Article review of “Integrating Environmental Management Control Systems to Translate Environmental Strategy”: for Advanced management accounting students

Article review of “Integrating Environmental Management Control Systems to Translate Environmental Strategy”: for Advanced management accounting students

 

How to present this article in Harvard reference format?

Roetzel, P.G., Stehle, A., Pedell, B. & Hummel, K. (2019) ‘Integrating Environmental Management Control Systems to Translate Environmental Strategy into Managerial Performance’, Journal of Accounting & Organizational Change 15(4), 626-653.

 

What are the key research issues the article wants to address?

The key research issues the article addresses are:

1.              The relationship between environmental strategy, environmental management control systems (MCSs), and environmental managerial performance: The article aims to investigate how environmental MCSs serve as mechanisms to translate environmental strategy into actual managerial performance related to environmental outcomes. This addresses a research gap as large-sample cross-sectional evidence on this relationship is missing.

2.              The integration of environmental and regular management control systems: The article examines the extent to which integrating environmental MCSs with regular MCSs affects the effectiveness of these control systems in translating environmental strategy into managerial performance. It addresses whether the level of integration impacts the relationship between environmental strategy and MCSs, MCSs and performance, or both.

3.              Focus on individual managerial performance rather than organizational-level environmental outcomes: Unlike prior research emphasizing firm-level environmental performance, this study focuses explicitly on individual managers’ environmental performance, a less explored area.

4.              Exploring the mediating role of environmental MCSs and the moderating role of MCS integration: The study investigates if environmental MCSs mediate the strategy-performance link and whether the degree of integration between environmental and regular MCSs moderates these relationships.

These issues collectively respond to calls for more comprehensive empirical evidence and theoretical development relating to how environmental strategies are implemented and controlled at the managerial level through control systems.

Describe two main theories employed in this article.

The article primarily employs the following two main theories:

1.              Contingency Theory: Contingency theory is the central theoretical framework used in this study. Originally developed in organizational design (Burns and Stalker, 1961; Lawrence and Lorsch, 1967; Perrow, 1967), it posits that the effectiveness of management control systems (MCSs) depends on their fit with internal and external contingencies. The article applies this idea to environmental management by arguing that the design and effectiveness of environmental MCSs are contingent on factors such as environmental strategy. Managers make strategic choices regarding environmental issues, and the MCS must align with these strategic choices to be effective. Thus, contingency theory explains how environmental MCSs should be designed and integrated with regular MCSs to translate environmental strategy into managerial performance.

2.              Durden’s (2008) Social Responsibility Framework: This framework links social responsibility goals with socially responsible outcomes through adequate management control practices. It conceptualizes the process through which formal and informal controls incorporate social responsibility objectives to influence managerial behavior and performance. The article uses this framework to model the implementation of environmental strategies and the behavioral impacts via environmental MCSs. In essence, social responsibility goals (here, environmental strategy) need to be embedded in control systems to achieve desired environmental managerial performance, supporting the mediation role of environmental MCSs.

Together, these theories underpin the article’s hypotheses regarding the mediating role of environmental MCSs and the moderating role of integration between environmental and regular MCSs in translating environmental strategy into managerial performance outcomes.

 

Highlight 2 main primary findings reported in this article.

The article reports the following two main primary findings:

1.              Environmental Management Control Systems (MCSs) Mediate the Relationship Between Environmental Strategy and Environmental Managerial Performance: The study finds that environmental MCSs serve as important translating mechanisms that mediate how a firm's environmental strategy impacts individual managers' environmental performance. This mediation confirms that environmental strategies influence managerial behavior through the use of formalized environmental controls and practices, aligning managers' actions with environmental objectives.

2.              Integration of Environmental and Regular MCSs Enhances the Effectiveness of Translation: The level of integration between environmental MCSs and regular MCSs significantly reinforces the mediating role of environmental MCSs. Specifically, integrated environmental MCSs more effectively translate environmental strategy into improved environmental managerial performance compared to separate systems. However, the integration primarily strengthens the impact of environmental MCSs on managerial behavior rather than the link between strategy and MCSs, indicating that integration enhances the controlling of managerial environmental behavior.

These findings bridge previous research lines on separate versus integrated environmental MCSs and provide empirical evidence that integration leads to stronger behavioral alignment with environmental strategy.

Describe 3 main claims of the article in terms of Toulmin's model of argument.

Using Toulmin's model of argument, which includes Claim, Grounds (evidence), Warrant (link), Backing, Qualifier, and Rebuttal, the article presents the following three main claims:

1.    Claim 1: Environmental management control systems (MCSs) mediate the relationship between environmental strategy and environmental managerial performance.

·        Grounds: Survey data from 218 firms tested via structural equation modeling show that environmental MCSs translate environmental strategy into managerial behavior aligned with environmental objectives.

·        Warrant: Management control systems are established mechanisms that align managerial behavior with firm strategies (Malmi and Brown, 2008), and contingency theory supports the need for fit between strategy and controls.

·        Backing: Prior studies on management control systems affirm their role in behavioral alignment, though most focus on firm-level outcomes; this study extends these findings to the managerial level.

·        Qualifier: This mediation effect holds within the context of the surveyed sample and may be influenced by the design of environmental MCSs.

·        Rebuttal: The direct relationship between environmental strategy and managerial performance without the mediator was non-significant, indicating possible limits if environmental MCSs are absent or poorly designed .

2.    Claim 2: The integration of environmental and regular MCSs strengthens the effectiveness of environmental MCSs in translating environmental strategy into environmental managerial performance.

·        Grounds: Moderated mediation analyses show that integrated environmental MCSs result in a stronger link between MCS use and managerial performance than separate systems  .

·        Warrant: Integrated management systems are more effective in fostering aligned managerial behavior because they combine “soft” cultural controls and “hard” performance indicators, enhancing integrated thinking.

·        Backing: Literature on integrated thinking and management control suggests integration facilitates organizational change and behavioral adaptation.

·        Qualifier: The moderating effect was significant only on the path between MCS and managerial performance, not on the path between strategy and MCSs.

·        Rebuttal: Separate environmental MCSs still function as translating mechanisms, though less effectively; the integration is not a strict necessity but a reinforcing factor.

3.    Claim 3: Firms preferentially use cultural and administrative control practices over traditional controls such as cybernetic controls and reward systems to align environmental strategy with managerial behavior.

·        Grounds: Survey results indicate that cultural controls and administrative controls have a stronger influence on managerial alignment with environmental objectives compared to cybernetic and reward-based controls.

·        Warrant: Cultural controls shape values and beliefs, creating shared understandings that are crucial for managing complex and sometimes conflicting strategic goals.

·        Backing: Previous qualitative and case study literature supports the importance of informal and administrative controls in environmental management.

·        Qualifier: Preference for these controls may reflect communication benefits with external stakeholders and internal acceptance challenges for reward systems.

·        Rebuttal: The relatively low use of reward controls may indicate unresolved goal conflicts or difficulties in balancing environmental with economic targets within the MCS.

These claims form the core argumentative structure of the article, supported by empirical data and linked via established theory in management control and organizational behavior.

 

 

 

Describe 2 main research limitations of the study.

The article identifies the following two main research limitations:

1.    Survey-Based Research Shortcomings: Being primarily based on survey data, the study is subject to typical limitations such as common method bias, self-reporting issues, and cross-sectional design constraints. Although the authors applied measures to mitigate common method bias (e.g., anonymity, neutral wording, Harman's single-factor test) and tested for nonresponse bias, the inherent limitations of survey methodology remain, which may affect the generalizability and causal interpretations of the findings.

2.    Focus on Environmental Managerial Performance Without Joint Analysis of Economic Performance: The study exclusively concentrates on environmental managerial performance and does not examine economic managerial performance or the interplay between environmental and economic objectives at the managerial level. Since managers typically balance multiple objectives, integrating both environmental and economic performance outcomes could provide a more comprehensive understanding of MCS effectiveness. The lack of this joint analysis is recognized as a limitation and a direction for future research.

These limitations suggest caution in interpreting the results and highlight avenues for future studies employing longitudinal or mixed-method approaches and broader performance metrics.