Customer pressure and green innovations at third party logistics providers in China. The moderation effect of organizational culture

• Published date: 11 February 2019
• Pages: 57-75
• DOI: https://doi.org/10.1108/IJLM-11-2017-0294
• Date: 11 February 2019
• Author: Zhaofang Chu,Linlin Wang,Fujun Lai
• Subject Matter: Management science & operations,Logistics

Customer pressure and green

innovations at third party

logistics providers in China

The moderation effect of organizational culture

Zhaofang Chu

Research Center for Smarter Supply Chain, Dongwu Business School,

Soochow University, Suzhou, China

Linlin Wang

Department of Human Resource Management, Business School,

Nankai University, Tianjin, China, and

Fujun Lai

Research Center for Smarter Supply Chain, Dongwu Business School,

Soochow University, Suzhou, China and

College of Business, University of Southern Mississippi,

Hattiesburg, Mississippi, USA

Abstract

Purpose –The purpose of this paper is to investigate how customer pressure influences green innovation in

the context of Chinese third-party logistics (3PL) providers, and especially the role of organizational culture in

moderating this relationship.

Design/methodology/approach –Based on survey data collected from 165 3PL providers in China,

hierarchical moderated regression analysis was conducted to test the hypotheses.

Findings –Customer pressure is an important driver of green innovation amongst 3PL providers.

Flexibility-oriented organizational culture strengthens the effect of this driving force, while control-oriented

organizational culture weakens this force. Green innovation significantly contributes to financial performance

and flexibility orientation strengthens this contribution, while control orientation weakens it.

Research limitations/implications –This research examines the contingency effect of organizational

culture in helping to resolve inconsistencies in the relationship between customer pressure and green

innovation. Although the inconsistencies cannot be resolved completely, the research opens an avenue to

explore other contingency factors or the possibility of a non-linear relationship.

Practical implications –3PL firms could undertake green innovation to satisfy customers’environmental

requirements. To develop their green innovation initiatives, managers should allow their employees greater

autonomy and design (or re-design) operations procedures and regulations to be more flexible, thus enabling

the diffusion of green innovation and avoiding or reducing the potential influence of control-oriented

organization culture.

Originality/value –The study considers the conditional effect of organizational culture to reconcile the

mixed results in the literature regarding the relationship between customer pressure and green innovation of

logistics service providers.

Keywords China, Green innovation, Sustainability, Survey, Logistics services, Organizational culture

Paper type Research paper

1. Introduction

With increasingly strict environmental regulations and the popularity of environmentalism

on the rise (Sarkis et al., 2010), green innovation has become one of the most important

strategic tools for more sustainable competitive advantage (Lin and Ho, 2011). The International Journal of

Logistics Management

Vol. 30 No. 1, 2019

pp. 57-75

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-11-2017-0294

Received 5 November 2017

Revised 30 April 2018

1 August 2018

6 September 2018

Accepted 6 September 2018

The current issue and full text archive of this journal is available on Emerald Insight at:

www.emeraldinsight.com/0957-4093.htm

The authors acknowledge that this research was supported by National Natural Science Foundation of

China (71402174, 71471125 and 71772132).

57

3PL providers

in China

By innovating products, processes and technologies that save energy, prevent pollution,

recycle waste or contribute to environmental management, firms can improve their

corporate image and enhance their competitive advantage through green differentiation

(Chen et al., 2006). With such benefits, green innovation has received considerable attention

from both researchers and practitioners (e.g. Lam and Dai, 2015). However, while most

studies have focused on innovations in manufacturing, the green innovation practices of

service providers –in particular, third-party logistics (3PL) providers –provide unique

challenges and opportunities (Lieb and Lieb, 2010). There is thus a need to expand our

understanding of green innovation in the 3PL context (Baz and Laguir, 2017).

Environmental issues have become a major concern for 3PL providers. Many firms are

becoming increasingly interested in pursuing green innovation (Rossi et al., 2013). First, 3PL

providers consume a remarkable amount of natural resources, which may have a negative

impact on the environment, including air pollutants, hazardous waste disposal and fuel

consummation, among other issues (Lin and Ho, 2011). Second, 3PL providers, especially

those in China, have recently become aware of environmental issues (Lin and Ho, 2011).

Although 3PL providers have little experience in the area, green innovation is now seen as a

major strategic tool for dealing with the issues (Chu et al., 2018).

However, because “firms in different industrial sectors may exhibit dissimilar attributes

toward environmental issues”(Lin and Ho, 2008, p.18), green innovation practices in

manufacturing may not be easily translated to the 3PL context, which thus requires further

studies (Lin and Ho,2011). In fact, the green innovationpractices of 3PL providersdiffer from

manufacturers’in several ways. First, compared to manufacturers, 3PL providers may face

less risk when investing in green innovation, as their role in the service sector requires less

expenditure on research and development (Wagner, 2008). Second, because they are part of

the service industry, 3PL providers may receive less scrutiny from governments and other

regulators with regard to environmental issues relative to manufacturers (Chu et al., 2018).

As a result, they may feel lower governmental pressure than manufacturers. Third, 3PL’s

green innovation practices are more likely to be desirable to customers because most 3PL

innovations are “ad hoc response(s) to [a] customer request”(Cui et al., 2012, p.101).

In response to calls for research on green innovation practices in the 3PL context

(Centobelli et al., 2017), this study examines whether 3PL providers develop green

innovation practices in response to pressure from customer’s environmental concerns.

In recent years, 3PL customers have begun voicing environmental concerns (Berg and

Langen, 2016), placing a high value on green capabilities as a criterion when selecting 3PL

providers (Large et al., 2013). To address such customer requirements, 3PL providers have

tended to adopt new environmental management practices (Lin and Ho, 2008).

Customer pressure –perceived criteria based on customers’environmental requirements

and concerns –is thus seen as the main factor driving 3PL providers’green innovation

practices (Baz and Laguir, 2017). However, previous empirical studies have provided mixed

evidence on therelationship between customerpressure and green innovationpractices in the

3PL context. For example, while Chu et al. (2018) confirmed the positive effect of customer

pressure on 3PL providers’green innovation practices,Lin and Ho (2011) found that customer

pressure did not affect Chinese logistics companies’(including 3PL providers) adoption of

green practices.These aggregatedresults suggest that the role of customerpressure in driving

3PL providers’green innovation needs to be further examined. Moreover, the contingencies

under whichcustomer pressure drives greeninnovations need to be explored (Chuet al., 2018) .

Therefore, the present study focuses on how customer pressure drives 3PL providers’green

innovation practices, especially the contingent role of organizational culture on this effect.

Examining the contingent effect of organizational culture may help resolve

inconsistencies in the extant literature (Liu et al., 2010) and extend our understanding of

firms’heterogeneous responses to customers’environmental pressure (Berrone et al., 2013).

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