LITERATURE REVIEW
Oversea key researches
Environmental management accounting (EMA) is increasingly recognized globally as a vital approach for achieving sustainable business practices that balance economic benefits with environmental protection While EMA has been widely adopted in developed countries, research on its application spans various fields, particularly in the manufacturing industry, which significantly contributes to environmental degradation due to its operational nature In contrast, service organizations, despite having less apparent environmental impacts, also pose considerable direct and indirect environmental challenges Studies on the implementation of EMA highlight these distinctions and underscore the need for broader attention to service sectors.
1.1.1 The overall research related to the diffusion of EMA and the need for adopting EMA
Despite the ongoing development of Environmental Management Accounting (EMA), research primarily emphasizes its tools and applications within enterprises (Bennett et al., 2003) Consequently, while some businesses have begun to implement EMA, overall adoption remains limited Many organizations have yet to adopt a comprehensive approach to environmental costing and often respond passively to environmental challenges.
Environmental Management Accounting (EMA) has seen an increase in application and relative use from 2002 to 2010, as noted by Schaltegger et al (2013) Despite this growth, research by Burritt and Tingey-Holyoak (2012) indicated that only 50% of enterprises employed sustainability-related cost accounting, with many other relevant tools remaining underutilized The slow development and low adoption rates of EMA can be attributed to the lack of guidelines, despite heightened stakeholder interest in environmental issues since the 1990s (Lee, 2011).
Research indicates that environmental management practices vary significantly between developed and developing countries, with findings suggesting that environmental challenges are generally less severe in developing economies compared to their developed counterparts (De Oliveira et al., 2010; Kang et al., 2012).
Research by Hsiao et al (2014) confirms that the implementation of Environmental Management Systems (EMS), including Environmental Management Accounting (EMA), is more prevalent in developed countries There is significant variation in how enterprises adopt environmental management practices, leading to differences in the comprehensiveness and ambition of their EMS objectives (Pham and Baird, 2015) While certain industries such as manufacturing, chemicals, farming, construction, and electronics have received considerable attention, the service sector, particularly the hotel industry, remains under-researched (Chan and Hawkins, 2012) Additionally, Qian et al (2011) highlight that EMA studies predominantly focus on highly polluting and energy-intensive industries.
1.1.2 Research about the roles of EMA application in enterprises
Research by Vasile and Man (2012) indicates that traditional management accounting systems often fail to deliver valuable and relevant information for effective environmental management and the oversight of related environmental costs This inadequacy results in a significant underestimation of the costs and benefits that businesses could realize by adopting appropriate Environmental Management Accounting (EMA) tools, as highlighted by Christ and Burritt (2013).
Effective environmental management practices in enterprises can lead to cost savings and reduced environmental impacts by optimizing resource usage, waste, and energy emissions However, a lack of guidance on Environmental Management Accounting (EMA) hinders the effective collection and analysis of environmental data, posing significant challenges to integrating these issues into existing accounting systems This gap complicates environmental performance evaluation and benchmarking, particularly in areas like waste management and pollution prevention (Masanet – Llodra, 2006; Jamil et al., 2015).
Traditional accounting methods often focus on resource costs and accumulation, neglecting the importance of activities, which limits their effectiveness in identifying necessary data (Jones, 2010; Vasile and Man, 2012) Furthermore, conventional management accounting systems may fail to provide accurate information for environmental management and related cost management (Gale, 2005) Consequently, businesses tend to underestimate the costs and benefits associated with effective environmental management To address this issue, there has been a growing global trend in researching Environmental Management Accounting (EMA).
In 1998, a Working Group was established to discuss and negotiate environmentally-friendly practices, comprising a diverse range of members including national environmental agencies, international organizations, industry representatives, accounting firms, academia, and United Nations agencies (Jasch, 2003) The group specifically focused on techniques for quantifying environmental costs In 2001, they published a report titled “Improving the Role of Government in the Promotion of Environmental Management Accounting,” which outlined principles and procedures for developing national Environmental Management Accounting (EMA) guidelines and frameworks The report highlighted that both conventional cost accounting and non-environmental costs are often overlooked in management practices (Farouk et al., 2012).
1.1.3 Research on factors impacting the EMA application in enterprises
Recent investigations highlight that the adoption of Environmental Management Accounting (EMA) tools in enterprises is influenced by both internal and external factors (Mensah, 2014) Specifically, research by D Jalaludin et al identifies key elements affecting the implementation of EMA among manufacturing companies in Malaysia.
A study conducted in 2010 involving 74 accountants revealed that they faced significant pressure from customers, shareholders, and management regarding environmental performance, which in turn influenced their management accounting practices and the adoption of Environmental Management Accounting (EMA) Research by Bartolomeo et al (2000) assessed the economic performance and future potential of 84 companies across Germany, Italy, the Netherlands, and the United Kingdom, specifically in the chemical, pharmaceutical, energy, and printing sectors The findings indicated a moderate interest in EMA among European companies, highlighting the need for increased focus over time Additionally, the majority of surveyed companies had established their own environmental strategies, with over half implementing an Environmental Management System (EMS) and employing environmental technical staff.
In the research sample, companies are more concerned about pollution control, the implementation of environmental cost allocation is only limited, and most
A recent study found that 11 companies prioritize short-term decisions, leading to minimal consideration of external impacts The research highlighted that these companies invest limited time and resources into assessing environmental parameters, often due to a lack of technical equipment and a general disinterest in externalities.
In their 2012 study, Christ and Burritt examined the influence of environmental strategy, corporate structure, industry, and firm size on the application of Environmental Management Accounting (EMA) through two multivariate regression models analyzing survey data from accountants They found that environmental, industry, and enterprise strategies significantly impacted the current and future use of EMA, while corporate structure showed no effect However, a limitation of the study was the reliance on accountants as survey participants, which may have led to an incomplete understanding of environmental activities within the enterprise, and the research did not account for the years of experience or positions of the respondents (Christ and Burritt, 2013).
In his 2013 research, Al Kisher explored various factors influencing the adoption of Environmental Management Accounting (EMA) by integrating multiple theories, including contingent, institutional, and legitimacy theories Kisher identified eight key factors that can impact a company's intention to implement EMA: (1) company strategy, (2) nature of formalization, (3) corporate culture, (4) support from senior executives, (5) pressure on enforcement, and (6) regulatory compliance.
A legal review reveals that legitimacy considerations, alongside pressure from stakeholders, play a role in the intention to adopt an Environmental Management Accounting (EMA) system Research indicates that factors such as age, education level, and years of work experience significantly influence this intention Additionally, organizational culture, environmental strategy, and technology are critical variables affecting EMA adoption However, in Libyan enterprises, a centralized management style within business strategy and organizational culture negatively impacts the intention to implement EMA practices.
Key research in Viet Nam
The implementation of Environmental Management Accounting (EMA) in Vietnamese enterprises remains largely unexplored, as highlighted by Phan Thi Bich Chi et al (2016) Current research on EMA in Vietnam is limited and can be categorized into several key areas.
1.2.1 The overall research related to the general perspectives of EMA and current EMA application in Vietnam
Recent studies in Vietnam focus on Environmental Management Accounting (EMA) systems, exploring concepts, methods for determining income and environmental costs, and accounting practices Research by Trinh Hiep Thien (2010) assessed the application of EMA tools in Vietnamese manufacturing enterprises through a practical survey and statistical analysis The findings revealed that most enterprises lack experience in management accounting, and senior managers have only a casual understanding of EMA Notably, manufacturing enterprises not engaged in environmentally harmful activities show limited interest and implementation of EMA practices.
Based on research by United Nations Division for Sustainable Development (UNDSD, 2001) and International Federation of Accountants (IFAC, 2005), in her
In her 2014 research, Hoang Thi Bich Ngoc examined the implementation of Environmental Management Accounting (EMA) in Japan and proposed strategies for its application in Vietnamese enterprises Similarly, Giang (2019) analyzed EMA practices in Japan, Korea, and Germany, while assessing the current state of EMA in Vietnam This comparative analysis led to recommendations for enhancing EMA in Vietnamese businesses.
In 2016, a study examined the state of environmental accounting practices in manufacturing enterprises in Quang Ngai Province, focusing on the processes of recording, analyzing, and reporting accounting information related to assets, liabilities, costs, and environmental income The research identified limitations in environmental accounting and proposed solutions for improvement Additionally, Hoang Thi Bich Ngoc's 2017 study utilized both qualitative and quantitative methods to evaluate the environmental cost management accounting system within the Vietnam Oil and Gas Group, highlighting both the strengths and weaknesses of the current practices.
1.2.2 Researches about the role of EMA application in Vietnamese enterprises
Research highlights the Environmental Management Accounting (EMA) system as a crucial tool for enterprises, aiding in informed decision-making and enhanced cost control Le and Nguyen (2016) provide a comprehensive overview of EMA, detailing its advantages and offering strategies to shift perspectives on environmental economics.
1.2.3 Research on factors impacting the EMA application in enterprise
According to research factors affecting the adoption of environmental cost management accounting, Pham et al., (2016) used contingency theory and institutional theory and carried out data collection through survey questionnaires
The study identifies seven key factors influencing the implementation of environmental cost management accounting, including coercive pressure, normative pressure, mimetic pressure, administrator awareness, environmental strategy, organizational culture, and human resources Notably, five of these factors align with previous research by Thi Nga Nguyen (2016, 2018a, 2018b, 2018c) Additionally, factors such as the role of management accounting, internal communication, and business environmental uncertainty are recognized as facilitators of environmental management accounting (EMA) adoption Other considerations include the business environment and task complexity However, the study's limitations include a narrow respondent base, primarily consisting of accountants and management accountants, with many participants from companies lacking a dedicated management accounting department.
According to another study by Thi Huyen Tram Nguyen and Ngoc Toan Pham
A study conducted in 2018 utilized both qualitative and quantitative methodologies, specifically EFA analysis, to identify six key factors that positively influence Environmental Management Accounting (EMA) These factors include government support, company size, managerial perception, business strategy, corporate culture, and the presence of qualified internal accountants.
Gap research and the aims of study
The automobile industry is crucial to Vietnam's economic development; however, it significantly contributes to environmental issues, particularly air pollution Research on the application of Environmental Management Accounting (EMA) in Vietnamese automobile enterprises can enhance their performance while also improving the living environment By synthesizing and evaluating previous studies conducted in Vietnam, this research aims to address these pressing concerns.
The author has identified a gap in research regarding the use of quantitative methods to explore the factors influencing the implementation of Environmental Management Accounting (EMA) in the Vietnamese automobile industry.
This research investigates the factors influencing the potential implementation of Environmental Management Accounting (EMA) within Vietnamese automobile industry enterprises It aims to quantify the impact of each factor using reliable methodologies The study will follow a structured approach to ensure comprehensive analysis and accurate results.
- 1st step: Conducting research about the current situation of the application of EMA in Vietnamese automobile industry enterprises
- 2nd step: Surveying and synthesizing factors impact the use of EMA in Vietnamese automobile industry enterprises
- 3rd step: Measuring the level of impact of factors mentioned above
- 4th step: recommendations and suggestions will be made to enhance the possibility of the use of EMA in Vietnamese automobile industry enterprise
This chapter provides a comprehensive overview of both international and Vietnamese research pertinent to the thesis It highlights the accomplishments of prior studies while also addressing their limitations, ultimately guiding the author in establishing a clear research direction for this dissertation.
THEORETICAL FOUNDATIONS
Overview of Environmental management accounting
2.1.1 The Development of Environmental Management Accounting
In the 1970s, the United States implemented requirements for disclosing pollution information, such as its material effects on pollution abatement activities, as noted by Feedman and Jaggi (1981) However, Ullman (1976) argued that companies often lack awareness of their environmental impacts, indicating that changing management behaviors involves both motivational and informational challenges To address this issue, Ullman proposed a model focused on the provision of environment-related information, marking an early development in physical environmental accounting systems.
In the early 1980s, research by Bouma and Van der Veen (2002) established a connection between environmental management and management accounting, highlighting the latter's potential in addressing environmental issues The enactment of significant U.S environmental regulations, such as the Superfund Amendment and Reauthorization Act of 1986, not only strengthened existing laws but also influenced other countries like Canada and the UK to implement similar regulations These evolving regulatory demands demonstrated that effective environmental programs could reduce impacts while providing financial benefits, creating "win-win situations" (Walley and Whitehead, 1994) As regulations became more stringent, businesses increasingly relied on management accounting to evaluate the costs and benefits of environmental management programs, paving the way for the development of environmental management accounting.
In the United States, environmental accounting and environmental management accounting emerged early due to community pressures influencing government policies and the environmental protection movement Key policies included compensation for environmental damage, emission restrictions, and waste treatment regulations According to Huynh Duc Long (2015), the primary aim of environmental accounting during that period was to assist managers in decision-making and ensure compliance with the information requirements set by the United States Securities and Exchange Commission.
In the 1980s, environmental pressures such as the greenhouse effect, ozone depletion, and resource shortages significantly impacted businesses, prompting the German government to revise its environmental policies This shift compelled companies to seek tools for assessing costs while balancing economic benefits with environmental protection As a result, Environmental Accounting emerged in Germany, paralleling developments in the United States This field is grounded in a legal framework that includes Environmental Law, Waste and Recycling Law, and regulations governing environmental responsibility throughout a product's lifecycle Faced with resource scarcity, Environmental Management Accountants in Germany have prioritized material flow cost accounting and analysis, focusing on the quantification of material usage and annual emissions.
In the early 1990s, a growing focus on environmental management led to the introduction of environmental auditing, which played a significant role in advancing environmental management accounting practices.
Management accounting's role in addressing environmental issues and enhancing environmental performance has gained significant attention (Gray and Bebbington, 2000) Research highlights the importance and advantages of environmental management accounting, with various European projects, particularly in the Netherlands and the United Kingdom, revealing insights into environmental costs and opportunities for cost reduction (Bartonlomeo et al., 2000) Concurrently, Environmental Management Accounting began to emerge in Korea, focusing on measuring environmental performance costs, allocating these costs based on activities, and assessing environmental benefits (Huynh Duc Long, 2015).
In the late 1990s, Japan began researching and implementing Environmental Management Accounting (EMA) in response to resource scarcity and the demand for sustainable development As a late adopter compared to developed nations, Japan has effectively utilized environmental accounting to enhance economic efficiency while safeguarding the environment, drawing on the experiences of countries like the United States, Germany, and South Korea (Huynh Duc Long, 2015) Their approach incorporates both monetary and physical measures, emphasizing material flow cost accounting and product life cycle costing in their EMA practices.
In the 21st century, Environmental Management Accounting (EMA) has gained significant attention due to the financial losses organizations face from environmental incidents (Schaltegger and Burritt, 2017) Various international governments and professional accounting bodies, including the United Nations Division for Sustainable Development and the International Federation of Accountants, are actively promoting EMA Key documents like "Environmental Management Accounting: Procedures and Principles" (UNDSD, 2001) and "International Guidelines: Environmental Management Accounting" (IFAC, 2005) have been developed to guide organizations in implementing EMA practices.
Environmental management accounting (EMA) is gaining traction among researchers, professionals, entrepreneurs, and policymakers as a vital tool for effective environmental management The growing interest in EMA is evident in the increasing number of discussions at conferences and seminars, highlighting its development as a prominent trend Furthermore, studies exploring the application of EMA across various industries are on the rise, indicating its expanding relevance and importance in sustainable practices.
Management accounting has evolved significantly, shifting its focus from merely providing internal information to emphasizing waste minimization and value creation through efficient resource use, aligning with sustainable development goals This evolution has led to the emergence of Environmental Management Accounting, which has gained increasing attention as a response to the challenges faced by traditional management accounting systems in addressing environmental activities.
This section will explore the various types of information related to Environmental Management Accounting (EMA) and demonstrate how EMA serves as a vital support mechanism for environmental management It achieves this by offering environmental cost categorization schemes and innovative costing approaches.
2.1.2 Definition and Categorization of Environmental Accounting
According to the United States Environmental Protection Agency (USEPA, 1995) The environmental management accounting system consists of three different fields: environmental national accounting, environmental financial accounting, environmental management accounting
Environmental National Accounting is a specialized branch of National Accounting that emphasizes the valuation and management of a nation's natural resources It involves tracking the material flow associated with the utilization of these resources, assessing the costs incurred for environmental protection, and accounting for the degradation resulting from resource consumption This approach aims to provide a comprehensive understanding of the economic impact of natural resource management and environmental sustainability.
22 resources….To provide information to the public, promote the use of sustainable resources, sustainable development economy
Environmental Financial Accounting is a specialized division within a company's financial accounting department that addresses accounting issues associated with environmental factors It focuses on specific environmental costs and income, providing valuable information to external stakeholders This approach aims to enhance the company's competitiveness in the market.
Environmental Management Accounting (EMA) is a specialized branch of a company's management accounting department that addresses environmental accounting issues It encompasses methodologies such as Material Flow Accounting (MFA) and Life Cycle Analysis (LCA), along with assessments of environmental costs and income The primary goal of EMA is to supply vital information to the enterprise, thereby enhancing the decision-making process.
Environmental accounting is a comprehensive field that encompasses all aspects of accounting influenced by an organization's environmental initiatives This discipline is applicable across various levels, including countries, regions, and businesses (Bennett and James, 2017) This study specifically emphasizes the role of environmental accounting within enterprises.
Some characteristics of the automobile industry enterprises
Since its inception, the automobile industry has played a crucial role in various sectors by fulfilling the growing demand for transportation and logistics Additionally, it significantly contributes to the socio-economic development of individual countries and the global economy as a whole.
2.2.1 Some characteristics of automobile industry enterprises
2.2.1.1 Firstly, the automobile industry needs a huge and long-term investment
Compared to the investment in the majority of other industries, capital investment in the automotive industry is much higher because each car has up to 20 thousand to
With 30,000 unique components, this type of vehicle relies on diverse production technologies, each with distinct characteristics Many of its spare parts are not interchangeable with other vehicles, leading to significant investment costs in manufacturing.
In Vietnam, the automobile industry has become an important industry, meeting the domestic market demand for trucks, passenger cars and some special-purpose vehicles
On July 24, 2014, the Prime Minister of Vietnam signed Decision No 1211/QD-TTg, which approved the Planning for the development of the country's automobile industry through 2020, with a vision extending to 2030 This decision follows the earlier Decision No 1168/QD-TTg, which outlined a comprehensive strategy for the growth of Vietnam's automobile sector by 2025, aiming for significant advancements by 2035.
The Plan aims to enhance Vietnam's automobile industry, establishing it as a key sector that meets domestic demand for trucks, passenger vehicles, and specialized vehicles It seeks to position Vietnam as a supplier of automotive components and high-value parts within the global automotive supply chain, thereby contributing to economic growth and fostering the development of other industries.
2.2.1.2 Secondly, the products of the Automobile Industry have a very high value
The automobile industry is characterized by high-value products, transforming cars into more than just vehicles; they now resemble mobile homes and symbolize wealth and prosperity With prices ranging from tens of thousands to hundreds of thousands of dollars, cars consist of nearly 30,000 intricate details, necessitating sophisticated manufacturing processes This complexity has positioned the automobile industry as a significant customer for various other sectors.
2.2.1.3 Thirdly, the Automobile industry requires technology, and high supporting industries
The automobile industry relies heavily on advanced technology, as each vehicle consists of thousands of unique components, each adhering to specific technical standards and manufacturing methods As the industry evolves, the complexity of these parts has increased, necessitating mechanical and technical support beyond human capabilities Modern machinery not only alleviates risks and burdens but also, under human supervision, ensures precise manufacturing and assembly of components, resulting in final products with minimal errors.
The automotive industry is heavily reliant on advanced technology, which presents both opportunities and challenges for manufacturers Keeping pace with technological advancements is crucial, as failure to do so can lead to product obsolescence and unmet customer demands In Vietnam, the influence of foreign technologies from countries like Korea, Japan, and Germany is significant, as these technologies are integrated into the production and assembly of various vehicle types.
Producing a car involves thousands of intricate details, making it impossible for a single business to handle every aspect independently This complex process relies on collaboration with various supporting businesses, forming a vast supply chain The auxiliary industry plays a crucial role by providing essential components, including mechanical processing, mold making, forging, heat treatment, surface treatment, manufacturing spare parts, and supplying raw materials for painting and dyeing.
2.2.1.4 Fourthly, the Automobile Industry needs a professional and widespread consumption network
High-value products, such as automobiles, require frequent after-sales care services like maintenance and repair Consequently, since the inception of the automobile industry, consumers have preferred purchasing through dealers rather than direct sales For instance, Ford operates over 15,000 dealerships worldwide, ensuring that all customer transactions are facilitated through authorized agents.
2.2.2 Advantages and disadvantages when applying EMA at automobile industry enterprises in Vietnam
The Vietnamese automobile industry remains resilient amid macroeconomic policy changes, thanks to a stable political regime The implementation of various Free Trade Agreements (FTAs), including CPTPP, ASEAN-EU, RCEP, and bilateral agreements with Korea and Japan, presents significant business opportunities for local enterprises Additionally, the young and well-trained workforce in Vietnam enhances the industry's potential, allowing companies to infuse fresh talent into their management teams at competitive costs.
The Vietnamese automobile industry faces significant challenges stemming from both external global business difficulties and internal management shortcomings Despite a slow recovery from the global economic downturn in 2014, factors such as unstable policy situations have adversely impacted foreign trade turnover between Vietnam and countries like Russia and EU nations.
Factors affecting the ability to apply EMA in enterprises
From research results on the application of EMA in the world, and in Vietnam The author has summarized a number of factors affecting the applicability of EMA as follow:
Table 2 3 Factors influencing EMA implementation
Enterprises are affected by pressure from legal regulations of state agencies (Government / authorities)
Chang and Deegan (2010); Qian et al.,(2011); Al Kisher (2013); Jamil et al.,
(2015), Nguyen Thi Nga (2016), Nguyen Thi Hang Nga (2018a, 2018c)
Enterprises are affected by pressure from customers
Chang and Deegan (2010); Qian et al.,(2011); Al Kisher (2013); Jamil et al.,
(2015), Nguyen Thi Nga (2016), Nguyen Thi Hang Nga (2018a, 2018c)
Enterprises are affected by pressure from the parent company / group
Chang and Deegan (2010); Qian et al.,(2011); Al Kisher (2013); Jamil et al.,
(2015), Nguyen Thi Nga (2016), Nguyen Thi Hang Nga (2018a, 2018c)
Enterprises are affected by pressure from financial institutions (banks, insurance ) and investors, shareholders
Chang and Deegan (2010); Qian et al.,(2011); Al Kisher (2013); Jamil et al.,
(2015), Nguyen Thi Nga (2016), Nguyen Thi Hang Nga (2018a, 2018c)
Enterprises are affected by pressures from the press and media
Chang and Deegan (2010); Qian et al.,(2011); Al Kisher (2013); Jamil et al.,
(2015), Nguyen Thi Nga (2016), Nguyen Thi Hang Nga (2018a, 2018c)
Enterprises are affected by pressure from environmental organizations
Chang and Deegan (2010); Qian et al.,(2011); Al Kisher (2013); Jamil et al.,
(2015), Nguyen Thi Nga (2016), Nguyen Thi Hang Nga (2018a, 2018c)
Operations of a business are influenced by information transmitted by firms participating in environmental activities
Qian et al.,(2011); Jalaludin et al., (2011); Al Kisher (2013); Nguyen Thi Hang Nga (2018a, 2018c)
Enterprises are influenced by the knowledge of the staff sent for training on environmental issues
Qian et al.,(2011); Jalaludin et al., (2011); Al Kisher (2013); Nguyen Thi Hang Nga (2018a, 2018c)
The company's environmental performance is influenced by its membership When businesses join professional associations such as (VACPA; ACCA )
Qian et al.,(2011); Jalaludin et al., (2011); Al Kisher (2013); Nguyen Thi Hang Nga (2018a, 2018c)
The business is influenced by the government's environmental protection law
Qian et al.,(2011); Jalaludin et al., (2011); Al Kisher (2013); Nguyen Thi Hang Nga (2018a, 2018c)
The business is affected by the environmental pollution standards / standards set by the government
Qian et al.,(2011); Jalaludin et al., (2011); Al Kisher (2013); Nguyen Thi Hang Nga (2018a, 2018c)
Businesses often mimic the environmental practices that multinational companies do
Qian et al.,(2011); Pham Thi Bich Chi et al., (2016); Nguyen Thi Hang Nga (2018a, 2018c)
Businesses often mimic the environmental activities that their competitors have done
Qian et al.,(2011); Pham Thi Bich Chi et al., (2016); Nguyen Thi Hang Nga (2018a, 2018c)
Businesses often mimic environmental activities that large firms in the same industry do
Qian et al.,(2011); Pham Thi Bich Chi et al., (2016); Nguyen Thi Hang Nga (2018a, 2018c)
Enterprise's environmental management activities are influenced by other companies in the industry
Qian et al.,(2011); Pham Thi Bich Chi et al., (2016); Nguyen Thi Hang Nga (2018a, 2018c)
Corporate environmental management activities are influenced by managers
Qian et al.,(2011); Pham Thi Bich Chi et al., (2016); Nguyen Thi Hang Nga
Environmental policies of the authorities will change in the near future
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga (2018b, 2018c)
The environmental resources that businesses use will be increasingly scarce
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga (2018b, 2018c)
Market demand for green products will increase in the near future
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga (2018b, 2018c)
Green competition in the enterprise's manufacturing sector will become increasingly fierce
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga (2018b, 2018c)
Technology in the production sector of enterprises is rapidly improving for environmental reasons
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga (2018b, 2018c)
The enterprise has a general policy on sustainable development
Ferreira et al., (2010), Chang and Deegan (2010); Qian et al.,(2011);Al Kisher (2013); Christ (2013); Watchira (2014); Nguyen Thi Hang Nga (2018b, 2018c) The enterprise is committed to complying with environmental regulations
Ferreira et al., (2010), Chang and Deegan (2010); Qian et al.,(2011);Al Kisher (2013); Christ (2013); Watchira (2014); Nguyen Thi Hang Nga (2018b, 2018c) The business aims to provide environmentally friendly products
Ferreira et al., (2010), Chang and Deegan (2010); Qian et al.,(2011);Al Kisher (2013); Christ (2013); Watchira (2014); Nguyen Thi Hang Nga (2018b, 2018c) Business plans to obtain Environmental
Ferreira et al., (2010), Chang and Deegan (2010); Qian et al.,(2011);Al Kisher (2013); Christ (2013); Watchira (2014); Nguyen Thi Hang Nga (2018b, 2018c) Enterprises build environmental management solutions for the benefit of the community
Ferreira et al., (2010), Chang and Deegan (2010); Qian et al.,(2011);Al Kisher (2013); Christ (2013); Watchira (2014); Nguyen Thi Hang Nga (2018b, 2018c) Help improve the image of the business, increase profits
Help businesses calculate product prices more accurately Deegan (2003); Gibson and Martin
(2004) Good support for businesses in preparing reports for related parties
Help businesses build a competitive advantage
Bring benefits to the society Deegan (2003); Gibson và Martin (2004)
Enterprises lack documents and documents to guide the implementation of environmental management accounting
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga ( 2018c)
Implementing environmental management accounting takes too much time and effort
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga ( 2018c)
The cost of implementing EMA is too high Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga ( 2018c)
Enterprises will face difficulties because of the weak technical skills of accountants and lack of experience when implementing environmental management accounting
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga ( 2018c)
Environmental benefits are difficult to measure
Chang and Deegan (2010); Qian et al.,(2011); Nguyen Thi Hang Nga ( 2018c)
Background Theory
Despite the numerous advantages that Environmental Management Accounting (EMA) offers to businesses, its adoption remains low in many countries, particularly in developing nations like Vietnam A significant factor contributing to this issue is the lack of awareness among managers regarding the benefits of enhancing environmental performance and mitigating environmental impacts.
In 2005, it was noted that Environmental Management Accounting (EMA) has received limited attention due to several factors Burrit (2004) highlighted that low environmental awareness, ineffective specialized agencies, and minimal pressure from stakeholders contribute to this neglect Additionally, weak environmental regulations and the challenges businesses encounter in their implementation further hinder the adoption of EMA practices.
The implementation of a management accounting system in an enterprise is a voluntary decision that varies based on individual business needs This study leverages Institutional Theory and Contingency Theory, alongside Burritt's insights, to assess and quantify the factors influencing the adoption of environmental management accounting practices.
Institutional theory attends to the deeper and more resilient aspects of social structure, as the ostensible subject is stability and order in social life (Scott, 2005)
Institutional studies have significantly contributed to understanding the persistence and homogeneity of phenomena by detailing how institutions govern actions Initially, institutional theory posited that formal organizational structures are influenced not only by technological requirements but also by institutional forces.
The view of institutional theory is mainly based on profound theoretical perceptions of society and economy (DiMaggio and Powell, 1983; Bouma and Van der Veen,
The theory of institutionalization highlights the significant influence of institutions on the behavior of businesses and workers, identifying three key mechanisms: coercive pressure, normative pressure, and mimetic pressure (DiMaggio and Powell, 1983) Coercive pressure, often linked to state authority, involves sanctions and threats to ensure compliance Normative pressures arise from cultural expectations, while mimetic pressure occurs when companies replicate the behaviors of others perceived as effective As new institutional rules develop, companies adapt to these norms, leading to isomorphism within their institutional context.
“Organization conforms to them – become isomorphic to their institutional context-
48 in order to signal their social fitness and gain legitimacy in the eyes of critical constituencies “(Greenwood et al., 2008)
Institutional theory, as noted by Scott and Christensen (1995) in Oliveira and Martins (2011), highlights the significance of the institutional environment in influencing an organization's structure and operations This theory posits that organizational decisions are shaped not only by efficiency objectives but also by social, cultural, and legal factors Consequently, businesses within the same industry often exhibit increasing similarities over time, driven by pressures from customers and competitors to emulate leading companies in their sector.
Institutional theory from a sociological perspective highlights how organizational behavior changes in response to societal factors, enabling organizations to enhance their development and maintain legal relationships with stakeholders in a competitive landscape External pressures compel organizations to adapt their strategies, models, processes, and systems to different environments This perspective suggests that the adoption of specific accounting systems is driven more by external pressures than by a desire for internal efficiency DiMaggio and Powell (1983) identify three mechanisms that facilitate institutional isomorphism, further illustrating the influence of external factors on organizational practices.
Coercive pressure refers to the influence exerted by external power institutions, both official and unofficial, on businesses This pressure often comes from governments, regulators, customers, and suppliers, compelling companies to modify their systems and procedures to adhere to regulations and legal requirements.
Mimetic pressure refers to how businesses adopt strategies and practices that have proven successful for their competitors or other social models, particularly in uncertain and ambiguous environments In such situations, companies often emulate one another to navigate challenges effectively.
According to DiMaggio and Powell (1983), when a particular experience or method is established as valuable or serves as a benchmark within an industry, businesses tend to replicate it without questioning its worth.
Businesses face normative pressure to adhere to professional standards, which is essential for the professionalization of their activities Professionals are compelled to follow regulations, rules, and ethical guidelines, with the primary sources of this pressure being education and professional associations These elements of professionalism significantly influence changes in organizational practices and career attitudes, as highlighted by DiMaggio and Powell (1983).
2.4.1.2 Applying institutional theory to the application of EMA
Institutional theory serves as a valuable framework for examining the motivation behind the adoption of environmental management accounting (EMA) in businesses Numerous researchers, including Bourma and Van der Veen (2002) and Rikhardsson et al., have utilized this theory to explore the dynamics of EMA implementation.
Research by Chang and Deegan (2010), Qian et al (2011), Jalaludin et al (2011), and Jamil et al (2015) highlights that the institutional environment significantly influences the adoption of new management practices, including accounting The implementation of Environmental Management Accounting (EMA) often relies on institutional pressure, particularly when the advantages of EMA are not immediately evident Numerous studies have established a connection between institutional pressure and the utilization of management accounting systems, such as Activity-Based Costing (ABC) (Arnaboldi and Lapsley, 2003, cited in Jalaludin et al., 2011), non-financial performance measurement (Hussain and Gunasekaran, 2002), and ISO 9000 certification (Martinez-Costa et al., 2008, cited in Jalaludin et al., 2011).
In summary, it can be proposed that three mechanisms of institutional pressure (coercive pressure, simulated pressure, regulatory compliance pressure) will affect the enterprise's EMA application
Contingency theory, initially developed in organizational theory during the mid-1960s, gained traction in accounting studies by the late 1970s This theory posits that the efficiency of business operations is influenced by the specific context of an organization, suggesting that an enterprise's performance is contingent upon the alignment of its structure with unforeseen events In essence, an organization's effectiveness is determined by its ability to adapt to unexpected situations Proponents of contingency theory argue that there is no one-size-fits-all solution to business challenges; rather, the effectiveness of any solution is contingent upon the unique characteristics of the business and its environment.
Since 1975, management accounting research has increasingly adopted a random approach, highlighting the impact of various factors on organizational structure and accounting systems Mintzberg (1979) categorizes uncertainty into four groups: the age and size of the enterprise, its technical systems, external environment, and relational power Otley (1980) emphasizes the significant role of random factors in shaping the international economic system Haldma and Lọọts (2002) further stress the importance of organizational context in designing effective accounting systems that can adapt to internal and external changes Hutaibat (2005) notes that factors like environment, scale, technology, and organizational strategy influence the selection of accounting information systems, asserting that there is no one-size-fits-all accounting solution; organizations must continuously assess and enhance their management accounting systems to remain competitive.