Prabanga Thoradeniya. for the. 5 th Australasian Conference on Social and Environmental Accounting Research, November 2006,

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1 Sustainable Development (Triple Bottom Line) Reporting and Management Behaviour of Australian Public Sector Organizations: An Application of the Theory of Planned Behaviour by Prabanga Thoradeniya PhD Candidate The Australian National University Associate Lecturer The Department of Accounting and Finance Faculty of Business and Economics Monash University for the 5 th Australasian Conference on Social and Environmental Accounting Research, November 2006, Wellington, New Zealand.

2 Abstract Over the last decade, literature on managers attitudes and involvement in environmental disclosures and reporting has provided important insights into the determinants of environmental reporting in corporate sector. However, the existing literature lacks empirically tested theoretical models and research on determinants of environmental, social and sustainable development/triple bottom line (TBL) reporting behaviour of Australian public sector managers. This study attempts to fill this gap. The purpose of this study is twofold. The primary purpose of the study is to explore the determinants/factors influencing Australian public sector managers behavioural decision intention to engage in sustainable development/tbl reporting. The secondary purpose of the study is to determine whether the well established social psychological model of Ajzen s (1985) Theory of Planned Behaviour (TPB) could be used to better understand the reasons behind managers behavioural decision intentions to engage in sustainable development/tbl reporting in the context of Australian public sector. The TPB was developed to address behaviours over which an individual has incomplete control. The outcome expectations, the impact of social norms, and the non volitional control of public sector managers will be captured by this theory. Therefore, this theory will provide an effective theoretical framework for studying the determinants of sustainable development/tbl reporting behavioural intention of Australian public sector managers. This research, which is not yet complete, is being conducted by a postal questionnaire survey among mangers of public sector organizations. TPB was used as a guide for the development of the survey instrument that will use in this study along with results of the pilot study. Twenty two (22) sustainable development/tbl reporting practitioners/managers of Australian public sector organizations, postgraduate and undergraduate environmental accounting students who have a thorough knowledge on environmental and sustainable development/tbl accounting at the Australian National University (ANU) participated for the pilot study. Some preliminary finding shows their feelings as to how they success in sustainable development reporting, obstacles, barriers they had encounter throughout the process, perceived consequences of the sustainable development/tbl reporting behaviour and social referents associated with it. Key words: Sustainable Development (TBL) Reporting, Theory of Planned Behaviour (TPB), Australian Public Sector Organizations. Please note: This paper presents a very early version of preliminary work being undertaken as part of my PhD research project. Currently I am finalising the questionnaire and looking forward to undertake the primary study. Your comments and suggestions are highly appreciated. Please do not quote this paper without the approval of the author. 2

3 1. Introduction Society demands for higher quality environment through policies on sustainable development, eco efficiency and wider disclosure of information leading to improved accountability (Schaltegger and Burritt, 2000). To act upon the sustainable development, organizations engage in a number of initiatives to minimise the environmental impact and to contribute to economic and social advancement of communities in which they operate. Organizations positioned as sustainable development practitioners will generally be welcomed by the society at large, increase eco efficiency of their operations and most employees are willing to take the challenges of environmental, economic and social stewardship. Sustainable development is emerging as a value driver (Schofield and Feltmate, 2003). The triple bottom line (TBL) the phrase coined by John Elkington (1997), is a helpful way of interpreting sustainable development which include economic, ecological and social dimensions (Lamberton, 2005; Holdsworth, 2002). TBL reporting is an integrated approach to public reporting of environmental, social and economic outcomes against established benchmarks (The Department of the Environment and Heritage, 2004, p.6). The interest of environmental reporting moved to social reporting in the mid 1990s, and now the focus is on triple bottom line reporting or sustainable development reporting (Gray and Milne, 2002). An organization should be economically, environmentally and socially accountable. This refers to the achievement of balanced and integrated economic, social and environmental performance (Nganwa, 2002). TBL reporting is evolving from the three dimensional definition of sustainable development (Lamberton, 2005). Therefore TBL reporting can be considered as one of the effective tools to measure sustainable development. In this study, sustainable development reporting and triple bottom line (TBL) reporting refers to the similar idea and these two terms are used interchangeably. The aim of this study is twofold. The primary aim of the study is to explore the Commonwealth Australian public sector management perceptions and to explain and predict the factors influencing public sector managers, decision intention to engage in sustainable development/tbl reporting. The secondary aim of the study is to determine whether the well established social psychological model of Ajzen s (1985) Theory of Planned Behaviour (TPB) could be used to better understand the reasons behind Commonwealth Australian public sector managers behavioural intentions to engage in sustainable development/tbl reporting. The remainder of the paper is organized as follows. Section two presents a brief description of the motivation and significance of the study. Section three discusses the theoretical framework adopted in the study. Section four presents the research questions and hypothesis development based on the theory of planned behaviour (TPB). Section five represents the research methodology. The final section presents the conclusion. 3

4 2. Motivation and Significance of the Study Numerous studies have focussed on private sector organizations which examine the sustainable development/tbl reporting disclosures; however, there is a scant previous research conducted on the Australian public sector organizational perspective. Burritt and Welch (1997) analysed annual reports of sixty Commonwealth entities, over the ten year period from 1984 to 1993 to identify the accountability and expected trends in types of environmental disclosures and levels of disclosure in the public sector. Frost and Seamer (2002) used a study sample of thirty five New South Wales public sector entities to investigate the relationship between the development of internal environmental management practices and annual report disclosures of environmental information. A report issued by the Allen Consulting Group (2001) states that the private sector companies have a more narrow purpose for adopting a TBL approach but public sector most likely requires replacing or supplementing an existing approach as public sector is more publicly visible through their choice of measurement and reporting and contains a degree of political visibility. Organizations are in the transitional period moving from traditional reporting to Sustainable development/tbl reporting. Therefore it is necessary to find out the management perceptions and intention to engage in sustainable development/tbl reporting. Their perceptions and other factors will affect the implementation of sustainable development/tbl reporting. Ajzen s (1985) Theory of Planned Behaviour (TPB) has a number of supporting empirical studies in other disciplines. The theory has been tested in a few waste management (environmental behaviour) studies in the private sector. In this study, Ajzen s (1985) TPB will be applied to the public sector context. Use of Ajzen s (1985) TPB to study public sector managers sustainable development/tbl reporting intentions represents an extension of the theory beyond any existing application, into a new behavioural context. This provides a motivation for the current study. This study will improve our knowledge of the factors influencing the Australian public sector managers intention to engage in sustainable development/tbl reporting and the use of the Theory of Planned behaviour (TPB) in explaining their intention to engage in sustainable development/tbl reporting provides a foundation for devising more effective methods and strategies to improve their sustainable development/tbl reporting behaviour. Therefore, this study has a practical significance. Prior research shows that stating his/her willingness to engage in proenvironmental behaviour has an effect on future behaviour and commitment favourably increases the subsequent behaviour (Hamid and Cheng, 1995). This study has a theoretical significance because it will fill the gap in literature as this study is focussed on sustainable development/tbl reporting of Commonwealth Australian public sector organizations and applying the TPB in this behavioural context. 3. Theoretical Perspective The Theory of Planned Behaviour (TPB) is the theoretical framework adopted in this study. TPB is an extension of the Theory of Reasoned Action (TRA), (Ajzen, 1988). 4

5 The Theory of Reasoned Action (TRA) TRA is a widely accepted model in social psychology to explain any human behavior (Fishbein & Ajzen, 1975; Ajzen and Fishbein, 1980). According to this theory human beings behave in a sensible way and make systematic use of information to achieve a reasonable behavioral decision (Ajzen and Fishbein, 1980; Ajzen, 1998). Before deciding to engage or not to engage in a given behavior, human beings consider the implications of their actions (Ajzen and Fishbein, 1980).TRA has been used in a wide variety of settings to understand the behavior namely, political voting, consumer behavior, drug and alcohol use, road safety, health behaviors, energy usage, nuclear power, ecological concerns and moral behavior (Hamid and Cheng, 1995). Previous research has suggested that an intention model such as TRA in social psychology has a potential theoretical foundation for research on the determinants of behaviors (Hamid and Cheng, 1995) Attitude toward the act Behavioural intention Behaviour Subjective norm Figure 1 : Theory of Reasoned Action (Fishbein and Ajzen, 1975) Attitude toward the Act Ajzen and Fishbein (1980) defined, an attitude is an index of the degree to which a person likes or dislikes an object, where "object" is used in the generic sense to refer to any aspect of the individual's world. TRA is concerned with attitudes towards behaviour and not with the more traditional attitudes toward objects, people or institutions (Ajzen, 1985, p 12; Ajzen and Fishbein, 1980). Attitude is an intangible construct. As a result it poses number of challenges as attitude is resistant to observation (Teo and Loosemore, 2001). Through observations and other information sources a person forms a number of beliefs about an action. These beliefs are viewed as an underlying a person s attitude and finally determine intentions and behaviour (Ajzen and Fishbein, 1980). That is, a person s attitude toward an action is determined by his salient set of beliefs about that action, even though he holds a large number of beliefs about a given action. Salient beliefs are no more than five to nine beliefs a person has about an action at a given point of time. Salient beliefs about an action and favourable or unfavourable evaluation of an action refer to attitude. The attitude is evaluative or affective in nature. This is the main feature that attitude is different from other concepts. Attitude is related to a person s belief about performing the behaviour, evaluation of consequences associated with the given behaviour and the strength of these associations. (Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980; Ajzen, 5

6 1988, Ajzen, 2006). An estimate of attitudes based on a person s beliefs can be obtained by multiplying belief strength and outcome evaluation, and summing the resulting products (Ajzen, 1988, Ajzen, 2006). If a person has a favourable attitude toward behaviour it will lead to performance of a favourable behaviour and if a person holds an unfavourable attitude toward behaviour that unfavourable attitude will lead to performance of an unfavourable behaviour (Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980; Ajzen, 1988). Equation 1, A B α b i e i n Where A B stands for attitude toward behaviour B; bi is the belief (subjective probability) that performing behaviour B will lead to outcome i; ei is the evaluation of outcome i; and the sum is over the n salient beliefs (Ajzen, 1988, p120; Ajzen and Fishbein, 1980). A person s attitude is directly proportional (α) to this summative belief index (Ajzen, 1991, p.191). Attitudes will differ across different organizational cultures. Four widely accepted dimensions of an attitude are affective (feelings/ emotions), behavioural (intentions/ actions), cognitive (knowledge/ beliefs), and evaluative (values/likes or dislikes) (Teo and Loosemore, 2001). Subjective Norm A person s subjective norm is his belief that important others think he should or should not perform a given behaviour (Fishbein and Ajzen, 1975, pp 401; Ajzen and Fishbein, 1980) or subjective norms reflect an individual s sense of social pressure to behave in the acceptable manner (Teo and Loosemore, 2001; Hamid and Cheng, 1995 and Ajzen, 1991). If important others perform the behaviour, he will think that the important referents think that he should perform the behaviour under consideration. Normative beliefs involve a specific individuals or groups rather than generalized important others (Ajzen and Fishbein, 1980). A person s subjective norm is a function of normative beliefs and motivation to comply (Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980; Ajzen, 1988; Ajzen, 2006). Equation 2, SN α b j m j n SN is the subjective norm; bj is the normative belief concerning referent j; mj is the person s motivation to comply with referent j; and n is the number of salient normative beliefs (Ajzen, 1988, p 121). The subjective norm (SN) is directly proportional (α) to the sum of the resulting products across the n normative beliefs (Ajzen, 1991). Behavioural Intention Attitude towards the behaviour and subjective norms are major determinants of the behavioural intention. The relative importance of attitudes and subjective norms 6

7 depends on the behavioural intention under consideration (Ajzen and Fishbein, 1980; Ajzen, 1988). Behavioural intention is the immediate determinant of the behaviour. Behavioural intention mediates the effect of attitude and subjective norm on behaviour (Ajzen and Fishbein, 1980). Behavioural intention is a person s subjective probability that he will perform the behaviour (Fishbein and Ajzen, 1975). Intentions capture the willingness of people to try hard and their efforts in order to perform the behaviour (Ajzen, 1991). Behaviour Fishbein and Ajzen (1975) defined overt behaviour as observable acts that are studied in their own right. To measure the specific behaviour (single act) performed or not performed by the individual, we have to define the behaviour clearly enough (Ajzen and Fishbein, 1980). Intention will lead to behaviour if the person possesses resources, abilities and cooperation of other people to perform the given behaviour. To understand the behaviour of a person, the factors determining his intention must be identified. An appropriate measure of intention will provide an accurate prediction of behaviour (Ajzen and Fishbein, 1980). For policy makers and planners increasing the frequency of behaviour that has not yet become a part of a person s behaviour is important than the actual behaviour (Hamid and Cheng, 1995). The Theory of Planned Behaviour (TPB) Attitude toward the behaviour Subjective norm Behavioural intention Behaviour Perceived behavioural control Figure 2 : Theory of Planned Behaviour (Ajzen, 1991) The Theory of Planned Behaviour (TPB) is an extension of the Theory of Reasoned Action (TRA) (Ajzen, 1988). It is designed to overcome the limitations associated with the TRA model which does not deal with behaviours over which people have incomplete control to exercise its power. At the most basic level of explanation, the theory postulates that behaviour is a function of salient information, or beliefs, relevant to the behaviour. Three kinds of salient beliefs are distinguished: behavioural beliefs which are assumed to influence attitude towards the behaviour, normative beliefs which constitute the underlying determinants of subjective norm and control 7

8 beliefs which provide the basis for perceptions of behavioural control (Ajzen, 1991, p 189). In this theory attitude, subjective norm and perceived behavioural control determine the behavioural intention which reflects how motivated he/she is to perform the behaviour. Therefore, TPB predicts and explains human behaviour in specific contexts (Ajzen, 1991, Teo and Loosemore, 2001, and Hamid and Cheng, 1995). Previous studies show that the addition of perceived behavioural control to the model had improved the prediction of behaviour intention. Perceived Behavioural Control The perceived behavioural control refers to the ease or difficulty of performing the behaviour and it will reflect the past experience and expected constraints or obstacles. (Ajzen, 1988; Ajzen, 1991; Ajzen, 2006; Hamid and Cheng, 1995;Teo and Loosemore, 2001). An individual s intention to perform a given behaviour is the main factor in this theory as in the TRA. The Stronger the behavioural intentions of an individual to perform the behaviour, the more likely the performance of that behaviour. However, intention leads to behaviour only if the person can decide at will to perform or not to perform the behaviour (volitional control). Non motivational factors such as resources (time, money, skills, and cooperation of others) and availability of required opportunities do affect performance of behaviour. Actual control over the behaviour is collectively determined by above factors. If the person possesses the resources, opportunities (ability/behavioural control) and he/she intends to perform that will result in individual performing the behaviour (Ajzen, 1998; Ajzen, 1991; Ajzen, 2002). Like behavioural beliefs determining attitude and normative beliefs determining subjective norm, beliefs about resources and opportunities (beliefs concerning factors that can prevent or facilitate goal attainment) can be considered as underlying determinants of perceived behavioural control (Ajzen, 1988). Perceived behavioural control is a function of a person s control belief strength and control belief power. This will facilitate or impede the performance of the behaviour (Ajzen, 2006). Equation 3, PBC α c k p k n Each control belief (c k) is multiplied by the perceived power (p k ) of the particular control factor to facilitate or inhibit performance of the behaviour, and the resulting products are summed across the n salient control beliefs to produce the perception of behavioural control (PBC) (Ajzen, 1991, p196). The general rule is that when attitude and subjective norm with regard to the behaviour in question are very favourable and perceived behavioural control is high, the greater the individual s intention to perform that behaviour. According to this theory, both perceived behavioural controls and behavioural intentions directly predict the behaviour (Ajzen, 1988; Ajzen, 1991; Ajzen, 2002). This is because of two reasons. First, having intentions will likely to lead to behaviour with the support of perceived behavioural control. Second, a direct link between perceived behavioural 8

9 control and behaviour can be expected because behavioural control is a substitute for a measure of actual control (Ajzen, 1988; Ajzen, 1991). This theory can be used as a good foundation for any study that investigates managerial decisions that affect the environmental performance (Cordano and Frieze, 2000). Therefore, it is evident that TPB will assist in exploring the sustainable development/tbl reporting behavioural intentions of Australian public sector managers. If the theory is applied to the sustainable development/tbl reporting behaviour of the public sector organizations, the reporting behavioural intention could be expected to affect by the managers attitude, subjective norm and perceived behavioural control to carry out the reporting task. Therefore, TPB provides an effective conceptual framework for this study. Literature Review of Application of the Theory of Planned Behaviour (TPB) A search of the bibliography of the theory of planned behaviour compiled by Icek Ajzen was carried out on the first of February, 2005 and found that there are a number of (nearly twenty studies) related to environmental behaviour, out of more than 500 studies which used the theory of planned behaviour. Following is a review of a few selected environmental behaviour studies, which is relevant to the present study. Author(s), Year and Journal Research or Behaviour of Interest Sample and Period Statistical Method Variables Not Tested & Additions to the Model Main Results Mark Cordano and Irene Hanson Frieze 2000 Academy of Management Journal Pollution reduction preferences of U.S. environmental managers 295 usable surveys of environmental managers at manufacturing facilities in the United States. Structural equation modelling (Using AMOS SEM software) Belief sets were not tested. Added past behaviour variable Attitudes, subjective norms and past behaviour have a positive relationship and perceived behavioural control has a negative relationship with behavioural preference for source reduction activity. Brenda L. Flannery and Douglas R. May 2000 Academy of Management Journal Environmental ethical decision making in the U.S. metalfinishing industry 139 usable surveys of members of the National Association of Metal Finishers (NAMF). Members are executives of firms engaged in plating, hard chroming, galvanizing and other forms of metal finishing. Hierarchical regression analysis Belief sets were not tested. Added personal moral obligation and moral intensity variables Manager s attitude was a marginal predictor and subjective norms were a significant predictor of managers environmental ethical decision intentions. They found support for two external PBC factors but found no support for the internal or selfefficacy component. Personal moral obligation factor was of little importance. 9

10 Shirley Taylor and Peter Todd 1995 Environment and Behaviour Individual waste management (recycling and composting) behaviour 761 Individual households in a city with a 120,000 population in Structural equation modelling (Using LISREL8 SEM software) Beliefs were tested based on the following, relative advantage, complexity predict attitude Internal & external normative beliefs SN Self efficacy, compatibility and resource facilitating conditions PBC Attitudes and perceived behavioural control positively influenced the intention to recycle and negatively influenced by the subjective norms. Attitude, subjective norm and perceived behavioural control positively influenced the composting intention. P. Nicholas Hamid and Sheung Tak Cheng 1995 Environment and Behaviour Antipollution behaviour (petition signing) 107 First year Chinese undergraduate students majoring in public and social administration. Regression analysis Belief sets were not tested. Added past behaviour and locus of control variables Past behaviour, attitude, subjective norms and perceived behavioural control but not locus of control predicted behavioural intention and intention predicted petition signing behaviour. Christina Knussen, Fred Yule, Julie MacKenzie and Mark Wells 2004 Journal of Environmental Psychology Recycling of household waste 252 members of the public in an area of Glasgow, Scotland with relatively poor recycling facilities. Autumn, 2000 Hierarchical multiple regression analysis Belief sets were not tested. Added past recycling behaviour, perceived habit of recycling and perceived lack of recycling facilities variables Attitudes, PBC, past behaviour and perceived habit were all significantly related to intentions but not the SN. Found a relationship between perceived habit and past behaviour; and between PBC and perceived lack of facilities. Michele Tonglet, Paul S. Phillips and Margaret P. Bates 2004 Resources, Conservation and Recycling Recycling and waste minimisation behaviour. 258 Brixworth households during the period March to July Multiple regression Belief sets were not tested. Added moral norm, past experience, situational factors, consequences of recycling and attitudes to waste minimisation variables. Attitude to recycling is the most significant predictor of recycling behaviour and knowledge of the general consequences of recycling and concern for the community predicted the recycling intention. Buy to reduce waste and re using to reduce waste (2 waste minimising variables) did not significantly correlated with either recycling intentions or attitude to recycle. 10

11 4. Research Problem and Hypothesis Development Based on the Theory of Planned Behaviour (TPB) This study will examine how different factors influence managers behavioural decision intention to engage in sustainable development/tbl reporting of Australian public sector organizations, using Ajzen s (1985) Theory of Planned Behaviour. The specific research questions are as follows: 1. What are the effects of social psychological variables (attitude, subjective norm and perceived behavioural control) on managers behavioural intention to engage in sustainable development/tbl reporting in Australian public sector organizations? 2. What demographic characteristics (level of education, age and gender) influence Australian public sector managers behavioural, normative and control belief sets to engage in sustainable development/tbl reporting? 3. Are Australian public sector managers social psychological variables (attitudes, subjective norms and perceived behavioural controls) towards engage in sustainable development/tbl reporting determined by their respective behavioural, normative and control belief sets? 4. What is the effect of past behaviour (experience) variable on managers behavioural intention to engage in sustainable development/tbl reporting in Australian public sector organizations? The previous studies (Bebbington et al., 1994; Gray et al., 1995; Deegan et. al., 1996; Frost and Wilmshurst, 1996; Guilding and Kirman, 1998; Deegan and Rankin, 1999; McGowan et al., 2000; Lodhia, 2003) emphasised on accountants and managers, attitudes to engage in environmental accounting. Senior accountants are considered as a part of the senior management team of an organization and they can involve in the process of developing the environmental agenda of the organization (Bebbington et al., 1994). The Australian Institute of Management s Members Code of Conduct states that managers should recognise the interest of the community and act accordingly, this recognition to include making every endeavour to conserve the environment, balancing the rights of future generations with current economic needs (Cited in Deegan et. al., 1996, p 409). The current study is focused on managers as they are responsible to take decisions to engage in sustainable development/tbl reporting. Environmental accounting literature will be used to develop the hypothesis for this study to examine the public sector managers intention to engage in sustainable development/tbl reporting and their antecedents within the framework of Ajzen s (1985) theory of planned behaviour due to scant literature in the area of sustainable development/tbl reporting. Beliefs play a key role in the theory of planned behaviour by providing cognitive and affective foundations for attitudes, subjective norms and perceived behavioural control (Ajzen, 2006). Prior research on theory of planned behaviour has provided 11

12 supportive evidence that a high, positive correlation is expected between global measures of attitude, subjective norm, and perceived control, and the belief based components of each measure (Ajzen and fishbein, 1980). The belief composites (total sets of salient beliefs) are the antecedents or causes of the direct measures of attitudes, subjective norms and perceived behavioural control (Ajzen, 2006). But the relationship between attitude, subjective norm, perceived behavioural control and its underlying beliefs are not very clear and well understood (Ajzen, 1991). To test this premise of relationship, I hypothesise that the underlying set of behavioural belief will determine the managers attitude, underlying set of normative belief will determine the managers subjective norm and underlying set of control belief will determine the managers perceived behavioural control to engage in sustainable development/tbl reporting. H1a The behavioural belief set (i.e., the sum of the cross products of behavioural belief about the anticipated consequences (behavioural belief strength) and outcome evaluation) of public sector managers to engage in sustainable development/tbl reporting is a direct antecedent that is positively related to their attitude to engage in sustainable development/tbl reporting. H2a The normative belief set (i.e., the sum of the cross products of normative belief about expectations of salient social referent (normative belief strength) and motivation to comply with each referent other) of public sector managers to engage in sustainable development/tbl reporting is a direct antecedent that is positively related to their subjective norms to engage in sustainable development/tbl reporting. H3a The behavioural control belief set (i.e., the sum of the cross products of behavioural control belief about anticipated obstacles and barriers (control belief strength) and control belief power) of public sector managers to engage in sustainable development/tbl reporting is a direct antecedent that is positively related to their perceived behavioural control to engage in sustainable development/tbl reporting. Understanding why people hold certain attitudes, subjective norms and perceived behavioural control will be helpful when developing programs for behavioural interventions (Ajzen, 2002; 2006).Bebbington et al. (1994) explored the role of UK accountants attitudes to determine (non)actions of accountants to undertake environmental accounting. They concentrated on volition as an intervening variable between the climate and action through an examination of accountants attitudes to engage in organization s environmental agenda. They found that accountants have the prerequisite attitudes to be involved in environmental accounting. Deegan et. al., (1996) argued that a shift in the attitudes of Australian accountants are required for them to engage in environmental accounting behaviour. Out of all three predictors of intention (attitudes, subjective norms and perceived behavioural control) attitudes toward the behaviour is the significant predictor of 12

13 intention. This shows that personal considerations influence than the social pressure when determining the intentions (Ajzen, 1991). Prior environmental behaviour studies which used TPB (Cordano and Frieze 2000; Taylor and Todd, 1995; Hamid and Cheng, 1995; Knussen et., 2004; Tonglet et., 2004) showed a significant relationship with attitudes and behavioural intentions. Based on the above analysis on environmental accounting and the theory of planned behaviour literature I hypothesise that managers attitude as an important antecedent of their intention to engage in sustainable development/tbl reporting. H1b The attitude of Australian public sector managers regarding sustainable development/tbl reporting is a direct antecedent that is positively related to their intention to engage in sustainable development/tbl reporting. In recent times Australian environmental laws had increased by a considerable number (Deegan and Rankin, 1996) as the Commonwealth government took the leadership in guiding states towards building awareness of environmental regulations (Burritt and Welch, 1997). Section 516A of the Environmental Protection and Biodiversity Conservation (EPBC) Act 1999, requires Commonwealth organizations to include in their annual reports a section detailing the environmental performance of the organization and the organization s contribution to Ecological Sustainable Development (ESD). In the future increased reporting might be driven by the development of better management practices, which in turn is driven by changes in the regulatory framework (Frost and Seamer, 2002, p.108). In some EU countries, social and environmental pressures have led to drive the sustainability reporting as compulsory reporting (Bebbington, 2002). Organizations have responsibilities to their stakeholders who are affected either favourably or unfavourably by their operations and those stakeholders have a right to demand for information about organization s environmental performance. (Deegan et.al., 1996). Wilmshurst and Frost (2000) found that out of the eleven factors examined shareholder/investor rights to information, is considered the most significant factor that influence the decision to disclose environmental information. Providing a true and fair view of operations, meeting legal obligations, satisfying due diligence requirements and community concern with operations also ranked as influential factors. At the same time a number of factors might influence a manager s decision to disclose environmental information in the annual reports based on the manager s perceptions of the information needs of the users of reports and the organizational wellbeing. Management s attitude toward environmental performance by the firm is also likely to be influenced by general feelings in the society toward environmental protection, as well as by the legislative regulations. If society expects firms to be socially responsible, it will influence the management to have a positive attitude toward the environment (Jaggi and Zhao, 1996, pp. 335). Transparency or openness in continuous reporting to stakeholders, community involvement and participation in the ecological sustainable development management process are necessary principles to progress towards sustainability in local governments. To accept the credibility of environmental accounting information, 13

14 environmentalists, councillors, accountants and local community should be involved in the process. Pressure from communities is a driving force for local government accountability in Australia (Burritt, 1999). Community groups may demand more action from local and other levels of government and private sector for improved sustainability (Maclaren, 1996).Wheeler and Elkington (2001) stated that in predicting the future of sustainability reporting, it is necessary to consider which stakeholder influence is most important to business. When companies become more aware of sustainability and its benefits they will face the international pressure to conform and adopt international best practice (Nganwa, 2002). Hedberg and Malmborg (2003) found that Swedish companies report their sustainability performance not only to financiers and other major stakeholders but also to general public and potential employees. Subjective norm also has been a reliable predictor of behavioural intention in prior environmental accounting and behaviour studies. Bebbington et al. (1994) stated that social norms would also support accountants to form an intention to involve in environmental accounting. Flannery and May (2000) found that a manager s attitude was a marginal predictor and subjective norm was a significant predictor of managers environmental ethical investment intentions. Based on the above analysis on environmental and sustainability accounting literature I hypothesise that, managers subjective norm as an important antecedent of their intention to engage in sustainable development/tbl reporting. H2b The subjective norms of Australian public sector managers to engage in sustainable development/tbl reporting is a direct antecedent that is positively related to their intention to engage in sustainable development/tbl reporting. Bebbington et al. (1994) argued that some other factors such as situational and internal constraints (other than attitudes and social norms) might be preventing accountants translating attitudes into environmental accounting behaviour. They considered the effect of the organization on the accountant and the ability of accountants to translate their belief into behaviour as the most relevant factors in the context of environmental accounting behaviour. They found that lack of knowledge of accountants due to ill equipped training and education is an important barrier for accountants to involve in environmental accounting. In their study they did not consider these organizational obstacles in detailed as their main focus was on volitional control. Further, Deegan et. al., (1996) argued that the training of accountants should focus on social issues as well. Accountants are unaware of how their skills could be utilized to improve the awareness of environmental sensitivity of the organizations (Lodhia, 2003). The ability to take action will depend on an individual s skill to apply action strategies to issues combined with appropriate knowledge. Knowledge of issues and action strategies are associated with responsible environmental behaviour (Hines, Hungerford and Tomera 1987). Deegan et.al., (1996) found that accountants have a little consensus regarding the objectives and measurement approaches to be adopted in environmental accounting and Australian standard setters are not active in this regard. Accountants also reported that they do 14

15 not have the expertise to provide information relevant to the environment (Deegan et. al., 1996). However, if reporting team works closely with the right personnel throughout the organization and senior management is supporting the process others within the organization will be motivated to support the reporting process (Owen, 2002). Also, monitoring and reporting on important sustainability issues requires a budget finance and technical support (Burritt, 1999). As sustainable development/tbl reporting activities require changes in current reporting practices, managers have to face a number of barriers, constraints and obstacles, as stated above, which limit the control managers possess and their desire to engage in sustainable development/tbl reporting. Based on the above analysis of barriers on environmental and sustainability accounting literature I hypothesise that, managers perceived behavioural control as an important antecedent of their intention to engage in sustainable development reporting, H3b The perceived behavioural control of Australian public sector managers to engage in sustainable development/tbl reporting is a direct antecedent that is positively related to their intention to engage in sustainable development/tbl reporting. Future behaviour can be determined by the past behaviour. Hamid and Cheng (1995) found that the past behaviour correlates with behavioural intentions and attitudes. Owen (2002) stated that companies largely depend on their existing systems and structures when publishing sustainability reports. Bebbington et al. (1994) in their analysis found that accountants are aware of the benefits and reasons for disclosure of environmental information, even though they are not actively involved in environmental reporting behaviour. Previous experience on environmental or social reporting would demonstrate a favourable say and its benefits to managers or it will indicate the resistance to engage in sustainable development/tbl reporting. Previous studies which applied the theory of planned behaviour have found that the past behaviour is a useful addition to the theory. Three of the six TPB studies reviewed earlier produced significant results with a past behaviour variable. Ajzen (1991) reviewed five theory of planned behaviour studies and found that the measure of past behaviour was significant in four out of the five studies and found that the introduction of past behaviour produced significant results. Based on the success of these previous studies and Bebbington et al. s (1994) findings on perceived reasons and benefits of disclosure of environmental information, I hypothesise the following by adding the past behaviour measure to extend the theory of planned behaviour: H4 Australian public sector managers past behaviour (experience) on environmental or social reporting practices will be positively related to their intention to engage in sustainable development/tbl reporting. Factors such as demographic characteristics and personality traits are some times related to the behaviour of interest but these factors do not constitute an integral part 15

16 of the theory but are instead considered to be external variables. These external variables may influence a person s underlying beliefs (Ajzen and fishbein, 1980; Ajzen, 1985). Kolvereid (1996) found that demographic characteristics (family background, gender and self employment experience) indirectly influence the employment status choice intentions through their effect on attitude, subjective norm and perceived behavioural control. Elliott et al., (2003) found that the effects of demographic characteristics (age and gender) on drivers speeding behaviour were mediated by the TPB variables. Through education and training, environmental awareness of new entrants to an organization can be improved (Gray and Collison, 2002). Bebbington et al., (1994) found that the accountants attitudes are homogeneous despite of different ages, qualifications and professional body membership but they concluded that pre training university education might slightly associate with accountants attitudes and required further investigation. Hines, Hungerford and Tomera (1987), in their meta analysis found that highly educated individuals were slightly more likely to engage in responsible environmental behaviour than the less educated individuals, but they stated that the directionality of the relationship is questionable. The results of their analysis indicated that younger individuals were slightly more likely to engage in responsible environmental behaviour than were old people. But they concluded that the age environmental behaviour relationship is tenuous. This was the case with gender too and concluded that there is no relationship between gender and responsible environmental behaviour. Given the consistent findings regarding the educational level and inconsistent findings regarding age and gender of prior environmental accounting and behaviour studies, the following hypotheses are put forward to test the premise that how demographic characteristics (educational level, age and gender) influence the sustainable development/tbl reporting behavioural intentions of Australian public sector managers. H5a Australian public sector managers level of education, only indirectly influence their intention to engage in sustainable development/tbl reporting through its positive effect on behavioural, normative and control belief sets. H5b Australian public sector managers age, only indirectly influence their intention to engage in sustainable development/tbl reporting through its positive effect on behavioural, normative and control belief sets. H5c Australian public sector managers gender, does not influence their intention to engage in sustainable development/tbl reporting through its effect on behavioural, normative and control belief sets. 16

17 A Proposed Model of Sustainable Development (TBL) Reporting Intention Formation Extended Model of Ajzen s (1985) Theory of Planned Behaviour Core Variables of Theory of Planned Behaviour Demographic Variables Behavioural Belief Set (H1a) Attitude (H1b) Level of Education (H5a) Age (H5b) Normative Belief Set (H2a) Subjective Norm (H2b) Behavioural Intention to Engage in Sustainable Development Reporting Actual Sustainable Development Reporting Behaviour Gender (H5c) Control Belief Set (H3a) Perceived Behavioural Control (H3b) Variable that Extend the Theory of Planned Behaviour Past Behaviour (H4) Figure 3 A proposed model of sustainable development reporting intention formation extended model of Ajzen s (1985) Theory of Planned Behaviour that provides the conceptual framework for this study. Arrows with dashed line will not be tested in this study. 5. Research Methodology This study will consist of two parts, the pilot study (preliminary survey) and the primary study (main postal questionnaire survey). Pilot Study (Preliminary Survey) Behavioural, normative and control beliefs can be identified through pilot work by eliciting beliefs from a representative sample of the population; (Ajzen, 2006; Ajzen, 1985; Ajzen and Fishbein, 1980). To elicit the salient behavioural, normative and control beliefs relating to sustainable development/tbl reporting, and to identify the reliable items to measure Theory of Planned Behaviour s latent constructs (attitudes, subjective norm, perceived behavioural control and intention), a pilot study was conducted with a sample of twenty two (22) respondents. This sample included ten (10) sustainable development reporting practitioners/managers of Australian public sector organizations, three (3) postgraduate students and nine (9) third year undergraduate students at the Australian National University (ANU). These students were nearing to complete the environmental accountability and reporting course and had a very thorough knowledge on environmental and sustainability accounting at the time of conducting the elicitation survey. Prior research (Liyanarachchi and Milne, 2005) found that accounting students can be used as surrogates for practitioners in decision making. 17

18 A description of the sustainable development/tbl reporting was given to all the respondents. To elicit behavioural outcomes, respondents were asked to list down their thoughts/beliefs that come to mind about engage in sustainable development/ TBL reporting. To elicit normative referents respondents were asked to list down relevant referent individuals and groups who would approve and disapprove of engaging in sustainable development/tbl reporting. To elicit salient control factors respondents were asked to list factors that may facilitate or impede the sustainable development/tbl reporting. Semantic differential (Osgood, Suci, and Tannenbaum, 1957) is most commonly used to measure attitudes (Ajzen, 2006; Ajzen and Fishbein, 1980). Initially, a list of 20 to 30 bipolar adjective scales should be selected from the published domain to measure attitudes directly (Ajzen, 2002; 2006). When conducting the pilot study twenty four (24) bipolar adjective scales were included in the preliminary questionnaire. These bipolar adjective scales were selected from the existing literature (Ajzen, 2006; Glandon, 2003; Osgood, Suci, and Tannenbaum, 1957). Five (5) subjective norm items were used in the preliminary questionnaire as a direct measure of subjective norms. Five (5) perceived behavioural control items were used as a direct measure of perceived behavioural control and four (4) items were used to measure the intention to engage in sustainable development/tbl reporting in the preliminary questionnaire. Pilot Study (Preliminary Survey) Results Demographic data on the respondents revealed that 31% of respondents were less than 24 years of age, with 50% between the ages of 25 and 34 and 19% above 35 years. 50% were male and 50% were female. The first step is to do a content analysis of the various beliefs emitted by different respondents. The most frequently elicited beliefs will constitute the modal set for the population in question (Ajzen and Fishbein, 1980). All the behavioural, normative and control beliefs regarding sustainable development/tbl reporting were content analysed and I came up with three different lists for behavioural, normative and control beliefs. To identify the modal salient beliefs, I organized the responses by grouping together beliefs that refer to similar outcomes and counted the frequency with which each outcome in a group was elicited. The following three tables show the identified modal salient beliefs regarding behavioural outcomes, important referents and factors that facilitate or impede the sustainable development/tbl reporting. Table 1: Perceived Consequences or Outcomes of Sustainable Development/TBL Reporting 1. It leads to additional costs for the organization It increases the reputation of the organization It improves monitoring of environmental and social impacts of the organization. Frequency 10 18

19 4. It enhances the accountability of the organization It improves stakeholder knowledge about the organization s activities towards sustainability. 6. Poor environmental and social data analysis of ESD reporting leads to the provision of inaccurate information. 7. It increases complexity in reporting because of the need to restructure the conventional accounting system. 8. It improves the reporting situation by contributing to sustainable development. 9. It opens the organization to public criticism when reporting unfavourable organizational impacts on environment. 10. It gives more information about the organization s activities for better decision making. 11. It integrates economic, environmental and social impacts within the reporting system. 12. It improves communication within the organization It assists in meeting legislative, regulatory and policy requirements. 14. It helps to increase staff morale It helps to attract good employees It will bring TBL issues to the attention of top management It will lead to cost savings It is a tool for comparison with other agencies It is difficult to address environmental problems. 1 Table 2: Important Referents Associated with Sustainable Development/TBL Reporting 1. Government Community 9 3. Employees 7 4. Environmental NGOs 5 5. Senior management 5 6. The Department of Environment and Heritage 5 7. The Global Reporting Initiative (GRI) 3 8. Researchers 1 9. Students Other organizations Frequency 19

20 Table 3: Potential Obstacles or Barriers and Factors which Facilitate Sustainable Development/TBL Reporting Frequency 1. Financial resources Sufficient time 7 3. Resistance from employees 6 4. Knowledge, skills or expertise of employees 5 5. Difficulty in accessing reliable data 5 6. Non financial data collection procedures 4 7. Unavailability of accepted accounting standard 4 8. Support from top management 4 9. Unfamiliarity with sustainable development reporting system Availability of Global Reporting Initiative (GRI) Sector Supplement for Public Agencies (SSAP) for reporting Lack of incentives to for employees Need to restructure the current accounting system Difficult to change the mind set of management 1 Primary Study Questionnaire Development As discussed in the previous section, a preliminary questionnaire was used to elicit responses from a representative sample. The responses representing each of behavioural, normative and control beliefs were content analysed and categorised in the previous section, to be used to develop the final questionnaire, to be administered to a larger sample of managers of Australian public sector organizations. This section discusses the development of the final questionnaire for the current study. A list of most commonly held beliefs (modal salient beliefs) in the research population should be included in the final questionnaire (Ajzen, 2006). One possibility is to take 10 or 12 most frequently mentioned outcomes. Another possibility is to use those beliefs that exceed a certain frequency (Ajzen and Fishbein, 1980). I decided to include all beliefs mentioned by at least 10% of the sample. As a result first 12 behavioural modal salient beliefs, which were shown in the table 1, were included in the final questionnaire. Most frequently mentioned individuals or groups are the salient referents (Ajzen and Fishbein, 1980). First 7 salient referents elicited from the pilot study, which were shown in the table 2, were included in the final questionnaire. These referents were most frequently mentioned by the research population and satisfy the criteria of at least mentioned by 10% of the sample. First 10 salient control beliefs elicited from the pilot study, which were shown in table 3, were included in the final questionnaire as these factors were mentioned by at least 10% of the sample. 20