Assignment 1

Strategic orientations, sustainable supply chain

initiatives, and reverse logistics Empirical evidence from an emerging market

Chin-Chun Hsu and Keah-Choon Tan Lee Business School, University of Nevada, Las Vegas, Nevada, USA, and

Suhaiza Hanim Mohamad Zailani University of Malaya, Kuala Lumpur, Malaysia

Abstract Purpose – Global outsourcing shifts manufacturing jobs to emerging countries, which provides new opportunities for improving their economic development. The authors develop and test a theoretical model to predict first, how sustainable supply chain initiatives might influence reverse logistics outcomes and second, the impact of eco-reputation and eco-innovation orientation strategies on the deployment of sustainable supply chain initiatives. The paper aims to discuss these issues. Design/methodology/approach – The proposed new model of antecedents and outcomes of sustainable supply chain initiatives underwent a rigorous empirical test through structural equation modeling with samples from an emerging market. Findings – The results show that firms that implement sustainable supply chain initiatives can realize positive reverse logistics outcomes; the study also provides new insights into eco-innovation and eco-reputation strategic orientations as theoretically important antecedents of sustainable supply chain initiatives. Research limitations/implications – Though the authors identify three components of sustainable supply chain initiatives, other components could exist, and ongoing research should investigate them. Practical implications – The findings have important implications for managers in emerging markets seeking to initiate ecologically friendly business practices. The authors offer strong evidence of the benefits obtained from reverse logistics in sustainable supply chain initiatives. Policy makers and firms attempting to nurture sustainable supply chain initiatives should not overlook the important role of eco-reputation and eco-innovation strategic orientations, which the results identify as important enablers. Originality/value – This study offers evidence of the critical role of eco-reputation and eco-innovation strategic orientations in deploying sustainable supply chain initiative programs, as well as of their mutual effects. This study also offers empirical evidence that implementing sustainable supply chain initiatives leads to reverse logistics, creating value, and a new source of competitive advantages. Keywords Eco-innovation, Emerging market, Strategic orientation, Eco-reputation, Reverse logistics, Sustainable supply chain initiatives

Paper type Research paper

1. Introduction Outsourcing trends since the early 1990s have transformed emerging countries into significant players in the global economy. Global outsourcing thus has reshaped global supply chain systems in significant ways, such that the globalized manufacturing network has shifted manufacturing jobs to emerging countries, which providing new opportunities for improving the economic development of emerging markets. But a globalized manufacturing network also poses significant risks to individual health and safety, national economies, and local, regional, and global environments

International Journal of Operations & Production Management Vol. 36 No. 1, 2016 pp. 86-110 ©EmeraldGroup Publishing Limited 0144-3577 DOI 10.1108/IJOPM-06-2014-0252

Received 20 July 2014 Revised 10 December 2014 29 January 2015 24 February 2015 Accepted 26 February 2015

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/0144-3577.htm

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(O’Rourke, 2005). Thus the question of whether manufacturing firms in emerging countries can manage their profit growth and environmental sustainability goals effectively has important implications at both national and global levels.

Sustainable business practices can help create wealth for firms and raise the standard of living in emerging markets; unsustainable economic activities lead to environmental degradation that can threaten an emerging country’s long-term prosperity and economic competiveness (Schmidheiny, 1992). Firms in emerging countries might adapt ecologically friendly strategies and guidelines from their business clients or competitors in more advanced economies, though rapid business development and continuous environmental deterioration also have increased the emphasis on environmental sustainability. In particular, environmental concerns have prompted the governments of some emerging economies to regulate business practices and set broad environmental improvement objectives (Child and Tsai, 2005). On the flip side, profit pressures and weak ecological traditions can decrease firms’ incentives to address the broader range of stakeholder interests associated with sustainable practices.

In this context, we note three pertinent knowledge gaps. First, many studies have focussed on green business approaches in advanced economies, but much less research has addressed the antecedents or outcomes of ecologically friendly business practices in emerging markets (Blome et al., 2014; Fabbe-Costes et al., 2014). Second, despite the ongoing debate about the potential outcomes of ecologically friendly supply chain activities (Prajogo et al., 2014), the benefits or outcomes of sustainable supply chain initiatives are poorly understood (Roehrich et al., 2014), though outcome measures are essential for managing and navigating competitive global markets. In a related sense, surprisingly few empirical studies examine the impacts on reverse logistics (Aitken and Harrison, 2013), despite their promise for creating new value and providing competitive advantages ( Jayaraman and Luo, 2007). Third, even when ecologically friendly supply chain commitments make sense, managers lack guidelines for how to start greening their firms’ supply chain efforts. A few prior studies identify external “enablers,” derived from institutional or stakeholder theory (Zailani et al., 2012), but relatively few cite strategically relevant factors. That is, research into sustainable supply chain initiatives tends to pertain to organizational capabilities, not the strategic orientation antecedents that precede the adoption of sustainable supply chain initiatives. By focussing on sustainability practices, definitions, and decision frameworks, these studies ignore the need for insights into how to develop sustainability strategies from an organizational perspective (Zhu and Sarkis, 2007). The fragmented, incomplete knowledge in this area thus fails to address adequately which key strategic orientation forces will drive sustainable supply chain initiatives.

In attempting to fill these knowledge gaps, this study makes three primary contributions. First, we study emerging economies. Some manufacturing firms identify and target segments of ecologically conscious buyers, in an effort to position themselves as favorable green suppliers, but most companies refuse to abandon their existing operations and production processes, regardless of the growing interest in sustainability (Größler et al., 2013). Thus, manufacturing firms in emerging countries must find ways to execute existing supply chain strategies through sustainable initiatives that implement more ecologically friendly programs than appeared in their past supply chain efforts. In particular, we study Malaysia, which is a member of Association of Southeastern Asian Nations and an integral part of the global economy; Malaysian suppliers have critical roles in global supply chains. The country represents an important manufacturing hub for global firms that seek to outsource the manufacture of

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component parts. The United Nations Conference on Trade and Development (UNCTAD) reports that foreign direct investment (FDI) inflows to Malaysia increased from US$9.1 billion in 2010 to US$11.9 billion in 2011, an increase of 30.8 percent (World Investment Report, 2013), which also raised Malaysia’s rank to 13 from 16 in the list of Top Prospective Host Economies for 2013-2015 (World Investment Report, 2013). Thus, the UNCTAD report affirms Malaysia’s attractiveness as a FDI destination. In this emerging economy, sustainable development remains at an early stage, whereas profit maximization is the priority for most manufacturing firms.

Second, we examine the reverse logistic effects of ecologically friendly purchasing, manufacturing, and packaging programs (De Leeuw et al., 2013; Hsu et al., 2013). Sustainable supply chain initiatives can deliver reverse logistic benefits; our empirical evidence even shows that firms can create competitive advantages for new value creation (Chavez et al., 2013). Reverse logistics refers to returns of products or packaging, after their use, for reuse, recycling, or reclamation of materials (Kapetanopoulou and Tagaras, 2011). By engaging in reverse logistics, firms can recycle remanufactured parts or components, as well as dispose properly of those components that cannot undergo remanufacturing or recycling (Lo, 2014). In turn, they constitute a substantial cost-driving area and may result in greater profitability and customer satisfaction, as well as benefitting the environment (Hsu et al., 2013).

Third, this study considers specific strategic orientation drivers that engender success in sustainable supply chain initiatives. Specifically, we identify and empirically examine two new strategic orientation factors that have been overlooked: eco-reputation and eco-innovation, both of which integrate environmental concerns into the firm’s business strategies. This study thus offers evidence of the critical role of eco-reputation and eco-innovation strategic orientations in deploying sustainable supply chain initiative programs, as well as of their mutual effects. Both antecedents may be important for understanding how firms respond to ecological challenges and derive sustainable supply chain initiatives, but neither has been the subject of prior research. We show that firms wishing to sustain their firm’s supply chain initiatives should develop their eco-reputation and eco-innovation strategic orientations first.

In the next section, we present a theoretical framework for the strategic orientation antecedents and reverse logistics outcomes of sustainable supply chain initiatives. Our research hypotheses reflect input from a wide array of literature. We discuss the research methodology and the results of the data analyses. Finally, this paper concludes by delineating the findings, their managerial implications, and limitations.

2. Literature review 2.1 Strategic orientations Strategic orientation originally stemmed from the market orientation notion, which was a popular means to measure firm performance. According to Manu and Sriram (1996, p. 79), strategic orientation refers to “how an organization uses strategy to adapt and/or change aspects of its environment for a more favorable alignment.” Extended versions focus on customer or technology orientations, and Narver and Slater (1990) argue that strategic orientation is an critical component of profitability for both manufacturing and service businesses, such that an orientation influences business decisions through its effects on business profitability (Schniederjans and Cao, 2009).

According to strategic choice theory (Child, 1972), strategic decisions also have a determining role in a firm’s business survival, and the fundamental issue is the strategic orientation, with a foundational assumption that firms can enact and actively shape their

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environments. Strategic choice theory centers on decision making in organizations designed to achieve well-defined goals. Thus, managerial discretion, interpretation, and perspective have great influence in strategic decision making, over the span of shared organizational actions. To achieve organizational effectiveness, firms must make appropriate strategic choices that “represent the competitive strategy implemented by a firm to create continuing performance improvements” (Morgan and Strong, 1998, p. 1055). Ultimately a strategic orientation is a firm’s overall direction and objectives, oriented toward an external business environment and driven by top management (Voss and Voss, 2000). Strategic choice theory focusses on managers’ strategic choices when their firms face external challenges (Child, 1972). If they have a strategic orientation, firms choose to leverage their strategy to adapt or change aspects of their external environment to ensure more favorable alignment. It also helps explain why firms take proactive and committed actions to address urgent issues such as sustainability.

Firms do not interact with their operating environments in identical ways. For example, in the same industry, some firms focus on a narrow, limited, product-market domains, in an effort to protect their market share. Others search continuously for new market opportunities through innovation and new product development. Responses to the operating environment reflect firms’ strategic orientations; strategic orientations largely their choices, establish their strategic positioning, affect their performance, involve multiple functions, are highly complex and ambiguous, and demand substantial resource commitments. In addition, a strategic orientation choice refers to the process of choosing one course of action rather than another. Thus a strategic orientation offers a means to comprehend the actions that firms take to enhance their profitability and competitive advantage. This pattern of past, or intended, decisions guides a firm’s ongoing alignment with its external environment and shapes strategic policies and procedures (Hill and Cuthbertson, 2011; Minarro-Viseras et al., 2005).

From a sustainable supply chain perspective, firms’ strategic orientations are critical, because sustainable business practices demand substantial firm resources and are technically complex, such that they require diverse skills contributed by technical experts, organizational experts, and top management (Saeed et al., 2014). From a strategic choice theory perspective, Sharma (2000) examines how firms use freedom of choice (discretion, interpretation, and perspective) to create strategies that influence firms’ orientation toward adopting sustainability initiatives. Ketchen and Hult (2011) cite strategic choice theory as appropriate for studying strategic supply chain management. With its focus on the best value, strategic choice theory seeks to identify supply chain models that can affect organizational outcomes and enact the environment. Strategic choice theory centers on the intra-organizational level and the provision of certain strategic capabilities (Ketchen and Hult, 2011). It also seeks to answers questions and challenges in extant supply chain management research. Finally, a strategic orientation toward sustainable business practices is influenced by various external agents, including suppliers, governments, regulatory organizations, green social groups, and rapidly changing technology (Shrivastava and Grant, 1985).

We examine two particular ecological strategic orientations: eco-reputation and eco-innovation. An eco-reputation is a stakeholder’s overall perception of a company’s efforts on environmental protection over time. This evaluation reflects each stakeholder’s experience of the ecological commitment of the company, as well as images based on the company’s actions, beyond simple compliance with government regulations (e.g. Chen, 2010). This definition is consistent with Banerjee (2001), Banerjee et al. (2003) and Esty and Winston (2009). Eco-innovation instead refers to the

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development of products and processes that explicitly account for concerns about the natural environment in pursuit of the goal of sustainable development and ecological improvements (e.g. Menon et al., 1999). Thus eco-innovation constitutes a firm’s strategic resources, from ecologically friendly technological advances to socially acceptable innovative paths, consistent with the view that product development and process improvement can be designed and executed in ways that are less harmful to the natural environment (Fussler and James, 1996; Segarra-Oña et al., 2014).

Hong et al. (2009) define an ecological strategic orientation as a firm’s long-term commitment to producing environmentally sound products and services by implementing environmental improvement goals. Environmentally sound products can promote a firm’s overall economic performance, through internal integration and external coordination with both major stakeholders, such as customers and suppliers. Moreover, to ensure a sustainable orientation for the supply chain, the firm must maintain its successful past practices while promoting and encouraging the implementation of consistent environmental innovative initiatives that reinforce its long-term sustainability (Hong et al., 2009; Awaysheh and Klassen, 2010). The adoption of sustainable supply chain initiatives depends on the firm’s strategic orientation (Baines et al., 2005). An ecological strategic orientation, such as eco-reputation or eco-innovation, influences strategic choices, such that each ecological strategic orientation can influence the impact of the firm’s decision makers on the adoption of sustainable business practices throughout the firm (Chiang et al., 2012).

2.2 Sustainable supply chain management Supply chain management encompasses “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). This definition sets the boundaries of the supply chain with the final customer. Traditional supply chains also are based on the production paradigm (Doran et al., 2007). In contrast, sustainable supply chains is an inter-disciplinary, cross-cutting issue. The 2005 world summit on social development (www.un.org/ga/59/hl60_plenarymeeting.html) identified three pillars of sustainability: economic development (profit), social development (people), and environmental protection (plant). These pillars are not mutually exclusive but can be mutually reinforcing. In the contemporary accounting framework, the triple bottom line provides the measure of business sustainability, in terms of financial, social, and environmental performance. In addition, Peter Senge, in an interview by Harvard Business Review, identifies sustainable supply chains as the core enablers of the next industrial revolution (Prokesch, 2010). The United Nations Global Compact recently launched a guide for advancing sustainability in global supply chains in four key areas: human rights, labor, environment, and anti-corruption (www.unglobalcompact.org).

With this study, we focus on the environmental perspective of sustainable supply chain practices. Specifically, firms must to partner with members throughout their supply chains to improve energy efficiency while reducing natural resource usage, waste, and adverse environmental impacts, which together lead to a stronger bottom line. Sustainable supply chains account for the environmental impacts of products and services as they flow throughout the supply chain. These environmentally friendly extensions of traditional supply chains include activities to minimize the negative environmental impacts of a product or service throughout its entire life cycle.

Sustainable supply chains deal with environmental issues in both forward and reverse versions (Rao and Holt, 2005). A sustainable forward supply chain would address

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environmental issues both upstream and downstream (Geyer and Jackson, 2004). Upstream, sustainable supply chains can have significant effects in terms of improving suppliers’ environmental performance (Sarkis, 2006). Downstream, these sustainable supply chains focus on reducing the environmental impacts of the products produced during their use and disposal. Such reductions often offer significant environmental benefits, because products generate most of their environmental emissions and waste during their use, such that these detrimental impacts may exceed those generated during the manufacturing stage. Through these outcomes, sustainable supply chains provide both economic and environmental benefits (Carter et al., 2000; Rao and Holt, 2005).

2.3 Sustainable supply chain initiatives Supply chains encompass all activities associated with the process flow for transforming raw materials into goods for end users. The process cycle begins with purchasing, including raw material purchasing activities by suppliers. Manufacturing activities follow, after which the product must be distributed to customers or retailers (Hill et al., 2012). According to sustainability literature, the potential green elements in this cycle include vendor assessments, environmental purchasing policies, green production policies, waste management, training, cross-functional integration, effective coordination between companies and suppliers, performance evaluation processes, the selection of suppliers, and leveraging relationships between suppliers and customers (Giovanni, 2012). We therefore conceptualize sustainable supply chain initiatives as those designed to accomplish the firm’s strategic supply chain functions – purchasing, manufacturing, and packaging – in ways that minimize their negative impacts on the natural environment. This conceptualization is line with prior definitions of sustainable supply chains (e.g. Hsu et al., 2013).

Green purchasing refers to an ecologically conscious purchasing initiative that aims to ensure procured materials or components meet the firm’s eco-friendly goals. The purchasing process can manifest the firm’s environmental preferences if it includes green purchasing criteria (Saghiri and Hill, 2014). Carter and Ellram (1998) argue that green purchasing also should reflect efforts to reduce, reuse, and recycle materials. Thus, purchasing decisions have significant influences on the sustainable supply chain (Yang et al., 2013) through the procurement of raw materials and components.

Green manufacturing entails the environmentally conscious production of a product, with the goal of minimizing its negative environmental impacts throughout its entire life cycle, as well as promoting positive ecological business operation practices, such as recycling and reusing products (Dam and Petkova, 2014). That is, green manufacturing considers environmental impacts in every stage of the product lifecycle (Giovanni, 2012), in an effort to minimize the environmental impacts of manufacturing processes, generate minimum waste, and reduce environmental pollution. Pursuing green manufacturing also helps firms lower their raw material costs, gain production efficiency, reduce environmental and occupational safety expenses, and improve their corporate image (Zhu and Sarkis, 2007). Thus, green manufacturing helps firms achieve profit growth and increase their market share.

Finally, green packaging is environmentally conscious packaging of a product, to minimize the associated negative environmental impacts. Packaging contributes directly to product success in supply chains, because it can enable the efficient distribution of products, as well as lower environmental impacts due to spoilage or waste. Increased attention to global climate change has made green packaging a primary focus area, to reduce waste and improve air quality, because different packaging characteristics

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(e.g. size, shape, materials) have different impacts. Hsu et al. (2013) indicate that green packaging includes considerations of cost (materials and shipping), performance (adequate protection of the product), convenience (easy to use), compliance (with legal requirements), and environmental impact (Liu et al., 2013; Lin et al., 2013).

2.4 Reverse logistics and competitive advantage Dowlatshahi (2000) define reverse logistics as activities by which a producer retrieves products and components to recycle, rebuild, or dispose of them properly. Reverse logistics also might refer to the actual process of return or take-back, after the consumer has used the product or packaging, to reuse, recycle, or reclaim materials, or else provide safe refills (Carter and Ellram, 1998). Using reverse logistics as a supply chain performance measure suggests how companies can obtain competitive advantages by quantifying the efficiency and effectiveness of their actions (Lehtinen and Ahola, 2010). Thus reverse logistics differentiate a firm, leading to a market advantage and opportunities to build competitive advantages.

Specifically, reverse logistics create tangible and intangible value by helping firms first, extract value from used/returned goods instead of wasting manpower, time, and to procure more raw materials, second, create additional value through increasing product life cycles, third, improve customer satisfaction and loyalty by paying more attention to faulty goods and merchandise repairs, and fourth, obtain feedback to suggest improvements and enhance understanding of the real reasons for product returns, which should lead to future product improvements or new product designs (Aitken and Harrison, 2013). Through reverse logistics, manufacturing firms not only receive products back from the consumer but also collect unsold merchandise for the manufacturer to take apart, sort, reassemble, or recycle (Yu et al., 2012). Alternatively, the returned product might be re-sold in secondary channels and thus generate revenue (Aitken and Harrison, 2013). Reverse logistics also might enhance customer loyalty, because customers respond positively to environmentally responsible actions by the firm, so goodwill generated by reverse logistics could be a source of firm competitiveness.

3. Hypotheses development We depict the key study constructs in Figure 1. The two strategic orientation antecedents, eco-innovation, and eco-reputation, precede sustainable supply chain initiatives. Sustainable supply chain initiatives then relate to the firm’s reverse logistics.

3.1 Relationship of eco-reputation and eco-innovation strategic orientations According to strategic orientation literature and strategic choice theory, a firm’s strategic orientations are critical, because they involve the commitment of a large amount of firm resources (De Toni and Tonchia, 2003). They also tend to be technically complex, demanding diverse skills gathered from technical experts, organizational experts, and top management. Furthermore, strategic orientations depend on external agents, such as suppliers, organized labor unions, and rapidly changing technology (Shrivastava and Grant, 1985). Strategic orientation choice involves a process of choosing a particular course of action, which helps explicate the actions that firms take to achieve enhanced profitability and competitive advantage. Because a strategic orientation is a pattern of past or intended decisions, guiding the firm’s ongoing alignment with its external environment and shaping internal

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procedures and policies, a firm may apply multiple orientation decisions at the same time to fulfill its strategic goals.

Testa and Iraldo (2010) introduce two strategic orientations that favor the adoption of green supply chain management practices by firms. We consider an eco-reputation strategic orientation, a strategy designed to make all stakeholders (customers, suppliers, society) aware of the firm’s efforts to implement eco-friendly systems and thus enhance its corporate image. We also note an eco-innovation strategic orientation, a strategy that guides companies to develop innovative products and operational processes that can improve their environmental performance. Companies that are frontrunners in developing eco-friendly product and process innovations have an opportunity to strengthen their leadership and differentiate themselves more from their competitors.

An organization’s ecologically friendly strategic orientation thus comprises all positioning strategies associated with a particular issue, such that greater integration

Strategic Orientations (SO)

Eco-reputation SO

Eco-innovation SO

Sustainable Supply Chain (SC)

Upstream SC

Green Purchasing

Downstream SC

Green Manufacturing Green Packaging

Outcome

Reverse SC

Reverse Logistics

Strategic Choice Theory • Firms have freedom of choice when formulating and implementing strategies. • Strategic orientation focusses on firms’ strategic choices when facing external challenges. • Strategic choice theory centers on the intra-organizational level and the provision of certain strategic capabilities. • Firms use freedom of choice to influence firms’ orientation toward adopting sustainability initiatives. • Ecological strategic orientation can influence the adoption of sustainable business practices.

Sustainable SCM Literature • Sustainable SCs account for the environmental impacts of products /services as they flow throughout the SC. • Using reverse logistics as a SC business/environment performance measure. • Reverse logistics create tangible and intangible value. • Firms obtain competitive advantages by quantifying the efficiency/effectiveness of their SC actions.

Strategic Orientations Sustainable Supply

Chain Initiatives Outcome

Eco-Reputation Strategic Orientation

(ERSO)

Eco-Innovation Strategic Orientation

(EISO)

Green Manufacturing (GM)

Green Packaging (GK)

Green Purchasing (GP)

Reverse Logistics (RL)

H2a

H2b

H2c

H1

H3a

H3b

H3c

H4a

H4b

H4c Figure 1.

Research model and hypotheses

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and formulation of positioning strategies should enable them to influence the firm’s sustainable business practices. That is, eco-reputation and eco-innovation strategic orientations should be mutually interdependent:

H1. An eco-reputation strategic orientation correlates positively with an eco-innovation strategic orientation.

3.2 Eco-reputation antecedents of supply chain initiatives Organizations may adopt sustainable business practices in response to the expectations of stakeholders. For example, such efforts appeal to consumers as they become increasingly aware of the need to protect the environment, such that they might expand the product’s unique selling points and boost corporate reputation. An eco-reputation strategic orientation also provides a buffer against short-term performance demands, such that managers can take a longer-term view and experiment with new strategies to enhance the firm’s reputation (Zhu and Sarkis, 2007). Ecologically friendly investments are significant expenditures with long return terms, so firms with an eco-reputation strategic orientation should be better able to make such investments (Fabbe-Costes et al., 2014; Hoejmose et al., 2013).

Toyota enjoys a strong eco-reputation, considering its top position on the Global 50 Green Brands List (Interbrand, 2013). As an auto manufacturer, Toyota regards its eco-reputation as its most important strategic resource; it has made large strides in reducing energy consumption, water use, waste, and toxic emissions (Chan et al., 2012). Toyota also successfully shares its eco-reputation strategic orientation with its suppliers; by working with them, Toyota exploits eco-reputation to not only create a positive image among consumers but also make profit from them, as evidenced by the economic success of its hybrid-electric Prius and its collaboration to produce the all-electric Tesla. Half of all Americans consider the ecological impacts of the products and services they buy (Leiserowitz et al., 2013), and a firm’s eco-reputation represents an important criterion for purchasing decisions. Many global firms therefore strategize to develop and maintain environmental reputations. For example, 3M launched an ecologically friendly version of its post-it notes made from recycled paper and started packaging large post-it packs in recyclable cartons instead of plastic wrap.

An eco-reputation strategic orientation grants managers the ability to invest capital to sustain their supply chain programs and wait to reap longer-term reputation benefits from their deployment (Huq et al., 2014). Eco-reputation is not an optional or low priority strategic orientation; it becomes the key to a company’s image. Therefore, this strategic orientation not some nice-to-have “add-on” but rather a core business philosophy that weaves throughout the company and radiates outward throughout the entire supply chain and its activities ( Jerónimo et al., 2013). We posit:

H2. An eco-reputation strategic orientation has a positive effect on a firm’s deployment of (a) green purchasing; (b) green manufacturing; and (c) green packaging.

3.3 Eco-innovation antecedent of supply chain initiatives According to Teece (2007), eco-innovation is the firm’s ability to integrate, establish, and reconfigure external and internal, environmentally friendly capabilities. Specifically, eco-innovation requires the development of new value through more efficient and effective environmentally friendly products, services, and processes. Product eco-innovation focusses on the creation of new products or improvement of existing products to meet environmental concerns; process eco-innovation focusses on

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the creation and implementation of innovative or substantially improved production or delivery methods (Blome et al., 2014).

Many global enterprises and governments use the term eco-innovation to emphasize the contributions of business to sustainable development while also improving competitiveness. For example, the European Commission launched the eco-innovation action plan (EcoAP) in 2011 to promote eco-innovation development across Europe. The EcoAP is a significant milestone, moving the European Union beyond ecologically friendly technologies and further fostering a comprehensive range of eco-innovative business activities. The long-term objective will focus on initiating and maintaining stronger, broader eco-innovation awareness across, and beyond European Union.

In a supply chain context, an eco-innovation strategic orientation guides firms to develop products and improve processes using product life-cycle viewpoints, as well as apply stricter environmental requirements for suppliers. Such a strategy requires environmental competencies and integrates relevant ecological activities, such as purchasing, manufacturing, and packaging, to improve current product and process developments (Chen and Hung, 2014). Therefore an eco-innovation strategy motivates firms to commit extra resources and cultivate innovative capabilities to build supply chain sustainability. To reach this goal, firms must develop innovative technologies that reflect the industry-specific characteristics and nature of the business, which likely differ from current practices, to improve their environmental performance (Saeed et al., 2014; Hoejmose, et al., 2013). Therefore, we posit:

H3. An eco-innovation strategic orientation has a positive effect on a firm’s deployment of (a) green purchasing; (b) green manufacturing; and (c) green packaging.

3.4 Reverse logistics outcomes Manufacturing companies have become increasingly responsible for collecting, dismantling, and upgrading used products and packaging materials (Zhu et al., 2012). Reverse logistics is inherently green and ecologically friendly, because repairing, refurbishing, or recycling a product instead of throwing it in a landfill protects the environment. Through reverse logistics, returned goods can be put back into inventory again, re-sold at liquidation centers, or broken down to component parts for sale (Aitken and Harrison, 2013) – all steps that can cut costs, increase profits, reduce negative impacts on the environment, minimize liabilities, and improve customer relationship (Chavez et al., 2013). Resource commitments to reverse logistics thus should be a priority (Zailani et al., 2012), because of their potential for enhancing performance through new value creation and offering strategic means to develop lasting linkages with customers and positive firm images. These reverse flows differ from standard, outbound operations and need special handling, likely requiring additional resource allocations throughout the product lifecycle. Allocating sufficient resources to support sustainable supply chain initiatives constitutes one of the principle antecedents of strong reverse logistics programs. Reverse logistics also depend heavily on reversing the sustainable supply chain, to enable firms to identify and categorize returned products, components, and packaging materials correctly for disposition, whether used or unused.

Reverse logistics is a continuous, embedded process, not just a one-time occurrence, such that it entails a built-in process (De Brito and Dekker, 2004). By affecting many components of the manufacturing process, reverse logistics expands the responsibilities of the supply chain. Therefore, reverse logistics demands a thorough reexamination of product life cycles to determine the amount of energy or waste

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consumed and generated by each product in every stage. The successful implementation of reverse logistics requires a comprehensive review of operational processes at every level of the company – from raw material procurement to packaging (Meade and Sarkis, 2002; Murphy and Poist, 2003).

Accordingly, firms need to implement at least the following strategies into each supply chain activity to make their reverse logistics work:

(1) Green purchasing: the procurement of environmentally friendly materials alters purchasing requirements and expands the related criteria (Min and Galle, 2001). green purchasing promotes recycling and the reclamation of purchased materials, which creates value if used or unwanted products can be recollected. However, non-returnable products often are less expensive to produce, and virgin materials tend to be priced equal to or lower than recycled materials (Walton et al., 1998).

(2) Green manufacturing: research and development can design specifications for environmentally friendly products, and firms can reengineer their manufacturing and production processes to rely on the addition of recyclable materials as part of the process. Green manufacturing considers environmental impacts throughout the product lifecycle, including the sale of used, unsold, or returned products in secondary markets (Van Hoek, 1999).

(3) Green packaging: examining current packaging can reveal possible changes and the potential of gathering leftover packaging or using less packaging (González-Torre et al., 2004). Green packaging addresses all packaging issues, including size, shape, and materials. Because reverse logistics entails a process of continuously taking back products or packaging materials to avoid environmental damages, it entails not just the use of recycled or recyclable materials but also the impacts of packaging on distribution arrangements, such as loading and handling efficiency and space utilization. The packaging used must be less costly, easy to handle, and environmentally friendly (Wu and Dunn, 1995). Because greener packaging can reduce reverse logistics costs, a positive relationship likely exists between the deployment of sustainable supply chain initiatives and reverse logistics.

Adding sustainability concepts for reverse logistics leads to a comprehensive framework for integrating green purchasing, green manufacturing, and green packaging (De Brito and Dekker, 2004). This model also acknowledges that modern customers prioritize sustainability factors in their strategic agendas in both production and service sectors (Murphy and Poist, 2000). Firms developing ecologically friendly reverse logistics networks can minimize the cost of returns, focus on designing recyclable packaging and pallets, reduce unnecessary deliveries, and exploit green materials for product design (Rogers and Tibben‐Lembke, 2001). Therefore, we hypothesize:

H4. A firm’s reverse logistic outcomes are positively associated with the deployment of (a) green purchasing; (b) green manufacturing; and (c) green packaging.

4. Methods 4.1 Sample We conducted survey in Malaysia among all EMS ISO 14001 – certified firms. By selecting firms with this certification, we ensure that the respondents have embarked, at least to some extent, on the adoption of sustainable supply chain initiatives. Of the

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2,255 manufacturing firms in Malaysia, 342 companies had obtained ISO 14001 certification. To obtain reliable data from this limited sample, we applied census sampling methods and requested that all 342 companies participate by providing input about their practices.

4.2 Respondents We received 125 completed questionnaires, for a response rate of approximately 36.5 percent. We describe the responding firms in Table I.

4.3 Measures We used multiple indicators to measure each research construct based on relevant literature. The Appendix details the survey instrument. Eco-reputation strategic orientation is the extent to which the firm maintains its environmental reputation throughout the product lifecycle. The five measurement items came from Testa and Iraldo (2010). Eco-innovation strategic orientation is company awareness, as reflected by its adoption of new ideals and strategies in its supply chain practices. These six measurement items came from Testa and Iraldo (2010). For both eco-reputation and eco-innovation strategic orientations, respondents used five-point Likert scales (1¼ “strongly disagree,” 5¼ “strongly agree”). Green purchasing practices include raw materials and components content requirements and restrictions, content labeling or disclosure, supplier questionnaires, supplier EMS certification, and supplier compliance audits. Six measurement items were adapted from Hammer (2006). Green manufacturing entails production activities applied to the process, such that inputs have relatively low negative environmental impact, are highly efficient, and generate little pollution. Seven relevant items were adopted from Ninlawan et al. (2010) and Zhu et al. (2007). Green

Description Categories Frequency %

Ownership of firm Malaysian fully owned 26 20.8 Joint venture 99 79.2

Number of employees Less than 100 12 9.6 100-250 2 1.6 251-500 17 13.6 501-1000 20 16.0 More than 1,000 74 59.2

Age of the firm Less than 6 years 26 20.8 6-10 years 14 11.2 11-15 years 7 5.6 More than 15 years 78 62.4

Type of products Consumer products 66 52.8 Industrial products 48 38.4 Combination/others 11 8.8

Major source for key materials and components Domestic 11 8.8 Regional/Asian 20 16.0 Global 94 75.2

Number of suppliers for key materials and components Single supplier 6 4.8 2-5 suppliers 31 24.8 6-10 supplier 9 7.2 More than 10 suppliers 79 63.2

Note: n¼ 125

Table I. Respondent profile

information

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packaging includes characteristics such as size, shape, weight, and materials being used. We adapted four measurement items from Ninlawan et al. (2010). A five-point Likert scale measured the three sustainable supply chain initiatives (1¼ “not at all,” 5¼ “very high extent”). Reverse logistics is the process of retrieving products from end consumers, to capture value or ensure proper disposal. We took seven items from Ninlawan et al. (2010) and used a five-point Likert scale (1¼ “not at all,” 5¼ “very high extent”) to assess the implementation of reverse logistics in each firm.

5. Results Figure 2 depicts the measurement models and Table II provides the descriptive statistics and zero-order correlation matrix for the six latent variables. The Cronbach’s α statistics for the constructs range from 0.904 (eco-reputation) to 0.975 (green manufacturing, reverse logistics), so the scales appear sufficiently reliable. The composite reliability statistics range from 0.890 (eco-reputation) to 0.972 (green manufacturing); the minimum AVE of 0.619 (eco-reputation) also exceeds the threshold value of 0.50.

In Figure 2, the CFA results show that the large and significant standardized loadings of each measured item on its construct offer evidence of convergent validity. The AVE statistics indicate excellent convergent validity. All the correlation coefficients are significant and less than 0.5, in support of discriminant validity. A more rigorous structural equation model approach is the χ2 difference test between a constrained and unconstrained model for each pair of constructs. Table III summarizes the results of these χ2 difference tests, which confirm the discriminant validity of the six constructs. Nomological validity also is supported, according to the various model fit indices in Figure 3.

Figure 3 also shows that eco-reputation strategic orientation has a positive effect on sustainable supply chain initiative components, in support of H2. Specifically, an eco-reputation strategic orientation related strongly to the deployment of green purchasing ( β¼ 0.33, po0.05), green manufacturing ( β¼ 0.22, po0.05), and green packaging ( β¼ 0.28, po0.05). Our results also offer broad support for H3; eco-innovation strategic orientation related positively to the deployment of green purchasing ( β¼ 0.26, po0.05), green manufacturing ( β¼ 0.35, po0.05), and green packaging ( β¼ 0.42, po0.05).

The results provide strong evidence of the positive impact of reverse logistics in terms of sustaining firms’ supply chain initiatives, though these effects differ according to the individual sustainable supply chain initiative components. Specifically, in line withH4b and H4c, green manufacturing (β¼ 0.26, po0.05) and green packaging (β¼ 0.19, po0.05) initiatives positively affect firms’ reverse logistics outcomes. However, green purchasing (β¼ 0.08, pW0.05) initiatives exhibited no significant relationship with reverse logistics outcomes, so we cannot confirm H4a. These findings suggest that green manufacturing and packaging initiatives are more effective in differentiating firms’ reverse logistic outcomes than are green purchasing initiatives. Perhaps green purchased materials simply are less visible in reverse logistics than are green manufacturing and green packaging.

6. Discussion Most emerging countries have undergone rapid economic development quickly. The downside to this rapid growth is the host of environmental pollution problems that have arisen and are of serious global concern. In response, this study makes three important contributions. First, by collecting empirical data from Malaysia, a major emerging country, we demonstrate for the first time the specific effects of each

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sustainable supply chain initiative on reverse logistics in a developing economy. Second, we extend prior research on the role of performance measures in green supply chain management and uncover how reverse logistics create competitive advantages. Third, we examine two unique, previously untested drivers of green supply chain

GP

0.01

0.36

0.51

0.25

0.27

C1

C2

C3

C4

C5

0.99

0.80

0.70

0.87

0.86

0.02 C6

0.99

0.01

0.23

GM

0.00

0.09

0.27

0.16

0.35

D1

D2

D3

D4

D5

1.00

0.95

0.85

0.92

0.81

0.19 D6

0.90

0.11 D7

0.94

0.27

0.07

0.06

Eco-Reputation Strategic Orientation (ERSO) Eco-Innovation Strategic Orientation (EISO)

Green Purchasing Initiative (GP) Green Manufacturing Initiative (GM)

ERSO

0.55

0.45

0.23

0.35

0.32

0.17

A1

A2

A3

A4

A5

0.67

0.74

0.88

0.80

0.82

0.23

EISO

0.16

0.16

0.49

0.11

0.00

0.13

B1

B2

B3

B4

B5

0.92

0.91

0.72

0.94

1.00

0.16 B6

0.92

0.07

0.08

0.15

GK

0.12

0.06

0.28

0.04

E1

E2

E3

E4

0.94

0.97

0.85

0.98 RL

0.27

0.24

0.01

0.00

0.15

F1

F2

F3

F4

F5

0.85

0.87

0.99

1.00

0.92

0.23 F6

0.88

0.03

0.24

Green Packaging Initiative (GK) Reverse Logistics (RL)

�2/df=0.74 /3=0.25, p-value=0.86, RMSEA = 0.000 NFI=1.00, CFI=1.00, RFI=1.00, AGFI=0.99 Cronbach’s �=0.904, CR=0.890, AVE=0.619

�2/df=0.75 /5=0.15, p-value=0.98, RMSEA=0.000 NFI=1.00, CFI=1.00, RFI=1.00, AGFI=0.99 Cronbach’s �=0.969, CR=0.964, AVE=0.820

�2/df=7.60 /7=1.09, p-value=0.37, RMSEA=0.026 NFI=0.99, CFI=1.00, RFI=0.99, AGFI=0.94 Cronbach’s �=0.953, CR=0.950, AVE=0.764

�2/df=2.18 /11=0.20, p-value=0.998, RMSEA=0.000 NFI=1.00, CFI=1.00, RFI=1.00, AGFI=0.99 Cronbach’s �=0.975, CR=0.972, AVE=0.833

�2/df=3.71/2=1.86, p-value=0.16, RMSEA=0.083 NFI=0.99, CFI=1.00, RFI=0.98, AGFI=0.93 Cronbach’s �=0.964, CR=0.966, AVE=0.875

�2/df=3.79/7=0.54, p-value=0.80, RMSEA=0.000 NFI=1.00, CFI=1.00, RFI=0.99, AGFI=0.97 Cronbach’s �=0.975, CR=0.971, AVE=0.850

Notes: �, Cronbach’s �. CR, composite reliability = (�c) = (Σ�)2/ [(Σ�)2+Σ(�)]. AVE, average variance extracted = (�v) = (Σ�2) / [Σ�2+Σ(�)]. where � is the indicator loadings, and � is the indicator error variances

Figure 2. Measurement models

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initiatives, eco-reputation strategic orientation and eco-innovation strategic orientation. The results offer useful theoretical and managerial implications.

Advancing sustainable business practices has the potential to help manufacturing firms in Malaysia manage their competing goals of profit growth and environmental protection. Although this model was developed in Malaysia, the findings should apply to firms in other emerging countries too. Most emerging countries remain in an early stage of economic development and face trade-offs between wealth creation and potential negative effects on social and environmental conditions. Manufacturing firms’ apparent efforts to pursue profit growth at all costs is the leading cause for a country’s dismal pollution record; unsustainable business practices lead to an array of environmental problems. The information in this paper can help business leaders in emerging markets develop sustainable supply chain activities that ensure their business success, through reverse logistics. Business leaders in emerging countries also should strengthen their eco-strategic orientation and develop sustainable business practices to enhance their implementation of reverse logistics, which can help them fulfill their environmental responsibilities. Building a sustainable business culture is a long process, but manufacturing firms’ ability to advance sustainable business practices

Mean ( µ)

SD (σ) ERSO EISO GP GM GK RL

ERSO correlation coefficient significant (2-tailed) 3.122 0.889 1.000 EISO correlation coefficient significant (2-tailed) 2.665 0.908 0.351 (0.000) 1.000 GP correlation coefficient significant (2-tailed) 3.031 1.033 0.396 (0.000) 0.372 (0.000) 1.000 GM correlation coefficient significant (2-tailed) 2.898 1.027 0.291 (0.000) 0.386 (0.000) 0.281 (0.000) 1.000 GK correlation coefficient significant (2-tailed) 2.822 0.983 0.387 (0.000) 0.439 (0.000) 0.418 (0.000) 0.362 (0.000) 1.000 RL correlation coefficient significant (2-tailed) 3.008 1.043 0.322 (0.000) 0.330 (0.000) 0.251 (0.000) 0.284 (0.000) 0.305 (0.000) 1.000

Table II. Descriptive statistics and correlations of the constructs

Constrained model Unconstrained model χ2 Difference test, df¼ 1 Paired analysis χ2 df χ2 df χ2 diff. p-value

ERSO-EISO 50.42 38 39.16 37 11.26 0.0008 ERSO-GP 108.65 40 100.82 39 7.83 0.0051 ERSO-GM 50.51 49 39.40 48 11.11 0.0009 ERSO-GK 49.43 25 39.60 24 9.83 0.0017 ERSO-RL 60.11 40 51.52 39 8.59 0.0034 EISO-GP 128.24 48 118.84 47 9.40 0.0022 EISO-GM 53.46 58 43.58 57 9.88 0.0017 EISO-GK 40.22 31 32.04 30 8.18 0.0042 EISO-RL 59.17 48 49.00 47 10.17 0.0014 GP-GM 73.49 60 63.56 59 9.93 0.0016 GP-GK 61.41 33 55.61 32 5.80 0.0160 GP-RL 149.83 50 140.58 49 9.25 0.0024 GM-GK 36.17 41 26.00 40 10.17 0.0014 GM-RL 46.19 60 36.71 59 9.48 0.0021 GK-RL 55.58 33 44.82 32 10.76 0.0010

Table III. Discriminant validity test

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ultimately could contribute to their competitiveness by enhancing their firms’ reputation and increasing consumer confidence at both international and national levels.

Eco-reputation strategic orientation and eco-innovation strategic orientation can enable sustainable supply chain initiatives. Our results show that eco-reputation strategic orientation is positively associated with sustainable supply chain initiatives; an eco-innovation strategic orientation suggests that sustainable supply chain initiatives are less risky than failing to adopt such practices. In addition, when the firm has both an eco-reputation and an eco-innovation strategic orientation, the two strategic orientations positively affect each other. Most studies of the drivers of organizational sustainability efforts empirically examine only the independent effects of the antecedent variables; our results suggest the antecedents also can interact in their effects, so they enhance understanding of when and why firms engage in sustainable activities. Incorporating bi-directional relationships thus can enhance knowledge of the drivers of organizational sustainable involvement. Furthermore, most sustainable supply chain studies draw their conceptual framework from the notion of institutional theory, with the assumption that external institutional forces motivate a company’s implementation of sustainable initiatives (Kauppi, 2013). Our findings suggest that the enablers of sustainable business practices may not be as divergent as has commonly been assumed. Instead, engaging in sustainable supply chain initiatives might combine the organization’s overall strategic orientations with respect to the natural environment and deliver environmental benefits (Stonebraker and Liao, 2004).

The results highlight the potential value of simultaneously examining different components of sustainable supply chain initiatives. The limited research in developing economy domains tends to focussed on a single aspect of sustainable supply chain initiatives. Our analyses reveal relatively strong positive correlations among the three different sustainable supply chain initiatives (Table II) but also indicate that each initiative can have different impacts on outcomes in different conditions. Empirical research on sustainable supply chain management should allow for this possibility.

Sustainable Supply Chain Initiatives

OutcomeStrategic Orientations

Eco-Reputation Strategic Orientation

(ERSO)

Eco-Innovation Strategic Orientation

(EISO)

Green Manufacturing (GM)

Green Packaging (GK)

Green Purchasing (GP)

Reverse Logistics (RL)

0.33

0.22

0.28

0.50

0.26

0.35

0.42

0.08

0.26

0.19

Insignificant path Significant at �=2.5%

�2/df = 780.14/504 = 1.548, RMSEA = 0.066, NFI = 0.94, NNFI = 0.97, CFI = 0.97, IFI = 0.97, RFI = 0.93, PGFI = 0.62 ECVI: Model = 7.76, Saturated Model = 9.60, Independence Model = 123.10

CAIC: Model =1,310.51, Saturated Model = 3,467.85, Independence Model =15,395.17

Figure 3. Results of structural

equation model

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7. Management implications This study also offers important new insights for managers. Figure 4 synthesizes the results with their related managerial implications. Our findings offer needed empirical support for investing in sustainable supply chain initiatives, and we offer strong evidence of the benefits obtained from reverse logistics in sustainable supply chain initiatives (Alblas et al., 2014). Managers can be confident that sustainable supply chain initiatives will benefit their firms’ reverse logistics. Ecological requirements are key criteria for products and production, particularly for companies that seek ways to ensure economic sustainability by staying competitive and profitable. This study offers empirical evidence that implementing sustainable supply chain initiatives leads to reverse logistics, creating value, and a new source of competitive advantages ( Jayaraman and Luo, 2007).

For managers interested in developing sustainable supply chain initiatives, our results also offer some alternatives. Decision makers in the firms attempting to nurture sustainable supply chain initiatives should not overlook the importance of eco-reputation and eco-innovation strategic orientations, which our results identify as important enablers (Awaysheh and Klassen, 2010). In general, making sustainable supply chain investments is easier if an ecological strategic orientation is a top priority within the firm or top managers emphasize eco-friendly business practices as sources of the company’s image (Roehrich et al., 2014). However, managers also need to attend carefully to the bi-directional relationship between eco-innovation and eco-reputation strategic orientation. In the presence of both, managers may find it easier and more effective to emphasize green supply chain activities.

The significant reverse logistics benefits stemming from sustainable supply chain initiatives suggest that manufacturing companies cannot only receive products back from consumers but also collect unsold merchandise, to take apart, sort, reassemble, or recycle. The returned product also can be re-sold in secondary channels and generate revenue. Managers thus should emphasize the strategic benefits of sustainable supply chain initiatives, rather than regarding reverse logistics as a cost center. They also should place more emphasis on the benefits of environmental sustainability, to encourage their firms to become environmentally sensitive.

8. Limitations and future studies This research has some limitations, and our findings also suggest several avenues for research. First, we collected most of the data from a single key informant in each Malaysian company. The potential thus exists for key informant common method bias, though we followed the recommendations by Phillips (1981) and used credible respondents (i.e. EMRs) to minimize this threat. Further research employing multi-informant designs or direct investigator observations might be useful though, to confirm our results. Second, our sample included manufacturing companies in Malaysia; we cannot guarantee that our results generalize to different industries. This research was developed primarily among manufacturing firms, with little consideration of the green supply chain behavior of service sectors. Thus, we encourage further research to examine the applicability of our findings to service sectors (Hill and Brown, 2007). Third, though we identify three components of sustainable supply chain initiatives, other components could exist, and ongoing research should investigate them. Forth, internal stakeholders, such as employers, are critical to drive sustainable purchasing. However, the research design of our study focusses on the firm’s strategic orientations in general; we do not aim to understand

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each stakeholder’s behavior. Noting the importance of internal stakeholders, we now address this concern as a potential future study. Fifth, we collected our sample from certified manufacturing firms, which tend to be larger and relatively resource abundant. Excluding small and medium-sized enterprises (SMEs) from our study might bias our findings. The incentives for SMEs to develop sustainable supply chains thus may differ from those that drive well-established firms. Moreover, with their limited resources, their ability to implement reverse logistics is questionable. Further research should test our results and validate our model using non-certified SMEs.

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Appendix. Survey instrument I. Strategic orientations This section assesses the strategic green orientations that firms use to implement green supply chain initiatives. We ask respondents to indicate on a five-point Likert scale (1¼ strongly disagree, 5¼ strongly agree) how the following focusses, concepts, and practices guide their firm’s green supply chain initiatives in terms of green purchasing, green manufacturing, and green packaging.

(A) Eco-reputation strategic orientation (ERSO)

A1. Our company is well-known for environmentally responsible and contributes in green initiatives.

A2. Consumers recognize our company and products due to our involvement in various green activities.

A3. Our company policy promotes green initiatives/activities and we have made good progress.

A4. Our company respects environmental welfare and is committed to develop green products. A5. We enhance our firm’s image and reputation through development of green initiatives.

(B) Eco-innovation strategic orientation (EISO)

B1. Our company allocates adequate resources for new green innovation initiatives/activities. B2. Our top management emphasizes process and product innovation that promotes

green initiatives. B3. Green life-cycle assessment is an important criterion while developing new products. B4. Our company competes on innovative driven goals and green initiatives. B5. Innovation culture is well-established in my company. B6. Our company aggressively conducts training and education in innovation-based green

initiatives.

II. Sustainable supply chain initiatives

This section assesses the extent of existence of sustainable supply chain initiatives (green purchasing, green manufacturing. and green packaging), We ask respondents to indicate on a five point Likert scale (1¼ not at all, 5¼ very high extent) the existence of the following initiatives in their firm.

(C) Green purchasing (GP)

Cl. Provides suppliers with design specifications that include green or environmental requirements.

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C2. Purchases materials from suppliers who are qualified in green partner environmental standards.

C3. Audit suppliers regularly to ensure that they are in compliance with environmental regulations.

C4. Requires key suppliers to be certified in EMS, such as ISO 14001. C5. Ensure purchased components are free of undesirable items such as lead or hazardous

materials. C6. Evaluates suppliers based on specific environmental criteria.

(D) Green manufacturing (GM)

D1. Produces products with reused or recycled contents such as recycled plastics and glass. D2. Uses life-cycle assessment to evaluate the environmental load of products. D3. Produces products that are free of hazardous substances, such as lead, mercury, and

chromium. D4. Designs products to ensure they have recyclable or reusable contents. D5. Produces products that reduce the consumption of materials and energy during use. D6. Reduces power consumption in products during manufacturing and transportation. D7. Increases product life-span resulting in higher efficiency and productivity.

(E) Green packaging (GK)

El. Makes sure that packaging uses renewable or recyclable contents. E2. Makes sure that packaging is reusable. E3. Minimizes the use of materials in packaging. E4. Avoids or reduces the use of hazardous materials in packaging.

III. Reverse logistics This section assesses the extent of reverse logistics implementation in the firm for the purpose of reuse, recycle, or reclamation of materials from the product or packaging. We ask respondents to indicate on a five-point Likert scale (1¼ not at all, 5¼ very high extent) the existence of reverse logistics implementation in their firm.

(F) Reverse logistics (RL)

Fl. Collects used or unwanted products from customers for recycling, reclamation of materials, or reuse.

F2. Collects used packaging from customers for reuse or recycling. F3. Requires customers to collect packaging materials for us. F4. Collects used or unwanted products from customers for remanufacturing. F5. Collects shipping materials from customers for reuse or recycling. F6. Returns products to customers after refill or repair.

Corresponding author Dr Chin-Chun Hsu can be contacted at: [email protected]

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