Journal of Cleaner Production 276 (2020) 122725

Contents lists available at ScienceDirect

Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Review

Sustainability reporting and management control e A systematic

exploratory literature review
Albert Anton Traxler a, *, Daniela Schrack b, Dorothea Greiling a
a
Institute of Management Accounting, Johannes Kepler University, Linz, Austria
b
Institute of Corporate and Regional Environmental Management and Institute for Integrated Quality Design, Johannes Kepler University, Linz, Austria

a r t i c l e i n f o a b s t r a c t

Article history: While there is extensive knowledge on management control systems (MCS) and a large body of literature
Received 12 March 2019 focusing on sustainability reporting (SR), studies investigating the interplay of SR and MCS are still at an
Received in revised form early stage, although a broad consensus exists that for a good progress towards corporate sustainability
9 April 2020
interlinking of reporting and control is needed. What is more, organizations which are just having a
Accepted 8 June 2020
Available online 17 July 2020
sustainability report in place, but do not implement proper control mechanisms towards sustainability,
run the risk that their efforts are perceived as a well-meaning reputation-building attempt at the best.
^ as de
Handling Editor: Cecilia Maria Villas Bo Against this background, the aim of this paper is to identify and cluster relevant literature on the
Almeida interplay between SR and MCS. To achieve this goal, a systematic literature review considering publi-
cations between the years 2000 and 2018 has been performed. For clustering the findings, the popular
Keywords: MCS package of Malmi and Brown (2008) was used. The systematic literature review is based on 53
Management control systems publications that examined the linkage of SR and MCS. The papers revealed various connections in both
Sustainability reporting directions e the effect of MCS on SR and the use of SR within MCS e that can be assigned to the different
Literature review
management control elements of the MCS package of Malmi and Brown (2008). Furthermore, the
findings suggest that there is a reciprocal linkage between SR and MCS and that the existing body of
literature does not go beyond an instrumental and therefore functionalistic perspective. Additionally, the
literature is lacking on empirical, theory guided and critical analyses.
© 2020 Elsevier Ltd. All rights reserved.

Contents

1. Motivation and research questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

2. Theoretical discourses on SR and MCS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Research method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Choosing the search terms and selecting the databases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2. Practical and methodological screening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3. Synthesizing the results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.1. Descriptive analysis: evolution of the literature, methods and theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5. Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.1. Descriptive analysis: evolution of the literature, methods and theories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2. Analysis of the results: the effect of MCS on SR and vice versa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Cultural controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cybernetic controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Reward and compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

* Corresponding author. Institute of Management Accounting, Johannes Kepler

University Linz, Altenberger Straße 69, 4040 Linz, Austria.
E-mail addresses: [email protected] (A.A. Traxler), [email protected]
(D. Schrack), [email protected] (D. Greiling).

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2 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

Administrative controls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6. Discussion and limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Discussion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Conclusion and avenues for further research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Declaration of competing interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

1. Motivation and research questions Accordingly, organizations should make efforts to ensure that the
mission, objectives and strategies set and communicated with SR,
Since the mid-1990s more and more organizations have started are linked and executed by proper control mechanisms (Ball and
to publish a sustainability report (KPMG, 2017). They report on Milne, 2005; Crutzen and Herzig, 2013; Maas et al., 2016), not
their economic, social and environmental impacts in order to create just for avoiding such negative perceptions, but to increase orga-
a higher transparency about their triple bottom line-performance nizational sustainability performance (Pennington and More,
and hence their contributions to a sustainable development (SD) 2010).
(Elkington, 1997; Herzig and Schaltegger, 2006). In that way, sus- For an effective enhancement of the sustainability performance,
tainability accounting could help to make society more sustainable, organizations have to link internal accounting and control mech-
or in other words, facilitate SD (Bebbington and Larrinaga, 2014). anisms with the external transparency purposes (Maas et al., 2016).
The motives for organizations to account for their sustainability This linkage of reporting and management control makes a sig-
impacts are very diverse, among them, maintaining or (re-)gaining nificant contribution for a good progress towards corporate sus-
legitimacy (Deegan, 2007), differentiating from competitors tainability and consequentially to a sustainable economy. However,
(Bebbington et al., 2009), meeting employees’ (Searcy and the claim for a better embedding of SR into internal control
Buslovich, 2014) or media expectations (Michelon, 2011), just to mechanisms leads unavoidably to the question of how to include
name a few examples. sustainability issues into corporate management control systems
Like conventional accounting, which is successfully used to (MCS).
optimize economic performance, sustainability accounting has the While there is a long history of traditional management control
potential to be a powerful tool to manage and control organiza- literature with its focus on efficiency enhancement for growth and
tions’ social and environmental impacts (Unerman et al., 2007). It is profitability (Anthony, 1965; Merchant, 1985; Simons, 1995a),
a broad concept that encompasses all instruments and methods research on management control for sustainability is an emerging
organizations have in place to measure or evaluate corporate sus- field (Lueg and Radlach, 2016; Maas et al., 2016). For Anthony
tainability and consequently also includes sustainability reporting (1965) management control is “[…] the process by which man-
(SR) (Dyllick and Hockerts, 2002; Gray, 1993; Schaltegger et al., agers ensure that resources are obtained and used effectively and
2006). Thereby, SR can be seen as the external disclosure of infor- efficiently in the accomplishment of the organization’s objectives”
mation that is gathered with the help of an organization’s sus- (Anthony, 1965: p. 17).
tainability accounting system. However, that does not mean that SR Management control literature suggests that employees and
does not have any internal relevance. Quite the contrary, SR may managers have different aims they strive for (Merchant and Van
also support internal information needs and performance mea- Der Stede, 2012). Management control mechanisms should
surement. Thus, it can contribute to organizations’ decision-making ensure that employees’ decisions and behaviors are in line with the
processes and helps to improve corporate sustainability perfor- organization’s objectives and strategies (Malmi and Brown, 2008).
mance (Hahn and Kühnen, 2013; Maas et al., 2016). In this vein, MCS for sustainability should make sure that the de-
In addition to the information provided on organizations’ eco- cisions taken and behaviors lived, are consistent with the sustain-
nomic, environmental and social impacts as results of their actions, ability objectives and strategies set by the organization. Thereby,
a sustainability report should also disclose organizations’ values literature suggests that MCS play a major role in orienting an or-
and governance models, and present the linkage between the ganization towards sustainability.
defined strategy and the obligation to SD (GRI, 2019a). In this view, Even though there is a growing number of publications focusing
besides the relevance for improving organizations’ accountability on MCS for sustainability and a large body of literature on SR as well
to a wide range of stakeholders and the purpose to measure sus- as a broad consensus that a substantial interplay between these
tainability performance at the organizational level, SR could help to issues of corporate sustainability exists, research on this interplay is
set corporate sustainability goals and drive change to make busi- still in its early stages. So far, prior literature reviews have only
ness activities more sustainable (Adams and McNicholas, 2007; focused on SR (e.g. Hahn and Kühnen, 2013), on a specific aspect of
GRI, 2013; Lozano et al., 2016). corporate sustainability or a certain control instrument (e.g.
SR has gained widespread adoption in practice, especially in Hansen and Schaltegger, 2016) or reviewed the literature on MCS
stock-exchange listed companies and the instrumental benefits of for SD in general (Lueg and Radlach, 2016), but did not consider the
SR are extensively discussed in the literature. Despite that, there are linkage between SR and MCS.
also many authors who introduce a critical perspective into the Against this background, the paper is aiming to identify and map
discussion (Burritt and Schaltegger, 2010; Cho et al., 2015; Gray, the literature which addresses the linkage between SR and MCS by
2010; Talbot and Boiral, 2018). Having a sustainability report in performing a systematic literature review. The systematic literature
place, but not making sure that effective actions for the improve- review is a highly suitable methodology to uncover insights and
ment of the sustainability performance are implemented, will end explore possible future research avenues especially in novel
in a well-meaning attempt at the best (Lueg and Radlach, 2016). research fields as the representational (Dumay et al., 2016;
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 3

Petticrew and Roberts, 2006). For structuring the literature review et al., 2005). In addition, organizations have to integrate stake-
and addressing the aim of this study the following research ques- holders’ expectations and values within the organizational con-
tions are outlined: trol mechanisms to address them in a sufficient way (Durden,
2008; Garcia et al., 2016; Ozs € o€ zgün Caliskan, 2014). Otherwise,
RQ1 How do management control systems affect sustainability there is a risk that stakeholders will stigmatize organization’s SR
reporting? practices as a PR-instrument without any relevant positive
RQ2 How does sustainability reporting affect management impact on organization’s sustainability performance (Durden,
control systems? 2008).
Another theoretical view in the instrumental perspective is the
The remainder of the paper is organized as follows: Section 2 principal-agent theory. Between an organization and its stake-
Theoretical Discourses on SR and MCS provides various theoretical holders, information asymmetries exist with regard to the organi-
lenses which suggest how SR could be used for control purposes as zation’s contributions to SD (Hahn and Kühnen, 2013; Pratt and
well as how MCS could influence SR. Section 3 Research Method Zeckhauser, 1985; Ross, 1973; Spence, 1974). However, a sustain-
describes the applied research approach e the systematic literature ability report can be used as an instrument for signaling the orga-
review e in detail. In section 4 Results, firstly the descriptive results nization’s contributions to SD directed at reducing those
of the literature review, the evolution of the literature, the used information asymmetries which is ideal for satisfying stakeholders’
methods and applied theories will be presented. This is followed by requests for information (Comyns and Figge, 2015; Hahn and
an in-depth analysis of the identified papers. Section 5 Discussion Kühnen, 2013). Hence, SR can be a control mechanism to match
and Limitations discusses the findings and addresses the main diverging interests between stakeholders and the management and
limitations of the study. Finally, section 6 Conclusion and Avenues for consequently a valuable tool. Using the example of listed com-
Further Research draws a conclusion and identifies possible avenues panies, the signaling of the sustainability performance reduces the
for future research. agency costs for investors and thus may lead to an improved access
The study contributes to the existing literature in several ways. to the capital market (Frias-Aceituno et al., 2013; Lee and Maxfield,
Firstly, it will identify and map the relevant literature in an 2015).
emerging research field. Secondly, it uses an analytical framework From an instrumental perspective, one could expect that there is
e the well-known MCS package of Malmi and Brown (2008) e and a strong interlocking of SR and MCS in practice, since organizations
clusters the relevant literature addressing the interplay along this will use SR as a management tool in order to create a competitive
framework. Thereby, it will provide a clearly structured overview of advantage and achieve conventional corporate goals by improving
the existing literature on the interplay between specific manage- sustainability performance. This in turn calls for exploiting the full
ment control elements and SR, which is new in the field. Based on potential of the tool SR in the course of managing, planning and
these findings, a synoptic framework for a reciprocal interplay controlling an organization’s sustainability performance, instead of
between SR and MCS will be developed which can be also used as a just using it as a simple communication tool without any significant
foundation for future research. Thirdly, the relevant body of control effect (Unerman et al., 2007). Within the three perspectives,
research is evaluated whether it is in line with an instrumental, a the instrumental perspective focuses on management techniques
social/political or a normative theoretical perspective. Finally, and a functionalistic approach, not taking the wider organizational
based on the structured findings, the study will provide future and societal context into account. This narrow focus can be seen as
research avenues and ideas for possible research projects. a major shortcoming of the perspective.
“While from an instrumental perspective the driving forces behind
2. Theoretical discourses on SR and MCS [organization’s corporate sustainability] include competition, effi-
ciency or some other form of rational adaptation to technical, market
As already mentioned, organizations have many different mo- and environmental conditions, the social and political perspective
tivations to account for their economic, social, and environmental emphasises how companies have to respond to societal expectations
impacts and/or to improve their sustainability performance. […]” (Hansen and Schaltegger, 2016: p. 202). Accordingly, the so-
Thereby, the described motivations in literature are grounded on a cial/political perspective is based on a social contract (Shocker and
broad variety of theories (e.g. stakeholder theory, legitimacy the- Sethi, 1973). As suggested by legitimacy theory, organizations
ory, neo-institutional theory or principal-agent theory). Hansen publish a sustainability report to demonstrate that their actions are
and Schaltegger (2016) classified the diverse theoretical ap- in line with society’s expectations and hence fulfil the social con-
proaches in the field by differentiating between an instrumental, a tract in order to gain, maintain, or regain legitimacy (Comyns and
social/political, and a normative theoretical perspective with Figge, 2015; Suchman, 1995). In this vein, legitimacy can be seen
varying driving forces behind. as a necessary resource, which can be influenced or manipulated by
The instrumental perspective is based on the (rational) view an organization (Deegan, 2002). Since society is constituted of
that organizations focus on sustainability performance in order various stakeholder groups, organizations have to take the expec-
to attain conventional organizational objectives like maximizing tations of a broad set of stakeholders into account to maintain their
profits or market share (Hansen and Schaltegger, 2016). This license to operate. However, publishing a sustainability report and
perspective is obvious e among other theories e in the most hence information about an organization’s contribution to SD, is
prominent line of stakeholder theory, the strategic stakeholder just one side of the coin. Organizations have to integrate sustain-
theory. The strategic view assumes that expanding the share- ability aspects in their strategies in order to support corporate
holder focus and hence considering a broader set of organiza- sustainability and thus meeting society’s expectations. For this,
tion’s stakeholder groups is essential for ongoing success proper control mechanisms are required (Lueg and Radlach, 2016;
(Freeman, 1994, 2010; Freeman et al., 2004; Mitchell et al., 1997). Rezaee, 2017).
In line with this, SR serves to create transparency about the ef- Neo-institutional theory suggests that organizations within an
forts and the performance that organizations pursue for organizational field tend towards homogeneity for gaining legiti-
contributing to SD. This is particularly important for influential macy (Deephouse, 1996; DiMaggio and Powell, 1983; Larrinaga-
or strategic relevant stakeholder groups (Freeman, 2010; Hahn Gonza lez, 2007). DiMaggio and Powell (1983) describe three
and Kühnen, 2013; Mitchell et al., 1997; Van der Laan Smith different mechanisms of isomorphic change e coercive, mimetic
4 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

and normative isomorphism e leading to homogeneity within an 3. Research method

organizational field. In this sense, the diffusion of SR practices
might be caused by the mechanism of isomorphic change triggered Mapping and assessing the literature in a specific area is a key
by organizations’ striving for legitimacy (Deegan, 2002; DiMaggio objective in any research project which requires a transparent
and Powell, 1983; Larrinaga-Gonza lez, 2007). A good example for approach (Massaro et al., 2016; Tranfield et al., 2003). The present
a normative isomorphism in the field of SR is the emergence of the study is based on a systematic literature review. In contrast to the
GRI and the related diffusion of their SR framework (Larrinaga- traditional or narrative literature review, this means that a sys-
Gonz alez, 2007). tematic, explicit, and reproducible methodology is used in order to
The social/political perspective would suggest that organiza- identify, evaluate, and synthesize the existing literature.
tions use SR primarily to influence society’s expectations or adapt The procedure of conducting a systematic literature review can be
to them for legitimation purposes (Bravo et al., 2012). Therefore, divided into seven working steps; choosing the research question(s)
one would assume a linkage of SR and MCS that is just sufficient (section: 1); selecting the databases; choosing the search terms (section:
enough to create the impression that the organization has taken 3.1); applying practical screening; applying methodological screening
extensive efforts to control and improve its sustainability perfor- (section: 3.2); doing the review; and synthesizing the results (section: 4)
mance. In this view, the interplay strongly depends on the (Fink, 2010). As most of the papers of our sample (41 of 53) were
isomorphic pressures in the field (Cho et al., 2015). There is most published within the last five years, we decided not to perform a
likely some decoupling in order to mitigate conflicting societal citation analysis, because the time span to getting cited was not suf-
expectations (Crilly et al., 2012). Thus, MCS and SR are loosely ficient for the larger part of the identified papers (Dumay, 2014).
linked. SR is not of interest as a management tool with a high po-
tential to enhance corporate sustainability performance, but for the 3.1. Choosing the search terms and selecting the databases
capability to react to society’s expectations and thus to ensure the
license to operate (Hansen and Schaltegger, 2016). At first, the relevant keywords for the research questions have to
In contrast, the normative theoretical perspective makes “[…] it be identified. Since the research questions are aiming at the inter-
a moral duty to integrate sustainability issues (and its stakeholders) play between SR and MCS, two different groups of words need to be
into […]” organizations’ MCS and to provide information about taken under consideration. For the first keyword group regarding
organizations’ contribution to SD in a sufficient way (Hansen and MCS and the relating terms, the authors draw upon substantial and
Schaltegger, 2016: p. 199). Stakeholder theory also has a norma- well-known literature in the field (Malmi and Brown, 2008;
tive view (Donaldson and Preston, 1995; Wall and Greiling, 2011). Merchant and Van Der Stede, 2012; Simons, 1995a).
Against the strategic branch of stakeholder theory, which assumes There is a widespread use of the term SR in practice and research
that organizations consider stakeholder expectations in order to for reporting that goes beyond the financial bottom line by
ensure ongoing success and to create a competitive advantage, including environmental and social aspects, although a broad range
normative stakeholder theory builds on philosophical or moral of alternative expressions exists (e.g. CSR reporting, TBL-reporting).
concepts (Donaldson and Preston, 1995; Freeman et al., 2004; These alternative expressions for the second keyword group were
Freeman, 2010). In this vein, organizations have to develop and derived from an extensive literature study and a subsequent dis-
implement a stakeholder management that benefits all stakeholder cussion among the researchers. Afterwards, the two keyword
groups, regardless of whether it improves the organizations’ groups were linked by using Boolean operators in order to create a
financial performance and/or it maximizes shareholder value or not search string (see Table 1).
(Hasnas, 1998). Hence, accepting that stakeholders have moral As the basis of the literature review, we selected the Web of
grounded claims, consequently calls for SR and MCS which take Science database, which includes more than 21,100 peer-reviewed,
these claims into account. On a societal level, normative social high-quality journals from all over the world from various disci-
contract theory constitutes ethical obligations organizations have plines (Clarivate Analytics (n.d.)) and which should therefore cover
towards society and its individual members based upon the ques- the most important publications in the field. To reach an even
tion of what society would demand from business to allow it to get broader exposure, we also used the EBSCO Business Source Premier
formed. Thereby it suggests that managers abide by these moral database, which contains more than 1,100 journals from business
grounded norms or rules because compliance is necessary to and economics (EBSCO Industries Inc (n.d.)). To validate our choice
authorize the existence of the organization. However, it is assumed of databases, we conducted an informal Google Scholar search. It
that society demands that an organization increases social welfare did not reveal any additional relevant papers which were not
without violating the fundamental principles of justice (Hasnas, already included in the selected databases.
1998).
This argumentation leads to the expectation, that there is a close 3.2. Practical and methodological screening
interlinking of SR and MCS. Unlike the instrumental perspective,
the interplay is not grounded on the endeavor to attain traditional The review e conducted in 2017 and updated in 2019 e includes
corporate goals, but on the moral or ethical obligation to contribute every empirical and conceptual journal paper written in English
to SD to a sufficient degree. Hence, it is the most proactive and published as of January 1, 2000 until December 31, 2018. The
perspective where organizations take actions which are in line with starting year was chosen because around the turn of the millen-
a stewardship approach towards SD. nium companies have started to publish reports that include all
Summing up the theoretical discourse, the instrumental as well three dimensions of the TBL and have not just focused on one
as the normative perspective suggest a strong linkage of SR and (Deegan and Unerman, 2011; Kolk, 2010). Moreover, in 2000, GRI
MCS in practice, however with diverging motivations behind launched its first reporting framework, thereby laying the foun-
ranging from conventional business objectives to moral or ethical dation for the later distribution of SR. Today, the GRI guidelines can
considerations. Against that, the social/political perspective as- be seen as the de facto standard for SR (GRI, 2019b; KPMG, 2017).
sumes that striving for legitimation is the driving force. In this vein, Book reviews, editorial notes and comments were excluded.
organizations’ SR and MCS are insofar linked as it is necessary to Since the literature on this topic is at an early stage and we want to
gain, regain or maintain legitimacy. cover the entire range, we do not exclude studies on the basis of
their quality. The identified keywords needed to occur within the
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 5

titles, keywords or abstracts of the papers. 4. Results

If all of these conditions were fulfilled, the content of the papers
was checked whether there is a sufficient linkage between SR and 4.1. Descriptive analysis: evolution of the literature, methods and
MCS. For the documentation we used a spreadsheet that captured theories
bibliographic data, the methodical approach, the theoretical
framework used and a summary of the relevant content itself. The In a first step, the paper sample was analyzed in terms of
rigorous compliance with the predetermined schedule helped us to descriptive statistics (for an overview of the 53 papers see Table 2).
reduce bias and therefore contributes to the reliability of the review Although the selection criteria for the database search allowed
(Massaro et al., 2016). Every paper was checked and confirmed by at results with a publication year starting in 2000, the first paper
least two researchers in order to increase the validity of the se- aiming at linking SR and MCS was published in 2007. As shown in
lection and, thus, as well increase the reliability of the review. Fig. 2, in the following years the publication of papers about this
Contradictions were resolved by discussions among the re- topic stayed at a low level with maximum 2 publications per year.
searchers. For the identified papers that fulfilled the outlined Starting from the year 2013, a rise of research activities for this topic
criteria, a check of the reference list was performed for whether it can be observed with a peak in the year 2016.
contained further relevant papers. Moreover, we checked if there The high number of publications in 2016 is due to a special issue
were any subsequent articles which cited the identified research. on this topic including 10 publications in the Journal of Cleaner
This approach resulted in 53 relevant papers overall which were Production. Fig. 3 shows the main journals that published topics on
included in the review. the interplay of SR and MCS. A total of 131 authors were involved in
producing the relevant 53 papers, with the vast majority of authors
working at research institutions in Europe at the time of
publication.
Concerning the underlying research methods, 21 papers are
based on an empirical-qualitative approach, whereas 17 used a
quantitative approach and 10 a conceptual one. 5 papers used a
mixed method, which is a combination of different approaches like
3.3. Synthesizing the results
literature reviews, (single) case studies or expert interviews.
In only 25 of the 53 papers theories were used for explaining the
In order to get a systematic insight about the literature, we
results. The most frequently chosen theories were stakeholder and
analyzed the results of the studies by means of a content analysis.
principal-agent theory. From the remaining 28 papers 9 referred to
With the help of the content analysis we identified the analyzed,
frameworks (e.g. Simons’ Levers of Control Framework, 1995b;
proposed or mentioned interplays between SR and specific man-
Laughlin’s framework for organizational change, 1991). This result
agement controls (in both directions according to RQ1 and RQ2).
is in line with the observations of Hahn and Kühnen (2013), who
This means that our sample contains qualitative and quantitative
conducted a literature review on determinants, trends and research
investigated relationships as well as qualitatively described link-
gaps of SR and concluded that most of the scientific articles dealing
ages in conceptual papers. We then classified the identified links by
with SR are not based on theories. Similar to that result, Günther
using the widespread MCS package of Malmi and Brown (2008) as
et al.’s (2016) article on environmental management control sys-
an analytical framework (Massaro et al., 2016) (see Fig. 1). The
tems also found in their literature review that the majority of the
reason for choosing the MCS package of Malmi and Brown (2008) is
studies do not explicitly refer to any theoretical framework. We also
that this framework e besides the framework of Broadbent and
analyzed whether the studies in our sample referred to the
Laughlin (2009) e is conceived to include the broadest under-
framework of Malmi and Brown (2008) and found only three
standing of MCS (Günther et al., 2016), since it encompasses
studies mentioning the framework (Battaglia et al., 2016; Maas
institutional as well as processual elements and formal as well as
et al., 2016; Mio et al., 2016).
informal controls. It consolidates other existing MCS approaches
The assignment of the described management controls to 1 of
and can be seen to date as the most comprehensive MCS approach
the 5 elements showed that the majority of the papers focused on
developed. The MCS framework of Malmi and Brown (2008) is
selective control elements. In total, the 53 studies revealed 133
presented in Fig. 1. Cultural Controls: Malmi and Brown (2008)
interplays of SR with the 5 management control elements. 36 of the
describe cultural controls referring to For the sake of complete-
53 papers address more than 1 management control element,
ness, we briefly describe the five specific management control el-
which supports the choice of the framework of Malmi and Brown
ements :
(2008) who describe MCS as a package.
The identification of management controls and their assignment
In detail, only 2 studies analyze all 5 management control ele-
to these five management control elements was done by at least
ments according to Malmi and Brown (2008) (Adams and Frost,
two researchers and the results have been discussed and merged in
2008; Kerr et al., 2015). 17 of the 53 papers address 4 of the 5
order to increase the reliability of our coding.

Table 1
Search string.

“management!control*” OR “MCS” OR “SMCS” OR “cultural!control*” OR “clan*” AND “sustainability!report*" OR “sustainability!disclosure*” OR “corporate!social!

OR “value*” OR “symbol*” OR “planning” OR “long!range!planning” OR responsibility!report*” OR “CSR!report*” OR “triple!bottom!line!report*” OR
“action!planning” OR “cybernetic!control*” OR “budget*” OR “financial! “TBL!report*” OR “integrated!report*“OR “global!reporting!initiative” OR “GRI”
measurement!system*” OR “non!financial!measurement!system*” OR OR “international!integrated!reporting!council” OR “IIRC”
“hybrid!measurement!system*” OR “reward*” OR “compensation*” OR
“administrative!control*” OR “governance!structure*” OR “organi!ation!
structure*” OR “polic*” OR “procedure*” OR “results!control*” OR “action!
control*” OR “personnel!control*” OR “cultural!control*” OR “belief!system*”
OR “boundary!system*” OR “interactive!control!system*” OR “diagnostic!
control!system*”
6 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

Fig. 1. Management Control Systems Framework (Malmi and Brown, 2008: p. 291).

 Cultural Controls: Malmi and Brown (2008) describe cultural controls referring to Flamholtz (1983) as “[…] the set of values, beliefs and social norms which tend to be shared
by its members and, in turn, influence their thoughts and actions” (Flamholtz, 1983: p. 158). Thereby they consider three different aspects of cultural controls: clan controls
which establish values and beliefs through ceremonies and rituals of a group (Ouchi, 1979), value controls which are formally communicated and reinforced organizational
definitions in order to provide values, purpose, and direction (Simons, 1995b) and symbol-based controls which are visible expressions like for example a dress code in
order to create a certain type of culture (Schein, 1997).
 Planning: Planning can be defined as an “ex ante form of control” (Flamholtz et al., 1985: p. 39) and includes goal-setting and developing standards or actions in order to
achieve these goals. Malmi and Brown (2008) differentiate between action planning for the immediate future and long range planning.
 Cybernetic Controls: According to Malmi and Brown (2008) cybernetic controls include the quantification of a phenomenon, the alignment to standards of performance as
well as feedback loops that detect unwanted variances in order to modify the system’s components. The lines between planning and cybernetic controls can get fuzzy,
especially in directing behavior by indicators and the use of KPIs. Cybernetic controls can be differentiated into four groups, namely budgets, financial measures (e.g.
indicators like ROI or EVA), non-financial measures (e.g. environmental or social indicators) and hybrids (a combination of financial and non-financial indicators like the
balanced scorecard (BSC)).
 Reward and Compensation: Within the management control element “reward and compensation” the focus is on “[…] motivating and increasing the performance of in-
dividuals and groups within organizations by achieving congruence between their goals and activities and those of the organisation” (Malmi and Brown, 2008: p. 293).
Improving the performance of indivudals can be reached by fostering intrinsic or extrinsic motivation, whereby management accounting research largely focuses on
extrinsic rewards (Ittner and Larcker, 2001).
 Administrative Controls: According to Malmi and Brown (2008) administrative control systems “[…] direct employee behaviour through the organizing of individuals and
groups, the monitoring of behaviour and […] the process of specifying how tasks or behaviours are to be performed or not performed” (Malmi and Brown, 2008: p. 293). Three
groups of administrative controls can be distinguished: organizational design and structure, governance structures (e.g. board composition, meetings) as well as policies
and procedures (e.g. standard operating procedures, rules, behavioral constraints).

management control elements, 4 papers analyze 3 management 4.2. Analysis of the results: the effect of MCS on SR and vice versa
control elements, 13 papers concern 2 of the management control
elements and 17 papers only deal with 1 of the 5 management Table 4 clusters the key findings of the investigated papers and
control elements. On average, 2.5 management control elements their assignment to the MCS package of Malmi and Brown (2008)
were addressed in each paper (see Table 3). and the two research questions. Each subchapter is thus struc-
In summary, Fig. 4 reveals the papers in which a relation be- tured along the research questions and the thematic clusters. In line
tween SR and the respective management control element could be with the idea of a systematic literature review, we concentrate in
identified. The listed numbers (article #) refer to the alphabetical each thematic cluster on a synthesized overview of the related
list of studies in Table 2. studies, accompanied by selected examples to highlight the main
It can be seen that for each type of management control element points.
a connection to SR can be found with the most common link be-
tween administrative controls (37 papers) and SR, followed by 4.2.1. Cultural controls
planning as well as cybernetic controls (each 30 papers). As already described in section 3.3, values, beliefs and social
In terms of an analysis about which management control ele- norms are shared by the organization’s members and might affect
ments have been predominantly addressed in the recent years, their thoughts and actions (Flamholtz, 1983). In line with this,
special attention is given to the interplay between administrative existing cultural aspects might result in specific actions, e.g.
controls and SR, and thereby, especially focusing on RQ1. This is changes in the reporting process or the SR process affects corporate
clearly demonstrated by the fact that in 2018 5 out of 6 studies culture.
examined this issue. Considering the last two years (2017 and 2018) With regard to a potential effect of existing cultural controls on
brings to light that 11 out of 13 studies investigate administrative SR (see RQ1), two main thematic areas could be identified,
controls. Compared to this, from the 23 studies that have been addressing different levels:
published before 2016, 14 addressed administrative controls, which
is approximately the same level as cultural controls (14), planning (1) Values and beliefs influence SR: Literature shows that inte-
(14) or cybernetic controls (15). The future will show if this current grating CSR values into the organizational vision and/or
research trend is an ongoing development that will shape the mission has a positive impact on the quality of SR and that
research in this field. the SR process is initiated by a values-based management
culture (Amran et al., 2014; Herremans and Nazari, 2016).
Similarly, Shabana and Ravlin (2016) note that values and
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 7

Table 2
List of the analyzed 53 papers.

No. Authors, Year Journal Methodical Approach Theoretical Framework

Mixed Con- Quantitat- Quali-

Methods ceptual ive/Survey tative

1 Adams & McNicholas Accounting, Auditing & ✓ N/A

(2007) Accountability Journal
2 Adams & Frost (2008) Accounting Forum ✓ N/A
3 Amran et al. (2014) Business Strategy and the ✓ Legitimacy theory, resource-based view
Environment
4 Arayssi et al. (2016) Sustainability Accounting, ✓ Stakeholder theory, agency theory
Management and Policy Journal
5 s & Mundy
Arjalie Management Accounting Research ✓ N/A
(2013)
6 Battaglia et al. (2016) Journal of Cleaner Production ✓ N/A
7 Blackburn et al. (2018) Marketing Intelligence & Planning ✓ Stakeholder theory
8 Bouten & Hooze e Management Accounting Research ✓ N/A
(2013)
9 Burritt & Schaltegger Accounting, Auditing & ✓ N/A
(2010) Accountability Journal
10 Contrafatto & Burns Management Accounting Research ✓ N/A
(2013)
11 Dah & Jizi (2018) Journal of International Accounting ✓ Agency theory, stakeholder theory
Research
12 de Villiers et al. (2016) Journal of Cleaner Production ✓ N/A
13 Dienes et al. (2016) Sustainability ✓ Agency theory, stakeholder theory
14 Dienes et al. (2016) Sustainability Accounting, ✓ N/A
Management and Policy Journal
15 Durden (2008) Accounting, Auditing & ✓ Stakeholder theory
Accountability Journal
16 Eccles & Serafeim Harvard Business Review ✓ N/A
(2013)
17 Frias-Aceituno et al. Accountability Journal ✓ Agency theory, stakeholder theory
(2013)
18 Frostenson & Helin Sustainability Accounting, ✓ Institutional logics
(2017) Management and Policy Journal
19 Garcia et al. (2016) Journal of Cleaner Production ✓ Stakeholder theory
20 Garcia-Meca & Corporate social responsibility and ✓ Agency theory, stewardship theory
Pucheta-Martinez Environmental Management
(2018)
21 Goetz (2010) Management Research Review ✓ N/A
22 Gunarathne & Managerial Auditing Journal ✓ Diffusion theory
Senarane (2017)
23 Herremans & Nazari Journal of Management Accounting ✓ Institutional theory, institutional logics
(2016) Research
24 Hu & Loh (2018) Sustainability ✓ Agency theory
25 Junior et al. (2017) Ecological Indicators ✓ N/A
26 Kaur & Lodhia (2018) Accounting, Auditing & ✓ Managerial stakeholder theory
Accountability Journal
27 Kerr et al. (2015) Pacific Accounting Review ✓ N/A
28 Kloviene_ & Speziale Economics and Business ✓ Institutional theory
(2015)
29 Kocmanov a& Journals of Business Economics and ✓ N/A
Simberov a (2014) Management
30 Laine et al. (2017) Accounting, Auditing & ✓ N/A
Accountability Journal
31 Lee & Maxfield (2015) Business and Society Review ✓ Agency theory, legitimacy theory, stakeholder theory
32 Lozano et al. (2016) Journal of Cleaner Production ✓ N/A
33 Maas et al. (2016) Journal of Cleaner Production ✓ N/A
34 Michelon & Parbonetti Journal of Management Governance ✓ Stakeholder theory
(2012)
35 Mio et al. (2016) Journal of Cleaner Production ✓ N/A
36 Mitchell et al. (2012) Accounting, Auditing & ✓ Organizational learning theory
Accountability Journal
37 Montecchia et al. Journal of Cleaner Production ✓ Legitimacy theory
(2016)
38 Morioka & Monteiro Journal of Cleaner Production ✓ N/A
De Carvalho (2016)
39 Nazari et al. (2015) Corporate Governance ✓ N/A
40 Nekhili et al. (2017) International Review of Financial ✓ N/A
Analysis
41 Oliver et al. (2016) Managerial Auditing Journal ✓ Systems thinking approach
42 € o
Ozs €zgün Caliskan Social Responsibility Journal ✓ N/A
(2014)
43 Palmer & Flanagan Journal of Business Strategy ✓ N/A
(2016)
(continued on next page)
8 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

Table 2 (continued )

No. Authors, Year Journal Methodical Approach Theoretical Framework

Mixed Con- Quantitat- Quali-

Methods ceptual ive/Survey tative

44 Passetti et al. (2018)Accounting, Auditing & ✓ N/A

Accountability Journal
45 Patel & Rayner (2015) Business & Society ✓ Transactional culture approach
46 Rezaee (2017) The Journal of Business Inquiry ✓ Agency theory, stakeholder theory, legitimacy theory, signaling
theory, institutional theory, stewardship theory
47 Shabana & Ravlin Business and Society Review ✓ Legitimacy theory, stakeholder theory
(2016)
48 Stacchezzini et al. Journal of Cleaner Production ✓ N/A
(2016)
49 Stubbs & Higgins Accounting, Auditing & ✓ N/A
(2014) Accountability Journal
50 Tamimi & Sebastianelli Management Decision ✓ Stakeholder theory
(2017)
51 Thijssens et al. (2016) Journal of Cleaner Production ✓ N/A
52 Thoradeniya et al. Accounting, Auditing & ✓ Theory of planned behaviour
(2015) Accountability Journal
53 Wildowicz-Giegiel Problems of Management in the 21st ✓ N/A
(2014) Century

Fig. 2. Yearly evolution of publications.

Fig. 3. Main journals of the sample.

Table 3
Number of papers addressing 1, 2, 3, 4 or 5 management control elements.

# Management control elements 1 2 3 4 5 Average

# Papers that address the respective number of management control elements 17 13 4 17 2 2.5
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 9

Fig. 4. Studies addressing the specific MCS package elements and SR.

beliefs directly affect the reporting mode and factors like To sum up, the literature review on cultural controls shows a
trust and commitment serve as enablers for a more sub- predominantly positive relationship between cultural controls and
stantive CSR reporting. Additionally, the manager’s personal SR. Furthermore, in line with an instrumental perspective, SR also
attitudes and beliefs are related to the manager’s effort in SR has a positive influence on corporate culture in terms of changing
(Durden, 2008; Thoradeniya et al., 2015). the communication of the vision, building a common language and
(2) Vision, mission and culture affect SR: Our review reveals that values, triggering learning processes and leading to higher loyalty
the integration of sustainability into the corporate’s vision, and trust among employees. The only critical paper was published
mission or culture is seen as vital for TBL-reporting (Kerr by Junior et al. (2017). The authors found that organizational values
et al., 2015; Rezaee, 2017) and that corporate culture have been barely considered in the sustainability approach.
shapes or drives SR (Gunarathne and Senarane, 2017; Patel Therefore, they suggest that cultural aspects do not play a major
and Rayner, 2015). role in the sustainability reports of the two companies studied.

Regarding RQ2 the following effects can be identified: 4.2.2. Planning

In the last decades sustainability has gained momentum. It is
(1) SR leads to fostering sustainable principles as a part of becoming an accepted practice, especially in stock-exchange listed
corporate culture (Adams and McNicholas, 2007). companies. Despite this trend, the systematic integration of sus-
(2) SR can also change awareness for sustainability issues and tainability into the corporate strategy is still a challenge for many
activities (Eccles and Serafeim, 2013; Maas et al., 2016). As a companies (Engert et al., 2016; Morioka and Monteiro De Carvalho,
consequence, this contributes to an increased motivation 2016; Oertwig et al., 2017). The authors recommend the systematic
€ o
(Ozs € zgün Caliskan, 2014), well-being among employees integration of sustainability issues into strategy as an organized
(Lozano et al., 2016), and fostering interaction among process of envisioning a desired future looking at the link between
decision-makers (Maas et al., 2016). planning and SR. The content analysis of the papers shows that
(3) SR may also help to communicate a shared vision, common there are various connections between the management control
values, or perceptions to employees and managers (Ajalie s element of planning and SR (RQ1). These links can be clustered as:
and Mundi, 2013; de Villiers et al., 2016; Mio et al., 2016)
by using a common language (de Villiers et al., 2016) or a (1) Integrating sustainability issues into strategy is seen as a
collective understanding of sustainability (Mitchell et al., precondition for measurement, management and reporting:
2012). Maas et al. (2016) and Rezaee (2017) argue that a company’s
(4) Furthermore, SR can trigger the process of continuous strategy drives the measurement and management
organizational learning (Battaglia et al., 2016; Lozano et al., approach. If companies aim at ensuring a high quality of the
2016), which should improve sustainability performance information in their reports, they need to institute good
(Mitchell et al., 2012). strategic controls (Nazari et al., 2015). In line with that,
(5) Finally, SR increases loyalty, trust, and pride within the em- Montecchia et al. (2016) found the higher the degree of
ployees and may shape identity with the corporate vision integration of CSR into corporate strategy, the more is re-
(Adams and Frost, 2008; Frostenson and Helin, 2017; ported about this integration.
Wildowicz-Giegiel, 2014). (2) Goals and indicators are used for measurement, manage-
ment and reporting: To achieve the goals set, companies
 10
Table 4
Clustered key findings using the Malmi and Brown (2008) MCS framework.

Cultural Controls (28)

RQ1 (MCS e SR) RQ2 (SR e MCS)

 Values and beliefs influence SR  SR leads to fostering sustainable principles as a part of corporate culture
 Vision, mission and culture affect SR  SR changes awareness and motivation for sustainable issues and activities
 SR helps to communicate a shared vision, common language or values

A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

 SR influences organizational learning
 SR increases loyalty and trust
Planning (30) Cybernetic Controls (30) Reward and Compensation (8)
RQ1 (MCS e SR) RQ2 (SR e MCS) RQ1 (MCS e SR) RQ2 (SR e MCS) no cluster possible due to low number of studies
 Systematic integration of sustainability  SR supports the  Adequate information systems  SR leads to a change in corporate financial
issues into strategy is a precondition alignment of strategy are a requirement for SR or sustainability performance
for measurement, management with external interests  Performance measurement  SR improves the information collection
and reporting  SR supports the inclusion requires indicators for SR process and changes the use of indicators
 Goals and indicators are used for of sustainability issues  BSC is used as a cybernetic control based
measurement, management and reporting into planning on indicators of the SR
 SR supports the
formulation and
implementation of
objectives
 SR is used for monitoring
of goal achievement
 SR leads to focus more
strongly on KPIs
Administrative Controls (37)
RQ1 (MCS e SR) RQ2 (SR e MCS)
 The existence of a CSR or sustainability  SR leads to changes in the organization
committee influences SR and in organizational learning
 The involvement of top management  SR changes procedures (meetings,
affects SR workshops) and the way of
 The composition and involvement of communication and collaboration
the board has an effect on SR between teams
 The engagement with stakeholders  SR influences the existence of
affects SR principles, codes of conducts,
policies and job descriptions
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 11

need to install measurement and reporting systems and 4.2.3. Cybernetic controls
sustainability indicators to measure the achievement of Overall, 30 studies have been found that detect a link between
goals. Garcia et al. (2016) argue that the publication of those cybernetic controls and SR. Focusing on the question how cyber-
indicators by means of a sustainability report increases the netic controls affect SR (RQ1), two main thematic clusters could be
quality of reporting. identified:

In addition to general descriptions about how strategic aspects (1) Adequate information systems are an important requirement
or plans are included in TBL- or integrated reports (Durden, 2008; for SR: Garcia et al. (2016), Herremans and Nazari (2016),
Mio et al., 2016) and that SR might lead to organizational change in Contrafatto and Burns (2013), as well as Bouten and Hooze e
general (Adams and McNicholas, 2007), various connections of SR (2013) state that SR relies on the support of adequate data
and planning could be found in the literature (RQ 2). They can be and internal information systems.
clustered as follows: (2) Performance measurement and related indicators play an
essential role for SR: By linking CSR indicators with a com-
(1) SR supports the alignment of strategy and related planning pany’s processes the quality, transparency and timing of SR
processes with external interests: Corporations have to react can be improved (Garcia et al., 2016; Kloviene_ and Speziale,
to stakeholder expectations and should systematically inte- 2014).
grate a social perspective into their frameworks to guide
s and Mundi (2013) stress the
their business strategy. Arjalie In addition to possible effects of cybernetic controls on SR in-
function of the sustainability report and of plans to tentions, quality or content, studies were published that support
communicate the alignment of the CSR strategy with the reverse direction (RQ2):
external interests and to build a coherent CSR agenda.
(2) Additionally, SR may help companies to include sustain- (1) External reporting is strongly and positively related with
ability issues into planning (Kloviene_ and Speziale, 2014; focusing the attention on corporate or financial performance
Lozano et al., 2016). Furthermore, SR may also be used as an (Adams and Frost, 2008; Lee and Maxfield, 2015; Mitchell
information source for long-term risk management which is et al., 2012). Wildowicz-Giegiel (2014) assumes that one of
part of corporate planning (Stubbs and Higgins, 2014; the main reasons for publishing CSR information is the
Wildowicz-Giegiel, 2014). intended increase in sustainability performance. Thus, the
(3) SR can also contribute to the articulation and implementa- integration of a sustainability report into MCS may also foster
tion of sustainability objectives. In this context, Kerr et al. financial or non-financial performance (Herremans and
(2015) found that the integration of SR into MCS is advan- Nazari, 2016; Lozano et al., 2016; Maas et al., 2016;
tageous for operationalizing sustainability objectives. More- Shabana and Ravlin, 2016).
over, Bouten and Hooze e (2013) claim that a sustainability (2) Further, SR improves the information collection process and
report may contribute to set even new sustainability objec- changes the use of indicators: The development and publi-
tives based on publication requirements. cation of a sustainability report leads to organizational
(4) After formulating and setting goals, they also have to be changes regarding data collection processes, indicators,
measured and monitored. In this regard, Palmer and metrics or the purpose of the control system (Kloviene_ and
Flanagan (2016) found that SR is considered as a method to Speziale, 2015; Lozano et al., 2016). For example, Adams
monitor the goal achievement within the planning process and McNicholas (2007) found that SR leads to an increased
and it provides the company with an understanding of what focus on KPIs not previously reported.
needs to be achieved in the future. (3) In six studies the BSC plays a role in operationalizing sus-
(5) Goals can only be measured and monitored if they are tainability objectives by means of indicators that are re-
operationalized. Implementing a sustainability report may ported in sustainability reports. A BSC is seen as a possible
help companies to focus more on sustainability related KPIs: solution for implementing sustainability objectives (Adams
If sustainability issues are integrated in the strategic plan- and Frost, 2008; de Villiers et al., 2016; Garcia et al., 2016;
ning process, a shift of the attention to new, other or an Mio et al., 2016; Mitchell et al., 2012).
expanded number of KPIs which have not been regarded so
far could be observed (Adams and Frost, 2008; Adams and Furthermore, two studies could be identified that address link-
McNicholas, 2007; Contrafatto and Burns, 2013). ages in both directions. Bouten and Hooze e (2013) report that ac-
counting information is used for SR, but SR may also lead to the
Summarizing, the papers focusing on RQ1 address in a very insight that additional data is required. Morioka and Monteiro de
general way that the systematic integration of sustainability issues Carvalho (2016) report similar results and state that indicators
into strategy encourages and improves SR. The strategic planning which are collected in the course of implementing social and
process is a precondition for measurement, management, as well as environmental practices can be used for SR and to assess and
reporting. Also, most studies focusing on the usage of SR for plan- manage sustainability performance.
ning (RQ2) show a broad variety of different positive linkages. SR There are also some critical voices towards the impact of SR on
can support organizations in order to align their strategy with the MCS in the case of cybernetic controls. For example, Arjalie s and
external stakeholder interests. Furthermore, SR brings sustain- Mundi (2013) show that diagnostic processes for CSR, including
ability related issues into the planning process, helps to formulate the comparison of (sustainability) performance against targets, are
and implement sustainability objectives, to monitor goal achieve- not fully embedded in many organizations because those processes
ment and to put the focus more strongly on KPIs. However, there do not seem to have equal priority compared to those for main-
are also two studies that did not reveal any or only a weak effect stream business activities. Furthermore, Durden (2008) found out
between SR and strategic planning processes (Frostenson and that in some cases the KPIs used did not include any sustainability
Helin, 2017; Mitchell et al., 2012). related measures and that the MCS was not orientated towards
monitoring TBL-dimensions. In a case study it was found that the
sustainability report is not closely linked to KPIs and that it is rather
12 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

a communication tool which just reports selected KPIs of the 2018; Dienes and Velte, 2016; Herremans and Nazari, 2016;
company (Frostenson and Helin, 2017). Hu and Loh, 2018; Rezaee, 2017; Tamimi and Sebastianelli,
To sum up, concerning the effect of cybernetic controls on SR, 2017). For example, gender diversity seems to strongly in-
most studies refer to the importance of adequate information sys- fluence the reporting process. Nekhili et al. (2017), Arayssi
tems and data as a prerequisite for SR and the importance of in- et al. (2016), as well as Frias-Aceituno et al. (2013) found
dicators for performance measurement. What’s more, an that a higher percentage of women on boards leads to pos-
integration of SR related information or KPIs in the control system itive effects concerning SR or IR.
increases the validity of data and reporting quality. Referring to the (4) Many studies address the importance of a strong stakeholder
effect or usage of SR for cybernetic controls, positive changes in engagement for the SR process and quality (Adams and Frost,
corporate sustainability performance and changes in the informa- 2008; Blackburn et al., 2018; de Villiers et al., 2016;
tion collection process, as well as the usage of indicators could be Herremans and Nazari, 2016; Kaur and Lodhia, 2018; Kerr
observed. On a more critical stance, three studies show that infor- et al., 2015; Mio et al., 2016; Stubbs and Higgins, 2014;
mation systems and indicators exist rather independently from the Thijssens et al., 2016; Wildowicz-Giegiel, 2014). Just to give
sustainability reports. one example, Lozano et al. (2016) found out that after
introducing the first sustainability report there was a better
4.2.4. Reward and compensation communication, dialogue and engagement with
In connection with achieving better sustainability performance stakeholders.
of executives and employees, reward and compensation means to
accurately direct the CSR behavior through incentives, for example The contents of the studies referring to the effect of SR on
by integrating CSR goals into the remuneration systems of man- administrative controls (RQ2) can be clustered as follows:
agers (Shabana and Ravlin, 2016).
Referring to the effect of rewards and compensation on SR (RQ1) (1) SR has the potential to change the organization and its
three papers could be revealed. In that context, reward systems can learning processes in the long term, like improved internal
support sustainable behavior and improve the probability and processes (Wildowicz-Giegiel, 2014), a restructuring change
quality of SR (Goetz, 2010; Hu and Loh, 2018). Bouten and Hooze e s and Mundy, 2013;
effect for the entire organization (Arjalie
(2013) identify the incentive system as one important environ- Lozano et al., 2016), and the promotion of individual or
mental management accounting tool that is linked to environ- organizational learning (Maas et al., 2016; Mitchell et al.,
mental reporting. 2012).
Coming to the question how SR is used for rewards and (2) SR changes procedures like meetings and workshops, as well
compensation (RQ2), Adams and Frost (2008) found out that as the way of communication and collaboration between
companies also use environmental and social impact data collected teams. For instance, Adams and McNicholas (2007) revealed
from the company’s sustainability report as the basis for managers’ that by implementing a SR process, different teams inter-
reward systems. Thus, KPIs from the reports not only serve to acted and regular meetings were arranged. It was also shown
measure corporate sustainability performance, but can also be used that through the SR process the communication between
for performance-based rewards, which is likewise supported by employees and managers is intensified (de Villiers et al.,
Shabana and Ravlin (2016). Key sustainability performance in- 2016; Frostenson and Helin, 2017; Lozano et al., 2016;
dicators from SR can be linked to executive rewards (Oliver et al., Oliver et al., 2016) and that there was a better communica-
2016), whereby one study shows that executive compensation is tion, dialogue, and engagement with stakeholders (Lozano
positively linked to ESG disclosure (Tamimi and Sebastianelli, et al., 2016).
2017). (3) Furthermore, SR influences the existence and development
With only eight papers, this management control element is of (new) principles, codes of conducts, policies (Adams and
barely addressed. In the few papers identified the instrumental McNicholas, 2007; Durden, 2008; Laine et al., 2017;
perspective clearly dominates. Thijssens et al., 2016), and the development of job de-
scriptions can be encouraged (Kerr et al., 2015).
4.2.5. Administrative controls
Regarding RQ1, the following thematic areas and studies could To sum up, the majority of the papers revealed positive effects of
be identified that show the important role of administrative con- administrative controls on SR, like the existence of a CSR commit-
trols for SR: tee, the involvement of the top management, and the diversity of
the board. The involvement of stakeholders was also found to have
(1) The existence and also the gender diversity of a CSR or sus- a positive impact on SR quality, but vice versa the communication
tainability committee has a positive influence on the quality with stakeholders can be improved by the SR process which depicts
of SR or facilitates IR (Amran et al., 2014; Stubbs and Higgins, a reciprocal interplay. Besides that, literature reveals evidence that
2014). On the contrary, Michelon and Parbonetti (2012) implementing SR leads to changes in administrative processes and
found only weak evidence of the relationship between the structures, like learning processes, procedures, and principles.
presence of a CSR committee or director and disclosure of
social information. 5. Discussion and limitations
(2) Furthermore, the involvement of the top management or
directors in the reporting process was found to be essential 5.1. Discussion
for the quality of a sustainability report (Frostenson and
Helin, 2017; Garcia-Meca and Pucheta-Martinez, 2018; After evaluating the existing body of literature on the interplay
Gunarathne and Senarane, 2017; Herremans and Nazari, of MCS and SR, it can be stated that with only 53 papers on that
2016; Nazari et al., 2015; Rezaee, 2017; Thoradeniya et al., topic, the issue is still an emerging subject and therefore in need of
2015). a more in-depth research, especially moving beyond the surface
(3) Also the structure and behavior of the board has an effect on level of management practices and hence an instrumental
the extent and quality of sustainability reports (Dah and Jizi, perspective. The result section reveals that both research questions
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 13

Fig. 5. Synoptic framework of the reciprocal interplay between SR and MCS.

have already been subject to different studies (see Table 4). The Although the analyzed studies are constructing interplays be-
main findings are summarized in the following synoptic framework tween SR and MCS, identifying the direction of the linkages was not
(see Fig. 5). always possible. Due to missing cause-effect-chains the interplay is
The current body of research addresses in a selected way the often only postulated, especially in the conceptual papers. In the
reciprocal interplay between SR and MCS. Concerning the first cases where a direction could be identified, the proposed linkages
research question, the literature review revealed that there are between MCS and SR (and vice versa) always showed a positive
drivers (e.g. women on boards, top management commitment, direction (e.g. the stronger the involvement of the top manage-
specific corporate values) and preconditions (e.g. existence of an ment, the better the reporting quality; the higher the degree of
adequate information system) that influence the extent, the pub- integration of sustainability topics into strategy, the more contents
lished topics or contents as well as the reporting quality of sus- are published in the sustainability report).
tainability reports (see the upper part of Fig. 5). In contrast, SR is Using the Malmi and Brown (2008) MCS framework allowed us
used within MCS in all five management control elements. Thereby to evaluate the comprehensiveness of the analysis of the interplay.
it serves as a tool to gain awareness for sustainability issues, to raise On average 2.5 MCS elements have been examined in each paper.
the understanding for these topics, or to shape vision or culture. Only a third of the papers address four or more MCS elements. The
Moreover, it is also used for goal setting in planning processes. The present focus of the literature is therefore more in line with a
published indicators are used as KPIs, and therefore as a perfor- piecemeal approach. Fig. 4 shows that the various MCS are
mance measurement tool. Furthermore, SR influences communi- addressed in an unbalanced way. This is most obvious given the
cation and collaboration across corporate teams and can change the small number of papers focusing on rewards and compensation.
organizational structure. Last but not least, it is also included into Furthermore, the examination of the 53 papers shows that only
reward systems. 25 of them refer to one or more theories, a finding the paper shares
For some of the investigated management control elements a with other literature reviews addressing related topics. Günther
reciprocal connection between SR and MCS is postulated. For et al. (2016) and Hahn and Kühnen (2013) also revealed in their
example, a high top management commitment for sustainability reviews that a significant proportion of studies does not explicitly
related topics leads to a higher probability to publish a sustain- refer to a specific theoretical framework. Those 25 papers which
ability report and to a stronger involvement in the SR process. include theoretical lenses use a broad variety of theories as an
Communicating the contents of the sustainability report internally explanatory approach (e.g. stakeholder theory, legitimacy theory or
again leads to a stronger embedding of a sustainability culture and a principal-agent theory). Using various theoretical lenses in a
common understanding for the importance of sustainability. Also research field is in line with Hahn and Kühnen (2013) who
concerning stakeholder engagement, a reciprocal interplay could recommend that different theories should be integrated into a
be identified as studies address the importance of a strong stake- holistic theoretical perspective.
holder engagement for the SR process and quality. Vice versa, the In line with a more critical evaluation, the theory-informed
process of producing a report also leads to an enhancement of papers dominantly use an instrumental perspective and neglect
administrative controls like better communication, dialogue and more critical in-depth insights which focus on the tensions of the
engagement with the stakeholders. interactions of the two management practices in its organizational
14 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725

context. The interplay is predominantly reflected in a functional- activities properly to one of the five management control elements
istic way, stressing the instrumental benefits of the interplay in all according to Malmi and Brown (2008). Hence, in a few cases a
five control elements. The influence which is synthesized in the closer discussion was needed. For instance, developing and using
lower part of Fig. 5 is in the vast majority of papers presented as a KPIs could be assigned to both planning and cybernetic controls.
positive influence. The instrumental framing strongly relies on Another example is employee behavior which could be assigned to
stakeholder and agency theory. Such an instrumentalized view both cultural and administrative controls, depending on if there is a
stresses the positive effects for gaining a competitive advantage stronger focus on the underlying values or on the actions involved.
and strategic positioning. In line with an instrumental view is also The same applies for continuous learning, which could be assigned
the way in which the interactions between the different manage- to cultural as well as to administrative controls, depending on the
ment controls are discussed. For example, rising the awareness for way and the intention how learning develops. In all of these cases,
sustainability might lead to a better integration of sustainability after coordination among the researchers, the decision was made in
issues into planning or decision-making and into continuous the favor of the meaning of the original paper.
learning which in turn might influence sustainability performance.
Cultural controls therefore influence other management controls 6. Conclusion and avenues for further research
like planning or cybernetic controls.
Moving to the socio/political perspective, the dominance of This study elaborated on the two research questions on how
positive framing continues. The control elements are seen as a pre- MCS affect SR and how SR affects MCS. We contributed to the
requisite for gaining and maintaining legitimacy or the license to existing literature in the field by conducting a systematic literature
operate (Deegan, 2002). The conformity to societal expectations is review, synthesizing the results by using the Malmi and Brown
stressed as an approach for managing legitimation risks. Concern- (2008) MCS framework, clustering the key findings of the investi-
ing the use of the socio/political perspective, this is a reductionistic gated papers, assigning the papers to the proposed theoretical
view which neglects organizational and societal tensions between perspectives, and providing ideas for future research. In conclusion,
MCS and SR. The more critical reasoning of the socio/political it can be said that the literature review shows the increasing rele-
perspective is neglected. By focusing on the value-added complying vance of research on the interplay between SR and MCS and that for
with legitimization needs, the theory-informed discussion is un- both research questions relationships have been addressed within
balanced. The positive reasoning of the normative perspective several studies. However, the review revealed that the literature
which is more in line with stewardship theory and in contrast to examining the interplay between SR and MCS is still in its early
principal-agent theory is an even more neglected theoretical lense stages, particularly with regard to in-depth analyses.
as the literature review shows. Moving to avenues for further research, the examined literature
Summing up our evaluation of the state of the literature, it can predominantly lacks well-grounded theoretical frameworks,
be concluded that the emerging topic of the interplay between MCS although a broad range of theories which could be assigned to the
and SR is predominately discussed in its function as a management three theoretical perspectives was identified. Future research in
technique. Even at that level, there are quite a lot of topics left out that field should include and develop more elaborated theoretical
and therefore the interplay between the research on MCS and SR is frameworks that allow more theory-guided analyses.
far from comprehensive. The shortcomings start with the unbal- Furthermore, the literature review has not really found elabo-
anced discussion of the MCS elements and the positive framing. The rated critical approaches on the interplay of SR and MCS. Most
insufficient consideration of tensions and challenges arising from studies in our sample focus on specific MCS elements, many of
the interplay leads to a too positive picture. There is a need for them on practices, tools, methods or techniques which do not
studies discussing the interplay as a challenging practice as well as include a critical perspective. Critical voices have queried the value
for investigations, both quantitative and qualitative, that go beyond of corporate sustainability. In this vein, SR is stigmatised as PR-
a mere functionalistic reasoning of the interaction. activity only, as greenwashing or impression management (e.g.
Burritt and Schaltegger, 2010; Gray, 2010; Talbot and Boiral, 2018).
5.2. Limitations If one considers SR as a mere PR-activity, one would predict that
there is no or only a marginal interplay between SR and MCS,
The main limitations are the choice of the sample, the kind of because organizations do not really want to pursue efforts to
linkages that are described in the studies, and the selectivity of the improve sustainability performance, but react superficially to
assignment to the five management control elements in some society’s expectations. Hence, investigating the linkages of SR and
ambiguous cases. In addition to empirical papers that investigated MCS under a critical view might reveal valuable insights.
the interplay between diverse management controls and SR, con- The literature review showed that the interplay between SR and
ceptual papers were also included in the analysis. The latter only MCS is still a largely under-researched field. This is true in general,
proposed a link between the two variables. Nevertheless, the au- but especially when it comes to empirically investigated linkages.
thors decided not to exclude this type of papers, since the linkage Therefore, more empirical research is needed. Further studies are
between SR and MCS is still a largely under-researched field and necessary that empirically investigate the effect of existing man-
they wanted to explore the entire spectrum of available literature. agement controls on SR and the moderating and/or mediating ef-
As already mentioned, in the empirical papers the authors fects of specific management controls. In accordance to the
identified linkages between SR and MCS, whereby directions or proposed synoptic framework the question arises which of the
causality could not always be identified. Against the backdrop that management controls are the real drivers for SR. What are the main
all studies have their own limitations and their basic framework factors that serve as a precondition in order that reporting pro-
conditions, we want to emphasize that the results of the literature cesses work smoothly? Which elements of MCS increase the
review can neither state causality nor be generalized. It is rather motivation for SR and which elements may serve as a trigger for an
useful for identifying the body of literature and the key research increased reporting quality? And which management control ele-
gaps. ments might turn out to be barriers for the motivation to report or a
While conducting the literature review and synthesizing the high quality of SR? More empirical research is required that ex-
results, the authors were sometimes confronted with the question amines the proposed reciprocal connection between SR and MCS by
of how to assign the mentioned systems, rules, practices and analyzing in-depth the underlying cause-effect-chains.
 A.A. Traxler et al. / Journal of Cleaner Production 276 (2020) 122725 15

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