Management control and sustainable development practices

Research on the interface of management control and sustainable development has gained a growing interest in corporates including related concepts such as corporate social responsibility and corporate sustainability (Schaltegger & Burritt, 2005; Van Marrewijk, 2003). There is an emergent body of academic literature on management control for sustainable development (e.g., Battaglia, Passetti, Bianchi & Frey, 2016; Buhr & Gray, 2012; Crutzen et al., 2017; Günther et al., 2016; Gond et al., 2012; Hahn, Preuss, Pinkse & Figge, 2014; Lueg & Radlach, 2016; Norris & O'Dwyer, 2004; Maas et al., 2016; Morsing & Oswald, 2009; Riccaboni & Leone, 2010; Schaltegger & Wagner, 2006). This is accompanied by substantial interest around the emergence of new forms of accounting and control for sustainability such as eco-control, social indicators, material flow cost accounting systems and stakeholder value concepts (Engert et al., 2016) and the way in which higher level integration of environmental and social issues into management control systems can support strategic integration of sustainability into organisations (Engert et al., 2016; Gond et al., 2012). Management control is argued to play a central role in supporting the formulation and implementation of strategies, policies and programmes orientated towards sustainable development (Ballou, Casey, Grenier & Heitger, 2012; Engert et al., 2016; Epstein & Roy, 2001; Gond et al., 2012; Perego & Hartmann, 2009). Lueg and Radlach (2016) argue that organisations that aim to enforce sustainable development alter the notion of traditional management control. Ball and Milne (2005) conclude that “new ideas and tools for management control are essential in the context of a shift towards sustainability” (p. 324).

Hahn et al. (2014) theoretically argue that differences between cognitive content and structure influence the three stages of the sense-making process (i.e., managerial scanning, interpreting, and responding) with regard to sustainable development among organisations. They elaborate

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on why managers rarely push for radical change when facing complex and ambiguous sustainability issues “since they are hampered by ambivalence and prudence” (p. 35). Crutzen et al. (2017) explored and theorised control patterns in large European firms. The results show that all researched companies deploy sustainability management controls. There are two distinct approaches to management control for sustainability: a focus on either a formal or an informal approach. Similarly, Norris and O'Dwyer (2004) examined the perceived influence of formal and informal control systems on socially responsive managerial decision-making through one in-depth case study in a large UK firm with findings indicating the dominant influence of informal controls such as social and self-control in instilling socially responsible decision making among the managers.

Schaltegger and Wagner (2006) also demonstrate how the management of the largest printing facility of Axel Springer developed top-down formal controls of sustainable development related issues by using the balanced scorecard approach. This study recommends that management of sustainability performance requires a sound management framework which connects environmental and social management with the business and competitive strategy and management. Such a management framework should also integrate environmental and social information with economic business information and sustainability reporting. Based on a longitudinal eight-year study (2006–2014) in a large Italian food co-operative, Battaglia et al. (2016) analyse whether and how the development and the use of sustainability control systems have been able to promote the integration of sustainability within an organisational strategy. The study shows that sustainability integration remains a fragile concept even in a co-operative, despite the similarities between co-operative values and the principles of corporate social responsibility.

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Morsing and Oswald (2009) conducted case study research on Novo Nordisk A/S from the perspective of organisational culture. The study explores the extent to which contemporary management control systems can help to influence sustainability at the operational level. Similarly, Gond et al. (2012) studied the uses of both management controls and sustainability controls (diagnostic vs. interactive) as well as their level of integration on three dimensions (technical, organisational and cognitive) to delineate eight ideal-types of organisational configurations. Others have empirically illustrated that management control systems are able to promote sustainability integration (Buhr & Gray, 2012; Riccaboni & Leone, 2010). The significance of integrating and studying specific sustainability controls systems with the more traditional management control systems have also been highlighted (George, Siti-Nabiha, Jalaludin & Abdalla, 2016), as this helps to ensure that business operations are run in conjunction with sustainability issues. Contrary to these findings, Durden (2008) claims that management controls are not able to monitor corporate social responsibility, and thus do not contribute to sustainable development integration.

Berry et al. (2009) and Lueg and Radlach (2016), in their literature reviews, identify sustainability control as an important emerging theme. Even though a growing body of literature argues that management control is crucial for corporate sustainable development (e.g., Durden, 2008; Gond et al., 2012; Günther et al., 2016; Norris & O'Dwyer, 2004), only a few empirical studies have examined management control and accounting practices from the point of view of sustainable development (Crutzen and Herzig, 2013; Epstein & Wisner, 2005; Gond et al., 2012; Günther et al., 2016) and these have not obtained wider stakeholder opinion on the role of management controls in sustainability practices. This study fills this gap by examining the opinion of stakeholders of a multinational mining company as to how they perceive the role of accounting sustainable development practices.

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