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Journal of Management Control
Published in:

24-02-2022 | Original Paper

The associations between management control systems, market orientation and CSR use

Authors: Faruk Bhuiyan, Kevin Baird, Rahat Munir

Published in: Journal of Management Control | Issue 1/2022

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Abstract

This study contributes to the management control system (MCS) literature by examining the association between MCSs, specifically Simons’ (Levers of control: how managers use innovative control systems to drive strategic renewal, Harvard Business School Press, Boston, 1995) four levers of control (i.e. belief, boundary, diagnostic and interactive) and CSR use, and the mediating role of market orientation on this association in a developing economy, Bangladesh. The study also develops a six-dimensional model of CSR use, utilising the principles of CSR use provided by the OECD. Data was collected using a survey of 201 Bangladeshi firms. The findings indicate that the boundary, diagnostic use and interactive use of levers of control exhibit a direct positive influence on the use of specific dimensions of CSR use. In addition, market orientation mediates the specific positive associations between the interactive use of controls and two different dimensions of CSR use: ‘accountability to external stakeholders’ and ‘environmental, occupational, and public health and safety’. Accordingly, the findings indicate that the influence of MCSs (i.e. the interactive use of control) on the use of CSR occurs both directly and indirectly (through market orientation) and consequently firms need to consider the role of MCSs in enhancing both market orientation and CSR use. Practitioners can use the findings of this study to implement appropriate MCSs and develop their market orientation in a manner which is conducive to CSR use.
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Appendix
Available only for authorised users
Footnotes
1
While market orientation is recognised is a part of Quinn and Rohrbaugh’s (1983) Competing Value Framework of organisational culture, this study focuses exclusively on market orientation.
 
2
Social MCSs refer to “those control processes that play a significant role in ensuring that CSR activities are incorporated into an organization’s strategic plans and objectives (Laguir et al., 2019, 535).
 
3
The recommended threshold scores for the assessment of good SEM model fit to the data set are CMIN/DF < 5.0; GFI > 0.90; AGFI > 0.80; CFI > 0.90; RMSEA < 0.08; SRMR < 0.08 (Hair et al., 2010).
 
4
Formative constructs were not considered appropriate as the manifest items are expected to move simultaneously in the same direction (i.e. be highly correlated) and reflect the underlying latent variable (Coltman et al., 2008).
 
5
Additional data analysis was conducted to explore whether the two observed dimensions of market orientation moderated the effects of each of the four levers of control on the use of each of the 6 dimensions of CSR. There were no observed interactions in respect to 4 of the 6 dimensions of CSR use, and minimal findings (1 out of 8 possible interactions) in respect to the other 2 dimensions of CSR use. Accordingly, given the findings in respect to the mediating effects of the two market orientation dimensions (customer orientation and competitor orientation), and the weak findings in respect to moderation we continue to present the mediating models.
 
6
NB we did not consider mediation in respect to the other three dimensions of CSR use as mediation assumes a significant relationship between the mediator and the outcome (MacKinnon & Luecken, 2011).
 
7
Mediation is confirmed when confidence intervals (bootstrapping lower and upper bound) do not include or cross zero (0) (McKinnon et al., 2004; Zhao et al., 2010).
 
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Metadata
Title
The associations between management control systems, market orientation and CSR use
Authors
Faruk Bhuiyan
Kevin Baird
Rahat Munir
Publication date
24-02-2022
Publisher
Springer Berlin Heidelberg
Published in
Journal of Management Control / Issue 1/2022
Print ISSN: 2191-4761
Electronic ISSN: 2191-477X
DOI
https://doi.org/10.1007/s00187-021-00332-5

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