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Institutional pressures, environmental management strategy, and organizational performance: The role of environmental management accounting

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  • A.D. Nuwan Gunarathne
  • Ki‐Hoon Lee
  • Pubudu K. Hitigala Kaluarachchilage

Abstract

This study investigates the implementation of environmental management accounting in translating environmental management strategy into organizational performance. Further, the study identifies the influence of institutional pressures on environmental management strategy and environmental management accounting to provide a better description of the impact of the institutional environment on corporate environmental practices. The data were collected from 144 business entities in Sri Lanka using a web‐based survey and analyzed using partial least squares structural equation modeling. We found statistically significant evidence to state that the environmental management strategy is positively associated with the environmental and economic performance of organizations, whereas environmental management accounting mediates this relationship. Further, a firm's institutional environment positively affects both environmental management strategies and environmental management accounting. This study emphasizes that the organizational information systems such as environmental management accounting are useful in providing information on environmental costs and monitoring environmental and financial performance when implementing environmental management strategies in the pursuit of corporate sustainable development.

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  • A.D. Nuwan Gunarathne & Ki‐Hoon Lee & Pubudu K. Hitigala Kaluarachchilage, 2021. "Institutional pressures, environmental management strategy, and organizational performance: The role of environmental management accounting," Business Strategy and the Environment, Wiley Blackwell, vol. 30(2), pages 825-839, February.
    • Handle: RePEc:bla:bstrat:v:30:y:2021:i:2:p:825-839
    DOI: 10.1002/bse.2656
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    5. Fangyu Gu & Yu Xie, 2022. "The differential impacts of coercive pressure from environmental law and proactive environmental strategy on corporate environmental performance: The case study of a pulp and paper company," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(5), pages 1909-1925, September.
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    7. Chamila H. Dasanayaka & Nuwan Gunarathne & David F. Murphy & Padmi Nagirikandalage, 2022. "Triggers for and barriers to the adoption of environmental management practices by small and medium‐sized enterprises: A critical review," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 29(4), pages 749-764, July.
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    11. Goodarzi, Shadi & Masini, Andrea & Aflaki, Sam & Fahimnia, Behnam, 2021. "Right information at the right time: Reevaluating the attitude–behavior gap in environmental technology adoption," International Journal of Production Economics, Elsevier, vol. 242(C).
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    20. Yan He & Zhaoshu Liu & Min-Jae Lee, 2024. "Navigating Sustainable Value Creation Through Digital Leadership Under Institutional Pressures: The Moderating Role of Environmental Turbulence," Sustainability, MDPI, vol. 16(21), pages 1-16, October.

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