Abstract
The purpose of this study is to empirically investigate the impact of environmental
innovation constituting product innovation (PDI) and process innovation (PCI) on firms’
financial performance (FFP). It also inquires the mediating roles of environmental
management accounting (EMA) and the firm’s environmental strategy (FES) between
innovation and FFP. We have analyzed primary data collected from 363 respondents,
working at the managing positions in the manufacturing sector of Pakistan. The proposed
model was estimated by applying structural equation modeling. Results show that PDI
and PCI have positive and significant impacts on FFP. Furthermore, the findings indicate
that EMA and FES mediate the relationship between innovation and FFP in the
manufacturing sector of Pakistan. This is the first study in the available literature on
EMA, which promulgates a comprehensive theoretical model in the context of the
manufacturing sector of Pakistan by introducing two mediators between the association
of environmental innovation and firms’ financial performance. This study suggests the
managers of the manufacturing companies or similar sectors to introduce innovations in
their products and processes for developing a better EMA system; they must propose
appropriate environmental strategies to enhance their firms’ performance. The current
study also tends to assist policymakers in developing appropriate policies for the manufacturing sector of Pakistan by realizing the importance of environmental
innovation, EMA, and FES so that their environmental and economic impacts can be
managed and regulated.
Naveed Iqbal Chaudhry, Humaira Asad, Muhammad Amir Ch, Rai Imitiaz Hussian. (2020) Environmental Innovation and Financial Performance: Mediating Role of Environmental Management Accounting and Firm’s Environmental Strategy, Pakistan Journal of Commerce and Social Sciences, Volume 14, Issue 3.
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