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123F E A T U R E A R T I C L E

Published online in Wiley Online Library (wileyonlinelibrary.com)

Correspondence to: Anis Ben Brik, United Arab Emirates University, College of Business & Economics, Al Ain - United Arab Emirates, P.O. Box 17555, (9713)

71333-266 (phone), (9713) 7624-384 (fax), [email protected].

Drivers of Green Supply

Chain in Emerging

Economies

I n t r o d u c t i o n

E nvironmental problems are global in nature and

scale, and tackling them requires policymakers

and leaders of firms based in Western developed

economies as well as emerging and developing economies

to embrace environmentally friendly practices (Hart,

1997). In response to the serious and increasing environ-

mental concerns, environmentally friendly policies have

emerged as an inescapable priority for policymakers in

most countries (Porter & Kramer, 2006). Similarly, envi-

ronmentalists are putting increasing pressure on firms

to improve their environmental performance. One of

the areas that policymakers and environmentalists have

focused on is green supply chain (GSC) management.

By definition, supply chain management involves

the management of upstream (Min & Galle, 2001) and

downstream (Murphy & Poist, 2000) relationships with

suppliers and customers. Supply chain greening consists

of activities that include reduction and/or substitution of

inbound materials, recycling, reclamation, and remanu-

facturing, and reverse logistics of outbound materials

(Zhu & Sarkis, 2004), as well as the process through

which the goods move through the firm, including

inbound and outbound transport, storage, and process-

ing of materials (Mellahi, Morrell, & Wood, 2009; Nara-

simhan & Carter, 1998). These activities aim at reducing

environmental risk by developing processes that facilitate

substituting harmful materials with more environmen-

tally conscious ones, reduction or elimination of using

In spite of the burgeoning interest in green supply chain management in Western developed countries

and large emerging economies, little research exists on the topic in small emerging and developing

countries. In this study, we surveyed fi rms based in Dubai to identify the main drivers of green supply

chain management and their impact on supply chain greening. We discuss theoretical and manage-

Anis Ben Brik

Kamel Mellahi

Belaid Rettab

124 F E A T U R E A R T I C L E

Thunderbird International Business Review Vol. 55, No. 2 March/April 2013 DOI: 10.1002/tie

education and information about environment degrada-

tion may give inappropriately low weight to environmen-

tally unfriendly practices because of lack of awareness of

the consequences (Rettab, Brik, & Mellahi, 2009). Rettab

et al. (2009) found that low green consumerism in Dubai

resulted in lack of pressure on firms to develop green

strategies. This study will help us understand the drivers

for GSC in a context where external pressure on firms to

adopt a GSC management are weak or absent.

In addition to the foregoing, given the nascence

of environmental performance in emerging countries,

research that provides a better understanding of the rela-

tive importance of different drivers for the adoption of

GSC management is of significant importance for man-

agers and policymakers. The current dearth of empiri-

cal knowledge on the drivers of supply chain greening

in emerging countries may result in management and

policymakers mistakenly addressing the wrong factors

and neglecting the factors that have the most impact.

For instance, experts know little about whether firms

that adopt a GSC management do so because of external

coercive pressure or as a result of internal factors such

as perceived economic benefit. To help close this gap in

knowledge, this exploratory study aims to answer a key

question: what are the most important determinants of

GSC management in a small emerging economy such as

Dubai?

potentially environmentally damaging substances, and

regular environmental auditing.

There is an extensive body of research on the driv-

ers for GSC. A chief limitation of this body of research is

its exclusive focus on firms based in Western developed

economies (Walton, Handfield, & Melnyk, 1998) and

large emerging countries such as China (Zhu, Sarkis,

& Geng, 2005; Zhu, Sarkis, & Lai, 2007; Zhu, Sarkis,

Cordeiro & Lai, 2008). Exceptions here include Rao’s

(2002) study of east Asian countries and Lee’s (2008)

study of Korean firms. As yet, research on firms based

in small emerging economies is still mostly uncharted

territory. In this article, our aim is to enhance the under-

standing of key enablers and drivers of GSC adoption in

emerging countries.

We chose Dubai as the location for our study because

it is one of the fastest-growing economies in the world

and one of the most attractive investment destinations

for multinational companies (MNCs) in the Middle East

region. Dubai has experienced record-breaking economic

growth and extraordinary transformation from a nomadic

economy to a modern service-based economy over the

past few decades. This makes Dubai an interesting case

for the study of GSC for a number of reasons. First, simi-

lar to other fast-developing regions within developing and

emerging countries, the quest for fast economic develop-

ment takes precedence over environmental degradation

in Dubai. By placing priority on economic development,

environmentally unfriendly economic projects may be

pursued at the expense of the environment, and pressure

on firms to green their supply chain is low. Lo, Fryxell,

and Wong (2006, p. 389) note that “it is a daunting task

to improve environmental enforcement in such countries

where officials are pro-growth, the administrative capacity

of environmental agency is usually weak, and government

and societal support is only just emerging.” Given that

quite often environmentally friendly practices are attrib-

uted to the efficacy and effectiveness of the regulatory

framework (Rugman & Verbeke, 1998), this study will

shed a new light on the adoption of GSC management

in a context where formal regulations are weak or absent

and government officials may harbour biases towards

economic development at the expense of environment

management responsibility. Further, in contrast to West-

ern developed countries where external forces such as

customer pressure, stakeholder pressure, and community

pressure play a significant role in pushing firms to adopt

environmentally friendly practices (Rugman & Verbeke,

1998), societal concerns over the negative environmen-

tal impacts of environmentally unfriendly practices is

low in Dubai. For instance, consumers with low levels of

The current dearth of empir- ical knowledge on the driv- ers of supply chain greening in emerging countries may result in management and policymakers mistakenly addressing the wrong factors and neglecting the factors that have the most impact.

Drivers of Green Supply Chain in Emerging Economies 125

DOI: 10.1002/tie Thunderbird International Business Review Vol. 55, No. 2 March/April 2013

to adopt GSC management is based on the assumption

that, generally, firms’ leaders assume that compliance

with environmental regulations impose added costs on

the organization, which may erode or weaken their com-

petitiveness (Christainsen and Haveman, 1981; Conrad &

Morrison, 1989; Darnall, 2006). Therefore, left to their

own devices, firm managers may refrain from allocating

rare resources to activities such as supply chain greening.

Furthermore, extant research provides evidence to sug-

gest that in the early stage of adoption of a new manage-

ment practice, regulations are necessary to prompt firm

managers to develop green practices to reduce their envi-

ronmental impact (Henriques & Sadorsky, 1996; Porter

& Van der Linde, 1995). This body of research posits that

the compulsory nature of regulations to green the supply

chain drives firm leaders to take necessary measures to

comply with regulations. In a similar vein, Klassen and

Vachon (2003) argued that regulations are the primary

driver for supply chain greening because firms are gener-

ally mindful of regulations due to fear of legal sanctions

if they do not comply.

In addition to the foregoing, environmental regula-

tions are also popular within policymaking circles. This

is reflected in the great proliferation of environmental

legislations (Rezaee, 2000). In almost all developed

nations, a plethora of legislation governs environmental

issues. This view is based on the previously mentioned

assumption that, given the choice, firm managers

will not pursue practices that are perceived to have a

negative impact on the bottom line. Rettab et al. (2009)

argued for a stringent regulatory framework for firms,

in general, and firms based in emerging and develop-

ing economies, in particular. They observed that an

incentive always exists for firms to resort to free riding,

and to try and opt out from any limiting ground rules,

no matter how ethically desirable. A large body of lit-

erature, however, questions the assumption that firms

adopt environmentally friendly practices through legal

compulsion. Indeed, current green business literature

in emerging and developing countries suggests that

regulations have little effect on firms’ environmental

practices (Lo et al., 2006; Pargal & Wheeler, 1996).

Lo et al. (2006) cite inadequate enforcement capacity

as the key reason for lack of firms’ compliance with

environmental regulations in emerging and developing

countries. One could argue, however, that at the early

stage of adoption of supply chain greening, such as

the case of emerging and developing economies, firm

leaders may use compliance with regulations to obtain

legitimacy from political actors by signaling that they

are committed to the regulators’ agenda or to increase

The remainder of the article is organized into

three sections. First, we will build on extant literature

to develop a theoretical framework of the key drivers

and barriers to GSC management in Dubai. Second, we

will describe the methodology of the study and research

design and analyze the findings of the study. Third, we

will discuss the major findings and their policy, manage-

rial, and theoretical implications.

T h e o r e t i c a l F r a m e w o r k f o r t h e A d o p t i o n o f G r e e n S u p p l y C h a i n

Literature on the drivers and enablers for GSC adoption

can be broadly categorized into two main streams: exter-

nal and internal drivers.

External Drivers

The external drivers’ literature has its theoretical roots

in institutional theory, which posits that firms adopt cer-

tain practices because of coercive institutional pressures

(Campbell, 2006, 2007; Hoffman & Ventresca, 2002;

Powell & DiMaggio, 1991; Zhu, Sarkis, Cordeiro & Lai,

2008). Institutional theorists argue that external pres-

sures play a critical role in determining organizational

actions by pushing firm leaders to adopt certain practices

and to refrain from practicing others (Powell & DiMag-

gio, 1991). Institutional scholars posit that institutional

pressures are required because managers generally have a

poor understanding of their firm’s environmental impact

(Ashford, 1993) and suffer from strong inertia that pre-

vents them from taking voluntary action to adopt a GSC

management (Cordano & Frieze, 2000).

External drivers are defined in this study as external

forces that may prompt a firm to consider and adopt

GSC management. Although many external factors

may drive a firm to adopt a GSC management, extant

research typically cites regulatory framework, pressure

from customers, and competitive dynamics as key driv-

ers. Given the large number of MNCs operating in Dubai

and the export-oriented nature of the Dubai economy,

we included pressures from headquarters and export

destination country regulations as potential key external

drivers for supply chain greening. We discuss each of

these factors in turn.

Regulations

Regulations are the most frequently cited drivers for

supply chain greening (Beamon, 1999; Green, Morton,

& New, 1996; Hall, 2001; Min & Galle, 2001; Walton

et al., 1998). The need for an external pressure such as

a stringent regulatory framework to coerce organizations

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Competition

In addition to regulations, firm leaders may adopt certain

practices because of mimetic isomorphism, which comes

from imitating other firms in the sector, such as their

competitors. Chan and Makino (2007) argued that firms

often conform to institutional pressure by mimicking the

prevalent organizational practices of their competitors to

gain legitimacy in their institutional environment. That

is, uniform institutional pressure will lead to uniform

intra-industry adoption of GSC as a “desirable, proper

or appropriate” practice (Suchman, 1995). Mimetic

interactions and collaboration with regulatory bod-

ies, which may lead to increased trust between them

as well as additional benefits such as access to critical

institutional-based resources that make their ability to

do business easier (Darnall, 2006). This leads to the

first regulatory driven hypotheses:

H1a: Local government regulations are positively associated with the adoption of GSC.

H1b: Export country regulations are positively associated with the adoption of GSC.

Customers

Customers may coerce firms to implement a GSC man-

agement (Darnall, 2006; Vandermerwe & Oliff, 1990).

This is because the demand for green products has

increased significantly over the years (Oyewole, 2001).

While this is especially the case in western Europe (for

example, opinion surveys have indicated that 80% of

consumers in Germany, Italy, and Spain would switch to

greener products if given the opportunity), evidence sug-

gests that this demand is also rapidly spreading worldwide

(Oyewole, 2001). Although little doubt remains that pub-

lic opinion has become a powerful force in encouraging

firms to take environmental issues seriously, one must

note that, because of access to information and the high

cost of green products, market pressure on firms to adopt

a GSC management varies greatly between countries. For

instance, Zhu et al. (2005) noted that consumers’ pres-

sure is modest in China. This is due in part to the fact that

supply chain greening generally results in higher costs

and more expensive products that Chinese consumers

might not be able to afford. Further, a lack of education

about green issues exists in emerging and developing

economies. Given the income disparity in Dubai—high

wages for professionals and very low wages for the major-

ity carrying out manual works—one would expect the

professional class to be able to pay price premiums for

their products and services, and they may exert pressure

on firms to adopt a GSC management; however, for the

majority, “green issues” would not be at the top of their

concerns, and they are not able to pay premium prices

for green products. Furthermore, generally in emerg-

ing and developing economies, the public has far less

knowledge of the nature of the products firms produce,

the raw materials required, the processes employed, and

the wastes generated. Based on the foregoing, one would

expect the market for environmentally friendly products

to still be small in Dubai and therefore consumers would

not put strong pressure on firms to green their supply

chain.

Given the income disparity in Dubai—high wages for professionals and very low wages for the majority car- rying out manual works— one would expect the professional class to be able to pay price premiums for their products and services, and they may exert pressure on firms to adopt a GSC management; however, for the majority, “green issues” would not be at the top of their concerns, and they are not able to pay premium prices for green products.

Drivers of Green Supply Chain in Emerging Economies 127

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H2c: Competition is not significantly associated with the adoption of GSC.

Internal Drivers

Walker, Di Sisto, and McBain (2008) divided internal

drivers for supply chain greening into managerial fac-

tors related to top management team ethical values and

commitment, and organizational drivers concerned with

the economic benefits of greening the supply chain. We

discuss these two drivers.

Leadership

Firms are managed by individuals with different levels

of commitment to environmental issues and endowed

with different capabilities that ultimately determine the

extent to which a firm’s leaders adopt a GSC management

(Vachon & Klassen, 2006). A large body of literature shows

that a key to green supply chain management is com-

mitment and support of the top management team and

a culture that fosters environmentally friendly practices

(Nakamura, Takahashi, & Vertinsky, 2001; Porter & van der

Linde, 1995; Weaver, Trevino, & Cochran, 1999; Zhu et al.,

2005). Managers may be committed to green the supply

chain because of the moral imperative to “do what is right”

with less regard for economic performance (Donaldson &

Davis, 1991). Zhu, Sarkis, & Geng (2005, p. 462) noted that

“without this initial upper management commitment, most

(green supply chain) programs are bound to fail, much

less be truly initiated.” Taking the above leadership—i.e.,

moral—arguments as a whole, we hypothesize that:

H3: Leadership has a positive influence on the adoption of GSC.

Economic Incentives

Organizations may also be driven by the business case for a

green supply chain by believing that supply chain greening

could lead to a sustainable competitive advantage (Walker

et al., 2008). Being early movers in supply chain greening

in emerging and developing economies provides firms

with valuable knowledge-based capital and tacit skills that

enhance the firm’s operational efficiency (Porter & van

der Linde, 1995), thereby improving their competitive

position (Handfield & Nichols, 2002; Hart & Ahuja, 1996;

Khanna & Damon, 1999; Rivera, 2002; Russo & Fouts,

1997). Furthermore, supply chain greening may enhance

the firm’s image and confer external legitimacy (Darnall,

2006). These thoughts lead to our final hypotheses that

GSC is an efficiency-driven practice, specifically:

H4: Economic incentives have a positive influence on the adop- tion of GSC.

isomorphism is particularly important in emerging and

developing economies (Zaheer, 1995). However, we

suspect that given the low level adoption of GSC manage-

ment in developing and emerging economies, mimetic

pressure would be very low.

Multinational Pressure

A large number of firms operating in Dubai are subsid-

iaries of MNCs. Therefore, one could argue that leaders

of MNCs may potentially drive supply chain greening

within their subsidiaries based in Dubai, because MNCs

are more visible as a result of a growing interest by a wide

range of stakeholders, including the media, nongovern-

mental organizations (NGOs), investors, and consumers,

in how MNC leaders manage the ethical implications of

increased global sourcing. Further, the high bargaining

power of MNCs vis-à-vis their suppliers created a respon- deat superior type relationship between MNCs and their suppliers. This led a number of stakeholders to argue

that MNCs have an inherent responsibility for the actions

of their suppliers (Rettab et al., 2009). Arnold and Bowie

(2007) argued that “MNCs’ managers have duties, both

in their own factories and in their contract factories …

because of the power they have over the owners and

managers of such factories, and because of the substantial

resources at their disposal.” Also, several rating agen-

cies monitor ethical and environmental performance of

global supply chains. An example here is the General

Index developed by Insight Investment and Account Abil-

ity, which screens and scores the performance of major

FTSE listed companies on key supply chain factors. This

importance allocated to ethical issues in the supply chain

is underpinned by the assumption that the choices firms

make in the ways they organize and manage their supply

chain are shaped, to a large extent, by the beliefs manag-

ers of MNCs in the firms’ headquarters hold about the

importance of ethical practices inside and outside their

firms. Therefore, an MNC could be seen as ethical or

unethical based on the way it manages ethical practices

within and between its networks of subsidiaries and sup-

pliers. Given the preceding analysis, one would expect

that MNCs would play a central role in their subsidiaries’

supply chain management and would perhaps mandate

rather than just encourage their subsidiaries to adopt a

GSC management. Accordingly, the following—market

driven—hypotheses are proposed:

H2a: MNCs policies are positively associated with the adoption of GSC.

H2b: Consumers’ pressure is not significantly associated with the adoption of GSC.

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Thunderbird International Business Review Vol. 55, No. 2 March/April 2013 DOI: 10.1002/tie

500 employees, and 16% of respondents were from firms

employing over 500 employees. Our initial descriptive

statistics revealed a high mean and standard deviation for

firm size, indicating potential extreme outliers in our sam-

ple. Therefore, we tested our data for univariate outliers

using Z-scores (Tabachnick & Fidell, 1996). Three outliers

for firm size were identified with values of individual mani-

fest variables outside the range of +/–3 standard deviations

from the respective mean. Subsequently, the three outli-

ers were excluded from further analysis. Sector-wise, the

sample is representative of economic activities in Dubai;

30% were from manufacturing, 35% from construction

and real estate sectors, 18% were from tourism, and 8%

and 6% were from trade and transport sectors, respectively.

Measures

Dependent Variable

Green Supply Chain

The construct was measured by 16 items using a 5-point

Likert-type scale (1 = implementing successfully, 2 = ini-

tiating implementation, 3 = considering it currently, 4 =

planning to consider it, 5 = not considering it), based on

previous literature (Gallastegui, 2002; Min & Galle, 2001;

Rao, 2002; Rao & Holt, 2005; Walton et al., 1998; Zhu &

Sarkis, 2006). Cronbach’s alpha for GSC is 0.86.

M e t h o d o l o g y

Data Collection and Sampling Procedures

The sampling frame consisted of a random 820 compa-

nies members listed in the 2008 Dubai Chamber of Com-

merce and Industry (DCCI) Directory. Dillman’s (2000)

recommendations were followed in formatting the sur-

vey. Each of the 820 questionnaires was emailed and/or

faxed, over a two-month period from February to March

2008, to the identified top manager along with a cover

letter explaining the nature of the study and the promise

of confidentiality. We used e-mails and electronic fax

machines for two reasons. All firms in Dubai have access

to, and rely heavily on, faxes and e-mails in their com-

munication because of the unreliability of the traditional

mail system. Also, our method guarantees that the ques-

tionnaire is received and filled out by the identified top

manager. After the original was sent out, three follow-ups

were conducted. The second, third, and fourth mailings

were sent to the nonrespondents three weeks after each

previous sending.

A total of 183 usable responses were received. This

resulted in an effective response rate of 22%. A majority

of respondents fall into small and medium-sized company

categories; 40% of respondents were from firms employ-

ing between 50 and 100 employees, 44% between 100 and

TABLE 1 GSC Practices

Approach Practice Reference(s)

Resource reduction Reusing Min and Galle (2001)

Recycling Min and Galle (2001)

Low-density packaging Min and Galle (2001)

Input material purifi cation and substitution Min and Galle (2001)

Waste elimination Biodegrading Min and Galle (2001)

Sorting for nontoxic incineration Min and Galle (2001)

Taking back packaging Min and Galle (2001)

Eco-design Providing design specifi cations to suppliers that include environmental requirements for purchased items

Zhu and Sarkis (2006)

Eco-labeling products Gallastegui (2002)

Substituting environmentally questionable materials Walton et al. (1998)

Supplier selection and evaluation

Selecting suppliers by environmental criteria Rao and Holt (2005)

Sending company auditors to appraise the environmental compliance of suppliers Rao (2005)

Supplier development Guiding or helping suppliers implement an environmental management system (EMS) Rao and Holt (2005)

Arranging funds to help suppliers in their environment programs Rao and Holt (2005)

Supplier awareness Bringing suppliers together Rao and Holt (2005)

Holding environmental awareness seminars for suppliers Rao and Holt (2005)

Drivers of Green Supply Chain in Emerging Economies 129

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size may influence the ability to perform socially respon-

sible activities, with more resources available for larger

organizations versus smaller organizations.

Second, we controlled for sector of activity. Past

research shows industries differ in their propensity to

engage in environmental initiatives (Waddock & Graves,

1997). Firms were grouped into five sectors, namely, tour-

ism, manufacturing, real estate, trading, and banking and

finance sectors.

Nonresponse Bias

Nonresponse bias is always a concern in survey research.

Although our response rate is within the range of typi-

cal response rates for strategic behaviors (Gatignon &

Xuereb, 1997; Slater, et al., 2006), we used Armstrong

and Overton’s (1977) extrapolation procedure to assess

possible nonresponse bias. We compared the answers

of the early survey respondents to those of late respon-

dents and a multivariate t-test was computed along with the study variables. Table 3 summarizes the results. The

results in Table 3 show that early respondents did not

provide statistically significant different responses from

late respondents (p > 0.05). Thus, nonresponse bias is less likely to be an inhibitor in our analyses.

R e s u l t s

Descriptive Statistics

Table 4 shows means, standard deviations, and zero-order

correlations. The results show that the main perceived

drivers for GSC management are, in descending order,

consumers (mean 4.81, SD 0.39), local government

Independent Variables

The construct addressed seven variables, namely, local

government regulations, export country regulations,

customers, competition, MNC pressures, leadership, and

economic incentives.

Regulation construct was measured by one item

adapted from Zhu and Sarkis (2006). MNC pressures

were measured by one new item suggested by business

professionals in Dubai. Competition was measured by

two items adapted from Zhu and Sarkis (2006) and Rao

(2005). Cronbach’s alpha for competition is 0.82.

Customers were measured by two items adapted from

Lamming and Hampson (1996) and Carter and Dresner

(2001). Cronbach’s alpha for customers is 0.79. Leader-

ship was measured by two items adapted from Wycherley

(1999). Cronbach’s alpha for leadership is 0.76. Eco-

nomic incentives were measured by three items adapted

from Green et al. (1996) and Rao and Holt (2005).

Cronbach’s alpha for economic incentives is 0.80. Export

country regulations were measured by one new item

suggested by business professionals in Dubai. Questions

were answered using a 5-point Likert-type scale (e.g., 1 =

extremely unimportant, 2 = unimportant, 3 = neutral, 4 =

important, 5 = extremely important).

Control Variables

Two control variables were included in the statistical

analysis because of their potential impact on the above

listed variables of interest. The control variables selected

were industry sector and firm size.

First, we controlled for the size of the firm and mea-

sured size by the number of employees. An organization’s

TABLE 2 Drivers of GSC

Factors Items Reference(s)

Economic incentives

Desire to reduce costs, pressure from investors, manage economic risk Green et al. (1996), Walker et al. (2008)

Enhanced brand image and reputation Rao and Holt (2005), Zhu et al. (2006)

Increased productivity and product and service quality Rao and Holt (2005)

MNC pressures Headquarters policies New item

Leadership Extension of founder’s value Wycherley (1999), Walker et al. (2008)

Values of owner, managers improving position in the company Walker et al. (2008)

Competition Gaining competitive advantage Zhu and Sarkis (2006)

Improved competitiveness Rao (2005)

Customers Pressure by customers to green supply chain Lamming and Hampson (1996)

Customer demand Carter and Dresner (2001)

Regulations Regulatory compliance Zhu and Sarkis (2006)

Export country regulations Compliance with export country regulations New item

130 F E A T U R E A R T I C L E

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4.02; SD 0.28). The correlation results presented in Table

4 indicate that the adoption of GSC practices is signifi-

cantly correlated with leadership, MNC pressure, export

countries’ regulations, and customers.

The results show that the zero-order correlations

among the dependent and only three independent vari-

ables were positive and statistically significant (p < 0.05). GSC is positively correlated with MNC pressure, consum-

ers, and leadership (r = 0.29, p < 0.05; r = 0.17, p < 0.1; r = 0.16, p < 0.05, respectively). In addition, all the factors of GSC practices and drivers of GSC have a reliability value

above the Nunnally’s lower acceptable control limit of

0.60 (Nunnally, 1978).

Reliability and Validity of Measurement Scales

Although we employed widely used measures, we subjected

the constructs used in this study to standard testing steps

to make sure our constructs were reliable and valid (Ping,

2004; Slater, et al., 2006). We analyzed the psychometric

properties of the constructs used in this study in confirma-

tory factor analysis (CFA) using LISREL 8.80. Additionally,

we evaluated the fit of the measurement model.

Construct Reliability, Convergent and Discriminant Validity

We assessed the construct reliability by calculating a

composite reliability (CR) for each construct. We used

the procedures suggested by Fornell and Larcker (1981)

to calculate the CR index (CRI). Along with reliability

calculations, we also examined the parameter estimates

and their associated t-values and assessed the average variance (AVE) of each construct (Anderson, 1982;

Bagozzi & Phillips, 1982). AVE was used to gauge con-

vergent validity (Fornell & Larcker, 1981; Ping, 2004).

regulations (mean 4.21, SD 0.41), MNC pressure (mean

4.11, SD 0.32), export countries’ regulations (mean 4.11;

SD 0.29), competition (mean 4.09, SD 0.29), economic

incentives (mean 4.05; SD 0.23), and leadership (mean

TABLE 4 Descriptive and Correlations of the Measures

Variables Mean SD 1 2 3 4 5 6 7 8 9

Green supply chain practices 3.62 0.89

Industry sectors — — –0.18*

Firm size (log) 5.87 1.03 0.27** –0.24**

Local government regulations 4.21 0.41 0.09 –0.04 –0.13

Export country regulations 4.09 0.29 –0.09 0.09 0.02 0.11

Competition 4.09 0.29 0.16 –0.09 –0.08 0.15 0.10

MNC pressures 4.11 0.32 0.29** 0.07 0.18* –0.06 –0.13 –0.11

Consumers 4.81 0.39 0.17* 0.17* 0.04 –0.11 0.01 –0.02 –0.11

Economic incentives 4.05 0.23 –0.15 –0.07 0.01 0.07 –0.08 –0.07 –0.09 0.11

Leadership 4.02 0.28 0.16** 0.11 0.09 0.10 0.11 –0.09 –0.12* 0.17 0.22**

** p < 0.05; *p < 0.1

TABLE 3 Comparison of Early and Late Respondents

Variables Mean N SD

Local government regulations Early 4.87 15 0.35

Late 4.00 24 0.00

Export country regulations Early 4.27 15 0.46

Late 4.00 24 0.00

Competition Early 4.20 15 0.41

Late 4.00 24 0.00

Economic incentives Early 4.13 15 0.35

Late 4.00 24 0.00

Consumers Early 4.80 15 0.41

Late 5.00 24 0.00

MNC pressures Early 4.07 15 0.26

Late 4.20 24 0.41

Leadership Early 4.47 15 0.52

Late 4.47 24 0.52

Resource reduction Early 2.93 15 1.71

Late 3.60 24 1.35

Eco-design Early 2.53 15 1.13

Late 2.40 24 1.24

Waste elimination Early 3.73 15 1.16

Late 3.60 24 1.30

Supplier Management (selection, development and awareness)

Early 4.53 15 0.99

Late 3.73 24 1.49

Drivers of Green Supply Chain in Emerging Economies 131

DOI: 10.1002/tie Thunderbird International Business Review Vol. 55, No. 2 March/April 2013

green supply chain drivers, we checked for possible pres-

ence of multicollinearity using variance inflation factor

(VIF). As shown in Table 5, all VIF scores are within the

tolerance level of less than 10.0 indicating that multi-

collinearity is not a problem in our regression model

(O’Brien, 2007).

We entered all GSC drivers together with control

variables in the regression model. We used logarithm of

firm size to capture expected decreasing marginal effect

of firm size on GSC. Although the relationship between

firm size and GSC adoption is expected to be significant

and positive (c.f. Zhu, Sarkis, Lai, & Geng, 2008), it is

not expected to be linear since GSC is not expected to

increase indefinitely as companies grow larger. A more

realistic assumption is that GSC increases by less for

every additional employee. That is, the marginal effect

of size should be decreasing.

As can be seen in Table 5, the results show that

the adoption of GSC is significantly associated with

two external drivers, namely, export country regula-

tions (β = 0.09; p < 0.1) and MNCs pressure (β = 0.25; p < 0.05), and one internal driver, namely, leadership (β = 0.28; p < 0.05). As expected, GSC is mainly driven by export country regulations, MNCs policies, and lead-

ership. However, home country regulations, consumer

awareness, competition, and economic incentives are

not significantly associated with supply chain greening.

Therefore, the results give support to hypotheses H1b,

H2a, H2b, H2c, and H3.

Fornell and Larcker (1981) and Ping (2004) suggested

convergent measures should contain less than 50% error

variance (i.e., AVE should be 0.5 or above). We used the

cutoff value of 0.70 and 0.50 for CR and AVE, respec-

tively (Bagozzi & Yi, 1988; Hair, Anderson, Tatham, &

Black, 1998). The composite reliabilities ranged from

0.70 to 0.92, the factor loadings ranged from 0.65 to 0.89

(p < 0.01), and the average variances extracted ranged from 62% to 82%.

Following the reliability analysis, we established

discriminant validity by calculating the shared variance

between each pair of constructs and verifying that it was

lower than the average variance extracted from the indi-

vidual constructs (Bagozzi & Phillips, 1982). According

to Bagozzi and Phillips (1982), as cited in Hult, Ketchen,

and Arrfelt (2007), discriminant validity can be assessed

in a two-step process. An initial level of discriminant

validity was established by calculating the shared vari-

ances between each pair of constructs and verifying

that it was lower than the average variance extracted

of the individual constructs (Bagozzi & Phillips, 1982).

This was the case for each average variance extracted/

shared variance scenario in both samples. Next, follow-

ing Anderson’s (1987)and Bagozzi and Phillips’s (1982)

procedures, we assessed pairs of constructs in a series

of two-factor confirmatory factor models using LISREL

8.80. The shared variances between pairs of all possible

scale combinations indicated that the average variances

extracted were higher than the associated shared vari-

ance in all cases. In other words, they are more inter-

nally correlated than they are with other constructs.

This suggests discriminant validity of the construct in

this study.

Fit of the Measurement Model

The model fit was evaluated using a series of indices

recommended by Hu and Bentler (1999): the DELTA2

(Bollen, 1989), comparative fit (CFI) (Bentler, 1990),

goodness-of-fit index (GFI), Tucker-Lewis (TLI), and the

root mean square error of approximation (RMSEA) indi-

ces. A fit to the data was achieved for the first-order-based

CFA, with DELTA2 = 0.90, CFI = 0.92, NFI = 0.90, GFI =

0.90, TLI = 0.92, PNFI = 0.74, RFI = 0.85, and RMSEA =

0.08 (chi-square = 1347, d.f. = 121).

Overall, all the measures in the construct were found

to be reliable and valid in the context of this study.

Regression Analysis

We used OLS regression analyses to identify the sig-

nificant drivers of green supply chain practices in Dubai.

Given the above strong correlations between some

TABLE 5 Regression Results between GSC Practices and

Drivers (Standard Estimations)

Variables Beta VIF t-value

Green supply chain practices 0.84 1.16 0.20

Industry sectors –0.10 1.15 –0.73

Firm size (log) 0.24* 1.07 1.78

Local government regulations 0.11 1.06 0.88

Export country regulations 0.09* 1.06 –0.70

Competition 0.18 1.11 1.37

MNC pressures 0.25** 1.09 1.87

Consumers 0.10 1.05 –0.83

Economic incentives –0.13 1.16 –1.03

Leadership 0.28** 1.14 1.85

R2 0.24

Adjusted R2 0.11

F-test 1.90*

** p < 0.05; *p < 0.1

132 F E A T U R E A R T I C L E

Thunderbird International Business Review Vol. 55, No. 2 March/April 2013 DOI: 10.1002/tie

headquarters of MNCs. We reason that export country reg-

ulations have an impact on GSC practices because firms

based in emerging nations face strict sets of environmental

regulations and safety requirements, particularly when

exporting to major markets such as the United States and

the European Union. Officials in major international mar-

kets often lay down detailed environmental requirements

that firms must meet in order to enter the market.

These barriers to entry into major international mar-

kets drive firms to improve their environmental perfor-

mance and upgrade their supply chain system. While the

internationalization of Dubai’s economy provides firms

with opportunities to export their products and services

internationally, they are also required to green their sup-

ply chain in order to access international markets and

enhance their global competitive ability.

We reason that pressures from headquarters of MNCs

drive supply chain greening for two reasons. First, some

MNCs compel their subsidiaries to enact GSC practices

in line with the MNC’s overall environmental strategy.

Second, subsidiaries of MNCs benefit from the finan-

cial and technical resources provided by headquarters

to effectively enact and manage green supply chain

D i s c u s s i o n a n d C o n c l u s i o n

Research on GSC has increased significantly in recent

years. Identifying the key drivers for GSC has been an

important element for this large literature. Much of this

work, however, focuses on firms located in Western devel-

oped countries or very large emerging countries, such

as China. This study focused on the relative importance

of drivers pushing for green supply chain adoption in a

small emerging economy. We developed tentative propo-

sitions and tested them using data from a sample of firms

based in Dubai.

The results show that local government regulations,

competitors, and customers are not significantly associated

with GSC practices. As expected, customers do not put

strong pressure on firms in emerging economies because,

perhaps, of lack of awareness of environmental issues and

unavailability of reliable information on firms’ environ-

mental activities (Rettab et al., 2009). Also, as expected,

the government regulations driver is not significantly

associated with supply chain greening. This result lends

credence to proponents of the regulation perspective that

believe regulations are not highly effective in emerging

economies. As indicated earlier, in most emerging econo-

mies formal regulations are absent, and when present they

tend to be less stringent and monitoring tends to be lax

(Mellahi, 2007). Campbell (2007, p. 954) noted that when

it comes to the adoption of socially responsible initiatives,

“it is not just the presence of regulations per se that mat-

ters but also the capacity of the state to monitor corporate

behaviour and enforce these regulations when necessary.”

Further, government officials tend to focus on economic

development at the expense of environment management

responsibility. A further possible explanation for our

results is that the fear of environmental regulations pos-

sibly compromising the firms’ competitiveness, combined

with weak monitoring and enforcing mechanisms, make

firms’ leaders less likely to comply. It is also plausible that

firms in Dubai do not possess the necessary capabilities to

green their supply chain. This is because switching from a

conventional to a green supply chain is not a straightfor-

ward process. Firm managers have to consider a number

of technological and managerial issues that could influ-

ence the implementation and running of a GSC. Overall,

the results show that all drivers emanating from Dubai’s

business environment are not significantly associated with

supply chain greening.

The results show that the two external drivers that

are significantly associated with supply chain greening

originate from outside the country where the firms

operate: export country regulations and pressure from

While the internationaliza- tion of Dubai’s economy provides firms with oppor- tunities to export their products and services inter- nationally, they are also required to green their sup- ply chain in order to access international markets and enhance their global com- petitive ability.

Drivers of Green Supply Chain in Emerging Economies 133

DOI: 10.1002/tie Thunderbird International Business Review Vol. 55, No. 2 March/April 2013

practices. This also reflects the extent to which leaders

of MNCs are effective in implementing, monitoring, and

enforcing their headquarters’ green policies.

The results show that managers’ commitment to envi-

ronmental issues is significantly associated with supply chain

greening. This is in line with extant research that reported

that green practices within firms reflect the commitment of

key managers (Greening & Gray, 1994; Henriques & Sador-

sky, 1996; Miles, 1987; Weaver et al., 1999). This result is

also in line with past research that consistently showed that

managers’ attitudes toward environmental issues are one

of the key predictors of adopting environmentally friendly

practices (Ellen, Wiener, & Cobb-Walgren, 1991; Minton &

Rose, 1997). Swanson (1995) noted that adoption of envi-

ronmentally friendly practices requires managers’ beliefs in

their positive “duty” toward the environment rather than

reactive efforts to avoid sanctions.

The results have significant implications for practition-

ers. The small size of emerging economies such as Dubai

makes it imperative for a significant proportion of firms

located in these economies to export to foreign markets,

especially Western developed markets, to remain competi-

tive. However, as our results suggest, while Western mar-

kets provide a new market for firms from small emerging

economies, they concurrently require them to overcome a

number of hurdles in order to access these markets. One

of these hurdles is the greening of their supply chain,

where it is often a precondition for firms from emerging

economies to meet a certain threshold in terms of envi-

ronmental performance of their supply chain in order

to get access to these markets. Therefore, based on our

results, we recommend that firms that rely on export of

their goods and services should not always wait until they

are forced to make changes to their supply chain system

to meet export requirements, but rather be proactive and

design—when possible, from the outset—a supply chain

system that enhances environmental performance.

Further, given the importance of export to these

firms, they need to make supply chain greening an inte-

gral part of their export strategy. Our results also sug-

gest that, albeit indirectly, firms in emerging economies

that seek to supply, or partner with, MNCs would need

to redesign their supply chain to meet environmental

standards set by MNCs. Furthermore, given that manage-

ment commitment to sustainability is significantly associ-

ated with adoption of GSC, we suggest that policymakers

should put more emphasis on raising awareness of envi-

ronmental issues and positive consequences of GSC

management. Further, policymakers should divert some

of the resources from developing and imposing regula-

tions that have little effect in practice, to providing firms

with support to help them develop the capabilities to

adopt green practices. This is especially the case for small

firms that tend to lack financial slack and innovative tech-

nologies and rely on government-supported assistance to

enable them to pursue a GSC management. For supply

chain managers, the results indicate that GSC initiatives

are more likely to be adopted if top management is com-

mitted to sustainability issues. Therefore, supply chain

managers should direct some of their efforts to obtaining

the commitment of top management to environmental

issues, rather than focusing solely on making the case for

greening the supply chain.

Future research could extend the present study in a

number of ways. First, this study focused on a single small

emerging economy. Comparative studies and/or studies

of other small emerging economies are highly warranted.

Second, endogeneity may be a particular concern for

some of the drivers. For instance, managers may become

more committed to GSC management once they are

forced by external factors to green their supply chain.

Second, future research that moves beyond identifying

drivers, enablers, and barriers influencing the adoption

of GSC in emerging countries and examines the perfor-

mance implication of different supply chain greening

strategies is much needed. Ideally, one could carry out

longitudinal case studies to identify the dynamics of GSC

management and to observe their effects on performance.

Policymakers should divert some of the resources from developing and imposing regulations that have little effect in practice, to pro- viding firms with support to help them develop the capabilities to adopt green practices.

134 F E A T U R E A R T I C L E

Thunderbird International Business Review Vol. 55, No. 2 March/April 2013 DOI: 10.1002/tie

Anis Ben Brik is adjunct faculty at the College of Business & Economics at the United Arab Emirates University. He

is an acknowledged expert in the fi eld of corporate social responsibility, corporate governance, and social entrepre-

neurship in the Middle East and North Africa. He is the founder and CEO of CSR Arabia, a leading organization to

promote CSR in the Arab World. He is also a partner of Openminds21, a leading German initiative of distinguished

entrepreneurs, academics, managers, and consultants to promote innovative thinking in business ethics.

Kamel Mellahi is a professor of strategy at Warwick Business School. He has authored 3 books and published

over 60 papers in strategy and international business journals such as Strategic Management Journal, Journal of International Business Studies, and Journal of Management Studies.

Belaid Rettab, PhD, is director of research at Dubai Chamber. He has a record of over 25 years of academic

research and international consultancy in western and eastern Europe, Africa, and Asia. He taught economics at

Erasmus University Rotterdam, and assisted the European Union, UN, WB, and several national governments in implementing developmental programs. He has published dozens of international publications covering economics, business ethics, international trade, entrepreneurship, and industrial organization.

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