Proactive strategic responses to sustainability determinants: the use of management control systems

Thesis by publication.Includes bibliographical references.Chapter 1. Introduction -- Chapter 2. Literature review -- Chapter 3. Research design -- Chapter 4. Paper One -- Chapter 5. Paper Two -- Chapter 6. Paper Three -- Chapter 7. Conclusion.This thesis examines the use of sustainability control systems in proactive strategic responses to institutional and resource-based view sustainability determinants. Despite the increasing importance of proactive strategic responses to sustainability determinants as a way of effectively addressing sustainability challenges and gaining competitive advantage, the literature is relatively silent about whether, how, and to what extent organisations’ use of sustainability control systems support proactive strategic responses to institutional and resource-based sustainability determinants. More specifically, this thesis seeks to examine the use of sustainability control systems in proactive strategic responses to sustainability determinants in terms of (i) strategic responses to institutional pressures for sustainability, (ii) translating proactive sustainability strategies into corporate sustainability performance, and (iii) implementing sustainability dynamic capabilities as a means of achieving sustainable competitive advantage. This thesis follows the ‘thesis by publication’ format, which consists of three interconnected empirical research papers: a case study-based paper, and two survey-based papers.The case study (Paper one) explores the use of sustainability control systems in strategically responding to institutional pressures for sustainability. Drawing on institutional theory (DiMaggio and Powell, 1983) and strategic responses to institutional pressures typology (Oliver, 1991), the study argues that organisations strategically respond to institutional pressures for sustainability using sustainability control systems. Data were collected by interviewing sustainability managers of a large-scale multinational apparel manufacturing organisation with its headquarters in Sri Lanka. The study finds that organisations actively respond to institutional pressures for sustainability using acquiescence, compromise, avoidance, defiance, and manipulation strategies. The results not only reveal that sustainability control systems (i.e. sustainability budgeting, sustainability key performance indicators, sustainability life-cycle assessment) play an important role in complying with institutional pressures for sustainability, but also in more proactive strategic responses, including compromise, avoidance, defiance, and manipulation.The two survey-based studies examine the use of sustainability control systems in proactive strategic responses to resource-based sustainability determinants. Theoretically, these two studies are based on the natural-resource-based view of the firm (Hart, 1995), dynamic capabilities (Teece et al., 1997), and levers of control framework (Simons, 1995). Data were collected from top managers in 175 multinational and local organisations operating in Sri Lanka, and analysed using Partial Least Squares Structural Equation Modeling.The first survey-based study (Paper two) examines the mediating effect of sustainability control systems on the relationship between proactive sustainability strategies and corporate sustainability performance. The study finds that sustainability control systems only partially mediate the relationship between proactive sustainability strategies and corporate sustainability performance. The mediating effect of sustainability control systems is examined under three sustainability strategies, where environmental and social strategies reveal a partial mediation, and an economic strategy shows no mediation. The second survey-based study (Paper three) examines the extent to which enabling and controlling uses of sustainability control systems moderate the relationship between sustainability innovation capabilities and sustainable competitive advantage. The study finds that while the enabling use of sustainability control systems positively moderates the relationship between sustainability innovation capabilities and sustainable competitive advantage, in contrast, controlling use of sustainability control systems negatively moderates. The study also compares the results between manufacturing and services industries. Contrary to the study’s expectation, the findings in the services sector do not show a significant moderating impact in both perspectives. The two survey-based studies provide novel empirical and theoretical insights into the management accounting and strategic management literatures using the natural-resource-based view of the firm in implementing proactive sustainability strategies and sustainability innovation capabilities with the support of sustainability control systems. As a whole, both the exploratory and confirmatory studies undertaken in this thesis provide empirical and theoretical evidence that the use of sustainability control systems has an important role in supporting proactive strategic responses to sustainability determinants and, in turn, impacts long term corporate sustainability performance.Mode of access: World wide web1 online resource (xiv, 275 pages