EMA Implementation and Corporate Environmental Firm Performance: A Comparison of Institutional Pressures and Environmental Uncertainty

Abstract

Environmental management accounting (EMA) practices guide a firm’s response to perceived environmental uncertainty (EU) and various institutional pressures (IP). Drawing upon institutional theory, this study explores the relative effects of institutional pressures and environmental uncertainty on the implementation of EMA, an environmental strategy (ES), and the resulting environmental 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 the busiest 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 EMA practices than institutional pressures; however, the choice of a firm’s environmental strategy is more influenced by institutional pressures. Likewise, the serial-mediation effect of environmental strategy and EMA practices is observed to be the strongest in the case of coercive pressures, with some notable moderation effect for perceived benefits and top-management support. The study concludes with theoretical and managerial implications.

1. Introduction

Rapid industrial and population growth in the 21st century imposed greater pressure on firms to contribute more towards the growth in the world economy, and the resulting environmental degradation also lent a focus to parallel measures of corporate social responsibility [1,2,3]. 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 surrounding environmental issues and reevaluate firms’ environmental performance. The prevailing evidence shows that environmental issues are mainly caused by manufacturing companies [4]. Therefore, companies are considering taking appropriate measures to curtail the adverse impact of their operating activities on the external environment. Modern firms ensure that their manufacturing and operational activities remain confined within the limits laid down by enforced regulatory regimes, [5,6]. Firms structure their policies according to guidelines provided by the governing institutional regime. These guidelines emanate in the form of either mimetic pressures (threats/checks, e.g., by competitors), coercive 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 institutional checks and how resultant environmental strategies and EMA (the definition and conceptualization of all major constructs and variables used in this study are provided in Appendix A) practices shape up, in terms of leading to a sustained and desirable corporate firm performance.

To improve environmental performance, firms are widely considering developing environmental strategies and environmental accounting standards. Environmental strategy links corporate practices and the natural environment [7]. Effective strategies help companies to improve their performance to meet the needs of both external as well as internal users [8]. EMA has gained considerable attention from researchers over recent decades. The current literature suggests that EMA performance enhances stakeholder satisfaction. Firms with a high environmental performance can sustain long-term financial and social benefits in addition to nuanced decision-making capabilities. [9,10,11,12,13]. Today, many companies are measuring their performance in terms of both financial and environmental performance [14] Therefore, environmental accounting, as an emerging field, has received greater attention in the recent literature [11,12,13,15,16,17].

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

Similarly, EMA, as an integral component of a firm’s environmental management control system, is known to achieve high corporate environmental performance. Firms aim to sustain various competitive advantages by adopting an environmental approach. For example, eliminating contamination from a firm’s manufacturing processes could raise efficiency by minimizing the required input, shortening processes, and controlling compliance-related expenses and accountabilities [21,22]. Environmental uncertainty is another important concern for managers, as the literature suggests that many external and contextual factors can influence the environmental performance of a firm. Environmental uncertainty 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 actions and outcomes, it will eventually lead to a failure to predict the way different environmental factors will affect a decision [23]. Scholars suggest that uncertainty is an important predictor of corrective behavior; when there is a high level of uncertainty managers should find ways to reduce the uncertainty level [24].

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

The framework (to be discussed shortly) developed for this study is grounded on the institutional theory as also practiced in the relevant literature; see, for example, [27,28,29]. Based on this, the present research develops several interesting propositions to cross examine the interlinkages among different constructs resulting in meaningful implications for both theory and practice [30]. The remainder of this paper continues discussion of the theoretical framework and hypotheses in next Section 2. Then we move on with the methodology in Section 3. Section 4 covers the analysis with results, followed by a discussion in Section 5. Finally, in Section 6, we present the conclusion and main research implications.

2. Theoretical Framework and Hypothesis Development

2.1. Institutional Theory

The present study adopted institutional theory to comprehend the development of environmental accounting practices in China. The current literature suggests that institutional framework supports an organization’s structure nationally and globally. It brings norms, ethical standards, societal behavior that create significant guidelines [31]. Institutional theory explains organizational behavior, particularly friendly environmental behavior; for instance, behavior about energy saving, environmental management practices, and the ecological responsiveness of firms [16,32,33,34].

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

Firms undertake several activities that lead to ongoing economic, environmental and social impact and values [38]. One such measure is the launch of EMA practices to govern the 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 stakeholders in society. For example, regulatory or coercive pressures come from governments and other allied bodies; similarly, mimetic pressures come from competitors and other industry players in businesses, etc.

According to institutional theory, external and institutional environments substantially affect organizational behavior and practices [37,39]. Firms change their behavior by adopting dominant practices guided by their institutional regimes and external environments, to ensure legality [37]. Therefore, firms are isolated when resisting institutional and external environments [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 mediating relationships between various constructs, such as institutional pressures, environmental uncertainty, and environmental strategy, and the corporate environmental performance of a firm. In addition to this, we are also interested to explore how top-management support and perceived benefits influence these relationships as moderating factors. Below, we discuss briefly the various constructs and the resulting hypotheses.

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 [42,43,44,45,46,47]. 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 competitors [53]. Mostly, organizations try to implement EMA practices when their competitors have begun this practice [54]. Hence, we can infer that:

Hypothesis 2 (H2).

Institutional pressures (coercive, normative, and mimetic) positively influence the 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 prevailing market conditions causing a firm to actively respond to present or future challenges [55]. Such changes bring many actual or perceived ecological-environment-related uncertainties to the natural environment [56]. Scholars suggest that environmental strategies are influenced by environmental uncertainty in firms [56]. Hence, it is proposed that:

Hypothesis 3 (H3).

Perceived environmental uncertainty positively influences the environmental strategy of a firm.

In a situation of a high level of uncertainty, complex environmental-accounting information helps managers to improve their decision-making quality and reduce negative impacts on environmental performance. This information helps them to choose between different solutions and alternatives. For example, transparency and accountability guide the decision-making of managers to improve corporate environmental performance [57]. Prior studies, such as [56], showed that uncertainty in external environments sufficiently affects an organization’s accounting practices. In addition, environmental uncertainty is identified as one of the factors that encourages the adoption of environmental accounting [58], which leads to corporate environmental performance [25]. Based upon the discussion given above, this study proposes that:

Hypothesis 4 (H4).

Perceived environmental uncertainty positively influences the environmental management accounting practice of a firm.

2.5. Environmental Strategies, Environmental Accounting and Corporate Environmental Performance

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

Empirical research results show that environmental strategies lead companies to apply a system of environmental management, with the proper implementation of environmental accounting (EMA). Indeed, ref. [63] argued that both environment accounting and environment management systems aim to link a company’s goals to achieving corporate environmental performance. According to [64], a company’s environmental strategies can improve the corporate environmental performance (CEP) that appears when using environmental performance indicators. Today, every company must develop an effective environmental strategy (ES), environmental management control system (EMCS), and environmental information system (EIS). Hence, we put forward another related proposition, that:

Hypothesis 5 (H5).

The environmental strategy of a firm positively influences the environmental management accounting practice of a firm.

2.6. Mediating Relationships

Prior research does not have enough evidence about the relationship between institutional 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 influence of various institutional pressures, firms respond by bringing in the best EMS to reduce the environmental effects for better decisions about EP. EMA provides diversified types of accounting information for beneficial decision making about environmental management [65,66]. EMS and EMA practices are implemented to sustain the environmental performance of firms. Previous studies emphasized that coercive, normative, and mimetic pressures increase the probability of the implementation of EMA, e.g., [62,65,67]. The best EMA execution expands the EP of organizations. Different scholars demonstrated the positive impact of EMA on the EP of organizations [7,25,68,69]. Prior research also noted that EMA mediates the relationship between various institutional pressures and firms’ corporate performance, suggesting the further possibility for a serial mediation relationship, in terms of ES and EMA, between institutional pressures and the CEP of a firm. Therefore, we develop the following two hypotheses:

Hypothesis 6 (H6).

Environmental management accounting practices mediate the relationship between institutional pressures (coercive, normative, and mimetic) and the corporate environmental performance of a firm.

Hypothesis 7 (H7).

An environmental strategy and environmental management accounting practices 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 considering developing environmental strategies that lead to better implications for environmental accounting standards. An environmental strategy links corporate practices and the natural environment [7]. The lack of information regarding green accounting and changes in the environment can be improved by adopting proper environmental strategies [70]. Prior studies suggested that environmental uncertainty affects environmental performance via environmental strategies and EMA through a mediation mechanism [25,56]. Based on the above discussion, we can formulate the two more hypotheses below:

Hypothesis 8 (H8).

Environmental management accounting practices mediate the relationship between environmental uncertainty and the corporate environmental performance of a firm.

Hypothesis 9 (H9).

An environmental strategy and environmental management accounting practices mediate the relationship between environmental uncertainty and the corporate environmental performance of a firm.

2.7. Moderating Relationships

2.7.1. Top-Management Support

Top-management support is a key supporting element for the implementation of different 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 the whole organization to design appropriate environmental strategies and deal with environmental uncertainty [25]. Top-management support is essential to ensure an organization’s understanding of and commitment to environmental issues. Without the ownership of top management, a firm might lose interest in implementing an environmental strategy and obtaining the desired benefits from it [12]. Hence, we propose that:

Hypothesis 10 (H10).

Top-management support moderates the relationship between institutional pressures (coercive, normative, and mimetic) and the environmental strategy of a firm.

Institutional pressures motivate firms to adopt EMA practices. Top-management support plays a vital role in responding to institutional pressure through two methods. Firstly, top-management support makes companies capable of implementing EMA [12]. EMA implementation usually needs various organizational resources; access to these is granted by the top management. Secondly, it is easier to implement EMA within firms because the 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 institutional pressures (coercive, normative, and mimetic) and the environmental management accounting practice of a firm.

2.7.2. Perceived Benefits

Previous research prescribed that institutional pressures affect environmental management practices and environmental strategies [10,43]. An effective environmental management strategy cannot be performed without the realization of perceived befits. Environmental management practices can help companies to fulfill their environmental responsibilities and to estimate the potential financial benefits for improving their environmental, as well as financial, performance [20,71]. Previous literature referred to the various benefits of environmental management practices, such as identifying opportunities to be cost-effective, avoiding the preliminary decision-making costs related to new investments, enabling better decisions for product pricing and relevant product-mix choices, and enhancing the CEP of a firm [12,71,72]. Accordingly, if organizations are concerned about the perceived benefits of the institutional pressure and environmental strategies relationship, it would be beneficial to adopt environmental management practices. Therefore, we move on with another hypothesis, 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 competitive rewards [13,73,74]. A recent study found that perceived benefits positively moderate institutional pressure and EMA, indicating that firms will be attracted to adopting EMA under 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 of a firm.

3. Methodology

3.1. Sample and Data Collection

The downside of heavy industrialization and modern manufacturing has left theorists and practitioners to deal with assessing the resultant negative impact and suggest measures to control the activities of these modern firms who also happen to be major beneficiaries of natural resources [3,10,25,75]. Hence, our unit of analysis for the present research was also manufacturing firms from different sectors. Furthermore, it was also ensured that the research only focused on representatives from these firms who were either middle or senior managers involved with such key decision-making roles, such as financial controlling and management accounting functions [3,72].

Based on a cross-sectional survey design, this study made use of the purposive sampling 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 Jiangsu province, namely, Suzhou city, which is one of the ten busiest industrial and manufacturing sectors in China. The choice of this industrial hub is also justified because this zone lies along the Yangtze River Delta—a region that is more affected by both water and air pollution, emphasizing the need to observe the status of EMA measures to offer implications for the industry and policymaking [33]. With the help of the local industry office, a contact list of manufacturing firms from various sectors was made, containing a randomized sample of 900 firms. Upon initial contact with these firms, a little over 65% of these firms agreed to participate 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 help our respondents record their responses, the survey was first translated with the help of a bilingual expert and then hosted on a free survey-hosting site. After performing initial testing with some faculty members and a selected team of industry professionals and making suggested improvements, the survey was made available for data collection. We also provided instructions to complete the survey along with the survey link with the respondents on email or WeChat. This exercise took four months, starting from June 2021 to August 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 sample size chosen for analysis was 243; making a 27% response rate comparable to other similar studies, such as [3,25]. The salient characteristics of firms making up our final sample are presented in

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

. Multiple exercises ensured that collected data was well-guarded for time and space bias. In addition, no major variations were noticeable for the two chunks of data collected for this study.

3.2. Measurement of Various Constructs

The survey constituted two sections, namely, demographic information and main measures aimed at measuring different constructs of our study. All these items were measured 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 are available in Appendix B. It is also notable to mention that the present study controlled for firm 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 some sample items for the constructs.

3.3. Coercive Pressure, Normative and Mimetic Pressure

The institutional pressure variable under three categories (i.e., coercive, mimetic, and normative) was measured using the instrument from [76]. Each of these dimensions was measured 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 regulations are important for our firm to implement environmental management accounting’. Similarly, a sample item for normative pressures is ‘the increasing environmental consciousness of consumers have spurred our firm to implement environmental management accounting’; and for mimetic pressure, the sample item is ‘the leading companies in our industry are well-known for implementing environmental management accounting’.

3.4. Perceived Environmental Uncertainty

Perceived environmental uncertainty was measured using 7 items from [55]. One sample item for this measure, for example, is ‘My organization is facing a challenge due to uncertainty 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 sample item 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 sample item 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 ‘The implementation of environmental management accounting can receive full support from our top management team.’

3.8. Perceived Benefits

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

3.9. Corporate Environmental Performance

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

4. Data Analysis and Results

4.1. Measurement Model

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

To begin with thereliability and validity testing, the discriminant and convergent validity measures were checked along with the reliability of the measurement model.

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.

provides the validated measures of discriminant validity based on the square-root values of AVE for each construct [79]. The available model was also tested for the presence of multicollinearity. All individual measures showed a VIF value below the threshold value of 3.3 recommended by [80].

To guard against common-method bias, we also ensured the recommended measures while designing the survey items, as laid down by [76,81]. We explicitly made it clear to all respondents 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 randomized while presenting the same section to different respondents to highlight any unengaged responses. It thus ensured that common-method bias was not a problem with the present research, as the VIF threshold value for all constructs was below the cut-off value of 3.3; the highest variation inflation factor (VIF) obtained was 3.01 [82].

To perform the reliability for different constructs Cronbach’s alpha measure was employed. All observed measures confirmed the validity level α = 0.7, as shown in the

Table 3. Reliability and convergent validity.

S No	Construct	Item	Factor Loading	Cronbach’s Alpha Value	Composite Reliability	Average Variance Extracted
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 environmental uncertainty	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 management accounting	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 environmental performance	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

below. All other reliability measures were also found to be following the standards recommended in the literature [79].

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. 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

, below. All indices meet the various goodness-of-fit criteria for different measures of APC, R-squared ARS, AVIF, etc. [83,84,85]. The relative path sizes for different constructs are also provided for main effects, mediation effects, and moderating effects in the

Table 5. Summary of direct effects.

Hypothesis	Path	Path Coefficient	Standard Error	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	0.259

Significance 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 environmental uncertainty exert a more pronounced influence on the resulting environmental strategy of a firm, the strongest of these come from the coercive pressures facing a firm, with a β-value of 0.413. The normative and mimetic pressures follow successively, in order, with the least coming from that of the mimetic pressures; however, still, this is stronger than environmental 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 is reversed for the consideration of EMA practices within a firm, as shown by the results here. 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 coercive and normative pressures having an almost equal moderate impact and mimetic pressures with the weakest magnitude in terms of β-value and significance, supporting H3 and H4. It points to the fact that, no matter how receptive firms may be to institutional pressures, the implementation of EMA practices comes in response to the influence of surrounding environmental uncertainty, which is in line with the shreds of evidence from past studies [25,87]. In line with this, the presence of an effective environmental strategy not only 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 a β-value of 0.509 and p-value < 0.001; therefore, this lends enough evidence to accept related hypothesis H5, as also noted by [6,25,88], who investigated the impact of environmental strategy 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 attempts to explore the concurrent effects of institutional pressures and perceived environmental uncertainty on the realization of environmental strategies as well as the implementation of environmental management accounting practices. We are also interested to find out how these two factors influence the resultant corporate performance in a sequential mediation fashion. In the case of institutional pressures, once again, the effects of coercive pressures and normative pressures are stronger, as compared to mimetic pressures. Results indicate that an environmental strategy exhibits a strong positive mediation effect for various relationships between coercive, normative, and mimetic pressures, respectively, and the implementation of EMA practices.

For H6, our results lend partial support. Researchers in the past have observed the mediating effect of environmental strategies on combined institutional pressures regarding EMA practices—see, for example, [6]—but this study segregates institutional pressures to understand the relative mediation effects of environmental strategies on different dimensions of institutional pressures, along with the association of EMA practices in a firm. Results conclude that the implementation of EMA practices can successfully mediate the relationships between coercive and normative pressures with the corporate environmental performance of a firm; however, no mediation effect is observed for the relationship between mimetic pressures and a firm’s corporate environmental performance.

To test the serial mediation effects of environmental strategy and EMA practices, the Warp-PLS7 tool is equipped with powerful and advanced functionality that allows the researchers to study both direct and indirect effects along single or multiple paths, in conjunction [89]. Results of mediation effects, as shown in

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

Hypothesis	Path	Direct Effect	Effect Size	Indirect Effect	Effect Size	Total Effect	Status of Hypothesis
	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.

, show that, as predicted by H7, the relationship between various institutional pressures and the corporate environmental performance of a firm are also sequentially mediated in the presence of both environmental strategy and EMA practices. For example, for the relationship (CP→ES→EMA→CEP), the results provide strong support, with a β-value of 0.12 with a p-value < 0.001. Similar results are observed for normative and mimetic pressures, thus supporting the argument that these institutional pressures lead to an eventful environmental strategy that ultimately drives firms towards implementing EMA practices and eventually to the successful corporate performance, in line with results drawn by [6].

Moving along to the mediation results, we observed that environmental strategy strongly mediates the relationship between perceived environmental uncertainty and environmental 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 perceived environmental uncertainty and resultant corporate performance of a firm is observed to be much stronger and more significant, i.e., β = 0.299, p-value < 0.001, thus lending support for H8. However, H9 fails to find support for the serial mediation effect of environmental strategy and EMA practices together, because the p-value > 0.05. It is interesting to note that the sequential mediation of environmental strategy and the implementation of EMA practices is observed to be significant for the relationship between institutional pressures and the corporate performance of a firm, but the same fails to find evidence in case of the relationship between environmental uncertainty and corporate firm performance.

4.5. Assessment of Moderation Effects

The research hypothesized that top-management support moderates the relationship between institutional pressures and environmental strategy (H10) and also the relationship between institutional pressures and EMA practices (H11) but results (summarized in

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.

) failed to find support, except for a relationship between coercive pressures and EMA practices. It is interesting to note that, contrary to our expectations, results showed a negative effect of top-management support on the association of coercive pressures with EMA practices. It means that, with more top-management support, this relationship weakened in practice.

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

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.

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, the firm’s overall environmental strategy is, however, strongly influenced by the three pillars of the institutional environment when compared to the effect of perceived uncertainty. It testifies to the significance of a holistic institutional regime for a firm’s long-term commitment to fulfilling its environmental responsibility through implementing EMA measures in part and formulating a comprehensive environmental strategy to achieve successful firm performance on the whole, as also noted in the extant literature [88,91]. Prevalent EMA systems help in managing relationships with various stakeholders and gaining a more approved and responsible social and societal status [6,43].

The present study has also investigated the mediating effect of a firm’s environmental strategy on the association of various institutional pressures and EMA practices. Results suggest a strong positive-mediation influence of environmental strategy for coercive, normative, and mimetic pressures’ relationships with EMA practices. The effect of mediation by EMA alone is observed to be weaker for the different relationships between institutional pressures and a firm’s corporate performance; however, the serial mediation influence of environmental strategy and EMA practices is observed to be significantly stronger for the relationship between coercive pressures and corporate firm performance. In the case of normative and mimetic pressures, the same relationship shows a relatively weaker influence. The extant literature has also supported similar findings for the mediation influence of EMA between the relationship of the environmental strategy of a firm and its corporate performance [25,55,88,92,93].

The mediating influence of EMA practices is observed to be the strongest for the relationship between perceived uncertainty and a firm’s corporate performance, showing the importance of EMA practices as a trusted and well-accepted safeguard mechanism to ensure a firm’s performance under more complex and more turbulent environmental conditions, as also noted by [25,87]. As the external market dynamics are driving the transformation of modern businesses into e-businesses, firms feel more inclined to adopt EMA practices to aid them in effective decision making [10,25,94].

Referring to the moderation effects, this study noted some notable positive influence of perceived benefits on the relationship between mimetic pressures and environmental strategy, while this effect is stronger for the relationship between mimetic pressures and EMA practices. This indicates that firms are more inclined to engage in practical environmental strategies and the implementation of an effective EMA mechanism when they observe their competitors doing the same. This drive obtains a further boost when firms perceive that enough benefits are associated with the implementation of EMA to outweigh the costs [95]. However, at the same time, results show that the effect of coercive pressures on the implementation of EMA practices becomes somewhat dampened under the influence of top-management support. Although it may appear as counter-intuitive, as the effect of coercive pressures is much more pronounced as compared to the other two institutional pressures, it still perhaps shows that top-management commitment is shaped under the influence of either normative or mimetic pressures. One possible explanation for this effect is the active role of government and the prevalent state of regulations that every organization has to follow and, therefore, top management’s active support is more focused 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 uncertainty on the appropriate choice of an EMA practice and corresponding environmental strategic plan in achieving eventful corporate environmental performance. It is one of the foremost attempts to draw a comparison between the involvement of institutional pillars and the environmental dynamism in conjunction with determining the corporate environmental strategic choices of firms in China—the most populous economy in the world. Results vindicate that firms’ choices of an appropriate environmental strategy is influenced more by institutional pressures as compared to the effect of environmental uncertainty; whereas the implementation of EMA practices is contingent more upon relative environmental uncertainty. The influence of institutional pressures on the implementation of EMA practices is somewhat limited. Moreover, environmental strategy and corresponding EMA practices also exert a sequential mediation effect on the various relationships between three institutional pressures and a firm’s corporate environmental performance. The study also notes some moderating effects of top-management support and perceived benefits for the relationship between coercive pressures and EMA practices, and the relationship between mimetic pressures and EMA practices.

6.1. Research Implications

Findings imply several notable recommendations for policy making and management practices. The resounding role of coercive pressure delivers a clear message for policy makers, to keep pushing, on their part, for the formulation and implementation of effective regulatory frameworks to encourage eco-friendly practices. It will also make the organizations think about their social and societal status and make them more responsible toward various stakeholders [6,76]. Normative pressures and mimetic pressures also positively influence EMA practices and corporate performance; hence, the government and other institutional bodies should offer incentives and recognition to those organizations that champion the successful adoption and implementation of EMA practices and ecofriendly measures [6].

Furthermore, corporate performance is influenced heavily by the choice of a firm to plan its environmental strategy and implement EMA practices under the influence of top-management commitment. It seems to be imperative for firms to think over environmental strategies from a holistic perspective. Firms should invest in long-term EMA measures that will not only help to achieve environmental strategic objectives but will also provide effective accounting information and control systems. Alongside this, management should also encourage employee participation and assimilation with these EMA programs by investing in training and development for them [3]. It will prepare future managers to learn and appreciate the environmental perspective and make them ready to be a part of sustainable corporate governance and performance. As informed from the literature, it is evident that firms outperform their competitors in financial as well environmental aspects once they can delineate long-term sustainable environmental management practices at all levels [96,97]. It is recommended that top-management support, indeed, infuses the same into the very culture of the organization to guide successors toward an end-to-end alignment of environment-friendly practices [10].

The present study offers notable avenues for researchers to build upon new propositions. The relative supremacy of institutional pressures over environmental dynamism is studied in the social settings of a government-controlled environment. Future research may benefit from testing a similar model under the influence of the market economy, to compare the effects of three institutional pressures and environmental uncertainty. Future research may also observe whether the choice of environmental strategy and implementation of EMA measures could apply some influence together, in an intermediary fashion, on the relationship between environmental uncertainty and corporate performance, which remains 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 be advisable 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 data collection performed through both online and face-to-face modes are recommended to dig out possibilities not covered in the present research. Lastly, an element of social-desirability bias may also come into effect, which can be addressed using objective data in support of evidence for existing EMA measures obtained through an interview with multiple stakeholders.

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