control 20 January 2015
Abstract:
This paper aims to link sustainability to management control. More specifically, this paper looks into the options for incorporating sustainability into MCS. Seven papers have been selected for a literature review. The papers have been summarized and are compared in the areas of sustainability
definition, methods, results and the incorporation of sustainability into MCS. It appeared that there are many different possible definitions and conceptualizations of sustainability. Also a number of
papers did not highlight all three pillars of sustainability (economic, environmental and social performance), where the social dimension seems to be neglected the most. Furthermore a number of examples have been derived from the literature about how sustainability can be incorporated into MCS. Some examples are the use of control systems where sustainability is already incorporated (e.g. eco-control), deploying a CSR strategy, implementing an environmental information system and the
use of performance measures. Also two papers which are reviewed provide frameworks in order to incorporate sustainability into MCS and/or strategy.
1 1. Introduction
Unsustainable production and consumption, pollution, climate change and vanishing oil and gas sources are topics which have received an increasing amount of attention over the past decades. The general line of reasoning was that ‘things cannot go on like this otherwise the world as a place to live, is in jeopardy’. Closely tied to this discussion is the concept of sustainability and sustainable
development. Already in 1987, a famous report called ‘Our Common Future’ was published and can be seen as one of the first calls for sustainable development. This report is also generally known as the Brundtland Report. The Brundtland definition of sustainable development is still frequently quoted in academic papers and is as follows: ‘’Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.’’ (Virtanen et al., 2013, p. 401; White, 2013, p. 213)
Also in today’s society, sustainability and sustainable development are important themes. A lot of debates are going on in politics, national and internationally. Also, a lot is being said and written about sustainability in the media. The government is providing an increasing number guidelines and legislation on sustainability and sustainability development (e.g. European Council taking initiatives to reduce greenhouse gases and energy efficiency). (Virtanen et al., 2013) As well, numerous initiatives are being undertaken to promote sustainability. However, many papers in the academic journals are not very explicit in defining sustainable development. ‘’Beyond a repetition of the Brundtland Report definition, most papers are silent on what sustainable development entails.’’ (Bebbington & Thomson, 2013, p. 281) This can potentially be problematic because in order to write, develop, discuss and/or apply a concept like sustainability, it is important that the concept is defined properly. In section 2.2, some definition(s) of sustainability will be presented, although it is beyond the scope of this thesis to come up with a single operational definition of this concept.
Sustainability can be researched in many different areas, and can be linked to many concepts. ‘’Industrial development has brought immeasurable wealth and prosperity while also causing unintended ecological degradation.’’(Henri & Journeault, 2010, p. 63 ; Shrivastava, 1995) Also, organizations ‘’play a major role in causing and potentially controlling ecological problems. (Henri & Journeault, 2010, p.63) This is the reason why in this thesis, sustainability will be related to organizations. As can be read above, organizations are potentially very influential on sustainability in the whole society. That is why organizations are an interesting unit of analysis. More specifically: the control of an organization. Because control entails carrying out organizational objectives and
strategies (Fisher, 1998) and assisting ‘’organizations in developing and maintaining viable patterns of behavior’’ (Otley, 1999, p. 364), it is rather important that sustainability is incorporated in the control of an organization if one wants to reach sustainable goals.
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(Bebbington & Thomson, 2013) This is an indication that the literature on the subject is rather thin.
The aim of this thesis is to review the literature in the field of sustainability and management control. More specifically, this thesis aims to identify in what ways sustainability can be incorporated into management control system(s) (MCS), in which lays the potential managerial interest. As mentioned above, when an organization aims to reach sustainable goals, it is important to incorporate
sustainability in the MCS. A literature review will be performed because the papers in the field seem to be quite scattered as can be read in the previous paragraph. By reviewing, comparing, analyzing relevant literature in the field, multiple views can be integrated to provide a more complete picture than those papers do by themselves. Based on those results, an attempt will be made to provide an adequate answer to the research question.
‘’Although organizations have embraced the sustainability rhetoric in their discourse and external reporting, little is known about the processes whereby management control systems contribute to a deeper integration of sustainability within organizational strategy.’’ (Gond et al., 2012, p. 205) Another author states that organizations and humans can hardly ever be sustainable as is reflected in the following quote: ‘’the probability is that no Western company has made a sustainable profit for a very long time, if ever.’’ (Gray, 1992, p.419-420) This statement raises the question to what extent an organization can reach sustainability. Also, the editorial published in the Management Accounting Research journal can be seen as a call for more research in the field of sustainability and
management control. As is stated in the paper by Bebbington & Thomson (2013, p. 283):
We were keen in this editorial to push the case for boundary crossing work to develop and build on this existing work in order that the sustainable development literature, and its concerns, can play a greater role in shaping the management accounting discipline.
Combined with the fact that not much literature was found on sustainability and management control (Berry et al., 2009) this research aims to enrich the existing theory by answering the following question: In what ways can organizations incorporate sustainability into their management control system? The research question relates to how companies can incorporate sustainability in their management control systems. The literature review performed in this thesis will focus on complete management control systems in relation to sustainability. This choice is made to narrow down the rather broad research question which has been proposed above.
In order to structure the literature review and enable comparison and analysis some potential sub questions are:
> What entails sustainability? This sub question is addressed in section 2.2. > What is management control? This sub question is addressed in section 2.1.
> What are the differences and/or similarities of the reviewed papers in the areas of defining sustainability, methods, results and incorporation of sustainability into MCS? This sub question is addressed in section 4. Finally, the research question mentioned in the previous paragraph will mainly be addressed in section 4.4 and party in section 5.
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methodology of the literature review process is described, combined with the summarized papers. In section 4, the reviewed papers will be analyzed and compared. Finally, these results will be discussed in section 5 together with the limitations of this thesis and avenues for future research.
2. Theoretical background
In this section, the most important concepts (management control and sustainability) will be defined. While it is beyond the scope of this thesis to decide on the most suitable sustainability definition, it is helpful to choose on a conceptualization of sustainability which will be worked with in this thesis. Finally, the potential link between management control and sustainability will be presented. 2.1 Management Control
‘’Management control is defined as the control managers exercise over other managers. It is the process by which corporate-level managers ensure that mid-level managers carry out organizational objectives and strategies.’’ (Fisher, 1998, p. 47) It can be applied at multiple levels in an organization. Another definition is given by Otley (1999): ‘’Management control systems provide information that is intended to be useful to managers in performing their jobs and to assist organizations in
developing and maintaining viable patterns of behavior.’’
Management control and management accounting focuses on internal reporting and is used within the organization as opposed to cost accounting which focuses on external reporting.
Management control can exist in three different levels, namely: corporate, management and
operational. ‘’Control is separable from the planning aspect. Planning determines firm objectives and goals, while control attempts to motivate employees to achieve these objectives and goals.’’ (Fisher, 1998, p. 48 ; Bhimani et al., 2008)
There are many possible ways to design a control system for an organization. ‘’In response to the universalistic approach that argues that optimal control design applies in all settings and firms’’ (Fisher, 1998, p. 48), the contingency theory became popular. ‘’In the view of contingency theorists, the design of accounting information and control systems is based upon specific characteristics of the organization or its environment.’’ (Birnberg, Turopolec & Young, 1983, p. 119) An example of a contingent variable is ‘competitive strategy and mission’. (Fisher, 1998) The competitive strategy and mission of an organization provide opportunities to integrate sustainability.
Frequently, a distinction is made between formal and informal controls. Both forms of control are important, even though informal controls are difficult to distinguish. ‘’Formal controls include rules, standard operating procedures and budgeting systems. These are the more visible, objective components of the control system.’’ (Langfield-Smith, 1997, p. 208) Whereas ‘’informal controls are not consciously designed. They include the unwritten policies of the organization and often derive from, or are an artefact of the organizational culture.’’ (Langfield-Smith, 1997, p. 208)
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control systems, beliefs systems, boundary systems and interactive control systems. ‘’The diagnostic control system works like an airplane cockpit scanning for abnormal functioning and keep critical performance variables within preset limits.’’ (Simons, 1995, p.81) Beliefs systems express the ‘’values and direction that senior managers want their employees to embrace’’ (Simons, 1995, p. 82), while boundary systems define the rules and limits. The fourth lever, interactive control systems ‘’must be created to share emerging information.’’ (Simons, 1995, p.86) If an organization aims to incorporate sustainability in their management control system, these levers could be a way of doing so.
2.2 Sustainability
To give a single clear definition of sustainability is beyond the scope of this thesis, and given the many definitions it is quite impossible as well. Thus the goal of this subsection is to present an overview of some definitions of sustainability and to give the reader a general idea to what sustainability entails.
It is not a simple task to define sustainability because ‘’sustainability, and its predecessor term, sustainable development, mean different things to different people.’’ (White, 2013, p. 213) Many authors have attempted to define sustainability, but the most commonly used definition appears to be the Brundtland report definition which has been stated in the introduction of this thesis.
(Bebbington & Thomson, 2013 ) According to Emery (2013),’’ sustainability is a hot topic among many different organizations.’’ (Emery, 2013, p. 16) In this commentary, sustainability is
conceptualized to consist of three pillars, namely: environmental, economic and social performance. This conceptualization resembles the triple bottom line approach (TBL) as mentioned in other papers (e.g. Durden (2008); Gond et al. (2012))
Another paper starts with stating: ‘’one might infer that it is now commonly accepted that society will never achieve sustainable development without corporate support, as the private sector represents the main productive force of the economy.’’ (Maletič et al, 2014, p.182) Because of this notion they translate the Brundtland definition to the business level as follows: ‘’meeting the needs of an organization’s direct and indirect stakeholders without compromising its ability to meet the needs of future stakeholders.’’ (Maletič et al, 2014, p.182) Interesting in this definition is the integration of stakeholders.
In his paper, White (2013) uses a tag-cloud to provide the top 25 most frequent words/phrases in definitions of sustainability. These are (in order of number of occurrences): ‘’environment, social, economic, life, system, nature, resources, human, development, needs, future generations, community, produce, time, earth, generation, ecological, world, process, meet, means, people, growth and equity.’’ (White, 2013, p. 216) Because of the many possible definitions of sustainability, this concept is not easy to grasp. This is also reflected in the following quote: ‘’There is clearly no single ‘sustainability’ that can be known and accounted for.’’ (Gray, 2010, p.56) In this thesis, the concept of sustainability as described by Emery (2013) where it consists of the three pillars: environmental, economic and social performance will be worked with. This is a quite broad conceptualization which covers the most important constructs in sustainability. This
conceptualization makes it possible to compare the papers which will be reviewed in this thesis.
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As being indicated above, there is not much literature on sustainability and management control (Arjaliès & Mundy, 2013 ; Berry et al., 2009). However, the relevance to make the link between these two concepts is reflected in the following quote: ‘’Because management control systems shape actors’ practices, and support strategy, they can, if used appropriately, push organizations in the direction of sustainability.’’ (Gond et al., 2012, p. 206) Furthermore, ‘’lasting attempts to integrate sustainability within strategy, beyond external reporting, discourse and mission statements, should be reflected at some stage within formal control mechanisms.’’ (Gond et al., 2012, p. 206) This quote reflects the importance to research in what way organizations incorporate sustainability in their management control systems. An example can be found in the following quote by Epstein & Wisner (2001, p. 1):
Just as the balanced scorecard is being adopted by corporations throughout the world to help them implement corporate strategy, it can be used by organizations to implement a
sustainability strategy and to link corporate sustainability objectives with appropriate corporate actions and performance outcomes.
An interesting quote can be derived from Emery (2013): ‘’It may take a village to raise a child, but it will take a nation of conscientious minds to make true sustainability a reality in the United States.’’ (Emery, 2013, p. 16) This is consistent with the following quote: ‘’However, the authors caution that corporations are unlikely to extend CSR activities beyond that which benefits their investors’ and by implication will fall short of the transformations required for a more sustainable society. (Bebbington & Thomson, 2013, p. 279) This quote is closely related to the concept of greenwashing which ‘’refers to a form of marketing and promotional activity that is used to promote the perception, regardless of the evidence, that an organization is environmentally friendly.’’ (Arjaliès & Mundy, 2013, p. 284) Consequently, as can be read in the previous paragraph and following the discussion in this section: when sustainability is not reflected within formal control systems, chances are fair that the practices of an organization can be related to greenwashing.
3. Literature 3.1 Methodology
In this section, the process of searching and selecting the relevant papers which will be reviewed is described in detail. The search for literature starts with a thorough search with relevant keywords in ‘Business Source Premier’ which is a bibliographic and full-text database specialized in the area of Business Administration. The methodology will mostly consist of a description and motivation of the research process. By describing the research process and the steps which have been taken to select the relevant literature, controllability is ensured.
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in order to be able to provide a more in-depth analysis and comparison of the papers which are reviewed in this thesis.
The quality of the papers which are reviewed is another important aspect. In order to ensure quality, only papers from ‘top’ or ‘very good’ rated journals will be considered. These ratings were found using the performance criteria presented by the SOM research institute of the University of
Groningen. Because this is a thesis in the management accounting and control area, and to limit the number of papers for the above mentioned reason, only ‘Accounting’ journals from the SOM list are considered. (http://www.rug.nl/research/som-ri/organization/performance-criteria/top-and-very-good-journals) Papers in the following journals are considered:
The literature search process will focus on articles from the last 10 years (from 2004 and on). On one side this choice has been made to limit the amount of articles to be found, on the other side all actual and relevant articles still fall into this range while still leaving room for the somewhat older articles to be incorporated in the literature review. Also because the theme of this thesis is an emergent theme in management control (Berry et al., 2009) and literature on this topic is still scarce (Bebbington & Thompson, 2013) it seems plausible to set the limit at 2004.
During the search for literature, only the options ‘peer reviewed (scholarly journals)’ and publication date ‘2004 up and including 2014’ has been used. Furthermore no extra search or limiting options have been used. An overview of the literature search process is depicted in the following table:
Keywords Results
‘Sustainability’ and ‘management control system’
22 results. After application of the SOM ‘Accounting’ journals list: 5 results remaining: Arjaliès & Mundy (2013); Durden (2008); Gond et al. (2012); Henri & Journeault (2010); Virtanen et al. (2013) ‘environmental’ and
‘management control system’
61 results. After application of the SOM ‘Accounting’ journals list: 7 results remaining: Henri & Journeault (2010); Janke et al. (2014); Cools & Slagmulder (2009); Langfield – Smith (2008); Perego & Hartmann (2009); Pondeville et al. (2013); Virtanen et al. (2013)
‘environmental’ and
‘management control system’ and ‘sustainability’
10 results. After application of the SOM ‘Accounting’ journals list: 2 results remaining: Henri & Journeault (2010); Virtanen et al. (2013)
Top rated accounting journals Very good rated accounting journals Accounting Review; Accounting, Organizations
and Society; Journal of Accounting Economics; Journal of Accounting Research
Abacus; Accounting and Business Research; Accounting, Auditing and Accountability Journal; Auditing- a Journal of Practice and Theory; Contemporary Accounting Research; European Accounting Review; Journal of Accounting; Auditing and Finance; Journal of Business
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‘eco-control’ 4 results. After application of the SOM ‘Accounting’ journals list: 1 result remaining: Henri & Journeault (2010)
‘sustainability’ and ‘management control’
63 results. After application of the SOM ‘Accounting’ journals list: Arjaliès & Mundy (2013); Durden (2008); Gond et al. (2012); Hartmann et al. (2013); Henri & Journeault (2010); O’Dwyer (2011); Virtanen et al. (2013)
‘corporate social responsibility’ and ‘management control system’
13 results. After application of the SOM ‘Accounting’ journals list: Arjaliès & Mundy (2013); Durden (2008); Gond et al. (2012)
‘corporate social responsibility’ and ‘management control’
42 results. After application of the SOM ‘Accounting’ journals list: Arjaliès & Mundy (2013); Durden (2008); Gond et al. (2012); O’Dwyer (2011)
Many papers were found with more than one keyword combination. By removing the double results, a total number of 12 unique papers were found during the literature search process. The next step in the process is to establish whether the papers which were found are suitable for the literature review. Cools & Slagmulder (2009) perform a case study in research the relationship between transfer pricing tax compliance and responsibility accounting (such as profit center, cost center etc.). Hartmann et al. (2013) is a commentary paper rather than a research paper. The paper by Janke et al. (2014) is a research about the relationship between the economic crisis and the interactive use of MCS. Whereas the paper by Langfield-Smith (2008) is a paper on strategic alliances in relation to risk, trust and controls. Finally, O’Dwyer (2011) is a paper about sustainability reporting which has an external focus rather than an internal. For the reasons mentioned above, these papers will not be incorporated in the literature review. This leads to the final selection of 7 papers which will be reviewed in this thesis: Arjaliès & Mundy (2013); Durden (2008); Gond et al. (2012); Henri & Journeault (2010); Perego & Hartmann (2009); Pondeville et al. (2013) and Virtanen et al. (2013).
3.2 Literature review
In this section, the selection of papers which was found and selected will be summarized. The main points from these articles will be presented.
3.2.1 The use of management control systems to manage CSR strategy: A levers of control perspective by Arjaliès & Mundy (2013).
The paper by Arjaliès & Mundy (2013) is a qualitative paper in which they study the link between management control and corporate social responsibility (CSR) strategy. The ‘levers of control’ perspective as proposed by Simons (1995) serves as conceptual framework. The LoC framework has already been described in section 2.1 of this thesis. CSR is defined in this article as follows: ‘’CSR consists of a set of social and environmental activities that companies implement on a voluntary basis in order to address the social and environmental impact of their business and the expectations of their
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mainstream business but which are tailored to address the specific issues that relate to environmental issues.’’ (Arjaliès & Mundy, 2013, p. 286; Henri & Journeault, 2010)
The data from the questionnaires was coded through a coding process. In the findings section numerous findings are presented, of which not all will be summarized here. ‘’In summary, the findings indicate that the companies in our study manage CSR strategy through a variety of MCS including extensive internal and external communications processes, EMS, CSR reporting systems and processes for reporting best practices.’’ (Arjaliès & Mundy, 2013, p. 295) The authors have summarized their findings in tabulated form, which will be presented here in order to give a complete yet compact overview of this study. The table can be found in Arjaliès & Mundy (2013, p. 296):
From the findings it appears that ‘’companies in our study mobilize the levers of control through a variety of MCS, such as EMS, codes of conduct and formal meetings that are used to discuss CSR activities in relation to the attainment of strategic objectives.’’ (Arjaliès & Mundy, 2013, p.295) Also, communication to employees is an important part of CSR strategy. Furthermore the findings
‘’indicate that the role and influence of external stakeholders in setting strategic direction and establishing key objectives against which to measure performance is an important feature of the management of CSR strategy.’’ (Arjaliès & Mundy, 2013, p.295)
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limits within which employees are permitted to engage in CSR activities in an attempt to ensure that their behavior is aligned with the organization’s objectives.’’ (Arjaliès & Mundy, 2013, p.296) An example of a boundary is a legal framework.
3.2.2 Towards a socially responsible management control system by Durden (2008).
The paper by Durden (2008) is based on a qualitative case study of a manufacturing company in New Zealand. The MCS of this company were examined. The case study organization ‘’promoted a strong stakeholder and social responsibility image and produced a TBL line report.’’ (Durden, 2008, p. 672) Ultimately, a framework is proposed ‘’that provides for the integration of the MCS with social accounting and social responsibility aspects.’’ (Durden, 2008, p. 671) In the theoretical section, stakeholder theory, social accounting research and MCS issues are elaborated on. The stakeholder theory basically ‘’suggests that organizations should treat stakeholders in an inclusive manner and emphasizes a (social) responsibility to operate in accordance with particular ethical or philosophical expectation.’’ (Durden, 2008, p. 674) In the area of social accounting this paper follows the line of thinking that ‘’management should put in place MCSs that are responsive to and aligned with the interests of both shareholders and stakeholders.’’ (Durden, 2008, p. 675) By MCS issues is meant that: ‘’in summary, the literature reveals that only limited attention has been given to MCS design issues in relation to social accounting research. This attention relates mainly to the area of environmental accounting.’’ (Durden, 2008, p. 676)
The organizational members who were interviewed during the data collection all appeared to have a strong commitment to social responsibility. However, ‘’any focus on social responsibility in a MCS context was virtually non-existent or, at best, only anecdotal.’’ (Durden, 2008, p. 680) From this quote it appears that organizational members can express their commitment to sustainability and social responsibility, but this does not mean that these constructs are also integrated in the management control systems. As is seen more often in organizations, ‘’it appeared that social responsibility was intended primarily to influence the external image of the company rather than being an integrated part of the MCS.’’ (Durden, 2008, p. 680) From this quote it appears that the position of sustainability in this organization can be related to the concept of greenwashing as discussed by Arjaliès & Mundy (2013).
One important reason for the fact that sustainability/social responsibility did not really reflect in the MCS ‘’was the apparent lack of development of social responsibility goals and how these aligned with stakeholder groups.’’ (Durden, 2008, p. 680) Also, ‘’there was uncertainty concerning how social responsibility should be measured, reported and monitored within the MCS.’’ (Durden, 2008, p.680) However, from the case study findings, it appeared that the owner and managers of the company valued social responsibility and the organization also published a TBL-report (triple bottom line consisting of financial, social and environmental factors). However, ‘’information contained in the report was largely text-based, anecdotal and descriptive in nature rather than reflecting a systematic reporting framework.’’ (Durden, 2008, p. 681) Social responsibility was not adequately incorporated in formal as well as informal controls.
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social responsibility or sustainability into the MCS. Also the lack of linkage between the TBL report and strategic plan was problematic as can be seen in the following (Durden, 2008, p. 686):
Reinforcing this issue was the lack of alignment between the content of the TBL report and the strategic plan. In this regard the strategic plan made no reference to stakeholders or TBL reporting and only mentioned social responsibility as an overall aim and did not indicate how it might be achieved.
Based on the prior literature combined with the case study findings a framework is proposed ‘’which provides for the integration of social responsibility into the MCS.’’ (Durden, 2008, p. 689) The framework is summarized as follows: ‘’the framework commences with the identification of relevant stakeholder groups. Interlinked with this is the development of social responsibility goals.’’ (Durden, 2008, p. 687) The link between the stakeholder groups and social responsibility goals in the
framework is reciprocal, indicating they ‘’should be developed in conjunction with and to reflect the needs of particular stakeholders.’’ (Durden, 2008, p. 687) ‘Identification of stakeholder groups’ and ‘social responsibility goals’ should be incorporated in the MCS through management intervention. ‘’Two key dimensions should steer the MCS in relation to social responsibility goals: formal
measurement and informal control.’’ (Durden, 2008, p. 688) The next construct in the framework is named management actions. ‘’This signifies how the MCS should guide and orientate management decision making and actions so that these directly reflect and encompass social responsibility
aspects.’’ (Durden, 2008, p. 688) Finally, this should lead to social responsible outcomes which should be aligned with external reporting.
3.2.3 Configuring management control systems: Theorizing the integrationof strategy and sustainability by Gond, Grubnic, Herzig & Moon (2012).
The paper by Gond et al. (2012) is a qualitative paper, of which the aim is to ‘’theorize further the roles and uses of MCSs and SCSs in the integration of sustainability within strategy.’’ (Gond et al., 2012, p. 206) SCSs are an abbreviation of sustainability control systems. ‘Uses’ and ‘integration’ of MCSs and SCSs are two concepts which are central in the theorizing process. (Gond et al., 2012) ‘Uses’ of MCSs is a concept which is derived from the levers of control framework by Simons (1995). This framework was presented in section 2.1of this thesis. To be complete, the following about diagnostic and interactive control is quoted from Gond et al. (2012, p. 207):
While diagnostic control systems are tools that help in the achievement of organizations’ intended strategies, interactive control systems provide input into the formation of strategy. That is to say, interactive control systems stimulate and guide emergent strategies in
response to opportunities and/or threats within an organization’s operating environment. ‘’By integration we refer to the degree of overlap between the two types of control systems under study.’’ (Gond et al., 2012, p. 206) Integration is important because ‘’when SCSs are run in parallel to traditional MCSs in practice, organizational decision-making is likely not be based on the broadest possible foundation of economic, ecological and social data available in the organization.’’ (Gond et al., 2012, p. 209)
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interactive) as well as on their level of integration to delineate ‘ideal-types’ of organizational configurations.’’ (Gond et al., 2012, p. 210) Eight types of configurations are presented by the authors. The configurations are based on previous literature and they are backed up by examples from empirical research. The eight configurations will be shortly mentioned below.
Dormant decoupled strategy: As the name already says this configuration ‘’corresponds to a situation within which the organization possesses parallel systems of control for management and
sustainability, yet neither of them is actually mobilized to deploy any kind of strategy.’’ (Gond et al., 2012, p.210) In this configuration the organization lacks a vision.
Strategy emergence through sustainability: In this configuration the organization shifts from a diagnostic to an interactive use of the SCSs. This shift ‘’can reflect an emerging strategic renewal through sustainability.’’ In this configuration there is still no integration of MCSs and SCSs, ‘’but the sustainability system is mobilized strategically by the top management team to deploy a
sustainability strategy.’’ (Gond et al., 2012, p.211)
Compliance driven sustainability strategy: The most important point of this strategy is ‘’is the
development of the sustainability control system driven by external pressures to report on social and environmental issues (e.g., legal pressures and/or stakeholder pressures).’’ (Gond et al., 2012, p.212) With this strategy, ‘’the sustainability control system is usually used as a ‘management by exception tool’ to detect a ‘big issue’ and to demonstrate that the organization has everything under control.’’ (Gond et al., 2012, p. 212) A famous example of this configuration is the Nike case. (Zadek, 2004) Schizoid sustainability strategy: This configuration ‘’refers to an organizational context within which contradictory sustainability and traditional strategies are followed and deployed through parallel MCSs and SCSs.’’ (Gond et al., 2012, p.212) Empirical examples of this configuration are some US multinationals who ‘’have been shown to exhibit contrasted sustainable behaviors in various
countries, supporting the view of corporate actors ‘being good while being bad’.’’ (Gond et al., 2012, p. 213; Strike et al., 2006)
The previous described configurations are loosely coupled, meaning there exists a low level of integration between MCSs and SCSs. For example, in the compliance driven sustainability strategy, this means that ‘’the sustainability data produced by the organization can hardly feed into any internal management processes.’’ (Gond et al., 2012, p. 212) The following four configurations refer to strategies in which MCSs and SCSs are strongly coupled and integrated. ‘’This ‘high’ integration means that SCSs and MCSs are coordinated and overlap.’’ (Gond et al., 2012, p. 213
Dormant integrated strategy: In this configuration MCSs and SCSs are tied, but not necessarily used to deploy strategy. (Gond et al., 2012) An example of this is given by Gond et al. (2012, p. 213):
This situation of ‘dormant integrated strategy’ can be found, for instance, in an organization that has recently integrated sustainability within its balanced scorecard (technical
12 Sustainability driven strategy
This configuration is ‘’the case of an organization within which the MCS is not used interactively and where the strategy-making process is driven by sustainability through the interactive use of the SCS.’’ (Gond et al., 2012, p.213)
Peripheral sustainability integration: ‘’This situation corresponds to the case of an organization within which only the regular MCS is used interactively to deploy the strategy, the management of sustainability being used as a diagnostic tool.’’ (Gond et al., 2012, p.214)
Integrated sustainability strategy: This configuration corresponds to a fully integrated MCS and SCS and an interactive use of these systems. ‘’In this context of ‘integrated sustainability strategy’, sustainability strategy and strategy-making overlap completely, allowing the deployment and renewal of sustainability strategy through the use of coherently integrated systems.’’ (Gond et al., 2012, p. 215) This configuration refers to the highest levels of sustainability implementation. (Gond et al., 2012)
It is possible for an organization to move across different paths of configurations. The different possible moves are from a high to low level of integration and vice versa (integration vs. disintegration) as well as from a diagnostic to interactive use and vice versa (mobilization vs.
demobilization). However, to prevent limited insights, this paper also considers different moves and paths across the different configurations which combine the possible moves mentioned above. (Gond et al., 2012) One important quote can be derived from the managerial implications section: ‘’Sustainability may be integrated into an MCS such that it remains dormant and does not inform the strategy. A more effective approach for managers willing to enhance the level of sustainable
organizational development is to integrate and interactively control for sustainability within the dominating MCS.’’ (Gond et al., 2012, p.221)
3.2.4 Eco-control: The influence of management control systems on environmental and economic performance by Henri & Journeault (2010).
The paper by Henri & Journeault (2010) is a quantitative paper which elaborates on the concept of eco-control. More specifically, the paper addresses the research question whether a relationship exists between eco-control and economic performance. The paper builds on data obtained from a large sample of manufacturing firms. In the introduction, it is highlighted that ‘’although
organizations play a major role in causing and potentially controlling ecological problems, they could also benefit from cost reductions through ecological efficiencies, the development of green markets and first-mover advantage, better community relations and improved image.’’ (Henri & Journeault, 2010, p. 63) Environmental management accounting (EMA) helps firms in this area and is defined as follows: ‘’the identification, collection, analysis and use of financial and non-financial information to support management activities in order to maximize environmental and economic performance and to achieve sustainable business.’’ (Henri & Journeault, 2010, p. 63) Eco-control is a part of EMA and a specific application of MCS. (Henri & Journeault, 2010)
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matters within MCS.’’ (Henri & Journeault, 2010, p. 64) Also, ‘’eco-control is defined as the
formalized procedures and systems that use financial and ecological information to maintain or alter patters in environmental activity.’’ (Henri & Journeault, 2010, p. 64) In this paper, Henri & Journeault (2010) describe three control practices of which eco-control is composed: ‘’uses of performance measures, budgeting and incentives.’’ (Henri & Journeault, 2010, p. 64) Furthermore, four uses are being described and studied: ‘’(i) to monitor compliance with environmental policies and regulation, (ii) to motivate continuous improvement, (iii) to provide data for internal decision-making, and (iv) to provide data for external reporting.’’ (Henri & Journeault, 2010, p.65)
Another important construct discussed in this article is environmental performance. Traditionally this construct has been studied in terms of ‘environmental impacts’ such as toxics and pollution.
However, the authors found this a limited view on a multidimensional concept. In order to overcome this limited view an environmental performance matrix was established which lead to the following aspects: ‘’(i) environmental impact and corporate image (external/results), (ii) stakeholder relations (external/process), (iii) financial impact (internal/results), (iv) process and product improvements (internal/process).’’ (Henri & Journeault, 2010, p.65) Only all four aspects together can contribute to a firm being effective as ‘’each of these four aspects is necessary but not sufficient for environmental performance.’’ (Henri & Journeault, 2010, p.65)
Guided through literature search, several hypotheses are derived in order to study the research question. These are stated as follows:
H1: ‘’Economic performance is positively influenced by eco-control.’’ (Henri & Journeault, 2010, p. 67) This hypothesis is rejected.
H2a: ‘’Environmental performance is positively influenced by eco-control.’’ (Henri & Journeault, 2010, p. 68) This hypothesis is accepted.
H2b: ‘’Economic performance is positively influenced by eco-control through environmental performance.’’ (Henri & Journeault, 2010, p. 69) This hypothesis is rejected.
H3: ‘’ The direct effect of eco-control on economic performance is greater for firms (a) facing greater environmental exposure, (b) dealing with greater public visibility, (c) reflecting greater environmental concern, (d) facing more pressure from stakeholders, and (e) reflecting larger size.’’ (Henri &
Journeault, 2010, p. 69) This hypothesis is rejected.
H4: ’’The indirect effect of eco-control on economic performance through environmental
performance is greater for firms (a) facing greater environmental exposure, (b) dealing with greater public visibility, (c) reflecting greater environmental concern, (d) facing more pressure from
stakeholders, and (e) reflecting larger size.’’ (Henri & Journeault, 2010, p.69) This hypothesis is accepted with the exception of hypothesis H4(d), which is rejected.
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indirect relationship between eco-control and economic performance was found mediated through environmental performance. (Henri & Journeault, 2010)
3.2.5 Aligning performance measurement systems with strategy: the case of environmental strategy by Perego & Hartmann (2009).
The paper by Perego & Hartmann (2009) is a quantitative paper which elaborates on the alignment of performance measurement systems (PMS) with environmental strategies.)In prior literature, there are multiple claims about the need to align PMS with strategy. However, ‘’much remains to be known about what such PMS strategy alignment entails, and whether and how firms achieve it.’’ (Perego & Hartmann, 2009, p. 397) The authors ‘’analyze the effect of firms’ environmental strategy on their use of environmental performance indicators.’’ (Perego & Hartmann, 2009, p. 398) More specifically, the authors ‘’test whether this relationship is mediated by (contingency-based) system characteristics and by (economics-based) measure properties.’’ (Perego & Hartmann, 2009, p. 398)
The reason for incorporating the contingency-based and economics-based perspectives ‘’lies in the fact that prior studies used different and rather separated theoretical perspectives.’’ (Perego & Hartmann, 2009, p.398) Contingency-based studies ‘’typically focus on system design choices, analyzing how firms design control systems that match their strategy. These studies typically explain the use of certain performance indicators by the broad design properties of the control system they are part of.’’ (Perego & Hartmann, 2009, p.398) Whereas ‘’economics-based studies instead focus on the properties of specific performance measures themselves, and explain the use of a certain
measure by its informativeness under a given strategic direction.’’ (Perego & Hartmann, 2009, p.398) Formulated differently, ‘’contingency studies disregard the informativeness of specific measures in explaining PMS use, economics-based studies disregard the system in which the specific measures are embedded.’’ (Perego & Hartmann, 2009, p. 398)
Perego & Hartmann (2009) define environmental strategy as follows: ‘’the organization-wide recognition of the legitimacy and importance of the biophysical environment in the formulation of organization strategy, and the integration of environmental issues into the strategic process.’’ (Perego & Hartmann, 2009, p.400; Banerjee, 2002, p. 181) This strategy can be placed on a continuum ranging from reactive to proactive. (Perego & Hartmann, 2009) Based on previous literature, the authors propose a conceptual model with three hypotheses attached to it. These are as follows:
H1: ‘’Environmental strategy positively influences the use of environmental performance measures, such that a more environmentally proactive strategy is associated with a higher use of environmental performance measures.’’ (Perego & Hartmann, 2009, p.402) This hypothesis is related to the direct alignment path in the conceptual model. This hypothesis is accepted.
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Quantification ‘’describes the actual structure or form of an information system according to the measure used to express or derive information.’’ (Perego & Hartmann, 2009, p. 403) This variable can be expressed in non-financial and financial aspects of environmental performance. Scope refers to the measures being narrow or broad. Broad measures provide information beyond the organizational boundaries. Timeliness refers to ‘’the frequency and speed of internal reporting about
environmental-related information systematically collected by the firm’s PMS.’’ (Perego & Hartmann, 2009, p. 404) This hypothesis is partially accepted ‘’for the variables capturing quantification of financial environmental performance measures.’’ (Perego & Hartmann, 2009, p. 414)
H3: ‘’There is a positive relationship between environmental strategy and the use of environmental performance measures, acting through (a) sensitivity, (b) verifiability and (c) congruence of
environmental performance measures.’’ (Perego & Hartmann, 2009, p.409) This hypothesis is related to the indirect alignment path in which the focus is on metrics-related properties, and is only
accepted for the mediating effect of sensitivity.
Sensitivity ‘’captures the controllability and influenceability of environmental performance through manager’s action.’’ (Perego & Hartmann, 2009, p. 407) Verifiability refers to measures that ‘’can be substantially duplicated by independent measurers using the same measurement methods.’’ (Perego & Hartmann, 2009, p. 407) Finally, the congruence of performance measures refer to ‘’the extent to which performance measures reflect the relative priority of a firm’s objectives.’’ (Perego &
Hartmann, 2009, p. 408)
Overall, the data confirm that ‘’firms with a more proactive environmental strategy rely more on PMS that systematically report environmental performance measures.’’ (Perego & Hartmann, 2009, p. 417) More specifically, the ‘’study provides additional evidence that strategic alignment manifests indirectly through the modification of specific PMS attributes and performance measures
properties.’’ (Perego & Hartmann, 2009, p. 417) Finally, resulting from the use of control variables in the statistical analysis it appears that ‘’companies greater in size tend to rely more on environmental PMS for performance evaluation and control purposes.’’ (Perego & Hartmann, 2009, p. 415)
3.2.6 Environmental management control systems: The role of contextual and strategic factors by Pondeville, Swaen & De Rongé (2013).
The paper by Pondeville et al. (2013) is a quantitative paper in which elaborates on the concept of environmental management control systems (EMCS). More specifically, ‘’this study investigates contextual and strategic factors associated with the development of environmental management control systems by manufacturing companies.’’ (Pondeville et al., 2013, p. 317) The paper builds on data obtained from a large sample of manufacturing firms. Two concepts are central in this paper, namely management control and environmental management. From best practices of
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Another concept which is defined in this article is the environmental information system.
Organizational members, especially managers, need accurate and up-to-date information in order to make adequate decisions. Information is therefore described as ‘’raw material of management control.’’ (Pondeville et al., 2013, p. 319) The focus of an environmental system is providing useful environmental information. Furthermore, three factors of EMCS development are considered, which will shortly be mentioned here. First, corporate environmental proactivity can be placed on a
continuum ranging between passive and proactive. Second, perceived ecological uncertainty (PEEU) consists of uncertainties linked to the natural environment such as ‘’a lack of information on green issues, the speed of green developments, and rapid shifts in legislation.’’ (Pondeville et al., 2013, p. 319) And third, perceived stakeholder pressure, which relates to pressure from for example: suppliers, customers, legislators and media. (Pondeville et al., 2013)
Guided through literature search, several hypotheses are derived in order to study the research question. These are stated as follows:
H1:’’ An environmental information system is positively associated with the development of (a) formal EMCS and (b) informal EMCS.’’ (Pondeville et al., 2013, p. 319) This hypothesis is accepted. H2: ‘’The degree of corporate environmental proactivity is positively associated with the
development of the (a) environmental information system, (b) formal EMCS, and (c) informal EMCS.’’ (Pondeville et al., 2013, p. 319) This hypothesis is accepted.
H3: ‘’The level of PEEU is positively associated with the development of the (a) environmental information system, (b) formal EMCS, and (c) informal EMCS.’’ (Pondeville et al., 2013, p. 320) This hypothesis is rejected.
H4: ‘’The level of PEEU is positively associated with the degree of corporate environmental proactivity.’’ (Pondeville et al., 2013, p. 320) This hypothesis is rejected.
H5: ‘’Greater perceived stakeholder pressure is positively associated with the development of the (a) environmental information system, (b) formal EMCS, and (c) informal EMCS.’’ (Pondeville et al., 2013, p. 321) This hypothesis is partially accepted as is reflected in the following quote: ‘’our model
indicated that an environmental information system represents a response to pressures from regulatory stakeholders. Market and organizational stakeholders encourage the development of a formal EMCS, but only organizational stakeholders enhance the development of an informal EMCS.’’ (Pondeville et al., 2013, p. 326)
H6: ‘’Greater perceived stakeholder pressure is positively associated with the degree of corporate environmental proactivity.’’ (Pondeville et al., 2013, p. 321) This hypothesis is accepted.
H7: ‘’The level of perceived regulatory stakeholder pressures has a decreasing incremental effect on the level of corporate environmental proactivity.’’ (Pondeville et al., 2013, p. 321) This hypothesis is rejected.
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hinders the emergence of a proactive strategy and the development of different EMCS. In our sample, managers seem unwilling to invest in external, future-oriented environmental information systems, perhaps due to the unpredictability of changes in the green market and legislation.’’ (Pondeville et al., 2013, p.328)
In this sample of companies, one particularly interesting result according to the authors is the negative relationship between PEEU and degree of corporate environmental proactivity. ‘’In our sample, managers seem unwilling to invest in external, future-oriented environmental information systems, perhaps due to the unpredictability of changes in the green market and legislation.’’ (Pondeville et al., 2013, p. 328)
3.2.7 Energy efficiency complexities: A technical and managerial investigation by Virtanen, Tuomaala & Pentti (2013).
The paper by Virtanen et al. (2013) is based on a qualitative case study and provides an example of ‘’how companies which are consumers of substantial amounts of materials and energy enhance sustainable development.’’ (Virtanen et al., 2013, p. 402) Two disciplines are combined in this paper, namely: environmental management accounting (EMA) research in the area of performance
measurement as well as technical energy efficiency research. (Virtanen et al., 2013) More specifically, ‘’the paper examines how complexities in the measurement and management of environmental performance may impede effective use of management control systems in affecting the ability and motivation of employees to work toward the goals of sustainable development.’’ (Virtanen et al. 2013, p.402-403) The case study took place in a Finnish petrochemical production plant. An
organization in this industry was chosen because ‘’its operation is characterized by high production volumes combined with high annual energy consumption and high annual energy costs.’’ (Virtanen et al., 2013, p. 405)
In the theoretical section, Virtanen et al. (2013) review previous literature on the concepts of ‘performance measurement and controllability’ and ‘work motivation’. The concepts are defined in light of ‘’the role of management accounting in fostering sustainable development within
organizations.’’ (Virtanen et al., 2013, p. 403) Some main points in this section are: ‘’in order to change corporate culture and to improve environmental performance, companies should also make sustainability performance an integral part of the performance evaluation.’’ (Virtanen et al., 2013, p. 403) The type of performance indicators used at higher organizational levels is usually different in comparison to indicators used at lower organizational levels. However, ‘’non-financial and qualitative factors play a vital role in affecting sustainability issues.’’ (Virtanen et al., 2013, p. 403) Finally, it can be noted that ‘’improving sustainability performance can provide significant personal rewards for many employees. More focus on the use of informal systems and the role of behavioral aspects is critical in providing employees with the intrinsic motivation to achieve individual and organizational goals.’’ (Virtanen et al., 2013, p. 404)
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efficiency was regarded as a strategic choice and an important factor in the company’s
competitiveness.’’ (Virtanen et al., 2013, p. 407) However, the importance of energy efficiency was not equally clear to all personnel groups. Finally, it appeared that indicators (related to the energy efficiency measure) were not clear enough.
A number of challenges regarding the energy efficiency indicator can be related to technical difficulties in the construction and usage of the measure. In the area of performance measures, the following can be quoted (Virtanen et al., 2013, p. 411):
In order to direct corporate culture toward fostering sustainable development, sustainability performance should be made an integral part of performance evaluation. Performance measures should also accurately reflect what is required of employees. In the case company, energy efficiency was not included in the scorecards of all units.
While adequate measures should be congruent, ‘’the targets for energy efficiency could not be expressed in a precise manner.’’ (Virtanen et al., 2013, p. 411) Furthermore, ‘’managers are often held accountable for issues they cannot control.’’ (Virtanen et al., 2013, p. 411) This also occurred in the case study company, as operators who were responsible for lower energy consumption did not know how they should control it.
In the area of motivation, the findings indicate that ‘’the case evidence supports the view that the employees were at least to some extent intrinsically motivated to work toward environmental goals.’’ (Virtanen et al., 2013, p. 412) However, as for extrinsic motivation, money seemed to play a large role in motivating the operators. All in all, ‘’the paper examined how complexities in the measurement and management of energy efficiency may impede effective use of management control systems to affect the ability and motivation of employees to work toward the goals of sustainable development.’’ (Virtanen et al., 2013, p. 412)
4. Analysis and Results
In this section the articles presented in the previous section will be analyzed and compared. In this section, also the research question will be kept in mind in order to be able to provide an answer to this in the discussion/conclusion section which will follow the current section. In this section the articles will be compared at the following points:
> How do the articles define and conceptualize the concept of sustainability? > What kind of methods do the articles use?
> What are the main findings presented in the articles?
> In what way(s) can sustainability be integrated in the management control system? 4.1 How do the articles define and conceptualize the concept of sustainability?
In this subsection the definitions and conceptualizations of sustainability by the reviewed articles are presented. In order to provide a clear overview and comparison the summarized findings are
presented in tabulated form.
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In the paper by Arjaliès & Mundy (2013), sustainability is mainly conceptualized as corporate social responsibility (CSR). CSR is defined as follows: ‘’CSR consists of a set of social and environmental activities that companies implement on a voluntary basis in order to address the social and environmental impact of their business and the expectations of their stakeholders.’’ (Arjaliès & Mundy, 2013, p.284) However, Arjaliès & Mundy (2013) also link societal and governance concerns to CSR. Furthermore, the view in this paper is that CSR is an essential component of an organization’s core business. This approach ‘’advocates that CSR strategy is essentially concerned with embedding socially and environmentally responsible actions throughout the organization in order to enhance long-term value.’’ (Arjaliès & Mundy, 2013, p.284 ; Moon, 2007)
In the theoretical section of the paper by Arjaliès & Mundy (2013) the concepts of sustainability and sustainable development are mentioned and the definitions of these concepts are being classified as highly complex. Next to the Brundtland definition, the authors quote Gray (2010): ‘’There is clearly no single “sustainability” that can be known and accounted for.’’ (Arjaliès & Mundy, 2013, p.286 ; Gray, 2010, p.56) From the same paper they also quote: ‘’sustainability appears as a ‘state of human- nature relationships’ and sustainable development as ‘a process through which we move towards that state.’’ (Arjaliès & Mundy, 2013, p.286 ; Gray, 2010, p.53) Also, the concept of win-win situation (Porter and van der Linde , 1995) is described: ‘’proponents of this view argue that business actions towards sustainability will be beneficial both for the economy and the environment.’’ (Arjaliès & Mundy, 2013, p.286) Finally, the concept of EMS is introduced which is defined in section 3.2.1 of this thesis.
4.1.2 Durden (2008).
In the introduction of the paper by Durden (2008) some examples are given of umbrella concepts which relate to social responsible accounting (e.g. CSR, social accounting and environmental accounting). Also the concept of triple bottom line reports (TBL) is introduced here, and remains an important concept throughout the paper. While the term ‘social responsibility’ is mostly used, in the paper by Durden (2008) this term is conceptualized as economic, environmental and social aspects of sustainability.
4.1.3 Gond et al. (2012).
In the introduction of the paper by Gond et al. (2012) the ‘triple bottom line’ is mentioned. This is an ‘’alternative paradigm to financial profit maximization in which economic, social and ecological criteria of performance are expected to be integrated.’’ (Gond et al., 2012, p.205) This is also
reflected in the statement why integration is important: when the MCSs and SCSs are not integrated, decision-making is probably not based on the ‘’broadest possible foundation of economic, ecological and social data available in the organization.’’ (Gond et al., 2012, p. 209) Another concept which is central in the paper by Gond et al. (2012) is sustainability control systems. An example of this is eco-control. (Henri & Journeault, 2010)
4.1.4 Henri & Journeault (2010).
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environmental performance, economic performance and other environmental management practices. These concepts have been defined in section 3.2.4 and their definition will therefore not be repeated again in this section.
4.1.5 Perego & Hartmann (2009).
The paper by Perego & Hartmann (2009) elaborates on organizations which have ‘’adopted environmental management systems to control the environmental impact of their products and services.’’ (Perego & Hartmann, 2009, p. 397) In the theoretical section, environmental management accounting is defined as: ‘’the management of environmental and economic performance through the development and implementation of appropriate environmental related accounting systems and practices.’’ (Perego & Hartmann, 2009, p. 399) Because environmental strategy is a central concept in the paper by Perego & Hartmann (2009) it was already defined in section 3.2.5 of this thesis. All in all, sustainability is mostly conceptualized in the environmental area.
4.1.6 Pondeville et al. (2013).
In the paper by Pondeville et al. (2013), sustainability is conceptualized in the form of EMCS.
Environmental management control systems are defined as: ‘’a package of formal, information-based routines and procedures that managers use to maintain or alter patters in organizational activities, specifically concerning the environmental aspects of organizational performance.’’ (Pondeville et al., 2013, p. 318) A distinction is made between formal and informal EMCS. Other important concepts are: environmental information system, corporate environmental proactivity and perceived
ecological environmental uncertainty. These have been defined and described in section 3.2.6 of this thesis.
4.1.7 Virtanen et al. (2013).
In the paper by Virtanen et al. (2013) sustainability is mostly conceptualized as sustainable
development. In the introduction, the Brundtland definition has been given. Also the triple bottom line has been reflected in the following quote: ‘’a prerequisite for the long-term survival of
individuals and organizations is a society that is economically, environmentally, and socially sustainable.’’ (Virtanen et al., 2013, p. 402) However, describing climate change related concepts such as emissions and fossil fuel combustion indicates that ‘’perhaps the most significant linkage between the three spheres of sustainability derives from the environmental sustainability, in particular, climate change.’’ (Virtanen et al., 2013, p. 402) Environmental management accounting (EMA) is defined as: ‘’the management of environmental and economic performance through the development of appropriate environment-related accounting systems and practices.’’ (Virtanen et al., 2013, p.402) Furthermore, environmental management systems (EMS) are frequently used by organizations to show commitment to (environmental) sustainability. ‘’The two most frequently used guidelines for EMS design and certification are the international standard, ISO 14001, and the
European standard, the Eco-Management and Audit Scheme (EMAS).’’ (Virtanen et al., 2013, p. 402) ISO 14001 was used by the case study organization
The focus in the paper by Virtanen et al. (2013) is on energy efficiency, and the paper contributes to EMA literature. However, it was shown that all three elements of sustainability (economic,
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the following part of the conclusion where the authors link energy efficiency to a reduction in emissions (Virtanen et al., 2013, p. 413):
Fewer emissions, a cleaner environment and conservation of natural resources can be seen as clear environmental benefits. These same achievements contribute positively to the social performance dimension when viewed from the long-term perspective. For example, the risk of climate change, which will presumably affect people’s lives, will be smaller. Finally, the economic performance dimension comes into the question as energy efficiency results in reduced energy costs. However, achieving this may require capital investments.
4.1.8 Comparison in tabulated form.
Article Conceptualization of sustainability
Arjaliès & Mundy (2013) In this paper, CSR is the central concept. Definition of CSR in their paper contains environmental and social aspects. Furthermore governance and societal aspects are incorporated. In their theoretical section, the win-win situation is introduced highlighting environmental and economic elements. In short, economic, environmental and social aspects of sustainability are present in this paper.
Durden (2008) This paper points out the fact that the concept of sustainability has many different names. The term used in this paper is social
responsibility. Also the TBL approach is highlighted and plays an important role throughout the paper. In short, economic,
environmental and social aspects of sustainability are present in this paper.
Gond et al. (2012) This paper also mentions the TBL approach. Furthermore, the importance of integrating MCS and SCS is emphasized otherwise decision-making is probably not based on the ‘’broadest possible foundation of economic, ecological and social data available in the organization.’’ (Gond et al., 2012, p. 209) In short, economic,
environmental and social aspects of sustainability are present in this paper.
Henri & Journeault (2010) In this paper, eco-control is the central concept. Furthermore the conceptual model in this paper is built around economic performance, environmental performance and other environmental practices. In short, economic and environmental aspects of sustainability are present in this paper.
Perego & Hartmann (2009) In this paper, sustainability is conceptualized in the form of environmental strategy. In the last part of the definition of environmental strategy can be read that it entails integrating
environmental issues into the strategy. Also the financial side received some attention with respect to performance measures. In short, environmental and economic aspects of sustainability are present in this paper.
Pondeville et al. (2013) In this paper, the central concepts are environmental management control systems, environmental information systems, corporate environmental proactivity and perceived ecological environmental uncertainty. Thus the environmental aspect of sustainability is present in this paper.
Virtanen et al. (2013) In this paper, the central concept is energy efficiency. Another
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definition, economic and environmental performance is mentioned. However, also a clear example of a TBL approach is given. In short, economic, environmental and social aspects of sustainability are present in this paper.
4.2 What kind of methods do the articles use?
In this subsection the methods used by the reviewed articles are presented. In order to provide a clear overview and comparison the summarized findings are presented in tabulated form.
4.2.1 Arjaliès & Mundy (2013).
The paper by Arjaliès & Mundy (2013) is a qualitative paper and is based on survey research. The sample featured CAC 40 companies located in France. CAC 40 ‘’is a benchmark stock market index that tracks the 40 largest French stocks based on market capitalization.’’ (Arjaliès & Mundy, 2013, p. 288) Questionnaires provide the primary source of data and consisted of open and closed questions. When available, also secondary data (companies’ reports and social ratings) was used in order to reach data triangulation. The questionnaires were submitted to the organizations by post, and in case of non-response were followed up by telephone calls. A final response rate of 87,5% was
realized which comes down to 36 participating organizations. Finally, an interview was held ‘’with the director of an agency advising on socially responsible investment.’’ (Arjaliès & Mundy, 2013, p.288)
4.2.2 Durden (2008).
The paper by Durden (2008) is a qualitative paper and is based on case study research. The case study organization is a food manufacturing company in New Zealand. Semi-structured interviews were held with 7 organizational members (including the board and management team). Informal discussions took place with 20 organizational members, leading to a total number of 27 which participated in the data collection process. Data triangulation was applied in this paper. The other sources of evidence were: informal interviews, documents and observations.
4.2.3 Gond et al. (2012).
The paper by Gond et al. (2012) is a qualitative paper and aims to develop theory. These authors build on previous literature and extend it into different strategy configurations. Also empirical literature has been provided in order to give examples of these configurations.
4.2.4 Henri & Journeault (2010).
The paper by Henri & Journeault (2010) is a quantitative paper and is based on survey research. The random sample featured 1500 manufacturing firms located in Canada. Questionnaires provide the primary source of data and consisted of Likert-scale type measurements. The questionnaires were submitted to the sample organizations by postal mail. A randomly selected sample from non-respondents was followed up by telephone calls. The final response rate was 20,9% which comes down to 303 usable questionnaires.
4.2.5 Perego & Hartmann (2009).
The paper by Perego & Hartmann (2009) is a quantitative paper and is based on survey research. The sample featured 285 potential respondents. Respondents with a professional qualification in
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organizations which employed over 100 people were considered. The organizations are located in the Netherlands. (Perego & Hartmann, 2009) Questionnaires provide the primary source of data and consisted of Likert-scale type measurements. The questionnaires were submitted to the sample respondents by postal mail. This was followed up by a second mailing. Ultimately, non-respondents were approached by telephone. The final response rate was 30,3% which comes down to 81 useable questionnaires.
4.2.6 Pondeville et al. (2013).
The paper by Pondeville et al. (2013) is a quantitative paper and is based on survey research. The sample featured 2600 manufacturing firms located in Belgium. Questionnaires provide the primary source of data and consisted of Likert-scale type measurements. The questionnaires were submitted to the sample organizations by postal and electronic mail. After one month, a follow-up mailing was sent. The final response rate was 10% which comes down to 256 useable questionnaires.
4.2.7 Virtanen et al (2013).
The paper by Virtanen et al. (2013) is a qualitative paper and is based on case study research. The case study organization is a petrochemical complex in Finland. In-depth semi-structured interviews with organizational members were held in order to gather the empirical evidence. The number of organizational members from the case study organization who participated in the research was 22.
4.2.8 Comparison in tabulated form.
Article Method
Arjaliès & Mundy (2013) Qualitative survey research (open and closed questions) Durden (2008) Qualitative case study research
Gond et al. (2012) Qualitative theory development research Henri & Journeault (2010) Quantitative survey research
Perego & Hartmann (2009) Quantitative survey research Pondeville et al. (2013) Quantitative survey research Virtanen et al. (2013) Qualitative case study research 4.3 What kind of findings is presented in the articles?
In this subsection the main findings of the reviewed papers are presented. Also the kind of findings is indicated. In order to provide a clear overview and comparison the summarized findings are
presented in tabulated form.
4.3.1 Arjaliès & Mundy (2013).
Arjaliès & Mundy (2013) derived many findings from their questionnaires. A summary of the findings was presented in tabulated form in section 3.2.1of this thesis. These findings ‘’provide insights into the MCS used by companies to manage CSR strategy and into how companies use these MCS in order to meet their external requirements, manage their risks and exploit strategic opportunities
generated by CSR activities.’’ (Arjaliès & Mundy, 2013, p.298) The findings are built around the LoC- framework as proposed by Simons (1995). A few examples of the findings are: all the firms in the
sample have employed a CSR strategy ‘’with some respondents specifically stating their belief that CSR
