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Adopting management control systems through CSR strategic integration and investigating its impact on company performance: evidence from Indonesia

Esti Dwi Rinawiyanti (School of Management, RMIT University, Melbourne, Australia and Department of Industrial Engineering, Faculty of Engineering, University of Surabaya, Surabaya, Indonesia)
Xueli Huang (School of Management, RMIT University, Melbourne, Australia)
Sharif As-Saber (School of Management, RMIT University, Melbourne, Australia)

Corporate Governance

ISSN: 1472-0701

Article publication date: 11 December 2020

Issue publication date: 8 June 2021

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Abstract

Purpose

This paper aims to investigate the extent to which the management control systems (MCS) adoption in corporate social responsibility (CSR) integration into business strategy has an impact on companies’ performance.

Design/methodology/approach

Using a sample of 435 Indonesian manufacturing companies, partial least squares structural equation modelling was used to investigate the impact of CSR strategic integration on companies’ performance based on the contingency and stakeholder theories.

Findings

The findings reveal CSR strategic integration has a positive and significant impact on companies’ performance, including employee, operating and financial performance and the company size can positively moderate the impact of this integration on both its operating and financial performance.

Practical implications

The findings can encourage managers to adopt MCS by undertaking CSR at the strategic level, resulting in superior performance, both socially and financially.

Social implications

Employee performance and operating performance can significantly mediate the effect of strategic integration on financial performance.

Originality/value

The paper suggests that adopting MCS through CSR strategic integration could improve company performance socially and financially. This is the very first study on this issue from an Indonesian perspective.

Keywords

Acknowledgements

The first author (EDR) would like to acknowledge the financial support of the Indonesian Endowment Fund for Education (LPDP), Ministry of Finance, in collaboration with the Directorate General of Higher Education (DIKTI), Ministry of Research, Technology and Higher Education, Republic of Indonesia, under Beasiswa Unggulan Dosen Indonesia-Luar Negeri (BUDI-LN) Batch I 2016.

Citation

Rinawiyanti, E.D., Huang, X. and As-Saber, S. (2021), "Adopting management control systems through CSR strategic integration and investigating its impact on company performance: evidence from Indonesia", Corporate Governance, Vol. 21 No. 3, pp. 463-478. https://doi.org/10.1108/CG-04-2020-0150

Publisher

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Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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