Material Flow Cost Accounting from a Natural-Resource-Based PerspectiveJulia Gross

16. März 2020

Material flow cost accounting (MFCA) is a method that promotes sustainable production by tracing and quantifying material and energy flows in physical and monetary units, in order to reveal the true costs of waste and inefficiency. A focus on the identification of opportunities for waste prevention and improved material and energy efficiency creates the possibility of achieving a win-win benefit of improved economic and environmental performance.
In order to successfully realize the resource efficiency improvements suggested by MFCA, firms may need to make changes to their existing resources and capabilities (R&C) or develop new ones. However, the existing body of research on MFCA has not yet explored the connection between the implementation of MFCA’s proposed improvements and the application of existing or potential company R&C. The purpose of this study was to conduct a quantitative MFCA analysis on a small manufacturing company and then to qualitatively analyze the results through the natural-resource-based view (NRBV) of the firm, a theory which focuses on the R&C that enable economically and environmentally sustainable business strategies.
Findings show that the identification and quantification of material and energy losses and the ensuing process of analyzing their causes and ways to reduce or eliminate them facilitates transparency into the R&C that can be leveraged or that need to be developed. Specifically, the MFCA analysis in combination with concepts from the NRBV can help management to identify which existing R&C they can already exploit, which ones they should further invest in, and what specific form these R&C should take for their company, in order to support a proactive environmental strategy of pollution prevention. In addition, this research contributes to an understanding of the origination of dynamic capabilities for environmental and economic sustainability by showing how MFCA can potentially influence the acquisition, reconfiguration, or development of R&C.