The implementation of Green Innovation and Environmental Management Accounting and Impact on Firm Profitability
Abstract
Businesses compete for green innovations that boost profitability while reducing their environmental footprint. The purpose of this study is to determine the impact of green-based innovation and environmental management accounting on the profitability of companies, as measured by the return on assets. This research was conducted on manufacturing companies listed on the Indonesia Stock Exchange in the observation year 2021. The hypothesis is tested using multiple linear regression. Findings show that green innovation and environmental management accounting can increase firm profitability. The implications of the results of this study show the importance of green innovation and environmental management accounting in enhancing firm profitability.
References
References
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Aguilera-Caracuel, J., & Ortiz-de-Mandojana, N. (2013). Green Innovation and Financial Performance: An Institutional Approach. Organisation and Environment, 26(4), 365–385. https://doi.org/10.1177/1086026613507931
Agustia, D., Sawarjuwono, T., & Dianawati, W. (2019). The Mediating Effect of Environmental Management Accounting on Green Innovation - Firm Value Relationship. International Journal of Energy Economics and Policy, 9(2), 299–306. https://doi.org/10.32479/ijeep.7438
Asadi, S., OmSalameh Pourhashemi, S., Nilashi, M., Abdullah, R., Samad, S., Yadegaridehkordi, E., Aljojo, N., & Razali, N. S. (2020). Investigating the influence of green innovation on sustainability performance: A case on Malaysian hotel industry. Journal of Cleaner Production, 258, 120860. https://doi.org/10.1016/j.jclepro.2020.120860
Banani, A., & Sunarko, B. (2022). Nexus between Green Finance, Creativity, Energy Accounting and Financial Performance: Banks Sustainability Analysis from Developing Country. International Journal of Energy Economics and Policy, 12(6), 447–455. https://doi.org/10.32479/ijeep.13806
Bartelmus, P. (1999). Green accounting for a sustainable economy: Policy use and analysis of environmental accounts in the Philippines. Ecological Economics, 29(1), 155–170. https://doi.org/10.1016/S0921-8009(98)00086-X
Ben Arfi, W., Hikkerova, L., & Sahut, J. M. (2018). External knowledge sources, green innovation and performance. Technological Forecasting and Social Change, 129(January), 210–220. https://doi.org/10.1016/j.techfore.2017.09.017
Burritt, R. L. (2004). Environmental management accounting: Roadblocks on the way to the green and pleasant land. Business Strategy and the Environment, 13(1), 13–32. https://doi.org/10.1002/bse.379
Chan, H. K., Yee, R. W. Y., Dai, J., & Lim, M. K. (2016). The moderating effect of environmental dynamism on green product innovation and performance. International Journal of Production Economics, 181, 384–391. https://doi.org/10.1016/j.ijpe.2015.12.006
Chen, X., Yi, N., Zhang, L., & Li, D. (2018). Does institutional pressure foster corporate green innovation? Evidence from China’s top 100 companies. Journal of Cleaner Production, 188, 304–311. https://doi.org/10.1016/j.jclepro.2018.03.257
Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of Green Innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339. https://doi.org/10.1007/s10551-006-9025-5
Cheng, C. C. J. (2020). Sustainability Orientation, Green Supplier Involvement, and Green Innovation Performance: Evidence from Diversifying Green Entrants. Journal of Business Ethics, 161(2), 393–414. https://doi.org/10.1007/s10551-018-3946-7
El-Kassar, A. N., & Singh, S. K. (2019). Green innovation and organisational performance: The influence of big data and the moderating role of management commitment and HR practices. Technological Forecasting and Social Change, 144(July), 483–498. https://doi.org/10.1016/j.techfore.2017.12.016
Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Badan penerbit Universitas Diponegoro.
Hofer, C., Cantor, D. E., & Dai, J. (2012). The competitive determinants of a firm’s environmental management activities: Evidence from US manufacturing industries. Journal of Operations Management, 30(1–2), 69–84. https://doi.org/10.1016/j.jom.2011.06.002
Hull, C. E., & Rothenberg, S. (2008). Firm Performance: The Interactions of Corporate Social Performance with Innovation and Industry Differentiation. Strategic Management Journal, 29, 781–789. https://doi.org/10.1002/smj
Jermsittiparsert, K. (2021). Linkage Between Energy Consumption, Natural Environment Pollution, and Public Health Dynamics in Asean. International Journal of Economics and Finance Studies, 13(2), 1–21. https://doi.org/10.34109/ijefs.20212001
Kemp, R., & Pearson, P. (2007). Final report MEI project about measuring eco-innovation. UM Merit, Maastricht, 32(3), 121–124.
Li, L., Liu, Q., Tang, D., & Xiong, J. (2017). Media reporting, carbon information disclosure, and the cost of equity financing: evidence from China. Environmental Science and Pollution Research, 24(10), 9447–9459. https://doi.org/10.1007/s11356-017-8614-4
Melnyk, S. A., Sroufe, R. P., & Calantone, R. (2003). Assessing the impact of environmental management systems on corporate and environmental performance. Journal of Operations Management, 21, 329–351. http://www.telegraph.co.uk/news/12067812/RSPCA-warns-rise-of-fad-pets-inspired-by-popular-films-is-leading-to-widespread-neglect-of-exotic-animals.html
Nilashi, M., Rupani, P. F., Rupani, M. M., Kamyab, H., Shao, W., Ahmadi, H., Rashid, T. A., & Aljojo, N. (2019). Measuring sustainability through ecological sustainability and human sustainability: A machine learning approach. Journal of Cleaner Production, 240, 118162. https://doi.org/10.1016/j.jclepro.2019.118162
Sachs, J. D. (2005). The End of Poverty: Economic Possibilities for Our Time. In The Penguin Press (Vol. 84, Issue 3). https://doi.org/10.2307/20034362
Sezen, B., & Çankaya, S. Y. (2013). Effects of Green Manufacturing and Eco-innovation on Sustainability Performance. Procedia - Social and Behavioral Sciences, 99, 154–163. https://doi.org/10.1016/j.sbspro.2013.10.481
Triguero, A., Moreno-Mondéjar, L., & Davia, M. A. (2013). Drivers of different types of eco-innovation in European SMEs. Ecological Economics, 92, 25–33. https://doi.org/10.1016/j.ecolecon.2013.04.009
Tse, Y. K., Tan, K. H., Ting, S. L., Choy, K. L., Ho, G. T. S., & Chung, S. H. (2012). Improving postponement operation in warehouse: An intelligent pick-and-pack decision-support system. International Journal of Production Research, 50(24), 7181–7197. https://doi.org/10.1080/00207543.2011.643505
Wong, C. Y., Wong, C. W. Y., & Boon-itt, S. (2020). Effects of green supply chain integration and green innovation on environmental and cost performance. International Journal of Production Research, 58(15), 4589–4609. https://doi.org/10.1080/00207543.2020.1756510
Wu, J., Zhang, W. Y., Zhang, S., Liu, Y. N., & Meng, X. H. (2013). A matrix-based Bayesian approach for manufacturing resource allocation planning in supply chain management. International Journal of Production Research, 51(5), 1451–1463. https://doi.org/10.1080/00207543.2012.693966
Abu Seman, N. A., Govindan, K., Mardani, A., Zakuan, N., Mat Saman, M. Z., Hooker, R. E., & Ozkul, S. (2019). The mediating effect of green innovation on the relationship between green supply chain management and environmental performance. Journal of Cleaner Production, 229, 115–127. https://doi.org/10.1016/j.jclepro.2019.03.211
Aguilera-Caracuel, J., & Ortiz-de-Mandojana, N. (2013). Green Innovation and Financial Performance: An Institutional Approach. Organisation and Environment, 26(4), 365–385. https://doi.org/10.1177/1086026613507931
Agustia, D., Sawarjuwono, T., & Dianawati, W. (2019). The Mediating Effect of Environmental Management Accounting on Green Innovation - Firm Value Relationship. International Journal of Energy Economics and Policy, 9(2), 299–306. https://doi.org/10.32479/ijeep.7438
Asadi, S., OmSalameh Pourhashemi, S., Nilashi, M., Abdullah, R., Samad, S., Yadegaridehkordi, E., Aljojo, N., & Razali, N. S. (2020). Investigating the influence of green innovation on sustainability performance: A case on Malaysian hotel industry. Journal of Cleaner Production, 258, 120860. https://doi.org/10.1016/j.jclepro.2020.120860
Banani, A., & Sunarko, B. (2022). Nexus between Green Finance, Creativity, Energy Accounting and Financial Performance: Banks Sustainability Analysis from Developing Country. International Journal of Energy Economics and Policy, 12(6), 447–455. https://doi.org/10.32479/ijeep.13806
Bartelmus, P. (1999). Green accounting for a sustainable economy: Policy use and analysis of environmental accounts in the Philippines. Ecological Economics, 29(1), 155–170. https://doi.org/10.1016/S0921-8009(98)00086-X
Ben Arfi, W., Hikkerova, L., & Sahut, J. M. (2018). External knowledge sources, green innovation and performance. Technological Forecasting and Social Change, 129(January), 210–220. https://doi.org/10.1016/j.techfore.2017.09.017
Burritt, R. L. (2004). Environmental management accounting: Roadblocks on the way to the green and pleasant land. Business Strategy and the Environment, 13(1), 13–32. https://doi.org/10.1002/bse.379
Chan, H. K., Yee, R. W. Y., Dai, J., & Lim, M. K. (2016). The moderating effect of environmental dynamism on green product innovation and performance. International Journal of Production Economics, 181, 384–391. https://doi.org/10.1016/j.ijpe.2015.12.006
Chen, X., Yi, N., Zhang, L., & Li, D. (2018). Does institutional pressure foster corporate green innovation? Evidence from China’s top 100 companies. Journal of Cleaner Production, 188, 304–311. https://doi.org/10.1016/j.jclepro.2018.03.257
Chen, Y. S., Lai, S. B., & Wen, C. T. (2006). The influence of Green Innovation performance on corporate advantage in Taiwan. Journal of Business Ethics, 67(4), 331–339. https://doi.org/10.1007/s10551-006-9025-5
Cheng, C. C. J. (2020). Sustainability Orientation, Green Supplier Involvement, and Green Innovation Performance: Evidence from Diversifying Green Entrants. Journal of Business Ethics, 161(2), 393–414. https://doi.org/10.1007/s10551-018-3946-7
El-Kassar, A. N., & Singh, S. K. (2019). Green innovation and organisational performance: The influence of big data and the moderating role of management commitment and HR practices. Technological Forecasting and Social Change, 144(July), 483–498. https://doi.org/10.1016/j.techfore.2017.12.016
Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 25. Badan penerbit Universitas Diponegoro.
Hofer, C., Cantor, D. E., & Dai, J. (2012). The competitive determinants of a firm’s environmental management activities: Evidence from US manufacturing industries. Journal of Operations Management, 30(1–2), 69–84. https://doi.org/10.1016/j.jom.2011.06.002
Hull, C. E., & Rothenberg, S. (2008). Firm Performance: The Interactions of Corporate Social Performance with Innovation and Industry Differentiation. Strategic Management Journal, 29, 781–789. https://doi.org/10.1002/smj
Jermsittiparsert, K. (2021). Linkage Between Energy Consumption, Natural Environment Pollution, and Public Health Dynamics in Asean. International Journal of Economics and Finance Studies, 13(2), 1–21. https://doi.org/10.34109/ijefs.20212001
Kemp, R., & Pearson, P. (2007). Final report MEI project about measuring eco-innovation. UM Merit, Maastricht, 32(3), 121–124.
Li, L., Liu, Q., Tang, D., & Xiong, J. (2017). Media reporting, carbon information disclosure, and the cost of equity financing: evidence from China. Environmental Science and Pollution Research, 24(10), 9447–9459. https://doi.org/10.1007/s11356-017-8614-4
Melnyk, S. A., Sroufe, R. P., & Calantone, R. (2003). Assessing the impact of environmental management systems on corporate and environmental performance. Journal of Operations Management, 21, 329–351. http://www.telegraph.co.uk/news/12067812/RSPCA-warns-rise-of-fad-pets-inspired-by-popular-films-is-leading-to-widespread-neglect-of-exotic-animals.html
Nilashi, M., Rupani, P. F., Rupani, M. M., Kamyab, H., Shao, W., Ahmadi, H., Rashid, T. A., & Aljojo, N. (2019). Measuring sustainability through ecological sustainability and human sustainability: A machine learning approach. Journal of Cleaner Production, 240, 118162. https://doi.org/10.1016/j.jclepro.2019.118162
Sachs, J. D. (2005). The End of Poverty: Economic Possibilities for Our Time. In The Penguin Press (Vol. 84, Issue 3). https://doi.org/10.2307/20034362
Sezen, B., & Çankaya, S. Y. (2013). Effects of Green Manufacturing and Eco-innovation on Sustainability Performance. Procedia - Social and Behavioral Sciences, 99, 154–163. https://doi.org/10.1016/j.sbspro.2013.10.481
Triguero, A., Moreno-Mondéjar, L., & Davia, M. A. (2013). Drivers of different types of eco-innovation in European SMEs. Ecological Economics, 92, 25–33. https://doi.org/10.1016/j.ecolecon.2013.04.009
Tse, Y. K., Tan, K. H., Ting, S. L., Choy, K. L., Ho, G. T. S., & Chung, S. H. (2012). Improving postponement operation in warehouse: An intelligent pick-and-pack decision-support system. International Journal of Production Research, 50(24), 7181–7197. https://doi.org/10.1080/00207543.2011.643505
Wong, C. Y., Wong, C. W. Y., & Boon-itt, S. (2020). Effects of green supply chain integration and green innovation on environmental and cost performance. International Journal of Production Research, 58(15), 4589–4609. https://doi.org/10.1080/00207543.2020.1756510
Wu, J., Zhang, W. Y., Zhang, S., Liu, Y. N., & Meng, X. H. (2013). A matrix-based Bayesian approach for manufacturing resource allocation planning in supply chain management. International Journal of Production Research, 51(5), 1451–1463. https://doi.org/10.1080/00207543.2012.693966
Published
2023-10-16
How to Cite
PUTRA, Pasca Dwi et al.
The implementation of Green Innovation and Environmental Management Accounting and Impact on Firm Profitability.
SAR (Soedirman Accounting Review) : Journal of Accounting and Business, [S.l.], v. 8, n. 2, p. 136 - 145, oct. 2023.
ISSN 2598-0718.
Available at: <https://jos.unsoed.ac.id/index.php/sar/article/view/9654>. Date accessed: 14 mar. 2025.
doi: https://doi.org/10.32424/1.sar.2023.8.2.9654.
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