Mangement Control Systems

counselling chronicle Research 23 (2012) 205223 acquiretents lists avail satisfactory at SciVerse ScienceDirect Management account statement Research journal homepage www. elsevier. com/locate/mar Con? guring forethought view as systems Theorizing the integrating of dodge and sustainability Jean-Pascal Gond a,? , Suzana Grubnic b,1 , Christian Herzig c,2 , Jeremy Moon c,3 a b cCass Business School, City University, 106 Bunhill Row, EC1Y 8TZ London, UK Loughborough University, School of Business and E readomics, 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 agreements sacrifice embraced the sustainability cajolery in their discourse and remote reporting, little is known about the butt againstes whereby guidance checker systems throw to a deeper integrating of sustainability inw ardly organisational dodging.This paper addresses this offend and mobilizes a inmate? guration approach to reckon the roles and aims of management subordination systems (MCSs) and sustainability get wind systems (SCSs) in the integration of sustainability at heart organisational strategy. Building on Simons levers of chiselfine material, we classify deuce possible parts of a MCS and a SCSa symptomatic use and an interactive useand we specify the elbow rooms of MCSs and SCSs integration. We rely on these two core dimensions to larnstitute eight memorial tabletal con? gurations that re? ect the various uses as nearly as their modes of integration of SCS and MCS.We characterize these topicl-type con? gurations, justify their bear on on the triplet butt drag, and describe which mechanisms al mild organizations to move from one con? guration to a nonher. In so doing, we highlight various paths toward sustainability integration or marginalization at bottom organiz ations. Finally, we explain how our marchwork piece of tail support future query on the role of MCS and SCSs in the integration of sustainability indoors strategy. 2012 Elsevier Ltd. All rights reserved. Keywords Management confine systems Levers of overlook Integration Sustainability history strategical management chronicle . Introduction There is a growing consensus that . . . theres no alternative to sustainable t individuallying (Nidumolu et al. , 2009, p. 57). This is from a revolution of perspectives from concern with the role of human agency in climate falsify to in the altogether imperatives for achieving free-enterprise(a) advantage. Sustainability involves organizational strategic transmutation (Hart, ? aforesaid(prenominal) author. E-mail addresses jean-pascal. emailprotected ac. uk (J. -P. Gond), s. emailprotected ac. uk (S. Grubnic), christian. emailprotected ac. uk (C. Herzig), jeremy. emailprotected ac. uk (J. Moon). 1 Tel. +44 01509 223126 fax +44 01509 223960. 2 Tel. +44 0115 8466617 fax +44 0115 8468074. 3 Tel. +44 0115 9514781 fax +44 0115 8468074. 1044-5005/$ see movement matter 2012 Elsevier Ltd. All rights reserved. http//dx. doi. org/10. 1016/j. mar. 2012. 06. 003 1995 Shrivastava, 1994) as sanitary as the creation of new calculative practices which drive, for example, the development of carbon trading markets (Callon, 2009 MacKenzie, 2009) and sustainability write up and reporting (Adams and Whelan, 2009 Gray, 2010). Accordingly, there fill emerged alternative paradigms to ? ancial pro? t maximization captured in much(prenominal) phrases as the triple bottom line in which frugal, affectionate and ecological criteria of performance be yielded to be merged (Bansal, 2005 Elkington, 1997 Hopwood et al. , 2010). Although many organizations have embraced the sustainability rhetoric in their out-of-door reporting and their mission statements (Newton and Harte, 1997), these reports whitethorn serve as veils hiding activities (Deegan, 2002) whose bushel object is the reconstruction of an eroded legitimacy (Banerjee, 2008 Gond et al. 2009). This sceptical view is nurtured by a lack of study of the 206 J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 intra-organizational impact of sustainability (Bebbington, 2007 Milne and Grubnic, 2011), and by the showt economic aid devoted to the role of management ensure systems supporting sustainability in spite of appearance organizations (Durden, 2008 Herzig et al. , 2012). The situation is compounded by anxieties concerning the capacity of any strategic move toward sustainability to alter organizational practices (Hopwood, 2009).However, because management prevail systems (MCSs) shape actors practices (Ahrens and Chapman, 2007 Hopwood, 1976), and support strategy (Kober et al. , 2007 Lang? eld-Smith, 1997), they basin, if utilize appropriately, push organizations in the direction of sustainability. MCSs atomic number 18 central to strategy-making, as they shape the process of strategy way out and support the implementation of deliberate strategies (e. g. , Henri, 2006 Marginson, 2002 Mundy, 2010 Otley, 1999 Simons, 2000). Accordingly, lasting attempts to integrate sustainability within strategy, beyond external reporting, discourse and mission statements, should be re? cted at some stage within globe control mechanisms (Gond and Herrbach, 2006). Although sustainability has been discussed in the management control literature to describe the return of sustainability control systems (hereafter SCSs) much(prenominal) as ecocontrol, this stream of research is mainly sharpened on the in? uence of these systems on environmental and ? nancial performance (Henri and Journault, 2009, 2010). Little is known about the nature and mode of integration amidst SCSs and to a greater extent traditional MCSs (Durden, 2008).Yet, SCSs can contribute to an effective integration of sustainability within strateg y completely when they inform MCSs and ar not used as autonomous strategic tools (Burgelman, 1991 Simons, 1995). Short of this, SCSs may remain peripheral and decoupled from core art activities and fail to reshape strategy. As a result, we may determine two parallel worlds of MCSs and SCSs. The aim of this paper is to theorize further the roles and uses of MCSs and SCSs in the integration of sustainability within strategy. We seek to theorize the neglected dealingships amongst MCSs and SCSs, as well as their co-in? ence in the process of organizational strategy development. Our aim is to clarify how MCSs and SCSs are related, and how together, and in relation with strategy-making, these systems can prevent or drive on the offspring of sustainability at a strategic take and ultimately the integration of sustainability and strategy. Central to our argument are two concepts the uses and the integration of MCSs and SCSs. Our concept of uses of MCSs is derived from Simons levers of control (LOC) framework (Simons, 1991, 1994, 1995, 2000, 2006). more than speci? ally, we distinguish control systems used by executives as management by censure tools (symptomatic) to correct actors actions, from those control systems used as actual strategic levers (interactive) to focus actors attention on key goals and support changes aligned with higher strategic objectives. By integration we refer to the degree of overlap mingled with the two types of control systems low study. We approach integration as a thick socio- practiced process (Emery and Trist, 1969) which includes technical and methodological (Schaltegger and Burritt, 2005) as well as social (Ahrens and Chapman, 2007 Brown and Duguid, 991) and cognitive (Hoffman and Bazerman, 2007) components. We explore the combinations of modes of integration and diagnostic vs. interactive uses of control systems to delineate a parsimonious number of slick con? gurations of SCSs and MCSs within organizations. We approach these con? gurations as ideal-types, in the Weberian sense of the term, that is the one-sided accentuation of one or more points of view and by the synthesis of a great many diverse, more or little present and occasionally absent concrete individual phenomena (Weber, 1904, p. 90).We theorize the relationship between these ideal-types and organizations capacity to elaborate a sustainability strategy. In line with foregoing con? guration theory-building (Doty and Glick, 1994 Miller, 1987, 1996 Mintzberg, 1983), we specify our framework by explaining which moves between con? gurations can support a change in strategic orientation toward sustainability. Finally, we discuss how this framework can support further existential studies on the role of formal control systems in the integration of sustainability within organizational strategy. The paper is organized as follows. interpreter 2 describes he role and uses of MCSs for strategy-making. Part 3 speci? es the problem of management and sustainability control systems integration. Part 4 explores the various con? gurations of some(prenominal) regular MCSs and SCSs, interprets empirical illustrations for each con? guration, and explains how they relate to speci? c approaches to sustainability strategy. Part 5 theorizes how moves across con? gurations explain the integration of sustainability within organizational strategy. Part 6 discusses the implications of the framework for future research on the role of management accountants and management control for promoting practices on sustainability. . Management control systems and strategy-making 2. 1. How MCSs in? uence strategy Simons (1990) conveys the idea of formal control systems in? uencing strategic processes within organizations. Although Hopwood (1987) pointed to the transformational potential of accounting and ways in which accounting change gives rise to preconditions for subsequent change, researchers have tended to cogitate control systems as passiv e and not constitutive of change. In contrast, Simons (1991) conveys the idea of formal control systems in? uencing strategic processes within organizations. Speci? ally, Simons (2000) highlights the role of information-based routines and procedures in twain elucidating strategic uncertainties and revealing strategic risks. Accordingly, formal controls have a role in strategic renewal in the minimization of organizational threats and in the embrace of opportunities arising from competitive dynamics or internal competencies. In more recent work, Simons (2006) illustrates strategic renewal by considering different stages in a ? rms telephone circuit life-cycle and the practices of newly appointed managers seeking to take charge and promote agendas and strategies. J. -P. Gond et al. Management Accounting Research 23 (2012) 205223 207 In reviewing the literature on MCSs and strategy, Lang? eld-Smith (1997) argues that strategy is flat in nature but that this is rarely recognized by researchers who simply assume that all managers view their organizations strategy in the same terms. Following on, she points to problems in under-specifying strategy and implies that care should be taken in research design in aim to uphold the integrity of research ? ndings. In a mistakable vein, Chenhall (2003) argues that strategy constructs used in accounting studies may be outdated.As a consequence, strategy in subject-based studies need not be con? ned, for example, to typology ( thoughtor, analyzer, defender) (Miles and Snow, 1978), mission (build, hold, harvest) and competitive position ( apostrophize leadership and differentiation) (Porter, 1980). Further, Lang? eld-Smith (1997) observes that strategy is under continual construction or, in her terms, an ongoing developmental process. Her study paves the way for alternative, dynamic, conceptions of strategy. The by-line sub-section considers Simons (1995) LOC framework and whether and how MCSs contribute to strategy-maki ng.We focus on this framework to investigate how MCSs in? uence strategy and sustainability. 2. 2. Two uses of MCSs for strategy-making Central to the Simons (1991, 1995, 2000) epitome is the distinction between interactive and diagnostic control systems on the basis of their respective contributions to the strategy-making process. While diagnostic control systems are tools that help in the achievement of organizations intend 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 organizations operating environment. The purpose of interactive control systems is to direct managers attention toward strategic uncertainties and to learning novel strategic responses to a changing environment. interactive control may be limit to one system only (Simons, 1991) or, given turbulent operating environments where complex infor mation ? ows are valued, more than one system. Consistent with Simons (1991) study, the present paper views formal control as pre possessively contributing to each strategy formulation or to strategy implementation. Use of formal control is mostly for the development of emergent strategies or else for the realization of intended strategies. In terms of the former, interactive control systems involve dialogue between top managers and subordinates in an effort to stimulate organizational learning and the development of new strategic initiatives.The link between interactive control and strategy-making is beef up by Wideners (2007) ? nding that interactive control is used to scan the external environment and, by implication, feed into strategic positioning. In relation to the last mentioned, diagnostic controls are used by executives as management by exception tools in order to correct actors actions and align activities toward the achievement of critical success factors. Focus upon two levers of control from Simons (1995) LOC framework should not be interpreted as the neglect of the other two levers. Interactive and diagnostic controls are used in order to identify con? gurations of control systems and, in so doing, theorize on an organizations capacity to integrate sustainability into strategy. As depicted diagrammatically by Simons (1995, 2006), belief and boundary systems surround the use of interactive and diagnostic controls and then cannot be considered as separate from them. Empirical support is provided by Widener (2007) that belief systems do indeed in? uence each of the other three systems.Further, Simons (2000) suggests bi-directional relations between interactive and belief systems on the one hand and boundary and diagnostic systems on the other. The pairs are theoretically plausible given that interactive-belief systems serve to authorize organizational actors and boundary-diagnostic systems seek to constrain and ensure compliance with rules. O n a practical direct, belief and boundary controls are less amenable to systematic investigating but, nevertheless, can be used to elaborate on and interpret ? ndings. 2. 3.Identifying MCSs for strategy-making In a brief review of the approaches taken by researchers in the operationalization of the LOC framework, Mundy (2010) observes differences in choices feed in the selection of MCSs. For the purpose of this study, and consistent with Mundy, a package of MCSs is put forward, any one of which can be used by directors in forming or supporting strategy. 6 The selection of speci? c MCSs was informed by three criteria (i) relevance to contemporary organizations (ii) complete when considering cybernetic controls in practice and, (iii) tangible in nature.Firstly, we note, for example, the argument of Nixon and Burns (Nixon and Burns, 2005) that there is a gap between the extant management control literature and practice as well as between the concepts in management control literature and conceptual developments in strategic management. Accordingly, controls presented in prior literature (see Berry et al. (2009) for a recent review) have been familiarized to have general applicability to national and multinational organizations 4 We thank the one of our Reviewer for this observation. A similar focus on the distinction between and attention upon interactive and diagnostic controls can be found in a number of works including Abernethy and Brownell (1999), Bisbe and Otley (2004), Henri (2006), and Kober et al. (2007). 6 Although our focus on actual MCSs embodying the broader sentiment of lever of control may seem to arti? cially constrain the original framework proposed by Simons (1995, 2000), it is instrumental in our reasoning as it allows for identifying types of MCSs and SCSs that can be integrate or used in speci? c ways, as illustrated finished empirical examples in the subsequent sections of this manuscript.However, the con? gurations delineated by combi ning a variety of forms of integration and uses of systems are broad enough to support a variety of theoretical perspectives and empirical operationalizations. Hence, they allow us to bring back the theoretical and empirical ? exibility of interpretation that has been lost by adopting the suppressive approach to levers of control. We thank our second Reviewer for having drawn our attention to this important assumption in our analysis. 208 J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223Table 1 Management control systems used by top managers and corresponding sustainability control systems. Management control systems Strategic planning Budgeting translation of the management control systems Long-range planning covering a ? ve-ten stratum period (based upon forecasts of competitive environments). A plan specifying goals to be achieved in the next year in incarnates initial preparation and on-going revisions and updates More speci? c ? nancial information than th at contained in the budget (includes information such as Return on Investment (RoI) and Economic Added range (EVA)).Measurements expressed in non-? nancial terms (e. g. , introduction of new products, market positioning). Examples of sustainability control systems deriving from the accounting control systems Sustainability planning (Bonacchi and Rinaldi, 2007) Environmental budgeting (Burritt and Schaltegger, 2001) Sustainability budgeting (Roth, 2008) Environmental/Material ? ow cost accounting systems (Herzig et al. , 2012 Wagner and Enzler, 2006), Sustainable value added (Figge and Hahn, 2004) Environmental performance evaluation systems (Dias-Sardinha et al. (2002), Material and vigor ? w accounting systems (Herzig et al. , 2012 Wagner and Enzler, 2006) Sustainability performance amount (Schaltegger and Wagner, 2006), Sustainability balanced scorecard (Figge et al. , 2002 Hubbard, 2009) Socio-eco-ef? ciency analysis (Schmidt et al. , 2004), Environmental investment appraisal (Burritt et al. , 2009) Reward system based on multidimensional performance system (Dutta and Lawson, 2009) Financial beat systems Non-? nancial measurement systems Hybrid measurement systems Project management Evaluation and reward A find of ? nancial and non-? ancial indicators to assess the achievement of strategic objectives (e. g. , balanced scorecard, tableaux-de-bord) Review of discrete blocks of organizational activity intended to ensure delivery to time and budget (e. g. , to improve project attributes) To direct the efforts of individuals and groups within an organization (e. g. , bonus payments). operating in a competitive environment. Secondly, the broad range of cybernetic controls as identi? ed in recent MCS research has been incorporated. The MCSs encompass controls presented by Malmi and Brown (2008) in their normative conceptual framework of management controls.This framework is based on extensive literature review, spanning forty years and covering the works of Chenhall (2003), Fisher (1995, 1998), Flamholtz et al. (1985), Lang? eld-Smith (1997), Otley (1980), and Simons (1995) amongst others. Finally, the use of accounting controls (in contrast to other systems such as human resources) is for pragmatic reasons (see as well as the works of Bisbe and Otley, 2004). By focusing on controls with form, we are able to observe more directly the relationships between MCSs and SCSs. 7 Table 1 provides an overview of the MCSs package that results from our analysis of prior studies.Formal controls, as presented in columns 1 and 2 of Table 1, comprise strategic planning budgeting ? nancial measurement systems non-? nancial measurement systems hybrid measurement systems project management and, evaluation and reward. The inclusion of three performance measurement systems corresponds with Simons (2006) shift towards performance measurement as well as remarks by Lang? eld-Smith (1997) and Widener (2007) that performance measures are necessary regardless of strategy pursued. According to the management control literature, budget systems (e. g. , Abernethy and Brownell, 1999 Bisbe and Otley, 2004 Kober et al. 2007), non? nancial measures (e. g. , Vaivio, 2004), hybrid measurement systems such as balanced scorecards or tableaux-debord (e. g. , Bisbe and Otley, 2004 Henri, 2006 Marginson, 2002 Tuomela, 2005), and project management (e. g. , Bisbe and Otley, 2004 Davila, 2000) have been used interactively as well as diagnostically within organizations. The MCSs included in our package have been shown to contribute to strategy-making through deployment of interactive controls in the studies of Bruining et al. (2004), Mundy (2010), and Widener (2007). In the next section, issues of integration in relation to SCSs, MCSs and strategy are discussed. . Sustainability and management control the integration challenge 3. 1. The emergence of sustainability control systems The MCSs described above were traditionally developed to align organization al and doingsal structures with the economic goals of organizations and to assist in improving economic performance. Despite more recent developments in hybrid and non-? nancial measurement systems and research indicating that ? nancial and non? nancial information can be considered equally important for both strategy deployment and development (Bhimani and Lang? ld-Smith, 2007), these traditional MCSs are seen to be limited in incorporating the interests of a broad range of stakeholders other than shareholders and in addressing environmental and social issues as well as their interrelationships with ? nancial issues (Bonacchi and Rinaldi, 2007 Burritt and Schaltegger, 2010 Durden, 2008 Herzig et al. , 2012 Norris and ODwyer, 2004). As a response to these limitations and to the prevalence of contemporary sustainability issues such as climate change, various internal sustainability accounting systems and techniques have been developed and implemented by organizations.Column 3 of Tab le 1 provides an overview of some speci? c sustainability approaches to management accounting and control. They are mainly derived from the large body of literature on environmental management accounting and eco-control that has burgeoned in the last two decades and, more recently, has started to capture the broader aspects 7 In deviation from Malmi and Brown (2008), the study does not explicitly include informal controls such as slide by in the enculturation of organizational members through training or the practice of clan controls (Ouchi, 1977).J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 209 of sustainability (Burritt and Schaltegger, 2010 Lamberton, 2005 Thomson, 2007). 3. 2. The integration problem deep down the growing stream of research on SCSs, attention has often been paid to the development of individual systems and tools of environmental/sustainability management accounting and control (such as environmental budgeting, environmental/sustainabili ty performance evaluation systems, eco-control or sustainability balanced scorecard).In contrast, little research has investigated the inter trick of these systems with regular management control, the improvements in decision-making created through better integration and how to overcome organizational barriers preventing such integration (Durden, 2008 Gond and Herrbach, 2006).With the exception of a very few in-depth role studies that have examined the relationships between MCSs in the context of socially obligated managerial decision-making (Durden, 2008 Norris and ODwyer, 2004) empirical evidence is scarce and our understanding of the interaction among these new forms of SCSs and their relationship with regular MCSs is limited. Some have thus called for more research into the needs and the speci? decision situations of managers as well as the use of various systems and tools when making environmental or sustainability related decisions (Herzig et al. , 2012). Similarly, others h ave stressed that the implementation process and related questions that arise from the use of management accounting tools and systems in the context of sustainability (such as integration-oriented cooperation and boundary-crossing, organizational learning) requires more attention (Bebbington, 2006 Burritt, 2004 Larrinaga-Gonzalez and Bebbington, 2001).In illuminating the various organizational processes whereby sustainability accounting contributes to raising awareness about and facilitating communication on sustainability issues inside organizations, we aim to contribute to advancing the discipline of sustainability management accounting and providing an impetus for future research. Likewise, it appears that the online evolution of the ? eld of sustainability in strategic management (Parnell, 2008) would bene? t from a broader perspective that in any case looks at the relationships and interactions between MCSs and SCSs.As discussed in the previous section, MCSs are seen to play a critical role in in? uencing the process of strategy-making throughout the organization and thereby guiding organizational learning. Embedding stakeholders expectations and sustainability issues within the strategy thus calls for a closer look at the interplay between these two kinds of systems and how organizational moves towards more sustainability can be enhanced by strategic and simultaneous mobilization of these two systems. draftsmanship on Milne (1996) we argue that approaching the ? eld of sustainable strategic management from this process perspective increases the understanding of the power of management accounting systems in showdown the increasing complexity of global problems and contributing to the sustainability strategy formulation process. Our research re? ects the general lack of clear understanding of managers key arguments or business logic for adopting sustainability strategies (Salzmann et al. 2005). We propose that better understanding of the links between t he two kinds of systems and their contribution to making a genuine sustainability strategy could enable organizations to move outside(a) from sustainability accounting systems operated in parallel to the regular management control and often built in response to external legal and societal pressures (Zadek, 2004) to more integrate and dynamic uses of control systems which support the development of new business opportunities. . 3. Dimensions of integration In order to clarify the processes whereby MCSs and SCSs can be corporate, this paper conceptualizes integration as a socio-technical process (Emery and Trist, 1969) that is, a thick interface between both types of system that encompasses organizational, cognitive, and technical dimensions. Technical Integration refers to the necessity of considering single practices of sustainability control within a broader system of management control. It is de? ed here as the integration of regular MCSs with activities and systems that can be described as internal sustainability management control but are dealt with outside the management control function of organizations. Despite the presentation of two parallel worlds, the descriptions of MCSs and SCSs (Table 1) reveal potential for methodological integration. However, in practice, these accounting systems, developed and used for managing and reporting sustainability impacts, vary in the way they are integrated into regular MCSs (Adams and Frost, 2008).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 (Burritt and Schaltegger, 2010). Therefore, technical integration involves methodological links between the two encompassing types of systems, such as the presence of a common calculability infrastructure to gather information for both systems.Organizational integration refers to the organizational di mensions that may or may not underlie MCSs and SCSs and point to actors practices in relation to both types of control systems. Rather than seeing regular and sustainability management control just as something organizations have, we argue that integrating sustainability into management control and strategy should also be approached as something people do, in line with recent calls for a practice perspective in management control and strategy (Ahrens and Chapman, 2007 Heidmann et al. 2008 Johnson et al. , 2007 Whittington, 1996, 2007). By de? ning actors roles and organizations formal structure in ways that facilitate the socialization of management accountants to become specialists of sustainability reporting and control and that enhance the ?nancial accounting skills of sustainability managers, organizations can reach a form of systemic integration, irrespective of the level of systems technical integration. We therefore argue that integration should also be approached through the social practice lens.Organizational integration can be reached through groups which may have developed similar practices of reporting or management control, although they 210 J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 do not belong to the same part of the organizational structure and do not operate through the same systems. This community of practice (Brown and Duguid, 1991) can be made up of accountants and managers using both or different systems but sharing a set of common practices (Ahrens and Chapman, 2007). Finally, our broad approach to integration encompasses cognitive dimensions.Regular and sustainability control systems can also be viewed as communication platforms that facilitate interaction and create opportunities for discussion between people who bring with them different patterns of thinking, mindsets and practical viewpoints with regard to sustainability (Heidmann et al. , 2008). The main aim of such dialogue is to attempt an diversify of cognition between those involved, to reach an understanding and to overcome or rede? ne cognitive boundaries. Cognitive dimensions of integration have been deemed as crucial for sustainability integration within organizations in prior works (Hoffman and Bazerman, 2007).Therefore, we argue, a complete overlap of both management and sustainability control systems should also be re? ected in shared cognitions among the managers working on mainstream strategy/control and sustainability. Crucial to overcoming cognitive biases that are socially and environmentally dysfunctional and that perpetuate unsustainable practices (Hoffman and Bazerman, 2007) is the process of working towards a common frame of reference or a shared perception of reality (Levine and Moreland, 1991). Even if the espousal of sustainability and its integration into management control is viewed as necessary, this is easier said than done.An expansion of perspectives requires knowledge that is exchanged and assimilate d into the respective individuals own knowledge structures (Godemann, 2008). It should be noted that these three forms of integration can co-exist within the same organization and may compensate each other and work together in bridging MCSs and SCSs. For example collective cognition or shared practices among users of two distinct control systems concentrate either on sustainability or management may compensate for a lack of technical integration between these systems by allowing a smooth circulation of information and knowledge.Furthermore, it is empirically and conceptually plausible to surmise that integration on one dimension can lead to tighter coupling on one or both of the other dimensions as an (un)intended consequence. For instance, strong technical integration may lead to the enhancement of organizational integration through the construction of new shared practices and thisin turnmay create renewed common understanding for users with different backgrounds (Bechky, 2003 Car lyle, 2004). Although we consider integration as a continuum variable that re? cts an aggregated level of technical, organizational and cognitive integration, incorporation of empirical evidence allows us to consider different forms of integration and to highlight the challenges of lamentable from one con? guration to another. 4. De? ning con? gurations of control systems In order to appreciate the modes of sustainability integration within organizational strategy, we rely on the various uses of both sustainability and management controls (diagnostic vs. interactive) as well as on their level of integration to delineate ideal-types of organizational con? urations. To do so, we distinguish two encompassing types of systems (management control vs. sustainability) and consider an overall level of systems integration that encompasses technical, organizational, and cognitive dimensions. Within these restrictive assumptions we delineate eight organizational con? gurations relating to int egration of MCSs and SCSs and to their speci? c uses. These eight con? gurations are summarized in Table 2 and discussed in-depth below. We present these ideal-types by moving from diagnostic to interactive uses of systems.We ? rst introduce low levels of integration con? gurations (characterized by a loose coupling between MCSs and SCSs) and then con? gurations with high levels of integration (tight coupling of MCSs and SCSs). Building on Millers (1986, 1996) insight that con? gurations produce strategy, for each con? guration we discuss the relationships between systems (considering technical, organizational and cognitive dimensions of integration), provide an empirical illustration, and then specify some key parameters of these con? urations, namely their stability, their empirical verisimilitude and their capacity to enhance simultaneously the environmental, social and economic dimensions of the bottom line (that is, the triple bottom line). 4. 1. Dormant decoupled strategy (co n? guration A) A ? rst ideal-type of organizational con? guration 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.As explained by Simons (1991, p. 60) when top managers of large business do not have a vision for the futureor a sense of urgency about creating such a visionthey do not appear to make control systems interactive. In this context of dormant decoupled strategy, the organization lacks vision for future development in both the strategic and sustainability domains. This situation prevents the emergence of a clear strategy and the focus is on a diagnostic control system.Such a lack of vision on sustainability and strategy may be reinforced by an absence of cognitive integration between both domains that could be perceived by executives as totally separated worlds (Swanson, 1999) and may also re? ect low organizational and/o r technical integration of MCSs and SCSs preventing the emergence of a community of practice around systems. This situation can occur, for instance, for developed or bureaucratized organizations enjoying a high level of monopoly power in their market but whose power is declining due to the entry of new more dynamic competitors.In such organizations, control systems for traditional management and sustainability may have grown progressively and independently with emphasis on diagnostic use. Some large formerly state-owned European value and transport companies faced these challenges when the energy market was liberalized in Europe. The dormant decoupled strategy con? guration can also occur in the less J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 211 SCS, sustainability control system MCS, management control system TBL, triple bottom line performance. requent contexts described by Meyer and Zucker (1989) as permanently failing organizations within which actor s fail to agree on a clear strategic direction and thus maintain uncertainties about the organizations future. The con? guration of a dormant decoupled strategy may also exist in uncertain business situations in which organizations operate illegally and under constrained circumstances. Such situations can emerge, for example, in developing countries where there are corrupt of? cials and ineffective regulations.Herzig et al. (2012, pp. 148172) report the case of an electroplating troupe in the Philippines which was required to move its shop because of landownership problems. Due to ill-advised and briefly-sighted decisions, the business was re-located to a mixed-zone which then forced the company to operate behind closed gates and at reduced capacity for more than one year. Strategic options to the company were limited as was the interactive use of regular and environmental control systems of the company.A low triple bottom line performance could be discovered from a combination of reduced economic performance, risks in operations and low legitimacy within the local community. Moreover, these threats to the existence of the company support the view that this con? guration is low in stability. For organizations acting in dynamic and competitive markets and within effective regulatory frameworks, such a situation is likely to be transitory, as pressures for strategizing are likely to emerge either from external stakeholders such as shareholders, government or competitors.A persistent lack of strategy in a competitive environment would probably force the organization out of business. We can therefore assume that the empirical verisimilitude of this con? guration is low and con? ned to periods of strategy crisis (Simons, 1991)apart from the relatively exceptional case of permanently failing organizations (Meyer and Zucker, 1989). The entrance of a new head or CEO may indeed stimulate the adoption of a new clear vision (Simons, 1994, 2006).Overall, organizations characterized by such a dormant decoupled strategy are unlikely to reconcile environmental, social and economic performance either in the short or in the long run. 4. 2. Strategy emergence through sustainability (con? guration B) A possible move from the dormant decoupled strategy con? guration consists in having a change in the use of the SCSs. The move from a diagnostic to an interactive use of SCSs can re? ect an acclivitous strategic renewal through sustainability.In this case of strategy emergence through sustainability, MCSs and SCSs are still not integrated, but the sustainability system is mobilized strategically by the top management group to deploy a sustainability strategy (Simons, 1994). Hence, the strategy emerges from the sustainability area within a dormant context (Mintzberg and Waters, 1984). Although such a con? guration seems to be empirically less plausible, its existence can be explained, for instance, by the creation of a dynamic new department for sustainabl e development or CSR, made of entrepreneurial actors who creation changes within a bureaucratized orCon? guration D Schizoid sustainability strategy Stability rugged Frequency Medium TBL High (short term) Con? guration B Strategy emergence through sustainability Stability Medium Frequency Low TBL Medium Con? guration A Dormant decoupled strategy Stability Low Frequency Low TBL Low level of control systems integration (cognitive, organizational, technical) Low Decoupling Con? guration C Compliance-driven sustainability strategy Stability High Frequency High TBL Medium Uses of control systems (diagnostic vs. interactive) Table 2 Con? uring uses and integration of control systems. a High Tight coupling Con? guration E Dormant integrated strategy Stability Low Frequency Low TBL Low Diagnostic use of MCS Diagnostic use of SCS Con? guration F Sustainability-driven organizational Strategy Stability Low Frequency Medium TBL Medium Interactive use of SCS Con? guration G Peripheral sustaina bility integration Stability High Frequency Medium TBL Medium a Interactive use of MCS Diagnostic use of SCS Con? guration H Integrated sustainability strategy Stability High Frequency Low TBL High (long term)Interactive use of SCS 212 J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 advance organization. These changes can be co-opted by top managers aiming at testing the ecological viability of this strategy within the organization (Burgelman, 1991) and thus using this control system interactively (Simons, 1990). The emergence of this con? guration can also be related to the willingness of a new top management team to promote strategic renewal through sustainability, by focusing managers attention on this speci? c system (Simons, 1994).In such contexts, members of the newly appointed sustainability team may have pro? les and backgrounds (e. g. , ex-civil servants or managers from NGOs) that diverge signi? cantly from the dominant managerial one, preventing cogn itive integration between users of MCSs and SCSs or may also work within an organizational unit loosely coupled to the rest of the organization or develop their own distinct systems of data-collection on sustainability issues. Such conditions can limit the organizational and technical integration of MCSs and SCSs.Strategy emergence through sustainability may occur in mature and stable industrial sectors that become subject to profound transformations due to new and emerging sustainability agendas such as global warming. For instance, several energy companies and utilities that operated by relying mainly on a diagnostic use of their MCSs have started thinking about sustainability strategically. Gond et al. (2010) report the case of British Utility for which a change in the industrial sector pushed the executives to recruit a team of experts in order to strategize sustainability.However, this team was made up of newcomers who were loosely integrated into the company from an organizati onal and cognitive viewpoint. They only had a pre-existing SCS which was decoupled from daily managerial activities. Although MCS and SCS integration was low across the three components, the newly appointed team started transforming the use of SCSs to make it a strategic device for engaging employees and managers. Hence, new opportunities for strategic renewal emerged progressively, even though the con? guration was characterized by a dormant mainstream strategy and low system integration.Within such a con? guration, it can be expected that organizations perform well on the non-? nancial dimensions. Although strategic renewal through mobilizing the SCS may also be motivated by economic considerations organizations will probably struggle to enhance their ? nancial performance in the medium or long term without refocus on a broader set of control systems in this con? guration where systems are less integrated, resulting in a medium capacity to achieve a triple bottom line. Therefore, the stability of this con? guration is medium. 4. . Compliance driven sustainability strategy (con? guration C) A second possible move out of the dormant decoupled strategy refers to the situation within which an organization mobilizes one of its MCSs to deploy its strategy (Simons, 1991, 1994, 1995), yet pays little attention to sustainability issues which are managed diagnostically through a system that operates parallel to the dominant MCS. One case in point 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) (Kolk, 2003 ODwyer and Owen, 2007). According to many observers of organizational life, this situation is often observed during early stages of sustainability integration (Maon et al. , 2009, 2010 Mirvis and Googins, 2006 Zadek, 2004). For instance, at the early stages of the Nike case reported by Zadek the company completed it couldnt just shut out the noise. It eventually responded to activists demands for labour codes and, after further pressure, agreed to external audits to verify whether these codes were being enforced (Zadek, 2004, pp. 28129). The corporate responsibility department of Nike emerged as an organizational answer to these external pressures (Zadek, 2004 Zheng, 2010). With this compliance-driven sustainability strategy, the sustainability control system is usually used as a management by exception tool to detect a big issue and to demonstrate (e. g. , through disclosure of sustainability performance information in annual reports) that the organization has everything under control. In this regard, this con? uration presents an important level of stability, except that the sustainable discourse and practice run the risk of being externally perceived as greenwashing or window dressing (Banerjee, 2008 Deegan, 2002). Within this type of con? guration, the sustainability data produced by the organization can ha rdly feed into any internal management processes as there is a low level of technical and organizational integration, re? ected in a decoupled organizational context (Boxenbaum and Jonsson, 2008 Meyer and Rowan, 1977).Similarly, executives and managers confronted with sustainability issues tend to ? rstly consider them as unrelated to their core business (Zheng, 2010), re? ecting low cognitive integration. Thus, this con? guration leaves little room for innovation and organizational learning through the diagnostic use of the sustainability system (Gond and Herrbach, 2006 Maon et al. , 2009). Accordingly, the organizational capacity to improve a triple bottom line performance remains low at this stage, even though the organization may exhibit high levels of ? nancial performance. 4. 4.Schizoid sustainability strategy (con? guration D) The fourth and last con? guration exhibiting lowintegration from a technical, organizational and/or cognitive viewpoint refers to an organizational con text within which contradictory sustainability and traditional strategies are followed and deployed through parallel MCSs and SCSs. Although this schizoid sustainability strategy is probably unusual, its existence ? nds theoretical and empirical support. Theoretically, Kets de Vrie and Miller (1984) argued that organizations are likely to sense neurotic symptoms such as chizophrenia. Prior research suggests contradictory injunctions are not uncommon within organizational contexts (Emery and Giauque, 2003), and these situations may trigger schizophrenic symptoms (Watzlawick, 1979). Accordingly, the deployment of control systems supporting contradictory logics can be a way of delegating to lower managerial echelons the management of tradeoffs J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 213 and tensions which have not been effectively managed at the higher end of the organization.It could also re? ect a disagreement at the board level about the levels of ante cedency to grant to strategic uncertainties. Both situations will de facto enhance the maintenance of low technical and organizational integration, and prevent cognitive integration of sustainability and strategy. Other theoretical arguments explain the presence of a loosely coupled yet fully developed sustainability strategy. For instance, such a sustainability strategy is a stronger shield to buffer external pressures and external scrutiny through manipulation and super? ial reporting exercises in order to present a facade of conformity (Oliver, 1992). A ? realist facade of conformity can be a way to attract institu? tional support for illegitimate actions (Elsbach and Sutton, 1992), a case in point being the instrumentalization of CSR practices by Ma? a organizations (Gond et al. , 2009). Empirically, diversi? ed US-based multinational corporations have been shown to exhibit contrasted sustainable behaviours in various countries, supporting the view of corporate actors being good while being bad (Strike et al. 2006). Accordingly, this con? guration could be of a medium frequency. Critical analyses of the corporations which are the most invested in by responsible investors also suggest that sustainability performance may vary to a great extent across their different impacts on stakeholders (Banerjee, 2008 Markowitz, 2008). For instance, Microsoft is simultaneously praised for its social initiatives while having been found guilty of violations of the anti-trust legal framework (Markowitz, 2008).In addition, a temporary lack of systems coordination can also be a transitory situation faced by an organization implementing an organizational change toward sustainability. This con? guration is thus characterized by a low level of stability. Finally, in terms of triple bottom line performance, this con? guration can generate high convergence between the various dimensions of performance in the short run, even though it does not enable this convergence to be sustain ed in the long run. We now turn to the characterization of a second set of ideal-type con? urations that correspond to situations where MCSs and SCSs are strongly coupled and integrated, through cognitive, organizational and/or technical processes (bottom line of Table 2). This high integration means that SCSs and MCSs are coordinated and overlap. Yet, important differences emerge from the various uses of both systems in these contexts. 4. 5. Dormant integrated strategy (con? guration E) Although both systems can be strongly tied from a technical, organizational or cognitive viewpoint, they are not necessarily mobilized to deploy any kind of strategy.This situation of dormant intergated strategy can be found, for instance, in an organization that has recently integrated sustainability within its balanced scorecard (technical integration) but does not mobilize this system due to the emergence of new radical uncertaintiese. g. , prospect of a merger or of an hostile takeoverwhich temp orarily prevents the adoption of strategic action. Such a situation arose from a part privatization of one of the largest pee planning and sewerage companies in Germany (Berliner Wasserbetriebe) as reported by Gmindner and Bergner (2002).The organizations control of and reporting about environmental issues was always well-developed because environmental issues had a high strategic relevance to the organization (as provider of drinkable water to the public) and were subject to strict regulation (under environmental law). After part-privatization of the public law institution, the new management board adopted a more defensive environmental strategy as it thought that environmental issues had been given too much attention in the past (at most, the board tried to meet regulations in a cost ef? ient way). As the public law company still acted in a monopoly position, bounded to public price regulation, no clear strategy emerged. This was, on the one hand, re? ected in the managements de cision to implement a new balanced scorecard without clarifying its strategic role and its relationship with the public budgeting processes and economic plan. On the other hand, due to lasting cognitive biases at top management level, it was dif? cult to clarify which strategic issues of an environmental and social nature would receive priority in the future.The dormant integrated strategy con? guration ? nds similar rationale to the dormant decoupled strategy con? guration except that control systems are integrated here, either technically, organizationally or cognitively. In our German exemplifying case, there are high levels of technical integration (e. g. , through the balanced scorecard), however organizational uncertainties prevent a more proactive approach to sustainability strategy being developed (see next con? guration). The parameters of this con? uration are expected to be similar to the ones of the dormant decoupled strategy, with a low level of stability, a low frequen cy and a low capacity to create a convergence between the various dimensions of performance. However, in this situation, given a lack of strategic vision, the prospects for sustainability strategizing are higher than in the dormant decoupled strategy case, because interactive engagement by the top management team with one of the two systems may be suf? cientdue to high systems integrationfor a move towards a con? uration which entails high potential for sustainability integration (see the next two con? gurations). 4. 6. Sustainability driven strategy (con? guration F) A second high integration con? guration 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. This sustainability driven organizational strategy corresponds, for instance, to the situation of sustainable businesses at their very early stage of development.Organizations at an early stage of d evelopment may have not yet integrated any formalized MCSs into their strategy-making process. Yet, as these organizations business models embed sustainability, the need to formalize and control sustainability related data and behaviour may be far higher, leading to an interactive use of this system, and to the development of an integrated MCS as a by-product. This con? guration can be observed in the case of green start-ups addressing sustainability issues through 214 J. -P. Gond et al. Management Accounting Research 23 (2012) 205223 their business model or at the early stages of organizational development focused on social responsibility or sustainability products/services. Medium sized corporations having constructed their business model around sustainability such as Innocent Drinks, for instance, may ? nd that having such a con? guration with a dominant focus on the sustainability parameters of their activities constrains growth. Because it re? ects a transitory stage of sustain able organizational development, this con? urations stability and empirical frequency are both medium. From a triple bottom line perspective, organizations in this situation may perform well from a social and environmental perspective, yet struggle to secure enough ? nancial resources for their development. As a result, their triple bottom line performance can be expected to be only modest. 4. 7. Peripheral sustainability integration (con? guration G) A third con? guration exhibiting a high level of integration of control systems is 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. This con? guration seems highly plausible from an empirical viewpoint, especially for organizations that have derived their sustainability systems from existing MCSsand thus enhanced technical or organizational integ rationwhile considering that the main strategic uncertainties are not related to the sustainability area (low cognitive integration), for instance because of the speci? s of their industrial sector. In such a con? guration, as sustainability data do not feed the process of strategy-making, sustainability-driven innovation is very unlikely (Gond and Herrbach, 2006). However, they may engender some constraints and boundaries related to sustainability owing to diagnostic monitoring of sustainability issues. This situation corresponds to the approach of sustainability or social responsibility management which dominated the design school of strategy (Mintzberg, 1990) as well as the planning school of strategy (Ansoff, 1965).Both schools of thought regarded these responsibilities as external constraints weighing on strategic choices rather than business opportunities on their own for strategy making or competitive advantage construction (Burke and Logsdon, 1996 Porter and Kramer, 2006). D rawing upon the Prince of Wales Accounting for Sustainability Practical Insights (Hopwood et al. , 2010) text, peripheral sustainability integration is exhibited by Sainsburys, HSBC, and Novo Nordisk.In each case, it is evident that strategy is aligned to a commercially driven business model where economic progress is at the forefront of business activity. As acknowledged by the authors of the Sainsburys case, given the economic crisis, it is not known if sustainability would be embraced if there was not scope to contribute to cost-cutting within the company and across supply chains. Similarly, at Novo Nordisk, ? nancial considerations dominate for the majority of investors despite articulation of social, economic and environmental interests within the companys Articles of Association.The cases reveal environmental scanning of stakeholder concerns and careful investment practices in order to protect against negative impacts on reputation and therefore ? nancial losses. Novo Nordisk seeks to identify emerging issues that are potentially material. HSBC has implemented the Equator Principles and in-house policies to allow management of sustainability risk as the bank has some knowledge of what loans will be used for and is thus able to refuse to make loans where social and environmental consequences will impact negatively upon likely repayments.Theoretically, the less than ideal deployment of a sustainability strategy of this con? guration can be linked to lasting cognitive barriers within an organization. Mindsets, for example, may prevent members of the top management team from perceiving the strategic uncertainties related to sustainability (Hoffman and Bazerman, 2007 Swanson, 1999), even though SCSs and regular MCSs are integrated technically and organizationally. Executives may thus fail to give full consideration to this issue in their strategy-making processes (Simons, 1994). This con? uration is also likely to occur when the sustainability control systems are directly derived from a reporting system built to comply with external pressures and expectations. Because compliance remains an important driver of organizations engagement toward sustainability, we can expect this con? guration to be relatively frequent. From a triple bottom line performance viewpoint, organizations characterized by such a con? guration may perform only at a medium level, as social and environmental dimensions of performance maybe regarded as relatively low organizational priorities, in contrast with ? ancial dimensions of performance. Within the cases, the integration of MCSs and SCSs may in part be attributed to the in? uence of the Accounting for Sustainability project (A4S), at least in the cases of Sainsburys and HSBC if not Novo Nordisk as the latter had not adopt the Connected describe Framework8 at the time of writing. Technical integration is apparent in Sainsburys application of the A4S decision-making tool and in HSBCs linking of sustainability wi th ? nancial information in external reports.To this end, HSBC invested in a tailored, group-wide online system in 2004 that collates data on energy, water, waste and carbon dioxide emissions. These data were previously collected within a series of standalone spreadsheets and not connected to ? nancial data. Organizationally, coupling between the systems has been facilitated by business case reasoning and adoption of a longer-term perspective. However, evidence in the cases suggests that more is needed to move toward stronger communities of practice and common frames of reference.Pertinently, a member of the Non-? nancial Data Management Team at Novo Nordisk commented on the need for 8 The Connected Reporting Framework was developed by A4S and aims to provide a new approach to corporate reporting that re? ects longerterm considerations. By measuring and linking sustainability and ? nancial performance, the aim is to provide a more rounded and balanced view of an organizations overal l performance and, in so doing, build credibility with a broader set of stakeholders. J. -P. Gond et al. / Management Accounting Research 23 (2012) 205223 215 ognitive integration I see challenges ahead in relation to a common understanding and language between the ? nancial and the non-? nancial people, a whole cultural thing, a way of thinking (Hopwood et al. , 2010, p. 224). In general, evidence suggests that stability at the three organizations can be considered high owing to adoption of a longer timeframe when making decisions and to a systematic approach to identifying potential stakeholder concerns. Sainsburys, for example, recognize that there is a need to support farmers if a continuous supply of lamb in the chain of supermarkets is to be secured.Given that social and environmental dimensions of performance serve to enhance economic dimensions at Sainsburys and HSBC, medium performance on the triple-bottom line can be expected. 4. 8. Integrated sustainability strategy (con? guration H) A last con? guration corresponds to an ideal-type of interactive use of both integrated systems. In this context of integrated sustainability strategy, sustainability strategy and strategy-making overlap completely, allowing the deployment and renewal of a sustainability strategy through the use of coherently integrated systems.This ideal con? guration if empirically rarecorresponds to the highest level of sustainability or social responsibility implementation described in prior models of CSR deployments (Maon et al. , 2009, 2010 Mirvis and Googins, 2006 Zadek, 2004). It uncovers the control infrastructure that needs to be in place for embedding sustainability. Movement toward an integrated sustainability strategy is demonstrated by the Aviva, BT and EDF Energy cases included in the Accounting for Sustainability Practical Insights (Hopwood e