Implementation of eco-control system by Indonesian manufacturing firms: Understanding the mediating role of organizational culture
-
Author(s)Muhammad Try DharsanaLink to ORCID Index: https://orcid.org/0009-0003-1947-8274
,
Andi Iqra Pradipta NatsirLink to ORCID Index: https://orcid.org/0009-0008-8539-0795
,
Fakhrul Indra HermansyahLink to ORCID Index: https://orcid.org/0009-0000-6246-2954
,
Khaerunnisa Nur Fatimah SyahnurLink to ORCID Index: https://orcid.org/0000-0001-7999-5917
-
DOIhttp://dx.doi.org/10.21511/ee.15(2).2024.02
-
Article InfoVolume 15 2024, Issue #2, pp. 12-21
- 218 Views
-
54 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
Implementing eco-control is a strategic way for companies to prevent environmental damage. This paper aims to analyze the effect of perceived environmental uncertainty and stakeholder pressure on system implementation through environmentally oriented organizational culture as a mediating variable. This study utilizes the PLS-SEM model using a sample of 104 manufacturing companies in Indonesia; 197 respondents from those companies completed the survey. All variables used in the research model are significant for a formative measurement model, and an internal model applied met all criteria. This study confirms a negative relationship between perceptions of environmental uncertainty and environmentally oriented organizational culture (β = 0.174, p < 0.01). The opposite effect is shown by the relationship between stakeholder pressure and organizational culture (β = 0.379, p < 0.01), and the positive effect of organizational culture on the implementation of eco-control in companies is significant (β = 0.650, p < 0.01). In addition, organizational culture partially mediates the relationship between perceptions of environmental uncertainty and the implementation of the eco-control system (β = 0.317, p < 0.05) and between stakeholder pressure and the implementation of this system (β = 0.401, p < 0.05). When companies through managers face uncertainty from the ecological environment and stakeholder pressure, they should utilize an eco-control system, which can succeed in profit goals and environmental responsibility.
view full abstract
- Keywords
-
JEL Classification (Paper profile tab)Q56, D81, M14
-
References46
-
Tables5
-
Figures1
-
- Figure 1. PLS-SEM analysis
-
- Table 1. Respondents’ information
- Table 2. Descriptive statistics
- Table 3. Measurement model results
- Table 4. Model fit indices
- Table 5. Path coefficients and p-values
-
- Abdel-Maksoud, A., Kamel, H., & Elbanna, S. (2016). Investigating relationships between stakeholders’ pressure, eco-control systems and hotel performance. International Journal of Hospitality Management, 59, 95-104.
- Agyemang, A. O., Yusheng, K., Twum, A. K., Edziah, B. K., & Ayamba, E. C. (2024). Environmental accounting and performance: Empirical evidence from China. Environment, Development and Sustainability, 26(2), 3687-3712.
- Al-Tuwaijri, S. A., Christensen, T. E., & Hughes, K. E. (2004). The relations among environmental disclosure, environmental performance, and economic performance: A simultaneous equations approach. Accounting, Organizations and Society, 29(5-6), 447-471.
- Anthony, R. N., & Govindarajan, V. (2007). Management Control Systems (12th ed.). New York: McGraw-Hill Education.
- Barney, J. B. (1986). Strategic factor markets: Expectations, luck, and business strategy. Management Science, 32(10), 1231-1241.
- Bouwens, J., & Abernethy, M. A. (2000). The consequences of customization on management accounting system design. Accounting, Organizations and Society, 25(3), 221-241.
- Chenhall, R. H., & Morris, D. (1986). The impact of structure, environment, and interdependence on the perceived usefulness of management accounting systems. Accounting Review, 61(1), 16-35.
- Cho, C. H., Jerome, T., & Maurice, J. (2022). Assessing the impact of environmental accounting research: Evidence from citation and journal data. Sustainability, Accounting, Management and Policy Journal, 13(5), 989-1014.
- Dubey, R., Gunasekaran, A., Childe, S. J., Papadopoulos, T., Hazen, B., Giannakis, M., & Roubaud, D. (2017). Examining the effect of external pressures and organizational culture on shaping performance measurement systems (PMS) for sustainability benchmarking: Some empirical findings. International Journal of Production Economics, 193, 63-76.
- Elkington, J. (1994). Towards the sustainable corporation: Win-win-win business strategies for sustainable development. California Management Review, 36(2), 90-100.
- Freeman, R. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman Publishing Inc.
- Galbreath, J. (2010). Drivers of corporate social responsibility: The role of formal strategic planning and firm culture. British Journal of Management, 21(2), 511-525.
- Gunarathne, N., & Lee, K. H. (2015). Environmental management accounting (EMA) for environmental management and organizational change an eco-control approach. Journal of Accounting & Organizational Change, 11(3), 362-383.
- Hair, J. F., Hult, G. T. M., Ringle, C. M., & Sarstedt, M. (2022). A Primer on Partial Least Square Structural Equation Modeling (PLS-SEM). California: SAGE Publication, Inc.
- Hartono, J., & Abdillah, W. (2014). Konsep dan Aplikasi PLS (Partial Least Square) Untuk Penelitian Empiris [PLS (Partial Least Square) Application Concept for empirical research] (1st ed.). Yogyakarta: BPFE Publishing. (In Indonesian).
- Hauser, S. (2016). Stakeholder influence and the diffusion of eco-efficiency practices in the natural gas exploration and production industry. International Journal of Energy Sector Management, 10(1), 56-68.
- Henri, J. F., & Journeault, M. (2010). Eco-control: The influence of management control systems on environmental and economic performance. Accounting, Organizations and Society, 35(1), 63-80.
- Henri, J. F., & Journeault, M. (2018). Antecedents and consequences of eco-control deployment: Evidence from Canadian manufacturing firms. Accounting Perspectives, 17(2), 253-273.
- Herman, B., Bashir, S., Syahnur, K. N. F., Haslindah, H., & Absah, Y. (2024). Transformation of SMEs: Strengthening entrepreneurship and product innovation as key drivers of business evolution. Hasanuddin Economics and Business Review, 7(3).
- Hwang, G. W., Fukumitsu, T., Ogiwara, Y., Takahashi, T., Miura, N., Kuge, S., & Naganuma, A. (2016). Whi2 enhances methylmercury toxicity in yeast via inhibition of Akr1 palmitoyltransferase activity. Biochimica et Biophysica Acta (BBA) – General Subjects, 1860(6), 1326-1333.
- Ittner, C. D., & Larcker, D. F. (2001). Assessing empirical research in managerial accounting: A value-based management perspective. Journal of Accounting and Economics, 32(1-3), 349-410.
- Jogaratnam, G. (2017). How organizational culture influences market orientation and business performance in the restaurant industry. Journal of Hospitality and Tourism Management, 31, 211-219.
- Kawai, N., Strange, R., & Zucchella, A. (2018). Stakeholder pressures, EMS implementation, and green innovation in MNC overseas subsidiaries. International Business Review, 27(5), 933-946.
- Kiron, D., Haanes, K., Reeves, M., & Velken, I. S. (2012). Sustainability Nears A Tipping Point. MIT Sloan Manage, 53(2), 69-74.
- Koehler, D. A., & Hespeinheide, E. J. (2013). Finding the value in environmental, social and governance performance. Deloitte Review, 12, 99-111.
- Lewis, J., & Harvey, B. (2001). Perceived environmental uncertainty: The extension of Miller’s scale to the natural environment. Journal of Management Studies, 38(2), 201-234.
- Miller, K. D. (1993). Industry and Country Effects on Executive’ Perceptions of Environmental Uncertainties. Journal of Internasional Business Studies, 24(4), 693-714.
- Mitchell, R., Bradley R., & Wood, D. (1997). Toward a Theory Identification and Saliance: Defining the Principle of Who and What Really Counts. The Academy of Management Review, 22(4), 853-886.
- Moreno-Castilla, C. (2004). Adsorption of Organic Molecules from Aqueous Solutions on Carbon Materials. Carbon, 42(1), 83-94.
- Nitzl, C., Roldan, J. L., & Cepeda, G. (2016). Mediation analysis in partial least squares path modelling: Helping researchers discuss more sophisticated models. Industrial Management and Data Systems, 116(9), 1849-1864.
- Perez-Batres, L. A., Doh, J. P., Miller, V. V., & Pisani, M. J. (2012). Stakeholder pressures as determinants of CSR strategic choice: Why do firms choose symbolic versus substantive self-regulatory codes of conduct? Journal of Business Ethics, 110(2), 157-172.
- Phillips, R. A. (2003). Stakeholder theory and organizational ethics. Berrett-Koehler Publishers.
- Pondeville, S., Swaen, V., & De Rongé, Y. (2013). Environmental management control systems: The role of contextual and strategic factors. Management Accounting Research, 24(4), 317-332.
- Primandaru, N., Kusuma, M. W., & Nasution, O. B. (2023). Antecedents of green manufacturing implementation by local MSMEs in Indonesia. Environmental Economics, 14(2), 103-113.
- Ratmono, D., Mail, R., Cahyonowati, N., & Janie, D. N. A. (2024). The role of environmental performance in mediating the relationship between green accounting and corporate social responsibility. Environmental Economics, 15(1), 46-55.
- Ravasi, D., & Schultz, M. (1993). Responding to organizational identity threats: Exploring the role of organizational culture. Academy of Management Journal, 49(3), 433-458.
- Rounaghi, M. M. (2019). Economic analysis of using green accounting and environmental accounting to identify environmental costs and sustainability indicators. International Journal of Ethics and Systems, 35(4), 504-512.
- Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. The Academy of Management Journal, 40(3), 534-559.
- Schaltegger, S., Hahn, T., & Burritt, R. (2000). Environment Management Accounting Overview and Main Approaches. Lueneburg: Center of Sustainability Management (CSM).
- Sholihin, M., & Ratmono, D. (2013). Analisis SEM-PLS dengan Warp PLS 3.0. [SEM-PLS analysis with Warp PLS 3] (1st ed.). Yogyakarta: Andi Offset. (In Indonesian).
- Unruh, G., & Ettenson, R. (2010). Winning in The Green Frenzy. Harvard Business Review, 88(11).
- Utami, R., Arif, H., Habbe, A. H., & Abdullah, F. (2024). Switching behavior of banks’ customer: Does it exist? Hasanuddin Economics and Business Review, 7(3), 146-161.
- Velasquez, M. G. (2002). Business Ethics: Concepts and Cases. (5th ed.). New Jersey: Mc. Pearson Education.
- Warrick, D. D. (2017). What leaders need to know about organizational culture. Business Horizons, 60(3), 395-404.
- Wheeler, D., Fabig, H., & Boele, R. (2002). Paradoxes and Dilemmas for Stakeholder Responsive Firms in the Extractive Sector: Lessons from the Case of Shell and the Ogoni. Journal of Business Ethics, 39, 297-318.
- Yu, Y., & Choi, Y. (2016). Stakeholder pressure and CSR adoption: The mediating role of organizational culture for Chinese companies. Social Science Journal, 53(2), 226-234.
