Management control systems and corporate social responsibility: perspectives from a Japanese small company

Abstract

Purpose

Corporate social responsibility (CSR) has become part of daily business for small- and medium-sized enterprises (SMEs) in Japan. The purpose of this study is to explore how management control systems (MCSs) can support the translation of activities into CSR actions using a case study of a SME in Japan.

Design/methodology/approach

The case is based on an interview with a CEO of a SME in Japan. The paper contributes to the discussion on CSR and MCSs and investigates the integration of CSR activities in SMEs in Japan through MCSs.

Findings

The case company’s formal control systems incorporate environmental and social aspects that are reflected in its top-down, stakeholder-centered approach into CSR through a formal CSR policy. An informal control system is evident and reflected in the CEO’s emphasis on creating shared value by implementing CSR. An interactive control system, a type of formal control system, is useful in the interactions between CEOs and employees and in translating the opinions of stakeholders into CSR actions. Formal control systems can be supported by informal control systems in the implementation of CSR activities.

Originality/value

This research contributes to the management accounting literature by showing that formal and informal control systems can support the motivation of employees and the integration of stakeholders’ opinions on the implementation of SMEs CSR activities in Japan. The MCS approach also contributes to SMEs in Japan that seek to address the demographic and economic challenges.

Citation

Hosoda, M. (2020), "Management control systems and corporate social responsibility: perspectives from a Japanese small company", Corporate Governance, Vol. 18 No. 1, pp. 68-80. https://doi.org/10.1108/CG-05-2017-0105