Linking environmental management control system to environmental and financial performance: The interactive role of environmental capabilities in the Jordanian manufacturing sector

Abstract

This study helps to understand the environmental management and control system (EMCS) and the debate surrounding environmental and financial performance. The relationship between EMCS and its environmental and financial performance has been debated over the last decade. The extent research on the impact from an EMCS and performance perspective reveals that empirical results on this topic are not yet conclusive, add the mixed outcome on the relation between EMCS and environmental and financial performance; This is due in part to neglecting of the role of environmental capabilities in improving the positive impact between EMCS and performance. Moreover, the elusive relationships between EMCS and performance require further investigation into the intermediate variables that can affect the relationships. This study develops a theoretical framework by investigating the impact of EMCS on environmental proactivity and organisational culture using resource-based view theory and eco-efficiency theory. Also, the impact of EMCS on both environmental and financial performance through environmental capabilities (i.e., environmental proactivity and organisational culture) as intermediary variables. Therefore, hypotheses are developed to test the relationship between the framework variables. An email survey was administered to 1000 random selected large manufacturing companies operating in Jordan. An analysis of 251 responses using Statistical Package for the Social Sciences (SPSS) AMOS revealed that significant relationship between EMCS and (organisational culture and environmental proactivity). Also, there is a direct and indirect relationship between EMCS and environmental performance, while EMCS has no direct impact on financial performance but indirectly (organisational culture and environmental proactivity). The overall findings of this research indicate that EMCS fosters organisational culture and environmental proactivity that can improve both environmental and financial performance. The contribution to the knowledge of this study is the exclusively focusing on the environmental capabilities (organizational culture and environmental proactivity), examining the impact of EMCS and environmental capabilities in the environmental and financial performance. this study provides scholars and practitioners with a better understanding of implementing the environmental management control system framework, backed by empirical evidence.