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Environmental management accounting and innovation: an exploratory analysis

2010, Accounting, Auditing & Accountability Journal

PurposeIncreased awareness regarding environmental issues has encouraged organisations to use environmental management accounting (EMA), which has been said to deliver many benefits to users, including an increase in innovation. There is, however, little evidence to consubstantiate this claim and thus this paper aims to investigate the issue. It also seeks to examine the role of strategy with EMA use and innovation.Design/methodology/approachThe paper uses a survey designed and administered to management accountants and financial controllers in large Australian businesses.FindingsThe analysis suggests that EMA use has a positive association with process innovation, but not with product innovation. It also finds that the effect of strategy on innovation was driven by the level of commitment to research and development. However, no statistically significant relationship between strategy and EMA use was found. The key driver of EMA use was industry.Research limitations/implicationsThe ...

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Please note you do not have access to teaching notes, tackling the integration challenge between environmental strategy and environmental management accounting.

Accounting, Auditing & Accountability Journal

ISSN : 0951-3574

Article publication date: 21 February 2022

Issue publication date: 10 January 2023

The research debate on the direct relationship between environmental strategy and environmental management accounting (EMA) is quite popular; however, integration challenges between these two factors still persist at the firm level. This paper seeks to adopt the contingency theory perspective to examine how EMA implementation varies across organizations with different intensity levels of environmental management strategy implementation (i.e. environmental management maturity, EMM).

Design/methodology/approach

The paper uses a web-based survey, designed and administered to public listed companies and members of three industry chambers in Sri Lanka.

This study finds that EMA implementation is significantly different among organizations at varying EMM stages. Further, it is observed that organizations at higher stages of EMM use significantly greater domain-based EMA tools and EMA for functional purposes. Therefore, the results show that when organizations progress from reactive to proactive environmental strategies, the EMA evolves to encapsulate and diversify to deal with more-sophisticated environmental management activities.

Originality/value

This is the first study to provide cross-sectional evidence on the relationship between the application of EMA tools and functional uses and the intensity of the environmental strategy pursuance (or EMM). It also proposes a multi-item comprehensive measurement tool for EMA implementation.

• Corporate sustainable development
• Environmental management accounting
• Environmental strategies
• Contingency theory

Acknowledgements

Conflict of interest : The authors declare that they have no conflict of interest.

Gunarathne, N. , Lee, K.-H. and Hitigala Kaluarachchilage, P.K. (2023), "Tackling the integration challenge between environmental strategy and environmental management accounting", Accounting, Auditing & Accountability Journal , Vol. 36 No. 1, pp. 63-95. https://doi.org/10.1108/AAAJ-03-2020-4452

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Environmental Management Accounting: A Case Study Research on Innovative Strategy

• Maria Masanet-Llodra

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Environmental management accounting and innovation: An exploratory analysis

Research output : Contribution to journal › Article › Research › peer-review

This output contributes to the following UN Sustainable Development Goals (SDGs)

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• 10.1108/09513571011080180

T1 - Environmental management accounting and innovation

T2 - An exploratory analysis

AU - Ferreira, Aldonio

AU - Moulang, Carly

AU - Sarwono, Bayu

N2 - Purpose – Increased awareness regarding environmental issues has encouraged organisations to use environmental management accounting (EMA), which has been said to deliver many benefits to users, including an increase in innovation. There is, however, little evidence to consubstantiate this claim and thus this paper aims to investigate the issue. It also seeks to examine the role of strategy with EMA use and innovation.Design/methodology/approach – The paper uses a survey designed and administered to management accountants and financial controllers in large Australian businesses.Findings – The analysis suggests that EMA use has a positive association with process innovation, but not with product innovation. It also finds that the effect of strategy on innovation was driven by the level of commitment to research and development. However, no statistically significant relationship between strategy and EMA use was found. The key driver of EMA use was industry.Research limitations/implications – The small sample size is the most important limitation of this study and affected the statistical power of the analysis conducted. The results need to be interpreted with caution.Practical implications – The study suggests that EMA use is associated with process innovation, implying that economic benefits may be realised by using this technique, while simultaneously enhancing environmental performance.Originality/value – This is the first study to provide cross-sectional evidence of the relationship between strategy, EMA use and innovation. It is also the first to propose a research instrument to measure EMA use as a multi-item construct.

AB - Purpose – Increased awareness regarding environmental issues has encouraged organisations to use environmental management accounting (EMA), which has been said to deliver many benefits to users, including an increase in innovation. There is, however, little evidence to consubstantiate this claim and thus this paper aims to investigate the issue. It also seeks to examine the role of strategy with EMA use and innovation.Design/methodology/approach – The paper uses a survey designed and administered to management accountants and financial controllers in large Australian businesses.Findings – The analysis suggests that EMA use has a positive association with process innovation, but not with product innovation. It also finds that the effect of strategy on innovation was driven by the level of commitment to research and development. However, no statistically significant relationship between strategy and EMA use was found. The key driver of EMA use was industry.Research limitations/implications – The small sample size is the most important limitation of this study and affected the statistical power of the analysis conducted. The results need to be interpreted with caution.Practical implications – The study suggests that EMA use is associated with process innovation, implying that economic benefits may be realised by using this technique, while simultaneously enhancing environmental performance.Originality/value – This is the first study to provide cross-sectional evidence of the relationship between strategy, EMA use and innovation. It is also the first to propose a research instrument to measure EMA use as a multi-item construct.

U2 - 10.1108/09513571011080180

DO - 10.1108/09513571011080180

M3 - Article

SN - 0951-3574

JO - Accounting, Auditing & Accountability Journal

JF - Accounting, Auditing & Accountability Journal

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Environmental Management Accounting: A Case Study Research on Innovative Strategy

• Published: 18 October 2006
• Volume 68 , pages 393–408, ( 2006 )

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• Maria J. Masanet-Llodra 1  

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The aim of this paper is to conduct an in-depth study on environmental management systems developed in the ceramic tiles sector. This study is conceived as an improvement on a previous survey related to an environmental diagnosis of the ceramic tiles sector where some incongruities between environmental explicit speeches and environmental actions were detected. Such incongruities revealed that firms assumed to be highly environmental committed while from facts this commitment was not so high proved. So, it was necessary to introduce case study research methodology to clarify and to understand the reasons of these inconsistencies. The main objectives of our case study research are two. The first one consists in determining the relationship between firms and environment, analysing environmental positions in companies assumed in their environmental strategy and their environmental behaviour reflected in facts, while the second one attempts to establish the role played by the accounting information system in the environmental management systems of the companies in the sector. Our case study research reveals the elaboration of a larger amount of environmental accounting information for internal use than for external one. This fact is due not only to the inexistence of regulations about environmental disclosures in Spain, at that time, but also to the importance of environmental internal accounting information for management which supports the prevalence of decision-usefulness theory in the implementation of environmental management systems.

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Departament de Finances i Comptabilitat, Universitat Jaume I, Campus del Riu Sec, 12071, Castellon, Spain

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Lecturer of Management Accounting in the Department of Finance and Accounting of the University Jaume I of Castellon (Spain). PhD in Business Management, with a focus on Environmental Management Accounting. Participant in several research funding programmes related to Environmental Management in Spain, Scotland and Guatemala.

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Masanet-Llodra, M.J. Environmental Management Accounting: A Case Study Research on Innovative Strategy. J Bus Ethics 68 , 393–408 (2006). https://doi.org/10.1007/s10551-006-9029-1

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Received : 21 December 2004

Accepted : 16 February 2006

Published : 18 October 2006

Issue Date : November 2006

DOI : https://doi.org/10.1007/s10551-006-9029-1

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