The impact of implementing green supply chain management practices on corporate performance

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 chain managers are required to decide on the CP dimension they want to improve and accordingly select the appropriate GSCM practices mix that leads to the desired level of improvement. Originality/value Although few earlier researches studied the impact of GSCM on CP, this study is 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 practices the firm needs to adopt to improve the targeted performance dimension.

Sustainable development and economic performance: Gaps and trends for future research

“…The results obtained indicated that the adoption of certain practices inside GSCM enables positive financial outcomes. This relationship was once again visited by Younis, Sundarakani, and Vel () who also found positive relationships between the adoption of GSCM practices and firm performance.…”

“…Other accounting variables used for financial performance were 3‐year average profit value (Younis et al, ); growth rate of sales (Tan et al, ); average month revenues (Lucato et al, ); revenue, profit, and rate trend (Oh et al, ); asset to total debt ratio (Paun, ); and weighted average cost of capital (Atan et al, ).…”

Sustainable Global Sourcing: A Systematic Literature Review and Bibliometric Analysis

“…Third, the environmental dimension of sustainable GS has a significant and positive relationship with social performance of the firm [151,152]. Lee (2016) [152] proposes that environmentally and socially responsible SCM are positively related to relationship commitment, which further positively affects each dimension of supplier performances i.e.…”

“…environmental, social and operational performance. Younis et al (2016) [151] indicate that the environmental practice exerts a positive influence on social performance. Specifically, green purchasing plays a role in improving the economic performance, while reverse logistics practices are found to impact the social performance (i.e., improved corporate image, social commitment, preserve the environment and enhanced employee job satisfaction) of the firm positively (ibid).…”

“…First, several studies in this cluster propose that there is a positive relationship between environmental sustainability programs or green purchasing activities and firms' economic performance in terms of both financial and operational performance [83,115,[149][150][151].…”