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Greening the black box: integrating the environment and management control systems

Author

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  • Heidi Sundin
  • David Andrew Brown

Abstract

Purpose - The purpose of this paper is to adopt an agency theory approach to investigate the integration of environmental issues into management control systems (MCS). Prior environmental accounting research has focussed on increasing organisations’ environmental accountability by “monitoring” through external reporting to stakeholders. However, this overlooks the alignment of agents’ interests within the firm. Design/methodology/approach - A qualitative case study is undertaken in a large Australian listed property trust to investigate how agents’ interests may be integrated with environmental objectives through the use of MCS. Findings - From the case an analytical framework is developed to illustrate how environmental issues are incorporated into organisational behaviour through MCS. The findings include, single objective environmental MCS; multiple objective MCS, which include priorities that specify environmental and economic trade-offs; and balancing MCS, which provide overarching decision-making principles without priorities. Practical implications - The findings provide examples of how an organisation may integrate environmental issues across a range of MCS and the things to consider in doing so. Originality/value - This paper draws on an agency perspective as an approach to incorporate environmental issues into MCS and to align behaviour. It explains a new way in which tensions can be managed. This study is one of the first to adopt the control package approach in investigating the incorporation of environmental issues in MCS.

Suggested Citation

  • Heidi Sundin & David Andrew Brown, 2017. "Greening the black box: integrating the environment and management control systems," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 30(3), pages 620-642, March.
    • Handle: RePEc:eme:aaajpp:aaaj-03-2014-1649
    DOI: 10.1108/AAAJ-03-2014-1649
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    Citations

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    Cited by:

    1. Leanne Johnstone, 2021. "Facilitating sustainability control in SMEs through the implementation of an environmental management system," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(4), pages 559-605, December.
    2. Anca Antoaneta Vărzaru & Claudiu George Bocean & Maria Magdalena Criveanu & Adrian-Florin Budică-Iacob & Daniela Victoria Popescu, 2023. "Assessing the Contribution of Managerial Accounting in Sustainable Organizational Development in the Healthcare Industry," IJERPH, MDPI, vol. 20(4), pages 1-16, February.
    3. Ik Muo & Adebayo Azeez, A., 2019. "Green Entrepreneurship: Literature Review And Agenda For Future Research," International Journal of Entrepreneurial Knowledge, Center for International Scientific Research of VSO and VSPP, vol. 7(2), pages 17-29, December.
    4. Egbert Willekes & Koos Wagensveld & Jan Jonker, 2022. "The Role of the Accounting and Control Professional in Monitoring and Controlling Sustainable Value," Sustainability, MDPI, vol. 14(23), pages 1-23, November.
    5. Leanne Johnstone, 2018. "Environmental management decisions in CSR‐based accounting research," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(6), pages 1212-1222, November.
    6. Hennig, Jan C. & Firk, Sebastian & Wolff, Michael & Coskun, Hülgen, 2023. "Environmental management control systems: Exploring the economic motivation behind their implementation," Journal of Business Research, Elsevier, vol. 169(C).
    7. Úbeda-García, Mercedes & Claver-Cortés, Enrique & Marco-Lajara, Bartolomé & Zaragoza-Sáez, Patrocinio, 2021. "Corporate social responsibility and firm performance in the hotel industry. The mediating role of green human resource management and environmental outcomes," Journal of Business Research, Elsevier, vol. 123(C), pages 57-69.
    8. Armando Della Porta & Francesco De Luca & Chiara Aufiero, 2023. ""Radicare" la sostenibilit? nella strategia attraverso i sistemi di management control: un caso di studio relativo ad una Pmi," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2023(2), pages 43-68.
    9. Leanne Johnstone, 2019. "Theorising and conceptualising the sustainability control system for effective sustainability management," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 30(1), pages 25-64, April.

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