Sustainability Integration and Control Systems: Case Studies from Sri Lanka

Abstract

This thesis investigates how and why sustainability integration of Management Controls Systems (MCSs) varies in relation to companies' strategic approaches to handling environmental and social issues. According to the extant literature, sustainability issues remain decoupled from MCSs used for strategic management purposes since academics and practitioners are more focused on developing individual sustainability controls for compliance and disclosure requirements. This study aims to close this research gap. In particular, it investigates how the proactive, reactive and accommodative approach to sustainability influences the integration of Sustainability Control Systems (SCSs) with regular MCSs. Further, this research addresses the dearth of literature related to developing countries by focusing on contingencies related to Sri Lankan manufacturing companies. Building on Gond et al.'s (2012) scholarly work, a theoretical framework is proposed relying on two dimensions: (i) the extent of control integration (strong to weak) and (ii) the level of control complexity (complex to simple) of SCS and MCS to explore their link to the strategic approach (proactive, accommodative and reactive). A multiple case study was conducted using semi-structured interviews with senior managers of five Sri Lankan companies. Thematic and pattern analysis attested to the plausibility of each company with the configurations. Findings present empirically plausible typologies of four control configurations: complex-strong, complex-weak, simple-strong, and simple-weak. The study finds that a company with a proactive strategic approach integrates controls strongly while having complex attributes. In contrast, reactive companies do not have a similar impetus for integration; thus, SCS remain decoupled from MCS with simple control attributes. The accommodative approach explains the interim combination of simple-strong and complex-weak configurations. It also shows how contextual factors in developing countries like Sri Lanka play a critical role in fostering or hindering the integration of sustainability into MCS and strategy. The insights and recommendations provided in this thesis could attract the attention of senior managers and policymakers in countries that share similar corporate, contextual, and cultural structures.