The Role of Environmental Management Accounting in Economic Development through Corporate Product and Process Innovation in East Java Indonesia

Abstract

Aims: This research aims to examine the influence of environmental management accounting on economic development through innovation Study Design: This research hypothesis testing was carried out using the Partial Least Square (PLS) approach. Place of Study: The sample data for this research was obtained from 150 respondents. The respondents in this research sample were accounting managers of manufacturing companies in East Java. Methodology: This research method is quantitative. This research will test the influence of the relationship between variables, namely the independent variable consisting of environmental management accounting as the independent variable (X1). The product innovation variable (Z1) and the process innovation variable (Z2) are mediating variables, and economic development (Y) is the dependent variable. Results: The result of the test shows that Environmental management accounting (EMA) is proven to have a positive and significant influence on Economic development, with a t value > t table (5.526 > 1.975) and a path coefficient of 0.000. The product innovation is also able to strongly mediate the relationship between environmental management accounting (EMA) and economic development, this finding is supported by the value of t count > t table (2.710 > 1.975) and a path coefficient of 0.000. The latest test results also prove that process innovation is also able to strengthen the relationship between Environmental Management Accounting (EMA) variables and economic development. Conclusion: Overall, the results of this study support the dimensions of management accounting environment (AML) can increase economic development even though companies carry out product innovation and process innovation activities. This research provides a perspective on possible strategies companies to achieve more effective environmental management accounting and supports company goals related to product innovation and company process innovation.