Environmental Management Control Systems Research Articles

Exploring the Duality of Formal and Informal Controls in Driving Eco-Innovations

Eco-innovations are crucial for addressing environmental challenges. Based on a survey of 301 large German firms, we explore the roles of formal and informal environmental management control systems (EMCSs) in translating external perceived stakeholder pressure (PSP) into eco-innovations. By employing partial least squares structural equation modeling, the findings indicate that both formal and informal EMCSs positively and partially mediate the relationship between PSP and eco-innovation. Building on the natural resource-based view (NRBV), our study contributes to the accounting literature by exploring the taxonomy of formal and informal controls. The results demonstrate the important role of informal EMCSs alongside formal EMCSs in developing the capabilities necessary to channel PSP toward eco-innovations, emphasizing the role of management controls in sustainable development. Furthermore, we contribute to quantitative research on the role of management controls in the field of environmental sustainability and innovation. The implications of our study are relevant for managers as formal and informal controls are anchored differently in the firm and therefore require different approaches to create a balance of both.

Environmental management control systems and environmental innovation: Unintended consequences of the EU non-financial reporting directive

We examine the effect of regulatory-driven environmental management control systems (EMCS) on environmental innovation by exploiting the non-financial reporting Directive 2014/95/EU as a quasi-natural experiment. One explicit aim of this directive is to improve the measuring, monitoring, and managing of undertakings’ performance and their impact on society. A regulated context may compel managers to prioritize external regulatory requirements over their specific organizational contingencies. This shift could lead to a decrease in flexibility, which is needed to effectively accelerate environmental innovation, arguably one of the corporate flagships for enhancing environmental performance. We perform a difference-in-differences design using the EU directive as a plausible exogenous shock to EMCS and environmental innovation. Our results suggest that: (i) the directive under study increases the adoption of EMCS, (ii) non-regulated EMCS foster environmental innovation and, even more importantly, (iii) regulatory-driven EMCS have a short-term (temporary) lessening effect on environmental innovation. In further analysis we find that this lessening effect reverses from t+1 onwards, once internal frictions are overcome, with the effect being positive in the long run.

Environmental management control system, blockchain adoption, cleaner production, and product efficiency on environmental reputation and performance: Empirical evidence from Indonesia

This research investigates the intricate relationships between Environmental Management Control Systems (EMCS), Blockchain Adoption (BCHA), Cleaner Production (CLPR), Product Efficiency (PROD), Environmental Reputation (ENRE), and Environmental Performance (ENPE) within organizational contexts in Indonesia. The study aims to shed light on the role of technology adoption, sustainability practices, and reputation management in shaping environmental outcomes. Methodologically, the research employs a quantitative approach, utilizing survey data from diverse organizations. Structural equation modeling (SEM) analyzes the data and tests the hypothesized relationships. The findings reveal significant positive relationships between EMCS and BCHA, EMCS and CLPR, EMCS and PROD, BCHA and CLPR, BCHA and PROD, and BCHA and ENRE. Cleaner Production demonstrates a substantial positive impact on both ENRE and ENPE. Product Efficiency influences ENRE positively. However, the direct influence of PROD on ENPE is found to be inconclusive. The study contributes to understanding sustainability dynamics by highlighting the pivotal roles of EMCS, BCHA, CLPR, and PROD in driving environmental reputation and performance within organizations. Furthermore, it underscores the significance of aligning perceived reputation with tangible environmental commitment. Limitations include potential data constraints and the challenge of establishing causality due to the study's correlational nature. Future research is encouraged to explore diverse contexts, conduct in-depth case studies, and investigate moderating variables. This research offers novel insights into the complex interplay between technology adoption, sustainability practices, reputation management, and environmental outcomes, providing valuable guidance for organizations striving to navigate the sustainability landscape in an era of heightened environmental awareness.

Environmental management control systems: Exploring the economic motivation behind their implementation

Environmental management control systems (EMCSs) effectively integrate environmental objectives into corporate decision-making, yet implementation costs may discourage their adoption. To understand firms’ economic motivation for implementing EMCSs, we theorize that internal and external factors drive both their economic performance and the decision to implement EMCSs. We argue that the environmental costs induced by firms’ pollution intensity drive the economic benefits of EMCSs as well as their implementation. Additionally, we suggest that this relationship depends on society’s environmental awareness. By introducing an archival measure of EMCS implementation, we test these hypotheses on a longitudinal dataset of European and US firms. Our results support the argument that environmental costs drive EMCSs’ economic benefits and implementation. We also find that environmental awareness in societies influences the impact of environmental costs. Our study highlights the importance of environmental awareness in society for aligning environmental and economic goals and thus to increase corporate environmentalism.

The Effect of Environmental Management Accounting and Control System Integration on Sustainability Orientation through Sectoral Green Economy Mediation

The orientation of sustainability within the scope of the company refers to the company's efforts to create long-term value by taking into account the social, environmental and economic impacts of the company's business activities. To achieve the goals of organizational development, companies must carry out effective environmental management. Company activities that are inseparable from natural resources must pay attention to the condition of the surrounding environment so as not to cause damage to the environment. The purpose of this study is to analyze how far the influence of environmental management accounting factors and the integration of control systems on the company's sustainability orientation. Then in this study will also analyze the effect of sectoral green economy as a mediating factor. The use of green economy sectoral factors aims to create an economy that also focuses on environmental protection. The research method used is a quantitative research method. The number of samples used in this study were 512 respondents. Respondents who were sampled were managers and employees of state-owned, mining & plantation companies in Indonesia. The sampling technique used was purposive sampling technique. Then the data were analyzed using SmartPLS software. From the results of the research above, it can be concluded that the environmental management accounting and control system integration variables have a significant effect on sectoral green economy and sustainability orientation. Then the sectoral green economy is also capable of being a good mediating factor in bridging the influence of environmental management accounting and control system integration on sustainability orientation.

The Impact of Financial Resources, Natural Ecological Orientation, and Environmental Innovation Capabilities on Environmental Management Accounting Across Kenyan SMEs

Nowadays competitiveness in the global manufacturing industry does not rely only on industry location, employment, productivity, and innovation. However, environmental regulations and standards (e.g, European countries (EU) policies and regulations) also have a significant impact on firms' competitive advantage (Dechezleprêtre & Sato, 2017; Agan et al. 2013). This is clearly manifested in exporters' performance from SMEs, especially in developing countries such as Kenya (Massoud et al., 2010), which show instability in the sales of shares in the EU (Osano, 2019). Qian et al., (2015) emphasized the advantages of implementing Environmental Management Accounting (EMA) as desirable environmental information systems export barrier overcome and boosting competitiveness. The determinants influencing Environmental Management Control Systems (EMCS) for superior performance or Sustainable Competitive Advantage (SCA) based on Natural Resource Based View (NRBV) is the subject matter of an ongoing debate (Asiaei et al., 2022). However, there has been increasing attention placed on the impact of Intangible resources (IRs) (Latan et al., 2018), since these resources were regarded as the most likely sources of a company's success because they are difficult to be acquired and replicated (Kamasak, 2017). On the other hand, tangible resources (TRs) (e.g. financial resources) have largely been ignored (Schriber & Löwstedt 2015). Corporations especially SMEs also need to integrate financial resources which are considered intrinsic manifestations of the context in which organizational activities occur (Schriber & Löwstedt 2015). At the same time, Newbert, (2007) confirmed that neither intangible nor tangible resources could have actual value without effective capabilities integration as both resources are considered static in nature. Keywords: Natural Resource Based View, Financial Resources, Natural Ecological Orientation, Environmental Innovation Capabilities. Environmental Management Accounting

The relationship of organizational culture with management control systems and environmental management control systems

This paper expands upon examinations of the flexibility–stability continuum of organizational culture in the extant literature by identifying how the four culture types of the competing values framework are associated with the emphasis on management control systems (MCS) and environmental management control systems (EMCS). By analyzing data drawn from a dyadic survey addressing both heads of management accounting and heads of sustainability or environmental management, this paper provides empirical evidence for multiple direct associations of different culture types, specifically, adhocracy, bureaucracy, clan, and market cultures, with a set of environmental and general management controls, specifically, action, cultural, personnel, and results controls. For instance, bureaucracy cultures are positively associated with action, personnel, and results controls for MCS and cultural controls for EMCS, while clan cultures are positively associated with cultural and personnel controls for MCS but negatively associated with action and results controls for EMCS. According to our findings, firms cannot transfer their emphasis on general MCS to specific EMCS because different organizational cultures are associated with MCS and EMCS in different ways. This disentanglement of organizational culture facilitates a deeper understanding of environmental controls at the organizational level.

Environmental Management Control Systems and Environmental Performance: Direct and Indirect Effect

Purpose: This study aims to examine the effect of environmental management control systems on environmental performance. Testing is carried out directly or through the environmental strategy mediation role. Theoretical framework: In contrast to previous studies, this research focuses on managerial activity processes that enable, encourage, ensure how a company and facilitate practices that achieve environmental performance and strategies to achieve it. The research model is built on the basis of stakeholder theory and contingency theory. Design/methodology/approach: The research was conducted through an online survey of hotel managers in Makassar City, Indonesia. Data analysis was performed by regression, path analysis and Sobel test. Findings: The results of the study prove that the environmental management control system has a positive and significant effect on environmental strategy and environmental performance. The Sobel test also proves that environmental strategy mediates the influence of environmental management control systems on environmental performance. Research, Practical & Social implications: This research covers hotels in Makassar, not all of them in Indonesia; therefore, generalizing the findings of this study should be exercised with caution. Secondly, this study assumes hotel homogeneity and does not consider hotel type. The findings of this study also provide recommendations on public policy and business practices to integrate environmental issues into managerial processes and decision-making as well as corporate control. Further research can expand this research by considering contextual and other contingency aspects. In addition, future research may use a larger sample and longitudinal data which allows to investigate changes in strategic environmental management control system policies over time. Originality/value: Improvements in research on environmental management control systems have become a very important issue in supporting the themes of sustainability in business practices globally. The originality of this research focuses on managerial processes to support sustainability practices in business, especially business practices in hotels.

The means to substantive performance improvements – environmental management control systems in ISO 14001– certified SMEs

PurposeThis study aims to address how the ISO 14001 standardisation and certification process improves substantive performance in small to medium-sized enterprises (SMEs) through the development of an environmental management control system (EMCS).Design/methodology/approachA qualitative cross-case interview design with those responsible for the implementation of an environmental management system (certified to ISO 14001) in SMEs is adopted to inductively “theorise” the EMCS.FindingsThe design and monitoring of environmental controls are often beyond the scope of the SMEs’ top management team and include extra-organisational dimensions such as the external audit and institutional requirements. This suggests more complex control pathways for SMEs to produce EMCS that primarily function as packages and are broader than the analytical level of the firm. Here, controlling for environmental performance exists at strategic and operational levels, as well as beyond the SMEs’ boundaries.Practical implicationsVarious internal controls are put forward for SME owner-managers to meet environmental targets (e.g. gamification and interpersonal communication strategies). This builds upon a broader accountability perspective wherein formalised hierarchical control is only one route for ensuring sustainable action within the ISO 14001-certified SMEs.Social implicationsThis study contributes to a more sustainable society through developing an understanding of how environmental sustainability is substantively managed by SMEs to improve performance for current and future generations.Originality/valueThis paper, to the best of the author’s knowledge, is one of the first to establish how SMEs control for environmental sustainability from empirically derived evidence. In doing so, it provides an example of the EMCS for the SME context.

Environmental MCS package, perceived environmental uncertainty and green performance: in green dynamic capabilities and investment in environmental management perspectives

PurposeThe organizations focus on environmental factors as stakeholders exert pressure to reduce the environmental influence arising from production tasks. This study aims to see the influence of the environmental management control system (MCS) package and perceived environmental uncertainty on green performance with the mediating role of green dynamic capabilities in Pakistani manufacturing organizations. Moreover, this study aims to see the moderating role of investment in environmental management between green dynamic capabilities and green performance.Design/methodology/approachThe partial least square structural equation modeling technique is used to test hypotheses. The data was collected through questionnaires using simple random sampling, and a total of 404 questionnaires were used in the final analysis. The data was collected from September 2021 to November 2021. Multiple regression analysis followed to see the influence of environmental MCS package, perceived environmental uncertainty, green dynamic capabilities and investment in environmental management on green performance.FindingsEnvironmental MCS package, green dynamic capabilities and investment in environmental management are positively related to green performance. Despite this, perceived environmental uncertainty is negatively related to green performance. Moreover, green dynamic capabilities significantly mediate between environmental MCS package, perceived environmental uncertainty and green performance. Finally, investment in environmental management significantly moderates between green dynamic capabilities and green performance.Practical implicationsThis research covers vital issues that how top management uses the environmental MCS package, perceived environmental uncertainty, green dynamic capabilities and investment in environmental management in determining green performance.Originality/valueThis research adds value to the existing literature by focusing on predictors that determine green performance. This pioneering study observes the influence of environmental MCS package and perceived environmental uncertainty on green performance and green dynamic capabilities as mediators by applying natural resource-based view theory. Moreover, investment in environmental management is used as a moderator between green dynamic capabilities and green performance. Finally, this study can benefit management, industrial policymakers and academicians.

Effects of the Environmental Strategy and Management Control System Package on Managerial Performance

This study examines the effects of the environmental strategy and the Management Control System (MCS) Package on management performance in Brazilian companies. A questionnaire prepared by Roetzel et al (2014) was applied to the companies listed as the 150 best companies to work in Brazil, and the sample consists of 73 respondents. Structural equation modeling was used to analyze the hypotheses. The environmental strategy positively influences the MCS Package. The MCS Package positively influences managerial performance. It was also found that cybernetic and cultural controls are the package's most comprehensive elements of MCS, a result that is consistent with Roetzel et al (2014), however, in the Brazilian scenario, were the administrative controls and not the remuneration and rewards that demonstrated less important role. The analysis of the interaction of these elements can instigate managers as to the importance of studying environmental issues in the Brazilian scenario, in order to broaden the discussion on an integrated environmental policy. Analysis of the effects of the environmental strategy and the MCS Package on management performance contribute to the consolidation of theoretical principles and can be essential for proposing sustainable development policies. Although these interactions were tested in the study by Roetzel et al (2014), the perception of managers may differ in contexts with different environmental management strategies.

THE INFLUENCE OF ENVIRONMENT MANAGEMENT CONTROL SYSTEM ON CAPITAL STRUCTURE DECISIONS AND THEIR IMPLICATIONS ON COMPANY PERFORMANCE

The study aims to examine the Environmental Management Control System (EMCS) effect on Capital Structure Decisions and Company Performance of the coal mining industry in Indonesia. This study used quantitative research with a sample size of 35 companies and Partial Least Square (PLS) for testing the hypothesis. The EMCS and Capital structure Decisions, directly and indirectly, influence company performance. Performance improvement will be even better if the EMCS can encourage sound capital structure decisions. This finding has implications for the management of the coal mining industry in Indonesia to improve company performance by encouraging Capital structure Decision through the EMCS implementation.

Are corporate environmental activities to meet sustainable development goals (SDGs) simply greenwashing? An empirical study of environmental management control systems in Vietnamese companies from the stakeholder management perspective

The purpose of this study is to address the criticism that corporate environmental activities to meet the UN sustainable development goals (SDGs) are simply greenwashing. To this end, we clarify whether and why corporate environmental activities are effective in achieving SDGs from the stakeholder management perspective. Using data on Vietnamese companies, we first empirically clarify the influence of stakeholder pressure on a company's environmental management control system (EMCS) implementation as a comprehensive approach to environmental activities and maintaining a proactive attitude toward the SDGs. Second, we examine the influence of EMCS implementation on environmental performance with or without proactive attitudes. The main findings are as follows. Companies implementing EMCSs normally improve their environmental performance, and pressure from final consumers and the government is a precondition for this accomplishment. However, if these companies incorporate the SDGs into their business targets, they can actually improve their environmental performance somewhat further, and government pressure plays an important role in this additional accomplishment. Therefore, corporate environmental activities to meet the SDGs work better than existing activities in Vietnam, refuting the criticism of greenwashing. Importantly, the Vietnamese government as a powerful stakeholder has proactively promoted domestic structural change to achieve the SDGs and has enacted many policies to encourage companies to be proactive in their environmental activities.

The Influence of Environmental Strategy, Environmental Reporting and Environmental Management Control System on Environmental and Economic Performance

The importance of corporate social responsibility, especially in the environmental domain, continues to grow in an era of mounting climate urgency. This study is based on original, empirical, survey-based research in two post-communist European countries and seeks to add a geographical viewpoint and to investigate the influence of innovative constructs (environmental reporting, environmental strategy, environmental management control system) on environmental and economic performance. Data are analysed through partial least squares structural equation modelling, which enables the use of a complex model with several links between constructs. Findings reveal that environmental strategy has a positive impact on the use of an environmental management control system and an indirect positive impact on environmental performance. The environmental management control system has been shown to have a positive influence on environmental performance and, ultimately, on economic performance.

The role of environmental management control systems for ecological sustainability and sustainable performance

PurposeThe purpose of this study determines how environmental management control system (MCS) packages influence ecological sustainability and sustainable performance through the mediating role of environmental strategies. Furthermore, this applies organizational capabilities as moderating variables between environmental strategies, ecological sustainability and sustainable performance in a sample of 373 construction firms.Design/methodology/approachThe authors apply quantitative questionnaire data from construction firm representatives (from project, sales and construction managers and contract managers, executive directors and engineers) to structural equation modeling and SmartPLS for our analysis.FindingsThe results demonstrate that recourse to environmental MCS packages significantly influence ecological sustainability, sustainable performance and environmental strategies. Additionally, environmental strategies and organizational capabilities significantly influence ecological sustainability and sustainable performance. Moreover, environmental strategies mediate between environmental MCS packages, ecological sustainability and sustainable performance. Organizational capabilities significantly moderate the relationship between ecological sustainability and sustainable performance.Practical implicationsThis research highlights the issue of how the management of construction organizations deploy environmental MCS packages, organizational capabilities and business strategies to measure ecological sustainability and improve their sustainable performance. This study fills a gap in the literature and facilitates the management of construction organizations in strengthening their internal resources in terms of environmental MCS packages, environmental strategies and organizational capabilities able to help improve their ecological sustainability and sustainable performance.Originality/valueThere are few studies building theoretical frameworks for incorporating environmental MCS packages, organizational capabilities, environmental strategies, ecological sustainability and sustainable performance into a single study. Although the influence of various types of intangible resources on ecological sustainability and sustainable performance receive considerable examination in the literature, there is a dearth of attention paid to understanding the role of environmental MCS packages, environmental strategies and organizational capabilities in determining the ecological sustainability and sustainable performance of construction organizations.

Stakeholder pressure, eco-control systems, and firms’ performance: empirical evidence from UK manufacturers

ABSTRACT This study investigates whether stakeholder pressure directly intensifies the extent of eco-control systems’ use, and thus indirectly affects economic and environmental performance. Cross-sectional data was collected from 93 UK manufacturers belonging to industries of high pollution propensity, and analysed using structural equation modelling. This study provides a broader understanding of environmental management control systems (EMCS) development, responds to calls in the literature for extending prior empirical research to both the antecedents and consequences of EMCS, and offers further evidence from the UK context (one of the leading countries in tackling environmental-related issues). Our findings reveal that the pressure from organisational stakeholders is significantly and positively associated with all eco-control systems’ constructs. Interestingly, our findings indicate a lack of significant indirect relations between stakeholder pressure groups and firms’ performance (economic or environmental), and only eco-control incentives influence UK firms’ environmental performance.

A framework of sustainable consumption and production from the production perspective: Application to Thailand and Vietnam

In the Sustainable Development Goals (SDGs) adopted by the United Nations (UN), goal 12 (“ensure sustainable consumption and production [SCP] patterns”) has eight outcome targets (12.1–12.8) and three targets for the means of implementation (MoI) (12.a–12.c). This “SCP-via-SDGs” approach is a much narrower, specific concept based on historical agreements that range from the Stockholm conference (1972) to the 10-Year Framework of Programmes (10YFP) (2012–2022). Meanwhile, “the academic SCP” is a highly interdisciplinary and complex approach that pursues an answer to what sustainability is, and it has not explicitly provided the SCP-via-SDGs framework at present. Thus, this study proposes a five-by-five framework for the SCP-via-SDGs approach from the production perspective (i.e., for individual firms), following the literature on corporate environmental management. The five stages (I–V) consider environmental management systems (EMS; I. strategy and process) for target 12.4, environmental management accounting (EMA; II. accounting and disclosure) for 12.6, and environmental management control systems (EMCS; III. financial, IV. environmental, and V. overall performance) for 12.2. Meanwhile, the five factors (1–5) consider the baseline and material flow (MF) factors (total waste, hazardous waste, raw materials used, and recycled waste) for targets 12.3 and 12.5. As an application, this study surveyed non-financial listed firms in Vietnam and compared the results to a previous study on Thailand. The results show that the firms are more likely to be at stage III (financial performance of EMCS) in Thailand and stage I or II (EMS or EMA) in Vietnam, suggesting that each market requires its own SCP policies, depending on the economic growth of each.

Mediating Role of Environmental Management Accounting and Control System between Top Management Commitment and Environmental Performance: A Legitimacy Theory

The purpose of current study is to assess the impact of top management commitment on firms’ performance, based on legitimacy theory with mediating role of environmental management accounting and environmental management control system. Survey-based data has been collected through questionnaires from ISO 14001 based manufacturing firms of Pakistan. Path analysis has been conducted by applying structural equation modelling on total 304 respondents' data to answer the study hypotheses by using SPSS and AMOS. Results of the study indicate that there is a positive and direct impact of top management commitment on the firms' environmental performance. Moreover, environmental management accounting and control system significantly mediate the relationship between top management commitment and environmental performance. The theoretical model of this study is first time developed and tested by the researcher in Pakistan. Practically, the findings of this research give a deep insight and understanding of how the managers in Pakistan can improve the environmental performance of their firms, through commitment and environmental management accounting as well as environmental management control system tools.

The construction of environmental performance in ISO 14001-certified SMEs

This paper explores the relationship between the implementation of an environmental management system (EMS) and environmental performance (EP) from a management accounting and control (MAC) stance. Particularly, it asks: How is environmental performance constructed in firms using ISO 14001? And, b), what is the relationship between ISO 14001 and environmental performance? Grounded in the relative novelty of a qualitative cross-case approach to construct EP from the perspectives of small to medium sized enterprises (SMEs) as an understudied empirical context in MAC research, it finds that EP is a fluid, multidimensional concept that embraces not only environmental, but also social, operational and financial dimensions. It also regards the interrelation of processes and outcomes, as well as field and firm, with temporal and spatial horizons. The findings of this research contribute to the MAC literature by proposing that ISO 14001 results in the formalisation of performance measures and outcomes in SMEs. Moreover, the study presents EP as a multidimensional construct and suggests that there are research limitations in trying to capture it solely as an output at the intra-organisational level through quantitative items. Consequently, future theorisations of environmental management control systems require a recognition of the intra-organisational and extra-organisational dimensions that contribute to the construction of EP. For SMEs, this study highlights the value of EMS in improving both substantive and symbolic performance.

Harnessing managerial performance dynamics in the pursuit of corporate environmental strategy

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings This research paper concentrates on the relationships between environmental strategy, managers' environmental performance, and the use of environmental management control systems (MCSs). The results show that integrating regular MCSs and environmental MCSs was the move that had a significantly positive effect on environmental management performance, which was stimulated as a result of renewed motivation in managers to follow the environmental MCS. Consequently, environmental MCSs do prove to be crucial in yielding individual environmental managerial performance guided from an environmental strategy. Achieving this position requires managers to adopt integrated thinking to the benefit of the organization. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.