A management control system to support corporate sustainability strategies
MetadataShow full item record
© 2016 Elsevier Ltd. This paper outlines a management accounting system, based upon cost variance analysis, which supports the pursuit of environmental and traditional financial goals within a decentralized organization. The framework decomposes inefficiencies into two parts. The first consists of what might be considered a natural outcome of pursuing the traditional economic goal of efficiency through cost-minimization, a "waste" variance. The second part consists of sustainability gains that produce societal benefit but may be incongruent with short-term economic goals, a "sustainability" variance. While elimination of waste variances can be encouraged using a traditional performance evaluation and reward structure, elimination of sustainability variances requires re-design of performance evaluation tools and reward structures. We demonstrate that differing production functions across operational units within organizations can impact the relative magnitude of the two variances. The failure to recognize and incorporate these differences can lead to inefficient allocation of resources and/or only partial fulfillment of the strategic environmental goals of the organization.
Showing items related by title, author, creator and subject.
Dutta, Saurav; Lawson, R.; Marcinko, D. (2013)Meaningful incorporation of environmental and social responsibility goals into organizational strategic plans requires a mechanism to measure and reward performance contributing to that objective. This paper formulates ...
Gary, M.; Yang, Miles; Yetton, P.; Sternman, J. (2017)Many academics, consultants and managers advocate stretch goals to attain superior organizational performance. However, existing theory speculates that, while stretch goals may benefit some organizations, they are not a ...
Gary, M.; Yang, Miles; Yetton, P.; Sterman, J. (2017)Many academics, consultants, and managers advocate stretch goals to attain superior organizational performance. However, existing theory speculates that, although stretch goals may benefit some organizations, they are not ...