Kenyan SME study links environmental capabilities to accounting adoption

Environmental management accounting was significantly associated with sustainable competitive advantage among 206 manufacturing small and medium-sized enterprises in Kenya, according to a peer-reviewed observational study. Natural ecological orientation and environmental innovation capabilities were also strongly associated with adoption of environmental management accounting, while the relationship between financial resources and adoption was not statistically significant.

The study examined manufacturing SMEs in a developing economy, where evidence on the adoption of environmental management accounting has been more limited than research focused on large firms. It investigated financial resources, natural ecological orientation and environmental innovation capabilities as possible antecedents of environmental management accounting. The analysis also tested whether adoption was associated with sustainable competitive advantage and whether the two organizational capabilities exerted indirect effects through accounting adoption. Data were collected from 206 SMEs and analyzed using SmartPLS 4.

Two intangible organizational factors emerged as significant antecedents of environmental management accounting. Firms with greater natural ecological orientation and stronger environmental innovation capabilities showed significant positive relationships with adoption. By contrast, financial resources were not significantly related to adoption. The authors interpret this pattern as supporting the argument that intangible resources may be more instrumental than tangible resources in fostering sustainable competitive advantage through environmental management accounting. The result does not demonstrate that financial resources are irrelevant in every context; it indicates that the relationship tested in this sample was not statistically significant.

The model also identified significant indirect effects from natural ecological orientation and environmental innovation capabilities to sustainable competitive advantage through environmental management accounting. Environmental management accounting itself was significantly associated with the reported competitive outcome. These are modeled relationships rather than proof that a particular accounting procedure directly caused better business performance. The study’s contribution lies in examining tangible resources, intangible resources and organizational capabilities together, extending the natural resource-based view with evidence from Kenyan manufacturing SMEs.

Several limitations constrain the conclusions. The observational design and survey-based analysis can identify associations and modeled indirect effects but cannot fully exclude alternative explanations or establish causation. The sample was also limited to manufacturing SMEs in one country, so the findings may not extend to large firms, other industries or different economic and institutional settings. The results are best understood as evidence from 206 firms rather than a universal finding about environmental management accounting. The supplied record describes the work as peer-reviewed, accepted open-access research published in Discover Sustainability on 18 September 2026, with the early version subject to further editorial changes.

Subject of Research: Antecedents of environmental management accounting and sustainable competitive advantage in Kenyan manufacturing SMEs

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

Article References: Salim, K. M. A., & Amir, A. M. (2026). Financial resources ecological orientation and capabilities as antecedents of environmental management accounting for sustainable competitive advantage. Discover Sustainability. https://doi.org/10.1007/s43621-026-04494-x

Image Credits: AI Generated

DOI: 10.1007/s43621-026-04494-x

Keywords: environmental management accounting, manufacturing SMEs, Kenya, sustainable competitive advantage, natural ecological orientation, environmental innovation capabilities, financial resources, natural resource-based view, observational research, SmartPLS, Financial, resources