Effects of institutional pressure on environmental management accounting for sustainable competitive advantage: organisational resources and capabilities as moderators

Abstract

This study investigates the primary role of institutional pressure specifically (coercive, mimetic, and normative pressures) to implement environmental management accounting (EMA) among SMEs in Kenya, and how such influences are affected by organisational resources and capabilities, with a focus on the function of EMA, on sustainable competitive advantage. To achieve this objective, thirteen hypotheses were formulated, with information from previous research and the institutional theory model and natural resource-based view model. In order to examine these hypotheses, data were collected from CEOs or managers or directors in small and medium enterprises operating in the Kenyan Exporters Association membership as well as the Union of Chambers of Commerce, and the industry partners database, who constituted the sample of this research, by using an web-based survey. A total of 206 usable questionnaires out of 350 were collected and the data were subjected to tests of variances, factor analysis, correlations and correlation coefficient. The empirical findings indicate that normative and coercive forces have a substantial and direct relationship with EMA adoption. However, there was no correlation between mimetic pressure and the adoption of EMA. In addition, the results revealed that only environmental innovation capability positively and substantially mitigated the effect of coercive and normative pressure on EMA adoption. Partial least square structural equation modelling (PLS-SEM) technique via Smart PLS version 4 software was utilised and analysed the data. The analysis discovered a significant and direct relationship between EMA and SCA. This study has made useful contributions to current knowledge by providing more explanations on EMA adoption in an unexplored context, and providing further insights into factors that facilitate and impede the adoption of EMA practices. The present study has also filled the gap in the EMA literature by developing a theoretical framework to assess the relationships between the factors within the institutional pressures, tangible resources, intangible resources and capability contexts resulted from EMA adoption. In conclusion, the current thesis provides empirical and theoretical evidence and expands our understanding of how firms adopt EMA through the interaction of institutional forces (i.e., coercive and normative constraints) and environmental innovation capabilities. Furthermore, this study highlights the relevance EMA usage in giving information to Kenyan SMEs to conduct superior sustainability competitive advantage.