Sustainability Management Accounting in Urban Development: A Case Study of an Egyptian State-Owned Enterprise

Abstract

The public sector literature on sustainability management accounting (SMA) has grown significantly in recent years, with numerous theoretical and empirical studies examining the purported link between management accounting and corporate sustainability within organisations. However, despite this surge, prior studies have largely confined their analytical scope to traditional SMA issues, such as corporate social, environmental, and governance responsibilities. Their analyses have predominantly concentrated on largely investigated elements such as situational linkages, transformational dynamics, agency issues, resistance, and conflicts. This study aims to address these limitations by examining corporate SMA systems within the burgeoning field of urban development. It utilises institutional theory and a case study from Egypt, a developing country, to explore how urban development could impact adopting a corporate SMA system in politically sensitive state-owned enterprises (SOEs). Contrary to existing literature, the findings indicate that urban development has created financial pressures for national governments, which have used these as a political instrument to implement a corporate SMA system within related SOEs. Additionally, the findings highlight the significant role of management accountants as central figures in integrating and standardising a corporate SMA system into the daily practices of current executives through advanced enterprise resource planning (ERP) technology. Moreover, as a development of institutional theory, the findings demonstrate the influence of corporate SMA reports on the decision-making processes of national governments in the context of urban development.

1. Introduction

Urban development involves state government initiatives that utilise technology and networks to enhance the environmental, social, and economic sustainability of urban areas across the nation. These initiatives include national sustainability projects in public health, urban infrastructure, and the environmental sector, all aimed at improving the quality of life for citizens. Smart cities, which are central to urban development, are defined by the implementation of these sustainability projects [1]. The public sector and its SOEs in urban development are responsible for carrying out these national government projects. To ensure their accountability, governance, and transparency, it is essential to implement corporate SMA systems that tackle the specific challenges and pressures of urban development at the national level. Corporate SMA systems in urban development are distinct from those in the widely investigated sustainability context, attributed to their “multifaceted nature” [2]. These systems integrate a range of corporate sustainability practices, including risk management, performance measurement, financial management, and internal controls. SOEs in urban development utilise these practices to showcase their dedication to corporate sustainability. In contrast to conventional SMA systems that concentrate on a “singular practice” [3], these multifaceted systems offer a variety of perspectives for assessing corporate sustainability performance within the realm of urban development. The implementation of corporate SMA systems is advantageous [4,5], as they act as pioneering government frameworks for sustainable corporate governance and accountability. These systems empower management accountants in SOEs to gather, monitor, assess, and report on corporate sustainability performance, including the key performance indicators (KPIs) set by the state government, within the ‘under-explored’ context of urban development.

While prior literature on public sector management accounting has offered significant insights into various sustainability-related practices, as systematically reviewed by Albertini [3], Vysochan et al. [6], Schaltegger et al. [4], and de Oliveira et al. [7], it has not addressed how pressures from national-level urban development impact the adoption or institutionalisation of an SMA system within government-led SOEs. Previous research, e.g., [2,8,9], has examined how various aspects of corporate sustainability, such as social, environmental, and economic sustainability, influence management accounting practices, including cost management, performance management, and social and environmental KPIs, in public sector corporations and/or agencies. However, these studies have primarily addressed the different forms and issues of sustainability rather than the impact on national urban development projects and the potential pressures from the central government on SOEs. They have concentrated on how management accountants are involved in corporate sustainability instead of their potential role in driving and generalising new SMA practices or changes within the established organisational rules and routines. There has also been a lack of focus on how SMA reports and related KPIs could aid decision-making in government-led SOEs, especially urban development financing decisions.

Furthermore, previous studies have often provided purely empirical analyses or, at best, superficial theoretical explanations without applying adequate theoretical frameworks or models to render these analyses more sensible and meaningful. Their empirical analyses frequently focus on quantitative methodologies based on questionnaires or surveys, with a dearth of research employing qualitative field case study approaches, e.g., [5,10,11]. There is a focus on exploring the alleged relationship between management accounting and sustainability primarily within private sector organisations, neglecting this relationship within politically sensitive public sector entities such as SOEs that have a unique governmental character. Research interests are predominantly centred on developed countries with stable political and economic conditions, e.g., [6,12,13], showing a lack of interest in studying developing countries and emerging economies that face various financial, political, and governmental challenges [5] and are currently experiencing significant growth in national urban development projects. This study seeks to address these shortfalls in previous literature. It seeks to explore the ‘hitherto unexamined’ impact of urban development on the adoption of an SMA system in an Egyptian SOE. The overarching research question is as follows: What effect does urban development have on corporate SMA systems in SOEs? This question is divided into two related sub-questions. The first is as follows: How do urban development projects affect national government requirements for SMA? The second is as follows: How is an SMA system adopted within an SOE under the pressures of urban development and national government mandates?

This study utilises the ter Bogt and Scapens [14] institutional theory framework, which offers an analytical advancement over the traditional framework by Burns and Scapens [15]. Historically, Burns and Scapens [15] developed their framework to argue for the internal institutionalisation processes of management accounting change, concentrating primarily on the internal and procedural changes in management accounting practices within organisations. However, they notably overlooked the impact of external forces or pressures that could potentially shape or reshape new management accounting practices within organisations. The institutional theory framework by ter Bogt and Scapens [14] has filled the significant analytical void left by the earlier Burns and Scapens [15] framework by incorporating the impact of the external environment and its elements or “institutions” on organisational-level management accounting systems. In their framework, ter Bogt and Scapens [14] define the external or macro-institutional level of the organisation as a “broader level”, which reflects the external pressures and influences that encircle the organisation. Conversely, the internal or micro-organisational level is termed as a “local level”, which focuses on the procedural adoption or institutionalisation of new practices and systems within organisations, influenced and often reshaped by the broader level’s external forces. Although the dynamics between broader-level influences and local-level organisational systems have been theorised and addressed in various theoretical models and empirical studies, e.g., [4,16,17], the framework by ter Bogt and Scapens [14] is distinguished by its analysis of these interrelationships. It introduces three new dimensions or concepts consistent with the current case study data: “situated rationality”, “generalised practices”, and “key actors”, which will be elaborated upon later.

This study employs the qualitative “extended case study” method by Burawoy [18] within an Egyptian SOE, anonymised as NAG. This approach differs from the traditional case study method by Yin [19], previously utilised in SMA literature, e.g., [3,10,11]. It incorporates contextual connections to the broader external environment or field level, surpassing organisational limits. While the traditional method concentrates on the internal structures, practices, and processes of organisations, the extended case study method not only analyses these internal elements but also examines the “rationality” behind new changes. It explores “whether and how” these implemented systems and processes within individual organisations are formed or modified in response to macro-level institutional forces [18]. Following the 2011 political revolution, Egypt has seen a “surge” in national urban development projects, backed by the new political–military regime and the state government [20]. This surge has increased the burden on SOEs like NAG, which are responsible for carrying out these projects. As will be explained later, NAG, compared to other SOEs and contexts, e.g., [11,12,21], has faced challenges and pressures in funding these initiatives due to practical constraints and financial failures. To overcome these financial hurdles, the state government has mandated the adoption of an SMA system within SOEs such as NAG. This new system, developed in early 2019, utilises cutting-edge ERP technology to gather, track, assess, and report KPIs pertinent to corporate sustainability within urban development. Based on Yin [19], NAG data have been gathered through semi-structured interviews, direct observations, and document analysis.

This study fuels the existing public sector management accounting literature on corporate sustainability with additional theoretical and analytical insights. In line with ter Bogt and Scapens [14], the Egyptian case findings demonstrate the impact of national-level urban development financing pressures on the organisational-level implementation of an SMA system within NAG, an SOE. This system is perceived as a form of situated rationality, as its adoption was mandated by the national government, resulting from top-down pressures rather than the resistance or conflict highlighted in prior studies, e.g., [3,5,9,13]. The case findings also highlight the role of management accountants in integrating and standardising the new system and related sustainability KPIs within the current management accounting practices of the executive members. Management accountants are viewed as pivotal to the SMA system, with sustainability KPIs becoming generalised practices in the daily corporate sustainability performance of the case organisation. This finding aligns with Bertz and Quinn [22], who emphasise the significance of management accountants’ experience as key actors in incorporating new management control practices within a public service organisation. Conversely, this finding contrasts with Kurki and Järvenpää’s [2] recent findings, which do not emphasise the role of management accountants in corporate sustainability in urban development. Their analysis focused solely on offering a managerial perspective on fostering psychological ownership of corporate sustainability for shaping the future role of management accountants. Moving forward, as an evolution of the adopted framework of ter Bogt and Scapens [14], the Egyptian evidence reveals that the national government utilises SMA reports and associated KPIs from SOEs in their decision-making processes, particularly in the context of urban development financing. This aspect has not been explored in previous research, which concentrated solely on analysing situational dynamics, transformational dynamics, and the multiple connections within corporate sustainability management accounting, e.g., [4,7,23,24].

The subsequent sections of this study are organised as follows: Section 2 provides a review of the existing literature, and Section 3 outlines the Egyptian context. Section 4 details the theoretical framework utilised, while Section 5 describes the methodology employed. Section 6 presents an analysis of the key findings, and Section 7 integrates these findings with theoretical perspectives and existing literature. The study concludes in Section 8, while Section 9 outlines the practical and social implications of the findings and proposes directions for future research.

2. Literature Review

A wealth of theoretical and empirical research has explored the purported link between management accounting and corporate sustainability in the public sector. This body of work primarily examines various SMA practices within public sector entities and their situational and transformational connections. Various interpretations of SMA and its attributes have been offered. For example, Zou et al. [13] identify SMA as encompassing material flow accounting, environmental performance management, and environmental management accounting. Pumiviset and Suttipun [5] categorise SMA as different forms of sustainability accounting, including activity-based costing, social KPIs, and environmental KPIs. Gibassier and Alcouffe [24] see SMA as greenhouse gas accounting, energy accounting, and sustainability management control. Mitchell et al. [23] highlight stakeholder inclusion and accounting for stakeholders. Fuzi et al. [25] present the sustainability balanced scorecard, sustainable decision-making, and human rights accounting. Vysochan et al. [6] suggest that SMA practices cover sustainability governance, biodiversity accounting, and environmental benchmarking. Despite the diverse array of SMA practices, this stream of studies has not addressed the situational linkages, known as “institutional dynamics” [3], that affect SMA practices, nor the transformational linkages, known as “recursive dynamics” [4], that foster sustainable development.

Numerous studies have explored the situational connections that impact SMA practices in public sector corporations and agencies. These analyses have primarily concentrated on the relationship between macro- and field-level factors and the micro-organisational implementation of SMA. Drawing on the concept of planetary boundaries, Schaltegger [9] addressed global environmental challenges and societal needs, discovering that sustainable development goals like poverty, quality education, gender inequality, and the notion of planetary boundaries shape the development and design of SMA methods. Through the lens of broad institutional theory, Bui and Fowler [11] investigated the climate change strategies and carbon accounting methods employed by two New Zealand electric companies in reaction to evolving government policies on climate change from 2002 to 2012. Their research indicates that political and institutional regulations and opportunities, including educational initiatives, drive SMA. Drawing on institutional theory and employing a questionnaire survey method among manufacturing firms in the Yangtze River Delta, Wang et al. [21] investigated the impact of institutional pressures on the adoption of environmental management accounting, as well as the influence of top management support and perceived benefits on this relationship. The findings reveal that coercive and normative pressures have a positive and significant influence on the adoption of environmental management accounting, while mimetic pressure does not. Top management support and perceived benefits serve as moderators in the relationship between institutional pressures and the adoption of environmental management accounting, enhancing the effects of coercive and normative pressures but diminishing the effect of mimetic pressure.

Furthermore, Albertini [3], through a single case study and leveraging levers of control theory, introduces a conceptual framework for management control levers. This framework demonstrates how companies can improve stakeholder integration by utilising belief, boundary, and diagnostic control systems together; develop a shared vision by combining belief and boundary systems; and boost organisational learning mainly via interactive control systems, supported by diagnostic control systems. It also details how continuous innovation is chiefly propelled by interactive and belief control systems, with a contributory role from diagnostic control systems. The findings suggest that developing and sustaining distinct and valuable environmental capabilities are key to enabling companies to derive financial advantages from their proactive environmental strategies. Management control systems aid in building these environmental capabilities by directing focus towards strategic imperatives and fostering dialogue. Lee [12] investigates carbon management and its metrics through an eco-control lens, concentrating on the automobile sector for practical illustration. A case study involving Korean car manufacturers reveals that eco-control promotes harmony between a company’s strategy for managing carbon and the metrics for carbon performance, offering valuable quantifiable data for business leaders. Moreover, effective mapping of carbon flow during production presents significant chances to enhance carbon efficiency throughout the supply chain. Utilising Besharov and Smith’s [26] theory of logics multiplicity, Alsaid and Ambilichu [27] investigate the impact of institutional pressures on the adoption of a sustainability performance measurement system within an Egyptian social enterprise. Their research reveals that a performance measurement system serves as a political instrument, enabling the privatised company to achieve societal acceptance and legitimacy within the government’s funding framework. The company’s non-political KPIs have evolved into political mechanisms to align with the funding scheme’s institutional requirements. This involvement of the central government epitomises field-level institutional logics, which shape the interplay between commercial and social logics at the organisational level, and subsequently influence the selection of internal KPIs at the individual level. This illustrates that institutional logics and their interactions across these levels are dynamic within the internal performance measurement systems of social enterprises. While the above studies have explored the situational (macro–micro) linkages affecting SMA practices within organisations, they have overlooked the transformational (micro–macro) linkages through which SMA impacts sustainable development and related decisions.

Research on the contribution of public sector management accounting to sustainable urban development is scarce. Few studies have explored the impact of SMA at the organisational level within public sector entities on wider contexts and decision-making processes. Utilising the institutional analysis and development framework, Burritt and Schaltegger [10] explore the role of accounting in propelling organisations toward sustainable practices in production and supply chains, extending beyond traditional corporate boundaries. The research identifies persistent issues with scope and terminology, a narrow sustainability focus due to complexity that hinders decision-making, and the necessity for transdisciplinary teams to enhance the interconnectedness and efficiency of supply chains. The case of “Puma” is presented as a tangible instance of adopting a novel accounting method to evaluate environmental impacts within supply chains, which subsequently influenced other companies to adopt similar practices. Schaltegger and Csutora [28] explored the current status and challenges of carbon accounting within the context of sustainability and management. Their findings suggest that carbon management accounting can assist decision-making across all organisational levels, whether a department faces regulatory compliance challenges, seeks to optimise energy and material flows for significant reduction impacts, or aims to enhance eco-efficiency, product innovation, or legitimacy. Utilising Dillard et al.’s [17] institutional theory model and examining the New Cairo city council’s smart electricity networks project in Egypt, Alsaid [29] explores the impact of political pressure from the military regime at the macro level on the institutionalisation of a performance measurement system at the micro-organisational level. The study reveals that performance measurement systems, particularly in politically and militarily sensitive smart cities, represent a cascading process of institutionalisation that is intimately connected to sustainable development within the broader context of urban policies. Furthermore, accounting-based performance metrics, influenced by political and military pressures on public–private partnerships, enhance smart city governance. Institutionalised measurement systems play a significant role in shaping political decisions and military actions within the city council.

Here again, utilising Dillard et al.’s [17] institutional theory model and examining a case study of an Egyptian SOE facing socio-political sustainability pressures to launch a smart electricity network in New Minya city, Alsaid [30] explores the dynamics of smart cities and their impact on the adoption of a multi-tiered management accounting system. The findings indicate that smart city initiatives have created social and political sustainability pressures, leading to the introduction of an ERP network as a novel management accounting system. This new, intricate, and multi-tiered management accounting system was developed to transform the sustainable city into an accounting city, ostensibly a smart city. Here, smart refers to the visibility and measurability of the sustainability performance of the collective entity known as the city, and its integration with various institutional levels, as demonstrated in a city network project for ERP-enabled electricity distribution and collaborative decision-making processes. In their recent study, Alsaid and Ambilichu [20] employed a theoretical triangulation of contingency theory, institutional theory, and social cognitive theory to examine the dynamics between performance measurement and urban development within an Egyptian public sector organisation’s sustainable energy project. Their research not only explored the macro–micro dynamics but also the recursive micro–macro interactions. The study’s findings indicate that dynamics have arisen between the urban development projects in the field and the unintended consequences of implementing the performance measurement system, specifically the sustainability KPIs reporting system. These dynamics have been institutionalised across three interrelated levels: the macro-level urban development contingencies and the pressures for sustainability KPIs reporting, the organisational institutionalisation of the performance measurement system, and the micro-organisational cognitive impact of sustainability KPI reports on political urban development decision-making. Yet, progress in the aforementioned studies has arguably been slow because their theoretical and practical analyses fail to meet the decision-making needs of all stakeholders at risk from organisations’ activities in sustainable development.

Accordingly, although the existing literature is systematised and numerous SMA tools and theoretically informed case studies have been examined, the connections to urban development are often implied rather than explicitly addressed. The existing literature has primarily examined the role of management accounting in tackling a range of sustainability challenges while maintaining traditional principles. It recognises the situational and transformational connections of management accounting to corporate sustainability but remains focused on internal audiences and organisational scopes [4]. Given the growing pressures of national urban development, SMA should cater to diverse stakeholders across various institutional levels, including state governments, extending beyond the confines of organisations [5]. This necessitates that SMA takes into account the contextual ties to both field- and macro-levels, which are essential for SMA reporting in urban development decisions. Consequently, the adoption of an SMA framework within SOEs engaged in urban development is vital and warrants further investigation. This is echoed by Kurki and Järvenpää [2] who observe that limited research has been conducted on the practical application and utilisation of SMA, and even less is known about how state-owned companies collect, manage, and communicate corporate sustainability performance internally and externally. This study contributes uniquely to this relatively uncharted domain.

3. The Egyptian Context

As a developing nation and emerging economy, Egypt has seen remarkable growth in urban development, with significant advancements following the 2011 political revolution that sought societal justice and equity. Among the outcomes was the initiation of Egypt’s 2030 sustainable urban development strategy in 2016, known as “Egypt Vision 2030” [31]. This strategy mandates SOEs like NAG to adopt an SMA system, distinguishing them from companies in other sectors. The government’s motive for this directive was to promote corporate sustainability and accountability among SOEs engaged in urban development. This move addressed the financial mismanagement that plagued many SOEs’ urban development initiatives before 2011, which were marred by political corruption, lack of accountability, disconnected management accounting practices, and manipulation by accountants. The introduction of an ERP-enabled SMA system serves as a novel approach for transitioning to corporate sustainability, linking the national government with its SOEs. Through this system, the government can assess the sustainability performance of SOEs involved in national urban development projects, such as NAG, to inform financing decisions. This system marks SOEs with a distinct identity of sustainability performance and public accountability in urban development, setting them apart from non-SOEs in the public sector.

Following the 2011 revolution, Egypt’s new governance initiated a series of urban development projects aimed at improving the quality of life at a national scale. These initiatives encompass public healthcare, human development, infrastructure, and environmental sustainability. The projects are valued at around USD 12 million, and financed by various entities [32]: the International Monetary Fund (IMF) contributes 50%, local city councils and governments provide 30%, and SOEs are responsible for the remaining 20%. The public sector, as the primary implementer, has imposed a financial burden on SOEs to self-finance 20% of the costs, either from their revenues or via private partnerships, marking a first in urban development financing. This economic strain, mandated by the state government, also served as a ‘catalyst’ for the adoption of an SMA system within SOEs, such as NAG, to promote fiscal sustainability and project accountability. Owing to the enhanced corporate sustainability of SOEs, Egypt has advanced nine positions in the IMF’s global urban development ranking for developing nations, as reported by Waisová [33].

NAG is one of the SOEs tasked with executing and partially financing national urban development projects. NAG’s sustainability quarterly bulletins [34,35] report an annual investment of approximately USD 3 million in each project. The company is backing the public healthcare sustainability initiative by building hospitals with state-of-the-art medical equipment. It also establishes vocational training centres to enhance the job skills of young people and graduates within the human development sustainability project. Moreover, the company aids in the development of contemporary roads and bridges as part of the infrastructure sustainability project and rolls out intelligent electricity grids to reduce harmful emissions in the environmental sustainability project. To secure funding legitimacy, the government has urged NAG to adopt an SMA system. This system, operational since early 2019, is powered by sophisticated ERP technology, rendering NAG’s sustainability performance and KPIs transparent to the state government and other financiers for joint financing decisions. In contrast to other cases, e.g., [10,11,12,21], NAG’s management accountants have significantly contributed to embedding the new SMA system and sustainability KPIs into the existing routines of the executive members, as will be analysed later.

4. Theoretical Framework

This study utilises the ter Bogt and Scapens [14] institutional theory framework, an evolution of the Burns and Scapens [15] model. The significance of this framework is not limited to examining how broader institutions may shape or reshape local practices within organisations. Other institutional theory perspectives, such as Dillard et al.’s [17] cascading institutionalisation model, Oliver’s [16] strategic responses to institutional processes model, and Besharov and Smith’s [26] multiple institutional logics model, have also theorised these macro–micro institutional dynamics. These models have been applied or adapted in various case studies that explore the situational and transformational connections of management accounting in areas like corporate sustainability, urban development, and smart cities, e.g., [10,11,21]. Nonetheless, these studies have focused on specific aspects such as internal institutionalisation, cascading institutionalisation, strategic responses, and complex institutional logics within their studied SMA practices. Adding to these theoretical endeavours, in addition to analysing the influence of broader institutions on local institutions within organisations, ter Bogt and Scapens [14] also introduce three new dimensions or concepts that align with the case study analysis below: “situated rationality”, “generalised practices”, and “key actors”.

In contrast to the above-mentioned models and studies, ter Bogt and Scapens [14] centre their institutional theory framework on the concept of situated rationality. They contend that local institutions or organisational practices, re/shaped by broader-level institutions or external forces, exemplify situated rationality. This concept represents a mindset adopted by key organisational executives when acting in specific situations. The link between situated rationalities and various institutional perspectives is not novel, harking back to foundational management accounting studies, e.g., [36,37,38], which explored the institutionalisation of management accounting changes within organisations. These seminal studies revealed diverse instances of management accounting stability and change, noting that institutionalised practices often embody situated rationality, arising from operational conflicts, employee resistance, agency problems, or internal rivalries. Although these perspectives differ, they concur that situated rationalities are generally fixed and undergo little alteration within organisations. Nonetheless, ter Bogt and Scapens [14] depart from these traditional views by suggesting that situated rationality can emerge from the impact of external influencers on an organisation’s operational practices. Previous institutional perspectives on situated rationalities primarily considered them as outcomes of internal influences like agency, conflict, or resistance, rather than external forces at a higher level, as proposed by ter Bogt and Scapens [14].

ter Bogt and Scapens [14] also emphasise the significant role of key actors in the change process of management accounting within organisations. While previous institutional theory perspectives and models have offered various explanations for management accounting changes due to internal or external influences, they did not address the influential role of management accountants in driving this change within their respective organisations. In contrast, ter Bogt and Scapens [14] describe the key actors’ roles in “deliberating” and “generalising” new systems and practices within the existing routines of organisational executives. They ascribe this role to the experience of key actors, which afforded them the internal power to not only discuss changes with executive members but also to institutionalise these changes within the organisation’s existing rules and routines. In contrast to the theoretical perspectives and models previously mentioned, which overlooked rules and routines, ter Bogt and Scapens [14] define rules as formal declarations of procedure established by an organisation’s key actors. Routines are the actual procedures that executives use, shaping the institutionalisation of new rules in their daily practices. Rules and routines are seen as the daily habits of key actors, largely shaped after careful deliberation. These local deliberations are influenced by the embedded rationality of key actors, which in turn is affected by the diversity of broader institutions. This diversity can lead to various forms of rationality within organisations. It demonstrates that the rationality present within organisations is formed by the interplay of internal and external institutions simultaneously, an aspect that previous institutional theory models, e.g., [16,17,26], did not consider.

ter Bogt and Scapens’ [14] framework has been applied in the recent public sector management accounting literature. Bertz and Quinn [22] applied the framework of ter Bogt and Scapens [14] to investigate the influence of key individual actors’ situated rationalities in the evolution of management control systems within a public service organisation. Their research underscores the significant impact these actors have in establishing new rationalities within a housing department. They found that external austerity measures, coupled with the experience rationalities of these actors, served as catalysts for altering established management control practices in public service administration. Additionally, their study uncovered interactions between generalised practices and situated rationalities, which ter Bogt and Scapens [14] had not previously emphasised. However, Bertz and Quinn [22] did not address the pressures of national urban development and their potential impact on the implementation of corporate SMA systems, nor the role of management accountants in integrating and generalising the new system within existing routines, or the use of national government and its SOEs for corporate management accounting reports and associated sustainability KPIs in decision-making processes. The present study aims to address these research limitations or criticisms theoretically and analytically in the context of urban development to further develop the framework proposed by ter Bogt and Scapens [14].

5. Methodology

This study employs Burawoy’s [18] extended case study method, which contrasts with the traditional case study approach where analyses are confined to organisational boundaries, as indicated by the above literature. The selection of this extended method is warranted by the unique context of the Egyptian SOE under examination, NAG. NAG experienced governmental funding constraints while executing national urban development projects, which subsequently had a significant impact on the adoption of a corporate SMA system within the organisation. Consequently, it was crucial to utilise this qualitative extended case method to understand the “interplay” between the national and organisational levels [18,39] that shape the implementation and development of a new SMA system in NAG’s routine operations.

Considering the governmental nature of the Egyptian company NAG, it stands out from other case studies and contexts as a “politically sensitive” SOE [35]. NAG is managed and intervened by the national government, represented by the Ministry of the Public Sector. Ethical considerations were addressed before initiating data collection for this government-led SOE. Before the data collection in early 2021, formal approval was secured from the Egyptian Central Agency for Public Mobilisation and Statistics. Established by Presidential Decree No. 2915 in 1964, this agency is recognised as the official authority responsible for authorising research data collection within government entities. This requirement is unique to SOEs and does not apply to private sector companies that do not need such governmental consents. The reason lies in the sensitive nature of government operations and the confidentiality maintained within these SOEs, particularly in urban development projects like those undertaken by NAG.

The approval stipulates that the data gathered on the company are to be utilised solely for scientific research and publication. It prohibits any unauthorised use by others without explicit permission from the Ministry of the Public Sector. Additionally, the agreement requires that the company’s name and the names of its board members and executives interviewed for data collection are not explicitly mentioned in the research. Instead, they should be referred to anonymously or through scientific coding. The approval stipulates that the data collection period must not surpass three to four months, whether consecutive or intermittent, per the Central Agency for Public Mobilisation and Statistics’ regulations on data gathering from governmental entities.

The approval also mandated the avoidance of sensitive subjects that could affect the company’s image and position during employee interviews. Indeed, issues such as organisational culture, employee behaviour, internal staff–management relations, or employee contentment with urban development project outcomes came up in the interviews. These subjects were difficult to delve into and discuss thoroughly due to their sensitive nature to the company and its staff. Therefore, adhering to the government’s approval and the recommendations of Burawoy [18] and Parker and Northcott [40], these sensitive matters were taken at face value, distinguishing this ‘academic research’ from ‘investigative journalism’.

Data within the NAG framework were gathered using semi-structured interviews, participant observations, and document analysis [19,39]. As depicted in

Table 1. Participants.

Job Titles	Codes	Categories	Age	Qualifications	Experience	Main Interviews (2021)	Ex-Post Interviews (2022)	Duration	Recorded or Notes Taken
						Number of Interview(ee)s
Chairman	P1	politician	56 years	PhD	20 years	1	-	2 h	recorded
Board director	M1	military	53	PhD	19	1	1	1.30	noted
Deputy board director	P2	politician	52	PhD	18	1	-	1.15–1.30	recorded
Urban development manager	M2	military	51	MPhil	15	1	1	1	recorded
SMA committee manager	A1	public administrator	51	CPA, ACCA	16	2	1	1	noted
SMA committee accountant	P3	politician	40	ACCA	10	1	-	2	recorded
SMA committee accountant	M3	military	43	MBA	13	2	1	1.30	recorded
SMA committee accountant	A2	public administrator	45	MSc	12	2	1	2	recorded
SMA committee accountant	A3	public administrator	50	CPA	10	1	-	1.30	noted
SMA committee accountant	P4	politician	42	CMA	11	2	-	2	noted
ERP manager	P5	politician	52	ACCA	15	1	1	1.45–2	recorded
Sustainability risk manager	A4	public administrator	49	ACMA	13	1	-	1.30	recorded
Sustainability financial manager	A5	public administrator	45	MSc, CIA	14	-	1	1	recorded
Sustainability performance manager	P6	politician	47	Diploma	11	-	1	1.15	recorded
Sustainability internal controls manager	A6	public administrator	43	MBA	17	-	1	1.20	noted
SMA reporting manager	P7	politician	48	MBA	15	-	1	1.45	recorded
Military delegate for urban development	M4	military	53	PhD	16	1	-	2	noted

Source: Authors.

, 27 interviews took place across two separate phases. Burawoy [18] asserts that prolonged data collection is advantageous for thoroughly comprehending or contemplating any potential changes in the phenomenon being studied, particularly if it has recently emerged or been applied, such as the implementation of SMA in urban development that began in early 2019. The first phase, from June to August 2021, during the COVID-19 crisis, included 17 virtual interviews with 13 executives or actors. They included the chairman, board director, deputy board director, urban development manager, corporate SMA committee manager, five SMA committee accountants, ERP manager, corporate sustainability risk manager, and the military delegate for urban development. Some individuals underwent multiple interviews to explore specific research questions more thoroughly, particularly those concerning the daily operations and functionalities of an SMA system. The second data collection phase in August 2022, post-COVID-19 crisis, involved four follow-up visits. This included 10 in-person interviews with six prior and four new executives. Attendees included the board director, urban development manager, SMA committee manager, two committee accountants, ERP manager, sustainability financial manager, sustainability performance manager, sustainability internal controls manager, and sustainability KPIs reporting manager.

A single interview guide was utilised, with questions adjusted slightly between periods to consider COVID-19’s potential effects and variations in participants’ roles, experience, and authority within NAG’s decision-making processes. This approach, as Yin [19] argued, helped mitigate potential interview bias, where interviewees might conceal key facts to present the company in best SMA practices. The participant list, created with the board director’s assistance, was designed and refined to align with the research objectives and questions. Interviewees and their codes included politicians, P, military personnel, M, and public administrators, A, with up to 20 years of experience and a range of qualifications, from academic degrees such as PhDs to professional certifications like the Association of Chartered Certified Accountants (ACCA). The interviews were primarily conducted in Arabic and ranged from one to two hours in duration. Transcripts were translated into English and sent to participants for verification and confirmation, following Parker and Northcott’s [40] qualitative case study protocol. Follow-up interviews uncovered the formation of a corporate SMA committee in NAG since June 2022. This supports Burawoy’s [18] earlier assertion regarding the significance of gathering data over extended or prolonged periods to monitor emerging events and practices. This emerging committee comprises six senior management accountants selected by the NAG board of directors in collaboration with the national government’s public sector ministry. This selection is based on their experience in corporate sustainability, management accounting, and government KPIs necessary for SOEs’ legitimacy. According to NAG’s sustainability quarterly bulletins [34,35], the committee is considered a “corporate asset”, tasked with collecting, managing, and reporting sustainability KPIs to support governmental decision-making in urban development. The committee operates daily through an advanced ERP platform. This ERP is viewed as a corporate SMA system [35], as it has enabled the company to manage national urban development demands and generate accurate and reliable SMA reports utilised by the government and other stakeholders in their decision-making processes.

To complement interviews and mitigate potential interview bias, a variety of documents were gathered and analysed. This approach was taken to enhance the reliability and validity of the research, thereby enriching its value and insights [18]. These documents, obtained from various sources such as the NAG website, the on-site library, and executive departments, included Egypt’s 2030 sustainable urban development strategy [31], national urban development projects, government funding schemes, required sustainability KPIs, public–private financing partnerships, the SMA operational protocol, and screenshots of daily ERP operations. The most significant document was the quarterly SMA reporting and its related sustainability KPIs, resulting from an ERP-enabled SMA system within NAG. These documents offered a more profound knowledge, awareness, and comprehension [19] of the vital role that corporate SMA reporting plays in shaping decisions at various institutional levels of urban development, thereby augmenting the data from interviews [39].

Moreover, eight observations were noted through active participation [18] in daily ERP practices and regular SMA committee meetings at NAG. Notes were taken during two observed meetings, which were not recorded due to confidentiality. The prior data collection approval emphasised that recordings of senior management meetings were prohibited to maintain the confidentiality of the governmental decisions made therein. This corroborates Parker’s [39] argument emphasising the importance of “maintaining confidentiality” in qualitative management accounting case studies. Every meeting included the SMA committee manager, the associated management accountants, either the board director or the deputy board director, a military delegate, and managers or representatives from the executive departments of national urban development. These meetings were held to discuss corporate SMA/KPIs reporting, viewed not only as a sustainability governance mechanism but also as an organisational decision-making tool in urban development. Decisions related to corporate sustainability risk management, performance measurement, financial accountability, and internal controls were among the topics addressed.

Further observations stemmed from the daily operations of NAG’s SMA system, notably facilitated by an advanced ERP platform. This platform connects NAG’s executive departments and extends to the government’s public sector ministry, serving corporate sustainability governance, transparency, and accountability remotely. The ERP platform functions as a ‘networked SMA system,’ enabling NAG’s committee management accountants to actively gather, monitor, and evaluate sustainability KPIs. It also facilitates reporting to NAG’s senior management and the national government, both of which have system access and can remotely monitor NAG’s daily corporate sustainability efforts. These observations corroborated previously gathered interview data regarding the daily capabilities of the ERP/SMA system and provided a practical view of the protocol of an established system in urban development, as described by Parker and Northcott [40].

Data analysis was performed manually, following the approach outlined by Burawoy [18], to ensure the precision of the participants’ expressions, meanings, and quotations. This analysis unfolded in three stages. Initially, data—sourced from interviews, documents, or observations—were thoroughly examined, and audio recordings were reviewed to pinpoint issues pertinent to the research aims and questions. These encompassed topics such as the pressures of national-level urban development financing, the adoption of a corporate SMA system, the establishment of a networked ERP operational platform, the formation of an SMA committee, the pivotal role of management accountants, and the impact of corporate SMA/KPIs reporting on governmental urban development decisions.

In the second stage, the previously mentioned issues were organised into two main fieldwork themes. Each theme received a unique code and sub-codes, creating what is referred to as the “coding tree” [18]. The first theme, labelled EI for external influencers, concentrated on national urban development financing challenges affecting SMA. The second theme, labelled IA for internal adaptations, addressed the processes involved in deploying an ERP-supported SMA system within NAG due to national urban development financing pressures. In the final analysis stage, these themes were connected to the existing literature and the institutional theory framework by ter Bogt and Scapens [14], which was reviewed post-data analysis to ensure its “applicability” [19]. As shown below, the case study findings were then interpreted through two distinct but interrelated perspectives. The first perspective examines the broader urban development pressures on SMA, while the second delves into the local implementation of an SMA system within NAG amidst these overarching government funding pressures in urban development.

6. Analysis

6.1. Broader Urban Development Pressures for Sustainability Management Accounting

In Egypt, the state government’s imposition of national urban development financing pressures was recognised as a potent institutional mechanism at the country’s broader level for the adoption of a corporate SMA system within SOEs. The NAG chairman, P1, noted that these pressures from the national government stemmed from a sequence of financial failures that impacted numerous SOEs, including NAG, in executing national urban development projects before the 2011 revolution. This historical context increased social injustice and reduced well-being, especially in poor and remote communities. It played a crucial role in establishing an SMA system, enabling the government to monitor corporate sustainability practices within SOEs, as exemplified by NAG, and to utilise SMA/KPI reports for informed decision-making, which will be elaborated on subsequently. The board director, M1, has also observed that the lack of reliable SMA systems previously compromised the integrity of sustainability reporting in urban development. Sustainability reporting was subject to “political influence”, relying on the connections between an SOE’s senior management and the central government’s public sector ministry. Previously, SMA was executed by specific ministry managers instead of a skilled committee of senior management accountants, which has become the standard in SOEs today. SMA practices were limited to the use of conventional management accounting techniques, including balanced scorecards, cost management, activity-based costing, divisional performance measurement, and environmental or social benchmarking. The interactions between ministry managers and heads of SOEs enabled fraudulent activities in SMA within NAG. This led to the manipulation of reported sustainability KPIs, which affected corporate and government decision-making processes regarding urban development financing. NAG’s SMA committee accountant, P3, concurs, stating

Before the revolution, characterised by corruption, favouritism, mediation, and dubious political relationships, the public sector’s SOEs were without a dependable management accounting system to oversee and regulate the corporate sustainability KPIs mandated by the government. The NAG’s antiquated management accounting system, although computerised, was not interconnected across the various corporate and governmental strata engaged in national urban development projects. This lack of networking facilitated frequent manipulations by both veteran NAG executives and high-ranking ministry officials, leading to chaos in reporting corporate sustainability practices or related KPIs and in decision-making processes. Such disorganisation contributed to NAG’s financial and executive shortcomings in urban development, ultimately impeding its ability to fulfil its social objectives for the public community as an SOE.

This turmoil in SOEs’ SMA practices was attributed to widespread political corruption and government failures in national urban development, persisting up to the second Egyptian revolution in 2013. The SMA committee’s senior accountant, A2, revealed that the ex-chairwoman of NAG, who held the position from 2003 to 2013, was implicated in this SMA corruption. She acted as a “political intermediary” between NAG and key ministry officials responsible for maintaining or enforcing corporate sustainability practices and KPIs established by the central government. However, their conduct and reputation were marred by bribery and intermediation. Through fraudulent actions, NAG “falsified” corporate sustainability reports to illegitimately secure urban development financing from the government. This practice continued due to the former chairwoman’s appointment by the ex-public sector minister, which was rooted in political patronage and intermediation. This contrasts with the current standards of merit and qualifications established after the 2013 revolution, which led to military-led political and government leadership and subsequent national campaigns against political corruption. NAG’s SMA committee manager, A1, endorses this, adding

Previously, the company lacked a corporate SMA system and only had scattered, ineffective management accounting practices focused mainly on performance measurement and control rather than sustainability accounting and management accountability during urban development governance. These traditional practices were internally focused and not used by the national government for external decision-making. Government decision-makers and associated SOEs viewed organisational management accounting reports merely as performance evaluations or variance reports, which played no part in urban development decision-making processes. The significance of management accounting in sustainable urban development diminished until the second Egyptian revolution in 2013…

…Post-2013, with the country’s shift towards new political, military, and governmental visions emphasising corporate sustainability in urban development, management accounting and accountants became integral to the successful SMA systems implemented in SOEs from early 2019. From 2013 to 2019, the public sector and associated SOEs underwent a period of sustainability transition. During this time, numerous structural and organisational reforms were implemented within SOEs, including corporate SMA reforms, to comply with new government mandates for national urban development. Consequently, a corporate SMA system has been established within NAG’s daily management accounting routines. This system is operated through an advanced ERP platform, recognised as NAG’s SMA system. The new system was launched through a collaboration between the SMA committee of NAG and Said Co. for Technology, one of our private-sector financial partners, and it officially went into operation on 4 January 2019.

Since then, the implementation of an ERP-enabled SMA system has become essential, serving not only to address the national urban development financing pressures from the state government but also to create a reliable and transparent framework for measuring and managing corporate sustainability performance in SOEs. Beyond the technical aspects, the ERP manager, P5, explains that ERP has effectively created a “collaborative” and “digitised” SMA infrastructure within the case SOE. This innovative infrastructure, diverging from past models, has led to considerable changes. These changes have influenced not only the political ideologies and government policies of NAG in addressing the financial pressures of national urban development but also the incorporation of SMA practices into the current routines of executives. The selection of ERP for the SMA system was made by the SMA committee’s management accountants, who brought extensive experience from working with similar systems at global sustainability organisations before their tenure at NAG. The newly implemented system has successfully interconnected the operational departments responsible for national urban development initiatives at NAG. It has also established a connection with the SMA committee of management accountants. This enables the committee to monitor and report in real-time to NAG senior management and the government/ministry on the progress of corporate sustainability performance, thereby aiding collaborative decision-making in urban development. In support of this, the SMA committee’s management accountant, P4, states

The SMA system is enhanced by a sophisticated, interconnected ERP platform. Unlike before, this operational platform is dedicated to digitally collecting, monitoring, and reporting NAG’s sustainability performance indicators in urban development. The upgraded system enables the SMA committee’s management accountants to both authenticate the reliability of sustainability KPIs and guarantee their transparency to the public. Corporate sustainability KPIs, previously hidden, are made public, thereby increasing the transparency, governance, and accountability of urban development initiatives overseen by the national government and its SOEs.

The SMA system has, therefore, been institutionalised as a political instrument to guarantee reliable and valid corporate sustainability KPIs within the specified SOE. The NAG deputy board director, P2, states that the ERP-supported SMA system is instrumental in meeting corporate sustainability KPIs and holding NAG accountable. The formation of the SMA committee, as seen in daily ERP activities, was to ensure NAG’s adherence to specific KPIs set by the central government for urban development. The objective was to fulfil the national requirements of urban development financial partners, which involved securing corporate sustainability in urban development SOEs like NAG, especially after significant financial shortcomings in the past. The SMA committee manager, A1, reports that the government or ministry has established “seven KPIs” to improve the sustainability performance of SOEs in urban development. An SOE that fails to incorporate these KPIs into its SMA system will be subject to a national financing “penalty”. This penalty involves a “25% reduction” from the government financing allocation designated for urban development. Should this occur, the SOE will face challenges in compensating for this reduced share from its own financial resources. A penalised SOE will risk losing its governmental legitimacy and societal acceptance regarding the sustainability services and products it provides to the public. These KPIs are adherence to corporate integrity, business ethics, and national law, KPI1, transparent and public reporting of corporate sustainability and engaging stakeholders in decision-making, KPI2, securing sustainable economic, social, and environmental advantages for societal justice and equality among citizens, KPI3, pinpointing government actions to bolster corporate sustainability performance, KPI4, fostering corporate leadership and employee skills, KPI5, overseeing corporate sustainability risks and performance with robust internal controls and financial governance, KPI6, and implementing best practices in corporate sustainability governance, KPI7. NAG’s SMA committee management accountant, M3, emphasises

Currently, the central government and urban development financial partners such as the IMF require specific sustainability KPIs, making it essential to integrate a corporate SMA system. These KPIs are crucial for maintaining the company’s control environment, risk assessment, monitoring activities, and information and communication regarding sustainability. Unlike before, the SMA committee’s management accountants are now required to ensure corporate compliance with integrity and ethics, evaluate risks and fraud, and implement extensive controls over technology and policies. Additionally, they must ensure the communication of relevant information both internally and externally, conduct ongoing assessments, and identify and report any deficiencies. Hence, in contrast to the pre-SMA system, the role of management accountants has evolved to become a central figure in corporate sustainability within urban development.

Furthermore, the management accountants’ reports on sustainability KPIs, issued by the SMA committee, have become a crucial institutional tool for decision-making in national urban development. The SMA committee management accountant, A3, has indicated that previously, these reports were “overlooked” by the central government, ministries, and financial partners involved in urban development decisions, for several reasons. Firstly, national-level decision-makers were unaware of the reports’ informative value, which previously relied on narrative content rather than KPIs. Secondly, numerous management manipulations and financial fraud scandals within SOEs like NAG eroded the government’s trust in management accountants’ narrative reports on corporate sustainability, particularly after public disclosure and accountability authorities revealed that SOEs’ management accountants played a significant role in these scandals, ultimately contributing to the failure of national urban development initiatives. An additional SMA committee management accountant, M3, adds

Unlike before, NAG’s SMA system has markedly decreased fraud among management accountants in corporate SMA/KPIs reporting. The adoption of a corporate SMA system, coupled with relevant KPIs, has normalised the everyday responsibilities of committee management accountants. This is achieved through a consistent procedural protocol via ERP, thereby tackling the previously observed fraud issues in corporate SMA reporting within past urban development initiatives.

ERP has improved the corporate SMA reporting process to meet the varied needs of national urban development policymakers. It has been observed that during the routine use of ERP features, both the national government or public sector ministry and the IMF require SMA reports every quarter. In contrast, other investors, such as the private sector or businesspeople, require these reports every six months to evaluate NAG’s sustainability performance in urban development for financial decision-making. For example, the NAG sustainability quarterly bulletin [35] revealed that SMA reports, characterised by reliability and validity through ERP, significantly contributed to the increase in IMF financial support for the Egyptian government and its SOEs such as NAG. This support grew from 22% before the 2011 revolution to about 50% following the 2019 adoption of a corporate SMA system facilitated by ERP. The NAG military delegate for urban development, M4, also remarked

In 2020, ERP aided the SMA committee’s management accountants in incorporating KPI2, which focuses on transparency and stakeholder engagement, into NAG’s SMA system. During this period, the IMF requested an SMA report on the public sector’s SOEs to assess their sustainability practices in urban development. The IMF used the SMA/KPIs report to evaluate the SOEs’ effectiveness in implementing national urban development projects and to decide on their financial allocations. A gap related to KPI2, crucial for accurate corporate sustainability evaluations, was noted in the report by the IMF. As a result, the IMF deferred the financial contributions to the SOEs, including NAG, for about three months until the SMA committee’s accountants refined the SMA framework with KPI2 and presented a revised report to the IMF. This event highlights the importance of implementing an SMA system with pertinent KPIs for well-informed funding decisions and reinforces the role of management accountants, as well as the significance of integrating ERP in corporate sustainability within urban development.

Based on the above, the central government’s financing has exerted institutional pressures on public sector SOEs to adopt a corporate SMA system for urban development. This move follows a series of unsuccessful attempts to execute and finance national urban development initiatives by these SOEs, including NAG. Operated via ERP, this system is recognised as a burgeoning domain in public sector management accounting, enabling the government to promote corporate sustainability within its SOEs engaged in urban development. It acts as a conduit for sustainability and a political asset in the decision-making process for national urban development funding. The introduction of this ERP-driven system has fostered a dynamic SMA landscape in urban development, instituting specific sustainability KPIs within SOEs that shape their routine operations and decision-making processes, as will be analysed in the next sub-section.

6.2. Local Implementation of a Sustainability Management Accounting System in Urban Development Pressures

Considering the national government funding pressures mentioned earlier, the case study SOE has implemented an SMA system to bolster corporate sustainability in urban development. The NAG chairman, P1, notes that, against expectations, the company has “welcomed” the integration of a corporate SMA system into the existing routines of its executive members. Following the ministry’s announcement of this system’s implementation within SOEs engaged in national urban development, senior management anticipated significant resistance from employees and potential conflicts among departments responsible for urban development projects. Contrary to these expectations, all parties and levels within NAG have embraced the shift towards a corporate SMA system. NAG’s senior management considers it a crucial “strategic step” to meet the national government’s urban development financing criteria. This perspective is particularly pertinent given the company’s past financial errors and management controversies, which have affected its social standing and public approval as an SOE. The SMA committee’s management accountant, A2, highlighted that “cookie jar reserves” were a major factor in the financial and operational shortcomings of past urban development initiatives. These reserves, established by the former chairwoman and corrupt ministry officials, were meant to fund urban development and enhance citizens’ quality of life. Nonetheless, subsequent probes by central government, ministry, and public accountability bodies revealed that these officials had diverted the funds to their personal accounts, not the intended projects. The misappropriated sum from these fraudulent reserves surpassed “USD 7 million”, provided to NAG by the central government, the IMF, and private partners. Consequently, this led to a one-year suspension of IMF aid and the termination of certain private sector financing agreements. In response, the ministry has now instituted a corporate SMA framework within its SOEs like NAG, enabling SMA committee accountants to “verify” the integrity and transparency of sustainability KPIs mentioned earlier in urban development. Another management accountant on the SMA committee, P3, remarked

NAG’s history of failures and the prior chairwoman’s internal manipulations necessitated intervention by the central government, specifically the public sector ministry, in NAG’s internal operations. This intervention marked the beginning of efforts to halt these failures and fraudulent activities. The government, especially the new public sector minister, has dismissed the former chairwoman and her corrupt associates from their positions. Moreover, they have been sentenced to three years by a government court for embezzling public funds and abusing their official capacities for personal gain, contrary to the collective and societal objectives pursued by the government. This has led to the initiation of corporate sustainability reforms within the ministry and NAG via management accounting.

Since its inception in 2019, the SMA system has served as a corporate mechanism for sustainability performance improvement within NAG, tackling national financial mandates. The SMA committee’s management accountant, P3, has detailed how the SMA system has integrated the government KPIs outlined in Section 6.1 into NAG’s established management accounting practices as a “series” of sustainability initiatives. These initiatives, which have defined the SMA system, include “sustainability risk management”, “sustainability performance measurement”, “sustainability financial governance”, and “sustainability internal control”. The collective implementation of these initiatives has allowed the company to fulfil the seven KPIs set forth by the central government for national urban development. Another management accountant from the SMA committee, A3, has observed that financial limitations imposed by the national government have forced NAG’s senior management to “revise” not only their management ideologies but also their accounting policies. The transition from traditional or strategic management accounting, defined by financial ratios, standard cost accounting, and variance analyses, to sustainability management accounting represents a “significant shift” in the company’s managerial approach to urban development. Although these traditional methods are still vital, their use now focuses more on algorithmic assertions to support corporate sustainability efforts that are essential for urban development. The NAG board director, M1, also acknowledged in his discussion that

Traditional management accounting methods have not kept pace with the demands of national urban development financing, the evolving role of management accountants in corporate sustainability, or their involvement in the national government’s decision-making processes. With the intensifying pressures of government financing, our senior management faced challenges with the public sector ministry, particularly as the adoption of government KPIs at the national level became obligatory for SOEs engaged in urban development, including NAG. The senior management opted to transition to a new SMA system that incorporates innovative and previously unused techniques like sustainability risk management, sustainability performance measurement, sustainability financial governance, and sustainability internal control. These novel techniques are designed to complement, not replace, existing management accounting methods such as ratio analysis, variance analysis, and cost analysis, thereby supporting corporate sustainability and decision-making. ERP has enabled the NAG’s SMA committee to integrate various techniques into a unified procedural protocol that aligns with the existing routines of its executive members, thus combatting fraud and corruption in corporate SMA reporting.

With the ERP implementation, the SMA committee’s management accountants have been pivotal in the smooth integration of new corporate sustainability techniques into the existing executive routines. As observed and corroborated by the chairman, P1, the expertise and insights of the management accountants on NAG’s SMA committee were crucial in adopting these techniques. They facilitated this by engaging in “productive dialogues” with other executives, ensuring the integration into their routines occurred seamlessly, avoiding any internal strife. The management accountants leveraged the pressure from national government funding as “leverage to convince” the executive members to embrace a new SMA system. This adoption has led to the integration of sophisticated corporate sustainability techniques into everyday practices, establishing them as part of corporate sustainability management accounting in urban development. The military delegate, M4, acknowledges that the executives had to come to a “consensus” on the adoption of an SMA system and related corporate sustainability practices that met national funding standards. This consensus was instrumental in securing legitimacy and approval for government funding, which in turn supported the “unproblematic” implementation of the SMA system and its sustainability practices within NAG. The management accountant of the SMA committee, A3, endorses

The ERP platform has structured the operational framework for an SMA system, incorporating new corporate sustainability practices through various channels. These channels encompass innovative practices in risk management, performance measurement, financial governance, and internal control. On the daily ERP interface, one can view these SMA channels within our operational portal, symbolising the recently implemented daily corporate sustainability practices in urban development that inform government financing decisions.

To exemplify, sustainability risk management practices have been institutionalised within the new SMA system. According to the sustainability risk manager, A4, and the SMA committee’s management accountant, P3, the SMA system has established specific daily practices to ensure the proper management of corporate sustainability risks in urban development. As observed through the ERP functional channel, these practices enable the committee’s management accountants to define NAG’s sustainability risk management strategy and risk limits, incorporate the risk management process into sustainable corporate governance policies, and review principal operational risks. The SMA committee’s management accountant, P3, states

Sustainability risk management practices empower management accountants to develop appropriate responses and engage employees in risk management. These practices also facilitate the provision of daily reports on the effectiveness of sustainability risk management. This is achieved through daily operational movement reports that the SMA committee delivers to NAG senior management at the end of each working day. Should any potential issues emerge, management accounting strategies are implemented to address them.

Specific daily practices have also been integrated into the existing SMA routines to guarantee the measurement of NAG’s internal sustainability performance. As observed in ERP operations and echoed by the SMA committee accountant, M3, and the sustainability performance manager, P6, these practices allow the committee’s management accountants to verify the validity of corporate sustainability goals and evaluate the success of internal sustainability efforts in meeting these goals. Additionally, they permit management accountants to oversee the internal performance landscape, quickly respond to potential shifts, and deliver daily updates on the operational performance trends of departments in charge of national urban development, including any obstacles and their immediate proposed resolutions. New daily management accounting practices have also been established to ensure NAG’s sustainable financial governance. As observed through the ERP system and explained by the sustainability financial manager, A5, these practices empower the committee’s management accountants to support the NAG senior management, the national government and other financial decision-makers. Management accountants play a crucial role in grasping the financial elements of urban development projects, pinpointing financial resources, and recognising potential risks. The SMA committee’s management accountant, P4, states

Beyond this, with the advent of new financial governance practices, management accountants are instrumental in formulating appropriate financial sustainability strategies and projections. They are responsible for furnishing senior management with daily financial performance reports and engaging with pertinent departments to address any unforeseen financial discrepancies in project budgets. In doing so, management accountants ensure stringent governance and accountability in national urban development financing.

Additional management accounting practices have been integrated into the new SMA system to bolster the efficacy of corporate sustainability internal controls. As observed via the pertinent ERP channel and articulated by the sustainability internal controls manager, A6, along with the SMA committee’s management accountant, M3, these practices enable the committee’s management accountants to guarantee the implementation of efficient internal processes and provide trustworthy internal control data to the government and other financiers. They are committed to complying with pertinent government regulations and policies regarding national urban development and protecting internal assets from management misuse and departmental fraud. They strive to preserve the integrity and transparency of internal operational systems, including information and communication technology systems, and to ensure executive accountability. An additional management accountant from the SMA committee, A2, adds

The SMA committee conducts two types of sustainability internal control reports: daily and quarterly. The daily report is dispatched at the close of each workday through the ERP platform to key decision-makers at NAG and the public sector ministry, to assess daily operations and make necessary decisions. ERP extends beyond just the SMA committee’s management accountants; it is an integrated platform that encompasses various parties involved in NAG’s national urban development projects. This includes executive departments at the NAG level and key decision-makers at the NAG and ministry levels, who are equipped to oversee daily sustainability performance and make necessary interventions remotely…

…The quarterly report monitors progress in the company’s internal sustainability control measures over the previous three months, compared to the preceding quarter. This report extends beyond the company’s senior management and the ministry, unlike the daily report which serves corporate governance and accountability. It is also shared with various significant funders and public accountability authorities at the national level, confirming NAG’s dedication to internal control practices for corporate sustainability in urban development.

SMA reports have significantly influenced decision-making within the case company. At a monthly SMA committee meeting, the discussion of quarterly SMA reports was central to evaluating corporate sustainability and making decisions. These reports, as observed in the meeting, provided a comprehensive and precise analysis of the newly implemented corporate sustainability practices in urban development. They serve as a management accounting tool that enables NAG’s senior management, the national government or public sector ministry, and urban development partners to make joint financial decisions. As stated in NAG’s sustainability quarterly bulletins [34,35], SMA reports have identified requirements from key funders like the IMF to initiate a new SMA practice for managing corporate sustainability costs. The SMA committee’s management accountants are in the process of enhancing the current SMA system, with the new practice anticipated to be operational by the end of 2025. The SMA reporting manager, P7, illustrated how SMA reporting functions as a vital tool in the company’s decision-making processes. In 2019, SMA reporting identified a need for training certain executives on the new ERP-enabled SMA system. The reports from that period highlighted technical deficiencies in their informational value, which were due to certain operational department staff not having adequate training in ERP functionalities. This affected their ability to input relevant data for their departments and associated national urban development projects. Since then, the ERP team and the SMA committee’s management accountants have been responsible for regularly technologically training the relevant NAG executives. This initiative was crucial for their job advancement within NAG and recognition at the ministry level. The SMA committee’s management accountant, P3, contributed to this by stating

In 2021, SMA reports indicated a marked improvement in corporate sustainability in the context of national urban development, despite senior management’s apprehensions about the potential sustainability risks posed by COVID-19. This unexpected boost in sustainability performance during the difficult times of the pandemic prompted senior management to provide financial bonuses and extra incentives to employees. The goal was to motivate them to stay resilient and overcome the challenges brought by the pandemic, while still advancing internal sustainability practices amid the pressures of national urban development financing.

Another management accountant, A2, cited another example, saying:

In 2022, amid the aftermath of the pandemic, SMA reports underscored the concerns of management accountants about potential financial sustainability risks facing the company. These concerns stemmed from possible fluctuations in both local and international markets over the next two years. Acting as a warning signal, these concerns led the senior management to increase NAG’s reserves from USD 3 million to USD 3.8 million, aiming to safeguard against the anticipated risks in urban development.

Ultimately, the adoption of a corporate SMA system is regarded as an institutional response to the urban development financing challenges set by the national government. This system was launched via a sophisticated, previously unused ERP platform, which has effectively embedded a variety of corporate sustainability practices. These practices, which include risk management, performance measurement, financial governance, and internal control, align with the government’s KPIs and are crucial for maintaining the company’s status and eligibility for urban development funding. The SMA committee’s management accountants have been instrumental in advocating for these practices and integrating them into the existing management accounting routines. Additionally, SMA reports serve as a pivotal tool in guiding the company’s decisions related to financial resources, staff training, and reserve allocation.

To distil the above findings, Figure 1 encapsulates how national urban development financing pressures affect adopting an SMA system in a politically sensitive SOE. This aligns with ter Bogt and Scapens’ [14] theoretical perspectives, illustrating the connection between NAG evidence and the applied institutional theory framework.

7. Discussion

Building on the foregoing, the findings from the Egyptian case study stand out from prior literature on public sector management accounting and corporate sustainability by offering unique theoretical and analytical perspectives. The above analysis has shown that the pressures of national government financing have steered the development and implementation of an SMA system within SOEs. Unlike earlier studies that attribute the adoption of institutionalised practices in SMA to situational linkages or transformational dynamics, e.g., [4,23,24], this research indicates that the establishment of a new SMA system has been driven by institutional pressures from national government financing in the realm of urban development. Consequently, the new SMA system is perceived as a form of situated rationality [14] within SOEs, often moulded by the influence of broader institutional forces. This suggests that the adoption of an SMA system has served as a political instrument, allowing SOEs such as NAG to respond to external pressures from the national government. This contrasts with prior SMA research which focused on institutional sustainability pressures from local or municipal governments on non-SOEs, e.g., [5,7,41], rather than pressures from national or central governments on their SOEs. It could lend support to the institutional viewpoint of Hiebl [42], despite not discussing the potential role of management accounting in corporate sustainability within urban development, regarding the potential of management accounting to act as a political resource or tool for fostering embedded agency and decision-making within organisations.

In this SOEs context, the emergence of a corporate SMA system represents a significant development within public sector management accounting reforms for urban development. This is particularly relevant for developing nations like Egypt, which have been markedly affected by SOEs’ historical inadequacies in financing and executing national urban development projects. This insight further underscores the necessity of meticulously examining the diverse institutional contexts in which government-led enterprises function during the identification and implementation of suitable SMA methods. This viewpoint differs from previous research in certain developed and developing countries that neglected the influence of context or external environmental forces on the development of SMA practices within pertinent organisations, e.g., [5,9,13]. Instead, these studies focus on examining entrenched agency issues, employee resistance, or managerial conflicts. As previously observed, management accounting plays a crucial role in aiding SOEs to address context-specific corporate sustainability practices within their daily ERP operations. As with NAG, SOEs are mandated by the national government or the public sector ministry to adopt certain sustainability practices, ensuring that their existing ERP-supported SMA routines are conducted responsibly. SMA systems bolster the sustainability, transparency, and accountability of SOEs in Egypt. Contrary to earlier research, e.g., [2,4,23], which focused on a singular SMA practice in other contexts, the various aspects of SMA—including risk management, performance assessment, financial governance, and internal controls—are crucial for the organisational efficiency and viability of SOEs within the Egyptian framework of urban development.

These previously unused aspects underscore the importance of involving management accounting and accountants in SOEs’ corporate sustainability, as well as securing central government legitimacy in national urban development financing schemes. Management accountants play a pivotal role, as key actors [14], in weaving new sustainability practices into the fabric of existing executives’ routines. This evolution represents a ‘paradigm shift’ in management accounting from a conventional or strategic role to one that is actively engaged in corporate sustainability [2], expanding its purview to encompass partnerships with national governments to fund urban development. Effective participation is enhanced by quarterly SMA reports that integrate internal SMA practices, allowing the central government and national financiers to evaluate the effectiveness of SOEs in urban development. Consequently, management accountants have a significant role in influencing decisions at both national and corporate levels. This perspective may vary from prior SMA literature, e.g., [5,11,21] that has not yet explored how national governments utilise SMA reports to inform governmental decisions. As previously mentioned, this SMA reporting aids in shaping urban financing decisions at the national government/ministerial and SOEs levels, as demonstrated by decisions on financial resources, public–private partnerships, and staff training. This perspective is considered an advancement beyond prior literature in the public sector and a significant enhancement to the applied theoretical framework of ter Bogt and Scapens [14], which does not consider the influence of management accounting reports on organisational decisions. Similarly, this applies to other analytical models traditionally used in this particular domain, e.g., [16,17,26].

Departing from prior research and models that overlooked technology’s role in SMA, this paradigm shift positions an advanced ERP platform as a mediator. It aims to establish a cohesive procedural framework for an SMA system, characterised by collaboration and digitalisation. An ERP-enabled SMA system is institutionally viewed as a novel approach to achieving corporate sustainability in urban development. This system has been instrumental in supplying national urban development financiers with trustworthy reports on corporate sustainability efforts. As observed earlier, the SMA committee’s report within NAG’s ERP system demonstrates the dependability and accuracy of corporate sustainability practices in meeting national government financing KPIs. These necessary government KPIs are considered a component of ter Bogt and Scapens’ [14] broader institutions, setting them apart from alternative theoretical models mentioned earlier. Previous SMA research has focused on broader institutions within the contexts of smart cities, smart cities’ governance, and urban development, concentrating mainly on macro-level institutions such as regulations, rules, and guidelines at the city council, local government, or social enterprise levels, e.g., [7,43,44]. However, these few studies have not explored the influence of country or national government-level institutions, which have a more significant impact than city or local governments in shaping SMA practices within SOEs. In this institutionalised context, with the pressures of national government financing, a supposedly non-political SMA system becomes politicised within SOEs. This finding stands apart from earlier research, e.g., [2,12,41] as it highlights how the politicisation of SMA systems was influenced by nationwide anti-corruption campaigns in the public sector, launched through central government financing initiatives in response to pre-2011 management accounting scandals in urban development. These national campaigns contributed to the successful implementation of a new SMA system in SOEs, leading to institutional alignment and compatibility. This shift is a departure from the negative consequences such as institutional complexity, resistance, or conflicts often emphasised in prior SMA research, e.g., [4,5,6,7,41].

8. Conclusions

This study seeks to explore the organisational deployment of a corporate SMA system in the context of national urban development. The central research question is as follows: In what ways does national urban development affect the implementation of a corporate SMA system in politically sensitive SOEs? This is further broken down into two sub-questions. Firstly, how does urban development financing shape national government pressures towards SMA within SOEs? Secondly, in what manner does a corporate SMA system function within SOEs to accommodate national government financing decisions? This study utilises the institutional theory framework of ter Bogt and Scapens [14] and Burawoy’s [18] qualitative extended case study method, focusing on an Egyptian SOE involved in urban development, overseen by the public sector ministry.

As previously discussed, the existing body of literature on public sector SMA provides a range of theoretical models and empirical analyses. These works explore situational connections in a top-down manner and comparatively assess transformational dynamics from a bottom-up perspective, both of which impact corporate SMA practices. However, these studies mainly focused on the presumed linkages between conventional (social and environmental) management accounting practices and corporate sustainability in non-SOEs, from limited institutional perspectives like agency issues, resistance, and internal conflicts. They overlooked the impact of national urban development on the establishment of SMA systems within SOEs, which face numerous sustainability challenges, particularly in politically sensitive developing nations. They also disregarded the alleged role of management accountants in promoting corporate sustainability within urban development, as well as how national governments utilise SMA reports in their urban development decision-making processes. This study aims to fill these research gaps in the existing SMA literature.

This study enriches the existing SMA literature with new theoretical and analytical insights. In comparison to best practices and other nations with similar systems, such as Thailand [5], New Zealand [11], the Yangtze River Delta [21], and Korea [12], the Egyptian case analysis earlier demonstrated that national urban development financing pressures have necessitated the central government’s adoption of a corporate SMA system in related SOEs, such as NAG. This system is considered a new form of situated rationality, arising from top-down pressures of national governments. These as-yet unexamined pressures differ from the well-studied issues of agency problems, resistance, complexity, or conflict highlighted in prior research. Additionally, the findings highlight the significant involvement of management accountants in promoting corporate sustainability within urban development through a sophisticated ERP platform. While recent studies have started to illuminate the role of management accountants in corporate sustainability, they have overlooked their potential role in urban development and the use of modern accounting technologies like ERP in the deployment of new SMA systems. Management accountants are increasingly recognised as pivotal in integrating and standardising new sustainability practices into the current management accounting routines of executives. This has contributed to the establishment of a new state of institutional alignment or compatibility within SOEs, serving as an alternative to the extensively researched institutional resistance and conflicts highlighted in prior literature. Moreover, in Egypt, where political sensitivity and external pressures exist, corporate SMA reporting significantly influences national government policymaking and decisions regarding urban development financing. This aspect has not been examined in prior SMA research, marking an advancement of ter Bogt and Scapens’ [14] institutional theory framework, which previously overlooked this analytical element.

9. Implications and Future Research

The above findings have practical and social implications when compared to existing literature. Practically, they imply that public sector decision-makers might employ a new SMA system to foster corporate sustainability in urban development. This perspective could alter how financiers of urban development perceive non-political SMA tools, potentially viewing them as political instruments in financing decisions. It might also prompt decision-makers to implement diverse internal SMA practices to guarantee corporate sustainability and accountability in urban development. Introducing an SMA system could also help professional accounting bodies such as the Chartered Institute of Management Accountants to organise a series of appropriate training workshops. These workshops would enhance management accountants’ capabilities, expertise, and knowledge, especially those working in SOEs, in applying diverse sustainability practices in line with the increasing urban development challenges. This professional training may become a key component in the accreditation and recognition process for management accountants within organisations.

Socially, the findings could encourage both state-owned and non-state-owned enterprises to adopt a collaborative and digitalised SMA system. This could engage diverse stakeholders and strengthen SOEs’ societal legitimacy in securing national financial resources. An ERP-enabled system might also allow central government officials to consolidate SOEs’ sustainability efforts, enhancing organisational efficiency and governmental sustainability. Such integration could improve urban development services for the public and guarantee a respectable quality of life for various communities and citizens. Implementing an SMA system could further advance university curricula by enriching student knowledge of the social and environmental aspects of sustainable management accounting and increasing their understanding of job market demands. Many universities in both developing and developed countries are now adopting curriculum transformation programmes to align their undergraduate and postgraduate accounting courses more closely with what employers expect from graduates. Furthermore, the integration of ERP as an advanced SMA technology optimises management and accounting processes in organisations, especially in SOEs suffering from workflow bottlenecks caused by outdated manual procedures or fragmented computer systems. This improvement markedly enhances the collective and social dynamics within operational departments, which have been obstructed by internal conflicts and disruptions affecting social relations and decision-making. The embrace of state-of-the-art technology can lead to enhanced operational and organisational opportunities, founded on cooperation and engagement, free from internal plotting and conspiracies, thus ensuring a dignified working environment for employees.

As with any context-specific case study, some research limitations suggest avenues for future work. As previously mentioned, SOEs are more committed to adopting an SMA system than their non-SOEs counterparts. Future studies could include these non-SOEs to explore how internal SMA practices differ when dealing with national urban development challenges. Accessing and interviewing key executives in central government or public sector ministry also posed challenges. Subsequent research could aim to engage these national-level executives to gain deeper insights into the influence of national government support on the acknowledgement of management accounting and accountants’ roles in SOEs’ corporate sustainability within urban development. This study applied institutional theory and a qualitative case study method to investigate the adoption of an SMA system in urban development. Given that such a system’s institutionalisation is an emerging field in public sector sustainability accounting, further research could include more theoretical explanations and analytical insights to enrich the existing knowledge on corporate sustainability management accounting. This encompasses, for instance, longitudinal and interdisciplinary studies that explore other theories like governmentality, legitimacy, and contingency. Such exploration would assist the public sector accounting research community enhancing their current understanding of the practical or situated implementation of advanced SMA systems in urban development. During interviews, the discussion of topics such as organisational culture, employee behaviour, social relations, and job satisfaction proved challenging due to the sensitive nature of these issues in SOEs. Future research could also investigate these claims to assess their impact on SMA implementation within the context of urban development.