The Interactive Effect of Cognitive Frame and Performance Measurement System Scope on Managers’ Choice of Sustainable Suppliers

Managerial response to stakeholders’ demands for profitability and sustainability can have long-lasting effects on organizations, stakeholders, and society. In an era dominated by business-case thinking, managers’ cognitive processes are particularly important. Yet alternatives to business-case thin...

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Bibliographic Details
Published in:Journal of management accounting research 2023-10, Vol.35 (3), p.153-171
Main Author: Pencle, Nadra
Format: Article
Language:English
Subjects:
Cognition & reasoning
Decision making
Management accounting
Suppliers
Sustainability
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Summary:Managerial response to stakeholders’ demands for profitability and sustainability can have long-lasting effects on organizations, stakeholders, and society. In an era dominated by business-case thinking, managers’ cognitive processes are particularly important. Yet alternatives to business-case thinking are underexamined. Operationally, to help direct attention toward sustainable goals, organizations implement performance measurement systems (PMS) with varying scope differences in the composition of financial and nonfinancial measures. To date prior research is inconclusive regarding the effectiveness of such actions. This study responds by mobilizing paradoxical thinking, an alternative form of cognition posited to better support complex managerial decisions. Experimentally, I investigate how cognitive frames moderate the effect of a broad versus narrow PMS in sustainable decision making. The results reveal managers who approach sustainable decisions with a paradoxical cognitive frame and are evaluated using broad PMS select more sustainable suppliers. These findings are important given the social and environmental implications of sustainability judgments.
ISSN:1049-2127
1558-8033
DOI:10.2308/JMAR-2022-041