Melco Management Accounting Research
Discussion Paper Series
No.MDP2023-002

Investigating the concept of “goal congruence” suited for themodern corporate environment-Expansion and strengthening in the environment, time, andorganisational structure axes-

September 2023

Takashi Ando
Associate Professor, Chiba University of Commerce, Faculty of Commerce and Economics
1-3-1 Konodai, Ichikawa-shi, Chiba 272-8512 Japane-mail: tando@cuc.ac.jp

Maki Makoto Foundation
Nagoya, Japan
Discussion Paper Series of the Melco Management Accounting Research, in order to promote
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Investigating the concept of “goal congruence”
suited for the modern corporate environment-Expansion and strengthening in the environment, time, and organisational
structure axes-

Takashi Ando

Abstract
The current corporate environment is characterized by the rate of change and people’s
diverse values compared to the past. Under such circumstances, it is difficult to demonstrate theoriginal significance of the concept of goal congruence, which forms is the basis of the
management accounting system, without expanding it. This is because goal congruence is ameans of contributing to management objectives.

The central function of the management

purpose is to enhance the internal control of the company and bring about long-term developmentof the entire organisation while ensuring harmony with the external environment. At present, thedemands from are diverse, and not all stakeholders are satisfied with achieving economic goals
alone, contrary to the approach as in the past.
Therefore, in today’s corporate environment, it is desirable to expand and strengthen theconventional concept of goal congruence in three ways. First it is important to determine theexternal environment dimension(①external environmental axis). Not every company must tackle
all economic, social, and global environmental challenges at every stage of corporate growth.
However, working in a well-balanced manner over the long-term can further improve thesustainability and survival of the corporate system. Second there is a need to reflect the long-term
vision of the management objectives, which includes incorporation of social and environmental
objectives into medium-term plans and specifically, develop them as short-term management
control systems (performance evaluation systems)(②time axis). Thus, social and environmental
indicators should be introduced into performance evaluation systems to strengthen relationships
over the time. The third the verticality of the organisational structure (from the top management
to the members)must be analyzed, and modified in line with company goals: it is important toshare the vision of the entire company (management objectives, medium-term management plans,1and annual management plans). Thus, there is a need for a communication systems (centered on
informal systems) that has a quality higher than that of conventional systems; this would not only
ensure the development of effective performance evaluation systems (formal systems) but also
promote the understanding of the original and its duties.
In other words, emphasizing the process of value creation in terms of the dimension of time
axis integrates the external and internal environmental systems organically, thus improving thequality of communication between the conventional layers (i.e., becomes meaningful). I propose
this new concept defined as “environmental goal congruence”.
In conclusion, the study indicates that the essence of “environmental goal congruence” isthe integration of “total and partial optimization” in the following three dimensions: (1) fromglobal (social and economic systems) to corporate systems, (2) from management purpose(medium-to long-term management plans) to short-term management plans (performance
evaluation systems), and (3) from top management to member’s mindset structures.
KW: environmental goal congruence, environmental management control, , management purpose,
CSV (Creating Shared Value), communication

1. Introduction“Goal congruence” is one of the central ideas in management accounting and control andcan be considered as be the ultimate goal of management control. This concept integrates partial
and total optimization of different systems to provide a certain direction to the activities of theentire organisation. Anthony (1965) was the first conceptualized this concept in accounting:however, it is my opinion that Drucker (1954) was the first to systematize the concept. This isbecause business administration and accounting are practical studies and Drucker(1954 ）practically developed the above concept in the field referred to as the “management by objectives”.
However, it has been over half a century since this concept was proposed, and due to the current
evolved structure of the management in the corporate environment, there are some issues thatneed to be re-examined.
Over the past 50 years, the corporate environment has undergone major changes, in termsof both quality and quantity. The rate of change has also accelerated, and it is well known that
there are various needs and expectations regarding the effectiveness of the management control
systems. During such changes in the corporate environment, is the concept of company’s goal
congruence still effective? Even though various management accounting methods have been2

developed since Johnson and Kaplan (1987) proposed the “Relevance Lost”, it is difficult to statethat the ultimate objective of the effectiveness of the goal congruence concept has beensystematically discussed to date.
The objective of this study is to investigate the ideal way for goal congruence that is suitable
for today’s market and social environments while determining the problem areas and directions
for improvement in the environments. Specifically, the concept of “environmental goal
congruence” (concept definition) is presented in an attempt to overcome the above-mentioned
problems with the aim of approaching its essence. The most significant aspect of addressing theseissues is that their potential to enhance the effectiveness of future management accounting systems.
Management accounting systems ultimately contribute to the improvement of goal congruence.
Therefore, it is important to discuss the underlying assumptions. In addition, I believe that thisstudy can provide a thought-provoking and systematic perspective on company's approach tosocial and environmental issues (social environmental accounting), management (based on areexamination of management philosophy and long-term planning; purpose management), andthe interaction and creativity endeavors with the members of the company. One of the mostimportant objectives of management accounting systems is to enhance the motivation of thecompany members. I believe the discussion in this study can also prove essential suggestions toimprove management accounting systems.
In the next section (Section2), I explain will take up goal congruence and similar concepts(cohesiveness and aggregation) and re-examine the related literature. After approaching theessence of the concept by comparing and investigating these concepts, an analysis was conductedon the characteristics required for the ideal goal congruence concept in today’s corporate
environment. Section 3 describes the actual examples of recent corporate efforts to solve such
issues（Japanese drink manufacturing company: Kirin Holdings Company Ltd.）. In Section 4,
I analyze the examples provided in the previous section (Section 3), and define a newenvironmental goal congruence concept, after depicting its grand design. The final section(Section 5) summarizes the major conclusions discussions and describes the significance andchallenges of this study.

2. Investigation of the Essence of Goal Congruence Concept and Practical Issues
In this section, the definition and content of the goal congruence concept are re-examinedby looking at the theory of Drucker (1954), who systematized the concept for the first time;cohesiveness and aggregation are then taken up as similar concepts. The previous studies ofthese three concepts are re-examined in order to approach the essence of the concept (Section 1).
3

The characteristic issues required for goal congruence in today’s corporate environment are theninvestigated (Section 2).

2-1.

Re-examination of the Goal Congruence Concept and Similar Concepts

2-1-1.

Essence of Goal Congruence Concept

Drucker (1954) called goal congruence the “integration of partial and total optimization”.
Top management needs managers with advanced skills that use those to reach the goals of theentire business, without making the acquisition of skills a goal in and of itself.
Drucker (1954) gives a dialogue with three stonecutters as an example. In response to thequestion, “what are you doing?”, the three stonecutters answer, “I’m making a living.”, “I’m doing
the best job in the entire country.”, and “I’m building a cathedral.”. Drucker (1954), of course, said
that the third man is the ideal figure. The first man does the work for the time being. He says that
he will do work that is appropriate for the compensation. Drucker says that the problem is thesecond man. Craftsmanship is an important element. Good work is impossible without it. In fact,
any organisation will fall unless it demands the best of its workers. However, first-rate craftsmen
and professionals run the risk of thinking that they are “achieving something” even though they
are just polishing stones or collecting trivial footnotes. Drucker (1954) emphasized that first-rateskills must certainly be emphasized, but that they must always be in the context of overall needs.
In this way, there is a risk of pursuing specialized skills in work that is specialized by function.
This is because it may divert the business perspective and efforts from its goals. This example
suggests that the functional work itself has a tendency of becoming the goal.
Drucker (1954) has also stated the following. The organisation creates a team and brings
together the functions of each person to conduct joint work. The person who works for an
organisation should contribute toward the common goal. Their work should be directed in thesame direction, their contributions should be integrated to produce a single seamless andfrictionless whole without overlap. Each job must be directed toward the goal of the overallbusiness for the business to be successful. The work must focus on overall success. Expected
outcomes are determined based on business goals. These should be evaluated by its contribution
to the success of the organisation.
Drucker (1954) also said that workers in an organisation must know and understand what
the business goal demands of them. Their superiors must also know the contributions expected ofthem and evaluate them. If these are not done, then the individuals working for the organisation
will be misdirected, and the work will be wasted. In place of teamwork, there will be friction,
dissatisfaction, and conflict.
Drucker (1954) also said that management is the person who takes responsibility for the4whole by their own actions, i.e., building a church by cutting stones. In other words, members
must take responsibility for participating in the setting of goals of the upper classes. Mutual
vertical understanding in this hierarchical structure is obtained by upward communication. Thisrequires a listening attitude from the superiors and a mechanism to convey the voices of theirsubordinates.
Drucker (1954) described the “management by objectives” based on this concept as follows.
The “management by objectives” ultimately aims for self-management. What is important intoday’s environment is the management principle of maximizing each person’s strengths andresponsibilities, giving direction to their vision and actions, and demonstrating teamwork; in otherwords, the management principle of harmonizing the goals of each individual with the interestsof the whole. This principle alone, not instructions or orders, motivates people to act according totheir work needs. It is this principle that transforms the objective needs of an organisation into
individual goals. In this way, members will independently make decisions and act based on theirwork needs rather than from instructions and orders.
Drucker (1954) convincingly explains the concept of goal congruence using such ananalogy. Its practical development should also be highly regarded. From the next section, previous
studies on two similar concepts are re-examined in order to further analyze the conditions forachieving this concept.
2-1-2.

Re-examination of the Cohesiveness Concept: from the Perspective of an Informal
SystemThis study is the result of fieldwork on informal groups in apartment buildings in
Massachusetts, USA. Here, insight was provided into the cohesiveness of organisations basedon a survey of the formation process and manner of communication of informal groups. The
cohesiveness of a group essentially is the preference that an individual has toward the entire
group or the individual members of that group. Festinger et al. (1950) found that higher
cohesiveness resulted in stronger friendships within the group, which activated the process ofcommunication within the group; the result of this communication was increased performance.
The uniformity of attitudes, views, and behaviors was brought out in that process, forming agroup standard as a result.
This study investigates this formation process in detail. Here, the important aspectrequired of an individual in this group is that the attitudes and opinions of the individual arerecognized by other members as group standard variables. Deviating from this results in othermembers slowing down the speed of their communication and trying to diligently communicate.
There are no problems if the individual at this point follows the group standard, but if not, thenthe frequency of communication to that individual from other members decreases, and that5

individual becomes “isolated” as a result. However, in the exceptional event that the individual
who does not follow the standard is also a member of any other group, the result is that thegroups may overlap. This is a case where the resistance of the individual was successful, but thisevent is rare in reality.
Here, “group standard” does not necessarily map objectively correct facts. There is atendency for reinforcement toward the maintenance and survival of the group. This should be
accepted as the premise of the thinking and attitudes of every member in the group. As a result,members within the group are oriented toward similar information, thoughts, and attitudes,
responding in the same way depending on the situation. Essentially, Festinger et al. (1950)
indicated that increased cohesiveness in an organisation facilitates member communication andenhances the functioning of informal systems. This is likely because it facilitates the adjustmentof the thinking and consciousness vectors of the members.
In this way, increasing the cohesiveness of an organisation can allow for goal congruence
to be more smoothly achieved. However, the increase in cohesiveness of the organisation is anecessary condition for the achievement of goal congruence, and it cannot be said that it
sufficiently satisfies the conditions. This is because it has only clarified that it contributes
to the increase in functions of informal systems, and that it is not necessarily the case for formal
systems. In this section, similar concepts to those of goal congruence relating to informal
systems were investigated, but in the next section, similar concepts relating to formal systems
will be investigated.
2-1-3. Re-examination of the Aggregation Concept: from the Perspective of a Formal
SystemThe case organisation POST in Bol et al. (2010) has a monopolistic comprehensive postal
service in South Korea. Here, the goal setting process in their study is re-examined. The
competitive environment at the time intensified due to the advancement of foreign-affiliatedcompanies as well as domestic companies, and there was a need for strategic changes in businessstructure, improvement of service content, and the increased efficiency of operations (specifically,
speeding up deliveries, etc.).
POST has a three-layer structure (one head office, eight regional headquarters, 103 stores).
The company-wide sales goal is determined by the task force team at the head office in Novemberof every year so as to be suitable for the corporate strategy. Here, the decision is made whileconsidering macro-economic trends, the business environment, intensity of competition, and teamforecasts for the next fiscal year. After undergoing the process in which the CEO re-examines
these goals in December and the director approves these goals, the company-wide sales goal forthe next fiscal year is determined.
Utilizing the financial goals of the entire company, the task force then allocates operational
6and capital budgets to the eight regional headquarters. At the beginning of January every year, theCEO convenes a goal review meeting with top management. At this meeting, the budget that
includes the sales goal by the regional director is announced and discussed in detail.
The regional director has the responsibility of allocating the sales goal of the overall region
to the sales goal of each store. The head office formally requests the regional director to improve
the initial goal (agreed upon with top executives), but the goal setting of each store is at thediscretion of each regional director. What the head office requests from the regional director is toalign the sum of the individual store goal values with the regional sales goal value presented by
the head office. This is because the store managers have better information with regards to regional
market trends, and from this point, the goal setting process can be said to be “participatory”. Store
managers can influence the sales goals they receive by sharing their information with regional
directors. The detailed goal setting process is as follows.
First, the regional director personally determines the provisional sales goal for each store.
Sales data to date is considered and the sales goal of the entire region is allocated to each store
according to the relative weighting of each store. Simultaneously, each store manager is asked toexpress their opinion on the sales goal imposed on their store, without being informed of the sales
goal values of other stores.
Here, the store manager is required to submit supplementary materials to the regional
director. At this stage, the store manager does not know about the regional-level sales goals
imposed by the head office or the individual store-level sales goals. The regional-level sales goalis then shared with other store managers at the regional sales goal review meeting in January.
Next, when information from all store managers is received, the regional director compares
the initial prospects with the goals presented by each store. If there is a large gap between the two
here, then the regional director requests further information from the store manager. Then, until
the end of January, the regional director and all the store managers meet at the regional head office,and the regional director presents, discusses, and agrees on sales goals for many of the stores.
In this way, discretion can be said to be an ability of middle management to reconcile theabstract goals of top management with actual field conditions. In many cases, the goals presented
by top management have not sufficiently considered actual field conditions. In contrast, taking theopinions of the field at face value and carelessly setting achievable goals will not lead to the
expected growth of the company. Middle management plays an important role in effectively
overcoming the dilemma of these two aspects. In other words, discretion is not just a collection of
numbers in the field. In contrast, “aggregation” is the extent to which the total sales goal value ofthe lower organisation matches and is linked to the sales goal value of the immediately higherorganisation. Therefore

there is the characteristic that increased aggregation (i.e., the moreaggregated and higher the goal of the higher system) results in lower concreate (extent to which
7actual field conditions are reflected) of the goal content, and increased difficulty in drawing avision of the specific behavior and activity for improving the values of those indicators. In otherwords, the middle management in this study used discretion to increase aggregation.
2-1-4. Summary
Up to this point, previous studies were re-examined to approach the essence of the goal
congruence concept, but first, these are summarized to clarify the premise and conditions forestablishing this concept.
First it can be seen from a re-examination of the concept of cohesiveness that an informal
system within an organisation must at least function at a minimum level in order to achieve goal
congruence. Organisational activities are conducted as a group, so achieving goal congruence is
impossible under a state where the willingness to collaborate with each other is low. Next it canbe seen from an examination of the concept of aggregation that the linking of goals within an
organisation needs to be built throughout the organisation. This is because if the organisationachieve goals that were set at the beginning of the term, then the ideal state is likely to be achieved.
What should be noted here is that although aggregation is one of the business level
requirements for achieving goal congruence, this does not necessarily sufficiently satisfy theconditions in today’s corporate environment. Especially within companies in markets with intense
environmental changes, achieving goals set at the beginning of the term, especially accounting
figures such as sales or profits, does not always lead to an ideal situation at the end of the term.
And it was confirmed from Drucker (1954) that the essence of cool congruence is in the“integration of partial and total optimization”. However, what is the ultimate end of suchintegration? Generally, the concept of a “goal “is often positioned as a means of achieving a“purpose”, or important points within the achievement process. Therefore, in the next section, therelationship between management purpose and goals is confirmed by re-examining research on
management purpose
2-2.

Aim and Function of Management Objectives
First, Takada (1978) explained the structure of management purpose as shown in Fig. 1

below. The solid arrows are regulatory relationships, and the dotted arrows are constraint
relationships. The management purpose consists of the management creed and management
objectives. The management goals aim for the realization of the management creed; in contrast,
the management creed is also restricted by the means (methods) of the management objectives.
Takada then argues that the management organisation needs to be controlled for the achievementof the management goal, systematizing the management economy as an important indicator inthis context.

8

【Figure 1: Trinity structure of management elements】
Excerpt from Takada (1978), p. 30

Management Purpose
Management CreedManagement Goals

Management
EconomyManagement
Structure

Similarly, Ackoff (1971) regarded ideal-seeking system as the hierarchical structure of“ideal (long-term objectives) – objectives (medium-term goals) – goals (short-term goals)”,
indicating that that achieving any one objective or goal tends to result in the pursuit of otherobjectives or goals that are closer to that ideal1.
It can be seen from these previous studies that goal congruence is ultimately a means toward
the realization of management purpose. In that case, what is the aim of management purpose, andwhat function does it have? These should have an indirect but meaningful effects on thecompany’s actions toward goal congruence. Therefore, a re-examination of previous studies isconducted on the theories in Barnard (1938), who is the father of modern business administration.
Barnard (1938) stated that the formal organisation consists of three components (common
purpose, willingness to serve, and communication). These components are dependent on eachother. It is first important for organisations to find a balance between these, but the problem forthe entire organisation is to adapt to the environment outside the company. Barnard (1938)
theoretically developed the former problem as “efficiency” and the latter problem as“effectiveness”. Here, Barnard (1938) said that of the three components, the common purpose
was important as the premise of the organisation (expressed as “axiom”). This is because thecommon purpose is very important for extracting the efforts of the members and forming a single
collaborative activity. Furthermore, the common purpose has an objective aspect in the form ofFurthermore, Ackoff (1971) states that the ideal is an objective that can be approached without
limit but can never be reached. Please refer to the description by Ackoff and Emery (1972) forthe positioning and characteristics of the ideal system.
19the responsibility of the management, and a subjective aspect in the form of pursuit of the idealsof the organisation. The subjective aspect also includes the balance with the relationship between
the general and social environment of the company, and consideration of feelings (sense of
belonging) of the members of the organisation. Essentially, it can be said to be efforts toward
human consideration and goodness.
Next, previous studies on the function of management purpose is examined. Sutton et al.
(1968) defined the management creed as a “system of beliefs published with a clear intention to
influence the emotions and activities of others”, based on a systematic survey of the management
creed of business owners and their organisations in the 1940s. It is important here to focus on the“strains are alleviated [for the business owner]” as a function of the creed. The business owner isforced to face various social conflicts due to their strong social influence, and it is said that theestablishment of the management creed stem from such emotional conflicts, anxieties, and doubts.
And with regards to the management , it is said that the ideology is formed in order to resolvethese emotional conflicts, alleviate anxieties, and overcome doubts within the scope of certain
cultural traditions and generally accepted ideas2.
Meanwhile, Ackoff and Emery (1972) broadly divided social systems into three aspects(state-maintaining system, goal-seeking system, purposeful system) and stated that purposefulsystems had the characteristic of undergoing trial and error for the methods of achieving the
purpose, and that the purpose itself was re-organized in response to environmental changes. They
position the ideal-seeking system among these as an important sub-system. This system has thecharacteristic of continuing to seek the ideal type according to a systematic process. Ackoff andEmery (1972) discussed the seeking of “Plenty, Truth, Good, and Beauty” as the four major
functions of this system. “Plenty” is positioned at the top in this basic structure. This is because it
is difficult to achieve the other factors without abundant resources. The trinity structure of “Truth”,“Good”, and “Beauty” is then formed toward the achievement of this absolutely legitimized ideal.
Particularly in the seeking of “Good”, there is a tendency to aim for a state without conflict, and“peace on mind and peace on earth” is emphasized as the basis of an all-powerful worldview.

Sutton et al. (1968) also indicated that (1) practical realism, (2) moral rigor, and (3) optimism as
the three elements common to many management philosophies at the time.
210

【Figure 2: Relationship between Management Purpose, Goal Congruence, and Management Control】
Created by author

Management Purpose

Goals(Management Creed)Management Control

Congruence
Note: the start point of the arrow indicates the means,
and the end point indicates the objectives.

As shown in Fig. 2, goal congruence is positioned as a means for achieving the management
purpose, but it can be seen that the management objectives include not only economic elements
but also social and environmental elements3. In that sense, it would be appropriate that goals ingoal congruence include not only include economic goals but also social and environmental goals.
However, in the present -day corporate practice, there is a very limited number of companies thathave incorporated social and environmental goals into medium- / short-term plans. Meanwhile,
there are more companies that are developing environmental performance evaluations as part oftheir short-term management plans. The work of forming the theoretical basis for these practices
will also be important. Furthermore, there are practices that can no longer be grasped by thecurrent concept of goal congruence even in companies that are not particularly socially or
environmentally advanced. These issues will be examined in the next section.

2-3. Examination of Practical Issues relating to Goal CongruenceFirst, the characteristics of today’s external environment surrounding companies are
examined. The rate of changes in the market environment have accelerated compared to the past,
but what is even more important here is not the rate of change but its quality. As argued by Simons(1995), even if today’s companies achieve the goals they set at the beginning of the term, they are
more likely to be unable to achieve their ideal situation. It can be seen in that sense as well that thesignificance of aggregation toward goal congruence is relatively declining (Clercq et al.2017;).
What is further required under such circumstances is for each department or each individual toindependently and flexibly judge and act based on the conditions for preparing an ideal situation,and to approach this situation by trial and error. One guideline for showing the ideal situation hereis the management creed that depicts the objective of the corporate activities in the first place.
Changing creed into the medium- / short-term (performance evaluation) goals concretely will

This aspect can be confirmed not only from the theoretical perspective but from the actual
management philosophies of many companies.
311

encourage the sharing of long-term visions with the entire company. To that end, communicationthat promotes a deeper level of understanding among the members will be required.
Meanwhile, emphasizing goal congruence too much emphasizes the speed of decisionmaking through the sharing of values, which may inhibit the consideration of various opinions
and creativity (Clercq et al.2017). In other words, efficiency is emphasized over effectiveness.
Even in terms of dysfunction, it is easy to bring about a situation where people with different
opinions or values are excluded from the group4. If this escalates further, this will encourage allmembers to take an inward attitude that makes then aware of only the survival of the organisation(i.e., maintaining the status quo), and will have the risk of being isolated from the values and trends
outside of the company, industry, or society as a whole5.
When these harmful effects become apparent, the significance of the goal congruence itself
cannot be fully demonstrated. Therefore, there is a need in today’s business environment to extend
the scope of conventional targets of goal congruence to outside of the company. In other words,
in order to achieve the original objective of goal congruence, it is important that values (higherlevel systems such as society or global environment) and goals inside and outside the company
have at least some kinds of association or causal / influential relationship in the medium- / longterm, even if they are not constantly closely linked.
It is not necessarily the case that previous studies did not have the view that the goal
congruence concept should reflect factors outside of the company. For example, Anthony and
Govindarajan (2007) indicated that it is important for the content of goal congruence to reflect
factors outside the company. National character, regional character, and social norms were given
as specific examples (Anthony and Govindarajan, 2007). However, Anthony and Govindarajan(2007) only indicated the need to deal with these within the scope of informal systems. In contrast,in the management control systems in environments developed today, requests from the socialand environmental system beyond the economic system outside the company has already brought
about the re-organisation of the formal system inside the company. Practices such as (single fiscal
year) environmental plans and goals, environmental budgets, environmental performance
evaluations, and social / environmental rewards are also currently underway as subsystems that
constitute a total system6.
In this regard, this can be said to be a harmful effect of an organisation with high cohesiveness.
Festinger et al. (1950) made a similar point.
5
For example, the scandals of Toshiba Corporation have been discussed from various aspects,
but Ogasawara (2016) stated that the actual goal congruence being reduced to a mere formality
and the systematic concealment activities that violate the law and ethics had been ongoing for
multiple years.
6
Sheng et al. (2022) also argued that by pursuing broader goal congruence with customers, whoare entities external to the company, customer satisfaction and loyalty can be increased through4

12

Furthermore, the “social norms” of informal systems outside the company as indicated by
Anthony and Govindarajan (2007) are neither written nor quantified7. Meanwhile, as represented
by the SDGs, social and environmental management in recent years is structured by clear goals(e.g., the 17 targets in the SDGs) and indicators. Essentially, it can be said that management thatconsiders the social and environmental aspects of a company had a strong “protective” tendency,such as following social norms. However, it can be said that this is not the case today, and that ishas begun to be regarded as a so-called “part of normal management activities”. This is also clear
from the fact that companies are re-organizing the formal system, as mentioned earlier. Under
these circumstances, the concept of “goal congruence” that forms the basis of management
accounting is not present in every circumstance, but in some advanced environments, it isimportant to re-examine the original meaning and make improvements according to the current
situation. In this paper, the concept of goal congruence with new social and environmental
elements added is called “environmental goal congruence” 8 due to the most characteristic featureof expanding and deepening the scope of the conventional environment that companies haveperceived. Previously, most social and environmental activities by companies were handled in an
ad hoc manner by remote departments. Using such a definition of the concept in the future, thenthere will be a rationale for the activity to develop while being properly positioned within thecompany-wide activities of the company. It is the author’s belief that this is not just a “temporary

value co-creation activities.
7
On the other hand, Kennedy and Widener (2019) is a study that examines the impact of
informal systems within companies on goal congruence. Here, the analysis was based on survey
data of 354 employees but did not establish a direct relationship between goal congruence withsocializing within the company. But indirect and limited causal relationship was identified.
8
There may be some readers who find it uncomfortable to redefine the concept of goal
congruence by focusing only on social and environmental issues. Put simply, the mere effort
toward social and environmental issues by a company tends to contradict (diametrically oppose)the fundamental principle of the activities of the company. More specifically, the necessity ofthis is as follows: (1) because the company is an economic entity in the first place, (2) these
efforts may improve long-term corporate competitiveness, but normally have high costs in the
short-term. In principle, companies do not aim to contribute to society and the environment as
their primary activity and objective, but rather aim to improve short-term profits and long-termcompetitiveness. However, it can be said that it is much more difficult to outline a path to bringabout such economic effects through efforts toward social and environmental issues comparedto that of economic activities. This is because (1) it is difficult to limit the scope and period of
influence of such activities, and (2) economic effects are also indirectly brought about. However,what can at least be said at this stage is that activities that put pressure on the “profit” that forms
the basis of corporate activities, even in the short-term, are against the principles of the company.
Therefore, it can be said that there is a need to expand the concept of goal congruence for socialand environmental activities that have finally begun to develop as part of corporate activities inrecent years.
13effort” but an original way of long-term, continuous, and systematic “social and environmental
management”. In the next section, the practice of Kirin Holdings will be described as an advanced
company toward the realization of such social and environmental management.

３. Design and utilization of environmental management control system at
Kirin H.
In this section, the initiatives of Kirin Holdings (henceforth, “Kirin H”9”) are described as
an example of an advanced company that systematically designs and utilizes environmental
management control systems.
There are still no companies that have been able to sufficiently implement environmental
goal congruence and social / environmental management. However, some efforts and trends
toward its realization can be confirmed. In this section, these concepts will be more specificallyclarified by analysing the practice of Kirin Holdings (henceforth, “Kirin H”10), which is a leading
example in this regard.
Kirin H has introduced and utilized the Balanced Score Card since 2004 in order to achieve
the vision of group management through adaptation to the external environment (Fujino and Hiki,
2004; Yokota and Senoo, 2010). The Balanced Score Card consists of four perspectives, and thefinal fourth perspective can be said to be outcome measures from a financial perspective. However,
Kirin H thought this tool was limited in its structure of the method.11 This was because there
continued to be periods of time when the final financial perspective did not produce results, nomatter how effective the three perspectives that lead to outcomes (learning and growth, internalbusiness process, customer perspectives). This is because the final financial performance index isgreatly influenced by the competitive situation of the company in the external market. In this way,
Kirin began to gradually emphasize external factors of the company rather than internally-oriented
goal congruence.
Meanwhile, Kirin H received social recognition of its various value creation activities andwas awarded the Porter Prize in 2010. Afterwards, Mr. Isozaki, who was the present of Kirin
Brewery Co. Ltd. at the time (current Kirin H president), met with Dr. Michael Porter andafterwards thought that the idea of CSV will be at the core of Kirin H’s strategy in the future. Mr.
9 The company introduced a pure holding company system in 2007, launching Kirin Holdings. Therefore, the initiatives prior to thisyear in this text are only related to those by Kirin Brewery Co., Ltd.
10 This company introduced a pure holding company system in 2007 and established Kirin H. Therefore, the efforts in the previous
year in the main text relate to the efforts of Kirin Brewery Co. Ltd.
11 The content of the following four paragraphs is based on the content of the two interviews that the authors conducted in 2016 and2018. The interviewers were Professor Eri Yokota (Keio University), Professor Shoji Oka (Kansai University), and the author; andthe interviewee was Hiroyuki Morita (Kirin H Group Management Strategy Chief CSV Promotion Office Manager). The firstinterview was conducted on June 17, 2016, and the second interview was conducted on February 6, 2018 at the Kirin Group Head
Office (Nakano Central Park South, 4-10-2 Nakano, Nakano-ku, Tokyo, 164-0001, Japan). The time was approximately 1.5 hours.

14

Isozaki then reformed the organisation and established the CSV headquarters in Kirin Co. Ltd.
(newly established intermediate holding company that comprehensively handles domestic
beverages) in 2013.12 Then in the next fiscal year in 2014, the CSV Promotion Office (within the
Corporate Planning Department) was newly established within the Kirin H group management
strategy section.
Initial CSV activities revolved around reconstruction assistance for the Great East Japan
Earthquake. 13 At the same time, they began to organize what was usually developed as acorporate activity from the perspective of CSV. CSV began to be developed in long-term plansfrom fiscal year 2016 (This plan is called “New KV 2021” in Kirin H), and in the following year,
this was linked with the three-year medium-term management plan. The CSV domain was thenset. Here, areas of high importance for both the company and stakeholders (i.e., double
materiality) were identified based on the materiality matrix presented by the Global Reporting
Initiative (GRI). Then, in June 2016, the domains of CSV activities for the entire corporate groupwere set as (1) health, (2) local societies / communities, and (3) environment.14
Kirin H has positioned CSV as a means to achieve sustainability in the same way as CSR.
The company’s ultimate goal is to achieve sustainability, and CSV is a broad concept that includes
CSR. Originally, the company has a strong defensive element that is centred on organisational
governance in CSR (i.e., the central issue is how to reduce the negative impact of corporate
activities on society and the environment), and in that regard, CSV has included CSR elements
and positioned the difference between them as stating that CSV aims to improve the company’s
long-term competitiveness through the development of a wider range of social and environmental
activities (i.e., the central issue is how to bring about a positive impact on society, environment,
and economy).15
Kirin H was the first in Japan to use “CSV” as a corporate internal department name.
Please refer to Ando (2020) for details in this main text.
14
This was formulated and released in 2019 as “CSV Purpose”, which is a guideline for cocreating value with society and achieving sustainable growth in a total of four domains: thesethree fields ((1) health, (2) local societies / communities, and (3) environment) and (4)responsibility as an alcohol producer. Then in February 2022, these domains and the icons of
SDGs were revised, and (2) local societies / communities was revised to communities.
Additionally, the policy was to independently leave each company’s own efforts within thegroup companies. The activity domain is called a group materiality matrix (GMM: management
issues for sustainable growth) by the company, and they are brought forth along with businessactivities of the company as it continues to develop its business in the future. This domain is also
positioned as a social and environmental issue that is considered to be the most important in thefields surrounding the activity.
15
However, currently in the company, these categories are becoming gradually less strict. In thecompany’s Social Contribution Activity Policy, now CSR is positioned to further strengthen its
role in strengthening the foundation of CSV management.
12
13

15

Kirin H reviewed the management philosophy in 2019 and declared that the company
would be a leading CSV company worldwide in 2027.16 Here, the basic guideline was set as a
CSV Purpose. Opinions from outside the company were actively incorporated, particularly in theformulation of those guidelines.17 However, the CSV Purpose is just a guideline and is abstract,
so it can be interpreted in various ways. Therefore, the company sought to convey what its value
specifically means to employees by formulating medium- to long-term management plans andshort-term performance evaluation indicators. This has the aim of improving goal congruence on
the time axis. Simultaneously, this CSV Purpose and medium-term management plan also reflect
the voices outside the company (i.e., external voice), so achieving the goal can ultimately lead tothe realization of the external voice. In other words, it can be seen that goal congruence here is not
limited to just within the organisation, as in the conventional sense, nor does it only emphasize
financial goals (i.e., goal congruence on the time axis / external environmental system axis).
The activities that are aimed at achieving goal congruence within the organisation at a
certain point in time are now investigated. Kirin Beverage Co. Ltd., which is a subsidiary of Kirin
H, has conducted direct dialogues with employees by President Hideki Horiguchi (at the time) inorder to disseminate the company-wide policy of CSV within the company.18 Particularly in
FY2021, the president aimed to have a dialogue with a total of 1,000 people, which he thenconducted. Especially during COVID-19, there was progress in the development of information
infrastructure, and employees can now freely talk remotely regardless of their location throughout
Japan. Eight management teams (top management) were in charge of discussions in groups of 5–
6 members. Dialogues involved discussions on CSV management and deepening of mutual
understanding. There is no specified moderator, and the management team (top management) first
begins to talk about the significance of the company’s management, emphasizing health and the

The content of the following four paragraphs is generally based on the content of the twointerviews that were conducted by the author. The interviews were conducted on April 22, 2022
(approximately one hour) and April 25, 2022 (approximately one hour). The interviewer was theauthor, and the interviewee was Hiroki Kaneda (Kirin H CSV Strategy Department Group
Planning Head). Due to COVID-19, the interview was conducted in an online format (using
Microsoft Teams). Incidentally, in the main text, this declaration is called “KV2027” within thecompany.
17
Specific examples of entities outside the company include investors, business partners,
experts, NPO associates, and labor unions. The forum for listening to the opinions of thesepeople is generally called “Stakeholder Engagement”, and this is used as a place to incorporate
the opinions of various stakeholders surrounding the company. The company holds regularmeetings once every three years according to the medium-term management plan and holds
irregular meetings about twice a year (first: environment-related themes, second: other themes).
18
Kirin Beverage Co. Ltd. is one of the major companies that consist of the Kirin Group. Other
major companies include Kirin Brewery Co., Ltd., and Kyowa Kirin Co., Ltd.
16

16

environment (i.e., importance of CSV). There are some instances where employees are asked tocome up with a theme related to CSV prior to the discussion. In such cases, there were somepeople who wondered, “What will happen if I incorporate CSV into my own work?”. Top
management may listen to and support such employees’ concerns on a one-on-one basis.
Meanwhile, there are some employees who feel, “I directly felt CSV through this way!”. Asvarious opinions from various departments are raised, employees’ understanding of CSV deepens
while they engage in mutual learning.
Such two-way dialogues are usually one hour in duration, and the aim of such practices is
to have employees perceive CSV as a personal matter. The dialogues aim to deepen employees’
understanding of CSV and have them specifically develop them as normal management activities.
In Japanese society, under the progress of “work style reform”, there is an ongoing trend ofdevising more ways of working and creating an environment and system that facilitates work.
Meanwhile, Kirin H is promoting “work satisfaction reform”. Especially after COVID-19, theideal forms of communication are also changing due to work from home. Kirin Group is making
efforts so that each employee can work in a positive manner even when the environment changes.
The company believes that improving work satisfaction of employees involves having themreflect once again on their own work, and for each employee to have a deep understanding on an
individual level, asking themselves, “Why am I doing this work?” and “What are the specificgoals to that end?”. Understanding how one’s own work is connected to the goals of the entire
company and communicating with leaders and members promote various forms of awareness inthe employee and leads to ideas that may never have emerged under conventional settings. Thiscan be said to be an effort to harmonize the external environment of the company with the valuesof individual members (traditional goal congruence by integrating external and internal
environmental system axes).
President Horiguchi (at the time) believes that “the source of long-term maintenance anddevelopment of a company is in the creativity of its members”. He believes that the most importantelement when conducting company management is to have passion at the individual level and toact independently and creatively. CSV management is a basic policy for the entire group company,
but Kirin H is still exploring how to maintain and develop itself under this policy.

4. Proposal of Environmental Goal Congruence concept
In this section, “environmental goal congruence” is presented as a concept thatcomplements the concept of goal congruence based on the cases described in the previous section.
This has the characteristic of expanding and deepening the scope of the environment that isassumed by the conventional goal congruence concept. Its significance and development are17

examined based on the case in Section 3.
4-1. Definition and essence of environmental goal congruence concept
As in the previous section, it was shown that the (1) aiming to create shared value (CSV) inthe long-term with entities outside the company from short-term value creation with an emphasison the inside of the company, and (2) aiming to change values and behaviour that are suitable forsociety through communication with members regarding various methods and issues were
important aspects for corporate social and environmental management. Both of these aspects havecontent that greatly exceed the conventional concept of goal congruence, so a new concept willbe created with these aspects (1) and (2) in mind.
First, social and environmental management does not merely extend the scope of theconventional environmental system to the outside, as its name suggests. It has the characteristicof reading the roles that society demands from a company and reconsidering it at all levels of thecompany (whole company, business divisions, individuals) through relationships with othercompanies and organisations in society. This process is called “reflection”, where the results ofactions are reflected upon, and this leads to the improvement of subsequent ways of thinking andactions. In other words, social and environmental management has the characteristic of“expanding and deepening” the scope of conventional corporate systems. Furthermore, thecontent of this reflection includes not only the daily operational level but also themes related to
the raison d’etre of the subject as the paramount qualitative issue. This is because ultimately, socialand environmental management emphasizes the realization of the management philosophy andaims to harmonize the environment inside and outside the company.
【Figure 3: Expansion and Strengthening of Goal Congruence concept】
Created by author
External Environment axis

G

Organizational

S

L

E

O

O

C

C

B

O

I

A

N

E

L

Structure axis
Employees(*Mainly
strengthened)O

T

Conventional

C

Y

top

Goal CongruenceSmanagement

Concept

short-termlong-term Time axis

18

As Drucker (1954) said, the ultimate goal of goal congruence is the “integration of partial
and total optimization”. There are three major directions for the partial and total here (Reference
Fig. 3). These are (1) time axis (long-term, medium-term, short-term level), (2) external
environment axis (global environment, social environment, social environment, economic
environment and corporate system), and (3) internal environment axis (top, middle, lower andindividual members: includes the mindset at the individual member level in the hierarchicalrelationship within the company according to the conventional concept). Environmental goal
congruence extended to the time axis is the integration of partial (short-term) and total (long-term)
goals aimed at the realization of the management philosophy. Environmental goal congruence thathas been extended to the dimension of the external environment axis has the characteristic ofexpanding the scope of the corporate environment to social or environmental systems anddeepening this value to the (3) mindset of departments and individuals in the internal environment
axis. Ultimately, this causes individuals, departments, and organisations to reconsider the way
corporate entities should be in society, and try to reflect values that are suitable for the environmentand society in the behavioural principles of organisations and individuals. For example, withregards to environmental problems, efforts are made to re-affirm the importance of those issues,
which every human being understands as self-evident. In other words, emphasizing the process
for value creation on the time axis organically integrates the external environmental system andinternal environmental system, and the structure becomes such that the quality of communication
between conventional layers is enhanced (i.e., becomes meaningful).
Environmental goal congruence refers to the state of harmony between values and goals
between all systems, from the global environmental system of the most expanded external
environmental system to the deepest structure of the individual mindset. In other words,
environmental goal congruence can be defined as the “tendency to instil the logic, norms, andculture of sustainability (of systems on earth, including corporate entities) into the mindset ofindividuals working at the company and encourage each member to independently act toward theobjective and goal of the higher system”.19 Here, “culture” is a broad concept that includes
To begin with, a company is an entity that operates with various dilemmas. They aim for
growth while balancing between different dimensions and the opposite principles of activities.
The essence of environmental management control is environmental goal congruence, but thepremise of the situation within the organisation is sectionalism and competition. The Japaneseterm for environment (環境), has the meaning of “enclosing” (環) the “border” (境), and theobjective of environmental management control is to make all systems except that borderconsistent with the principles of sustainability. The reason why this needs to be consistent isbecause corporate organisations are essentially oriented toward survival and growth, which leads
to much sub-organisational level competition within the organisation, with each entity tending tooperate with different principles. The system that controls the management of the principles of19

19context and social background. For example, the scandals of Toshiba Corporation have been
discussed from various aspects, but Ogasawara (2016) stated that the actual goal congruence being
reduced to a mere formality and the systematic concealment activities that violate the law andethics had been ongoing for multiple years. In this way, environmental goal congruence is not justabout the pursuit of aggregation; it is also important to harmonize the context inside and outside
the organisation.20
In essence, environmental goal congruence can be said to have the following threecharacteristics. The first is the characteristic of expanding and deepening the scope of conventional
corporate systems. The scope was conventionally limited to the economic subsystem of acompany, but the scope is now expanded to outside the company (economic systems such asindustry groups and markets,21 social systems, global environmental systems). It also has thecharacteristic of sharing within the company the information and findings obtained throughinteractions with entities outside the company, and further deepening these to the individual or
department mindset level.
The second is the concept that reflects that value of time. Changes in the market
environment have accelerated compared to the past, but what is even more important here is not
the speed of the change but its quality. As argued by Simons (1995), even if today’s companies
achieved their goals set at the beginning of the term, they are more likely to be unable to achieve
their ideal situation. Here, it is important for each department or individual to independently andflexibly judge and act in order to achieve the ideal situation. Here, one guideline for this ideal
competition and cooperation is environmental management control (*environmental goal
congruence is based on the principle of “cooperation”). More specifically, just because it is“environmental” does not necessarily mean that everything is based on principles ofcooperation. This is because environmental efforts are also subject to performance evaluation
among departments within a company. However, considering the nature of the issues in the firstplace, it can be said that the global environmental issue itself has a relatively strong cooperative
element because this is a common issue for all living things on earth. Meanwhile, there are somecooperative elements in recent economic activities (e.g., open innovation or the formation ofindustrial clusters). However, if economic growth is constant and constituents want to obtain
more economic results, then they will take a share of other entities. Therefore, it can be said thatthe economic principle has strong competitive principles.
20
As a result, the cohesiveness of society as a whole will increase.
21
The most important feature of this axis is the company’s environmental goals that are
required by society. Given the influence of the SDGs and Japan’s carbon-neutral strategy, large
companies today are required to formulate and implement long-term environmental plans. It canbe said that goals that were set in the higher-level system of the company (i.e., global level,
national level, industry level) directly and indirectly affect the company, and that the case study
company was required to share the goals that were broken down from society within its own
company. In other words, it can be said that this is a congruence of common goals of society as awhole regarding the environment, and corporate goals.
20

situation is the management philosophy that depicts the purpose of the corporate activities in thefirst place. However, this is overly abstract, so this needs to be embodied as a medium- to longterm and short-term level (performance evaluation goals) in order to realize this.
The third characteristic is that when members of the company work toward goal
congruence with the above-mentioned two characteristics, the quality of communication between
members will improve. This is because each individual or department will be able to reposition(reflect on) themselves within the upper-level system that goes beyond the corporate organisation;and through this, they will develop company-wide (highly harmonious) activities in order to createcommon values for companies and society / global environment22.
What kind of competitive advantages can an organisation gain by realizing suchenvironmental goal congruence? Konosuke Matsushita, who is the first president of Panasonic
Corporation and who has been called the god of management, said that this “enables management
where your feet are on the ground, without slipping upwards”. Given his position, he was often
asked how he could lead his business to success. He said, “We just do the obvious things in an
obvious way. Then the business will be in harmony with the principles of nature and be successful”(author’s interpretation / translation). Even children are aware of the importance of protecting theenvironment, even if adults do not loudly proclaim it. However, if people are blinded only by the
success of the business, then there is a higher possibility of deviating from the principles ofnature.23 Konosuke Matsushita’s words suggest that it is important to work diligently on various
issues without bias.
【Figure 4: Essence of Environmental Goal Congruence】
Created by author<Partial (sub-system)><Total (total system)>(1) Corporate System

Global Environmental System (social system)(2) Performance Evaluation System

Management Purpose (management plan)(3) Individual member's Mindset Structure

Corporate System (business divisions, departments)◎Integration of "Partial Optimization" and "Total Optimization" in Three Dimensions
Note: The parentheses in each dimension represent
the sub-system of the term on the left.

In other words, the essence of environmental goal congruence is in the integration ofpartial optimization and total optimization in three dimensions (Reference Fig. 4). The first
A similar argument is made by Müller and Rothermund (2017), who point out the importanceof setting goals that are compatible with the characteristics of each employee. They also say
congruence between individual implicit motives and goal properties boosts implicit selfregulation.
23
In this regard, cases of scandals that emphasize only the survival of the corporate entity aresuggested.
22

21

dimension is the integration of corporate systems and (economic systems, social systems) global
environmental systems. The second dimension is the integration of (environmental)
performance evaluation systems and (short-term management plan, medium / long-term
management plan) management objective systems. The final dimension is the integration of theindividual member-level mindset structure and (department, division) corporate systems. It is
desirable that the partial contributes to the total, and there is a need for the former to beappropriately positioned, utilized, and developed in the latter. In particular, the third dimensionof the integration of the member and company (top management) has been the conventional
meaning of goal congruence; however, characteristics in this dimension are the (1) deepening to
the mindset structure and (2) expansion of the communication content to corporate activities
with the theme of medium- / long-term society and environment.24 Essentially, environmental
goal congruence is characterized with the aim of expanding and strengthening relationships inthese three dimensions.
4-2. Potential effects of Environmental Goal Congruence
Meanwhile, the ultimate aim of the management accounting system is to improve themotivation of the members, but what kind of impact can the development of goal congruence
have?
Based on Herzberg (1976), “job enrichment” can be expected to improve the motivation(both in terms of quality and amount) of all company members, including managers. The
argument made by Herzberg (1976) was originally that motivation for work is increased throughan improvement in one’s own sense of competence and sense of accomplishment, which isachieved by making members aware of the position of their duties (“partial”) in the collaboration
system (“total”) through the vertical and qualitative expansion of duties. Similarly, Maslow (1970;1971), who advocated the theory of the hierarchy of needs, can provide evidence to support thisIn axes (1) and (3) in the figure, the total system of (3) is the sub-system of (1), so there is a
substantial connection, and (1) is positioned as a higher-level system of (3). The discussion inthis paper centered on how foal congruence is suited to changes in the external environment.
However, its content is also considered to be suitable for changes in the “internal environment” .
Employees are now being treated as equals to companies in terms of their position. In thiscontext, companies are beginning to clarify the purpose of their activities, share values with theiremployees and try to further evolve the company through the development of their employees.
A concrete example of this is the increasing demand for disclosure of human capital informationin accordance with ISO 30414 and the introduction of tools and systems for visualizing such
resources in companies. This has encouraged companies to put the right people in the rightplaces and made it easier for employees to develop their careers based on labor-managementagreements. These are the implication of this third dimension.
24

22

claim.25 Maslow (1970) stated that human needs are mainly composed of five stages, and thatwhen lower-order needs are satisfies, humans act to satisfy higher-order needs. The final level ofself-actualization can be further broken down between two levels, consisting of nontranscending
self-actualization and transcending self-actualization, the latter of which has greater emphasis on
contributing to others (Maslow, 1971).26 The motivation for members to engage in social andenvironmental management is not always limited to a need for contributing to others, but thesefactors are also present to a relative degree. Therefore, for a company to grow sustainably, it isdesirable to aim for environmental goal congruence as the members grow.
It can be confirmed that these theories are also applicable to corporate practice. For example,
Ando (2021) is a case study of Daiwa House Industry, which showed that the company sought tofoster a “pride in work” and cohesiveness (feeling of “being glad to be working at the company”)
of its members in its process of creating and publishing integrated reports.27 In either case, theconcept of environmental goal congruence shown in this paper is just an ideal type. However,when considering the cases examined in Section 3 of this paper and the cases published in Ando(2020), it can be understood that the latest corporate trends are oriented in this direction.
4-3. Conventional Goal Congruence concept and contributions to Management Accounting
Research
In that case, does this concept of environmental goal congruence merely provide atheoretical basis for the practice of social and environmental management of companies inrecent years? It is the author’s belief that the following contributions will also be made to thepractice of management accounting.
The first contribution that can be indicated is that the development of problem-solving
human resources can be promoted. All members of the organisation sharing the raison d’etre(management objective) of the corporate entity makes it easier for organisational members to (1)prioritize and (2) act flexibly in an environment with high uncertainty and rapid changes.
Specifically, members will be able to make independent decisions and act based on the sharingof values without asking their bosses individually or frequently hold unproductive meetings.
Although this theory is just a hypothesis and has faced much criticism, its impact on many
subsequent studies and the business world is immeasurable.
26
More specifically, Maslow (1971) states that this state of self-transcendence is a state often
seen in very creative and talented people, intelligent people, strong personalities, leading andresponsible leaders and managers, virtuous people, etc., who nevertheless did not reach selfactualization. Here, Maslow (1971) also describes the self-actualized as “non-peakers”, and theself-transcendent as “peakers”.
27
However, there needs to be continued surveys to see how much of these feelings are actually
held by members in the field, even if the company is trying to foster such feelings.
25

23

The second contribution is that goal congruence will be easier even in external
environments where changes are drastic and directions / prospects are difficult to establish. As
stated by Simons (1995), diagnostic control systems are premised on a stable external
environment, so it is not necessarily the case that the realization of goals set by each department
at the beginning of the term will lead to an ideal situation for the overall company at the end of
the term. In seeking environmental goal congruence, each member is encouraged to act while
being aware of the long-term goals of the entire company and society and thinking about its
implication, and its potential will be even higher. This can be done through the development ofproblem-solving human resources in the first contribution. If members could independently
participate in management activities, then they will be able to find meaning and value in theirwork, and it may lead to improvements in the decline in the organisational retention rate ofyoung people, which has often been regarded as a problem in recent years.
The third contribution is that environmental goal congruence is a concept that connects acompany with the external / internal environment, so scandals will be less likely to occur if thisconcept can be developed in a concrete manner. This is because this reflects the social culture in
the external environment of the company into the consciousness and behaviour of each member.
This will increase the continuity and sustainability of the company.
Essentially, “sustainability and survival” (Mizoguchi, 1987), which is the aim ofmanagement accounting in today’s environment, make contributions to environmental
congruence. However, there is no need to orient toward environmental goal congruence (i.e.,
expanding the goal congruence concept to date) by all companies at all times. In particular, it
would be desirable to emphasize environmental goal congruence and develop them specificallyin cases of a multinational company with a large scale and world-class activities, or if a strategy
for further growth and sustainability of the organisation is needed.

5. Conclusions
In this paper, the essence of the concept of goal congruence was examined, and discussions
were provided of how this can be reconstructed in today’s corporate environment. The concept ofenvironmental goal congruence was then presented. It can be said that today’s corporate
environment is characterized by the speed of change and the diversity of quality relative to that in
the past. Under these circumstances, it is difficult to demonstrate the original meaning of theconcept of goal congruence, which is also the aim of management accounting systems, unless it
is expanded and understood. This is because goal congruence is a means of contributing tomanagement objectives. The central function of the management purpose is to enhance theinternal control of the company and to bring about the sustainability and development of the entire
24

organisation through harmony with the external environment. The needs demanded fromcompanies have also diversified, and not all stakeholders are satisfied with achieving economic
goals as in the past. First, it is important for the top management of the company to be aware of
the diverse needs demanded of from the company through repeated dialogue with various entities
outside of the company. Furthermore, organisation members will also be required to understandthe company-wide objectives of the company, play a part in this, and act in a flexible manner in
response to environmental changes.
Therefore, it is desirable to expand and strengthen the concept of goal congruence in three
dimensions. The first is the axis of the external environment dimension. It is not always necessaryfor every company to tackle all aspects of the economy, society, and global environment at every
stage of corporate growth. However, the company can further improve the sustainability andsurvival of the corporate system by working in a well-balanced manner in the long-term. The
second is the time axis. There is a need to reflect the long-term vision of the management
objectives, which usually includes a large amount of social and environmental content, into
medium-term plans and specifically develop them as short-term management control systems(performance evaluation systems). This means that social and environmental indicators should be
introduced into performance evaluation systems in order to strengthen relationships on the timeaxis. As a result, the specific meaning of the abstract long-term vision can be effectively conveyed
to the members. The third axis is the verticality of the organisational structure (from top
management to members). It is desirable that all members not only develop performance
evaluation systems (formal systems) but also share the context in order to share a long-term visionin an even more substantial manner. To that end, there is a need for higher quality communication(e.g., dialogues themed on the raison d’etre of the entire company and the significance of duties
at the individual member level). In other words, emphasizing the process for value creation on thetime axis results in the organic integration of the external environmental system and internal
environmental system, thereby improving the quality (i.e., deepening the significance) ofcommunication between layers. This environmental goal congruence concept, which has this newscope of meaning, was then defined as “tendency to instil the logic, norms, and culture ofsustainability into the mindset of individuals working at the organisation; and encourage eachmember to independently act based on this”. In proposing this concept, it was claimed that the“sustainability and survival” (Mizoguchi, 1987) of the organisation, which is the aim ofmanagement accounting, was achieved.
The contribution of this study is that it was able to form the theoretical foundation ofenvironmental management accounting. Research on environmental management accounting has
been consistent with the logic that designing and utilizing methods and systems contributes to cost
reduction in the short-term. This study emphasized the importance of formally and informally25

developing long-term perspectives and corporate objectives in the first place. It was argued thatcompanies could acquire new sustainable and competitive advantages, not just cost reductions,through these efforts. At the same time, the main idea of the “importance of the part contributing
to the whole” was repeatedly indicated.
This study may also imply the convergence of environmental accounting and management
accounting, which were developed almost entirely separately. Management accounting has also
evolved from the traditional standard cost accounting to strategic management accounting, and it
has turned its attention to outside the company. Similarly, environmental accounting is also
shifting its focus to improving long-term corporate competitiveness. To date, environmental
accounting has focused on CSR (ad-hoc and special activities by the company) as a theoreticalfoundation, but today, this is developing into something that is rooted in the logic of ordinary
management activities, which is called CSV. In this way, this study suggests that the boundaries
between the areas of environmental accounting and management accounting are gradually
lowering.
A limitation of the present study is that the results of the practice are unconfirmed due to it
being a new practice. Interview surveys showed that (1) improving the quality of communication
between members and (2) bringing about the creativity of the organisation beyond that are theaims of CSV practice. It certainly seems that the ideas of CSV have taken root at the individuallevel in the case study company, and the interviewee stated that a future issue is how to shift that
consciousness to practice in the future. Further investigation of the process of such practice,including similar cases, will be a future research subject.

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