Factors Influencing Environmental Accounting Information System Design

An entity's environmental strategy indicates both the entity's dedication and motivation to incorporate environmental stewardship in its daily activities; this may affect both external and internal reporting demands of an environmental accounting information system. A firm only interested in legitimizing its actions to society or appeasing its stakeholders (Islam and Deegan, 2008) may outfit their information system differently than a firm that finds it economically beneficial to aggressively pursue an environmental stewardship strategy (Clarkson et.al., 2008). Also, governmental and not-for-profit entities may have different considerations from for-profit firms when developing their environmental strategies since no profit motive exists (Ball, 2005; Herbohn, 2005). Even within governmental agencies, strategies will vary depending on whether an objective relates to environmental stewardship of the agency's actions or establishment and enforcement of environmental regulations (Cormier et.al., 2004) for a model on corporate environmental reporting, which considers company management assessments of stakeholder influences on a company's environmentally related actions).

Stakeholders' power (or lack thereof) to influence an entity's actions can impact the entity's environmental objectives and strategies (Aerts and Cormier, 2009; Darnell et.al., 2009; Magness, 2006; Neu et.al., 1998). Communications from an entity's management concerning environmental issues may positively or negatively impact the development of a system, as noted in a number of case studies (Ball, 2005; Dey, 2007; Herbohn, 2005). Thus, an entity's strategy towards environmental stewardship will impact the environmental accounting information system developed, and the types and level of management communications on environmental issues moderate this effect.

Experimental methods can contribute to the literature by focusing on these factors in ways that extend the archival and case study findings. Specifically, the reported associations within these studies can be extended with experiments to better understand why the associations exist. Environmental strategies can be manipulated in a laboratory setting (e.g. stakeholder appeasement strategies, pro-environmental versus pro-economic strategies, etc.) to help determine which entity strategies result in certain manager decisions that influence the ways that environmental data are implemented into an accounting information system. Stakeholder influences can be manipulated (e.g. strong external pressures, weak interactions with the entity, etc.) and studied to observe how decision makers respond to these pressures when forming the entity's environmental strategy. The model suggests that the environmental strategy employed determines the way in which an entity's environmental information system is implemented.

Environmental accounting information systems
After considering how stakeholder influences and an entity's environmental strategy molds the implementation of an environmental information system, the model emphasizes considering data organization and data quality in designing experiments on environmental accounting information systems. Relative to traditional accounting information, environmental accounting information comprises lower levels of user familiarity (Gray and Bebbington, 2001), which may hinder effective processing of this non-traditional data. This unfamiliarity may very well be contributing to the resistance organizations experience when an environmental accounting initiative struggles to make progress (Ball, 2005; Dey, 2007; Herbohn, 2005).

Experiments can explore any potential underlying psychological mechanisms that may contribute to organizational resistance (Ball, 2005) or cognitive difficulties (Kaplan and Wisner, 2009) associated with effectively using environmental data. The current literature is mainly silent on providing these types of explanation; experiments have the potential to extend the literature by determining why certain behaviors and decisions are observed.

To provide an example of psychological factors that may be important to explore in an environmental accounting context yet does not receive much attention in the extant literature, consider the following about the nature of environmental data. The organizational display of environmental data, and their combination with non-environmental metrics, warrants a particular and unique concern to decisions involving environmental information because of the unfamiliarity and potential complexity of this non-traditional data. Different types of data organization and different levels of data quality are well-known factors that impact the cognitive processing of information (Schkade and Kleinmuntz, 1994), so it is important to understand these cognitive influences on the capturing and presentation of environmental data in the implementation of accounting information systems. A better understanding of why behaviors and decisions occur would be helpful in determining how to mitigate factors such as cognitive biases in the processing of environmental information. Data organization and data quality are further explored below.

Data organization
The organization component of displayed data relates to the data visual structure (Schkade and Kleinmuntz, 1994). For example, a traditional way to organize a balanced scorecard's data is to classify and present the data in four perspectives (financial, customers, internal business processes, and learning and growth). When new data are considered to be included in the scorecard, there is debate on whether the new data organization should result in a new, fifth perspective, or whether the data should be embedded within the traditional perspectives. In Kaplan and Wisner's (2009) study, these "new data" are environmental metrics. In their experimental design, the data organization's manipulation includes a four-perspective scorecard in which environmental data embed within the traditional four perspectives, or a five-perspective scorecard in which a standalone fifth perspective isolates and groups environmental data together.

Another way to analyze data organization in an evaluative context includes considering its evaluation mode. In separate evaluation (SE) mode, alternatives are presented and evaluated sequentially. In joint evaluation (JE) mode, alternatives are presented and evaluated jointly (Fischhoff et.al., 1980). For example, assume a manager must analyze evaluations from three employees who are competing for the same promotion within the firm. If the employee analyzes the candidates for promotion in SE mode, then the manager will analyze each candidate's information one at a time. She will finish analyzing the first candidate before moving on to evaluate the second candidate. However, if the manager evaluates the candidates in JE mode, then she will analyze the candidates' information together and at the same time. When alternatives are analyzed in JE mode, direct comparisons can be made between the alternatives (and thus establish a reference point) that are not available for evaluations made in SE mode.

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