Research Factors Affecting The Applicability Of Environmental Management Accounting Ema In Vietnam Automobile Industry Enterprises Case.pdf

Research Factors Affecting The Applicability Of Environmental Management Accounting Ema In Vietnam Automobile Industry Enterprises Case Research Factors Affecting The Applicability Of Environmental Management Accounting Ema In Vietnam Automobile Industry Enterprises Case

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MINISTRY OF INDUSTRY AND TRADE

INDUSTRIAL UNIVERSITY OF HO CHI MINH CITY

NGUYEN THI PHUONG

RESEARCH FACTORS AFFECTING THE APPLICABILITY OF ENVIRONMENTAL MANAGEMENT ACCOUNTING (EMA) IN

VIETNAM: AUTOMOBILE INDUSTRY ENTERPRISES CASE

Major: Accounting Code: 60.34.03.01

M.A THESIS

HO CHI MINH CITY, 2022

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This M.A thesis was completed at Industrial University of Ho Chi Minh City

Science supervisor: Ph.D Tran Ngoc Hung This M.A thesis was presented at Council assess of Master Thesis at University Industrial of Ho Chi Minh City Jun 02, 2021

The Council assess of Master Thesis include:

1 Assoc.Phrof.Ph.D Tran Quoc Thinh - Chairman 2 Ph.D Le Vu Ngoc Thanh - Reviewer No 1 3 Ph.D Dang Anh Tuan - Reviewer No 2 4 Ph.D Ngo Nhat Phuong Diem - Commissioner 5 Ph.D Nguyen Ngoc Khanh Dung - Secretary

ACCOUNTING AND AUDITING

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MINISTRY OF INDUSTRY AND TRADE

INDUSTRIAL UNIVERSITY OF HO CHI MINH CITY

SOCIALIST REPUBLIC OF VIET NAM

Independence - Freedom – Happiness

THE DUTY OF THE MASTER THESIS

Full name: Nguyen Thi Phuong ID: 17001051

Date of Birth: July 20, 1987 Address: Hop Ly, Ly Nhan, Ha Nam

I Title name:

Research factors affecting the applicability of environmental management accounting (EMA) in Viet Nam: Automobile industry enterprises case

DUTY AND CONTENT:

Determine the factors that impact on the possibility of environmental management accounting application in Vietnamese automobile industry enterprises

Measure the level of each factor

Based on the research results, the author suggests solutions to enhance the possibility of environmental management accounting applications in Vietnamese automobile industry enterprises for improving their performance

II DATE OF DUTY: The decision No.1874/QĐ-ĐHCN, October 14, 2019 III DATE OF COMPLETION: ………

IV SCIENCE SUPERVISOR: Ph.D Tran Ngoc Hung

Ho Chi Minh City, May 21, 2021

SUPERVISOR

(Signature, Full name)

HEAD OF DEPARTMENT

DEAN FACULTY OF ACCOUNTING AND AUDITING

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ACKNOWLEDGMENTS

First of all, I would like to express my sincere appreciation and gratitude to school administrators and all lectures of the Industrial University of Ho Chi Minh City, especially my PhD Tran Ngoc Hung - my direct lecturer and supervisor for my thesis I would like also to take this opportunity to thank all CEO, CFO, Chief accountants and Staff of Accounting Department at case study companies for providing me the necessary information and completing questionnaires for this thesis

Many thanks to my classmates and colleagues for their silent support throughout the course

Finally, I would like to thank my family for giving me the energy and encouragement in the whole process of this postgraduate research

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ABSTRACT

Purpose: The purpose of this study is to detect and measure the impact of factors on the applicability of environmental management accounting in Vietnam: automobile industry enterprises case

Design/ methodology: This research was conducted using a mixed research design approach of qualitative research methods and quantitative research methods Survey questionnaires were collected from 352 subjects of industry automobile enterprises at the big city and industrial zones in Vietnam By using Descriptive Statistical Method, Regression Analysis SPSS 26.0 software

Findings: The research results show that there are 7 factors affecting the ability to apply environmental management accounting in Vietnamese automobile industry enterprises, including: Coercive pressure; Normative pressure; Mimetic pressure; Business environmental uncertainty; Environmental Strategy; Benefits when applying environmental management accounting; Task complexity

Implications: This study systematized the theoretical basis, providing an overview of environmental management accounting Research results are also the basis necessary and useful references for other relevant scientific researches to environmental management accounting At the same time, the author proposes solutions to contribute to improving the applicability of environmental management accounting in Vietnam: automotive industry enterprises case

123docz.net - File bi loi xin lienhe: lethikim34079@hotmail.com

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M.A CANDIDATE

( Signature, Full name)

Nguyen Thi Phuong

123docz.net - File bi loi xin lienhe: lethikim34079@hotmail.com

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CHAPTER 1 LITERATURE REVIEW 7

1.1 Oversea key researches 7

1.1.1 The overall research related to the diffusion of EMA and the need for adopting EMA 7

1.1.2 Research about the roles of EMA application in enterprises 9

1.1.3 Research on factors impacting the EMA application in enterprises 10

1.2 Key research in Viet Nam 13

1.2.1 The overall research related to the general perspectives of EMA and current EMA application in Vietnam 13

1.2.2 Researches about the role of EMA application in Vietnamese enterprises 14

1.2.3 Research on factors impacting the EMA application in enterprise 14

1.3 Gap research and the aims of study 15

1.3.1 Determining the gap research 15

1.3.2 The aims of study 16

CHAPTER 2 THEORETICAL FOUNDATIONS 18

2.1 Overview of Environmental management accounting 18

2.1.1 The Development of Environmental Management Accounting 18

2.1.2 Definition and Categorization of Environmental Accounting 21

2.1.3 Definition of Environmental Management Accounting 24

2.1.4 Types of Information Includes under Environmental Management Accounting 27

2.1.5 Benefits of Environmental Management Accounting Application 29

2.1.6 Content of Environmental management accounting 31

2.2 Some characteristics of the automobile industry enterprises 40

2.2.1 Some characteristics of automobile industry enterprises 40

2.2.2 Advantages and disadvantages when applying EMA at automobile industry enterprises in Vietnam 42

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2.3 Factors affecting the ability to apply EMA in enterprises 43

3.4 Determination of influencing factors and research model 57

3.4.1 Determination of influencing factors 57

3.4.2 Research model 58

3.5 Qualitative research method 59

3.5.1 Qualitative method design 59

3.5.2 Results of expert discussions 61

3.5.3 Build of scale and encode data 65

3.5.4 Research hypothesis design 69

3.6 Quantitative research 70

3.6.1 Building the questionnaires 70

3.6.2 Sampling investigation method 71

3.6.3 Analysis method of the research data 72

3.6.4 Regression model 76

CHAPTER 4 RESEARCH RESULTS AND DISCUSSION 79

4.1 Sample descriptive statistics 79

4.2 Research data 81

4.3 Evaluate the scale 82

4.3.1 Evaluate the reliability of the scale 82

4.3.2 Evaluate the scale value 85

4.4 Multivariate regression analysis 92

4.4.1 Overall regression model 92

4.4.2 Verifying the suitability of the model 92

4.4.3 Regression weight test 93

4.4.4 Check the multi-collinearity phenomenon 94

4.4.5 Check for residual autocorrelation 94

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4.4.6 Verify the normal distribution of the residue 95

4.4.7 The test assumes the variance of the error (remainder) remains constant 96

4.4.8 Test research hypotheses 97

4.4.9 Check the difference in degrees of accountants at the business 98

4.4.10 Check for differences about the degree 99

4.4.11 Check out the difference in the type of business ownership 101

5.3 Limitations and Possible future research 113

5.3.1 Limitations of the thesis 113

5.3.2 Possible future research 113

LIST OF RESEARCH RELATED TO THE AUTHOR’S THESIS 116

APPENDIX No.4: SURVEY QUESTIONNAIRES 135

APPENDIX No.5 CRONBACH'S ALPHA RELIABILITY TEST RESULTS 140

APPENDIX No.6: EFA FACTORS ANALYSIS RESULTS 144

APPENDIX NO.7: RESULTS OF CORRELATION MATRIX TEST; RELEVANCE OF MODEL; VARIANCE ANOVA; REGRESSION COEFFICIENTS 156

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APPENDIX No.8: STANDARD DISTRIBUTION RESULTS OF RESIDUALS 158APPENDIX No.9: LIST OF SURVEY PARTICIPANTS 160CURRICULUM VITAE 176

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LIST OF FIGURES

Figure 2 1 EMA at the core of sustainable development 24

Figure 3 1 Research framework 55

Figure 3 2 Research procedures 56

Figure 3 3 Research model 58

Figure 4 1 Histogram graph of normalized remainder 95

Figure 4 2 P-P Plot plot of normalized remainder 96

Figure 4 3 Scatter plot between predicted value and regression residue 96

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LIST OF TABLES

Table 4 1 Research sample information 79

Table 4 2 Analytical results Cronbach's Alpha shows the scale of the independent variables 83

Table 4 3 Analysis results Cronbach's Alpha for the scale of the dependent variable 84

Table 4 4 Test KMO and Bartlett for scales of independent variables 85

Table 4 5 Table of variance extracted for the scale of the independent variables 86

Table 4 6 Rotation factor matrix 86

Table 4 7 KMO and Bartlett testing for scale of independent variables (2nd time) 88

Table 4 8 Table of variance extracted for the scale of independent variables (2nd time) 88

Table 4 9 Matrix of rotational factors (2nd time) 89

Table 4 10 KMO and Bartlett tests for dependent variable scale 91

Table 4 11 Table of variance extracted for the scale of the dependent variable 91

Table 4 12 The dependent variable factor matrix 92

Table 4 13 Summary of regression model 93

Table 4 14 ANOVA table 93

Table 4 15 Regression weighting table 94

Table 4 16 Test there are differences in the degree of applicability of EMA in automobile industry enterprises between 2 groups from intermediate / college above and from university above 98

Table 4 17 Table comparing the mean of the applicability of EMA in the automobile industry enterprises between 2 groups of intermediate / college above and university or higher 99

Table 4 18 Verifying the differences in the degree of applicability EMA in the automobile industry enterprises among 4 groups of Degrees College, University, Master, and PhD doctor 99

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Table 4 19 The Anova test with differences in the effects on the applicability of EMA in the automotive industry enterprises of 4 groups of Degrees: College, University, Master, and PhD doctor 100Table 4 20 Table comparing mean values about differences the effects in the applicability of EMA in the automotive industry enterprises of 4 groups of Degrees: College, University, Master, and PhD doctor 100Table 4 21 Examining the differences in the applicability of EMA in the automobile industry enterprises of 6 groups of State-owned enterprises, 100% foreign-invested enterprises, Joint-ventures, and Companies Limited Liability, Shares with State Capital, Limited Company, Shares without State Capital, Other type 101Table 4 22 Test of Anova with differences in the applicability level of EMA in the automobile industry enterprises of 6 groups of State owned enterprises, 100% foreign invested enterprises, and joint venture enterprises Limited Liability Company, State Capitalized Joint Stock Company, Company Limited, Joint Stock Company without State Capital, Other type 101Table 4 23 Table comparing average values about the applicability of EMA in the automobile industry enterprises of 6 groups of State owned enterprises, 100% foreign invested enterprises, and joint venture enterprises Limited Liability Company, State Capitalized Joint Stock Company, Company Limited, Joint Stock Company without State Capital, Other type 102

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LIST OF ACRONYMS

AAA American Accounting Association EA Environment accounting

EFA Exploratory factor analysis

EMA Environmental Management Accounting EMS Environmental management System

IFAC International Federation of Accountants

MFA Material Flow Accounting

LCA Life Cycle Analysis

UNDSD United Nations Division for Sustainable Development

USEPA US Environmental Protection Agency

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INTRODUCTION

1 Rationales of the research

Nowadays, environmental issues have been concerned seriously world-wide, as the increasing number of significant environmental threats to the future of humanity These include, but not limited to, not only natural disasters such as hurricanes, tsunami, global warming but also human-made disasters including oil spills, plastic solid waste, the over-consumption of non-renewable resources, global air pollution (Jones, 2010) These incidents have given hostage to fortune, and therefore led to calling for organizations around the world to consider its environmental performance seriously (Lee, 2011) So adopting cleaner and safer, more friendly environmental practices have become more and more aware by the public, with the help of increased media coverage (Burritt et al., 2003) Environmental management accounting (EMA), as part of Environmental Accounting, may assist management to address environmental impacts of organization activities, particularly by providing related environmental information for making decisions Even though EMA has still no definite boundary or denomination, it has emerged as an interface between management accounting and environmental management (Bennett et al., 2003) Many recent studies on EMA from different perspectives reflect the importance of accounting when pursuing environmental management strategies (Schaltegger et al., 2013) There was numerous research on the environmental management systems and these first ones have been done in the developed economies (Hsiao et al., 2014) However, EMA’s studies in developing countries are scant, and according to the work of (Xiaomei, 2004; Jalaludin et al., 2010) in China and Malaysia show that the majority of enterprise in developing countries were considered that they were still far behind advanced countries in terms of understanding and applying EMA techniques and methods

Air pollution can imperil human health and welfare of plants and animals, resulting from emissions from industrial sources, power and heat generation, waste disposal,

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and the operation of internal combustion engines Fuel combustion is the largest contributor to air pollutant emissions, caused by man, with the origin from the automotive industry (Sharma & Sharma, 2014) Though, there have been main focuses on highly polluting and energy intensive industries, such as the importance and benefits on EMA (Jamil et al., 2015), the level of adoption and implementation of EMA practice is still weak in firms in many countries, especially in developing countries and Viet Nam is no exception.

In fact, the concept of “Sustainable Development” has also been introduced in business circles decades ago, calling on companies to implement socially responsible businesses (ACCA, 2003), which means balancing the company’s profit with environmental sensitivity Along with that view, (Elkington, 1994) argued that businesses should not only care about accounting profit but also pay attention to their environmental and social responsibilities, and they should manage and report on it Therefore, the change in awareness of social responsibility of enterprises against environmental issues, accounting work holds the leading position.

Along with the importance and great benefits that EMA brings through research from countries, and understanding the situation at automobile industry enterprises in VietNam where business operations impact the environment The author has found that almost all businesses are indifferent to application of EMA, except for some large enterprises listed on the stock market or multinational corporations and companies such as: Thaco Truong Hai, Toyota VietNam etc The questions considered here are why enterprises have not applied EMA and what causes obstacles to applying EMA?

To answer these questions, the author will study in depth to find out what factors have been and will affect to apply EMA in the automobile industry enterprises, measure and evaluate the impact of these factors on the implementation process These findings will serve as a basis for proposing practical solutions to promote the application of EMA in the automotive industry enterprises in Viet Nam So that is

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the reason the Author chose the thesis’s subject as “Research factors affecting the applicability of environmental management accounting (EMA) in Viet Nam: automobile industry enterprises case”

The implementation of environmental management accounting and the factors

affecting the implementation of environmental management accounting

 Research scope

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Content scope: The study focuses on determining the factors affecting the

application of EMA in Vietnamese automobile industry enterprises

Spatial scope: This thesis is limited at automobile industry enterprises, mainly located in two big cities such as Ho Chi Minh City, Hanoi and neighboring

Secondly, By using quantitative method, through collecting research data by survey questionnaire and using statistical software to support processing data Quantitative research method phase aims at solving the goal: Measuring the influence on the possibility implementation of EMA application in Vietnamese automobile industry enterprises

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of factors affecting the applicability of EMA in Viet Nam: automobile industry

enterprises case

Secondly, Based on some research models in the prior research, the author has collected some factors, which are considered to be appropriate with Vietnamese enterprises characteristics After discussion with experts through deep interviews, some new factors are added and measured with the results showing that these factors have significant impact on the use of EMA in Vietnamese automobile industry enterprises case And this result should be a reliable source of reference for related researches in coming future

 Practical contribution

Firstly, EMA is a quite new research field that has not attracted the attention of enterprises, especially in the automotive industry, one of industries, which currently have a strong impact on the environment The results of this study will contribute to promoting totally and increase the possibility of applying EMA in VietNam

automobile industry enterprises

Secondly, this study also contributed to raise the awareness of administrators in Vietnam automobile enterprises in particular and as well as manufacturers in general about production and business with the environmental responsibility, towards increasing economic benefits, protecting the environment, and sustainable development not only for their own company but also for the world

7 Thesis organization

The thesis includes five chapters in addition to introduction and appendix It’s presented according to the layout and content as follows:

Chapter 1: Literature review

Chapter 2: Theoretical foundations Chapter 3: Research methodology

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Chapter 4: Research results and discussion Chapter 5: Conclusion and recommendations

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CHAPTER 1 LITERATURE REVIEW

Within the scope of this chapter, the author generalizes domestic and foreign studies related to this research topic Thereby the author also evaluates and identifies gaps from previous studies In addition, the combination of the previous studies is also partly to demonstrate the urgency of this thesis then forming research the orientation for this thesis

1.1 Oversea key researches

Environmental management accounting has been recognized by the world as an effective solution to help achieve sustainable business operations, meaning both achieving economic benefits and protecting the environment Environmental management accounting has also been applied in many countries around the world, especially in developed countries Along with that, there are also many studies by many scientists who have conducted research on this topic, with many opinions and in many different fields (Bennett et al., 2002; Bennett et al., 2003; Jasch, 2006), especially the manufacturing industry (Kim, 2002; Gale, 2005) is the area that creates the most environmental impacts, which comes from the nature of its activities (Chang, 2007) Compared to the manufacturing industry, the service organisations have typically failed to be the focus of interest and attention because they are less obvious environmental impacts but they still have several significant environmental impacts – both direct and indirect (Bennet et al., 2006) Studies related to the EMA application can be summarized in some areas as follows

1.1.1 The overall research related to the diffusion of EMA and the need for adopting EMA

Because EMA is still in its developing stage, most studies tend to focus on its tools, describing how it can be applied in enterprises (Bennett et al., 2003) As a result, though some enterprises have been employing EMA, the uptake of practice is still considered low Many enterprises have not yet developed a holistic approach to environmental costing and they even react in a passive way towards environmental

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issues, in some cases they just measure environmental cost only to the extent of compliance with legal environmental requirements (Gadenne and Zaman, 2002) Schaltegger et al., 2013 pointed out some positive findings with regard to EMA that both application and relative application have increased overtime within the period of 2002 to 2010 Meanwhile, Burritt and Tingey-Holyoak, 2012 also revealed that in a sample of their research in 2012, there were fifty percent of enterprises using sustainability-related cost accounting However, they found that many other accounting tools related to sustainability are ignored and need greater promotion Even though there are many stakeholders who pay more attention to environmental issues since the 1990s, the absence of guidelines caused slow development and low adoption rates of EMA (Lee, 2011)

Researching about the differences in the adoption or adaptation of environmental management practices in developed and developing countries, there were some conclusions that environmental issues are less intense in developing economies compared to the developed countries (De Oliveira et al., 2010; Kang et al., 2012) Confirming these above findings, Hsiao et al., 2014 revealed that the implementation of the Environmental management System (EMS), which includes EMA, seemed more intensive in developed countries Moreover, there was variation in the extent to which enterprises implement environmental management practice; as a result, it led to the different adoption of EMS in the comprehensiveness of their coverage and the ambitiousness of their objectives (Pham and Baird, 2015) There has also been different emphasis on variable industries, such as focusing upon manufacturing, chemicals, farming, construction and electronics, but limited research has been done on the service industries like hotel industry (Chan and Hawkins, 2012) And in their research, Qian et al., (2011) also pointed out that the main focus of EMA studies has been on highly polluting and energy intensive industries

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1.1.2 Research about the roles of EMA application in enterprises

As reported in the research of Vasile and Man (2012), conventional management accounting systems have seemed to be unable to add value in terms of providing adequate and appropriately meaningful information which is being used to assist environmental administration and administrating – related environmental overheads And this has led to the understatement of costs and benefits that would ordinarily be achieved by enterprises if they adopt or implement appropriate EMA tools (Christ and Burritt, 2013)

In any enterprise, the operating activities may result in certain costs being incurred However, when combining effective environmental management practices with other operating activities, this may result in benefits and cost savings Moreover, if the accounting system could be employed to seek out, identify and exploit financial savings in resources usage, waste and energy emissions, it may lead to reduction in the enterprises environmental impacts (Masanet – Llodra, 2006) In the study of Jamil et al (2015), they found that lack of guidance on EMA causes difficulties in effectively collecting, identifying, analyzing and evaluating environment – related data This problem was considered as a main barrier to the integration of environmental issues into the existing accounting systems and practices, and so far, causing a challenge to environmental performance evaluation and benchmarking, especially in waste management and pollution prevention

As usual, traditional accounting methods generally direct attention to the resources cost employed and their accumulation without paying attention to activities, so, they do not offer the ideal framework capable of identifying necessary data (Jones, 2010; Vasile and Man, 2012) In addition, traditional management accounting systems and practices may not provide sufficiently accurate information for environmental management and environment – related cost management (Gale, 2005) As a result, enterprises significantly underestimate both the costs and benefits of sound environmental management In order to fill in this gap, there has been a recent worldwide trend on researching in the field of EMA, such as forming the Expert

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Working Group in 1998, whose responsibility included discussions and negotiations of environmentally – friendly practices The members of this organization are extended list including national environmental agencies and ministries, international organizations, industry, accounting firms, academia, and United Nations agencies (Jasch, 2003), focusing particularly on techniques to quantify environmental costs, and in 2001 the EWG published a report titled “Improving the Rose of Government in the Promotion of Environmental Management Accounting”, describing certain principles and procedures related to EMA development of national EMA guidelines and framework This report stated that both conventional cost accounting and non – environmental costs of the accounts are assumed to be hidden with respect to management (Farouk et al., 2012)

1.1.3 Research on factors impacting the EMA application in enterprises

Recently there have been more investigations in EMA and researchers also point out that the application of EMA tools in enterprises is affected by not only internal but also external factors (Mensah, 2014) Concerning factors which impact the EMA adoption among manufacturing companies in Malaysia, D.Jalaludin et al., 2010 had collected ideas of 74 accountants being interviewed and showed that they were pressured by their customers, shareholders, head officer and the management in terms of environmental performance This pressure will affect their management accounting practices, including EMA adoption through the influence on their company policy In the research of Bartolomeo et al.(2000) the surveyed result in the actual status of economic performance and the future potential of 84 companies in Germany, Italy, Netherland and United Kingdom– on chemical and pharmaceutical industries products, energy and printing industry The results show that companies in Europe have a moderate level of interest in EMA but it has to increase over time Most companies in the survey have their own environmental strategies, more than half of them have an EMS and 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

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companies only focus and make short-term decisions The study also revealed that companies in the study only performed negligible measures of external impacts because of too much time and effort, lack of technical equipment to measure the environmental parameters and companies themselves are less interested in externalities

In their study in 2012, Christ and Burritt used variables on environmental strategy, corporate structure, industry, firm size By using two multivariate regression models to analyze the data of survey from the accountants of the enterprises, they half concluded that environmental, industry and enterprise strategies gave a significant impact on the use of EMA in the preset and in the future, while the corporate structure does not affect the application of EMA However, the limitation of this study is the surveyors, who are only accountants, so sometimes there is no full awareness of environmental activities in the enterprise as well as the research did not distinguish the number working year and working position of survey participants (Christ and Burritt, 2013)

Meanwhile, Al Kisher (2013) had run research to examine factors affecting the application of EMA The study incorporates many theories to build models such as contingent theory, institutional theory, legitimacy theory etc Though Kisher considers eight factors which may affect the intention of adopting the EMA include:(1) Company strategy,(2) Nature of formalization, (3) corporate culture, (4) support from senior executives pressure on enforcement, (5) regulatory compliance, (6) legal review (legitimacy considerations) (7) pressure from stakeholders, (8) education level and number of years of work, but the results show that only age, education level and number of years of work affect the intention of applying the EMA In addition, the variables such as organization culture, environmental strategy and technology also have a significant impact on the intention to adopt an EMA of a business However, the business strategy and organization culture sampled at enterprises in Libya, the centralized management style trait has a negative impact on the intention to adopt the EMA

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To assess the level of application of EMA at manufacturing enterprises in Nairobi, Wachira (2014) had measure the influence of factors including: (1) costs of complying with environmental regulation; (2) firm size; (3) production technology level; (4) time operating time; (5) environmental strategy and (6) financial performance to the extent of applying EMA in the enterprise Also, by using questionnaires method and in depth interview to collect information, the conducting univariate analysis and multivariate regression analysis The analysis results show that three factors that have a significant influence on the application of EMA are the costs of complying with environmental regulations, environmental strategies and financial performance of enterprises

To investigate factors and barriers affecting EMA in practice, Jamil et al., 2015 used institutional theory and carried out data collection through survey questionnaires, but the subjects were managers of smack and medium enterprises The study used descriptive and regression analysis to analyze the relationship between the application of EMA and the pressure of coercion, compliance pressure and pressure of imitation In this thesis, The author had found that coercive factors have a significant influence on EMA practices, and with increasing coercive pressures, manufacturing SMEs are more willing to practice EMA (Jamil et al., 2015) Their result is in line with the prior results of Chang (2007); DiMaggio and Powell (1983),Chang and Deegan(2010), Qian et al., 2011 in which they stated that the impact of social, economic and political institutions on an organization’s behavior with regards to making changes and adopting new practices Under the coercive pressures exerted by the government and legalization, organizations were forced to make changes and adopt certain attributes to gain legitimacy for their operations, such as adopting new techniques due to the need to comply with environmental regulations Meanwhile, Jalaludin et al., (2011) conducted in-depth interviews and analyzed information from the survey questionnaires This study showed that coercive pressure did not have a strong effect on the application of EMA in Australian Universities In addition, their finding also shows that financial

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constraints are the considerable factors which limit the development of EMA in the manufacturing SME Besides, other factors such as the insufficient environmental knowledge (with regards to true costs and benefits), employees skill also contributed to the restriction of the integration of environmental issues into the accounting systems and practices

1.2 Key research in Viet Nam

In fact, EMA is not familiar with Vietnamese enterprises, so research about implementing EMA in Vietnamese enterprises is still very limited (Phan Thi Bich Chi et al., 2016) Studies related to the EMA in Viet Nam can be summary in some areas as follows:

1.2.1 The overall research related to the general perspectives of EMA and current EMA application in Vietnam

In Viet Nam, most recent studies mainly introduce EMA systems such as: concept, classification of methods to determine income, environmental costs and how to account for these expenses and income research paper, analysis of experiences of developed countries in the world to guide the application of EMA in Viet Nam In order to assess the status of applying EMA and the extent of applying EMA tools to sever the management process in Vietnamese manufacturing enterprises, Trinh Hiep Thien (2010) has conducted a practical survey of a number of manufacturing enterprises, by using statistical method, in order to evaluate the possibility of applying EMA in Vietnamese manufacturing enterprises In addition, he also summarized the experience of applying in developed countries and compared to the application of EMA in Vietnamese manufacturing enterprises The research’s result is that most enterprises lack experience in management accounting and the senior manager’s knowledge about the EMA is casual In particular, for manufacturing enterprises which are not running business activities affecting the environment, the level of interest and implementation of EMA are limited

Based on research by United Nations Division for Sustainable Development (UNDSD, 2001) and International Federation of Accountants (IFAC, 2005), in her

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research, Hoang Thi Bich Ngoc (2014) had introduced and analyzed the application of EMA in Japan for proposing solutions how to apply EMA in Vietnam enterprises In their research, Giang (2019) also introduced and analyzed the experience of applying EMA in Japan, Korea, Germany and the current status of applying EMA in Vietnam Based on this comparison, they suggested solutions for developing EMA for Vietnamese enterprises In his research, Pham Hoai Nam (2016) had analyzed the current status of organizing environmental accounting work in manufacturing enterprises in Quang Ngai Province, including the process of recording, analyzing and providing accounting information, concerning assets, liabilities, costs, environmental income In this study, the author also analyzed the causes of limitations in environmental accounting work and proposed solutions to improve the implementation of environmental accounting in manufacturing enterprises in Quang Ngai province Hoang Thi Bich Ngoc, 2017 conducted the study using both qualitative and quantitative methods to assess the status of the accounting system of environmental cost management in processing enterprises – Vietnam Oil and Gas Group In the results, she had assessed the situation of the advantage and shortcoming of the accounting system of environmental cost management being implemented

1.2.2 Researches about the role of EMA application in Vietnamese enterprises

Some studies have been conducted to identify the EMA system as an important source of information to support making decisions in enterprises and to control costs more effectively According to their research, Le and Nguyen (2016) have summarized an overview of the EMA as well as the benefits of implementing EMA, along with providing solutions to contribute to changing the perception of 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

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and analysis factors exploring EFA The study has shown that there are seven factors that have a significant impact in the application of environmental cost management accounting: Coercive pressure, Normative pressure, Mimetic pressure, Administrator awareness, Environmental strategy, Organizational culture, the human And five of the seven factors mentioned above are also consistent with the study of Thi Nga Nguyen (2016); Thi Hang Nga Nguyen (2018a); Thi Hang Nga Nguyen (2018b) and Thi Hang Nga Nguyen (2018c) Besides, a number of factors determining the application of other EMA such as the role of management accounting, internal communication (Thi Nga Nguyen, 2016), business environmental uncertainty are also the factors to promote adoption of EMA (Thi Hang Nga Nguyen, 2018b) There are also factors such as: Business environment or task complexity (Thi Hang Nga Nguyen, 2018c) However, the study also has limitations that the respondents are only accountants, chief accountants and management accountants account for a small proportion, and the majority of respondents are in enterprises that do not have a separate management accounting department

According to another study by Thi Huyen Tram Nguyen and Ngoc Toan Pham (2018) used the methodology qualitative and quantitative, EFA analysis There are 6 factors that positively influence EMA: The support of the government, company size, manager perception, business strategy, corporate culture, qualified internal accountant

1.3 Gap research and the aims of study

1.3.1 Determining the gap research

Though the automobile industry is considered to play a vital role in Vietnamese economic development strategy However, this industry has created a great negative impact on the environment, especially the air pollution status Therefore, study about EMA application in Vietnamese automobile industry enterprises not only helps to enhance the enterprises performance but also be meaningful to improve living environment By synthesizing and considering prior research in Vietnam and

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worldwide, the author has found that until now, there was no research using quantitative methods concerning the factors that impact on the possibility of EMA application in Vietnamese automobile industry enterprises

1.3.2 The aims of study

By determining the gap research above, we inherit and conduct the research about the factors impacting the possibility of EMA application for Vietnamese automobile industry enterprises In addition, the study will measure by reliable methods about the level of impact of each factor The study will be conducted with steps as below: - 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

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CONCLUSION OF CHAPTER I

This chapter presents an overview of oversea and Vietnamese research related to the thesis Based on an overview of oversea and Vietnamese researches related to the dissertation, the author draws on some issues that previous studies have achieved, as well as, the limitations that previous studies still exist and the author also found his research orientation

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CHAPTER 2 THEORETICAL FOUNDATIONS

2.1 Overview of Environmental management accounting

2.1.1 The Development of Environmental Management Accounting

According to a study by Feedman and Jaggi (1981), some requirements for disclosing pollution information (for example, material effects on pollution abatement activities) were enacted in the United States in the 1970s However, Ullman (1976) suggested that companies are not aware of their environmental impacts, and changing management behaviors seem to be both a motivational and an informational problem Therefore, he develops a model devoted entirely to the provision of environment – related information, which can be seen as an early development of physical environmental accounting systems

It was not until the early 1980s, in the study of Bouma and Van der Veen, 2002 The author proved that the environment or environmental management was linked to management accounting, and the potential of management accounting in managing environmental issues was shown In this period, some of the United States environmental regulations were highly influential in environmental accounting and reporting, for example the passing of the United States Superfund Amendment and Reauthorization Act of 1986 They not only reinforced the comprehensive environmental response compensation and liability act but also inspired the legislators in other countries, such as Canada and the United Kingdom to enact environmental regulations Through the increasingly demanding regulation, a business case was made the Demonstrates environmental programs help reduce environmental impacts and generate financial against, or so-called “win-win situations” (Walley and Whitehead, 1994) However, with increasingly strict regulations on the environment, along with the pressures that exist around, it requires businesses, management accounting to assist in determining costs and benefits of environmental management programs This has provided an avenue to the development of environmental management accounting

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Thus, it can be seen that in the United State, environmental accounting in general and environmental management accounting in particular were born very early, due to pressures from the community affecting environmental policies of the United State government and environmental protection movement These include policies on compensation for damage caused to the environment, policies on emission restriction and policies on waste treatment before discharging into the environment However, according to author Huynh Duc Long (2015), the purpose of environmental accounting in the United State at that time mainly focused on making decisions of managers and providing environmental information in accordance with the provisions of the United States Securities and Exchange Commission

Also in the 1980s, nearly all aspects of business were affected by the environmental-related pressures of nature that could threaten the sustainable development of enterprises such as: Greenhouse effect, ozone hole, resource shortage Stemming from the requirements of reality, on the one hand, it forces the German government to change environmental policies, on the other hand, requires businesses to find a tool to assist in determining costs as well as to ensure the goal of increasing economic benefits and protecting the environment Businesses found that preventing environmental problems can carry the benefit for them Therefore, Environmental Accounting began to appear in Germany Thus, just like the United States In Germany, Environmental Accounting in general and Environmental Management Accounting in particular are formed on the basis of a legal system such as: Environmental Law, Waste and Recycling Law, Law responsible for the environment throughout the product life cycle (Huynh Duc Long, 2015) However, under the pressure of resource shortage, in Germany, Environmental Management Accountants focus a lot on material flow cost accounting, material flow analysis, determining the amount of materials used and annual emissions

In the early 1990s, continuing interest and attention on environmental management enabled the launching of environmental auditing, which contributed to the further development of the environmental management accounting, the applicability of

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management accounting in responding to environmental issues and managing environment performance was becoming apparent (Gray and Bebbington, 2000) The studies on the importance and benefits of environmental management accounting are performed A number of European projects, such as in the Netherlands and the United Kingdom, also reported similar findings which show the extent of environmental costs and opportunities to reduce the costs (Bartonlomeo et al., 2000) At this time, Environmental Management Accounting in Korea began to appear and focuses on measuring environmental performance costs, allocating environmental costs on an activity basis, measuring and assessing environmental benefits (Huynh Duc Long, 2015)

In the late 1990s, Environmental Management Accounting began to be researched and applied in Japan, in the face of intense pressures on scarcity of resources and pressure on demand for sustainable development As a country that implements environmental management accounting later than developed countries, Japan has successfully applied environmental accounting for the purpose of increasing economic efficiency and protecting the environment, because they have absorbed experience of other countries such as the United State, Germany, and South Korea (Huynh Duc Long 2015) In Japan, they use both monetary and physical measures, focusing on material flow cost accounting, product life cycle costing on implementing their environmental management accounting

In the 21st century, Environmental Management Accounting receives increasing attention as environmental incidents have caused significant financial losses to various organizations (Schaltegger and Burritt, 2017) Some international governments and professional accounting bodies have devoted themselves to promoting EMA, for example the United Nations Division for Sustainable Development, International Experts Group on EMA, and the International Federation of Accountants Documents such as “Environmental Management Accounting: Procedures and Principles (UNDSD, 2001) and “International Guidelines: Environmental Management Accounting” (IFAC, 2005) were produced

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to guide EMA studies and practices Besides, there are also many researchers, professionals, entrepreneurs and policy makers interested in environmental management accounting as an environmental management tool Discussions about the development of environmental management accounting at conferences or seminars are now becoming a trend and the number of studies on the application of environmental management accounting in other industries is increasing (Burritt, 2004) From the above analysis, it can be seen that the goal of management accounting has had important changes, not only stopping at providing information about internal management but also focuses on waste minimization (reducing resource losses) and creating value through efficient resource use, in line with current sustainable development perspectives Therefore, Environmental management accounting has formed, developed as well as attracted increasing attention and interest And this is an answer to the challenges that traditional management accounting systems face in relation to environmental activities (Ferreira et al., 2010)

The next section will consider types of information under EMA and explain how EMA fulfills the role as a support mechanism to environmental management by providing environmental cost categorization schemes and costing approaches

2.1.2 Definition and Categorization of Environmental Accounting

2.1.2.1 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 National Accounting Which focuses on accounting national natural resources, accounting material rotation flows in the use of national natural resources, accounting costs for prevention of environmental consequences, accounting for wear and tear of the use natural resources, official

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resources….To provide information to the public, promote the use of sustainable resources, sustainable development economy

- Environmental Financial Accounting is the company’s financial accounting department, which focuses on accounting issues related to the environment, specific costs, income related to the environment… to provide information to people outside the business, aiming to improve competitiveness

- Environmental Management Accounting is the company’s management accounting department, which focuses on accounting issues related to the environment, specific Material Flow Accounting –MFA, Life Cycle Analysis –LCA, Environmental Cost Environmental Income… to provide information to the enterprise’s internally, serving the decision making process

Thus, Environmental accounting is an inclusive field of accounting and covers all areas of accounting that may be affected by organizational responses to the environment – related issues, it is used in a different scope, such as a country, a territory, or a business (Bennett and James, 2017) Within the scope of this study, the focus is on environmental accounting within the enterprise

2.1.2.2 Definition of Environmental Accounting

Definitions of environmental accounting are varied (for example: Gauthier et al., 1997; Deegan, 2003; Bennett and James, 2000; Schaltegger and Burritt, 2017) Below are some definitions of environmental accounting that have been used extensively in previous studies

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Table 2.1 Summary of definition Environmental Accounting

Gauthier et al., 1997 Environmental accounting is that aspect of accounting, while inseparable from financial and management accounting, deals more specifically with environmental concerns; that is, the aspect of the information system that enables data collection and analysis, performance follow-up decision – making and accountability for the management of environmental costs and risks

Deegan , 2003 Environmental accounting is a broader term that relates to the provision of environmental – performance related information to stakeholders both within, and outside, the organization While environmental accounting can be “corporate –focused” it should also be appreciated that environmental accounting can also be undertaken at a national or regional level

Bennett and James, 2000

Environmental accounting covers both national and firm-level accounting activities, the processing of both financial and non-financial information, and the calculation and use of monetized external damage costs as well as those that are internal to the firm Shcaltegger and

Burritt, 2017

Environmental accounting is a branch of accounting that deals with: Activities, methods and systems

Recording, analysis and reporting

Environmentally induced financial impacts and ecological of a defined economic system

In spite of some differences, most definitions emphasize key themes such as a link between financial and environmental performance, quantitative measurement in monetary value and physical units, accounting for internal and external costs, wide stakeholder considerations and a need for an environmental accounting information system These emerging themes are considered in the further development of environmental accounting For the purpose of this study, environmental accounting of the enterprises is considered as an integral part of accounting, related to information on environmental activities in the enterprise's scope It aims to collect,

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analyze and provide environmental information for internal and external parties to use to make decisions

The next section will discuss the definition of environmental management accounting, a subsection of environmental accounting

2.1.3 Definition of Environmental Management Accounting

Environmental management accounting is an important part of the environmental management system, which is actually driven by the environmental policy of a company Environmental management system is the part of the overall management system that includes organizational structure, planning activities, responsibilities, practices, procedures, processes and resources for developing, implementing, achieving, reviewing and maintaining the environmental policy (ISO, 14001) Environmental management accounting seves to plan, structure, and review the environmental policy and actions behind it Therefore, Environmental management accounting is at the core of the sustainable development concept It relates to measuring the performance of the environmental management system that is put in place to operationalize the environmental policy of a company, that itself depends on the corporate social responsibility

Figure 2 1 EMA at the core of sustainable development Environmental Management System Sustainable

development

Corporate social Responsibility

Environmental Management

Accounting

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Previous studies have explained that Environmental Management Accounting is a new tool for environmental management There are also differences in environmental accounting definitions, but almost all of them explain that Environmental management accounting is viewed as an extension of conventional management accounting, and is an integral part of overall environmental accounting practices of organizations (UNSD, 2001; IFAC, 2005) It is not also a separate system but also it helps to improve the management accounting system

According to Birkin (1996) indicates that “Environmental management accounting provides a service to management that is rooted in the internal functions of the firm but is outward-looking where appropriate…EMA is a straightforward development of management accountancy” Jasch (2006) also explained environmental management accounting as an information system, not separate from management accounting However, environmental management accounting focused on the flow of materials, and the balanced nature of the material flow

According to The International Federation of Accountant Statement Management Accounting Concepts, EMA is “the management of environmental and economic performance through the development and implementation of appropriate environment – related accounting systems and practices While this may include reporting and auditing in some companies, environmental management accounting typically involves life-cycle costing, full-cost accounting, benefit assessment, and strategic planning for environmental management”

According to the definition, The United Nations Division for Sustainable Development considers environmental management accounting systems as generating information for internal decision making, and such information can be either physical or monetary in focus They stated that: “The general use of environmental management accounting information is for internal organization calculations and decision making Environmental management account procedures for internal decision making include both physical procedures for material and

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energy consumption, flows and final disposal, and monetary procedures for costs, saving and revenues related to activities with potential environmental impacts” (UNDSD, 2001)

In addition, there are many definitions of environmental management accounting, which will be summarized on Table 2.2 below by the author

Table 2 2 Summary of definitions of Environmental Management Accounting

Schalegger and Burritt, 2000

Environmental management accounting is more narrowly defined as covering only the financial aspect and environmental-related aspects of accounting, helping managers make decisions and taking responsibility for those decisions

Bartolomeo et al., 2000 Environmental management accounting is the generation, analysis and use of financial and related non – financial information in order to integrate corporate environmental and economic policies and build sustainable business

Jasch, 2003 Environmental management accounting is an integrated method to convert data from financial accounting to cost accounting and balance the flow of materials to increase resource efficiency and reduce impact and environmental risks as well as reducing environmental protection costs

Bouma and Correlje, 2003

Environmental management accounting can be regarded as a subset of environmental accounting which refers to accounting systems and techniques that provide decision-makers and management with financial and non-financial information about the firm or organization and its environment

Although there are some differences in environmental management accounting definitions about the scope of application, most definitions explain that