Material Flow Cost Accounting, Perceived Ecological Environmental Uncertainty, Supplier Integration and Business Performance: A Study of Manufacturing Sector in Malaysia

Abstract

This article seeks to explore the implementation of Material Flow Cost Accounting (MFCA) across the manufacturing sector. The paper aims to understand the role of perceived ecological environmental uncertainty (PEEU) and supplier integration (SI) on MFCA implementation, and thus subsequently examines the effect of MFCA implementation on firms' environmental and economic performance. The research model was empirically tested based on online-survey. The questionnaires were emailed to 1200 randomly selected industrial firms. The usable responses was 123 firms. The data was analysed using a structural equation modelling (SEM) approach through partial least square (PLS) software. The main results from survey of 123 companies showed low level of MFCA implementation. Further, the analysis of PLS indicated that companies which recognise bigger ecological environmental uncertainty are less motivated to implement MFCA. Tthe study also found that SI has a direct positive impact on MFCA implementation since companies which decided to implement MFCA were more likely able to achieve better environmental and economic performance. Thus, companies perceive the importance of being ecologically responsible and that such practice will increase companys' prosperity in many ways, ecologically and economically.

Material Flow Cost Accounting in Developing Countries: A Systematic Review

“…This provides some first insights into MFCA diffusion in a developing country context as prior survey-based research has been primarily concerned with EMA application in general rather than examining MFCA specifically [4]. Nonetheless, in the study by Salim et al [55], we are not certain about how many companies know about MFCA, how many companies know about MFCA but not apply it, and how many companies know about MFCA and apply it in practice in the context of developing countries despite many case-based efforts in proving various benefits of MFCA and the ability of its application. Do companies know about MFCA and if yes, what do they know about it?…”

“…However, case studies primarily investigate MFCA implementation at one company in a specific country [52][53][54] rather than examining multiple cases across sectors and/or countries (e.g., comparative research designs). Two papers used a quantitative method to collect data by conducting a survey [55,56]. Surveying 123 companies, Salim et al [55], for example, show that there is a low level of MFCA implementation in Malaysia.…”

“…Two papers used a quantitative method to collect data by conducting a survey [55,56]. Surveying 123 companies, Salim et al [55], for example, show that there is a low level of MFCA implementation in Malaysia. Another example is that Yagi and Kokubu [56] analyze the characteristics of material flow management to facilitate the expanded use of MFCA through surveying 101 firms in Thailand.…”

“…Five publications show explicitly enablers of and/or barriers to MFCA application [55,56,65,73,76]. First, Salim et al [55] highlight that there is a direct positive impact of supplier integration on MFCA application, while companies with bigger ecological environmental uncertainty are less motivated to apply MFCA. Second, Yagi and Kokubu [56] reveal that hazardous waste and raw material management could facilitate the promotion of MFCA.…”

“…Drawing from current literature, our knowledge about the level of MFCA application in emerging countries remains limited to insights from individual company case studies. There is one article showing a low level of MFCA application in the context of Malaysia through surveying 123 enterprises [55]. This provides some first insights into MFCA diffusion in a developing country context as prior survey-based research has been primarily concerned with EMA application in general rather than examining MFCA specifically [4].…”