Finding the Point of Balance - A case study on how a Swedish listed manufacturing company employs management control systems to balance circularity and profitability.

Abstract

An economic paradigm shift towards a circular economy is occurring within organisations due to regulations and increased stakeholder pressures and motivators creating the need to meet the demands of circularity whilst trying to remain profitable. For an organisation to balance contradictory objectives, steering of employee behaviour and actions through management control systems is necessary. Whilst much research has focused on the interaction of circularity and profitability, little empirical knowledge exists regarding how organisations can employ management control systems to work with this dilemma. This thesis therefore aims to enhance the understanding on which management control system practices and activities are important and challenging whilst balancing circular and financial objectives. To achieve this aim a case study of a Swedish listed manufacturing organisation through twelve interviews has been carried out. The data gathering and analysis has been guided by ‘Management Control Systems as a Package’ by Malmi and Brown (2008) related to relevant academic literature on circular economy. Based on the conducted case study the thesis concludes that the most important management control system practice is the organisational design creating a foundation for internal communication and collaboration. Further, the research concludes that the most challenging management control system activity is breaking down long-term circular objectives in the short-term as well as their lack of measurability, consequently leading to a slightly higher prioritisation of profitability. The study contributes to the academic literature of empirical studies and exemplifies how organisations can employ management control systems to balance circularity and profitability.