From institutional pressure to the sustainable development of firm: Role of environmental management accounting implementation and environmental proactivity

Abstract

Abstract The current study purposes to assess the impact of institutional pressures (coercive, mimetic, and normative) on environmental performance of the firm along with the mediation of implementation of environmental management accounting and moderation of environmental proactivity between them. Quantitative data are collected through structured questionnaire from 500 middle‐level and top‐level managers and owners of manufacturing firms of Pakistan. Data are analyzed through SPSS and AMOS in which structural equation modeling in performed to assess hypotheses. Findings show that coercive, mimetic, and normative pressures are significant derivers of environmental performance. It is further found that coercive, mimetic, and normative pressures significantly enhance the implementation of environmental management accounting, which in turn enhances the environmental performance of the firm. Furthermore, environmental proactivity is found to be a significant moderator between mimetic pressure and environmental performance while no moderation by environmental proactivity is confirmed in relationships of coercive pressure and normative pressure with environmental performance. The current findings are anticipated to assist practitioners in strategy development and execution to improve environmental performance of the firm and policymaking to control environmental impacts of businesses and improve environmental conditions in the country. The current study is the first one to empirically examine the moderating role of environmental proactivity and mediating role of execution of environmental management accounting between institutional pressures and environmental performance in context of Pakistan; so, it will open new areas of discussion and analysis for researchers in the domain of institutional theory.

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