Mangement Control Systems

Management Accounting Research 23 (2012) 205–223

Contents lists available at SciVerse ScienceDirect

Management Accounting Research journal homepage: www.elsevier.com/locate/mar

Configuring management control systems: Theorizing the integration of strategy and sustainability
Jean-Pascal Gond a,∗ , Suzana Grubnic b,1 , Christian Herzig c,2 , Jeremy Moon c,3 a b c

Cass Business School, City University, 106 Bunhill Row, EC1Y 8TZ London, UK Loughborough University, School of Business and Economics, Loughborough, Leicestershire LE11 3TU, UK Nottingham University Business School, International Centre for Corporate Social Responsibility, Jubilee Campus, Wollaton Road, Nottingham NG8 1BB, UK

a r t i c l e

i n f o

a b s t r a c t
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. This paper addresses this gap and mobilizes a configuration approach to theorize the roles and uses of management control systems (MCSs) and sustainability control systems (SCSs) in the integration of sustainability within organizational strategy. Building on Simons’ levers of control framework, we distinguish two possible uses of a MCS and a SCS—a diagnostic use and an interactive use—and we specify the modes of MCSs and SCSs integration. We rely on these two core dimensions to identify eight organizational configurations that reflect the various uses as well as their modes of integration of SCS and MCS. We characterize these ideal-type configurations, explain their impact on the triple bottom line, and describe which mechanisms allow organizations to move from one configuration to another. In so doing, we highlight various paths toward sustainability integration or marginalization within organizations. Finally, we explain how our framework can support future research on

References: Abernethy, M.A., Brownell, P., 1999. The role of budgets in organizations facing strategic change: an exploratory study. Accounting, Organizations and Society 24 (3), 189–204. Acquier, A., 2010. CSR in search of a management model: a case of marginalization of a CSR initiative. In: Smith, C., Bhattacharya, C.B., Vogel, D., Levine, D. (Eds.), Global Challenges in Responsible Business. Cambridge University Press, pp. 107–132. Adams, C.A., 2004. The ethical, social and environmental performance–portrayal gap. Accounting, Auditing & Accountability Journal 17, 731–757. Adams, C.A., Frost, G.R., 2008. Integrating sustainability reporting into management practices. Accounting Forum 32, 288–302. Adams, C.A., Whelan, G., 2009. Conceptualising future change in corporate sustainability reporting. Accounting, Auditing & Accountability Journal 22 (1), 118–143. Ahrens, T., Chapman, C.S., 2007. Management accounting as practice. Accounting, Organizations and Society 32, 1–27. Ansoff, I.H., 1965. Corporate Strategy: An Analytical Approach to Business Policy for Growth and Expansion. McGraw-Hill, New York. Banerjee, S.B., 2008. Corporate social responsibility: the good, the bad and the ugly. Critical Sociology 34 (1), 51–79. Bansal, P., 2005. Evolving sustainability: a longitudinal study of corporate sustainable development. Strategic Management Journal 26 (3), 197–218. Bebbington, J., 2006. Accounting for sustainable development performance. Research Executive Summaries Series 2 (15). Bebbington, J., 2007. Changing organizational attitudes and culture through sustainability accounting. In: Unerman, J., Bebbington, J., O’Dwyer, B. (Eds.), Sustainability Accounting and Accountability. Routledge, London, pp. 226–242. Bechky, B.A., 2003. Sharing meaning across occupational communities: the transformation of understanding on a production floor. Organization Science 14 (3), 312–330. Berry, A.J., Coad, A.F., Harris, E.P., Otley, D.T., Stringer, C., 2009. Emerging themes in management control: a review of recent literature. British Accounting Review 41 (1), 2–20. Bhimani, A., Langfield-Smith, K., 2007. Structure, formality and the importance of financial and non-financial information in strategy development and implementation. Management Accounting Research 18 (1), 3–31. Bisbe, J., Otley, D.T., 2004. The effects of the interactive use of management control systems in product innovation. Accounting, Organizations and Society 29 (8), 709–737. Bonacchi, M., Rinaldi, L., 2007. DartBoards and clovers as new tools in sustainability planning and control. Business Strategy and the Environment 16 (7), 461–473. Botschen, S., Hahn, T., Wagner, M., 2002. OBI: Nachhaltigkeitsmanagement mit dem FOX. In: Schaltegger, S., Dyllick, T. (Eds.), Nachhaltig managen mit der Balanced Scorecard (Sustainably Managing with the Balanced Scorecard). Gabler, Wiesbaden, pp. 259–281 (only available in German). Boxenbaum, E., Jonsson, S., 2008. Isomorphism, diffusion and decoupling. In: Greenwood, R., Suddaby, R., Oliver, C., Sahlin-Anderson, K. (Eds.), Handbook of Organizational Institutionalism. Sage, pp. 78–98. Brown, J.S., Duguid, P., 1991. Organizational learning and communities-ofpractice: toward a unified view of working, learning, and innovating. Organization Science 2, 40–57. Bruining, H., Bonnet, M., Wright, M., 2004. Management control systems and strategy change in buyouts. Management Accounting Research 15 (2), 155–177. Burgelman, R.A., 1991. Intraorganizational ecology of strategy making and organizational adaptation: theory and field research. Organization Science 2, 239–262. Burke, L., Logsdon, J.M., 1996. How corporate social responsibility pays off. Long Range Planning 29 (4), 495–550. Burritt, R.L., 2004. Environmental management accounting: roadblocks in the way to the green and pleasant land. Business Strategy and the Environment 13, 13–32. Burritt, R.L., Herzig, C., Tadeo, B., 2009. Environmental management accounting for cleaner production: the case of a Philippine rice mill. Journal of Cleaner Production 17 (4), 431–439. Burritt, R., Schaltegger, S., 2001. On the Interrelationship between ecoefficiency and operational budgeting. Environmental Management and Health 12 (2), 158–174. Burritt, R.L., Schaltegger, S., 2010. Sustainability accounting and reporting: fad or trend? Accounting, Auditing & Accountability Journal 23 (7), 829–846. Callon, M., 2009. Civilizing markets: carbon trading between in vitro and in vivo experiments. Accounting, Organization and Society 34 (3–4), 535–548. Carlyle, 2004. Transferring, translating, and transforming: an integrative framework for managing knowledge across boundaries. Organization Science 15 (5), 555–568. 222 J.-P. Gond et al. / Management Accounting Research 23 (2012) 205–223 Heidmann, M., Schäffer, U., Strahringer, S., 2008. Exploring the role of management accounting systems in strategic sensemaking. Information Systems Management 25 (3), 244–257. Henri, J.-F., 2006. Management control systems and strategy: a resourcebased view. Accounting, Organizations and Society 31, 529–558. Henri, J.-F., Journault, M., 2009. Revisiting the link between management control systems and strategy in contingency-based research. Paper of the Annual Conference of the Canadian Aaccounting Academic Association. Henri, J.-F., Journault, M., 2010. Eco-control: the influence of management control systems on environmental and economic performance. Accounting, Organizations and Society 35, 63–80. Herzig, C., Viere, T., Schaltegger, S., Burritt, R., 2012. Environmental Management Accounting. Case Studies of South East-Asian Companies. Routledge, London. Hoffman, A., Bazerman, M.H., 2007. Changing practices on sustainability: understanding and overcoming the organizational and psychological barriers to action. In: Sharma, S., Starik, M., Husted, B. (Eds.), Organizations and the Sustainability Mosaic. Edward Elgar Publishing. Hopwood, A.G., 1976. Accounting and Human Behavior. Prentice Hall, Englewood Cliffs, NJ. Hopwood, A.G., 1987. The archaeology of accounting systems. Accounting, Organizations and Society 12 (3), 207–234. Hopwood, A.G., 2009. Accouting and the environment. Accounting, Organizations and Society 34 (3–4), 433–439. Hopwood, A.G., Unerman, J., Fries, J. (Eds.), 2010. Accounting for Sustainability: Practical Insights. Earthscan, London. Hubbard, G., 2009. Measuring organizational performance: beyond the triple bottom line. Business Strategy and the Environment 18 (3), 177–191. Islam, M.A., Deegan, C., 2008. Motivations for an organisation within a developing country to report social responsibility information. Accounting, Auditing & Accountability Journal 21, 850–874. Johnson, G., Langley, A., Melin, L., Whittington, R. (Eds.), 2007. Strategy as Practice: Research Directions and Resources. Cambridge University Press, Cambridge, UK. Kaplan, R., Norton, D., 1996. The Balanced Scorecard: Translating Strategy into Action. Harvard Business Press, Boston. Kets de Vrie, M.F.R., Miller, R., 1984. The Neurotic Organization: Diagnosing and Changing Counterproductive Styles of Management. Jossey-Bass, San Francisco. Kober, R., Ng, J., Paul, B.J., 2007. The interrelationship between management control mechanisms and strategy. Management Accounting Research 18 (4), 425–452. Kolk, A., 2003. Trends in sustainability reporting in the Fortune Global 250. Business Strategy and the Environment 12 (5), 279–291. Lamberton, G., 2005. Sustainability accounting—a brief history and conceptual framework. Accounting Forum 29 (1), 7–23. Langfield-Smith, K., 1997. Management control systems and strategy: a critical review. Accounting, Organizations and Society 22 (2), 207–232. Larrinaga-Gonzalez, C., Bebbington, J., 2001. Accounting change or institutional appropriation?—a case study of the implementation of environmental accounting. Critical Perspectives on Accounting 12 (3), 269–292. Levine, J.M., Moreland, R.L., 1991. Culture and socialization in work groups. In: Resnick, L.B., Levine, J.M., Teasdale, S.D. (Eds.), Perspectives on Socially Shared Cognition. American Psychological Association, Washington, DC, pp. 257–279. MacKenzie, D., 2009. Making things the same: gas, emission rights and the politics of carbon markets. Accounting, Organization and Society 34 (3–4), 440–455. Malmi, T., Brown, D.A., 2008. Management control systems as a package—opportunities, challenges and research directions. Management Accounting Research 19 (4), 287–300. Maon, F., Lindgreen, A., Swaen, V., 2009. Designing and implementing corporate social responsibility: an integrative framework grounded in theory and practice. Journal of Business Ethics 87, 71–89. Maon, F., Lindgreen, A., Swaen, V., 2010. Organizational stages and cultural phases: a critical review and a consolidative model of corporate social responsibility development. International Journal of Management Reviews 12 (1), 21–38. Marginson, D.E.W., 2002. Management control systems and their effects on strategy formation at middle-management levels: evidence from a UK organization. Strategic Management Journal 23, 1019–1031. Markowitz, L., 2008. Can strategic investing transform the corporation? Critical Sociology 34 (5), 681–707. Chenhall, R., 2003. Management control systems design within its organizational context: findings from contingency-based research and directions for the future. Accounting, Organizations and Society 28 (2–3), 127–168. Davila, A., 2000. An empirical study on the drivers of management control systems design in new product development. Accounting, Organizations and Society 25, 383–410. Deegan, C., 2002. The legitimising effect of social and environmental disclosures—a theoretical foundation. Accounting, Auditing & Accountability Journal 15 (3), 282–311. Dias-Sardinha, I., Reijnders, L., Antunes, P., 2002. From environmental performance evaluation to eco-efficiency and sustainability balanced scorecards. Environmental Quality Management 12 (2), 51–64. Doty, D.H., Glick, W.H., 1994. Typologies as a unique form of theorybuilding: toward an improved understanding and modeling. Academy of Management Review 19 (2), 231–251. Durden, C., 2008. Towards a socially responsible management control system. Accounting, Auditing & Accountability Journal 21 (5), 671–694. Dutta, S.K., Lawson, R.A., 2009. Aligning performance evaluation and reward systems with corporate sustainability goals. Cost Management (November/December), 15–23. Elkington, J., 1997. Cannibals with Forks: The Triple Bottom Line of 21st Century Business. Oxford University Press, Oxford. Elsbach, K.B., Sutton, R.I., 1992. Acquiring organizational legitimacy through illegitimate actions: a marriage of institutional and impression management theories. Academy of Management Journal 35, 699–738. Emery, F.E., Trist, E.L., 1969. Socio-technical systems. In: Emery, F.E. (Ed.), Systems Thinking. Penguin, Harmondsworth, pp. 281–296. Emery, Y., Giauque, D., 2003. Sens et paradoxes de l’emploi public au XXIème siècle. Presses Polytechniques et Universitaires Romandes, Lausanne. Figge, F., Hahn, T., 2004. Sustainable value added. Measuring corporate contributions to sustainability beyond eco-efficiency. Ecological Economics 48 (2), 173–187. Figge, F., Hahn, T., Schaltegger, S., Wagner, M., 2002. The sustainability balanced scorecard—linking sustainability management to business strategy. Business Strategy and the Environment 11 (5), 269–284. Fisher, J.G., 1995. Contingency-based research on management control systems: categorization by level of complexity. Journal of Accounting Literature 14, 24–53. Fisher, J.G., 1998. Contingency theory, management control systems and firm outcomes: past results and future directions. Behavioural Research in Accounting 10 (Supplement), 47–57. Fiss, P.C., 2007. A set-theoretic approach to organizational configurations. Academy of Management Review 32 (4), 1180–1198. Fiss, P.C., 2010. Building better causal theories: a fuzzy set approach to typologies in organization research. Academy of Management Journal 54 (2), 393–420. Flamholtz, E., Das, E., Tsui, A., 1985. Toward an integrative framework of organizational control. Accounting, Organizations and Society 10 (1), 35–50. Gmindner, C.U., Bergner, M., 2002. Die Weiterentwicklung der BSC bei den Berliner Wasserbetrieben. In: Schaltegger, S., Dyllick, T. (Eds.), Nachhaltig managen mit der Balanced Scorecard (Sustainably Managing with the Balanced Scorecard). Gabler, Wiesbaden, pp. 199–227 (only available in German). Godemann, J., 2008. Knowledge integration: a key challenge for transdisciplinary cooperation. Environmental Education Research 14 (6), 625–641. Gond, J.-P., Herrbach, O., 2006. Corporate social reporting as a learning tool? A theoretical framework. Journal of Business Ethics 65 (4), 359–371. Gond, J.-P., Palazzo, G., Basu, K., 2009. Reconsidering instrumental corporate social responsibility through the Mafia metaphor. Business Ethics Quarterly 19 (1), 55–58. Gond, J.-P., Krikorian, F., Cabantous, L., 2010. The double edge of strategizing: a study of institutional work and actors’ practice in the craft of corporate social responsibility. Paper presented at the European Group on Organization Studies Conference (EGOS), Lisboa, Portugal, July. Gray, R.H., 2010. Is accounting for sustainability actually accounting for sustainability and how would we know? An exploration of narratives of organisations and the planet. Accounting, Organizations and Society 35 (1), 47–62. Hart, S., 1995. A natural resource-based view of the firm. Academy of Management Review 20 (4), 986–1014. J.-P. Gond et al. / Management Accounting Research 23 (2012) 205–223 McWilliams, A., Siegel, D.S., 2001. Corporate social responsibility: a theory of the firm perspective. Academy of Management Review 26 (1), 117–127. McWilliams, A., Siegel, D.S., 2011. Creating and capturing value: strategic corporate social responsibility, resource-based theory, and sustainable competitive advantage. Journal of Management 37 (5), 1480–1495. Meyer, J.W., Rowan, B., 1977. Institutionalized organizations: formal structure as myth and ceremony. American Journal of Sociology 83, 340–363. Meyer, M.W., Zucker, L.G., 1989. Permanently Failing Organizations. Sage, Newbury Park, CA. Miles, R.E., Snow, C.C., 1978. Organizational Strategy, Structure, and Process. McGraw-Hill, New York, NY. Miller, D., 1986. Configurations of strategy and structure: toward a synthesis. Strategic Management Journal 7, 233–249. Miller, D., 1987. The genesis of configuration. The Academy of Management Review 12 (4), 686–701. Miller, D., 1990. Organizational configurations: cohesion, change, and prediction. Human Relations 43 (8), 771–789. Miller, D., 1996. Configurations revisited. Strategic Management Journal 17, 505–512. Miller, D., Whitney, J.O., 1999. Beyond strategy: configuration as a pillar of competitive strategy. Business Horizons 42 (3), 5–17. Milne, M.J., 1996. On sustainability: the environment and management accounting. Management Accounting Research 7, 135–161. Milne, M.J., Grubnic, S., 2011. Climate change accounting research: keeping it interesting and different. Accounting, Auditing & Accountability Journal 24 (8), 948–977. Mintzberg, H.T., 1979. The Structuring of Organizations. Prentice Hall, Englewood Cliffs, NJ. Mintzberg, H.T., 1983. Structure in Lives: Designing Effective Organizations. Prentice Hall, Englewood Cliffs, NJ. Mintzberg, H.T., 1990. The design school: reconsidering the basic premises of strategic management. Strategic Management Journal 11, 171–195. Mintzberg, H.T., Waters, J.A., 1984. Of strategies, deliberate and emergent. Strategic Management Journal 6, 257–272. Mirvis, P., Googins, B., 2006. Stages of corporate citizenship: a developmental framework. California Management Review 48 (2), 104–126. Mundy, J., 2010. Creating dynamic tensions through a balanced use of management control systems. Accounting, Organizations and Society 35 (5), 499–523. Newton, T., Harte, G., 1997. Green business: technicist kitsch? Journal of Management Studies 34 (1), 75–98. Nidumolu, R., Prahalad, C.K., Rangaswami, M.R., 2009. Why sustainability is now the key driver to innovation? Harvard Business Review 87 (September), 57–64. Nixon, W.A.J., Burns, J., 2005. Management control in the 21st century. Management Accounting Research 16 (3), 260–268. Norris, G., O’Dwyer, B., 2004. Motivating socially responsive decision making: the operation of management controls in a socially responsive organisation. British Accounting Review 36, 173–196. O’Dwyer, B., Owen, D., 2007. The reporting and assurance dimension. In: Crane, A., Matten, D., Moon, J., Siegel, D.S. (Eds.), The Oxford Handbook of Corporate Social Responsibility. Oxford University Press, New York/Oxford, pp. 384–409. Oliver, C., 1992. The antecedents of deinstitutionalization. Organization Studies 13 (4), 563–588. Otley, D., 1980. The contingency theory of management accounting: achievement and prognosis. Accounting, Organizations and Society 5, 231–244. Otley, D.T., 1999. Performance management: a framework for management control system research. Management Accounting Research 10, 363–382. Ouchi, W.G., 1977. The relationship between organizational structures and organizational control. Administrative Science Quarterly 22 (1), 95–112. Parnell, J.A., 2008. Sustainable strategic management: construct, parameters, research directions. International Journal of Sustainable Strategic Management 1 (1), 35–45. 223 Porter, M.E., 1980. Competitive Strategy. Free Press, New York. Porter, M.E., Kramer, M.R., 2006. Strategy & society. The link between competitive advantage and corporate social responsibility. Harvard Business Review (December), 1–15. Roth, H.P., 2008. Using cost management for sustainability efforts. Journal of Corporate Accounting & Finance 19 (3), 11–18. Salzmann, O., Ionescu-Somers, A., Steger, U., 2005. The business case for corporate sustainability: literature review and research options. European Management Journal 23 (1), 27–36. Schaltegger, S., Burritt, R.L., 2005. Corporate sustainability. In: Folmer, H., Tietenberg, T.T. (Eds.), The International Yearbook of Environmental and Resource Economics 2005/2006. Edward Elgar, Cheltenham, pp. 185–222. Schaltegger, S., Wagner, M., 2006. Integrative management of sustainability performance, measurement and reporting. International Journal of Accounting, Auditing and Performance Evaluation 3 (1), 1–19. Schmidt, I., Meurer, M., Saling, P., Kicherer, A., Reuter, W., Gensch, C., 2004. SEEBALANCE—managing sustainability of products and processes with the socio-eco-efficiency analysis by BASF. Greener Management International 45, 79–94. Shrivastava, P., 1994. CASTRATED environment: GREENING management studies. Organization Studies 15 (5), 705–726. Simons, R., 1990. The role of management control systems in creating competitive advantage: new perspectives. Accounting, Organizations and Society 15 (1/2), 127–143. Simons, R., 1991. Strategic orientation and top management attention to control systems. Strategic Management Journal 12, 49–62. Simons, R., 1994. How new top managers use control systems as levers of strategic renewal. Strategic Management Journal 15, 169–189. Simons, R., 1995. Levers of Control, How Managers Use Innovative Control Systems to Drive Strategic Renewal. Harvard Business School Press, Boston, MA. Simons, R., 2000. Performance Measurement and Control Systems for Implementing Strategy: Text and Cases. Prentice Hall, Englewood Cliffs, NJ. Simons, R., 2006. Levers of Organization Design: How Managers Use Accountability Systems for Greater Performance and Commitment. Harvard Business School Press, Boston. Strike, V., Gao, J., Bansal, P., 2006. Being good while being bad: social responsibility and the international diversification of U.S. firms. Journal of International Business Studies 37, 850–862. Swanson, D.L., 1999. Toward an integrative theory of business and society: a research strategy for corporate social performance. Academy of Management Review 24 (3), 506–521. Thomson, I., 2007. Mapping the terrain of sustainability accounting. In: Unerman, J., Bebbington, J., O’Dwyer, B. (Eds.), Sustainability Accounting and Accountability. Routledge, London, pp. 19–36. Tuomela, T.S., 2005. The interplay of different levers of control: a case study of introducing a new performance measurement system. Management Accounting Research 16, 293–320. Vaivio, J., 2004. Mobilizing local knowledge with “proactive” non-financial measures. European Accounting Review 13, 39–71. Wagner, B., Enzler, S., 2006. Material Flow Management: Improving Cost Efficiency and Environmental Performance. Physica, Heidelberg. Watzlawick, 1979. The Language of Change. Basic Books, New York. Weber, M., (Shills, E.A., Finch, H.A., Eds. & Trans.) 1904. Max Weber on the Methodology of the Social Sciences. Free Press, Glencoe, IL. Whittington, R., 1996. Strategy as practice. Long Range Planning 29 (5), 731–735. Whittington, R., 2007. Strategy practice and strategy process: family differences and the sociological eye. Organization Studies 28 (10), 1575–1586. Widener, S.K., 2007. An empirical analysis of the levers of control framework. Accounting, Organizations and Society 32, 757–788. Zadek, S., 2004. The path to corporate responsibility. Harvard Business Review 82 (12), 125–132. Zheng, X., 2010. Sensemaking, institutions and crises of legitimacy: the case of Nike’s sweatshop. Unpublished Doctoral Dissertation. Nottingham University Business School.