Environmental management strategies in family businesses : exploring triggers, outcomes, and the moderating effects of environmental management accounting - the case of Sri Lanka

Purpose: Family businesses play a crucial role in the global economy, constituting two-thirds of all businesses worldwide. Understanding how these businesses respond to mitigate their environmental impacts is essential for tackling global environmental challenges. However, the effect of family involvement on their environmental management strategies (EMSs) and environmental management accounting (EMA), which improves the effectiveness of EMSs, remains underexplored. Research Design: Based on the study's ontological and epistemological standpoints, the pragmatism paradigm was chosen as the philosophical approach. An exploratory sequential mixedmethods approach was chosen, comprising two phases: a qualitative first phase followed by a quantitative second phase. Findings: The comparative case study reflects a positive trend towards EMS application in small and medium-sized family businesses in Sri Lanka. Both types of businesses employ resource management strategies like energy efficiency, water conservation, and waste reduction initiatives, demonstrating the preventive level of EMSs. Physical environmental management accounting (PEMA) and monetary environmental management accounting (MEMA) tools have been applied in several aspects: EMA as a strategic tool for EMS formulation and EMA as a supportive management tool for EMS implementation and control. Two major triggering factors catalysing the adoption of EMSs were identified: external institutional pressure and environmental consciousness of familiness. The lack of necessary and industry-specific regulatory pressures in emerging economies has led many industries to implement EMSs reactively. Thus, the establishment of EMSs primarily relied on pressures of normative, mimetic, and environmental consciousness of familiness. The regression analysis of the quantitative study confirmed that the environmental consciousness of familiness is, overall, more dominant than the institutional pressures in EMS application in Sri Lankan family businesses. Contributions: The contributions of the study are fourfold: (1) presenting an integrated theoretical framework to investigate the influence of internal resource capabilities and external institutional pressures on the adoption of EMSs by family businesses. (2) Contributing to the knowledge gaps in the extant literature by exploring the application of EMSs and EMA practices in family businesses in emerging economies. (3) Modifying and testing a new instrument called ‘environmental consciousness of familiness’ to measure the effect of family involvement on environmental responsibility (4) Modifying and testing an EMA tool to measure the application of EMA practices in small and medium-sized family businesses in emerging economies. Conclusions: The study highlights the connections between the environmental consciousness of familiness, institutional pressures, EMS application, EMA practices, and enterprise performance. The study further reveals that incorporating environmental responsibility as a core aspect of business strategy could lead to positive environmental and economic outcomes, ultimately leading to long-term business resilience. Owner-manager values and principles are the foundation of any business, setting the tone for the rest of the organisation. Therefore, leveraging owner-manager values becomes a viable approach to instil an environmentally responsible culture in a family business. Therefore, improving the environmental awareness of owner-managers, coupled with a thorough review of environmental regulations, is a lasting solution to augment the environmental responsiveness of family businesses in Sri Lanka.