Effect of environmental management accounting practices on organizational performance: role of process innovation as a mediating variable

Abstract

PurposeThis study aims to determine (1) the effect of environmental management accounting on organizational performance and (2) the mediating effect of process innovation on the relationship between environmental management accounting and organizational performance.Design/methodology/approachThis research uses survey methods designed for management accountants of large manufacturing companies in Indonesia. Data from 123 respondents were analyzed using the WarpPLS.FindingsThe implementation of environmental management accounting exerted a positive effect on organizational performance. It is evident that the implementation of environmental management accounting encourages companies to innovate processes which will improve how well the organization performs.Research limitations/implicationsThese findings still contained several limitations such as data were only collected from one province in Indonesia, and so the findings might not be generalizable to other provinces in Indonesia. Also, the number of variables studied only involved three. The study only focused on certain dimensions of environmental management accounting without considering other dimensions in-depth.Practical implicationsThese findings extend the literature on environmental management accounting and demonstrate, from a practical perspective, environmental management accounting (EMA), which prioritizes the environment, will encourage companies to innovate their processes so that they are more environmentally friendly; EMA recognizes the important role of accountants in managing environmental issues.Originality/valueThis study documents the importance of environmental management accounting to assist companies in getting accurate information on environmental issues and environmental costs.

The role and perception of accountants on environmental management accounting in an emerging market: Study on South Africa’s companies.

“…The adoption of the EMA practices is directly linked to environmental regulations or cost savings. This echoes findings by Sari et al (2020) that companies are compelled to adopt EMA due to potential financial benefits attached to the system.…”

A Systematic Review of Barriers in Adoption of Environmental Management Accounting in Chinese SMEs for Sustainable Performance

“…They argued about the importance of various stakeholders' roles which exerts pressure on organizations for following environmental management practices. To them, these include supply chains, customers, and community which in a way encourages and pressurizes organizations ( 17 , 50 , 53 ) to work for sustainable environmental performance. Johnstone ( 48 ) also added by mentioning the culture of adhocism in SMEs that limits their ability to implement EMAP either fully or partially.…”

Influence of environmental management accounting practices on the environmental sustainability of South African cement and mining companies

“…The absence of an unequivocal and mutual definition of EMAP influences understanding of its antecedents and consequences. Sari et al (2021) argue that this creates a critical challenge because "as long as different definitions are used, empirical results cannot reliably be compared." Mungai et al (2020) used waste management as an environmental performance construct.…”