The paper aims to analyse the relationship between the firm business strategy and its sustainability strategy, highlighting the role played by performance measurement systems (PMSs) in favouring the alignment between the two aspects of the company life. The relationship between business strategy and sustainability is today more and more relevant for firms as a consequence of the actual context, which asks for a new strategic paradigm, more focused on the ethical conduct of the firm, the social and environmental impact of its activities, and its duties and responsibilities towards all stakeholders. Moreover, a lot of studies clearly showed that CSR, effectively embedded, measured and communicated, has a positive correlation with higher profitability, lower risk and better returns on the capital market. The relationship between the business strategy and the so called “social strategy” has been considered by literature according to three main perspective. The first one considers sustainability and social goals as instrumental and subordinated to the business strategy and to the competitive and financial objectives. The second one recognizes that firms have obligations towards all the stakeholder categories and have to pay attention to their different expectations, however, such perspective may consider the social strategy as a distinct one from the business strategy. According to the last perspective, instead, CSR and sustainability have to be strictly integrated into the company goals and mission, defining a long term convergence among financial, competitive and social objectives. Social goals are part of the company main objectives, and an integration between the business strategy and the sustainability strategy occurs. A firm that intends to embed CSR and sustainable principles into practice needs to use a set of effective managerial mechanisms able to influence people behaviour and to align people objectives with the company strategy. In particular, according to Dixon, Nanni and Vollmann (1990), the driving forces for improvement come from strategies, but they should come also from actions and measures, measures lead to both an evolution in actions and changes in strategy. As a consequence, performance measurement systems (PMSs) play a fundamental role for the implementation of a social strategy, due to the fact that in the organisations those objectives are pursued and those actions are implemented which managers are responsible for and upon which they are evaluated and rewarded (Anthony, 1965). PMSs also deal with the identification of the drivers of past and future performance and the related indicators, favouring the alignment between the business strategy and the social strategy. The design, implementation and use of PMSs focused on CSR and sustainability ask an enterprise big efforts. Firstly, the company needs to identify the critical performance areas to be monitored considering the relevant stakeholders, the business strategic objectives and the performance dimensions, according to the triple bottom line (TBL) perspectives; secondly, it has to define the set of indicators, both quantitative and qualitative, consistent with relevant stakeholders’ expectations, the measurement rules and the relationship among different KPIs; finally, the frequency of measurement should favour timely and reliable analysis. Moreover, traditional data measuring, gathering, processing and reporting systems focused on financial indicators need to be integrated with new accounting systems, such as environmental and social accounting. The described efforts may explain the limited diffusion of the PMSs oriented to CSR among companies. Starting from these premises, the objective of this paper is twofold: on one side, to present and discuss the different CSR approaches that can be implemented by firms; on the other side, to analyse the role of PMS in embedding CSR and sustainability into business strategy, with particular reference to a few real business cases. More in depth, the paper main objectives are as follows: 1. to explore the relationship between business strategy and sustainability highlighting the different available taxonomies; 2. to analyse and discuss the design choices with respect to the PMSs (structure and content) in order to guarantee the consistency between the business strategy and the CSR approach, with particular reference to the Sustainability Balanced Scorecard model; 3. to identify strength and weakness points, favourable conditions and difficulties underlying the implementation of a Sustainability Balanced Scorecard through the analysis of some real cases.

Embedding sustainability into business strategy

PISTONI, ANNA ISIDE EUFEMIA;
2016-01-01

Abstract

The paper aims to analyse the relationship between the firm business strategy and its sustainability strategy, highlighting the role played by performance measurement systems (PMSs) in favouring the alignment between the two aspects of the company life. The relationship between business strategy and sustainability is today more and more relevant for firms as a consequence of the actual context, which asks for a new strategic paradigm, more focused on the ethical conduct of the firm, the social and environmental impact of its activities, and its duties and responsibilities towards all stakeholders. Moreover, a lot of studies clearly showed that CSR, effectively embedded, measured and communicated, has a positive correlation with higher profitability, lower risk and better returns on the capital market. The relationship between the business strategy and the so called “social strategy” has been considered by literature according to three main perspective. The first one considers sustainability and social goals as instrumental and subordinated to the business strategy and to the competitive and financial objectives. The second one recognizes that firms have obligations towards all the stakeholder categories and have to pay attention to their different expectations, however, such perspective may consider the social strategy as a distinct one from the business strategy. According to the last perspective, instead, CSR and sustainability have to be strictly integrated into the company goals and mission, defining a long term convergence among financial, competitive and social objectives. Social goals are part of the company main objectives, and an integration between the business strategy and the sustainability strategy occurs. A firm that intends to embed CSR and sustainable principles into practice needs to use a set of effective managerial mechanisms able to influence people behaviour and to align people objectives with the company strategy. In particular, according to Dixon, Nanni and Vollmann (1990), the driving forces for improvement come from strategies, but they should come also from actions and measures, measures lead to both an evolution in actions and changes in strategy. As a consequence, performance measurement systems (PMSs) play a fundamental role for the implementation of a social strategy, due to the fact that in the organisations those objectives are pursued and those actions are implemented which managers are responsible for and upon which they are evaluated and rewarded (Anthony, 1965). PMSs also deal with the identification of the drivers of past and future performance and the related indicators, favouring the alignment between the business strategy and the social strategy. The design, implementation and use of PMSs focused on CSR and sustainability ask an enterprise big efforts. Firstly, the company needs to identify the critical performance areas to be monitored considering the relevant stakeholders, the business strategic objectives and the performance dimensions, according to the triple bottom line (TBL) perspectives; secondly, it has to define the set of indicators, both quantitative and qualitative, consistent with relevant stakeholders’ expectations, the measurement rules and the relationship among different KPIs; finally, the frequency of measurement should favour timely and reliable analysis. Moreover, traditional data measuring, gathering, processing and reporting systems focused on financial indicators need to be integrated with new accounting systems, such as environmental and social accounting. The described efforts may explain the limited diffusion of the PMSs oriented to CSR among companies. Starting from these premises, the objective of this paper is twofold: on one side, to present and discuss the different CSR approaches that can be implemented by firms; on the other side, to analyse the role of PMS in embedding CSR and sustainability into business strategy, with particular reference to a few real business cases. More in depth, the paper main objectives are as follows: 1. to explore the relationship between business strategy and sustainability highlighting the different available taxonomies; 2. to analyse and discuss the design choices with respect to the PMSs (structure and content) in order to guarantee the consistency between the business strategy and the CSR approach, with particular reference to the Sustainability Balanced Scorecard model; 3. to identify strength and weakness points, favourable conditions and difficulties underlying the implementation of a Sustainability Balanced Scorecard through the analysis of some real cases.
9786067490541
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11383/2052545
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