2016 - Emerald - Younis, Sundarakani, Vel - CR-04-2015-0024
2016 - Emerald - Younis, Sundarakani, Vel - CR-04-2015-0024
2016 - Emerald - Younis, Sundarakani, Vel - CR-04-2015-0024
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Article in Competitiveness Review An International Business Journal incorporating Journal of Global Competitiveness · May 2016
DOI: 10.1108/CR-04-2015-0024
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26,3
The impact of implementing
green supply chain management
practices on corporate
216 performance
Received 19 April 2015
Revised 14 September 2015
Hassan Younis, Balan Sundarakani and Prakash Vel
Accepted 7 October 2015 University of Wollongong in Dubai, Dubai, UAE
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Abstract
Purpose – The purpose of this research is to investigate the implementation of green supply chain
management (GSCM) practices and its impact on corporate performance (CP). The research in
particular examines the results of implementing a set of GSCM practices on different dimensions of
the CP.
Design/methodology/approach – This study, being the first of its kind in the Middle East,
developed a research model to test the relationship between four main GSCM practices namely,
eco-design, green purchasing, environmental cooperation and reverse logistics, and four
dimensions of CP: operational performance, environmental performance, economic performance
and social performance, while controlling three main variables (firm size, firm age and environment
management system certification). Statistical analyses were based on the data collected, through
survey questionnaires, from 117 firms in the manufacturing industry in the UAE. Reliability and
validity of the research model were tested by the commonly accepted statistical tools. To test the
hypotheses relating implementation of GSCM practice and CP, multiple regression analysis was
used.
Findings – The finding of the study was that GSCM practices impact the CP dimensions
differently. While none of the four GSCM practices were found to have any impact on the
environmental performance, green purchasing and environmental cooperation were found to have
a significant impact on the operational performance. The study found that only green purchasing
plays a role in improving the economic performance, while only reverse logistics practices were
found to impact the social performance of the firm positively.
Research limitations/implications – Research on GSCM is still in the nascent stage. Further
refinement of the survey to differentiate between different manufacturing industries might be needed.
Generalizability of the findings is also limited because of data collected from manufacturing firms in the
UAE. This research provides important insights. The findings of this research are generally consistent
with those of prior studies in other parts of the world. Firms in manufacturing industry in the UAE
believe that GSCM practices help the company design and develop better products which, in turn,
increase the company chances in selling its products in the international markets while, at same time,
improving the average profit and market share. It was also found that the UAE firms believe that
implementation of GSCM practices help improve the corporate image, enhance employees’ job
satisfaction and improve employees’ health and safety.
Practical implications – Implementation of GSCM practices improves CP in different ways. Supply
Competitiveness Review chain managers are required to decide on the CP dimension they want to improve and accordingly select
Vol. 26 No. 3, 2016
pp. 216-245
the appropriate GSCM practices mix that leads to the desired level of improvement.
© Emerald Group Publishing Limited
1059-5422
Originality/value – Although few earlier researches studied the impact of GSCM on CP, this study is
DOI 10.1108/CR-04-2015-0024 different and makes a unique contribution by offering a holistic view of the impact of implementing four
main GSCM practices on all dimensions of CP. The study offers some insights on the type of GSCM Green supply
practices the firm needs to adopt to improve the targeted performance dimension.
chain
Keywords Manufacturing industry, Corporate performance, Green supply chain management,
Quantitative research
management
Paper type Research paper
217
1. Introduction
The integration of environmental concerns and organizational performance started
gaining attention over the recent decades. Climate change, the depletion of natural
resources and environmental pollution are the main drivers behind the international
efforts to greening the supply chains. Greening the supply chain has become an
organizational mandate in some developed countries. However, when it comes to Middle
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Eastern countries, majority of them are still late adopters. The term green or carbon
emission or carbon credits is not yet ubiquitous in organizational operations.
Although some early researchers focused on carbon emission models and pollution
studies, “green” as a definition was not institutionalized until the past decade. Hervani
et al. (2005) was probably the first academician who coined a clear definition for green
supply chain stating; “Green supply chain is a concept that combines green
procurement, environmental management of manufacturing materials, environmental
circulation, marketing, and reverse logistics”. However, Sarkis’ (1998) definition was
rather narrower in focus coining “a combination of the activities of an environmental
company and reverse logistics, and emphasized the latter’s importance”. Later in 2010,
Sundarakani et al. (2010) defined:
[…] green supply chain management can be defined as the integration of environmental
thinking into supply chain management, including product design, supplier selection and
material sourcing, manufacturing processes, product packaging, delivery of the product to the
consumers, and end-of-life management of the product after its use.
However, in between, definitions were forwarded on other aspects like Beamon (1999)
defined a green supply chain as:
[…] the extension of the traditional supply chain to include activities that aim at minimizing
environmental impacts of a product throughout its entire cycle, such as green design, resource
saving, harmful material reduction and product recycle and reuse.
Going beyond Beamon’s definition above, Kumar and Putnam (2008) claimed that the
end-to-end supply chain process, which was called “cradle to grave” in the early eighties,
is now called “cradle to cradle”, which means that the product has to be returned back to
the origin (the manufacturer) to be reproduced or properly disposed; therefore,
extending the supply chain to include green activities is not sufficient anymore as
claimed by Beamon earlier. Srivastava (2007), on the other hand, believes that green
supply chain management (GSCM) practices need to be integrated across the whole
supply chain including acquisition of raw material, product design, manufacturing
processes, finished product delivery and finally the management of the disposal of the
product after its useful life.
Recently, Agrawal et al. (2015) intended to present a comprehensive review of the
published literature on reverse logistics issues being one of the most important GSCM
practices, the authors found that there is no single study available on the drivers and
CR barriers of reverse logistics adoption and implementation across sectors and
26,3 demographics. To provide a forecasting method that is able to predict the rate of product
returns and expected time of product returns claiming they are stochastic, random and
uncertain, Agrawal et al. (2014) proposed a model for forecasting product returns using
graphical evaluation and review technique which was validated by a case study within
the electronics industry in India.
218 Motivating businesses to adopt GSCM practices starts by exploring the
improvements these practices can bring about, not only on the economic side but also on
other dimensions including the operational, social and environmental image of the
organization. Hence, a holistic study is called for. Thus, this paper attempts to explore
the impact of implementing a set of common green supply chain practices on different
dimensions of corporate performance (CP).
The remainder of the paper is organized as follows: Section 2 reviews the existing
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literature in the field of green supply chain and CP. The research framework and
hypotheses development are discussed in Section 3. Section 4 discusses the research
methodology including the statistical analysis and hypotheses testing. Discussion of the
analysis and findings are presented in Section 5, while the conclusion is presented in
Section 6. The managerial implications are presented in Section 7, while the avenues for
further researches and the research limitations are presented at Sections 8 and 9,
respectively.
2. Literature review
The literature on GSCM and CP started to appear in the journals and social science
books since early 1990s when a Harvard Business Scholar, Michael Porter, sparked a
debate by claiming that corporate environmental improvements lead to financial
improvements in the long term, and he also introduced the concept of “Innovation
offsets” and that GSCM can be a vehicle for creating competitive advantages for a firm
(Porter, 1991).
A recent study on the sustainable supply chain by Carter and Easton (2011), which
intended to provide a systematic review of the evolution of supply chain management
over a period of 20 years, found that environment aspects of supply chain have been the
focus of researchers and academicians. The authors reviewed 80 articles and contrasted
them in terms of: subject, inferential, moderation, methodology, analysis used, context
and theory used. The authors found that a large focus on consumer product industry
with 55 per cent of the articles heavily relied on descriptive statistics and 10 per cent
included moderating variables, whereas less than 4 per cent used conceptual theory
building and hence a clear lacuna in this area could be spotted.
The inconsistency in the existing literature stems from the mixed results reported on
GSCM practices and its impact on CP outcomes. More specifically, while some studies
found no relationship, other studies revealed either a positive or a negative relationship.
Watson et al. (2004), compared ten pairs of firms (environmental management system
[EMS] adopters and non-EMS adopters) in different industries with an objective to
propose and test a framework that quantifies EMS improvements to determine their
impact on financial performance. The authors found no significant difference in the
financial performance between EMS adopters and non-adopters.
2.2 Green supply chain management and corporate performance: negative relationship
The second wave of literature documented negative relationships between
implementation of GSCM practices and the different dimensions of CP. Examples of
negative relationships include the work of Richey et al. (2005). The study used a survey
questionnaire to collect data from 118 respondents to examine the effect of reverse
logistics programs on reverse logistics performance in the automobile aftermarket
industry in the USA. The findings revealed that internal innovation impacts
performance negatively as it seems too costly. Another example of a negative
relationship was reported by Montabon et al. (2007). The authors used content analysis
of 45 corporate reports to empirically examine the relationship between a set of different
environment management practices (EMPs) and firm performance. The study found a
negative relationship between EMPs and the return on investment. The strengths of the
study include: meeting most statistical assumptions for the canonical correlation
analysis used and clearly justifying the use of content analysis to tackle the subject
matter. Furthermore, Large and Thomsen (2011) reported a negative relationship
between green cooperation with suppliers and purchasing performance. The authors
obtained quantitative data from 109 purchasing and supply managers in Germany
using survey questionnaire. The objective was to study the impact of different
approaches (green assessment and green collaboration) on environmental performance
improvement and to investigate the impact of environmental performance
improvements on the outcomes of purchasing department.
2.3 Green supply chain management and corporate performance: positive relationship
Supporters of Porter’s earlier claim on GSCM–CP positive relationship are many, and
their research provides evidence from numerous industries to show that different GSCM
practices lead to a variety of positive relationships on performance outcomes. The
following section highlights the main studies.
CR A very recent study conducted by Diabat et al. (2013) to explore the relationship
26,3 between green supply chain practice initiatives and performance outcomes using
survey questionnaire to 50 participants from industry and academia, found that three
main GSCM practices, namely, eco-design, co-operation with customers and reverse
logistics, can impact the economic performance positively and can lead to better CP.
Similarly, Green et al. (2012) used a larger sample size of 159 managers in the
220 manufacturing industries in the USA to examine and assess the impact of implementing
GSCM practices on the environmental, operational and organizational performance.
Using structural equation modeling, the authors found positive relationships between
different GSCM practices (including: internal environmental management, green
purchasing, green information systems, cooperation with customers, investment
recovery and eco-design and different dimensions of CP). Although a very low response
rate of 8 per cent was reported, the study was the first to introduce staged GSCM
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implementation.
Adopting a similar research methodology used by Green et al. (2012); Zhu and Sarkis
(2004) surveyed 186 manufacturing firms in China to examine the relationship between
GSCM practice and environmental and economic performance. The authors found that
enterprises with higher levels of GSCM adoption are having better environmental and
positive economic performance.
In a same context, Liang and Chang (2008) surveyed 127 enterprises in China to
investigate the potential influences of GSCM on the performances of SMEs. Using
structural equation modeling, the authors found that performance of SMEs is positively
associated with implementation of GSCM practices. Analogous results were also
reported by Zailani et al. (2012) who used a solid theoretical background that relied on
strategic choice theory and institutional theory to develop their argument. The
researchers adopted a survey tool to gather data from 132 ISO 14001 certified
organizations in Malaysia and used structural equation modeling to examine the extent
to which internal proactive environmental strategy and external institutional drivers
motivate firms to adopt eco-designs that influence environmental performance. The
findings squared with those of Zhu and Sarkis (2004) and Liang and Chang (2008).
Furthermore they found that regulations and incentives positively impact
environmental performance.
On the positive relationship between GSCM practices and environmental
performance, a study by Kung et al. (2012) reported similar findings. The authors
analyzed responses of a survey questionnaire to 118 respondents in the manufacturing
industry in Taiwan to investigate the relationship between green management and
environmental performance. Using hierarchical regression analysis, positive
relationships were found between green manufacturing, green packaging, the adoption
of ISO 14001 and the attainment of environmental labels from one side and
environmental performance from the other side. Additionally, the work of Cordano et al.
(2010) on the green practices in the winery industry in the USA reported similar results.
Using a survey questionnaire to 369 managers within the industry, the authors intended
to examine whether the development of rudimentary EMS, increases the success of
implementing solid waste recycling and energy conservation practices. The multiple
regression analysis used confirmed that firms with more developed EMP achieve
greater success in implementing energy conservation and recycling activities and
consequently better environmental performance.
In a similar manner, Gonzalez et al. (2008) analyzed the existence of differences in the Green supply
implementation of environmental practices between companies that possess some form chain
of certified EMS (ISO 14001 or EMS) and those that do not have any such system in
Spain. The researcher used a survey questionnaire during one to one interviews with
management
157 executives in the automotive industry. Using logistic regression to test the
relationship, the author found that there is a significant relationship between the
possession of certified EMS, organization size and demand on suppliers to implement 221
environmental practices (i.e. environmental performance) which in turn indicate that
implementation of GSCM represented by having EMS certification such as ISO 14001,
directs the corporate environmental behavior toward the surrounding stakeholders
including its suppliers. Although the study was limited to one industry within one
country, it can be considered as one of the genuine works in the field as all statistical
assumptions were met and the authors used valid and reliable measures to measure both
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variables, in particular, EMS as the independent variable and corporate practices as the
dependent variable.
Based on the above, the scattered nature of observations and findings from studies on
GCSM practices and their impact on CP could be evidenced. However, the dearth of a
holistic conceptual model acts as a deterrent in giving potential researchers a proven
research benchmark.
2.4 Review of independent variables selected for the proposed theoretical model
Green supply chain practices are those initiatives that any organization adopts to
comply with environmental legislations, reduce its operations’ negative impact on the
environment and improve its performance. This research will focus on those green
supply chain initiatives that have been widely adopted and discussed in the existing
literature which include: green purchasing, eco-design, environmental cooperation and
reverse logistics. The above four practices will become the independent variables for the
theoretical model to be investigated.
2.4.1 Green purchasing. Green purchasing can be defined as an environmental
purchasing initiative that aims to ensure that purchased products and material meet
with environmental objectives set by the purchasing firm such as reducing sources of
waste, encouraging recycling, reuse and substitution of materials (Carter and Ellram,
1998; Min and Galle, 2001; Zsidisin and Siferd, 2001).
2.4.2 Eco-design. This research adopts the definition developed by Johansson (2002)
for eco-design, which defines eco-design as the actions taken during product
development stage targeted toward minimizing a product’s environmental impact
during its whole life cycle starting from acquiring raw material to manufacturing, use
and finally to its final disposal without compromising other essential product criteria
such as performance and cost.
2.4.3 Environmental cooperation. Adopting green supply chain practices requires
internal and external cooperation among the different stakeholders, for example, in the
manufacturing industry, cooperation to achieve environmental objectives needs to exist
between the organizations’ different departments such as purchasing, marketing,
production and human resources.
Environmental cooperation has been used as a GSCM initiative by several studies
but in one of two forms, either in the upstream with the suppliers or in the downstream
with the customers. In this research, cooperation with suppliers or customers will be
CR referred to as environmental cooperation. Examples on existing studies that used
26,3 environmental cooperation include the work of Lee et al. (2012), who examined its impact
on different performance dimensions within electronic firms in Korea. In the same way,
Perotti et al. (2012) used environmental cooperation along with other GSCM initiatives to
examine how the adoption of GSC practices by third-party logistics (3PLs) in Italy can
affect the company performance. Using collaboration with suppliers and collaboration
222 with customers in addition to other GSCM initiatives, Diabat et al. (2013) aimed to
examine their impact on different CP measures.
2.4.4 Reverse logistics. This research adopts the definition proposed by Carter and
Ellram (1998) that defines reverse logistics as:
[…] the return or take back of products and materials from the point of consumption to the
forward supply chain for the purpose of recycling, reuse, remanufacture, repair, refurbishing
or safe disposal of the products and materials.
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Like other green supply chain initiatives, reverse logistics plays a key role in enhancing
the organization’s operational efficiency, improves its competitiveness and reduces
system-wide costs.
Reverse logistics is one of the most commonly used GSCM practices in the existing
literature. For example, Perotti et al. (2012) included reverse logistics along with other
GSCM initiatives in their study of some logistics providers in Italy to assess the adoption
level of such initiatives and their potential impact on different CP dimensions. Likewise,
Diabat et al. (2013) used Fuzzy TOPSIS method to explore how reverse logistics along
with other GSCM initiatives can lead to improved CP. In the same way, reverse logistics
was among three GSCM practices that Eltayeb and Zailani (2009) intended to rank in
terms of the adoption levels in Malaysia.
2.5 Review of the dependent variables selected for the theoretical model
CP is the other side of the GSCM–Performance equation and was always considered as
the dependent variable in most of the studies examined its relationship with GSCM.
GSCM initiatives might lead to tangible benefits such as cost reduction (Orlitzky et al.,
2003; Melnyk et al., 2003; Eltayeb et al., 2011), improved quality (Melnyk et al., 2003),
wastes reduction (Azevedo et al., 2011), reduction of lead times (Melnyk et al., 2003),
improved profitability (Darnall et al., 2008; Menguc and Ozanne, 2005), positive stock
returns (Klassen and McLaughlin, 1996; Menguc and Ozanne, 2005) and energy
conservation (Cordano et al., 2010). GSCM practices may also lead to intangible benefits
including: enhanced competitiveness (Rao, 2002; Rao and Holt, 2005), increased
shareholders value (Bose and Pal, 2011), increased customer satisfaction (Azevedo et al.,
2011), improved job satisfaction (Jun et al., 2006), enhanced efficiency (Azevedo et al.,
2011) and new market opportunities (Diabat et al., 2013; Walley and Whitehead, 1994).
Elkington (1994) introduced the concept of “triple bottom line”, claiming that
sustainability is nothing but the intersection of economic, environmental and social
performance; however, this research adds another dimension that is operational
performance. Consequently, and based on the different effects GSCM practices can have
on CP, it can be claimed that they fall under four different performance dimensions:
environmental (such as waste reductions and resource savings), operational (such as
enhanced efficiency and improved quality), economic (such as improved profitability
and positive stock returns) and social (such as improved job satisfaction and enhanced
health and safety). The section below elaborates more on each of these dimensions, while Green supply
Figure 1 portrays how they are interrelated. chain
2.5.1 Environmental performance. This research adopts a modified version of the management
definition developed by Zhu et al. (2008), thus environmental performance refers to: the
ability of the organization to reduce air emissions, effluent waste and solid wastes and
the ability to decrease consumption of hazardous and toxic material and decreased
frequency for environmental accidents. 223
2.5.2 Operational performance. This research uses a modified version of Melnyk
et al.’s (2003) and Zhu et al.’s (2008) definition for operational performance; therefore,
operational performance refers to the organization’s capabilities to more efficiently
produce and deliver products to customers with improved quality and reduced lead
times which ultimately lead to improving its position in the marketplace and increasing
its chances in selling its products into international markets.
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2.5.3 Economic performance. This research adopts an extended version of Green and
Inman (2005) and Zhu et al. (2007) definition for economic performance; hence, economic
performance is defined as the financial and marketing performance improvements
resulted from implementing GSCM practices that lead to enhancing the firm’s position
compared to the industry average. The financial improvement encompasses increased
costs for material purchasing, decreased costs for energy consumption, decreased cost
for wastes discharge and decreased costs for environmental accidents. The
marketing-based improvements include: increased average return on sales, increased
average profit and profit growth and increased average market share growth.
2.5.4 Social performance. The research adopts Wood’s (1991) definition for social
performance which is:
[…] a business organization’s configuration of principles of social responsibility, processes of
social responsiveness, and policies, programs and observable outcomes as they relate to the
firm’s societal relationships.
CR
26,3
224
Figure 1.
Performance model
Green supply
chain
management
225
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Figure 2.
Theoretical model
4. Research methodology
Given the deductive nature of the study that suggests a model with a causal relationship
between green supply chain practices and CP requiring validation using empirical data,
a quantitative approach is adopted using information gathered through a survey
questionnaire to obtain categorical data needed for the statistical testing.
4.1 Measurement
Measuring the operationalized constructs in this research was from different sources.
For example, eco-design was measured using four items adopted from Zsidisin and
Hendrick (1998) and Carter and Ellram (1998). Green purchasing was measured using
five items adopted from Zsidisin and Hendrick (1998) and Walton et al. (1998). For
environmental cooperation, the research used eight measures adopted from three
different sources: Zsidisin and Hendrick (1998); Walton et al. (1998) and Vachon and
Klassen (2006). Reverse logistics was measured using three items adopted from Rao Green supply
(2007). chain
The measurement of the independent variable dimensions was from different
sources as explained hereafter.
management
Environmental performance is measured using five items adopted from Zhu et al.
(2007). Whereas, operational performance was measured using six items adopted from
Melnyk et al. (2003). The economic performance was measured using four items adopted 227
from Zhu et al. (2007) and three items adopted from Green and Inman (2005). Finally, the
social performance variable was measured using five items: three items were adopted
from Rao (2002), one item adopted from Homburg and Stock (2004) and Zhu et al. (2008)
and the last item was adopted from Cordano et al. (2010). Table I summarizes the
measurement items adopted for each construct and their sources
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4.4 Results
In total, 143 responses were received with 14.7 per cent response rate; however, only 117
responses were found complete which could be used for the statistical testing.
CR Variable Measurement item Source
26,3
Eco-design Design of products for reduced consumption of Zsidisin and Hendrick
material/energy (1998), Carter and
Design of products for reuse, recycle, recovery of material, Ellram (1998)
component parts
Design of products to avoid or reduce use of hazardous
228 products
Design of processes for minimization of waste
Green purchasing Provide design specification to suppliers that include Zsidisin and Hendrick
environmental requirements for purchased items (1998), Walton et al.
Environmental audit for suppliers’ internal management (1998)
Second-tier supplier environmentally friendly practice
evaluation
Suppliers are selected using environmental criteria
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the survey was sent in two waves, and the test for the non-response bias was conducted
using Armstrong and Overton’s (1977) approach to ensure no difference exists between
early and late responses. To measure the reliability of the measurements and to verify
the internal consistency of the constructs, Cronbach’s alpha was used as displayed in
Table III. The results indicate that all the values are above 0.7 and this confirms that the
constructs are acceptable (Cronbach, 1951).
4.7 Descriptive statistics of independent variables Green supply
Table IV shows the means for the four IV constructs. With respect to the practices, it is chain
clear that, on an average, the eco-design construct contains the strongest practices
(Mean ⫽ 3.76, SD ⫽ 1.34), followed by the reverse logistics (Mean ⫽ 2.81, SD ⫽ 1.47),
management
followed by environmental cooperation construct (Mean ⫽ 2.77, SD ⫽ 1.31). The weakest
practices are identified as the green purchasing (Mean ⫽ 2.7, SD ⫽ 1.38). The suggestion
therefore is that, the UAE manufacturers pay good attention to the eco-design of their 231
products and the reverse logistics and product take back driven primarily by the close
cooperation between the supply chain members on environment-related matters. In
contrast, there is less attention paid to green purchasing, indicating that auditing
suppliers for environmental commitment and selecting them based on environmental
criteria are not considered as much of priority compared to other practices.
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Eco-design 4 0.826
Green purchasing 5 0.832
Environmental cooperation 8 0.888
Reverse logistics 3 0.710
Environmental performance 6 0.860
Operational performance 6 0.890 Table III.
Economic performance 7 0.921 Cronbach’s ␣
Social performance 5 0.891 variables
Factor loadings for all measurement items are above 0.7 as shown in the table.
Kaiser–Meyer–Olkin measure of sampling adequacy value for the eight constructs is
greater than 0.50 as recommended by Kaiser (1974), and therefore factor analysis is
appropriate for the data. Bartlett’s test of sphericity tests the appropriateness for the
factor analysis; the sigma values for the eight constructs are all 0.0 and therefore less
than ␣ at 5 per cent which confirms that factor analysis is appropriate for the selected
data.
Eco-design (ED) ED1 Design of products for reduced consumption of material/energy 0.811 0.000 0.815 66.298
ED2 Design of products for reuse, recycle, recovery of material, component parts 0.813
ED3 Design of products to avoid or reduce use of hazardous products 0.790
ED4 Design of processes for minimization of waste 0.839
Green purchasing GP1 Provide design specification to suppliers that include environmental 0.819 0.000 0.737 66.419
(GP) requirements for purchased items
GP2 Environmental audit for suppliers’ internal management 0.835
GP3 Second-tier supplier environmentally friendly practice evaluation 0.830
GP4 Suppliers are selected using environmental criteria 0.794
Environmental EC1 Cooperation with suppliers and customers for eco-design 0.874 0.000 0.721 58.426
cooperation (EC) EC2 Cooperation with suppliers and customers for cleaner production 0.780
EC3 Cooperation with suppliers and customers for green packaging 0.755
EC4 Cooperation with suppliers and customers for using less energy 0.745
EC5 Working together to reduce environmental impact of our activities 0.784
EC6 Conducting joint planning to anticipate and resolve environmental-related 0.754
problems
EC7 Making joint decisions with other supply chain members about ways to 0.809
reduce overall environmental impact of our products
Reverse logistics (RL) RL1 Use of remanufacturing 0.642 0.000 0.827 63.187
RL2 Recovery of the company’s end-of-life products 0.843
RL3 Taking back packaging 0.709
Environmental EP1 Reduced waste water 0.850 0.000 0.786 63.332
performance (EP) EP2 Reduced solid wastes 0.724
EP3 Decreased consumption for hazardous/harmful/toxic materials 0.819
EP4 Decreased frequency for environmental accidents 0.795
EP5 Improve a company’s environmental situation 0.799
(continued)
performance
Table VI.
233
practices and
management
chain
Green supply
CR
26,3
234
Table VI.
GSCM practices and Bartlett’s Factor Variance
CP Code Measurement items KMO significance loadings explained
Economic EcP1 Decreased cost for materials purchasing 0.899 0.000 0.867 75.880
performance (EcP) EcP2 Decreased cost for energy consumption 0.816
EcP3 Decreased fee for waste treatment and discharge 0.825
EcP4 Average return on sales and investment over the past three years 0.894
EcP5 Average profit and profit growth over the past three years 0.922
EcP6 Average market share growth over the past three years 0.897
Operational OP1 Significantly reduced lead times 0.848 0.000 0.824 64.702
performance (OP) OP2 Significantly improved product quality 0.776
OP3 Significantly improved its position in the market place 0.788
OP4 Helped the company design/develop better products 0.837
OP5 Implementing green practices helps in reducing all types of wastes 0.746
OP6 Improved its chances in successfully selling its products in international 0.850
markets
Social performance SP1 Improved corporate image 0.784 0.000 0.868 69.942
(SP) SP2 Social commitment 0.881
SP3 Preserve environment 0.738
SP4 Enhanced employee job satisfaction 0.810
SP5 Enhanced health and safety of employees 0.875
The final set of hypotheses (H4a-H4d) examined the relationship between GSCM Green supply
practices and the social performance. The results show that only reverse logistics chain
practices have a significant impact ( ⫽ 0.208) on the social performance, and thus only
H4d is supported. Table X summarizes the social performance hypotheses results.
management
5. Discussion
The study found that EMS certification is associated with all dimensions of CP and such 235
an association is a good indication that firms in the UAE are going into the right
direction because EMS implementation and certification forms the basis for any green
initiative to drive CP into the desired green direction. Such a finding was also echoed by
Melnyk et al. (2003). The authors found that there is a positive relationship between the
presence of formal certified EMS and improved performance such as reduced costs
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in the business for many years have the same view when it comes to green initiatives
and their impact on CP.
Although environmental performance showed high levels of attainment as discussed
in the descriptive statistics, and ranked second after social performance (Mean ⫽ 3.75,
SD ⫽ 1.04), the study found that none of the independent variables have any impact on
the environmental performance. Similar findings were also reported by Green et al.
(2012). The author found no significant relationship between green purchasing and
environmental performance. Furthermore, Simpson et al. (2007) reported that no
significant relationship was found between environmental commitment and
environmental performance. The explanation is that organizations in the UAE
implement GSCM practices without assessing which practices deliver the best outcome,
for example Lo (2014) claims that reverse logistics practices might deliver better
performance outcomes than eco-design practices for firms in the downstream of the
supply chain. It also differs from one industry to another, and green purchasing
practices might lead to better performance outcomes than eco-design for firms in the
textile manufacturing industry.
The study found that green purchasing and environmental cooperation are
positively related to operational performance. These results square with the results
reported recently by Diabat et al. (2013). The authors found that environmental
cooperation is one of the most important GSCM practices that can lead to better
operational performance outcomes. Such interesting findings in this study might be due
to some recent regulations such as “Istedama”, Pearl Rating and “Green Building”
initiatives launched by the UAE Government aimed at motivating supply chain
members to work more closely together to deliver more sustainable products and
projects.
Both eco-design and reverse logistics were found to have no impact on operational
performance. Similar findings were also reported by Richey et al. (2005). The researchers
found that the implementation of reverse logistics procedures did not improve the
corporate operational performance. Although both practices were found to be the most
highly adopted GSCM practices in the UAE, they failed to impact the operational
performance. It may be possible that the level of implementation was not sufficient
enough to lead to better outcomes (Zhu and Sarkis, 2006). Both practices require
cooperation with other chain members for the benefits to be realized; however, the study
did not find such cooperation as environmental cooperation was ranked third in terms of Green supply
adoption by the firms surveyed. chain
As far as economic performance is concerned, only green purchasing was found to management
have a significant impact on economic performance of the four GSCM practices.
Surprisingly, both variables are having the lowest levels of adoption and attainment. In
other words, green purchasing is the lowest GSCM practice in terms of implementation,
and economic performance is the lowest in terms of attainment. The only explanation is 237
that the improvement in the economic performance of firms in the UAE in the green
context is mainly due to green purchasing practices. Green purchasing practices
therefore are important for firms that have limited resources and want to realize
economic benefits in the short term. Analogous results were found by Green et al. (2012).
The researcher found that within the US manufacturing industry, green purchasing is
positively linked to economic performance.
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The study did not find any significant impact of other green practices on the
corporate economic performance. It is possible that other practices might be
long-term-oriented and entail huge initial investments such as pollution prevention
systems, R&D in eco-design products and so on, but green purchasing is less
capital-intensive, as it is an externally oriented green supply chain initiative (Eltayeb
et al., 2011). Eltayeb et al. (2011) found that better economic performance is the main
driver for Malaysian firms to adopt green purchasing practices which might be the case
of most of the firms in the UAE, as reported by the study.
Only reverse logistics practices were found to have a significant impact on the
corporate social performance. Reverse logistics was found to be the second highly
implemented green supply chain practice in the UAE after eco-design, while social
performance had the highest attainment level. Therefore, it is not surprising to have
such a relationship.
6. Conclusion
The impact of implementing GSCM practices on CP has not received a great deal of
interest within the UAE context, and therefore tackling this area was deemed necessary.
Earlier studies reported variegated results on the impact of implementation of GSCM
practices on CP in different industries and using different measures and dimensions of
CP.
This study shed light on GSCM practices currently adopted by business
organizations in the UAE and their impact on CP in an attempt to motivate them to
maintain an environmentally benign position while continuously endeavoring to
improve the environmental, operational, economic and social aspects of CP.
The study found that operational performance positively improved when
implementing green purchasing and environmental cooperation practices; therefore,
organizations aiming to improve the quality of their products and shorten the lead times
may need to involve upstream and downstream supply chain members and work
collaboratively with them from design stages all the way through disposal.
Green purchasing has been found to be a good tool for economic vitality as it
improves the firm’s economic performance resulting from reduction in material and
energy consumption, as well as improvements in market share, average sales return and
average profit.
CR Firms interested in their corporate image and the social commitment shall devote
26,3 more resources to implement reverse logistics practices which are found to impact social
performance positively. Employee job satisfaction and health and safety measures are
also improved once social performance is improved and thus firms need to actively
involve and participate in reverse logistics campaigns.
In conclusion and to answer the research question, it can be claimed that overall,
238 GSCM practices impact CP positively. However, if the firm is interested in certain
dimensions of CP, for example, operational performance, then green purchasing and
environmental cooperation are the most important green practices that influence such
dimensions. On the other hand, if the firm is more interested in pecuniary outcomes, then
only green purchasing can help improve the corporate economic performance. Lastly,
societal-oriented firms that intend to develop social acumen to maintain the corporate
image need to focus on reverse logistics practices.
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7. Managerial implications
Supply chain managers need to carefully select the right mix of green supply chain
practices to drive CP to the desired levels. Some practices may improve certain
performance dimensions; therefore, it is crucial to decide which performance dimension
brings the most value to the organization and consequently work with other chain
members to implement the practices that improve it.
8. Further researches
Extending this study to other industrial sectors in the UAE may provide fruitful
avenues to understand how the performance of these firms behaves toward GSCM
practices implementation and how they comply with mounting environmental
regulations in the construction, transportation or other environment-sensitive sectors.
It can be claimed that this study lays the foundations for future researches in other
Gulf Cooperation Council (GCC) countries such as Saudi Arabia where the
manufacturing industry is booming. Qatar, on the other hand, is witnessing
unprecedented economic vitality in almost all sectors including oil and gas, construction
and aviation, and therefore looking at its firms’ position on the environmental radar and
the different green practices implemented would be intriguing.
Further studies may investigate the impact of EMS certifications such as ISO 14001
on different CP dimensions within the UAE business organizations to assess whether
such certifications play any role in improving their environmental acumen.
9. Limitations
Some limitations cannot be overcome in this study which are threefold; first, this study
was limited to firms in manufacturing industry only, and this was due to the realization
that manufacturing industry in any region accounts for a big portion of the
environmental impacts and that manufacturing is greatly involved in the depletion of
natural resources. Second, the study was limited to manufacturing industries in the
UAE and that was due to the fact that the research purposefully intended to find out
what GSCM practices the UAE businesses embark on and how they relate to the
different magnitudes of CP and accordingly offer some insights based on the data
gathered and the analysis thereafter. Other GCC countries for example may have similar
socio-cultural situations to the UAE, but the UAE is marching ahead with different
green initiatives such as “Istedama”, Emirates Green Buildings and Masdar which all
make it different and entail studying it singly. Finally, the study did not differentiate Green supply
between early and late adopters of green supply chain practices which was due to chain
difficulties in capturing such information, which, if gathered, could have provided a
deeper look into how the different corporate performance dimensions are impacted over
management
time and how the green practices implementation outcomes are realized.
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Corresponding author
Balan Sundarakani can be contacted at: balansundarakani@uowdubai.ac.ae
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