Growing stakeholder and regulatory pressures are forcing companies to make sustainability a core part of their corporate strategy. Consequently, this development necessitates adjustments in management control systems (MCSs). However, research on the social dimension of sustainability in this regard remains limited. This study aims to fill this void by examining how corporate social goals materialize in MCSs of family businesses.
Based on semi-structured interviews with representatives from 11 German family businesses, the authors identify the materialization of social goals in MCSs and classify these manifestations according to Malmi and Brown’s MCS framework. The authors focus on family businesses as scope of the investigation as they are widely recognized for their strong social goal orientation.
The authors identify a large variety of controls used to materialize social goals in MCSs. In particular, the authors find that cultural controls play a dominant role in such endeavors, specifically in smaller companies, while larger companies exhibit a higher degree of the materialization of social goals in MCSs in general. However, the study respondents often pursue social goals as a necessary by-product of their business activities, rather than seeing them as an equally important obligation to society. Not only are the effects of social initiatives often not actively tracked, but the enforcement of demands from stakeholders and regulations to integrate social sustainability as an integral part of companies’ business models also remains limited.
Due to the exploratory research approach, the study findings may lack generalizability. Accordingly, this study is intended as an initial exploration of the topic to stimulate subsequent research.
The authors provide insights for companies seeking to incorporate social goals in their MCSs, offering guidance on initial steps toward a more structured integration.
This study provides a better understanding of how social goal orientation can be materialized in MCSs, laying a foundation for the stronger pursuit of corporate social goals.
The authors contribute to reducing the gap of mainly environmentally focused approaches to sustainability in accounting studies and advance the literature by introducing insights on the materialization of social goals in MCSs.
