Role of Normative Pressures to Adopt Green Supply Chain Management Practices and Their Impact on Environmental and Economic Performance

Abstract

Businesses around the globe are facing tremendous pressures to improve their manufacturing practices to minimize their harmful effects on the environment. These pressures are being exerted from different stakeholders but in developing countries mostly there are powerful suppliers and customers, which can change the choices of decision makers in the local industry. According to institutional theory these pressures combined are called normative pressures. By using path modeling this study attempted to find out the role of normative pressures to adopt green supply chain management (GSCM) practices and the impact of those adopted practices on environmental and economic performance of those companies through partial least square (PLS) structural equation modeling (SEM). Data was collected from 134 manufacturing companies in Pakistan through a questionnaire. Path analysis results confirmed that normative pressures have positive and significant impact on adopting the GSCM practices and subsequently these practices improve the environmental performance of the companies in Pakistan. Results also confirmed many existing studies that GSCM practices directly do not improve economic performance but environmental performance does have a significant positive effect on the economic performance Key words:Normative pressures; Green supply chain management practices; Environmental performance; Economic performance; Pakistan Resumo: Empresas em todo o mundo estão enfrentando enormes pressões para melhorar suas práticas de fabricação para minimizar seus efeitos nocivos sobre o meio ambiente. Essas pressões estão sendo exercidas por diferentes partes interessadas, mas nos países em desenvolvimento existem principalmente fornecedores e clientes poderosos, que podem mudar as escolhas dos tomadores de decisão na indústria local. Segundo a teoria institucional, essas pressões combinadas são chamadas de pressões normativas. Com a modelagem de caminhos, este estudo buscou descobrir o papel das pressões normativas na adoção de práticas de gestão da cadeia de suprimentos verdes (GSCM) e o impacto dessas práticas adotadas no desempenho ambiental e econômico dessas empresas através da modelagem de equações estruturais(SEM) utilizando minimos quadradas (PLS). Os dados foram coletados de 134 empresas de manufatura no Paquistão por meio de um questionário. Os resultados do Path Analysis confirmaram que as pressões normativas têm impacto positivo e significativo na adoção das práticas de GSCM e, posteriormente, essas práticas melhoram o desempenho ambiental das empresas no Paquistão. Os resultados também confirmaram muitos estudos existentes de que as práticas de GSCM não melhoram diretamente o desempenho econômico, mas sim o desempenho ambiental que tem um efeito positivo significativo sobre o desempenho econômico.

Institutional Pressures, Green Supply Chain Management Practices on Environmental and Economic Performance: A Two Theory View

“…This will be critical in enhancing collaboration with customers and improvement in sales. Therefore, a long-term approach will work for improved economic performance [8,19,50,61,82,88,106,108,109]. Hence, this study was also in line with the mentioned prior studies, where, in the long run, the environmental performance had a positive effect on the economic performance of manufacturing companies in Pakistan.…”

“…Zhu et al [14] also found a positive effect of normative pressures on Internal, but no impact on External. Although a study by Sancha et al [65] found no effect of normative pressures on individual practices such as green supplier coordination, some other studies have seen a significant positive effect of normative pressures on GP, CC, and IR [82,102].…”

“…The most important insight for both practitioners and academics in the field of GSCM is to find the level of improved economic performance and the tools in which to improve it. While most of the studies could not find any significant effect or found only negative results [43,82,106,107], few have also found positive results [8,76,108]. There is almost a consensus now that organizations need to consider environmental improvement as a strategic decision while accepting that short-term economic benefits are not possible.…”

“…Some studies have reported a positive impact [9,10,20,52,76,79], while certain early research has witnessed a negative impact on economic performance [14,43,61]. There is also some research that could not find any significant direct relationship [57,80,81], while others found an indirect effect on economic performance through improvement in environmental performance [14,61,82]. Most of the studies do commit that, at the start, due to heavy capital investments, it might show negative impacts but that, in the longer run, green practices either directly or indirectly generate economic benefits to the manufacturer [80,83].…”

Pathways towards Green Banking adoption: moderating role of top management commitment

“…Community pressure is a type of normative pressure that can impact an organizational environmental strategy either directly or indirectly. The adoption of green management practices can positively influence an organization's relationship with the community (Saeed et al, 2018). Conformance with community expectations is one of the main sources of social legitimacy for a firm (Qi et al, 2011).…”