Strategic responses to institutional pressures for sustainability

Abstract

Purpose The purpose of this paper is to examine the role of management control systems (MCS) in strategically responding to institutional pressures for sustainability (IPS). Drawing on institutional theory (DiMaggio and Powell, 1983) and strategic responses to institutional pressures framework (Oliver, 1991), the study argues that organisations strategically respond to IPS using MCS. Design/methodology/approach Data were collected by interviewing sustainability managers of a large-scale multinational apparel manufacturing organisation with its headquarters in Sri Lanka. Findings The study finds that organisations actively respond to IPS using acquiescence, compromise, avoidance, defiance, and manipulation strategies. The results not only reveal that formal MCS play a critical role in complying with IPS, but also in more active responses, including compromise, avoidance, defiance, and manipulation. The findings highlight that organisations use MCS as a medium to respond strategically to IPS, and in turn, the use of MCS has important implications for organisational change and improvement. Practical implications The study has implications for Western organisations, finding that suppliers committed to sustainability in Asia strategically respond to IPS as a means of strengthening outsourcing contracts, instead of blindly accepting. Findings indicate that organisational changes and success seem to be a function of strategically responding to IPS rather than operating an organisation by neglecting sustainability challenges. The organisational ability to use MCS in strategically responding to IPS has the potential for long-term value creation. Originality/value This study provides novel insights into the MCS, strategy and sustainability literatures by exploring different uses of MCS tools in strategically responding to IPS. More specifically, it shows how the use of MCS tools varies in supporting strategic responses, and with respective IPS. In doing so, it enhances our understanding of the importance of the use of MCS in dynamics of institutional change and practical variances in strategically responding to IPS.

Theorising and conceptualising the sustainability control system for effective sustainability management

“…Nevertheless, this framework has not yet been applied in sustainability stream. To detail, Wijethilake et al (2017) comment that SCS are the means for organisations to respond to strategic pressures from the institutional environment. Moreover, external stakeholders are often presented as instrumental for the design of sustainability MAC practices and systems (e.g.…”

“…Although, the majority of system theorisations within general MAC research are concentrated within the boundaries of a firm and neglect the input of the controlled. Therefore, building upon Guenther et al (2016) and Wijethilake et al (2017), the following definition of SCS is offered to guide this research: SCS are the dynamic constellation of management accounting tools that connect organisational strategy with operations in a given context by providing information and direction, as well as monitoring and motivating employees to continually develop sustainable practices and procedures for future improved sustainability performance.…”

“…This definition infers that employees are not only guided by the system, but also have the capacity to develop the system from the bottom-up in a particular context which brings with it nuanced sustainability problems and attitudes. Thus, employees are motivated not only to participate in meeting objectives (see Wijethilake et al 2017), but also to actively contribute to the development process of SCS and sustainability in general.…”

Environmental Management Accounting: The Missing Link to Sustainability?

“…They further insist on the necessity to engage with a broad range of stakeholders to capture all possible impacts and facilitate an understanding of all factors that could influence the achievement of sustainability (Frame and Cavanagh 2009). While the literature has demonstrated the influence of top management commitment and values (Norris and O'Dwyer 2004;Wijethilake, Munir, and Appuhami 2017) on the implementation of social and EMCS, it has also demonstrated the necessity for a group of different stakeholders to engage with an organisation. Different types of stakeholders will influence different types of controls at different levels of the organisation (e.g.…”

“…(4) We encourage scholars to look beyond the organisation boundaries to see how a business organisation can use controls to fulfil sustainability within its own industry, its supply chain, by prompting its customers to a certain 'usage' of its products and encouraging end-of-life management, and, more broadly, how EMA tools and EMCS and governance from a business organisation can influence its externalities towards society as a whole. Need to seek internal and external stakeholder engagement Planet boundaries Need to include planet boundaries through, for example, science-based targets (5) We need to develop studies such as the research conducted by Rodrigue, Magnan, and Boulianne (2013) and Wijethilake, Munir, and Appuhami (2017) to better understand the influence of internal and external stakeholders on the development of EMA and EMCS. (6) Lastly, we argue that academics should engage our research closer with sustainable development thinking (Bebbington and Thomson 2013), that is include planet boundaries within the design of new EMA tools and, controls, systems and packages ( Figure 1).…”