Influences of Environmental Strategy on the Design and Use of Performance Measurement Systems



In this paper we investigate how the adoption of a proactive environmental strategy affects the design of environmental performance indicators and their subsequent use. In conformity with the extant strategy-MAS literature, we use contingency and agency insights to predict that strategy adoption affects the design of the MAS system, as well as the quality of the performance metrics it contains. These aspects affect subsequent use of environmental performance indicators for decision-making and control. In this study we use a dual methodology, to provide both cross-sectional and longitudinal evidence. A survey conducted in a randomized sample of manufacturing companies located in The Netherlands, providing evidence from 81 controllers and financial managers, broadly suggests that the firm’s strategic emphasis on environmental management influences the extent to which environmental performance measures are used, via the design and quality aspects of the MAS. Contrary to agency theory predictions, however, we found no significant relationship between the perceived informativeness of environmental performance measures and their subsequent use for decision-making and control. In a subsequent longitudinal case study, we provide evidence of the iterative, instead of linear, effects between the variables studied. The paper contributes to extant literature in environmental accounting that has predominantly focused on determinants and effects of environmental reporting, while leaving managerial accounting aspects related to environmental management largely unexplored. It also extends the prior MAS literature in that examines the links between strategy and MAS design.


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Peter Roosenboom