The Roles of Integration and Use of Management Tools in Economic Performance: A Comparative Analysis of Manufacturing Firms

By Wagner, Marcus | International Journal of Management, June 2011 | Go to article overview
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The Roles of Integration and Use of Management Tools in Economic Performance: A Comparative Analysis of Manufacturing Firms


Wagner, Marcus, International Journal of Management


The purpose of this paper is to analyse empirically the link between specific aspects of accounting and economic performance and to illuminate the role which the integration of non-traditional corporate objectives with other core aspects of a firm's operations and the utilisation of management tools have in this. The paper takes a comparative perspective by analysing manufacturing firms in two European countries, the Netherlands and Germany. As a methodological novelty for empirical work on the above issues it applies structural equation modeling to this data, which is a statistical approach to account for latent variables in empirical research. This is enabled by the high response rates to surveys in both countries, yielding 362 observations in the Netherlands and 342 in Germany as a basis for the analysis. The analysis finds that integration is positively associated with economic performance and that specific elements of accounting as well as that the more extensive usage of management tools can explain the significantly more positive effects in German firms. The paper provides novel and to date rare empirical evidence based on large-scale survey data (rather than individual case studies) that specific aspects of accounting and related management tools help to improve the economic performance of firms.

1. Introduction

Sustainable development and corporate sustainability are increasingly perceived as a long-term trend, rather than a short-term fad. Profit-oriented organisations are therefore increasingly expected to provide solutions towards these two objectives (Schaltegger and Burritt, 2005). To enable such solutions, sustainability accounting in the widest sense becomes an increasingly important enabling factor, since managers often perceive that it can both contribute to profitability as well as to corporate sustainability and sustainable development at large.

Whilst sustainability accounting can be understood in different ways (Lamberton, 2005; Schaltegger and Burritt, 2006), one important element of it that is commonly mentioned is the non-monetary evaluation of performance, i.e. sustainability performance measurement (Yongvanitch and Guthrie, 2006). This relates to qualitative and broadly -defined goals, performance measures to assess progress on these goals, target values for quantitative performance indicators and specific activities that lead to organizational change which ultimately is reflected in quantitative improvement towards and beyond pre-defined target values for corporate performance.

One important element of sustainability accounting especially in the non-monetary realm is integration. This paper therefore aims at evaluating the role of integrating corporate strategy and sustainability accounting and management based on large-scale empirical data. In doing so, it can provide insights that go beyond case studies on individual organizations that to date are predominant in empirical research on sustainability accounting. For this purpose, the paper adopts a very similar notion to the one of Schaltegger and Burritt (2006) described earlier and doing so also enables an empirical assessment to which degree this definitional approach is useful for empirical research.

To develop a better understanding of the context of such an empirical study, in the following the literatures on the link between accounting and performance, on the role of integration for sustainability, the relationship of sustainability performance measurement and sustainability accounting, and the role of management tools (and here particularly the balanced scorecard) for sustainability accounting are reviewed. This will help to identify empirically relevant research topics and will assist the development of research questions as well as the identification of research gaps.

2. Literature review

Linking sustainability accounting and performance: A holy grail and the role of contingencies

As long as one accepts the proposition that more environmental and social management activities (i.

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