Use of sustainability management control systems in Indian firms: Institutional factors and their effects on firm performance

The purpose of this study is to analyze which institutional factors influence firms' use of SMCS and to examine the mechanism by which SMCS use improves firm performance. A questionnaire survey was conducted to empirically analyze the relationship between institutional factors, SMCS utilization, and corporate performance. Since the purpose of this study is the use of SMCS in corporate CSR management, 1,325 companies listed on the different stock exchanges of the country were selected as the target companies for the questionnaire survey. Exploratory and confirmatory factor analyses were performed to confirm the reliability and validity of the measured variables. First, the reliability of the measured variables is evaluated by Cronbach's α. The validity of the measured variables is evaluated by AVE (Average Variance Extracted) and C.R. (Construct Reliability). The results of the questionnaire survey revealed that mandatory factors such as CSR-related laws, regulations, and international standards, as well as normative factors such as the influence of CSR-related experts and stakeholders outside the company, affect SMCS utilization and that SMCS utilization improves corporate CSR performance, which in turn indirectly affects financial performance.