Analysis of Relationship Among Stakeholder Pressures, Environmental Management Accounting Use, Strategy, and Innovation: an Empirical Evidence From Indonesia

As an increased awareness of a global issue regarding the environmental impact of business activity; this study aims to examine the relationship among stakeholder pressures, environmental management accounting use, strategy, and innovation. This study is performed by conducting the survey to management accountants and environmental managers of companies in Indonesia. The convenience sampling technique was used and resulted in 34% response rate. The hypothesis testing was conducted by using Structural Equation Modeling (SEM) with SmartPLS 2.0 software. The results are: (1) the stakeholder pressures have a positive effect on EMA use, (2) the prospector strategy has no positive effect on EMA use, (3) EMA use has a positive effect on process innovation, but not with product innovation, (4) the prospector strategy has a positive effect on process innovation as well as on product innovation


INTRODUCTION
Nowadays, as awareness of environmental issues, eco-efficiency 2 , and sustainable development have been increasing, the external pressures towards organizations, besides from the internal ones, will challenge many corporations.
Since there were government regulations and demand pressures from societies toward better environmental management by the 1 Corresponding author 2 Eco-efficiency is reached by the delivery of competitively-price goods and services that satisfy human needs and bring quality life, while progressively reducing environmental impacts and resource intensity throughout the life cycle, to a level at least in line with the earth's estimated carrying capacity (on Jollands et al., 2003).
organizations, the existence of institutional theory as a social system-based theory could be used in searching the meaning of social behavior (Meyer and Rowan, 1977;Qian et al., 2011

HYPOTHESIS DEVELOPMENT
As Qian, Burrit, and Monroe (2011, p. 97) stated that "there is no commonly used In the other side, this study also used institutional theory to explain the effect of social structure to the environmental management accounting use.
Prior researches and literatures explained that there is no single and universal appropriate management accounting system to be applied effectively to every organization in every circumstance (Kelly and Pratt, 1992;Islam and Hu, 2012). Luther and Longden (2001) found that referred to the contingency theory; contingent factors existed in influencing management accounting and identifying potential additional factors, such as changed stakeholder pressures (Kattan et al., n.d.).
Contingency theory also used in explaining the business strategy that significantly influences the management accounting system use in organizations (Cadez andGuilding, 2008, on Islam andHu, 2012 (Ferreira et al., 2009;IFAC, 2005). The use of EMA can be organized into three broad categories; they are: compliance, eco-efficiency, and strategic position (IFAC, 2005).

Use
In purpose of regulating the environmental corporate performance, there are incentives and pressures in running the businesses, such as the rules from the stricter regulator and the demands from societies. In every country, in line with growing concern of the civil society and the common public regarding companies' environmental impacts, each government has produced the law rules about environmental management for organizations. In the other side, through the institutional theory that was explained by Delmas and Toffel (2004) said that the stakeholder pressures will influence the environmental management practices.
In other words, an institutional theory indicates that with the existence of the demand pressures from the societies in having better life environment and the related regulations from the government, will pressure the organizations to do good actions in preserving the environment.
However, organizations will take more business strategies such as getting an innovation way to manage environmental costs in every business management lines.
The same opinion is also stated by

Use
EMA use in an organization is likely to be influenced by its business strategy (Ferreira et al., 2009). This claim is strengthen by management control system (MCS) which ensure that managers use the available resources effectively and efficiently in the pursuit of the objectives of the organization (Anthony, 1965, on Ferreira et al., 2009 The prospector is also flexible to respond quickly to changing market conditions. This type of strategy from Miles and Snow (1978) explained that the extent to which the organization pursues innovation is likely to be related to their business strategies. Gosselin (1997) proposed the conclusion which if the type of strategy followed by an organization determines the need for innovation with regards to activity management and observes that organization which pursues a prospector strategy tends to adopt accounting innovations, like EMA (Ferreira et al., 2009). Thus, the use of EMA is likely to be greater in organization which pursues a prospector strategy since it may assist them with their aim of being innovative (Gosselin, 1997, on Ferreira et al., 2009). Hence, the following hypothesis is proposed:

H2: The prospector strategy has a positive effect on Environmental Management
Accounting (EMA) use.

Effect of EMA use on Innovation
Through EMA implementation is expected to achieve a sustainable

Effect of Prospector Strategy on
Innovation Miles and Snow (1978, p. 29) described the prospector which the organizations almost continually search for market opportunities, they also regularly experiment with potential responses to emerging environmental trends, thus, these organizations often are the creators of change and uncertainty to which their competitors must respond (Kulzick, 2008).
Beside, this organizational strategy typically determines the different emphasis that organizations place on product and process innovations in achieving their competitive advantage (Etlie, 1983;Hull et al., 1985;on Ferreira et al., 2009). Cozzarin and Percival, 2006(on Etlie, 1983Hull et al., 1985) found that innovation complements many organizational strategies, while others noted the strategy is an antecedent of the emphasis that organizations place on product and process innovation (Ferreira et al., 2009) As explained before that a prospector strategy aims to be the first in the market, even though not all efforts are ultimately successful (Miles andSnow, 1978, on Ferreira et al., 2009). These organizations also aim to respond rapidly to early signals of market needs or opportunities. Therefore, the greater the emphasis on being the first in market, the higher the level of product innovations. Based on this step, the prospectors will seek to improve efficiency in product production and delivery. Ferreira Above hypotheses are presented in a research model shown in Figure 1.

Research Variables
The measurement of the latent variables are summarized as shown in Table   1   1. The company has introduced new production processes (IPrc1) 2. The company has modifications to production processes (IPrc2) 3. The company is the first to introduce production processes (IPrc3) 4. The frequency of production process improvements in the company, compared by the industry average (IPrc4)     The Table 4 and Table 5

Non-response Bias Test
In this study, the non-response bias test was conducted through the independent sample t test by looking the variance of the population from the group before and after the cut-off date (using the group of after cut-off date as a proxy for non-respondents) on key variable of interest. The independent sample t test could be observed through the score of Levene's Test for Equality of Variance.
The result shows that the answer's mean is the same for both of group. So, all of the survey could be collectively processed for further analysis.

Descriptive Analysis
Based on  Source : primary data 2012-2013, processed.

Path Analysis
Before conducting the evaluation of the structural model, it is requisited to perform measurement model analysis to ensure that each variable is valid and reliable (Ghozali, 2008). The analysis of prior measurement model concluded that there was a need to revise the outer model.
Identification of the revised outer model will be started from excluding the indicators of the latent constructs which were not meet the convergent validity, discriminant validity, and composite reliability. Table 7 summarized the indicators that were needed to be excluded from the outer model.

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The Table 9 showed that the correlation of EMA construct with its indicators is higher than the correlation of   Source: primary data 2012-2013, processed.  Next, reviewed from the T statistics in Table 12, not all of the path coefficients were statistically significant.
Although the model had been revised, there were still the ones that not met the significant level (T statistics below 1,96).   (Kattan et al., n.d.).

EMA -> IPrd
Since the organizations faced such as changed stakeholder pressure; the company strategies as arms of management control system within organization would be used.
So, through the contingency theory the strategy will affect on management control system of organizations, including  (2006) that EMA use will encourage the organizations to innovate the product.
However, this finding is consistent with . This finding showed that the companies which adopted the prospector strategy will encourage them to innovate the process of products and its products as well.