Examining the inter-relationship among competitive market environments, green supply chain practices, and firm performance

Pages1025-1048
DOIhttps://doi.org/10.1108/IJLM-02-2017-0050
Date30 July 2018
Published date30 July 2018
AuthorSeok-Beom Choi,Hokey Min,Hye-Young Joo
Subject MatterLogistics,Management science & operations
Examining the inter-relationship
among competitive market
environments, green supply chain
practices, and firm performance
Seok-Beom Choi
Department of Chinese Economics and Trade, Cheju Halla University,
Jeju, Republic of Korea
Hokey Min
Department of Management, Bowling Green State University,
Bowling Green, Ohio, USA, and
Hye-Young Joo
Chung-Ang University, Seoul, Republic of Korea
Abstract
Purpose The purpose of this paper is to assess the impact of competitive market environments on the
firms decision to adopt green supply chain management (GSCM) practices, while checking to see if the firms
commitment to particular types of GSCM practices improves its performance.
Design/methodology/approach To confirm a positive link between the firms GSCM practices to its
performance, the authors collected the data from 322 Korean firms via questionnaire surveys and then
analyzed these data using the structural equation model.
Findings Among various types of GSCM practices, green purchasing has the greatest impact on both
manufacturing and marketing performances. Also, internal environmental management positively influenced
both manufacturing and marketing performances, whereas cooperation with customers and reverse logistics
had no significant impact on the firms manufacturing and marketing performances.
Originality/value To provide a practical advice for firms which are hesitant to embrace green supply
chain practices due to skeptical views about their true managerial benefits, this paper discerned more
effective GSCM practices from less effective GSCM practices. In so doing, this paper is one of the few studies
which pinpointed what types of specific GSCM practices are most effective in enhancing firm performance.
Keywords Green supply chain management, Structural equation model, Firm performance
Paper type Research paper
1. Introduction
Over the last decade, the planet earth has suffered from an unusual cycle of unprecedented
heat waves, cold spells, droughts, floods and wildfires. For example, the summer of 2012
was the warmest summer on record, whereas the winter of 2014 was the coldest winter on
record for the USA. Similarly, Australia, Japan, Korea, China and Europe experienced the
record-setting heat waves in 2013 (Sheppard, 2014). The surface air temperatures on
the average so far this decade are about 0.9
o
C higher than they were in the 1880s
((The) Economist, 2015). Many suspect that this extreme weather pattern is a vital sign of
climate changes induced by human activities. Unless reversed, some scientists believe that
this pattern can eventually destroy the livelihood of all species on earth by disrupting the
biodiversity and causing serious food shortages (Pimm, 2009; Safont et al., 2012). A main
culprit for this concerning pattern is the emission of harmful carbon dioxide into air.
Actually, the level of atmospheric carbon dioxide reached 399 parts per million in 2014, The International Journal of
Logistics Management
Vol. 29 No. 3, 2018
pp. 1025-1048
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-02-2017-0050
Received 26 February 2017
Revised 30 July 2017
27 November 2017
Accepted 10 April 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
This research was partly funded by the National Research Grant of the Korean Government
(NRF-2014S1A2A2028564). This paper forms part of the regular section.
1025
Examining
the inter-
relationship
which was the highest record for 650,000 years of this planets history ((The) Economist,
2015; NASA, 2015). This rapid rise of a carbon dioxide level in the air contributed to human
activities associated with transportation (especially, use of gasoline-powered vehicles),
inventory management, waste disposal, product manufacturing and energy creation (Piecyk
and McKinnon, 2010; Sundarakani et al., 2010; Hua et al., 2011). Recognizing the detrimental
impact of human activities (especially industrial activities) on environmental degradation, a
growing number of todays customers have begun to appreciate the firms commitment to
environmental friendliness (greening initiatives) more than ever before. This changed
attitude of customers has prompted firms to consider leveraging their environmental
friendliness as the major selling point or the customer order-winning criterion. However, the
firms commitment to greening initiatives often create a dilemma in that the firms
environmental friendliness rarely comes free and its payoffs are not clearly known.
To handle this dilemma, a series of attempts have been made to assess the impact of
greening initiatives (e.g. green supply chain practices) on the firms performance. The focal
point of these attemptsis to determine whether greening initiatives are worthy of investment
and managerial focus. For example, Klassenand McLaughlin (1996) discovereda strong link
between the firms greening initiatives and i ts financial performan ce, as measured by st ock
market performance. Similarly, Melnyk et al. (2003) observed that the extent/maturity of the
firms environmental management system was directly correlated with the firms
performance, as expressed by perceived cost saving, lead time reduction, product quality
improvement, market position strength and corporate reputation enhancement. Later,
Montabon et al.(2007) confirmed that the firms environmental management practices such as
remanufacturing, environment-friendly product design and surveillance of the market for
environmental innovation were positively associated with the firms performance, as
expressed by sales growth and return on investment (ROI). A plethora of other studies
including the ones conducted by Florida (1996), Berry and Rondinelli (1998), Claver et al.
(2007), Yang et al. (2011), Schrettle et al. (2014) and Tseng et al. (2015) verified a causal
relationship between the firms environmental management practices and its performance.
While there is little doubt that the firms environmental management practices could
improve its performance, the aforementioned literature rarely explained which particular
environmental management practices or strategies were more effective in improving the
firms performance than their alternative options. More importantly, the aforementioned
literature did not examine how the collective environmental management efforts of multiple
firms belonging to the same supply chain network affected those firmsperformances.
Recognizing the need for such examination, Zhu and Sarkis (2004) looked into the potential
relationship between the adoption of green supply chain management (GSCM) practices
such as internal and external environmental management, ISO 14000 certification,
investment recovery and eco-design and the firms operating performance such as cost
control. Generally speaking, GSCM is referred to as an incorporation of environment-
friendly initiatives into every aspect of supply chain activities encompassing sourcing,
product design and development, manufacturing, transportation, packaging, storage,
retrieval, disposal and post sales services including end-of-product life management
(Min and Kim, 2012). Based on the empirical study of Chinese manufacturers, Zhu and
Sarkis (2004) found that firms having higher levels (more mature stages) of GSCM practices
tended to reap the greater economic benefits in terms of some operational cost savings
(e.g. decrease in environmental compliance cost), while increasing other operating costs
(e.g. increase in costs of purchasing environment-friendly materials). This finding was
expected, but they also investigated the moderating effects of both quality management and
just-in-time manufacturi ng practices on the firms operational perfo rmance. They
discovered that in some instances firms adopting GSCM practices along with quality
management practices could benefit more due to the positive moderating effect of quality
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