Institutional-based antecedents and performance outcomes of internal and external green supply chain management practices

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Abstract

Green supply chain management (GSCM) has been a developing topic for at least a couple of decades. Over this time, significant complexities have been observed in its management. Helping to simplify and understand these complexities is necessary from both a practical and research perspective. Given this situation and to further enhance understanding of the topic and even supply chain management in general, this paper develops and empirically tests a theoretical model on the different types of institutional pressures motivating manufacturing enterprises to pursue green supply chain management (GSCM) practices and commensurate performance outcomes. Using a sample of 396 Chinese manufacturers, path analysis is used to evaluate the many structural links. The statistic results show that institutional pressures have driven the manufacturer adoption of internal GSCM practices which in turn relate to their external GSCM practices adoption. The statistic results also suggest that GSCM practices do not directly affect economic performance, but can improve it indirectly. This research contributes to the literature on institutional theory in corporate environmental practices. The research findings provide useful insights for managers seeking to adopt GSCM practices. The results also provide policy insights for professional organizations, regulators, and legislators to further promote GSCM.

Highlights

► We develop a theoretical model on economic gains of green supply chain management. ► We empirically test a model of green supply chain drivers, practice and performance. ► Institutional pressure brings green supply chain management practice and performance. ► Manufacturers' managers should respond to pressures for environmental improvements. ► Policy makers should further motivate manufacturers to green their supply chains.

Introduction

Stricter environmental regulations and potential competitive gains from embracing environmental practices have caused manufacturers to adopt various environmental management practices. In collaboration with their supply chain partners, suppliers and customers, manufacturers can command a better strategic and competitive position if they implement environmental management in a cost-effective manner (Vachon and Klassen, 2006). Collaborative organizational actions to lessen product and process environmental burdens can help reduce unnecessary wastes and improve supply chain efficiencies (Seuring and Muller, 2008). A supply chain-wide management approach for environmental management in the form of green supply chain management (GSCM) has gained in popularity for manufacturers in the hopes of mitigating their environmental damages while achieving operational performance gains (Zhu et al., 2008, Zhu et al., 2012a, Zhu et al., 2012b, Svensson, 2007).

A variety of stakeholder and institutional pressures are major motivating forces that lead enterprises to pursue GSCM related practices (Tate et al., 2010). Governmental or regulatory institutional pressure is a key driver motivating the implementation of external GSCM practices (Gonzalez-Benito and Gonzalez-Benito, 2006). Commercial competitive pressures have caused organizations to pursue internal eco-design initiatives (Chung and Wee, 2008). Other studies have examined relationships of institutional pressure, particularly regulatory pressure, with environmental management practices such as internal GSCM practice on ISO14001 certification (Quazi et al., 2001) and external GSCM practice on investment recovery (Mitra, 2009). This line of institution-theoretic investigation requires a systematic analysis to further understand and promote proactive environmental management practices such as GSCM (Beskovnik and Jakomin, 2010).

The first objective of this paper is to parlay institutional theory understanding to systematically evaluate three kinds of institutional pressures, namely, normative, coercive, and mimetic pressures (DiMaggio and Powell, 1983) on the implementation of GSCM practices in the Chinese context. It is further examined whether GSCM practices implementation by manufacturing enterprises in China is motivated by a specific and individual institutional pressure or collectively by all of them.

The extent of GSCM practices contributing to organizational performance improvements is also unclear. Economic performance has traditionally been, and continues to be a top management priority for manufacturers. GSCM is significantly related to economic performance (Carter et al., 2000). GSCM related practices can enhance the ability of organizations to compete which certainly includes economic performance improvements (Yang et al., 2010, deBrito and Berardi, 2010). Studies have shown that GSCM practices can provide ‘win-win’ opportunities with both environmental performance and economic benefits (Chien and Shih, 2007). A third dimension of performance, operational performance, has not seen as much research (Corbett and Klassen, 2006). Thus, another major objective of this study is to identify the ways, and to determine if, GSCM practices can contribute to economic performance or deliver additional benefits through improved environmental and operational performance.

Using previous fragmented and disjointed studies which sometimes show conflicting results, this study develops and empirically evaluates a comprehensive model explaining various theoretical linkages of GSCM. These linkages include the relationships between pressures/drivers, GSCM practices implementation, and performance outcomes. Survey data collected from a corporate level sample of Chinese manufacturing organizations is used to investigate these linkages. The model contributes to theoretic development on diffusion and performance outcomes from implementing GSCM.

The findings also provide implications for regulators in both developed and developing countries on how to promote GSCM practices among manufacturers by creating awareness of environmental protection and institutionalizing pressures on them to further embark on implementation of GSCM for performance gains. The empirically tested theoretical relationships on the implementation of GSCM provide practical implications for manufacturers to identify ways for improving environmental and operational performance as well as economic benefits through proper design of GSCM practices.

Section snippets

Theoretical development and hypotheses

Using the organizational boundary of a manufacturer, GSCM can be broadly classified into internal and external practices. Both internal and external GSCM practices may be driven by institutional pressures encompassing the normative, coercive, and mimetic pressures. In this paper, internal GSCM practices are defined as practices that can be implemented and managed independently by individual manufacturers. External GSCM practices typically require some level of cooperation with external

The survey instrument

The major components and relationships of the constructs of this study are shown in Fig. 1. Three institutional pressure components correspond to the isomorphic forces from the institutional theory (DiMaggio and Powell, 1983).

GSCM practice and performance components are developed on the basis of previous study (Zhu et al., 2005). Two GSCM practices, namely eco-design (ECO) and internal environmental management (IEM), can be implemented and managed by an individual manufacturer. Accordingly, ECO

General results and descriptive statistics

Table 2 shows the results of descriptive statistics on GSCM pressures/drivers, practices, and performance. Chinese manufacturers generally encounter all three types of pressures for environment protection, showing mean values over 3.50 (3=neutral; 4=somewhat important) for these constructs. These results include average values of 3.93 for coercive pressure, 3.72 for normative pressure, and 3.61 for mimetic pressure. However, Table 2 shows that Chinese manufacturers only consider internal GSCM

Discussions

For most manufacturers, especially for those in developing countries such as China, a major objective is to avoid economic loss (risk) due to penalties from any environmentally oriented malfeasance. Alternatively, proactive organizations tend to seek improvements in their economic performance through environmental management practices such as GSCM. Overall, the empirical results show the structural relationships between pressures/drivers, internal and external GSCM practices, environmental and

Conclusions

Generally, structural relationships exist among GSCM adoption pressures, practices, and performance. The institutional pressures for environmental protection have driven Chinese manufacturers to implement internal GSCM practices, followed by external GSCM practices. The empirical results suggest that GSCM practice does not significantly affect economic performance, but improved environmental and operational performance improvement can bring economic performance in the longer term. Thus, we

Acknowledgments

This work is supported by a grant from National Science Fund for Distinguished Young Scholars (71025002), National Key Basic Research Program of China (973 Program, 2011CB013406) and the National Natural Science Foundation of China Projects (71033004). Lai is fully supported by a grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (GRF PolyU 5440/09H).

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