Interrelating material flow cost accounting with management control systems to introduce resource efficiency into strategy

Abstract In this study, we examine the goal of encouraging corporate strategy to adopt a more efficient and sustainable use of natural resources. Material flow cost accounting (MFCA), with its flow-based view, is able to support the formulation of a resource-efficient strategy. However, such goals as resource efficiency can only be achieved if corporations commit themselves to these targets on a strategic level and transfer them to all corporate levels using management control systems (MCS). The four levers of MCS developed by Simons (1995) adopt a key role in this implementation process. We contribute to literature by highlighting that such methods as MFCA require continuous development toward an increased interrelation with MCS, particularly with the four levers of control (LOC), such that the underlying goal of resource efficiency can become part of corporate strategy. Therefore, in a systematic literature review, we analyze how far MFCA and its direct antecedent approaches currently address the LOC. For this purpose, we analyze the contents of 82 studies and derive nine salient issues that are relevant to the interrelation aspect. To guide future research, we moreover ask: What further conceptual developments of MFCA would increase the focus on the LOC? On this basis, we develop a summarizing conceptual framework consisting of five stages. Because this research approach can also be transferred to other methods that aim for further important economic, environmental, and social objectives, we purposefully highlight the course toward sustainable development.

[1]  Sally K. Widener,et al.  An Empirical Analysis of the Levers of Control Framework , 2005 .

[2]  Malcolm Smith,et al.  The Effects of the Diagnostic and Interactive Use of Management Control Systems on the Strategy-Performance Relationship , 2013 .

[3]  R. Zhao.  Simulation-Based Environmental Cost Analysis for Work-in-Process , 2012 .

[4]  T. Heupel,et al.  Green Success: Process-based Environmental Cost Accounting — Implementation in SME’s in Germany , 2003 .

[5]  Jean-François Henri,et al.  Management control systems and strategy: A resource-based perspective , 2006 .

[6]  Michiyasu Nakajima.  The New Management Accounting Field Established by Material Flow Cost Accounting (MFCA) , 2006 .

[7]  B. Redda.  Post-privatisation changes in management control, firm activities and performance: the case of Eritrea-based firms , 2007 .

[8]  J. Kouřilová,et al.  DMFCA Model as a Possible Way to Detect Creative Accounting and Accounting Fraud in an Enterprise , 2013 .

[9]  Charles Vlek,et al.  Practice and Outcomes of Multidisciplinary Research for Environmental Sustainability , 2007 .

[10]  Alfred D. Chandler.  Strategy and Structure: Chapters in the History of the Industrial Enterprise , 1962 .

[11]  Chris Durden,et al.  Towards a socially responsible management control system , 2008 .

[12]  Tim Short,et al.  Introducing the All Seeing Eye of Business: a model for understanding the nature, impact and potential uses of waste , 2013 .

[13]  Michiyasu Nakajima.  The New Development of Material Flow Cost Accounting (MFCA) : MFCA analysis in Power Company and Comparison between MFCA and TPM (Total Productive Maintenance) , 2008 .

[14]  Henry Mintzberg.  Patterns in Strategy Formation , 1978, International Studies of Management & Organization.

[15]  E. A. Lowe,et al.  ON THE IDEA OF A MANAGEMENT CONTROL SYSTEM: INTEGRATING ACCOUNTING AND MANAGEMENT CONTROL , 1971 .

[16]  Göran Finnveden,et al.  Scenarios in selected tools for environmental systems analysis , 2008 .

[17]  M. Porter.  What is strategy , 2000 .

[18]  Marc Journeault,et al.  Eco-control: The influence of management control systems on environmental and economic performance , 2010 .

[19]  Stefan Seuring,et al.  Integrated chain management in Germany – identifying schools of thought based on a literature review , 2007 .

[20]  Mario Schmidt,et al.  Stoffstromnetze und ihre Nutzung für mehr Kostentransparenz sowie die Analyse der Umweltwirkung betrieblicher Stoffströme , 2002 .

[21]  Tero-Seppo Tuomela,et al.  The interplay of different levers of control: A case study of introducing a new performance measurement system , 2005 .

[22]  Bernd Wagner,et al.  Materialflusskostenrechnung – die internationale Karriere einer Methode zu Identifikation von Ineffizienzen in Produktionssystemen , 2010 .

[23]  Robert A. Simons,et al.  Levers of Control: How Managers Use Innovative Control Systems to Drive Strategic Renewal , 1994 .

[24]  D. Brown,et al.  Management control systems as a package—Opportunities, challenges and research directions , 2008 .

[25]  Naohiro Goto,et al.  Preliminary Design of Eco-City by Using Industrial Symbiosis and Waste Co-Processing Based on MFA, LCA, and MFCA of Cement Industry in Indonesia , 2012 .

[26]  Ralph Oliver Kober,et al.  The Interrelationship Between Management Control Mechanisms and Strategy , 2007 .

[27]  David Smith,et al.  A Review of Australian Management Accounting Research: 1980-2009 , 2011 .

[28]  Daniela Schrack.  Die Materialflusskostenrechnung in der Lieferkette , 2014 .

[29]  Mario Schmidt,et al.  Material Flow Cost Accounting as an Approach to Improve Resource Efficiency in Manufacturing Companies , 2013 .

[30]  Andreas Möller,et al.  Material and Energy Flow‐Based Cost Accounting , 2010 .

[31]  Johnny Jermias,et al.  The Effects of Strategy-Management Control System Misfits on Firm Performance , 2012 .

[32]  Réjean Samson,et al.  Implications of choices and interpretation in LCA for multi-criteria process design: de-inked pulp capacity and cogeneration at a paper mill case study , 2009 .

[33]  Valérie Swaen,et al.  Environmental Management Control Systems: The role of contextual and strategic factors , 2013 .

[34]  Mario Schmidt,et al.  Implications of Material Flow Cost Accounting for Life Cycle Engineering , 2011 .

[35]  E. Günther,et al.  Etablierung betriebswirtschaftlicher Methoden durch Normung , 2014 .

[36]  R. Anthony,et al.  Planning and Control Systems: A Framework for Analysis , 1965 .

[37]  Christine Jasch,et al.  How to perform an environmental management cost assessment in one day , 2006 .

[38]  David Otley,et al.  Emerging themes in management control: a review of recent literature , 2009 .

[39]  Jean-Pascal Gond,et al.  Configuring management control systems: Theorizing the integration of strategy and sustainability , 2012 .

[40]  Julia Mundy,et al.  Management Accounting Research the Use of Management Control Systems to Manage Csr Strategy: a Levers of Control Perspective , 2022 .

[41]  A. Möller,et al.  Methodische Behandlung interner Materialkreisläufe in der Materialflusskostenrechnung , 2010 .

[42]  Uwe Götze,et al.  Energy Cost Accounting: Conventional and Flow-oriented Approaches , 2012 .

[43]  Kim Langfield-Smith,et al.  Management control systems and strategy: A critical review☆ , 1997 .

[44]  國部 克彦.  International standardization on material flow cost accounting: ISO 14051 , 2008 .

[45]  Jeremy C. Short,et al.  The Art of Writing a Review Article , 2009 .

[46]  M. Porter,et al.  Wettbewerbsvorteile. Spitzenleistungen erreichen und behaupten , 2007 .

[47]  Chika Saka,et al.  Environmental management accounting applications and eco-efficiency: case studies from Japan , 2006 .

[48]  P. Perego,et al.  Aligning Performance Measurement Systems with Strategy: The Case of Environmental Strategy , 2009 .

[49]  D. Tranfield,et al.  Towards a Methodology for Developing Evidence-Informed Management Knowledge by Means of Systematic Review , 2003 .

[50]  M. Steinfeldt,et al.  Environmental Accounting Instruments: Implementation & Continuous Use — Concepts for the Application of Input-Output Balance, Environmental Performance Indicators and Flow Cost Accounting , 2006 .

[51]  Mary A. Malina,et al.  A Social Network Analysis of the Literature on Management Control , 2011 .

[52]  Michiyasu Nakajima.  On the Differences between Material Flow Cost Accounting and Traditional Cost Accounting : In Reply to the Questions and Misunderstandings on Material Flow Cost Accounting , 2004 .

[53]  Huibrecht Margaretha van der Poll,et al.  Integrating ERP and MFCA systems for improved waste-reduction decisions in a brewery in South Africa , 2013 .

[54]  Mark Starik,et al.  Toward a Theory of Sustainability Management , 2013 .

[55]  Katsuhiko Kokubu,et al.  Implementing Material Flow Cost Accounting in a Pharmaceutical Company , 2008 .

[56]  Michiyasu Nakajima.  Evolution of Material Flow Cost Accounting (MFCA) : Characteristics on Development of MFCA Companies and Significance of Relevance of MFCA , 2009 .

[57]  Katsuhiko Kokubu,et al.  Material Flow Cost Accounting: Significance and Practical Approach∗ , 2013 .

[58]  Katsuyuki Nakano,et al.  Collaborative activity with business partners for improvement of product environmental performance using LCA , 2011 .

[59]  Daniel Heubach,et al.  Konzepte zur Einführung und Anwendung von Umweltcontrollinginstrumenten in Unternehmen : Endbericht des Forschungsprojekts INTUS , 2004 .

[60]  Pauli Miettinen,et al.  How to benefit from decision analysis in environmental life cycle assessment (LCA) , 1997 .

[61]  Erik Strauß,et al.  Management control systems: a review , 2012, Journal of Management Control.

[62]  A. Riccaboni,et al.  Implementing strategies through management control systems: the case of sustainability , 2010 .

[63]  Christine M. Jasch,et al.  Environmental and Material Flow Cost Accounting: Principles and Procedures , 2008 .

[64]  Ernesto Lópes-Valeiras Sampedro,et al.  The Environment as a Critical Success Factor in the Wine Industry: Implications for Management Control Systems , 2010 .

[65]  J. C. Jansen.  Resource Efficiency: What does it mean and why is it relevant? , 2013 .

[66]  Andreas Bode,et al.  Looking at the Cost: Using Flow Analysis to Assess and Improve Chemical Production Processes , 2012 .

[67]  Jaroslava Hyršlová,et al.  Material Flow Cost Accounting (MFCA) – Tool for the Optimization of Corporate Production Processes , 2011 .

[68]  Thomas Loew,et al.  Betriebliche Umweltkostenrechnung : Methoden und praxisgerechte Weiterentwicklung , 1997 .

[69]  S. Schaltegger,et al.  Sustainability and management control. Exploring and theorizing control patterns in large European firms , 2017 .

[70]  Arlene Fink,et al.  Conducting research literature reviews : from the internet to paper , 2014 .

[71]  Brendan O’Dwyer,et al.  Motivating socially responsive decision making: the operation of management controls in a socially responsive organisation , 2004 .

[72]  R. Chenhall.  Management control systems design within its organizational context: findings from contingency-based research and directions for the future , 2003 .

[73]  David Otley,et al.  A Conceptual Development of Simons’ Levers of Control Framework , 2012 .

[74]  Identification of economic potentials in production processes: An industrial case study , 2011, Comput. Chem. Eng..

[75]  Markus Strobel,et al.  Flow Cost Accounting, an Accounting Approach Based on the Actual Flows of Materials , 2002 .

[76]  Edeltraud Guenther,et al.  Carbon accounting: a systematic literature review , 2012 .

[77]  Thomas Günther,et al.  Kostenrechnung und Kostenanalyse , 2011 .

[78]  Annett Bierer,et al.  Material Flow Cost Accounting: A Tool for Designing Economically and Ecologically Sustainable Production Processes , 2014 .

[79]  K. Papaspyropoulos,et al.  Challenges in implementing environmental management accounting tools: the case of a nonprofit forestry organization , 2012 .

[80]  M. Strobel,et al.  Flusskostenrechnung Ein ERP-basiertes Instrument zur systematischen Reduzierung des Materialeinsatzes , 2012 .

[81]  I. Thomson,et al.  Sustainable development, management and accounting: Boundary crossing , 2013 .