Control Systems for Sustainability: Exploring the patterns in Norwegian firms

Abstract

Sustainability is becoming of high importance for companies. Businesses increasingly commit to sustainability initiatives and report on sustainability performances. They also start to develop and embed sustainability strategies into their operation activities, reshaping their business models, value and supply chains based on new principles like circular economy. Confidence in sustainability reporting and implementation of sustainability strategies are defined as a research area for the current study. Although the identified issues can be analysed from different angles, the current study utilises the concepts of internal and management controls, the practices of which are closely related. Based on Malmi and Brown’s management control framework (2008) and COSO Internal Control-Integrated Framework (2013), this thesis, first, examines what control mechanisms Norwegian companies are using to achieve sustainability goals, and then explores the extent to which packages of formal and informal control mechanisms are developed in the observed companies, further theorizing the sustainability control patterns. The study uses a mixed research design with the data collection methods of the online survey and semi-structured interviews. The results of the study show that all control mechanisms were deployed in the researched companies, with cultural control and planning control being the most widely used types of control, and rewards and compensation being the rarest applied control system. The study identifies five distinct control systems packages and concludes that both formal and informal controls are likely to be necessary in order to achieve sustainability goals. In addition, the study theorizes the path towards developing a complete control package, discussing obstacles to moving from one package to another and, where possible, how to overcome them. The insights and recommendations provided in this paper are likely to support organizations in their effort to translate aspirations into practices. Finally, the study proposes opportunities for future research. Keywords: management control systems, internal control, package, sustainability strategy, sustainable development