Article review of “'Environmental management accounting for strategic decision-making”

Article review of “'Environmental management accounting for strategic decision-making”

 

How to present this article in Harvard reference format?

Swalih, M. M., Ram, R. & Tew, E. (2024) 'Environmental management accounting for strategic decision-making: A systematic literature review', Business Strategy and The Environment, 33, pp. 6335–6367. doi: 10.1002/bse.3828.

 

What are the key research issues the article wants to address?

The article aims to address the following key research issues:

1.    Understanding the genuine and proactive implementation of Environmental Management Accounting (EMA): While EMA is recognized as pivotal for supporting eco-efficiency decisions within organizations, there is a gap in the literature regarding its actual use for sustainable development beyond compliance or legitimacy purposes.

2.    Investigating why and how EMA is used for strategic decision-making: The study explores the motives behind EMA adoption and the ways organizations employ EMA tools strategically.

3.    Identifying factors influencing EMA usage: Using the drivers–enablers–outcomes–barriers framework, the research examines internal organizational factors (like management's environmental responsibility and leadership commitment) and external pressures that affect EMA integration.

4.    Exploring the evolving nature of EMA use: The paper highlights the shift in EMA application from short-term compliance-focused efforts to recognizing its potential in long-term strategic sustainable development.

5.    Contributing to pragmatic approaches in sustainability accounting: By delving into the theoretical underpinnings and motivations for enhanced EMA use, the study contributes insights on how organizations move from using EMA for legitimacy to leveraging it for proactive, solution-oriented managerial decisions toward sustainability.

These issues collectively address the role of EMA in fostering strategic sustainable development within organizations.

 

Describe two main theories employed in this article.

The article identifies two main theories frequently employed in the Environmental Management Accounting (EMA) literature:

1.    Contingency Theory: This is the most commonly used theory, cited in twelve studies. Contingency theory posits that organizational adoption and utilization of EMA depend on internal and external contextual factors or contingencies. Examples of such factors include environmental strategies, top management commitment, environmental proactivity, and environmental uncertainty. Organizations tailor their EMA practices based on these situational variables to enhance decision-making and sustainability performance.

2.    Natural Resource-Based View (NRBV): The second most used theory, with eight studies applying it, NRBV emphasizes the strategic role of organizational resources and capabilities in achieving sustainable competitive advantage. It explains how organizations with proactive environmental strategies and strong leadership leverage EMA tools to manage environmental risks, innovate greener technologies, and capitalize on green investment opportunities, thereby gaining competitive benefits through sustainability.

These theories provide frameworks to understand how EMA adoption and usage are shaped by organizational context and resources, influencing strategic environmental decision-making.

 

Highlight 2 main primary findings reported in this article.

Two main primary findings reported in the article are:

1.    Dominance of Secondary or Manufacturing Sector in EMA Studies: Across empirical studies examined, 34% were conducted in the secondary (manufacturing) sector, while only 8% and 7% were in the primary and tertiary sectors, respectively. Notably, 51% of studies covered multiple sectors, with significant research focused on industries like paper production, food and beverages, and multiple manufacturing industries.

2.    Transition in EMA Usage Motives from Legitimacy to Strategic Sustainable Development: The article identifies an evolving progression in why organizations use EMA for strategic decision-making. Initially, EMA is adopted primarily to gain legitimacy and meet stakeholder demands (46.06% of the literature focused on this). Over time, organizations recognize EMA’s operational and economic benefits, shifting toward improving organizational efficiency (25.96%) and advancing strategic sustainable development (17.98%). This transition reflects a move from reactive, compliance-driven use to proactive, strategic application supporting sustainability goals, involving more advanced EMA tools and committed leadership.

 

Describe 3 main claims of the article in terms of Toulmin's model of argument.

Applying Toulmin's model of argument, which consists of claim, data (evidence), warrant (reasoning linking data to claim), backing, qualifier, and rebuttal, here are three main claims from the article structured accordingly:

1.    Claim 1: EMA is primarily adopted by organizations initially for legitimacy purposes before evolving toward strategic sustainable development.

• Data (Evidence): 46.06% of studies focus on EMA adoption for legitimacy reasons; organizations use basic EMA tools like energy and water accounting to comply with regulations and societal expectations. Over time, use expands to advanced tools linked with proactive sustainability strategies.
• Warrant: Organizations respond to external stakeholder pressures (governments, customers, regulators) for legitimacy, then internalize EMA benefits leading to broader strategic applications.
• Backing: Supported by institutional theories such as legitimacy theory and stakeholder theory, indicating organizations conform to external demands but also by contingency and resource-based view theories explaining deeper strategic adoption.
• Qualifier: This progression is a general trend but may vary based on organizational context and sector.
• Rebuttal: Some organizations may remain at the legitimacy stage without advancing to strategic sustainability due to resource or commitment limitations.

2.    Claim 2: The use of EMA enables organizations to improve organizational efficiency by identifying hidden costs and managing resources.

• Data (Evidence): EMA tools help reduce water and energy consumption, waste, and emissions, and improve cost-effectiveness as evidenced by findings from multiple empirical studies; 35.96% of literature relates to efficiency gains.
• Warrant: By providing precise environmental and cost data, EMA allows internal decision-makers to optimize resource use and reduce operational costs.
• Backing: Studies indicating operational benefits and economic performance improvements linked with EMA deployment.
• Qualifier: The extent of efficiency improvements depends on the organization's ability to integrate EMA into decision-making processes.
• Rebuttal: Without organizational commitment or adequate capability, efficiency benefits may not materialize fully.

3.    Claim 3: EMA supports strategic sustainable development through long-term planning, investment decisions, and competitive advantage.

• Data (Evidence): A minority (17.98%) of studies relate EMA to strategic sustainable development, showing usage in capital budgeting, environmental planning, and innovation; EMA facilitates evaluation of green investments and drives sustainable competitive advantage.
• Warrant: EMA provides accurate, forward-looking environmental data and financial assessments essential for strategic sustainability decisions.
• Backing: The contingency and resource-based view theories explain how committed leadership and organizational resources leverage EMA for sustainability strategies.
• Qualifier: This use is emerging and less common compared to legitimacy and efficiency motives but is growing.
• Rebuttal: Barriers like lack of expertise, institutional support, or strategic vision can limit EMA’s use for strategic sustainable development.

These claims collectively argue that EMA evolves in organizational use from legitimacy compliance to operational efficiency, and ultimately to strategic tools for sustainable development, supported by empirical literature and theoretical frameworks.

 

Describe 2 main research limitations of the study.

Two main research limitations of the study identified from the article are:

1.    Limited Focus on EMA for Strategic Sustainable Development: The study highlights that only a small portion of the existing literature (about 17.98%) focuses on the use of EMA for long-term strategic sustainable development decisions. A significantly larger share emphasizes short-term legitimacy (46.06%) or organizational efficiency (35.96%). This imbalance limits comprehensive understanding of how EMA contributes to corporate strategic sustainability goals and suggests a research gap in exploring EMA’s role in proactive, long-term decision-making.

2.    Dependence on Existing Literature and Potential Sector Bias: The study is a systematic literature review based on papers available in selected databases up to 2023, which may restrict the inclusion of unpublished work or recent innovations. Also, empirical studies predominantly focus on secondary/manufacturing sectors (34%), with much less representation in primary (8%) and tertiary (7%) sectors, possibly limiting the generalizability of findings across different industries.

These limitations imply the need for more empirical research on advanced EMA applications for strategic sustainability and broader sectoral representation to enhance the study’s scope and practical relevance.