Decoding sustainability success: The role of environmental management accounting and environmental management initiatives under institutional pressure.

In response to rising stakeholder demands and the evolving landscape of environmental policy reforms in China, this research examines the impact of institutional pressure on the implementation of environmental management accounting and environmental management initiatives, as well as their subsequent effects on environmental performance. A structured questionnaire was used to gather responses from 510 small and medium-sized entrepreneurs in Jiangsu Province. The research employed three methods: PLS-SEM, fsQCA, and necessary condition analysis (NCA) to evaluate the relationship between the variables. The results revealed that institutional pressure has a significant influence on environmental management accounting and initiatives. Moreover, the research validated that environmental management initiatives enhance organizational performance. Further, environmental management accounting was also found to have a positively mediating relationship between institutional pressure, environmental management initiatives, and performance outcomes. In addition, fsQCA analysis revealed that all three conditions, including institutional pressure, environmental management initiatives, and accounting, are sufficient and strong in achieving high organizational performance but are unnecessary in isolation. The study elucidates how institutional pressure economically incentivizes the adoption of environmental management accounting and initiatives, which in turn act as critical mediating channels driving enhanced environmental and financial performance among SMEs. The study contributes to the sustainability accounting literature by highlighting the importance of firm-level institutional and regulatory support, as well as by developing environmental management accounting capabilities within firms to enhance their environmental and financial performance.