Citation: Kong, Y.; Javed, F.; Sultan,

J.; Hanif, M.S.; Khan, N. EMA

Implementation and Corporate

Environmental Firm Performance: A

Comparison of Institutional Pressures

and Environmental Uncertainty.

Sustainability 2022, 14, 5662. https://

doi.org/10.3390/su14095662

Academic Editor: Lúcia

Lima Rodrigues

Received: 30 March 2022

Accepted: 25 April 2022

Published: 7 May 2022

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sustainability

Article

EMA Implementation and Corporate Environmental FirmPerformance: A Comparison of Institutional Pressures andEnvironmental UncertaintyYusheng Kong 1, Fahad Javed 1,2,*, Jahanzaib Sultan 3, Muhammad Shehzad Hanif 4 and Noheed Khan 5

1 School of Finance & Economics, Jiangsu University, Zhenjiang 212013, China; yshkong@ujs.edu.cn2 Faculty of Business & Commerce, GIFT University, Gujranwala 52250, Pakistan3 Lyallpur Business School, G.C. University, Faisalabad 38860, Pakistan; jahanzaibsultan@gcuf.edu.pk4 UCP Business School, University of Central Punjab, Lahore 44600, Pakistan; mshahzadhanif@yahoo.com or

shehzad.hanif@ucp.edu.pk5 Department of Management Sciences and Commerce, Alhamd Islamic University, Islamabad 45400, Pakistan;

noheed_khan@yahoo.com* Correspondence: mfahadjaved@gmail.com

Abstract: Environmental management accounting (EMA) practices guide a firm’s response to per-ceived environmental uncertainty (EU) and various institutional pressures (IP). Drawing uponinstitutional theory, this study explores the relative effects of institutional pressures and environmen-tal uncertainty on the implementation of EMA, an environmental strategy (ES), and the resultingenvironmental performance (EP) of firms under the influence of top-management support (TMS)and perceived benefits (PB). Based on data collected from 243 firms operating in Suzhou, one of thebusiest business hubs in China, this research used the structural equation modeling (SEM) technique.Findings reveal that environmental uncertainty exerts a stronger influence on the adoption of EMApractices than institutional pressures; however, the choice of a firm’s environmental strategy is moreinfluenced by institutional pressures. Likewise, the serial-mediation effect of environmental strategyand EMA practices is observed to be the strongest in the case of coercive pressures, with some notablemoderation effect for perceived benefits and top-management support. The study concludes withtheoretical and managerial implications.

Keywords: environmental management accounting; institutional pressures; environmentaluncertainty; environmental performance; environmental strategy; perceived benefit;top-management support

1. Introduction

Rapid industrial and population growth in the 21st century imposed greater pressureon firms to contribute more towards the growth in the world economy, and the result-ing environmental degradation also lent a focus to parallel measures of corporate socialresponsibility [1–3]. In response, stakeholders, e.g., stockholders, employees, customers,government, and suppliers, also became concerned about environmental issues. Hence,an emergent requirement arises for managers to be deeply concerned about surroundingenvironmental issues and reevaluate firms’ environmental performance. The prevailingevidence shows that environmental issues are mainly caused by manufacturing compa-nies [4]. Therefore, companies are considering taking appropriate measures to curtail theadverse impact of their operating activities on the external environment. Modern firmsensure that their manufacturing and operational activities remain confined within the limitslaid down by enforced regulatory regimes, [5,6]. Firms structure their policies accordingto guidelines provided by the governing institutional regime. These guidelines emanatein the form of either mimetic pressures (threats/checks, e.g., by competitors), coercive

Sustainability 2022, 14, 5662. https://doi.org/10.3390/su14095662 https://www.mdpi.com/journal/sustainability

Sustainability 2022, 14, 5662 2 of 25

pressures (threats/checks by the law), and normative pressures (checks by society, etc.).It is still a pressing question for researchers to explore the relative effects of these institu-tional checks and how resultant environmental strategies and EMA (the definition andconceptualization of all major constructs and variables used in this study are provided inAppendix A) practices shape up, in terms of leading to a sustained and desirable corporatefirm performance.

To improve environmental performance, firms are widely considering developingenvironmental strategies and environmental accounting standards. Environmental strat-egy links corporate practices and the natural environment [7]. Effective strategies helpcompanies to improve their performance to meet the needs of both external as well asinternal users [8]. EMA has gained considerable attention from researchers over recentdecades. The current literature suggests that EMA performance enhances stakeholder satis-faction. Firms with a high environmental performance can sustain long-term financial andsocial benefits in addition to nuanced decision-making capabilities. [9–13]. Today, manycompanies are measuring their performance in terms of both financial and environmentalperformance [14] Therefore, environmental accounting, as an emerging field, has receivedgreater attention in the recent literature [11–13,15–17].

Environmental accounting helps companies to manage their environment by con-trolling energy consumption, natural resources, and pollution, as per the guidelines ofdifferent environmental standards and cases [18,19]. The existing academic literatureover two decades has been mainly centered on developing managerial tools for practic-ing environmental accounting in the decision-making context [20]. The enormous effortsfrom researchers and practitioners have led to the evolution of a complete framework formanagerial decision-making about using environmental accounting tools. These practicesinvolve the collection of relevant physical or monetary data from the company’s histor-ical or forthcoming actions to indicate time-series trends for firms’ strategic initiativesfor operations and growth objectives [20]. As [14] noted, as a firm decides to manage itsenvironment, it integrates most of its accounting data with its environmental strategies.

Similarly, EMA, as an integral component of a firm’s environmental managementcontrol system, is known to achieve high corporate environmental performance. Firmsaim to sustain various competitive advantages by adopting an environmental approach.For example, eliminating contamination from a firm’s manufacturing processes couldraise efficiency by minimizing the required input, shortening processes, and controllingcompliance-related expenses and accountabilities [21,22]. Environmental uncertainty isanother important concern for managers, as the literature suggests that many external andcontextual factors can influence the environmental performance of a firm. Environmentaluncertainty occurs when there is a lack of information about relevant environmental issues.When there is a question about the accuracy of some specific decision regarding actionsand outcomes, it will eventually lead to a failure to predict the way different environmentalfactors will affect a decision [23]. Scholars suggest that uncertainty is an important predictorof corrective behavior; when there is a high level of uncertainty managers should find waysto reduce the uncertainty level [24].

This study attempts to investigate the relation between institutional pressures, per-ceived environmental uncertainty, environmental strategies, EMA, top-management sup-port, and corporate environmental performance. The study adds to the current literature inmany ways: First, it tests the role of environmental strategy, environmental uncertainty,and environmental accounting as important predictors of corporate environmental perfor-mance. Secondly, in response to a call from [14,25] to test the contextual or contingencyfactors in the environmental performance context, the study aims to test the relationshipbetween environmental uncertainty and environmental accounting and corporate environ-mental performance. The study also examines the moderating effect of top-managementsupport and perceived benefits on the relationship between institutional pressure, environ-mental strategy, and environmental accounting, as [26] noted the influential character oftop-management support in implementing environmental practices.

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The framework (to be discussed shortly) developed for this study is grounded on theinstitutional theory as also practiced in the relevant literature; see, for example, [27–29].Based on this, the present research develops several interesting propositions to crossexamine the interlinkages among different constructs resulting in meaningful implicationsfor both theory and practice [30]. The remainder of this paper continues discussion ofthe theoretical framework and hypotheses in next Section 2. Then we move on withthe methodology in Section 3. Section 4 covers the analysis with results, followed by adiscussion in Section 5. Finally, in Section 6, we present the conclusion and main researchimplications.

2. Theoretical Framework and Hypothesis Development2.1. Institutional Theory

The present study adopted institutional theory to comprehend the developmentof environmental accounting practices in China. The current literature suggests thatinstitutional framework supports an organization’s structure nationally and globally. Itbrings norms, ethical standards, societal behavior that create significant guidelines [31].Institutional theory explains organizational behavior, particularly friendly environmentalbehavior; for instance, behavior about energy saving, environmental management practices,and the ecological responsiveness of firms [16,32–34].

Institutional theory posits that a firm’s performance (both in terms of economic aswell as environmental aspects) greatly relies on surrounding institutional settings. Firmsbehave like open systems, where interactions keep happening on a regular basis with anenvironment that is made up of regulations and rules, normative beliefs and social val-ues [35]. Firms tend to comply with institutional settings to better fit into the environmentbecause they keep adjusting themselves to gain that legitimacy that aligns them to societaland regulatory regimes [36,37].

Firms undertake several activities that lead to ongoing economic, environmental andsocial impact and values [38]. One such measure is the launch of EMA practices to governthe environmental impact both inside and outside a firm’s boundaries. Broadly speaking,firms respond to three such checks or pressures from the environment, namely, mimetic,coercive and normative pressures. These pressures originate from different stakeholdersin society. For example, regulatory or coercive pressures come from governments andother allied bodies; similarly, mimetic pressures come from competitors and other industryplayers in businesses, etc.

According to institutional theory, external and institutional environments substantiallyaffect organizational behavior and practices [37,39]. Firms change their behavior by adopt-ing dominant practices guided by their institutional regimes and external environments, toensure legality [37]. Therefore, firms are isolated when resisting institutional and externalenvironments [40]. Hence, it increases the probability of delaying the application of EMA,which is concerned about environmental issues for society [41].

The research model presented in Figure 1 pledges to explore the direct and mediatingrelationships between various constructs, such as institutional pressures, environmentaluncertainty, and environmental strategy, and the corporate environmental performance ofa firm. In addition to this, we are also interested to explore how top-management supportand perceived benefits influence these relationships as moderating factors. Below, wediscuss briefly the various constructs and the resulting hypotheses.

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Figure 1. Research framework.

2.2. Institutional Pressures and Environmental Strategy Institutional pressure is a restraining force that is applied by society, professions,

governments, and regularity bodies on organizations to implement environmental management practices [42]. Usually, these pressures have three different dimensions, namely, coercive, normative, and mimetic [37]. Prior research findings suggested that corporate environmental strategies are determined by institutional pressures [6,43]. Coercive pressure is created by regulatory bodies, regularization agencies, international investors, and rating organizations [42–47]. Similarly, an inclination to adopt the best market practices championed by other players in a business is guided by mimetic pressure originating from uncertainty in the environment [37,46,48]. Meanwhile, normative forces are set up by various industrial and professional bodies, consumer associations, and formal training and development exercises [6,37,46,49]. Therefore, we propose that:

Hypothesis 1 (H1). Institutional pressures (coercive, normative, and mimetic) positively influence the environmental strategy of a firm.

2.3. Institutional Pressures and EMA Practices Prior research suggested that environmentally friendly behavior is affected by

coercive pressures [25,37]. Organizations receive benefits by following regulations and standards [50]. These benefits could come in different ways, for instance, bank financing at a low rate, and a subsidy in tax [25]. Normally, when organizations feel coercive pressure, EMA applications can assist them to achieve financial benefits, social justice, and government funding [35].

Normative pressure associated with suppliers, the media, customers, trade associations, and social actors, also plays a vital role in developing environmental strategies [51]. Fundamental EMA-implication norms are created by trade associations and industries. Management expertise and knowledge are good resources for organizations. These can be acquired by communications with other firms and government representatives [52]. Further, EMA application would be valuable for building a socially acceptable corporate image for firms in the presence of media and social actor pressure, thus abating the loss of firm reputation [34].

Mimetic pressure is directly related to competitor success. Organizations make their strategies for future profits by comparison with competitor profits [37]. Whenever organizations face uncertainty problems, they copy the operating standards of

Figure 1. Research framework.

2.2. Institutional Pressures and Environmental Strategy

Institutional pressure is a restraining force that is applied by society, professions,governments, and regularity bodies on organizations to implement environmental man-agement practices [42]. Usually, these pressures have three different dimensions, namely,coercive, normative, and mimetic [37]. Prior research findings suggested that corporateenvironmental strategies are determined by institutional pressures [6,43]. Coercive pres-sure is created by regulatory bodies, regularization agencies, international investors, andrating organizations [42–47]. Similarly, an inclination to adopt the best market practiceschampioned by other players in a business is guided by mimetic pressure originatingfrom uncertainty in the environment [37,46,48]. Meanwhile, normative forces are set up byvarious industrial and professional bodies, consumer associations, and formal training anddevelopment exercises [6,37,46,49]. Therefore, we propose that:

Hypothesis 1 (H1). Institutional pressures (coercive, normative, and mimetic) positively influencethe environmental strategy of a firm.

2.3. Institutional Pressures and EMA Practices

Prior research suggested that environmentally friendly behavior is affected by co-ercive pressures [25,37]. Organizations receive benefits by following regulations andstandards [50]. These benefits could come in different ways, for instance, bank financingat a low rate, and a subsidy in tax [25]. Normally, when organizations feel coercive pres-sure, EMA applications can assist them to achieve financial benefits, social justice, andgovernment funding [35].

Normative pressure associated with suppliers, the media, customers, trade associa-tions, and social actors, also plays a vital role in developing environmental strategies [51].Fundamental EMA-implication norms are created by trade associations and industries.Management expertise and knowledge are good resources for organizations. These canbe acquired by communications with other firms and government representatives [52].Further, EMA application would be valuable for building a socially acceptable corporateimage for firms in the presence of media and social actor pressure, thus abating the loss offirm reputation [34].

Mimetic pressure is directly related to competitor success. Organizations make theirstrategies for future profits by comparison with competitor profits [37]. Whenever organi-zations face uncertainty problems, they copy the operating standards of competitors [53].

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Mostly, organizations try to implement EMA practices when their competitors have begunthis practice [54]. Hence, we can infer that:

Hypothesis 2 (H2). Institutional pressures (coercive, normative, and mimetic) positively influencethe environmental management accounting practice of a firm.

2.4. Environmental Uncertainty, Environmental Strategy and EMA Practices

Environmental uncertainty refers to unpredictable circumstances or changes in prevail-ing market conditions causing a firm to actively respond to present or future challenges [55].Such changes bring many actual or perceived ecological-environment-related uncertain-ties to the natural environment [56]. Scholars suggest that environmental strategies areinfluenced by environmental uncertainty in firms [56]. Hence, it is proposed that:

Hypothesis 3 (H3). Perceived environmental uncertainty positively influences the environmentalstrategy of a firm.

In a situation of a high level of uncertainty, complex environmental-accounting in-formation helps managers to improve their decision-making quality and reduce negativeimpacts on environmental performance. This information helps them to choose betweendifferent solutions and alternatives. For example, transparency and accountability guide thedecision-making of managers to improve corporate environmental performance [57]. Priorstudies, such as [56], showed that uncertainty in external environments sufficiently affectsan organization’s accounting practices. In addition, environmental uncertainty is identifiedas one of the factors that encourages the adoption of environmental accounting [58], whichleads to corporate environmental performance [25]. Based upon the discussion given above,this study proposes that:

Hypothesis 4 (H4). Perceived environmental uncertainty positively influences the environmentalmanagement accounting practice of a firm.

2.5. Environmental Strategies, Environmental Accounting and Corporate EnvironmentalPerformance

Some researchers believed that environmental strategy could increase a firm’s costsand reduces its performance, particularly in a short-term scenario [59]. However, manyrecent studies reported that the adoption of an environmental strategy helps to increaselevels of differentiation, which consequently promotes corporate performance [60,61].Environmental strategies significantly help to reduce the damaging effect of differenthuman actions on the natural environment, and scholars have made extensive efforts toidentify the performance results of environmental strategies [59,61]. An environmentalstrategy offers many precautionary measures to protect the environment, to help companiesperform strategic planning [62].

Empirical research results show that environmental strategies lead companies to applya system of environmental management, with the proper implementation of environmentalaccounting (EMA). Indeed, ref. [63] argued that both environment accounting and en-vironment management systems aim to link a company’s goals to achieving corporateenvironmental performance. According to [64], a company’s environmental strategiescan improve the corporate environmental performance (CEP) that appears when usingenvironmental performance indicators. Today, every company must develop an effec-tive environmental strategy (ES), environmental management control system (EMCS),and environmental information system (EIS). Hence, we put forward another relatedproposition, that:

Hypothesis 5 (H5). The environmental strategy of a firm positively influences the environmentalmanagement accounting practice of a firm.

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2.6. Mediating Relationships

Prior research does not have enough evidence about the relationship between institu-tional pressures and environmental performance, since the role of any mediating element,such as EMA practice, is yet to be studied in detail. It was shown that, under the influenceof various institutional pressures, firms respond by bringing in the best EMS to reducethe environmental effects for better decisions about EP. EMA provides diversified typesof accounting information for beneficial decision making about environmental manage-ment [65,66]. EMS and EMA practices are implemented to sustain the environmentalperformance of firms. Previous studies emphasized that coercive, normative, and mimeticpressures increase the probability of the implementation of EMA, e.g., [62,65,67]. Thebest EMA execution expands the EP of organizations. Different scholars demonstratedthe positive impact of EMA on the EP of organizations [7,25,68,69]. Prior research alsonoted that EMA mediates the relationship between various institutional pressures andfirms’ corporate performance, suggesting the further possibility for a serial mediationrelationship, in terms of ES and EMA, between institutional pressures and the CEP of afirm. Therefore, we develop the following two hypotheses:

Hypothesis 6 (H6). Environmental management accounting practices mediate the relationshipbetween institutional pressures (coercive, normative, and mimetic) and the corporate environmentalperformance of a firm.

Hypothesis 7 (H7). An environmental strategy and environmental management accountingpractices mediate the relationship between institutional pressures (coercive, normative, and mimetic)and the corporate environmental performance of a firm.

To manage the environmental uncertainty being faced, companies are widely consider-ing developing environmental strategies that lead to better implications for environmentalaccounting standards. An environmental strategy links corporate practices and the naturalenvironment [7]. The lack of information regarding green accounting and changes in theenvironment can be improved by adopting proper environmental strategies [70]. Priorstudies suggested that environmental uncertainty affects environmental performance viaenvironmental strategies and EMA through a mediation mechanism [25,56]. Based on theabove discussion, we can formulate the two more hypotheses below:

Hypothesis 8 (H8). Environmental management accounting practices mediate the relationshipbetween environmental uncertainty and the corporate environmental performance of a firm.

Hypothesis 9 (H9). An environmental strategy and environmental management accounting prac-tices mediate the relationship between environmental uncertainty and the corporate environmentalperformance of a firm.

2.7. Moderating Relationships2.7.1. Top-Management Support

Top-management support is a key supporting element for the implementation of differ-ent practices and behaviors, such as the adoption of technology, environmental protection,green management, and environmental accounting [1]. Top managers provide training,leadership, and communication opportunities to increase employee commitment in thewhole organization to design appropriate environmental strategies and deal with environ-mental uncertainty [25]. Top-management support is essential to ensure an organization’sunderstanding of and commitment to environmental issues. Without the ownership of topmanagement, a firm might lose interest in implementing an environmental strategy andobtaining the desired benefits from it [12]. Hence, we propose that:

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Hypothesis 10 (H10). Top-management support moderates the relationship between institutionalpressures (coercive, normative, and mimetic) and the environmental strategy of a firm.

Institutional pressures motivate firms to adopt EMA practices. Top-management sup-port plays a vital role in responding to institutional pressure through two methods. Firstly,top-management support makes companies capable of implementing EMA [12]. EMAimplementation usually needs various organizational resources; access to these is grantedby the top management. Secondly, it is easier to implement EMA within firms becausethe support of top management motivates teams to pursue supportive behaviors [3,12].Therefore, we contend that:

Hypothesis 11 (H11). Top-management support moderates the relationship between institutionalpressures (coercive, normative, and mimetic) and the environmental management accountingpractice of a firm.

2.7.2. Perceived Benefits

Previous research prescribed that institutional pressures affect environmental manage-ment practices and environmental strategies [10,43]. An effective environmental manage-ment strategy cannot be performed without the realization of perceived befits. Environmen-tal management practices can help companies to fulfill their environmental responsibilitiesand to estimate the potential financial benefits for improving their environmental, as wellas financial, performance [20,71]. Previous literature referred to the various benefits ofenvironmental management practices, such as identifying opportunities to be cost-effective,avoiding the preliminary decision-making costs related to new investments, enabling betterdecisions for product pricing and relevant product-mix choices, and enhancing the CEP ofa firm [12,71,72]. Accordingly, if organizations are concerned about the perceived benefitsof the institutional pressure and environmental strategies relationship, it would be benefi-cial to adopt environmental management practices. Therefore, we move on with anotherhypothesis, that:

Hypothesis 12 (H12). Perceived benefits moderate the relationship between institutional pressures(coercive, normative, and mimetic) and the environmental strategy of a firm.

Environmental management practices cannot be performed without perceived benefits;hence, it is useful to recognize the association between institutional pressures and EMA [41].The employment of EMA brings a lot of financial and non-financial benefits, for instance,cost saving, a decrease in environmental and social risk, and an increase in competitiverewards [13,73,74]. A recent study found that perceived benefits positively moderateinstitutional pressure and EMA, indicating that firms will be attracted to adopting EMAunder the influence of perceived benefits [62]. The following hypothesis is proposed, thus:

Hypothesis 13 (H13). Perceived benefits moderate the relationship between institutional pressures(coercive, normative, and mimetic) and the environmental management accounting practice ofa firm.

3. Methodology3.1. Sample and Data Collection

The downside of heavy industrialization and modern manufacturing has left theoristsand practitioners to deal with assessing the resultant negative impact and suggest measuresto control the activities of these modern firms who also happen to be major beneficiariesof natural resources [3,10,25,75]. Hence, our unit of analysis for the present research wasalso manufacturing firms from different sectors. Furthermore, it was also ensured that theresearch only focused on representatives from these firms who were either middle or senior

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managers involved with such key decision-making roles, such as financial controlling andmanagement accounting functions [3,72].

Based on a cross-sectional survey design, this study made use of the purposive sam-pling method. Since China is a huge country, instead of going for nationwide data collection,we preferred to narrow down our sample to one of the topmost industrial zones of Jiangsuprovince, namely, Suzhou city, which is one of the ten busiest industrial and manufacturingsectors in China. The choice of this industrial hub is also justified because this zone liesalong the Yangtze River Delta—a region that is more affected by both water and air pollu-tion, emphasizing the need to observe the status of EMA measures to offer implications forthe industry and policymaking [33]. With the help of the local industry office, a contact listof manufacturing firms from various sectors was made, containing a randomized sampleof 900 firms. Upon initial contact with these firms, a little over 65% of these firms agreed toparticipate in the present research.

The data-collection exercise was undertaken fully through web-based questionnaires,keeping in view the pandemic situation. To better account for language barriers and helpour respondents record their responses, the survey was first translated with the help ofa bilingual expert and then hosted on a free survey-hosting site. After performing initialtesting with some faculty members and a selected team of industry professionals andmaking suggested improvements, the survey was made available for data collection. Wealso provided instructions to complete the survey along with the survey link with therespondents on email or WeChat. This exercise took four months, starting from June 2021 toAugust 2021. We ran two campaigns for data collection, which included reminders as well.A total of 388 unique forms were collected from different firms. Out of this, the final samplesize chosen for analysis was 243; making a 27% response rate comparable to other similarstudies, such as [3,25]. The salient characteristics of firms making up our final sample arepresented in Table 1. Multiple exercises ensured that collected data was well-guarded fortime and space bias. In addition, no major variations were noticeable for the two chunks ofdata collected for this study.

3.2. Measurement of Various Constructs

The survey constituted two sections, namely, demographic information and mainmeasures aimed at measuring different constructs of our study. All these items weremeasured on a five-point standard Likert scale using anchor 1 as ‘disagree’ with 5 being‘agree’. These items were incorporated based on previous literature; details of all these areavailable in Appendix B. It is also notable to mention that the present study controlled forfirm size, age, and type, and neither of these factors contributed significantly to our model.In the following discussion, we present a detailed account of each construct and also somesample items for the constructs.

3.3. Coercive Pressure, Normative and Mimetic Pressure

The institutional pressure variable under three categories (i.e., coercive, mimetic, andnormative) was measured using the instrument from [76]. Each of these dimensions wasmeasured using 4 items, as also incorporated in the relevant literature; for example, see [33].One sample item for coercive pressure measure, for example, is ‘Environmental regulationsare important for our firm to implement environmental management accounting’. Similarly,a sample item for normative pressures is ‘the increasing environmental consciousness ofconsumers have spurred our firm to implement environmental management accounting’;and for mimetic pressure, the sample item is ‘the leading companies in our industry arewell-known for implementing environmental management accounting’.

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Table 1. Firm characteristics.

Firm-Related Characteristics (N = 243)

Firm Characteristic Category Frequency % Age

Firm age

<10 years 50 20.58

10 to 15 years 74 30.45

15 to 20 years 80 32.92

>20 years 39 16.05

Industry/sector

Agriculture and food 26 10.70

Appliances and equipment manufacturing 41 16.87

Mechanical and metallurgical engg. 61 25.10

Chemical and energy 33 13.58

Electronics and telecom 42 17.28

Textile 25 10.29

Pharmaceutical 15 6.17

Ownership structure

State owned 25 10.29

Private 45 18.52

Foreign controlled 80 32.92

Joint venture 93 38.27

Firm size (total employees)

<500 42 17.28

500 to 1000 46 18.93

1001 to 2000 79 32.51

>2000 76 31.28

3.4. Perceived Environmental Uncertainty

Perceived environmental uncertainty was measured using 7 items from [55]. Onesample item for this measure, for example, is ‘My organization is facing a challenge due touncertainty related with Changes in the competitor’s environmental strategies’.

3.5. Environmental Strategy

The environmental strategy was measured using 7 items adopted from [25]. A sampleitem for this measure reads ‘My organization has an established KPI mechanism for air,waste, water and energy areas’.

3.6. Environmental Management Accounting

The 6 items for the construct of EMA were adopted from [3]. For example, one sampleitem is ‘Our firm’s accounting system can identify, estimate, and classify environmental-related costs and liabilities’.

3.7. Top-Management Support

It was measured using 4 items from [3]. One sample item for this measure is ‘Theimplementation of environmental management accounting can receive full support fromour top management team.’

3.8. Perceived Benefits

‘Perceived benefits’ construct was measured using 4 items from [3]. Here is a sampleitem for this scale: ‘The implementation of environmental management accounting canprovide our firm with different information for decision making and improve our firm’sperformance’.

3.9. Corporate Environmental Performance

A seven-item scale adopted from [25] was used to measure this construct. Here is onesample item from the questionnaire: ‘My organization enjoys improved reputation due toits responsible behavior towards environment’.

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4. Data Analysis and Results4.1. Measurement Model

The choice of variance-based SEM technique was made based on such specific con-ditions, such as sample size, data normality, etc. This research intended to test both thedirect and indirect effects of different institutional pressures and environmental contingentfactors on corporate firm performance. The available data was tested for data normalityand some constructs reported non-normal data; hence, we made use of Warp-PLS-7 forconducting the analysis, which is considered to be a robust and advanced tool under suchconditions [77]. The initial analysis showed that all factor loadings for our items rangedfrom (0.732–0.898), thus validating the minimum threshold of 0.50 to continue with theanalysis of the measurement model [78].

To begin with thereliability and validity testing, the discriminant and convergentvalidity measures were checked along with the reliability of the measurement model.Table 2 provides the validated measures of discriminant validity based on the square-rootvalues of AVE for each construct [79]. The available model was also tested for the presenceof multicollinearity. All individual measures showed a VIF value below the threshold valueof 3.3 recommended by [80].

Table 2. Discriminant validity result for different constructs.

Construct CP NP MP PEU ES EMA TMS PB CEP

CP 0.831 0.237 0.224 0.433 0.466 0.284 0.375 0.272 0.435

NP 0.237 0.844 0.208 0.47 0.407 0.272 0.369 0.233 0.483

MP 0.224 0.208 0.821 0.448 0.362 0.262 0.353 0.247 0.475

PEU 0.433 0.47 0.448 0.799 0.18 0.495 0.38 0.234 0.618

ES 0.466 0.407 0.362 0.18 0.801 0.474 0.357 0.228 0.328

EMA 0.284 0.272 0.262 0.495 0.474 0.807 0.65 0.175 0.508

TMS 0.375 0.369 0.353 0.38 0.357 0.65 0.814 0.338 0.53

PB 0.272 0.233 0.247 0.234 0.228 0.175 0.338 0.871 0.445

CEP 0.435 0.483 0.475 0.618 0.328 0.508 0.53 0.445 0.783

Note: bold diagonal values represent square root of average variance (AVEs) extracted values.

To guard against common-method bias, we also ensured the recommended measureswhile designing the survey items, as laid down by [76,81]. We explicitly made it clear to allrespondents that the information they provided would be kept completely anonymous,private, and confidential. Moreover, special care was taken to avoid using any ambiguous,unfamiliar, or highly technical terms. Lastly, the presentation sequence was randomizedwhile presenting the same section to different respondents to highlight any unengagedresponses. It thus ensured that common-method bias was not a problem with the presentresearch, as the VIF threshold value for all constructs was below the cut-off value of 3.3; thehighest variation inflation factor (VIF) obtained was 3.01 [82].

To perform the reliability for different constructs Cronbach’s alpha measure wasemployed. All observed measures confirmed the validity level α = 0.7, as shown in theTable 3 below. All other reliability measures were also found to be following the standardsrecommended in the literature [79].

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Table 3. Reliability and convergent validity.

S No Construct Item Factor Loading Cronbach’s AlphaValue

CompositeReliability

Average VarianceExtracted

1 Coercive pressure CP1 0.821 0.851 0.899 0.691

CP2 0.847

CP3 0.832

CP4 0.825

2 Normative pressure NP1 0.829 0.866 0.908 0.713

NP2 0.826

NP3 0.864

NP4 0.858

3 Mimetic pressure MP1 0.782 0.839 0.892 0.674

MP2 0.819

MP3 0.843

MP4 0.838

4 Perceived environmentaluncertainty PEU1 0.78 0.905 0.925 0.639

PEU2 0.803

PEU3 0.844

PEU4 0.74

PEU5 0.794

PEU6 0.836

PEU7 0.795

5 Environmental strategy ES1 0.819 0.906 0.926 0.641

ES2 0.782

ES3 0.87

ES4 0.804

ES5 0.773

ES6 0.804

ES7 0.746

6 Environmental managementaccounting EMA1 0.773 0.892 0.918 0.651

EMA2 0.842

EMA3 0.799

EMA4 0.841

EMA5 0.834

EMA6 0.748

7 Top-management support TMS1 0.86 0.83 0.887 0.663

TMS2 0.8

TMS3 0.772

TMS4 0.823

8 Perceived benefits PB1 0.898 0.894 0.926 0.759

PB2 0.839

PB3 0.863

PB4 0.883

9 Corporate environmentalperformance CEP1 0.758 0.894 0.917 0.612

CEP2 0.813

CEP3 0.8

CEP4 0.797

CEP5 0.765

CEP6 0.809

CEP7 0.732

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4.2. Structural Model

The results of the final structural model reveal the important values of β-levels andp-values for various constructs employed in our model, as shown below, in Figure 2. Thecombination of three institutional pressures and perceived environmental uncertaintyjointly explained about 49% of the variance, whereas the total variance explained for EMAfrom the contributing variables stands at 70% while 26% of the total variance for corporateenvironmental performance is attributed to EMA. The model-fitness indices are producedin Table 4, below. All indices meet the various goodness-of-fit criteria for different measuresof APC, R-squared ARS, AVIF, etc. [83–85]. The relative path sizes for different constructsare also provided for main effects, mediation effects, and moderating effects in the Table 5.

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4.2. Structural Model The results of the final structural model reveal the important values of β-levels and

p-values for various constructs employed in our model, as shown below, in Figure 2. The combination of three institutional pressures and perceived environmental uncertainty jointly explained about 49% of the variance, whereas the total variance explained for EMA from the contributing variables stands at 70% while 26% of the total variance for corporate environmental performance is attributed to EMA. The model-fitness indices are produced in Table 4, below. All indices meet the various goodness-of-fit criteria for different measures of APC, R-squared ARS, AVIF, etc. [83–85]. The relative path sizes for different constructs are also provided for main effects, mediation effects, and moderating effects in the Table 5.

Figure 2. Research framework with path coefficients and corresponding p-values.

Table 4. Model-fitness indices for research framework employed.

Model-Fit Indices Indices Value Comments

Average path coefficient (APC) 0.158 p < 0.001 Average R-squared (ARS) 0.484 p < 0.001

Average adjusted R-squared (AARS) 0.468 p < 0.001 Average block VIF (AVIF) 1.376 Acceptable if <= 5, ideally <= 3.3

Average full collinearity VIF (AFVIF) 2.004 Acceptable if <= 5, ideally <= 3.3 Tenenhaus GoF (GoF) 0.632 Small >= 0.1, medium >= 0.25, large >= 0.36

Sympson’s paradox ratio (SPR) 0.769 Acceptable if >= 0.7, ideally = 1 R-squared contribution ratio (RSCR) 0.981 Acceptable if >= 0.9, ideally = 1

Statistical suppression ratio (SSR) 0.923 Acceptable if >= 0.7 Nonlinear bivariate causality direction ratio

(NLBCDR) 0.712 Acceptable if >= 0.7

Figure 2. Research framework with path coefficients and corresponding p-values.

Table 4. Model-fitness indices for research framework employed.

Model-Fit Indices

Indices Value Comments

Average path coefficient (APC) 0.158 p < 0.001

Average R-squared (ARS) 0.484 p < 0.001

Average adjusted R-squared (AARS) 0.468 p < 0.001

Average block VIF (AVIF) 1.376 Acceptable if <= 5, ideally <= 3.3

Average full collinearity VIF (AFVIF) 2.004 Acceptable if <= 5, ideally <= 3.3

Tenenhaus GoF (GoF) 0.632 Small >= 0.1, medium >= 0.25, large >= 0.36

Sympson’s paradox ratio (SPR) 0.769 Acceptable if >= 0.7, ideally = 1

R-squared contribution ratio (RSCR) 0.981 Acceptable if >= 0.9, ideally = 1

Statistical suppression ratio (SSR) 0.923 Acceptable if >= 0.7

Nonlinear bivariate causality direction ratio(NLBCDR) 0.712 Acceptable if >= 0.7

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Table 5. Summary of direct effects.

Hypothesis Path Path Coefficient StandardError Effect Size Status of

Hypothesis

H1 CP→ ES 0.413 *** 0.060 0.191 Supported

NP→ ES 0.320 *** 0.061 0.131 Supported

MP→ ES 0.307 *** 0.061 0.114 Supported

H2 CP→ EMA 0.171 ** 0.062 0.050 Supported

NP→ EMA 0.168 ** 0.061 0.046 Supported

MP→ EMA 0.142 * 0.062 0.039 Supported

H3 PEU→ ES 0.184 ** 0.062 0.038 Supported

H4 PEU→ EMA 0.587 *** 0.058 0.294 Supported

H5 ES→ EMA 0.576 *** 0.058 0.274 Supported

EMA→ CEP 0.509 *** 0.059 0.259Significance level * p < 0.05; ** p < 0.01; *** p < 0.001.

4.3. Assessment of Direct Effects

Results show that, while the institutional pressures as compared to environmentaluncertainty exert a more pronounced influence on the resulting environmental strategyof a firm, the strongest of these come from the coercive pressures facing a firm, with aβ-value of 0.413. The normative and mimetic pressures follow successively, in order, withthe least coming from that of the mimetic pressures; however, still, this is stronger thanenvironmental uncertainty, thus lending support for H1, as also observed by [6,42,86],and for H2 as well, which was endorsed by [3,62]. Interestingly, the same pattern isreversed for the consideration of EMA practices within a firm, as shown by the resultshere. Environmental uncertainty exhibits a stronger impact on EMA practices (β = 0.587,p-value < 0.001) as compared to the effect of institutional pressures; with the coerciveand normative pressures having an almost equal moderate impact and mimetic pressureswith the weakest magnitude in terms of β-value and significance, supporting H3 andH4. It points to the fact that, no matter how receptive firms may be to institutionalpressures, the implementation of EMA practices comes in response to the influence ofsurrounding environmental uncertainty, which is in line with the shreds of evidence frompast studies [25,87]. In line with this, the presence of an effective environmental strategy notonly leads to effective implementation of EMA practices (β-value = 0.576, p-value < 0.001)but also guides the successful corporate environmental performance of a firm, with aβ-value of 0.509 and p-value < 0.001; therefore, this lends enough evidence to accept relatedhypothesis H5, as also noted by [6,25,88], who investigated the impact of environmentalstrategy and EMA strategies’ implementation on organizational performance.

4.4. Assessment of Mediation Effects

To the best of the authors’ knowledge, this research is one of the foremost attemptsto explore the concurrent effects of institutional pressures and perceived environmentaluncertainty on the realization of environmental strategies as well as the implementation ofenvironmental management accounting practices. We are also interested to find out howthese two factors influence the resultant corporate performance in a sequential mediationfashion. In the case of institutional pressures, once again, the effects of coercive pressuresand normative pressures are stronger, as compared to mimetic pressures. Results indicatethat an environmental strategy exhibits a strong positive mediation effect for variousrelationships between coercive, normative, and mimetic pressures, respectively, and theimplementation of EMA practices.

For H6, our results lend partial support. Researchers in the past have observed themediating effect of environmental strategies on combined institutional pressures regardingEMA practices—see, for example, [6]—but this study segregates institutional pressuresto understand the relative mediation effects of environmental strategies on different di-

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mensions of institutional pressures, along with the association of EMA practices in a firm.Results conclude that the implementation of EMA practices can successfully mediate therelationships between coercive and normative pressures with the corporate environmen-tal performance of a firm; however, no mediation effect is observed for the relationshipbetween mimetic pressures and a firm’s corporate environmental performance.

To test the serial mediation effects of environmental strategy and EMA practices, theWarp-PLS7 tool is equipped with powerful and advanced functionality that allows the re-searchers to study both direct and indirect effects along single or multiple paths, in conjunc-tion [89]. Results of mediation effects, as shown in Table 6, show that, as predicted by H7,the relationship between various institutional pressures and the corporate environmentalperformance of a firm are also sequentially mediated in the presence of both environmentalstrategy and EMA practices. For example, for the relationship (CP→ES→EMA→CEP), theresults provide strong support, with a β-value of 0.12 with a p-value < 0.001. Similar resultsare observed for normative and mimetic pressures, thus supporting the argument that theseinstitutional pressures lead to an eventful environmental strategy that ultimately drivesfirms towards implementing EMA practices and eventually to the successful corporateperformance, in line with results drawn by [6].

Table 6. Summary of direct, indirect and total effects.

Hypothesis Path Direct Effect Effect Size Indirect Effect Effect Size Total Effect Status ofHypothesis

CP→ EMA 0.171** 0.050

CP→ES→EMA 0.237 *** 0.069 0.408 ***

H6 CP→EMA→CEP 0.087 * 0.038 Supported

H7 CP→ES→EMA→CEP 0.12 *** 0.052 0.207 *** Supported

NP→ EMA 0.168 ** 0.046

NP→ES→EMA 0.184 *** 0.051 0.352 ***

H6 NP→EMA→CEP 0.085 * 0.041 Supported

H7 NP→ES→EMA→CEP 0.094 ** 0.045 0.179 *** Supported

MP→ EMA 0.142* 0.039

MP→ES→EMA 0.177 *** 0.048 0.319 ***

H6 MP→EMA→CEP 0.072 n.s. 0.034 Not supported

H7 MP→ES→EMA→CEP 0.09 ** 0.043 0.162 *** Supported

PEU→ EMA 0.587 *** 0.294

PEU→ES→EMA 0.106 ** 0.053 0.693 ***

H8 PEU→EMA→CEP 0.299 *** 0.185 Supported

H9 PEU→ES→EMA→CEP 0.054 n.s. 0.033 0.353 *** Not supported

Significance level * p < 0.05; ** p < 0.01; *** p < 0.001.

Moving along to the mediation results, we observed that environmental strategystrongly mediates the relationship between perceived environmental uncertainty andenvironmental management accounting practices in a firm (β = 0.106, p-value < 0.01).While the mediating effect of these EMA practices on the relationship between perceivedenvironmental uncertainty and resultant corporate performance of a firm is observed to bemuch stronger and more significant, i.e., β = 0.299, p-value < 0.001, thus lending supportfor H8. However, H9 fails to find support for the serial mediation effect of environmentalstrategy and EMA practices together, because the p-value > 0.05. It is interesting to notethat the sequential mediation of environmental strategy and the implementation of EMApractices is observed to be significant for the relationship between institutional pressuresand the corporate performance of a firm, but the same fails to find evidence in case of therelationship between environmental uncertainty and corporate firm performance.

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4.5. Assessment of Moderation Effects

The research hypothesized that top-management support moderates the relationshipbetween institutional pressures and environmental strategy (H10) and also the relationshipbetween institutional pressures and EMA practices (H11) but results (summarized inTable 7) failed to find support, except for a relationship between coercive pressures andEMA practices. It is interesting to note that, contrary to our expectations, results showeda negative effect of top-management support on the association of coercive pressureswith EMA practices. It means that, with more top-management support, this relationshipweakened in practice.

Table 7. Summary of moderating effects.

Hypothesis Path Path Coefficient p-Value Status of Hypothesis

H10 TMS on [CP→ ES] −0.029 n.s. Not supported

TMS on [NP→ ES] 0.003 n.s. Not supported

TMS on [MP→ ES] −0.007 n.s. Not supported

H11 TMS on [CP→ EMA] −0.119 ** Supported

TMS on [NP→ EMA] 0.033 n.s. Not supported

TMS on [MP→ EMA] −0.064 n.s. Not supported

H12 PB on [CP→ ES] 0.053 n.s. Not supported

PB on [NP→ ES] −0.068 n.s. Not supported

PB on [MP→ ES] 0.089 * Supported

H13 PB on [CP→ EMA] 0.060 n.s. Not supported

PB on [NP→ EMA] 0.017 n.s. Not supported

PB on [MP→ EMA] 0.110 ** Supported

Significance level * p < 0.10; ** p < 0.05; n.s. => 0.05.

Figure 3 helps to understand the dampening effect of top-management support onthe relation between EMA practices and coercive pressures by showing the high- andlow-management support in two different quadrants.

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Figure 3. Dampening effect of top-management support on the relation between CP and EMA.

For H12 and H13, we hypothesized that perceived benefits would also exert a boosting effect on the relations of institutional pressures with environmental strategy and EMA practices. The result showed partial support for the case of mimetic pressures’ relationship with environmental strategy as well as its relationship with EMA practices, as also demonstrated by [3].

These results are also demonstrable from the supporting Figure 4, which shows an evident effect of perceived benefits on the relationship between mimetic pressures and the resulting environmental strategy of a firm, while similar evidence is also noted for boosting the effect of perceived benefits in the case of mimetic pressures and EMA implementation, as shown in Figure 5, below.

Figure 4. Invigorating effect of perceived benefits on the relation between MP and ES.

Figure 3. Dampening effect of top-management support on the relation between CP and EMA.

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For H12 and H13, we hypothesized that perceived benefits would also exert a boostingeffect on the relations of institutional pressures with environmental strategy and EMA prac-tices. The result showed partial support for the case of mimetic pressures’ relationship withenvironmental strategy as well as its relationship with EMA practices, as also demonstratedby [3].

These results are also demonstrable from the supporting Figure 4, which shows anevident effect of perceived benefits on the relationship between mimetic pressures and theresulting environmental strategy of a firm, while similar evidence is also noted for boostingthe effect of perceived benefits in the case of mimetic pressures and EMA implementation,as shown in Figure 5, below.

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Figure 3. Dampening effect of top-management support on the relation between CP and EMA.

For H12 and H13, we hypothesized that perceived benefits would also exert a boosting effect on the relations of institutional pressures with environmental strategy and EMA practices. The result showed partial support for the case of mimetic pressures’ relationship with environmental strategy as well as its relationship with EMA practices, as also demonstrated by [3].

These results are also demonstrable from the supporting Figure 4, which shows an evident effect of perceived benefits on the relationship between mimetic pressures and the resulting environmental strategy of a firm, while similar evidence is also noted for boosting the effect of perceived benefits in the case of mimetic pressures and EMA implementation, as shown in Figure 5, below.

Figure 4. Invigorating effect of perceived benefits on the relation between MP and ES. Figure 4. Invigorating effect of perceived benefits on the relation between MP and ES.

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Figure 5. The invigorating effect of perceived benefits on the relation between MP and EMA.

5. Discussion The present study is an attempt to delve into the effects of perceived environmental

turbulence, in concurrence with existing institutional pressures, on the evolution of environmental strategy and policy by a firm. The study determines the driving elements that determine the adoption of effective EMA practices and their impact on organizational environmental performance. We are interested to identify which of the two prime aspects, namely, turbulent environmental perception (perceived environmental uncertainty) and existing institutional pressures, i.e., coercive, normative, and mimetic pressures, separately exert more influence on a firm’s environmental strategy, and the adoption and implementation of EMA practices.

In general, institutional pressures exert varying degrees of effects on the drive towards environmental strategy and policy [3,76]. This pattern is quite often different for different societies. For example, firms from developed countries were observed to be more influenced by normative and mimetic pressures, as compared to coercive pressures, in their pursuit of the implementation and disclosure of environmental practices [90]. Firms from developing countries, on the contrary, feel more inclined towards the adoption of environmental practices under the influence of mostly coercive pressures; see, for example, [3,35]. The results of the present study are in line with these previously observed trends, where firms tend to respond to the implementation of EMA practices under the influence of various institutional pressures; however, the effect of coercive pressures is the strongest for these firms in China, as compared to normative and mimetic pressures. It shows an indication of the daunting role that the Chinese government is playing in the formulation and enforcement of regulations for environmental protection. While the smallest effect of mimetic pressures, here, would also caution that, still, the external influence of competitors is not at the stage of instigating healthy competition concerning the adoption of ecofriendly measures.

It is also observed that the role of environmental uncertainty is more pronounced than the effect of coercive pressures, which speaks to the magnitude of turbulence being experienced by these firms. As a response, these firms feel the emergent need for the adoption and implementation of necessary EMA practices, to sustain their self image under these highly uncertain external circumstances. Results from this research also highlight that, although uncertainty is the prime factor in the adoption of EMA measures,

Figure 5. The invigorating effect of perceived benefits on the relation between MP and EMA.

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5. Discussion

The present study is an attempt to delve into the effects of perceived environmentalturbulence, in concurrence with existing institutional pressures, on the evolution of en-vironmental strategy and policy by a firm. The study determines the driving elementsthat determine the adoption of effective EMA practices and their impact on organizationalenvironmental performance. We are interested to identify which of the two prime as-pects, namely, turbulent environmental perception (perceived environmental uncertainty)and existing institutional pressures, i.e., coercive, normative, and mimetic pressures, sep-arately exert more influence on a firm’s environmental strategy, and the adoption andimplementation of EMA practices.

In general, institutional pressures exert varying degrees of effects on the drive towardsenvironmental strategy and policy [3,76]. This pattern is quite often different for differentsocieties. For example, firms from developed countries were observed to be more influencedby normative and mimetic pressures, as compared to coercive pressures, in their pursuit ofthe implementation and disclosure of environmental practices [90]. Firms from developingcountries, on the contrary, feel more inclined towards the adoption of environmentalpractices under the influence of mostly coercive pressures; see, for example, [3,35]. Theresults of the present study are in line with these previously observed trends, wherefirms tend to respond to the implementation of EMA practices under the influence ofvarious institutional pressures; however, the effect of coercive pressures is the strongestfor these firms in China, as compared to normative and mimetic pressures. It shows anindication of the daunting role that the Chinese government is playing in the formulationand enforcement of regulations for environmental protection. While the smallest effect ofmimetic pressures, here, would also caution that, still, the external influence of competitorsis not at the stage of instigating healthy competition concerning the adoption of ecofriendlymeasures.

It is also observed that the role of environmental uncertainty is more pronouncedthan the effect of coercive pressures, which speaks to the magnitude of turbulence beingexperienced by these firms. As a response, these firms feel the emergent need for theadoption and implementation of necessary EMA practices, to sustain their self image underthese highly uncertain external circumstances. Results from this research also highlightthat, although uncertainty is the prime factor in the adoption of EMA measures, the firm’soverall environmental strategy is, however, strongly influenced by the three pillars of theinstitutional environment when compared to the effect of perceived uncertainty. It testifiesto the significance of a holistic institutional regime for a firm’s long-term commitmentto fulfilling its environmental responsibility through implementing EMA measures inpart and formulating a comprehensive environmental strategy to achieve successful firmperformance on the whole, as also noted in the extant literature [88,91]. Prevalent EMAsystems help in managing relationships with various stakeholders and gaining a moreapproved and responsible social and societal status [6,43].

The present study has also investigated the mediating effect of a firm’s environmentalstrategy on the association of various institutional pressures and EMA practices. Resultssuggest a strong positive-mediation influence of environmental strategy for coercive, nor-mative, and mimetic pressures’ relationships with EMA practices. The effect of mediationby EMA alone is observed to be weaker for the different relationships between institutionalpressures and a firm’s corporate performance; however, the serial mediation influence ofenvironmental strategy and EMA practices is observed to be significantly stronger for therelationship between coercive pressures and corporate firm performance. In the case ofnormative and mimetic pressures, the same relationship shows a relatively weaker influ-ence. The extant literature has also supported similar findings for the mediation influenceof EMA between the relationship of the environmental strategy of a firm and its corporateperformance [25,55,88,92,93].

The mediating influence of EMA practices is observed to be the strongest for therelationship between perceived uncertainty and a firm’s corporate performance, showing

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the importance of EMA practices as a trusted and well-accepted safeguard mechanismto ensure a firm’s performance under more complex and more turbulent environmentalconditions, as also noted by [25,87]. As the external market dynamics are driving thetransformation of modern businesses into e-businesses, firms feel more inclined to adoptEMA practices to aid them in effective decision making [10,25,94].

Referring to the moderation effects, this study noted some notable positive influenceof perceived benefits on the relationship between mimetic pressures and environmentalstrategy, while this effect is stronger for the relationship between mimetic pressures andEMA practices. This indicates that firms are more inclined to engage in practical envi-ronmental strategies and the implementation of an effective EMA mechanism when theyobserve their competitors doing the same. This drive obtains a further boost when firmsperceive that enough benefits are associated with the implementation of EMA to outweighthe costs [95]. However, at the same time, results show that the effect of coercive pres-sures on the implementation of EMA practices becomes somewhat dampened under theinfluence of top-management support. Although it may appear as counter-intuitive, asthe effect of coercive pressures is much more pronounced as compared to the other twoinstitutional pressures, it still perhaps shows that top-management commitment is shapedunder the influence of either normative or mimetic pressures. One possible explanationfor this effect is the active role of government and the prevalent state of regulations thatevery organization has to follow and, therefore, top management’s active support is morefocused on the pressures coming from society and competitors.

6. Conclusions

The present study aimed to understand the relative roles of three institutional pillars,namely, coercive, normative and mimetic pressures and external environmental uncertaintyon the appropriate choice of an EMA practice and corresponding environmental strategicplan in achieving eventful corporate environmental performance. It is one of the foremostattempts to draw a comparison between the involvement of institutional pillars and theenvironmental dynamism in conjunction with determining the corporate environmentalstrategic choices of firms in China—the most populous economy in the world. Resultsvindicate that firms’ choices of an appropriate environmental strategy is influenced moreby institutional pressures as compared to the effect of environmental uncertainty; whereasthe implementation of EMA practices is contingent more upon relative environmentaluncertainty. The influence of institutional pressures on the implementation of EMA prac-tices is somewhat limited. Moreover, environmental strategy and corresponding EMApractices also exert a sequential mediation effect on the various relationships between threeinstitutional pressures and a firm’s corporate environmental performance. The study alsonotes some moderating effects of top-management support and perceived benefits for therelationship between coercive pressures and EMA practices, and the relationship betweenmimetic pressures and EMA practices.

6.1. Research Implications

Findings imply several notable recommendations for policy making and managementpractices. The resounding role of coercive pressure delivers a clear message for policymakers, to keep pushing, on their part, for the formulation and implementation of effectiveregulatory frameworks to encourage eco-friendly practices. It will also make the organiza-tions think about their social and societal status and make them more responsible towardvarious stakeholders [6,76]. Normative pressures and mimetic pressures also positivelyinfluence EMA practices and corporate performance; hence, the government and otherinstitutional bodies should offer incentives and recognition to those organizations thatchampion the successful adoption and implementation of EMA practices and ecofriendlymeasures [6].

Furthermore, corporate performance is influenced heavily by the choice of a firm toplan its environmental strategy and implement EMA practices under the influence of top-

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management commitment. It seems to be imperative for firms to think over environmentalstrategies from a holistic perspective. Firms should invest in long-term EMA measuresthat will not only help to achieve environmental strategic objectives but will also provideeffective accounting information and control systems. Alongside this, management shouldalso encourage employee participation and assimilation with these EMA programs byinvesting in training and development for them [3]. It will prepare future managers tolearn and appreciate the environmental perspective and make them ready to be a part ofsustainable corporate governance and performance. As informed from the literature, it isevident that firms outperform their competitors in financial as well environmental aspectsonce they can delineate long-term sustainable environmental management practices atall levels [96,97]. It is recommended that top-management support, indeed, infuses thesame into the very culture of the organization to guide successors toward an end-to-endalignment of environment-friendly practices [10].

The present study offers notable avenues for researchers to build upon new propo-sitions. The relative supremacy of institutional pressures over environmental dynamismis studied in the social settings of a government-controlled environment. Future researchmay benefit from testing a similar model under the influence of the market economy, tocompare the effects of three institutional pressures and environmental uncertainty. Futureresearch may also observe whether the choice of environmental strategy and implementa-tion of EMA measures could apply some influence together, in an intermediary fashion, onthe relationship between environmental uncertainty and corporate performance, whichremains insignificant in the present research.

6.2. Further Research

There are some limitations to present research that will guide future research avenues.It was conducted in one of the busiest industrial zones of China; however, it would beadvisable to replicate the same in other areas, keeping in view the size of the country.This study relied mostly on online data collection during the time of the pandemic era.Since the present study captured one-time data, more longitudinal studies with datacollection performed through both online and face-to-face modes are recommended to digout possibilities not covered in the present research. Lastly, an element of social-desirabilitybias may also come into effect, which can be addressed using objective data in supportof evidence for existing EMA measures obtained through an interview with multiplestakeholders.

Note: All illustrations including figures and tables are authors’ elaboration unlessotherwise stated explicitly.

Author Contributions: Conceptualization, Y.K.; Data curation, M.S.H.; Formal analysis, Y.K. andM.S.H.; Methodology, N.K.; Project administration, Y.K. and F.J.; Resources, F.J. and J.S.; Supervision,Y.K. and F.J.; Validation, F.J. and J.S.; Visualization, N.K.; Writing—review & editing, M.S.H. Allauthors have read and agreed to the published version of the manuscript.

Funding: This research & the APC was funded by National Natural Science Foundation (grantnumbers 71973054, 71371087) from the Jiangsu University Research Fund.

Institutional Review Board Statement: Not applicable.

Informed Consent Statement: Not applicable.

Data Availability Statement: The data for this study may be requested from the authors.

Conflicts of Interest: The authors declare no conflict of interest.

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Appendix A. Important Variables and Conceptualizations

Sr Variables Definition

1 Environmental management accounting (EMA)“Management of environment and economic performance

through the development and implementation of appropriateenvironmental-related accounting systems and practices” [6].

2 Environmental uncertainty (EU)

“Environmental uncertainty refers to unpredictablecircumstances or changes in prevailing market conditionscausing the firm to actively respond the present or future

challenges” [55].

3 Environmental strategy (ES)“Corporate EMS represents a set of initiatives implemented inan organization to reduce the environmental impact through

products, processes, and corporate policies” [10].

4 Environmental performance (EP)

“Environmental performance pertains to measures that aim atproduction of environment-friendly products, reduction ofpollution and waste at source, managing the reduction of

environmentally harmful materials, enhancements in energyefficiency” [63].

5 Institutional pressures (IP)

“Institutional pressures are the pressures exerted bygovernments, professions, or society on organizations to adopt

environmental management practices, beyond the technicalefficiencies”.

Appendix B. Measurement of Constructs

Institutional Pressures

Coercive pressure [76].CP1. Our firm tries to reduce the threat from the environmental regulations by

implementing environmental management accounting.CP2. Environmental regulations are important for our firm to implement environmen-

tal management accounting.CP3. The local government has set strict environmental standards, which our firm

needs to comply with.CP4. Several penalties have been imposed on firms that violate environmental stan-

dards and regulations.Normative pressure [76].NP1. The increasing environmental consciousness of consumers have spurred our

firm to implement environmental management accounting.NP2. Being environmentally responsible and disclosure of environmental information

is a basic requirement for our firm to be part of this industry.NP3. Nongovernmental organizations around our firm expect all firms in the industry

to implement environmental management accounting.NP4. Stakeholders may not support our firm if our firm does not implement environ-

mental management accounting.Mimetic pressure [76].MP1. The leading companies in our industry set an example in the field of implement-

ing environmental management accounting.MP2. The leading companies in our industry are well-known for implementing

environmental management accounting.MP3. The leading companies in our industry are intending to reduce their impacts on

the environment by implementing environmental management accounting.MP4. The leading companies in our industry have obtained competitive advantages

by implementing environmental management accounting.

Perceived environmental uncertainty [55]

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EU1. My organization is facing a challenge due to uncertainty related withNational/international environmental laws.EU2. My organization is facing a challenge due to uncertainty related with Environ-

mental tax policies.EU3. My organization is facing a challenge due to uncertainty related with Environ-

mental regulations affecting the sector.EU4. My organization is facing a challenge due to uncertainty related with Availability

of substitute environmental products.EU5. My organization is facing a challenge due to uncertainty related with Environ-

mental product demand.EU6. My organization is facing a challenge due to uncertainty related with Changes in

the production process on the market.EU7. My organization is facing a challenge due to uncertainty related with Changes in

the competitor’s environmental strategies.

Environmental strategy [25]

ES1. My organization has a long and successful history of implementing environmen-tal Programs.

ES2. My organization has already acquired ISO certification or it is actively workingon to acquire ISO certification.

ES3. My organization has invested in R&D for the betterment of environment.ES4. My organization has a long term commitment to environment.ES5. My organization has an established reporting mechanism that maintains data

and logs related to environment protection.ES6. My organization has an established KPI mechanisms for air, waste, water and

energy areas.ES7. My organization has introduced awards and rewards program at different levels

to encourage employee participation towards sustainable environment.

Environmental management accounting [3]

EMA1. Our firm’s accounting system recording all physical inputs and outputs (suchas energy, water, materials, wastes, and emissions).

EMA 2. Our firm’s accounting system can carry out product inventory analyses,product improvement analysis, and product environmental impacts analyses.

EMA 3. Our firm using environmental performance targets for physical inputs andoutputs.

EMA 4. Our firm’s accounting system can identify, estimate, and classify environmental-related costs and liabilities.

EMA 5. Our firm’s accounting system can create and use of environmental-relatedcost accounts.

EMA 6. Our firm’s accounting system can allocate environmental-related costs toproducts.

Top management support [3]

TMS1. Top management team in our firm is committing to implement environmentalmanagement accounting.

TMS 2. The implementation of environmental management accounting can receivefull support from our top management team.

TMS 3. Top management team can provide adequate resources to support the imple-mentation of environmental management accounting.

TMS 4. Top management team consistently assesses the business impact on theenvironment by implementing environmental management accounting.

Perceived benefits [3]

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PB1: The implementation of environmental management accounting is beneficial toincrease our firm’s competitiveness and legitimacy.

PB2: The implementation of environmental management accounting is useful toreduce our firm’s environmental cost and environmental impacts and thus to enhance thefirm image.

PB3: The implementation of environmental management accounting is helpful toreduce our firm’s operational costs and can identify new opportunities.

PB4: The implementation of environmental management accounting can provide ourfirm with different information for decision making and improve our firm’s performance.

Corporate environmental performance [25]

EP1. My organization is complying with environmental regulations.EP2. My organization is preventing and mitigating environmental crises.EP3. My organization is working to find cost cutting opportunities.EP4. My organization works to limit environmental impact beyond its boundaries.EP5. My organization enjoys improved reputation due to its responsible behavior

towards environment.EP6. My organization is work to generate societal benefits.EP7. My organization is able to achieve Increased competitive advantage.

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