The effect of green shipping practices on multinational companies’ loyalty in Malaysia

• DOI: https://doi.org/10.1108/IJLM-01-2019-0005
• Pages: 974-993
• Date: 11 November 2019
• Published date: 11 November 2019
• Author: Erwind Jozef,Kavigtha Mohan Kumar,Mohammad Iranmanesh,Behzad Foroughi
• Subject Matter: Management science & operations,Logistics

The effect of green shipping

practices on multinational

companies’loyalty in Malaysia

Erwind Jozef and Kavigtha Mohan Kumar

Graduate School of Business,

Universiti Sains Malaysia (USM), George Town, Malaysia

Mohammad Iranmanesh

School of Business and Law, Edith Cowan University, Perth, Australia, and

Behzad Foroughi

Graduate School of Business,

Universiti Sains Malaysia (USM), George Town, Malaysia

Abstract

Purpose –The globalization of market and production activities with unequal distribution of market

demand and resources has accelerated the demand for shipping services. Public concerns about

environmental issues and the impacts of shipping service providers’green shipping practices (GSPs) on the

reputation and performance of multinational companies (MNCs) motivated the authors to test the impact of

shipping companies’GSPs on MNCs’loyalty by considering timeliness and perceived value as moderators.

The paper aims to discuss this issue.

Design/methodology/approach –The data were collected from 141 MNCs and analyzed using the partial

least squares technique.

Findings –The results show that company policy and procedure, shipping documentation, shipping

equipmentand shipping materials havesignificant effects on MNCs’loyalty.Furthermore, timelinesspositively

moderates the impacts of shipping materials and shipping design on compliance, while perceived value

positively moderates the effects of shipping equipment and shipping design for complianceon MNCs’loyalty.

Practical implications –The results provide insight for shipping service providers on GSPs that may lead

to MNCs’loyalty by considering the roles of lead time and freight rate.

Originality/value –The results extend the literatureby testing empirically the impacts of GSP of shipping

companieson MNCs’loyaltyand also by investigatingthe moderatingimpacts of perceivedvalue and timeliness.

Keywords Sustainability, Survey, Asia, Buyer–supplier relationships, Global logistics, Maritime logistics

Paper type Research paper

1. Introduction

As a non-core business function, logistics is the most common area that is presently

outsourced (König and Spinler, 2016; Sohn et al., 2017), and theshipping industry as a key

component of the global logistics system plays an essential role in facilitating international

trade and commerce in the global economic system (König and Spinler, 2016; Tseng and

Liao, 2015). According to IMO (2016), around 90 percent of the world’s trade in terms of

volume is carried by sea, indicating the pivotal role of this industry in global supply chains

(Panayides, 2006), particularly for multinational companies (MNCs). However, emissions

from the international shipping sector contribute significantly to global air pollution

(Tanaka and Okada, 2019), and environmentally sustainable operations in the shipping

industry have emerged as important topics for policy makers and firms involved in

shipping supply chains (Chang et al., 2013).

Serious environmental degradation has incurred, originating from transport logistics

activities such as terminal operations, inland transport operations and container shipping.

Environmental issues in shipping logistics will be more prevalent as shipping users become

aware of the increase in global warming and put pressure on the shipping service providers

The International Journal of

Logistics Management

Vol. 30 No. 4, 2019

pp. 974-993

© Emerald PublishingLimited

0957-4093

DOI 10.1108/IJLM-01-2019-0005

Received 5 January 2019

Revised 11 July 2019

20 August 2019

Accepted 21 August 2019

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

www.emeraldinsight.com/0957-4093.htm

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IJLM

30,4

for more environmentally sustainable shipping services (Yang, 2018). In the shipping

industry, the role of environmental regulators is undertaken by government and shipping

service users. These two parties are the key players in ensuring that shipping operations are

environmentally friendly (Linder, 2018). As environmental protection standards in the

shipping industry are lagging behind other sectors (Lister et al., 2015), shipping users can

play a significant role in increasing the enforcement of shipping environmental regulations.

Chang and Danao (2017) also found that although customer requests have a positive effect

on the adoption of green shipping practices (GSPs) among shipping firms, enforcement of

regulations has no effect. As such, users can be conscious service buyers by choosing to

enter service contracts with shipping service providers with proper environmental practices,

as their decision to use the service of a particular shipping service provider plays a key role

in shipping companies’long-term performance. Furthermore, in today’s global context,

MNCs that use shipping are pressured by government, non-government organizations and

customers to act in a sustainable manner ( Jia et al., 2018; Kawai et al., 2018; Riikkinen et al.,

2017). In the pursuit of sustainability, one key challenge they face is its extension to other

supply chain partners such as shipping companies. Customers and other stakeholders do

not differentiate between all the different actors in a supply chain (Seuring and Gold, 2013),

and therefore, MNCs take the responsibility for their service providers in the eyes of

stakeholders (Hartmann and Moeller, 2014; Koplin et al., 2007; Seuring and Müller, 2008).

Image and reputation are important for shipping users, as environmental issues within their

shipping service providers can damage their sustainability performance. The loyalty issue

between users and service providers will arise if the latter are found to be causing any

environmental damage. As such, this investigation of the relationships between shipping

companies’GSPs and MNCs’loyalty is important.

The norm of logistics research, regardless of whether it involves road, sea or air

transport, is that the focus for loyalty is judged on the basis of cost savings or productivity,

while environmental aspects are neglected (Lun et al., 2011). It is thus timely to include

environmental aspects in shipping operations. The limited studies on the environmental

aspects of the shipping industry have focused on investigating the environmental and

financial impacts of adopting shipping technologies, such as burning cleaner fuel and

running cleaner engines (Viana et al., 2009) and also on developing GSP constructs to

evaluate the implementation of GSP in shipping companies (Lai et al., 2011, 2013).

Considering the importance of MNCs’loyalty in the long-term financial performance of

shipping companies, there is a lack of research on the impacts of shipping companies’GSPs

on MNCs’loyalty. Knowing which GSPs has an effect on MNCs’decision to make continued

use of shipping companies’services will guide shipping companies to invest and engage in

GSPs that have an effect on their long-term profitability.

Most companies are competing in terms of the global supply chain, so to meet these

challenges, shipping service providers operate cost-effectively to ensure that lower freight

rates and timely service can be offered to shipping users. In logistics studies, the selection of

and loyalty toward logistics service providers are found to be based primarily on logistics

service costs and on-time delivery ( Jharkharia and Shankar, 2007; Gil Saura et al., 2008). As

GSPs may lead to higher costs and cause delays in delivery, this study investigated the

moderating effects of timeliness and perceived value on the relationship between shipping

companies’GSPs and MNCs’loyalty.

This paper makes two main contributions to the literature. First, the impacts of six GSPs

suggested by Lai et al.(2013)–namely, policy and procedure, shipping documentation,

shipping equipment, cooperation,shipping materials and shippingdesign for compliance –on

MNCs’loyalty were tested toanswer the question of which GSPs have more effect on MNCs’

decisionto continue using the serviceof a particular shipping company.Second, by testing the

moderatingeffect of timeliness and perceivedvalue, the study includesthe interaction effect of

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