This study aims to examine the integration of integrated reporting (IR) into the formal control systems (FCSs) early adopters use to implement IR, and investigate whether it drives informal control systems (ICSs) change at this early stage.
A case study was conducted in seven large Japanese companies. Data were gathered through semi-structured interviews and e-mail exchanges with the managers responsible for developing integrated reports in Japanese companies that excel in IR practices. Content analysis was adopted to analyze the data.
The results showed incremental changes to the integration of IR into FCSs. However, the integration may not cause radical changes to ICSs because all sample companies recognized the importance and necessity of embedding integrated thinking in all levels of companies to put it into practice for value creation over time.
This study contributes to IR research from an internal corporate perspective. Specifically, this study provides new knowledge on the relationships between IR and MCSs. This research also gives new insight into operationalization and internalization of sustainability in terms of IR and MCSs in companies, not only in Japan, but also worldwide.
