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Abstract

Environmental Accounting (EA) serves as a strategic tool for organisations to integrate environmental considerations into operations, decision-making, and reporting. However, in emerging economies, its adoption remains uneven and insufficiently explained regarding how institutional pressures and internal capabilities jointly shape these practices. This study examines how institutional pressures and firms’ internal capabilities influence Environmental Accounting Practices (EAP) among 146 Tanzanian manufacturing firms. Anchored in Institutional Theory and the Resource-Based View (RBV), the study adopts a complementary analytical approach by integrating sufficiency and necessity logics using Partial Least Squares Structural Equation Modelling (PLS-SEM) and Necessary Condition Analysis (NCA). The PLS-SEM results indicate that coercive, normative, and mimetic pressures have significant positive effects on EAP adoption, while internal capabilities do not exhibit a significant direct effect. Conversely, the NCA results reveal that coercive pressure, mimetic pressure, and internal capabilities are necessary conditions for EAP adoption, whereas normative pressure is not. These findings demonstrate that EAP adoption is jointly shaped by external pressures acting as drivers and internal capabilities functioning as essential bottlenecks. The study contributes to the sustainability accounting literature by integrating the sufficiency and necessity logics through the combined use of PLS-SEM and NCA approaches. Study recommends that policymakers and professional bodies like NBAA continue strengthening regulatory enforcement, training and benchmarking, while firms invest in internal capabilities to enhance EAP adoption. Limitations and future research are also discussed.

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