Question 2 Flashcards
What are the three forms of MCS-SCS integration described by Beusch et al. (2022)?
The three forms of MCS-SCS integration are:
Organizational Integration: Embedding sustainability into roles, responsibilities, and values across the organization.
Cognitive Integration: Reconciling differing mental models or cognitive frames about sustainability.
Technical Integration: Linking systems for measuring and reporting financial and sustainability metrics.
How does Simons’s Four Levers of Control framework relate to MCS-SCS integration?
Simons’s Four Levers of Control (LOC) framework outlines systems to manage strategies:
Beliefs Systems: Establish shared sustainability values and goals (e.g., MECH Concerns).
Boundary Systems: Define acceptable behaviors (e.g., supplier codes).
Diagnostic Controls: Measure performance against sustainability KPIs (e.g., energy per value-added).
Interactive Controls: Foster dialogue to align differing perspectives and address uncertainties (e.g., “go and see” procedure).
What role did cognitive integration play in addressing tensions at MECH?
Cognitive integration addressed tensions between operational managers, who viewed sustainability as a luxury dependent on financial success, and top management, who adopted a shared value approach. Interactive controls, such as dialogues and the “go and see” procedure, reconciled these differing perspectives to foster alignment.
What challenges did MECH face in aligning MCS and SCS?
Challenges included:
Low external demand for the E-line portfolio, which hindered alignment with market needs.
Difficulty in quantifying soft metrics, like societal impacts, in their diagnostic systems.
Tensions between managers regarding sustainability’s role in financial performance.
How did MECH integrate sustainability into its beliefs system?
MECH integrated sustainability into its beliefs system through the MECH Concerns framework, which encompassed business, environmental, employee, and societal goals. The Code of Conduct emphasized performance improvement over compliance, embedding sustainability into the company’s core mission.
What role did external sustainability demand drivers play in MECH’s strategic pivot?
External demand drivers, such as regulatory requirements and customer needs, influenced MECH’s pivot from the E-line portfolio to a fee-based business model. This shift aligned sustainability with customer incentives, offering financial benefits alongside environmental impacts.
How did MECH transition from the E-line portfolio to digitalization and fee-based contracts?
MECH transitioned by:
Recognizing the limited market demand for E-line products and discontinuing separate reporting.
Leveraging digitalization to create fee-based contracts with KPIs for machine performance and energy use.
Aligning sustainability goals with economic incentives, appealing to customer needs.
How do interactive controls help integrate MCS and SCS?
Interactive controls foster cross-level dialogues and learning, addressing tensions between differing perspectives on sustainability. They encourage collaborative problem-solving, as seen in MECH’s “go and see” procedure, which helped align strategic and operational managers’ views.
Why is technical integration important in MCS-SCS alignment?
Technical integration ensures that financial and sustainability metrics are measured and reported together, enabling unified decision-making. At MECH, this was achieved through diagnostic controls like energy per value-added, though challenges remained in quantifying societal impacts.
Can interactive controls change traditional MCS in multinational companies?
Yes, interactive controls can challenge traditional MCS by fostering dialogue, aligning sustainability with financial goals, and addressing tensions. However, success depends on strong leadership, alignment with market realities, and overcoming resistance to change.
What lessons from MECH’s journey highlight the importance of organizational integration?
MECH’s organizational integration fostered shared responsibility for sustainability, moving it from a specialist domain to a company-wide priority. Interactive dialogues and tools like the “go and see” procedure helped operationalize sustainability goals across all management levels.
How does the MECH case illustrate the iterative nature of MCS-SCS integration?
MECH’s journey shows that integration is iterative, requiring adaptation to internal and external challenges. For instance, the initial reliance on E-line diagnostics evolved into fee-based contracts and digitalization, reflecting ongoing refinement of sustainability controls.
What are Management Control Systems (MCS)?
Management Control Systems (MCS) are systems, rules, practices, and values designed to align organizational behavior with strategic goals. They traditionally focus on financial performance but can be adapted to incorporate sustainability objectives.
What are Sustainability Control Systems (SCS)?
Sustainability Control Systems (SCS) are tools and practices aimed at achieving environmental and social objectives alongside economic goals. They complement MCS by embedding sustainability into operational and strategic processes.
What is the role of the Four Levers of Control in MCS-SCS integration?
The Four Levers of Control help manage strategies by:
Beliefs Systems: Articulating core values and sustainability goals.
Boundary Systems: Setting acceptable behaviors and risk limits.
Diagnostic Controls: Measuring and tracking performance against goals.
Interactive Controls: Encouraging dialogue and adaptive learning.
