This paper aims to present the viability of “governance control”, a method that the author finds more appropriate in tackling the environment, society and governance. It is necessary that a control theory must accept competitive edge, value creation, and sustainability as contradictory factors and respond to them flexibly. Because these factors contain long- and short-term temporal paradoxes, financial and nonfinancial paradoxes, and paradoxes between internal aspects and external ones of companies. How do we tackle the wide variety of paradoxes or restrictions in companies? Different from the conventional control in management, it emphasizes the development of systems of control that consider not only the inside, but also the outside of companies, that is, more outward looking management control that prioritizes social/external aspects. In short, based on the discussion, this paper tries to construct a new control theory by clarifying the viability of “governance control”.

This paper introduces a case study of the division of a well-established shipbuilding company in Nagasaki Prefecture referred to in this paper as “A” company, to examine its use of target costing techniques established in June of 2010 to increase its competitive advantage and profitability in the face of strong international competition. Specifically, this case study research uncovered that the target costing techniques put in place since June of 2010 were ineffective in reaching “A” companies desired profitability goal because of external factors and internal organizational deficiencies. The author utilized this evidence to propose a new approach of target costing to achieve the profitability goal and competitive advantage of this and other Japanese shipbuilding companies.

Manufacturing system such as Toyota Production System establishes its superiority based on mid-to-long term viewpoint, whereas short-termism in profit management has advanced since shareholder-value-oriented management appeared and developed. One of its backgrounds is that the institutional investor’s activity to search for low PER stocks or good settlement causes short-termism in profit management through the investor relationship. It is one of the important management problems, especially in manufacturing company how to change confrontation (dysfunction) into integration (eufunction) between mid-to-long term schema and short term one in management system. For the approach to it, this paper shows Potential PER as a new stock price valuation indicator and Dual-mode Management Accounting Model.

Social and human aspects of corporations have been increasingly emphasized. We can not realize sustainable corporate value creation if the economic aspect and the social/human aspects of corporations are not conformed for the long term. Sustainable corporate value creation requires the recognition of various stakeholders and corporate governance. The type of corporate governance depends on a view of corporation. The roles of Integrated Reporting are long-term corporate value creation by the engagement with investors and by recognizing various stakeholders (pursuit of plural corporate values) which influence value creation. These two roles are related. We point out that roles of Integrated Reporting depend on a view of corporation.