Financial resources ecological orientation and capabilities as antecedents of environmental management accounting for sustainable competitive advantage

Environmental Management Accounting (EMA) enables SMEs to adopt greener production practices and strengthen their sustainable competitive advantage (SCA). While EMA is recognized for enhancing performance in large firms, significant research gaps persist regarding its application within small and medium-sized enterprises (SMEs), particularly in new geographical contexts. Prior studies acknowledge the role of antecedents of EMA, whether tangible or intangible resources. However, limited research simultaneously examines both types of resources alongside organizational capabilities to determine EMA adoption. This study addresses the limited empirical evidence on the combined role of financial resources (FR), natural ecological orientation (NEO), and environmental innovation capabilities (EIC) as key antecedents to EMA adoption. It further examines the mediating effect of EMA adoption on SCA among manufacturing SMEs in Kenya. Grounded in the natural resource-based view (NRBV), data were collected from 206 SMEs and analyzed using SmartPLS 4. Empirical findings indicate no significant relationship between FR and EMA adoption, supporting the argument that intangible resources may be more instrumental than tangible resources in fostering SCA through EMA. In contrast, NEO and EIC demonstrated strong and significant relationships with EMA adoption. Additionally, results show that EMA adoption significantly enhances SCA, with NEO and EIC exerting significant positive effects on SCA through EMA adoption. Practically, the findings guide SMEs in leveraging NEO and EIC to boost green performance and value within global supply chains by creating shared sustainability benefits beyond compliance. Furthermore, the study informs policymakers on how to promote these enablers to enhance SME competitiveness in sustainable markets.