Sustainability control systems in short-term operational and long-term strategic decision-making

Sanjaya C. Kuruppu, Markus J. Milne and Carol A. Tilt

Meditari Accountancy Research, 2023, vol. 32, issue 1, 234-265

Abstract: Purpose - This study aims to respond to calls for more research to understand how sustainability control systems (SCSs) feature (or do not feature) in short-term operational and long-term strategic decision-making. Design/methodology/approach - An in-depth case study of a large multinational organisation undertaking several rounds of sustainability reporting is presented. Data collection was extensive including 26 semi-structured interviews with a range of employees from senior management to facility employees, access to confidential reports and internal documents and attendance of company meetings, including an external stakeholder engagement meeting and the attendance of the company’s annual environmental meeting. A descriptive, analytical and explanatory analysis is performed on the case context (Pfister et al., 2022). Findings - Simon’s (1995) levers of control framework structures our discussion. The case company has sophisticated and formalised diagnostic controls and strong belief and boundary systems. Conventional management controls and SCSs are used in short-term operational decision-making, although differences between financial imperatives and other aspects such as environmental concerns are difficult to reconcile. SCSs also provided information to justify company actions in short-term decisions that impacted stakeholders. However, SCSs played a very limited role in the long-term strategic decision. Tensions between social, environmental and economic factors are more reconcilable in the long-term strategic decision, where holistic risks and opportunities need to be fully identified. External reporting is seen in a “constraining” light (Tessier andOtley, 2012), and intentionally de-coupled from SCSs. Originality/value - This paper responds to recent calls for rich, holistic and contextually-grounded perspectives of sustainability processes at an extractives company. The study provides novel insight into how SCSs are used (or not used) in short-term or long-term decision-making and external reporting. The paper illustrates how a large company is responding to sustainability pressures within the unique contextual setting of New Zealand. The study outlines the imitations of existing practice and provides implications for how sustainability-based internal controls can be better embedded into organisations.

Keywords: Decision-making; Sustainability reporting; Management control systems; Levers of control; Sustainability strategy; Sustainability control systems (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:medarp:medar-12-2021-1548

DOI: 10.1108/MEDAR-12-2021-1548

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