Resources, Conservation and Recycling 55 (2011) 495–506
Contents lists available at ScienceDirect
Resources, Conservation and Recycling
journal homepage: www.elsevier.com/locate/resconrec
Green supply chain initiatives among certified companies in Malaysia and
environmental sustainability: Investigating the outcomes
Tarig K. Eltayeb a , Suhaiza Zailani b , T. Ramayah c,∗
a
b
c
College of Commerce and Business Administration, Dhofar University, Oman
Graduate School of Business, Universiti Sains Malaysia, Minden, 11800 Penang, Malaysia
School of Management, Universiti Sains Malaysia, Minde, 11800 Penang, Malaysia
a r t i c l e
i n f o
Keywords:
Green supply chain
Green supply chain outcomes
Certified manufacturing companies
Malaysia
a b s t r a c t
The relationship between green supply chain initiatives and performance outcomes has been subject to
numerous studies but the results are not conclusive. This study tries to assess the actual environmental,
economic and intangible outcomes resulting from the adoption of green supply chain initiatives. This
study used a structured questionnaire derived from the literature and employing a mail survey to collect
responses form a group of 569 ISO 14001 certified firms in Malaysia. The results of testing the hypotheses
that predicted that green supply chain initiatives have positive effect on the outcomes showed that ecodesign have significant positive effect on the four types of outcomes (environmental outcomes, economic
outcomes, cost reductions, and intangible outcomes). Reverse logistics was found to have significant
positive effect on cost reductions only. However, green purchasing was not found to have significant
effect on any of the four types of outcome. Through designing environmentally friendly products and
taking back products and packaging, business organizations can generate benefits to the environment,
in the form of reduced waste and better resource utilization, in addition to economic benefits and cost
reductions to the organizations.
© 2010 Elsevier B.V. All rights reserved.
1. Introduction
Natural environment becomes a challenging issue to business organizations in recent years as a result of global and local
environmental problems. Business operations, such as sourcing,
manufacturing and logistics, are believed to be responsible for most
of these problems (Beamon, 1999). Consequently, business operations are subject to increasing pressures and scrutiny from various
stakeholders inside and outside organization such as government
agencies, workers, neighbors and not-for-profit groups (Sarkis,
2006). This is over and above growing demand of customers and
environmental societies for more environmental friendly products.
These challenges and pressures push firms to seriously considering
environmental impacts while doing their business. Green becomes
a common practice to portray the environmental friendly image of
products, processes, systems and technologies, and the way business is conducted (Vachon and Klassen, 2006a,b). However, most
of the adopted green solutions, especially in developing countries,
remain to be the traditional command-and-control or “end-of-the-
∗ Corresponding author.
E-mail addresses: [email protected] (T.K. Eltayeb),
[email protected] (S. Zailani), [email protected] (T. Ramayah).
URL: http://www.ramayah.com (T. Ramayah).
0921-3449/$ – see front matter © 2010 Elsevier B.V. All rights reserved.
doi:10.1016/j.resconrec.2010.09.003
pipe” solutions where a firm tries to eliminate or reduce negative
environmental impacts, after they are created, rather than adopting a proactive approach to reduce the sources of waste or pollution
(Anbumozhi and Kanda, 2005; Walton et al., 1998).
The traditional green initiatives are associated with many
weaknesses and problems. The end-of-the-pipe approach does
not eliminate pollutants, but merely transforms them from one
medium to another (Sarkis, 2006). Moreover, focusing green practices inside organization may expose the organization to negative
environmental performance of other organizations in its supply
chain. For instance, the poor environmental performance of small
suppliers can affect badly the performance and image of buying
companies (Christmann and Taylor, 2001; Cousins et al., 2004;
Faruk et al., 2002; Darnall and Edwards, 2006; Hall, 2001). In addition, community stakeholders often do not distinguish between an
organization’s environmental practices and the practices of its suppliers (Rao, 2002; Sarkis, 2006). In Malaysia, environmental issues
have become very important issue of concern for the Malaysian
government and the public. The Environmental Quality Act was
established in 1974 and has been amended a number of times to
encompass 18 sets of regulations to help implement projects relating to clean air, sewage and industrial effluent assessment (Rao,
2004, p. 292). Moreover, numerous pressure groups were formulated to monitor environmental issues. Pressure groups include
non-governmental organizations (NGOs) such as Environmental
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Protection Society of Malaysia, in addition to intense media scrutiny
of environmental problems (Green Purchasing Network Malaysia
GPNM, 2003). However, despite government efforts and growing
public awareness of environmental issues, environmental problems continue to persist. In response to environmental issues at
global and local levels, firms start to adopt environmental management initiatives that can be categorized in five levels as follows:
Defensive compliance: Waste minimization or cleaner production:
Eco-efficiency: Design for environment: Green supply chain.
Green supply chain is defined as “the extension of the traditional
supply chains to include activities that aims at minimizing environmental impacts of a product throughout its entire life cycle, such
as green design, resource saving, harmful material reduction and
product recycle or reuse” (Beamon, 1999). The traditional supply
chain is typically defined as “a set of three or more entities directly
involved in the upstream or downstream flows of products, services, finances, and/or information from a source to a customer.”
(Mentzer et al., 2001, p. 4). The definition of traditional supply chain
set the boundaries of supply chain to end in the final consumer.
Moreover, the traditional supply chains are based on a linear production paradigm which relies on constant input of virgin natural
resources and unlimited environmental capacity for assimilation
of wastes (Geyer and Jackson, 2004). The objective of green supply
chain is to eliminate or minimize negative environmental impacts
(air, water, and land pollution) and waste of resources (energy,
materials, products) from the extraction or acquisition of raw materials up to final use and disposal of products (Hervani et al., 2005).
The study of the outcomes of green supply chain initiatives is
expected to portray the extent to which green supply chain initiatives are effectively adopted. The relationship between green
supply chain initiatives and performance outcomes has been subject to numerous studies but the results are not conclusive. While
Carter et al. (2000), Rao and Holt (2005), and Zhu and Sarkis (2004)
found that green supply chain initiatives have significant positive relationship with environmental and economic performance
of organizations, Vachon and Klassen (2006b) and Zhu et al. (2007)
found no significant relationships between green supply chain initiatives and such performance outcomes. This inconclusive result
raises the question of what are the actual outcomes that can be
realized from the adoption of green supply chain initiatives.
Moreover, the available studies investigate only the environmental, economic, and operational outcomes of green supply chain
initiatives. However, intangible outcomes, such as organizational
image and customer loyalty, receive little consideration as an outcome of green supply chain initiatives. Although empirical studies
show that intangible outcomes result from the adoption of internal green practices such as Environmental Management Systems
(EMS), (Hui et al., 2001; Perry and Singh, 2002; Poksinska et al.,
2003; Rao, 2002; Sulaiman and Ahmad, 2002; Tan, 2005; Vastag
and Melnyk, 2002), no study found investigating the intangible outcomes of green supply chain initiatives. Therefore, this study tries to
find out actual environmental, economic and intangible outcomes
resulting from the adoption of green supply chain initiatives. This
paper is organized as follows. Next section discusses on the green
supply chain initiatives and the outcomes. This is followed by the
methodology and analysis. The discussions will end the paper.
2. Literature review
2.1. Green supply chain initiatives
The concept of green supply chain is a multidisciplinary issue
that emerges mainly from performing environmental management
practices in the context of supply chains (Sarkis, 2006; Walton et
al., 1998). Environmental management represents specification of
how organizations care about the natural environment and minimize the negative environmental effects of their entire operations
(Klassen and McLaughlin, 1996; Welford, 2000). Environmental
management principles specify policies, procedures, and audit protocols for controlling operations that create waste materials or
emissions (Matthews, 2003). These principles usually take the form
of standardized EMS such as British Standard for EMS BS7750
(1994), the EU eco-management and audit scheme (1993), and the
international standard ISO 14000 (Bansal and Clelland, 2004). These
standards have been developed to provide organizations with a
framework to implement EMS (Netherwood, 1996).
While environmental management principles and standards
provide powerful tools that have a potential to generate significant
improvements to environmental performance of organizations,
their focus restricted only on creating and documenting environmental policies and procedures (Curkovic et al., 2005). Such policies
and procedures may represent efforts to improve environmental
performance only within the organization’s operational boundaries
rather than being extended throughout the supply chain (Bansal
and Clelland, 2004; Handfield et al., 2005). Firms can market themselves as being environmentally proactive (by virtue of having an
EMS) without undertaking the effort of “greening” their supply
chains (Darnall and Edwards, 2006). Unlike the traditional environmental management, the concept of green supply chain assumes
full responsibility of a firm towards its products from the extraction or acquisition of raw materials up to final use and disposal
of products (Hart, 1995). It represents application of environmental management principles to the whole set of activities spanning
the entire customer order cycle, including design, procurement,
manufacturing and assembly, packaging, logistics, and distribution
(Handfield et al., 1997; Zsidisin and Siferd, 2001). This implies that
there is a wide range of initiatives that can be performed within
green supply chains. As a result, there is a disagreement among
scholars regarding what green supply chain initiatives are. The lack
of consensus on green supply chain initiatives is due to the fact
that green supply chain is a new area of study and practice, and
theory in this area is underdeveloped, as pointed out by (Sarkis,
1999). The green supply chain initiatives that have been widely discussed in the literature can be generally classified into the following
categories:
(1) Eco-design or design for the environment: Includes activities that
aim to minimize environmental impacts of products during
their entire life cycle (Beamon, 1999; Hervani et al., 2005;
Sarkis, 1998; Walton et al., 1998; Zhu et al., 2007).
(2) Green purchasing: Includes activities that aim to make sure that
purchased items have desirable environmental attributes such
as reusability, recyclability, and absence of hazardous materials (Bowen et al., 2001a,b; Carter and Carter, 1998; Hervani et
al., 2005; Min and Galle, 2001; Preuss, 2001; Rao, 2002, 2004;
Walton et al., 1998; Zhu et al., 2007).
(3) Supplier environmental collaboration: Includes activities that
aim at improving environmental performance and capabilities of suppliers at undertaking joint projects for developing
green products and innovations (Bowen et al., 2001a; Canning
and Hanmer-Lloyd, 2001; Hall, 2000; Rao, 2002; Vachon and
Klassen, 2006a,b; Vachon and Klassen, 2007a,b).
(4) Customer environmental collaboration: Includes activities that
aim at improving environmental performance and capabilities
of customer at undertaking joint projects for developing green
products and innovations (Canning and Hanmer-Lloyd, 2001;
Vachon and Klassen, 2006a,b, 2007a,b).
(5) Reverse logistics: Include activities that aim at taking back
products or materials for the purposes of reuse or recycling
(Alvarez-Gil et al., 2007; Beamon, 1999; Blumberg, 1999; Carter
and Ellram, 1998; Hervani et al., 2005; Murphy and Poist, 2003;
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Ravi et al., 2005; Richey et al., 2005; Sarkis, 1998; Zhu et al.,
2007).
2.1.1. Eco-design
Eco-design (environmental-conscious design), also called
design for the environment and green design, refers to actions
taken during product development aim at minimizing a product’s
environmental impact during its whole life cycle – from acquiring
materials, to manufacturing, use, and ultimately to its final disposal
– without compromising other essential product criteria such as
performance and cost (Johansson, 2002). Accordingly, eco-design
is considered one of the green supply chain initiatives because
it integrates environmental aspects into product design process,
taking into consideration entire flow of the product in its supply
chain. This consideration is very important because the majority
of environmental impacts arising from production, consumption
and disposal of the product are direct consequences of decisions
made at the design stage (Handfield et al., 2001). At the design
stage, the function of the product, process or service is defined,
and raw materials, supplies and process chemicals are selected.
These in turn determine the energy which will be consumed to
create them and the waste which will be generated. The specific
eco-design actions or activities vary between companies and
products. However, the basic eco-design activities include the
following:
1. Design for reduction or elimination of environmentallyhazardous materials such as lead, mercury, chromium and
cadmium (Zsidisin and Siferd, 2001).
2. Design for reuse is a design that facilitates reuse of a product or
part of it with or without minimal treatment of the used product
(Sarkis, 1998).
3. Design for recycling, is a design that facilitates disassembly of the
waste product, separation of parts according to material, and
reprocessing of the material (Lin et al., 2001).
4. Design for remanufacturing, is a design that facilitates repair,
rework, and refurbishment activities aiming at returning the
product to the new or better than new condition (Beamon, 1999).
5. Design for resource efficiency, including reduction of materials
and energy consumption of a product during use, in addition
to promoting the use of renewable resources and energy (APO,
2004).
2.1.2. Green purchasing
Green purchasing is an environmentally-conscious purchasing
initiative that tries to ensure that the purchased products or materials meets environmental objectives set by the purchasing firm, such
as reducing sources of waste, promoting recycling, reuse, resource
reduction, and substitution of materials (Carter et al., 1998; Min and
Galle, 2001; Zsidisin and Siferd, 2001). Green purchasing means
that purchasing or supply chain managers consider the issue of
sustainability in their purchasing of inputs in addition to the traditional purchasing criteria of cost, quality, and delivery (Lambert and
Cooper, 2000). Several green purchasing activities can be identified
from the literature. Hamner (2006) summarized the basic green
purchasing activities in seven points as follows:
1. Product content requirements: buyers specify that purchased
products must have desirable green attributes such as recycled
or reusable items.
2. Product content restrictions: buyers specify that purchased products must not contain environmentally undesirable attributes
such as lead, CFCs or plastic foam in packaging materials.
3. Product content labeling or disclosure: buyers require disclosure of
the environmental or safety attributes of purchased product con-
4.
5.
6.
7.
497
tent. Such disclosure can be done using green seals and indicators
of relative environmental impact such as scientific certification
system offered by various commercial organizations.
Supplier questionnaires: buyers send questionnaires to suppliers
asking them to provide information about their environmental
aspects, activities and/or management systems.
Supplier environmental management systems: buyers require suppliers to develop and maintain an environmental management
system (EMS). However the buyer does not require supplier to
certify the system.
Supplier certification: buyers require suppliers to have an EMS
that is certified as fully compliant with one of the recognized
international standards such as the British Standard 7750 (BS
7750), ISO 14001 from the International Organization for Standardization (ISO), and the European Union Eco-Management and
Audit Scheme (EMAS).
Supplier compliance auditing: buyers audit suppliers to determine
their level of compliance with environmental requirements.
Green purchasing deals mainly with controlling environmental
performance of suppliers. Being located at the beginning of the forward flow of materials within an organization, purchasing is placed
in an advantageous position to play a key role in the greening of
products and activities (Carter et al., 1998; Preuss, 2001). However,
incorporating environmental considerations into the purchasing
function may post significant pressures and complications to the
purchasing process because purchasing must consider the supplier’s environmental aspects, as well as supplier’s cost, lead-time,
quality and flexibility (Handfield et al., 2002).
2.1.3. Supplier environmental collaboration
Supplier environmental collaboration extends green purchasing activities to include more collaborative activities performed
by the buying firm to improve the supplier’s environmental performance (Bowen et al., 2001a). The main supplier environmental
collaboration activities include the following:
1. Supplier education: Includes conducting educational activities
by buyers towards their suppliers about environmental issues
and environmental management activities. Examples of these
educational activities include holding awareness seminars for
suppliers, informing the suppliers about the benefits of green
practices, and bringing together suppliers in the same industry
to provide them know-how information (Bowen et al., 2001a;
Rao, 2002).
2. Supplier support: Includes providing direct support from buyers
to suppliers to help them improve their environmental performance. Examples of these support activities include setting up
environmental teams to guide suppliers in their development of
environmental programs, visiting suppliers premises to provide
on-site technical assistance, and provision of financial assistance
to suppliers to improve their environmental performance (Hines
and Jones, 2001; Walton et al., 1998).
3. Joint ventures: In this form of collaboration, buying firm works
jointly with its suppliers and establishes common teams and
joint long-term programs to develop green innovations and
solutions such as clean technologies and green product designs
(Bowen et al., 2001a; Vachon and Klassen, 2006a,b).
Unlike green purchasing, supplier environmental collaboration
entails a lot of involvement and investment in suppliers’ operations. In this case, buyer focuses less on immediate outcome of
suppliers’ environmental efforts (e.g. compliance to green standards), and more on the process by which more environmentally
sound products or process might be achieved (Vachon and Klassen,
2006a,b).
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2.1.4. Customer environmental collaboration
Similar to supplier environmental collaboration, customer environmental collaboration involves direct intervention of a firm to
improve the environmental performance of its customers. Customer environmental collaboration includes exchange of technical
information between a firm and its customers, in addition to willingness to learn about each other’s operations in order to plan and
set goals for environmental improvement. It also implies cooperation to reduce the environmental impact associated with product
flows in the supply chain (Vachon and Klassen, 2007a,b). The specific customer environmental collaboration practices are similar to
those mentioned for suppliers previously, except the selling firm
takes the ownership of the activities:
1. Customer education
2. Customer support
3. Joint ventures
2.1.5. Reverse logistics
Reverse logistics focuses primarily on the return or take-back
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 (Carter and Ellram, 1998; Alvarez-Gil et al., 2007; Stock,
1998). Reverse logistics encompasses the traditional logistics activities of transportation and inventory management, but its focus is
to get product back from customers rather than moving product to
customers (Goldsby and Stank, 2000; Mollenkopf and Closs, 2005).
Used or end-of-life products returned into the forward supply chain
for three main purposes (Beamon, 1999; Wells and Seitz, 2005):
1. Reuse, is the process of collecting used products from the field,
and distributing or selling them used. The ultimate value of the
product is reduced, without additional processing.
2. Remanufacturing, is the process of collecting a used product
from the field, assessing its condition, and replacing defective or
obsolete parts with new or refurbished parts. The identity and
functionality of the original product is retained.
3. Recycling, is the process of collecting used products, disassembling them, separating them into material categories, and
processing them into recycled products, components, and/or
materials. The identity and functionality of the original materials
is lost.
In conclusion, there are five basic categories of green supply chain initiatives described in the literature; eco-design, green
purchasing, supplier environmental collaboration, customer environmental collaboration, and reverse logistics. In real life, it can be
observed that some of the above-mentioned initiatives are widely
adopted while others are low. Therefore, for this study, only three
initiatives will be studied. They are reverse logistics, green purchasing and environmental collaboration since they are commonly
adopted in Malaysia. This raises a question about what benefits or
outcomes to business organizations in adopting green supply chain
initiatives.
2.2. Outcomes of green supply chain initiatives
Outcomes are defined in this study as the results that are actually
realized from adopting green supply chain initiatives by manufacturing firms. While environmental initiatives are considered to
involve considerable costs and investments, especially during initial stages (Min and Galle, 2001), and it is against sound business
strategy and a poor allocation of firm investment that generally
generate negative returns to shareholders (Walley and Whitehead,
1994), many scholars believe that these initiatives are no longer
a threat, but a business opportunity (e.g., Paul, 1995; Porter and
van der Linde, 1995; Hutchinson, 1996; Martin, 2005; Heese et al.,
2005) and even a source of sustained competitive advantages (Hart,
1995; Sinding, 2000). For green supply chain initiatives, previous
studies found that these initiatives result in numerous performance
outcomes and can be broadly classified into four categories:
(1) Environmental outcomes: include effects of green supply chain
initiatives on the natural environment inside and outside the
firm (Bowen et al., 2001; Rao, 2002; Vachon and Klassen, 2006b,
2007a,b; Zhu and Sarkis, 2004; Zhu et al., 2007).
(2) Economic outcomes: are financial benefits that reflect to the
whole organization such as profitability sales, market share,
and productivity (Carter et al., 2000; Rao and Holt, 2005; Ritchie
et al., 2001; Zhu and Sarkis, 2004).
(3) Operational outcomes: Are benefits that reflect on the operational level of the organization such as cost reductions, quality,
flexibility, and delivery (Carter et al., 2000; Chung and Tsai,
2007; Rao and Holt, 2005; Ritchie et al., 2001; Vachon and
Klassen, 2006b, 2007a,b).
(4) Intangible outcomes; Are conceptual or difficult to quantify outcomes such as organizational image and customer satisfaction
(Smith, 2005).
2.2.1. Environmental outcomes
Environmental outcomes represent positive consequences of
green supply chain initiatives on the natural environment inside
and outside organizations. They include reduction of solid/liquid
wastes, reduction of emissions, resource reduction, and decrease
of consumption for hazardous/harmful/toxic materials, decrease
of frequency of environmental accidents, and improved employee
and community health (Five Winds International, 2003; Geyer
and Jackson, 2004; Zhu and Sarkis, 2004). The literature tends to
support the idea that green supply chain initiatives have positive environmental outcomes. For instance, Frosch (1994) argued
that an inter-firm linkage facilitated by proximity could lead
to improvement in environmental performance. Florida (1996)
stated that closer bonds between suppliers and customers can
facilitate cleaner production. Geyer and Jackson (2004) identified
environmental benefits of green supply chain as: (1) diversion
of products from landfill of the end-of-life waste, (2) replacing primary with secondary resources in the reverse supply
chain, thus avoiding the environmental burdens of production processes. Zhu and Sarkis (2004) analyze data from the
manufacturing sector in China and found significant positive
relationships between green supply chain initiatives (green purchasing, eco-design, and customer cooperation) and environmental
performance.
2.2.2. Economic outcomes
Economic outcomes are financial benefits that result from green
supply chain initiatives. Economic outcomes include profitability,
revenue growth, increase in market share, and increase in productivity (Mollenkopf and Closs, 2005; Stock et al., 2006; Zhu and
Sarkis, 2004). Green supply chain initiatives can lead to economic
outcomes in many ways. Mollenkopf and Closs (2005) identified
four ways that reverse logistics can generate financial benefits
to a firm: (1) increased revenues from “secondary” sales (sale
of reprocessed or remanufactured products) and from reducing
discounting levels by offering fresh stock in place of unsold or lowselling stock, (2) the goodwill earned from acting in a socially or
environmentally responsible manner can produce real economic
value, (3) cost reductions that come from the reduced cost of
goods sold and lower operating expenses can enhance profitability (4) better management of returns inventory can improve asset
turnover.
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In addition, Heese et al. (2005) emphasize that a firm can often
gain a competitive edge by introducing product take-back. Using
its market acuity, its reputation, its better access to original parts
and its potential to efficiently refurbish used products in-house,
a manufacturer that takes back and resells refurbished products
creates an additional source of income. Partially passing these benefits on to the customer by means of price discounts, a refurbishing
manufacturer not only increases its unit margin, but also its market share. Stock et al. (2006) add further that effective product
returns strategies and programs can result in increased revenues,
lower costs, improved profitability and enhanced level of customer
service. Nevertheless, studies on the economic benefits of green
supply chain initiatives found varying results. Bowen et al. (2001a)
suggest that economic performance is clearly not being reaped
in short-term profitability and sales performance. Min and Galle
(2001) found that green purchasing lead to increased operational
costs, and this in turn may have a negative impact on firm’s financial performance. Zhu et al. (2007) found no significant impact on
economic performance. However, other studies suggest a positive
relationship between green supply chain initiatives and economic
performance (Carter et al., 2000; Rao and Holt, 2005; Zhu and Sarkis,
2004).
2.2.3. Operational outcomes
Operational outcomes represent direct impact of green supply
chain initiatives on operational performance of a firm. Operational
outcomes include cost reductions, product quality improvements,
improvements in delivery and flexibility (Chung and Tsai, 2007;
Vachon and Klassen, 2006a). The most cited operational outcome
of green initiatives in the literature is cost reductions. Porter and
van der Linde (1995, p. 126) provide comprehensive view of how
environmental activities can result in costs reductions: (1) materials savings resulting from more complete processing, substitution,
reuse, or recycling of production inputs, (2) better utilization of
by-products in producing more products, (3) elimination or reduction of cost of activities involved in discharges or waste handling,
transportation and disposal, (4) lower energy consumption during
production process and during product use, (5) lower packaging
costs, (6) lower product cost (for instance, from material substitution, and (7) conversion of waste into valuable forms. Moreover,
Tibben-Lembke (1998) show that green supply chain impact on
disposal costs through guaranteed disposal, regulatory compliance,
economies of scale, better salvage price, better access to secondary
markets, lower disposal cost, and lower transportation cost.
Global Environmental Management Initiative (GEMI, 2001)
illustrates further three ways by which resource utilization can
result in cost savings for a firm. First, through minimization of
resource consumption cost per unit can be reduced. Second, minimization of wastes and discharges can result in minimization of
waste disposal efforts and costs. Finally, cost savings can result
from use of alternative green materials or devices such as use of
reused and recycled materials instead of virgin materials. Similarly,
Mollenkopf and Closs (2005) affirm that the use of recycled, refurbished, or remanufactured products in the forward supply chain
can create additional revenue, reduce operating costs, and minimize the opportunity costs of writing off defective or out-of-date
products. However, other studies doubt the cost reductions from
environmental initiatives and argue that these initiatives lead to
increased costs rather than reductions (Min and Galle, 2001; Walley
and Whitehead, 1994). Other than cost reductions, some studies
found positive relationships between green supply chain initiatives
and other aspects of operational outcomes. Vachon and Klassen
(2006b) explore the effect of green collaboration, with suppliers
and customers, on operational performance. They found that green
collaboration with customers is positively linked to quality, flexibility, and environmental performance, while collaboration with
499
suppliers is associated with better delivery performance. Moreover,
Chung and Tsai (2007) found that eco-design have positive impact
on delivery and quality.
2.2.4. Intangible outcomes
Intangible outcomes represent conceptual or difficult to quantify outcomes of green supply chain initiatives such as improved
product image and enhanced image and goodwill of a firm in the
eyes of its stakeholders (customers, employees, and community).
Such improved image is expected to generate customer satisfaction
and loyalty, employee satisfaction, brand value, enhanced publicity and marketing opportunities, and better acceptance of a firm
by local communities (Five Winds International, 2003; Jayaraman
and Luo, 2007). Jayaraman and Luo (2007) identified intangible outcomes that result from green supply chains as: (1) offering green
products can help companies retain environmentally conscious
customers and employees, (2) returned goods can provide valuable
information about customer reaction, expectations, habits, opinion and satisfaction level, (3) philanthropy and goodwill returns
can significantly improve a corporate image and increase market
share.
Five Winds International study (2003) compiled “success stories” of firms in North America that undertake green procurement
initiatives. The study reports that these firms realized numerous
intangible benefits from green procurement such as: (1) easier
compliance with environmental regulations and demonstration of
due diligence, (2) improved image, brand and goodwill, and support of environmental/sustainability strategy and vision, and (3)
improved employee and community satisfaction through cleaner
air and water, reduced risk of accidents, less demand for landfill and less demand for resources. It is evident from the previous
sections that green supply chain initiatives can result in positive
outcomes both for external environment and to adopting organizations. While this may add to the value and importance of green
supply chain practices, question arises about how to diffuse these
valuable and important initiatives among business organizations.
2.3. Framework and hypothesis development
The available empirical evidence suggests that green supply
chain initiatives are associated with better environmental performance (reduction of hazardous pollutants, wastes, and material
use, etc.), economic performance (financial gains, increase in
market share, sales growth, etc.), operational performance (cost
reductions, deliver quality) as well as intangible gains (improved
organizational image customer satisfaction and loyalty, etc.). Fig. 1
presents the framework for this study.
The next section will detail the hypotheses that are developed
to be tested for this research.
2.3.1. Effect of green supply chain initiatives on environmental
outcomes
Green supply chain initiatives are expected to generate valuable
environmental outcomes inside and outside organization. Inside
organization, green supply chain initiatives may have significant
effects in reducing consumption of hazardous materials and wastes
Green Supply Chain Initiatives
Green Supply Chain Outcomes
•
•
•
•
•
•
•
Eco-Design
Green Purchasing
Reverse Logistics
Environmental
Economic
Operational
Intangible
Fig. 1. Research framework.
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that may have negative effects on employees and general work conditions. Externally, green supply chain initiatives are expected to
have positive effects on the natural environment through reducing
emissions and wastes throughout product life cycle and reducing burden on the natural resources through reducing the amount
of materials and energy usage in producing and using products.
Numerous empirical studies found significant positive relationship between green supply chain initiatives and environmental
outcomes. For instance, Zhu and Sarkis (2004) found that green
purchasing and eco-design are significantly positively linked with
environmental performance. Therefore, it is hypothesized that:
•
•
•
•
H1.1: Green supply chain positively affects environmental outcomes.
H1.1a: Eco-design positively affects environmental outcomes.
H1.1b: Green purchasing positively affects environmental outcomes.
H1.1c: Reverse logistics positively affects environmental outcomes.
2.3.2. Effect of green supply chain initiatives on economic
outcomes
Although the traditional view of environmental initiatives is that
such initiatives are against sound business strategy and a poor allocation of firm investment that generally generate negative returns
to shareholders (Walley and Whitehead, 1994), many scholars are
in agreement that the environment makes good business sense and
is no longer a threat, but a business opportunity (e.g., Paul, 1995;
Porter and van der Linde, 1995; Hutchinson, 1996; Martin, 2005;
Heese et al., 2005). Moreover, some authors believe that competitive strategies, such as cost, differentiation and niche strategies, can
be weaved based on environmental concerns (Banerjee, 2001; Hart,
1995). Furthermore, empirical studies found significant positive
association between green supply chain initiatives and economic
performance. Sroufe (2003) found significant positive relationship
(p-value < 0.01) between design practices (the use of substitution,
reduction of materials contributing to environmental problems, the
use of product and process redesign to eliminate potential environmental problems, redesigning to aid in disassembly, and the
increased use of recycled materials) and operational performance
(cost reductions, improved chances of selling products in international markets, benefits outweigh costs). Carter et al. (2000) and
Zhu and Sarkis (2004) found also significant positive relationship
between green purchasing and economic performance. Accordingly, it is hypothesized that:
• H1.2: Green supply chain initiatives positively affect economic outcomes.
• H1.2a: Eco-design positively affects economic outcomes.
• H1.2b: Green purchasing positively affects economic outcomes.
• H1.2c: Reverse logistics positively affects economic outcomes.
2.3.3. Effect of green supply chain initiatives on operational
outcomes
Operational outcomes represent direct impact of green supply
chain initiatives on operational performance of a firm. Operational
outcomes include cost reductions, product quality improvements,
improvements in delivery and flexibility (Chung and Tsai, 2007;
Vachon and Klassen, 2006a). However, other studies doubt the cost
reductions from environmental initiatives and argue that these initiatives lead to increased costs rather than reductions (Min and
Galle, 2001; Walley and Whitehead, 1994). Other than cost reductions, some studies found positive relationships between green
supply chain initiatives and other aspects of operational outcomes.
Vachon and Klassen (2006b) explore the effect of green collaboration, with suppliers and customers, on operational performance.
They found that green collaboration with customers is positively
linked to quality, flexibility, and environmental performance, while
collaboration with suppliers is associated with better delivery performance. Moreover, Chung and Tsai (2007) found that eco-design
have positive impact on delivery and quality. Accordingly, it is
hypothesized that:
• H1.3: Green supply chain initiatives positively affect operational outcomes.
• H1.3a: Eco-design positively affects operational outcomes.
• H1.3b: Green purchasing positively affects operational outcomes.
• H1.3c: Reverse logistics positively affects operational outcomes.
2.3.4. Effect of green supply chain initiatives on intangible
outcomes
Green supply chain initiatives, through their focus on reducing
negative impacts on the environmental and promoting environmentally friendly products, are expected to improve the image of
a firm in the eyes of its stakeholders including government, customers, suppliers, employees, and the public at large. This positive
image is very important because it may lead to other intangible benefits such as gaining customer satisfaction and loyalty in
addition to improved staff morale (Hoffman, 2001; Five Winds,
2003). Although no empirical test of the relationship between green
supply chain initiatives and intangible outcomes is found in the literature, the available empirical evidence shows that environmental
intiatives, in general, have significant intangible outcomes such as
customer loyalty (Hui et al., 2001; Kassinis and Soteriou, 2003), staff
morale (Hui et al., 2001), in addition to enhanced organizational
image (Ann et al., 2006; Jayaraman and Luo, 2007; Mollenkopf and
Closs, 2005; Perry and Singh, 2002; Poksinska et al., 2003; Sulaiman
and Ahmad, 2002; Tan, 2005; Vastag and Melnyk, 2002). Therefore,
this study hypothesizes that:
• H1.4: Green supply chain initiatives positively affect intangible outcomes.
• H1.4a: Eco-design positively affects intangible outcomes.
• H1.4b: Green purchasing positively affects intangible outcomes.
• H1.4c: Reverse logistics positively affects intangible outcomes.
2.4. Control variables
To ensure robustness and credibility of results, this study controls for a number of extraneous or contextual variables that may
affect the results of the study. The control variables in this are;
type of industry, number of employees (firm size), firm ownership,
number of suppliers, and participation in green-interested associations. The selection of these variables is based on previous studies
that found significant effect of these variables on green initiatives.
For instance, Banerjee (2001) found that high impact industries
(e.g. chemical industry) have high green initiatives compared with
low impact industries (e.g. textile industry). Bowen (2002) argues
that larger firms are more committed to voluntary green initiatives because they have more resources and they are more visible
to the society. Participation in green-interested associations, e.g.
professional associations is expected to raise the level of awareness of green issues in a firm, and consequently its green initiatives
(DiMaggio and Powell, 1983).
3. Methodology
3.1. Sample and data
This study conducted a survey to obtain quantitative data for statistical testing of the hypotheses. The survey was conducted using
mail questionnaire. Mail questionnaire method was employed in
this study because of its advantage of covering wide geographical
T.K. Eltayeb et al. / Resources, Conservation and Recycling 55 (2011) 495–506
501
Table 1
Conceptual construct definitions, items and sources.
Construct
Definition
Source
Green purchasing
Environmentally-conscious purchasing practice that aims at ensuring
that purchased items meets environmental objectives of the firm such
as reducing or eliminating hazardous items, reducing sources of waste,
and promoting recycling and reclamation of purchased materials
Environmental-conscious design of a product and its packaging that
aims at minimizing negative environmental impacts of the product
and its packaging throughout its entire life and promoting positive
environmental practices such as recycling and reusing of the product
and its packaging
The return or take-back of a product or packaging, after use, from
customers or to suppliers for the purpose of reuse, recycling,
reclamation of materials from the product or packaging, or safe refill of
products
Actual impacts of green supply chain initiatives on environmental
performance of a firm such as compliance to environmental standards,
reductions in air emissions, resource consumption, and consumption
of hazardous materials
Actual impacts of green supply chain initiatives on financial
performance of the firm such as increase in profitability, productivity,
sales, and cost reductions.
Actual impacts of green supply chain initiatives on operational
performance of a firm such as cost reductions, product quality
improvements, improvements in delivery and flexibility
Actual impacts of green supply chain initiatives on difficult to quantify
or conceptual aspects related the firm’s and product image in the eyes
of external and internal stakeholders including customers, suppliers,
employees, and the general public.
Carter et al. (1998), Zhu et al. (2007), Hamner (2006)
Eco-design
Reverse logistics
Environmental outcomes
Economic outcomes
Operational outcomes
Intangible outcomes
area with less time and cost (Sekaran, 2003). The following subsections provide detailed description of the methodology utilized in
the survey.
The unit of analysis of the study is the individual firm. The
population of this study consists of all EMS ISO 14001 certified
manufacturing firms in Malaysia. The term “firm” here refers to
companies as well as individual units or sites within companies.
ISO 14001 certified firms were selected because they are expected
to be embarked in the adoption of green purchasing initiatives. This
is supported by the studies of Darnall et al. (2008), Sroufe (2003),
and Zhu et al. (2008). A sampling frame is a list of all elements in
a population (Sekaran, 2003). For this study, the sampling frame
represents all ISO 14001 certified firms in Malaysia. The sampling
frame was obtained from SIRIM organization in addition to the
Federation of Malaysian Manufacturers (FMM) directory 2007 of
Malaysian manufacturers (FMM, 2007). These two sources provided a sampling frame of 569 certified manufacturing firms in
Malaysia by 2007. Given the small sampling frame of the study
and the likelihood of low response from mail survey (Sekaran,
2003); all the 569 are included in the study. Thus, the sampling
technique employed in this study is census. As such, the study
made a mail survey of a total of 569 ISO 14001 certified firms in
Malaysia.
This study combines issues related to the environment (green
issues) with business aspects (supply chain). Therefore, the appropriate person to get the required data from should ideally have
knowledge about the two aspects. Certification organizations usually appoint an Environmental Management Representative (EMR)
in each firm to act as a link between the certification organization
and the certified firm. The EMR can belong to any department in the
certified firm but mainly comes from operations, quality control,
and environmental health and safety departments. The EMR keeps
all the documents regarding green issues in his firm and makes
regular updating to the certification organization about progress
in environmental performance in his firm. Because this person is
expected to be highly informative about green issues in his firm, in
addition to his knowledge about the business issues, this person is
considered to be the most appropriate respondent. Therefore, the
questionnaires were addressed to the EMR in each firm.
Vachon and Klassen (2006a), Zhu et al. (2007)
Carter and Ellram (1998), Rogers and Tibben-Lembke (2001)
Zhu et al. (2007), Rao (2002)
Zhu et al. (2007), Rao (2002)
Zhu et al. (2007), Rao (2002)
Rao (2002), Kassinis and Soteriou (2003).
3.2. Variables and measurement
The questionnaires used in this research was gleaned and
compiled form various validated instruments from the literature
reviewed but some modifications were made to wording to suit
the context of this research. The details of the constructs and their
respective sources are presented in Table 1.
4. Results
The total population of the study is 569 firms. Given that this
study is using consensus, all the 569 firms are used in the study.
However, after excluding the 16 firms used for the pre testing
of the questionnaire and the two firms used for the interviews,
the population of the study becomes 551. Accordingly, a total of
551 questionnaires were mailed to the respondents. After two
reminder letters in addition to telephone calls and e-mails, 132
completed questionnaires were received. The response rate is 24%.
This response rate is considered acceptable given the low response
expected from mail survey (Sekaran, 2003) and generally low
response rate for this type of correlational study in Malaysia. The
response rate is also considered acceptable compared to other similar studies. For instance, Vachon and Klassen (2006a,b) study on
green supply chain initiatives reported a response rate of 23%, Rao
(2002) study on green supply chain initiatives in Southeast Asia
(including Malaysia) reported a response rate of 10%.
To ensure that the received responses are representative of the
population of the study, a response bias is conducted following
the procedure suggested by Armstrong and Overton (1977) of
comparing early with late responses. Early responses are defined in
this study as responses received before sending the first reminder
(17 days from the first mailing), whereas late responses are those
received after that. According to this criterion, 59 responses are
considered early responses and 73 responses are considered late
responses. Chi-square test is used to test for significant differences
between early and late responses among twelve characteristics of
firms and respondents under study. All the twelve characteristics
of firms and respondents (type of industry, age of the firm, number
502
T.K. Eltayeb et al. / Resources, Conservation and Recycling 55 (2011) 495–506
Table 2
Profile of responding firms.
Variable
Categories
Type of industry
Electrical and electronics
Chemicals
Rubber and plastics
Metals and machinery
≤15 years
>15 years
Less than 100
100–250
251–500
501–1000
More than 1000
Consumer products
Industrial products
≤10 suppliers
More than 10 suppliers
1–5 years
More than 5 years
1–5 years
More than 5 years
Domestic
Regional/Asian
Global
Malaysian fully owned
Local and Foreign joint venture
American-based company
Japanese-based company
European-based company
Other (Korean/Taiwanese)
Yes
No
Age of the firm
No. of employees
Type of products
Number of suppliers
Supplier relationship length
Customer relationship length
Source of inputs
Ownership status of the firm
Green associations participation
of employees, type of products, ownership status of the firm, participation in green-interested associations, job title, department
attached to, years of work in the firm, qualification, gender, and age
of respondents) show no significant differences between early and
late responses. Therefore, it can be concluded that non-response
bias is not an issue in this study.
4.1. Profile of sample firms and respondents
The characteristics of responding firms are presented in Table 2.
4.2. Factor analysis of green supply chain initiatives
Factor analysis was performed for all the items included in green
supply chain initiatives. The analysis starts with evaluating the
appropriateness of the data or correlation matrix for factor analysis. As outlined in the methodology chapter, for the data matrix
to be appropriate for factor analysis (factorability of the correlation
matrix), there must be sufficient number of statistically significant
correlations in the matrix as indicated by KMO measure of sampling adequacy and Bartlett’s test of spherecity. The KMO measure
should be at least 0.6 and Bartlett’s test of spherecity should be significant (p < .05) (Hair et al., 1998; Pallant, 2003). By inspecting the
values in Table 2, the KMO measure of sampling adequacy is 0.88
and the Bartlett’s test of spherecity is significant (p < .01) which
indicates that the matrix meets the assumption of factor analysis and can be factorized. The three extracted factors matched the
three conceptualized types of green supply chain initiatives; green
purchasing, eco-design, and reverse logistics. All items for green
purchasing loaded in factor 1 with loading values above the specified limit of 0.45 and cross loadings below 0.35. Similarly, the items
of eco-design and reverse logistics loaded on factors 2 and 3, respectively, with loading values above 0.45 and cross loadings below
0.35. The total variance explained by the three factors is 67.47%
which exceeded the minimum value of 0.60 recommended by Hair
et al. (1998).
Frequency
%
68
19
14
24
32
100
10
31
37
17
37
56
76
32
100
10
122
4
128
37
30
65
39
18
16
46
10
3
72
60
51.5
14.4
10.6
18.2
24.2
75.8
7.6
23.5
28.0
12.9
28.0
42.4
57.6
24.2
75.8
7.6
92.4
3.0
97.0
28.0
22.7
49.2
29.5
13.6
12.1
34.8
7.6
2.3
54.5
45.5
4.3. Factor analysis of green supply chain initiatives outcomes
The result of factor analysis for the items that measure the outcomes from green supply chain initiatives is presented in Table 3.
The table shows that the value of KMO measure of sampling adequacy is 0.896 (above the recommended level of 0.6) and Bartlett’s
test of spherecity is significant (p < .01). This indicates that conditions of factor analysis were satisfactorily met and the data matrix is
appropriate for subsequent factor analysis. The items were loaded
on four distinct factors with eigenvalues above 1. The four factors cumulatively captured 73.36% of the total variance in the data
(above the recommended level of 60%). The loading values of all
items are above the minimum value of 0.45 on one factor and below
the maximum value of 0.35 on other factors. Recalling that there
are three outcomes from green supply chain initiatives (environmental, economic and intangible outcomes), it is clear from the
inspection of the four extracted factors that two of them correspond
to two of the outcomes from green supply chain initiatives. Specifically, factor 1 captures all the items of the intangible outcomes and
factor 2 captures all the items of environmental outcomes. However, the items of economic outcomes split between factors 3 and
Table 3
Cronbach’s alpha, mean and standard deviation of major variables.
Variable
Number of
items
Cronbach’s
alpha
Mean
Standard
deviation
Green purchasing
Eco-design
Reverse logistics
Environmental outcomes
Economic outcomes
Cost reductions
Intangible outcomes
9
9
6
6
4
3
7
0.929
0.931
0.914
0.884
0.907
0.879
0.917
3.37
3.48
2.74
4.08
3.74
3.35
3.95
.74
.79
.87
.52
.60
.73
.50
Note: The predictors were measured using a 5-point Likert scale with (1, not at all;
5, very high extent). The outcomes were measured using a 5-point Likert scale with
(1, strongly disagree; 5, strongly agree).
T.K. Eltayeb et al. / Resources, Conservation and Recycling 55 (2011) 495–506
Green Supply Chain Initiatives
Green Supply Chain Outcomes
•
•
•
•
•
•
•
Eco-Design
Green Purchasing
Reverse Logistics
Environmental
Economic
Cost Reductions
Intangible
Fig. 2. Revised research framework.
4. This indicates that there is a new variable or type of outcome
emerges from the factor analysis.
By inspecting the items encompassed in the two factors, it is
clear that factor 3 captures items that reflect general economic
performance of the firm (productivity, profitability, revenue, and
market share). Therefore, this factor will retain the name of economic outcomes. However, the items for factor 4 focus specifically
on cost reductions (decrease in production, material, and packaging costs). Therefore, this factor will be given the name ‘cost
reductions’. This splitting is justifiable because economic outcomes
reflect more the overall performance of the firm while cost reductions focuses more on the operational level. Nevertheless, cost
reductions returned back as part of operational outcomes. Therefore, the revised framework and revised hypotheses are shown in
Fig. 2.
Based on the revised framework the following hypotheses are
formulated to be tested.
• H1.1: Green purchasing (GP) positively affects outcomes
H1.1a: Green purchasing positively affects environmental outcomes.
H1.1b: Green purchasing positively affects economic outcomes.
H1.1c: Green purchasing positively affects cost reductions.
H1.1d: Green purchasing positively affects intangible outcomes.
• H1.2: Eco-design (ED) positively affects outcomes
◦ H1.2a: Eco-design positively affects environmental outcomes.
◦ H1.2b: Eco-design positively affects economic outcomes.
◦ H1.2c: Eco-design positively affects cost reductions.
◦ H1.2d: Eco-design positively affects intangible outcomes.
• H1.3: Reverse logistics (RL) positively affects outcomes
◦ H1.3a: Reverse logistics positively affects environmental outcomes.
◦ H1.3b: Reverse logistics positively affects economic outcomes.
◦ H1.3c: Reverse logistics positively affects cost reductions.
◦ H1.3d: Reverse logistics positively affects intangible outcomes.
503
4.4. Reliability analysis and descriptive for the main variables of
the study
Reliability analysis is conducted in this study to ensure that the
measures of variables have internal consistency across time and
across the various items that measure the same concept or variable (Sekaran, 2003). Reliability is measured in this study using
Cronbach’s alpha coefficients. The measures are considered to have
sufficient level of reliability when Cronbach’s alpha values equal to
or greater than 0.70 (Nunnally, 1978). Table 3 provides the values of
Cronbach’s alpha for all the variables. It appears from the table that
the values of Cronbach’s alpha ranges between 0.884 and 0.931.
These values well exceed the minimum value of 0.70. Thus, it can
be concluded that the measures have acceptable level of reliability.
Taking into consideration that the scale used for green supply chain initiatives is 1–5 (with 3 is the middle point), the
table shows that the most adopted green supply chain initiative
in the Malaysian industry is eco-design (mean = 3.48, standard
deviation = 0.79), followed by green purchasing (mean = 3.37, standard deviation = 0.74), and the lowest adopted green supply
chain initiative is reverse logistics (mean = 2.74, standard deviation = 0.87). This means that, on average, the Malaysian firms
adopted high eco-design and green purchasing, and low reverse
logistics. From Table 3 we can also conclude that environmental outcomes value is the highest among the four values
(mean = 4.08, standard deviation = 0.52) and closely followed by
intangible outcomes (mean = 3.95, standard deviation = 0.50), economic outcomes (mean = 3.74, standard deviation = 0.60), and lastly
cost reductions (mean = 3.35, standard deviation = 0.73). The result
indicate that, on average, during the last three years the sampled
Malaysian firms experienced high level of increase in environmental and intangible outcomes, above average increase in economic
outcomes, and moderate cost reductions.
4.5. The effects of green supply chain initiatives on outcomes
Hypothesis two predicts that green supply chain initiatives
(green purchasing, eco-design, and reverse logistics) positively
affect the four categories of outcomes (environmental outcomes,
economic outcomes, cost reductions, and intangible outcomes).
In step one, the analysis tests the effect of control variables on
dependent variable. In step two, the independent or predictor
variables were introduced to test their marginal effect on the
dependent variable. Table 4 shows the result of the two step
Table 4
Multiple regressions: effects of control variables and green supply chain initiatives on outcomes.
Variables
Control variables
Type of industry
Number of employees
Firm ownership
Number of suppliers
Participation in green associations
Model variables
Green purchasing
Eco-design
Reverse logistics
F value
R2
Adjusted R2
R2 change
F change
*
**
p < 0.05.
p < 0.
Environmental outcomes
Economic outcomes
Cost reductions
Step 1
Std. Beta
Step 2
Std. Beta
Step 1
Std. Beta
Step 2
Std. Beta
Step 1
Std. Beta
Step 2
Std. Beta
Step 1
Std. Beta
Step 2
Std. Beta
−0.049
0.096
−0.053
−0.031
0.156
−0.147
0.052
−0.230
−0.118
−0.017
0.038
0.123
−0.134
0.026
0.290**
−0.038
0.114
−0.192
−0.009
0.205*
0.065
0.013
0.004
−0.010
0.244**
−0.003
0.032
−0.116
−0.040
0.130
0.021
−0.089
0.041
0.045
0.261**
−0.080
−0.109
−0.062
−0.013
0.132
0.954
0.039
−0.002
0.039
0.954
0.033
0.656**
−0.102
7.021**
0.332
0.285
0.293
16.495**
2.934*
0.112
0.074
0.112
2.934*
−0.120
.353**
−0.026
3.189**
0.184
0.126
0.072
3.320*
1.554
0.063
0.022
0.063
1.554
Intangible outcomes
0.017
0.319**
0.195*
3.089**
0.179
0.121
0.117
5.356**
1.847
0.074
0.034
0.074
1.847
−0.111
0.526**
−0.060
4.333**
0.235
0.181
0.161
7.925**
504
T.K. Eltayeb et al. / Resources, Conservation and Recycling 55 (2011) 495–506
regression analysis for testing the effect of control variables and
green supply chain initiatives on environmental outcomes. In
step one, none of the control variables have significant effect
and the variables explain only 4% of variance in the dependent
variables. After adding the three types of green supply chain initiatives, R square increased by 29%, and the model as a whole
becomes significant (F = 7.02, < 0.01). Of the three types of green
supply chain initiatives, only eco-design shows significant effect
on environmental outcomes (ˇ = .66, < 0.01). Thus, hypothesis
H1.2a (eco-design positively affects environmental outcomes) was
supported.
The result of regression analysis of control variables and green
supply chain initiatives on environmental outcomes indicate that
only participation in the association s show significant influence
on economic outcomes and the control variables together explain
11% of variance in the dependent variable. In step two, the addition of green supply chain initiatives explains additional 7% of the
variance. Of the three types of green supply chain initiatives, only
eco-design shows significant effect on economic outcomes (ˇ = .35,
< 0.01). Therefore, hypothesis H1.2b (eco-design positively affects
economic outcomes) was supported.
The regression analysis for testing the effect of green supply
chain initiatives on cost reductions show that participation in green
associations reveals significant effect on cost reductions. However,
the model is not significant and the control variables together
explain only 6% of variation in cost reduction. After the addition
of green supply chain initiatives, R square increased by 12% and
the model became significant (F = 5.36, < 0.01). Two variables
show significant show significant positive effect on cost reductions;
eco-design (ˇ = .32, < 0.01) and reverse logistics (ˇ = .19, < 0.05)
while the effect of green purchasing is not significant. These results
give support to hypotheses H1.2c (eco-design positively affects
cost reductions) and H1.3c (reverse logistics positively affects cost
reductions).
The regression analysis for testing the effect of green supply
chain initiatives on intangible outcomes show that only participation in green associations has a significant effect on the dependent
variable in step one. However, the control variables together
explain only 7% of variance in the dependent variable and the model
as a whole is not significant. In the second step, the addition of
green supply chain initiatives adds additional 16% and the model
becomes significant. Investigating the effect of three types of green
supply chain initiatives on intangible outcomes reveals that only
eco-design has significant effect on intangible outcomes (ˇ = .53,
< 0.01). Therefore, hypothesis H1.2d (eco-design positively affects
intangible outcomes) was supported.
5. Discussions
The results of this study, and the previous studies, imply that
externally-oriented green supply chain initiatives, such as green
purchasing and reverse logistics, have little effect on the internal performance of the firm. This may indicate that the benefits
of these initiatives may reflect on external parties rather than
on the firm. For instance, in green purchasing the firm focuses
on improving environmental performance of its suppliers. While
the benefit of such initiative may reflect indirectly on the firm,
through obtaining green materials and other inputs, the direct
effect goes to suppliers. This view is supported by Carter (2005) who
found no direct relationship between purchasing social responsibility (PSR) and cost reductions, however, he found that supplier
performance mediate the relationship between PSR and cost reductions, his study indicates the direct benefit of green purchasing
reflects first on suppliers before it is reflected in firm performance.
The above explanation is evidenced further by the strong rela-
tionship, found in this study, between eco-design and the four
types of outcome. Eco-design is an internally-focused type of
green supply chain initiatives. This means that the firm tries to
improve environmental attributes of its products internally, with
little cooperation or interaction with external parties such as suppliers and customers. Therefore, the impact of such improvement
can be directly linked to the internal performance of the firm.
This is evidenced also by Sarkis et al. (2007) who found significant effect of internal environmental management on economic
performance and no effect of the externally oriented green supply
chain initiatives (green purchasing and customer cooperation) on
economic performance.
The significant effect of reverse logistics on cost reductions,
found in this study, give indication that gaining economic benefits is the main purpose of performing reverse logistics in the
Malaysian firms. This is evidenced also by the significant relationship found in this study between expected business benefits and
reverse logistics. This means that the adoption of reverse logistics
is reflected directly in reduction of costs of materials and packaging
because the firm uses recycled or reused materials instead of virgin
ones. However, the insignificant effect of reverse logistics on economic outcomes indicates that cost savings from reverse logistics
are small in amounts, so, they are not reflected in ‘macro’ indicators
of firm’s economic performance such as profitability and productivity. This is supported by Clift (2003) who showed that the high
costs associated with product recovery and recycle make returned
products and components economically uncompetitive compared
with the ‘new’ ones. This study investigated the effect of green
supply chain initiatives on intangible outcomes as a newly investigated relationship that is rarely found in the previous literature.
Although the results of the study showed that only eco-design have
significant effect on intangible outcomes, the results gives indication that intangible outcomes are distinguished types of outcomes
that result from green supply chain initiatives. The results indicated
that firms that performed eco-design realized significant intangible outcomes, in terms of improved company image and customer
satisfaction and loyalty.
5.1. Limitations and recommendations
Future studies can investigate the effect of green supply chain
initiatives on other measures of outcomes. The insignificant effects
of green purchasing and reverse logistics on the outcomes suggest
that the benefits of these initiatives are realized by external parties,
such as suppliers and customers, rather than the focal firm. Therefore, future studies may consider utilizing inter-organizational
measures of outcomes such as dyadic measures rather than measuring the outcomes only from internal perspective. Furthermore,
future studies may investigate the effect of green supply chain initiatives on other kinds of outcomes such as operational outcomes.
Although one kind of operational performance is covered in this
study (cost reductions) other kinds, such as quality, flexibility, and
delivery may need to be investigated.
5.2. Conclusion
Some green supply chain initiatives were found in this study
to have direct impact on firm’s performance outcomes. This signifies that green supply chain initiatives can be of value to the
organizations as well as to the external environment. Through
designing environmentally friendly products and taking back products and packaging, business organizations can generate benefits to
the environment, in the form of reduced waste and better resource
utilization, in addition to economic benefits and cost reductions
to the organizations. Therefore, green supply chain initiatives can
play significant role in achieving the “triple bottom line” of social,
T.K. Eltayeb et al. / Resources, Conservation and Recycling 55 (2011) 495–506
environmental, and economic benefits and, therefore, contributing
to sustainable development of the society.
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