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Journal of Cleaner Production 56 (2013) 86e93

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Reprint of Lean management and supply management: their role in green practices and performanceq

Sara Hajmohammad a, Stephan Vachon a,*, Robert D. Klassen a, Iuri Gavronski b

a Richard Ivey School of Business, Western University, London, Canada b Universidade do Vale do Rio dos Sinos, Programa de Pós-Graduação em Administração, Brazil

a r t i c l e i n f o

Article history: Received 30 August 2010 Received in revised form 21 June 2012 Accepted 13 July 2012 Available online 27 June 2013

Keywords: Environmental performance Environmental management Supply management Lean management

DOI of original article: http://dx.doi.org/10.1016/j q This article is a reprint of a previously published

article has been published in the wrong issue. The ar reader’s convenience and for the continuity of the s poses, please use the original publication details: H management and supply management: their role in mance, Journal of Cleaner Production, 39 (2012) pp. 3 * Corresponding author.

E-mail addresses: [email protected] (S ivey.ca (S. Vachon), [email protected] (R.D. Kla (I. Gavronski).

0959-6526/$ e see front matter � 2013 Elsevier Ltd. http://dx.doi.org/10.1016/j.jclepro.2013.06.038

a b s t r a c t

Organizations are faced with increasing pressure to engage in sustainable development and to integrate environmental and social dimensions into their traditional performance metrics. Prior research suggests that lean management and supply management are potentially important determinants of environ- mental performance and can be seen as capabilities that ease the adoption of environmental practices. To help understand the roles of lean and supply management in regards to improving the firm’s environ- mental performance, a conceptual model proposes that the magnitude of environmental practices me- diates the relationship between lean and supply management with environmental performance. To test the model, plant-level survey data from a sample of Canadian manufacturing plants is used. The results indicate that supply management and lean activities provide means by which resources are invested in environmental practices. The empirical analysis also confirms that the impact of lean management, and to a lesser extent supply management, on environmental performance is mediated by environmental practices.

� 2013 Elsevier Ltd. All rights reserved.

1. Introduction

As manufacturing corporations develop know-how and capa- bilities for cleaner production, research must continue in its quest to better understand potential linkages between operations/supply chain systems and environmental performance. This paper aims to examine how two of these systems, namely lean management and supply management, impact environmental performance. In particular, a conceptual model is developed suggesting that lean management and supply management can have an indirect effect on environmental performance by supporting the development of environmental practices which in turn impact performance d that

.jclepro.2012.07.028. article. Due to an error, this ticle is reprinted here for the pecial issue. For citation pur- ajmohammad, S., et al., Lean green practices and perfor- 12e320.

. Hajmohammad), svachon@ ssen), [email protected]

All rights reserved.

is environmental practices mediate the impact of lean and supply management on environmental performance.

Several studies fall under the label of “lean and green” (Florida, 1996; King and Lenox, 2001) or “green supply chain” (Vachon and Klassen, 2006a; Vachon and Mao, 2008), but only a few have analyzed both issues simultaneously (Mollenkopf et al., 2010). For instance, some studies have looked at the synergy existing between lean management and environmental management practices (Florida,1996) while others concentrated more on the link between lean management and environmental performance (King and Lenox, 2001; Rothenberg et al., 2001).

Similarly, a segment of the literature has linked supply man- agement activities with environmental management (Bowen et al., 2001; Vachon, 2007) while another segment has focused on the link between supply chain management and environmental per- formance (Rao, 2002; Vachon and Klassen, 2006b). For instance, Vachon and Klassen (2007) present empirical evidence indicating that buyeresupplier integration is related to the type of environ- mental investment made in the buyer’s plant. Building on evidence from case studies in the United Kingdom and Japan, Hall (2000) concludes that a buying organization’s understanding of its sup- pliers’ operations and capabilities is key in developing a green supply chain and that such understanding can only be achieved by a sound supply management.

S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e93 87

The literature appears to have parallel paths for the research that have addressed the leanegreen and supplyegreen linkages: one series ofstudiesfocusesonthe fitbetweenlean/supplymanagement and environmental practices and another examines the link with environmental performance. Building on the fact that environ- mental practices are generallylinked to environmental performance (Klassen and Whybark, 1999b; Melnyk et al., 2003), the question becomes, is the link between lean/supply management and envi- ronmental performance a direct relationship or is it a relationship mediated by environmental practices. Despite a fair number of studies on these topics, very fewstudies (if any) have simultaneously addressed environmental management practices, operation/supply chain systems, and environmental performance. Hence, this paper’s main objective is to empirically assess the effect of lean and supply management on the extent of environmental practices and envi- ronmental performance in manufacturing organizations.

This paper contributes to the operations management literature in three ways. First, a theoretical model is developed linking the four constructs of interest for this study: lean management, supply management, environmental practices, and environmental perfor- mance. Another contribution is to empirically assess the mediating effect of environmental practices on the relationship between lean management, supply management and environmental perfor- mance. Such a mediating effect has not been assessed in the liter- ature and is important in clarifying the role of lean management and supply management regarding environmental management or performance: are lean management and supply management directly linked to environmental performance? Finally, the paper has a managerial contribution because its results can guide man- agers in setting a suitable operating context for adopting and implementing environmental practices within their organization.

Thereare fiveadditional sections tothis paper. First, theliterature streams on lean management, supply management, and environ- mental management (practices and performance) are reviewed leading to the development of the conceptual model and hypothe- ses. Next, in Section 3, the survey methodology and construct measurement are detailed. The results are presented in Section 4. In Section 5, the results are contextualized and the research implica- tions are discussed. A synthesis of the paper including the limita- tions of the study makes up the concluding section.

2. Literature review and conceptual model

Drawing from lean management, supply management and environmental management literatures, the four constructs of in- terest as well as a series of hypotheses linking these constructs are presented in this section. According to the research question and objective of this paper, lean management as well as supply man- agement can lead to improved environmental performance, but their influence can be mediated by the level of a firm’s environ- mental practices.

2.1. Environmental practices and environmental performance

An overview of the different environmental technologies potentially adopted by manufacturing organizations can help to better appreciate the notion of environmental practices. Environ- mental technologies, widely defined to include managerial tech- niques and procedures which control or eliminate the negative impacts of products or services on the natural environment (Shrivastava, 1995), have been classified in the literature into three mutually exclusive categories of pollution prevention, pollution control, and management systems (Klassen and Whybark, 1999a). The profile of environmental investments can take the form of any combinations of these three technologies; it is important to note

that the total investment (the level of resources invested) is inde- pendent of its form (Klassen and Vachon, 2003; Klassen and Whybark, 1999b; Vachon and Klassen, 2007). While all three cat- egories aim at improving environmental performance, technologies that address pollution at the source are generally recognized generating other benefits such as cost reduction and the develop- ment of valuable resources (Hart, 1995). This type of technology is of interest for this paper and would generally be associated with pollution prevention (structural investments to reduce pollution at the source) and management systems (infrastructural investments) (Klassen and Whybark, 1999a,b; Vachon and Klassen, 2007). Therefore, we define environmental practices as the level of re- sources invested in activities and know-how development that lead to pollution reduction at the source. It includes efforts to imple- ment environmental management systems (e.g., ISO 14001), reduce waste, or recycle materials.

Environmental practices and organizational performance (including environmental performance) have been theoretically linked through the natural resource-based view (NRBV) of the firm (Hart, 1995). The NRBV proposes that organizations, through proper environmental management, can develop capabilities that are valu- able, rare and difficult to replicate by competitors (Russo and Fouts, 1997). Therefore, according to the NRBV, a firm can gain competi- tive advantage by pursuing environmental strategies such as pollu- tion prevention or minimizing emissions, effluents and waste (Hart, 1995; Russo and Fouts, 1997). Within the NRBV framework, several studies have provided empirical evidence to support the linkage between investment in and adoption of environmental practices within a firm or across its supply chain and its environmental per- formance. For instance, manufacturing structural investments aim- ing to reduce pollution at the source (Klassen and Whybark, 1999b), facility-level resource conservation practices (Pullman et al., 2009) and environmental proactivity (Russo and Fouts, 1997) were all positively linked to environmental performance.

H1: The extent of environmental practices is positively associated with environmental performance.

2.2. Lean management and the environment

Theterm lean production isassociatedwith the Toyota Production System where it is integrated with just-in-time tactics in order to improve quality and delivery time. Many researchers argue that lean management encompasses a set of inter-related, complementary and mutually reinforcing operating practices d often referred to as bundles d that aim at reducing or eliminating non-value-added activities throughout a product’s entire value stream, within an or- ganization and along its supply chain network (Narasimhan et al., 2006; Shah and Ward, 2003, 2007; Vonderembse et al., 2006). They also suggest that the implementation of these practices is associated with higher operational performance, such as a reduction in customer lead time, manufacturing cycle time or manufacturing costs, and an improvement in labor productivity and quality (De Treville and Antonakis, 2006; Hopp and Spearman, 2004; Sherrer- Rathje et al., 2009; White et al., 1999).

Given that manufacturing operations through product design and process technologies can critically influence environmental performance (Hart, 1995), the relentless pursuit of waste minimi- zation embedded in lean management practices (Womack and Jones, 2003), opens doors for continued efforts in reducing the risk for the environment (Florida, 1996). In fact, waste is the common denominator for lean and green management (Porter and van der Linde, 1995). The continuous effort through lean management to reduce operational waste either from discarded materials,

S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e9388

consumption of energy, or water usage translates into lower envi- ronmental harm, thus enhancing environmental performance (King and Lenox, 2001).

A recent review of just-in-time manufacturing studies indicates a robust link (through meta-analysis) between set-up time reduc- tion and manufacturing performance (i.e., cost and quality) (Mackelprang and Nair, 2010): that is better use of resources per unit produced and fewer defects leading to a reduction of waste hence better environmental performance. King and Lenox (2001) found that lower level of inventory was positively linked with lower waste generation and lower emissions. Interestingly, empirical evidences in the automotive industry do not indicate such a correlation: Rothenberg et al. (2001) found that inventory levels were not statistically linked to VOC emissions level. They suggest that in some instances environmental performance and lean management can be traded-off.

Despite these mixed results, the lean and green paradigm has grown both in organizations and academia (Chapman and Green, 2010; Mollenkopf et al., 2010; Taubitz, 2010). Ultimately, some scholars argue that going lean leads inadvertently to environmental efficiency due to its core principle of “zero waste” (Florida, 1996; Rothenberg et al., 2001).

H2a: The level of lean management activities is positively associ- ated with environmental performance.

The lean and green literature has also suggested that lean and green shared similar capabilities. In fact, lean management can reduce the marginal costs of a firm’s environmental practices, either by lowering their implementation costs or by providing new insights into their actual value, which will in turn result in improved envi- ronmental practices (King and Lenox, 2001; Simpson and Power, 2005). Building on the above discussion, a context marked by an extensive application of lean management helps organizations to develop capabilities in rethinking their processes with reduction of transportation/movement, material used, and defects in mind. These capabilities are transferable to environmental management. For example, these capabilities can ease process and product redesign which aims to reduce the likelihood of adverse environmental im- pacts by the production processes (Klassen, 2000). As such, the ca- pabilitiesdeveloped through leanmanagementcan assistininitiating green activities within the operations. In other words, lean manage- ment is contributing to the adoption of environmental practices.

H2b: The level of lean management activities is positively associ- ated with the extent of environmental practices.

Given hypotheses H2a and H2b, the question becomes to what extent lean management contributes to environmental perfor- mance directly. In fact, the link between lean management and environmental performance can be the result of the increase in environmental practices that is sparked by lean management.

H2c: The impact of the level of lean management activities on environmental performance is mediated by the extent of environ- mental practices.

2.3. Supply management and the environment

Inter-organizational activities between a buying organization and its supplier are generally termed supply management. In fact, from a tactical function in an organization, supply management has attracted a lot of operations management researchers’ attention as it has become more strategic over the last two decades (Krause et al.,

2007, 2009). The integration of environmental issues into supply management has been the topic of numerous studies (Vachon and Klassen, 2006a; Zhu and Sarkis, 2004). For example, previous studies have shown that development and deployment of supply management capabilities d such as internal integration of the manufacturing firm’s functions, collaborative approach with sup- pliers, or detailed purchasing policies and procedures d facilitate the implementation of green activities within the supply chain (Bowen et al., 2001). Also, Klassen and Vachon (2003) found that two types of supply chain activities, namely collaboration and evalua- tion, are associated with the level and form of a plant’s investment in environmental technologies. The joint collaborative activities be- tween a plant and its suppliers drive great investment in environ- mental technologies through knowledge sharing and introducing a greater variety of options addressing particular environmental challenges (Bonifant et al., 1995; Purdy and Safayeni, 2000).

We define supply management here as a series of interactions with suppliers that pertain to supplier development (Krause et al., 2000) and communication (Prahinski and Benton, 2004) such as supplier evaluation, supplier award and recognition. It is important to note that these interactions are not necessarily directed to environmental issues. For instance, a certification process related to a quality specification would be considered as part of supply management. Thus, supply management helps buying organiza- tions to achieve essentially two goals: (i) communicate their pri- orities to suppliers and (ii) gain a better understanding of the suppliers’ operations and capabilities.

From an environmental perspective, one outcome from supply management is the adoption of environmental practices and tech- nologies by the buying organizations. An organization can benefit from more intense interaction with suppliers by identifying and bringing in external know-how that is housed at the supplier plant (Vachon and Klassen, 2006b). For example, such external know- how can extend the capacity of a buying firm to effectively imple- ment radical innovation beneficial for the environment (Florida, 1996; Geffen and Rothenberg, 2000). Also, an organization can gain a better understanding of their suppliers’ existing capabilities leading to potential avenues for synergy d without the synergy, the environmental practices may have not been adopted.

The buying organization can also improve environmental per- formance from supply management. By guiding suppliers to improve manufacturing capabilities (for greater efficiency or qual- ity), the buying organization reduces their own waste significantly. Walmart’s packaging scorecard is a supplier evaluation tool gauging suppliers’ efforts in reducing packaging. By reducing packaging, the suppliers’ eco-efficiency increases and Walmart’s ecological foot- printis reduced (e.g., energyefficiency in transportation) (Plambeck, 2007; Stundza, 2006). Similar to lean management, the linkage be- tween supply management and environmental performance can be partially or fully mediated by environmental management e hence the following hypotheses:

H3a: The level of supply management activities is positively asso- ciated with environmental performance. H3b: The level of supply management activities is positively asso- ciated with the extent of environmental practices. H3c: The impact of the level of supply management activities on environmental performance is mediated by the extent of environ- mental practices.

2.4. Lean and supply management

The conceptual model presented in Fig. 1, includes a link from lean management to supply management. While issues of supplier

Environmental Practices

Environmental Performance

Supply Management

Lean Management +

+

+

+

+

Direct effect

Indirect effect (mediation)

+

Fig. 1. Conceptual model.

S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e93 89

development and feedback are usually incorporated in a larger view of lean management (Shah and Ward, 2007), it is generally recognized that a dichotomy exists between internal and external practices in manufacturing organizations (Bozarth et al., 2009; Schroeder et al., 2002; Shah and Ward, 2007). A model having lean management (essentially an internal set of practices) and supply management as separate constructs is theoretically (Simpson and Power, 2005) and empirically (Gavronski et al., 2012) supported in the literature.

A recent study suggests a link from JIT production to JIT pur- chasing (Inman et al., 2011). Also, boundary spanning activities such as strategic supply management were found to be driven by internal quality management implementation (Yeung, 2008). Therefore, evidence from the literature suggests a link from the internal operating practices (e.g., lean management) toward external practices such as supply management.

H4: The level of lean management activities is positively associated with the level of supply management activities.

3. Methodology

3.1. Data collection

Data from a sample of Canadian manufacturing plants was collected through a mail survey conducted between September and December 2007, following a procedure inspired by Dillman (2000). The plant was chosen as the level analysis because it is generally where many environmental issues are evaluated and operational decisions are implemented. Using the National Pollutant Release Inventory (NPRI) and the Canadian Scott’s Directory, a sample frame of 503 randomly selected plants with more than 100 em- ployees in the North American Industrial Classification Systems (NAICS) codes 332e335.1 A total of 94 usable responses were collected from that effort, leading to a response rate of 18.7%. Out of 94 plants, 22 have reported that they had more than 250 employees. Unfortunately due to missing data in some questionnaires, the sample was reduced to 85 for this study.

To minimize key-informant bias, each plant was contacted by phone prior to sending the survey in order to identify the individual most knowledgeable about the production, environmental and supply practices and performance (Kumar et al.,1993). Furthermore, although responses from multiple informants may have been preferred, the informants chosen for this study were positioned to make the assessment asked of them. In addition, the study was tested for common method bias, which could pose problems for

1 These four industries are fabricated metal products (NAICS 332), machinery manufacturing (NAICS 333), electronics (NAICS 334), and electric appliances (NAICS 335).

survey research that relies on self-reported data d especially if the same person provides the data at the same time. One important concern in such cases is that common method bias may artificially inflate observed relationships between variables. To minimize common method variance, the dependent variables were placed after the independent variables in the survey; which helps to diminish, if not avoid, the effects of consistency artifacts (Podsakoff et al., 2003). A Harman’s single factor test was also conducted (Harman,1967; Shah and Ward, 2007). If common method variance existed, a single factor would emerge from a factor analysis of all questionnaire measurement items, or one general factor that accounted for most of the variance would result. The exploratory factor analysis revealed four factors with eigenvalues greater than 1.0 that accounted for 66.8% of the totalvariance. The first factor only accounted for 36.73% of the variance. These results suggested that common method variance was not a serious problem in our study.

3.2. Survey questionnaire and measures

The survey instrument used for this research was part of the Canadian segment of the Global Manufacturing Research Group (international survey, fourth round). The survey included multiple scale items for each of the constructs. Appendix 1 provides the relevant survey questions for each construct of interest.

Lean management d as noted earlier, lean management com- prises a set of operating practices that aims at reducing non- value-added activities within the organization. Thus, our four- item scale measures the extent to which firms deploy resources (money, time and/or people) to (i) just-in-time manufacturing, (ii) lead time reduction, (iii) set-up time reduction, and (iv) total quality management. Supply management d a five-item scale captures the degree of activities that aim to improve supplier performance and to develop their capabilities, such as suppliers’ evaluation, certifi- cation, recognition and development programs as well as auditing of suppliers’ facilities. Environmental practices and performance d the extent of envi- ronmental practices is assessed by using a four-item, seven- point scale which captures the extent to which resources have been invested in four programs related to environmental man- agement over the previous 2 years: ISO 14001 certification, pollution prevention, recycling of materials and waste reduc- tion. Environmental performance is measured by a five-item, seven-point scale, in terms of improvements in the amount of air emissions, waste water generation, solid waste disposal, consumption of hazardous/harmful/toxic materials, and energy consumption. Control variables d to avoid any unjustifiable influence of alternative factors, other than those included in our model, on the plant’s environmental performance, two control variables are included while analyzing the model. First, there is a control for plant size because the environmental performance gains or failures observed may be explained by this factor, as opposed to the mechanisms modeled. On one hand, larger firms may have greater adverse environmental impacts and consequently be under more external pressure to improve their environmental performance; on the other hand, they might have larger resource pools to invest in environmental technologies and consequently higher levels of environmental improvement. In the study, plant size is measured as the natural logarithm of the number of employees (Grant et al., 2002; Vachon and Klassen, 2006a). The second possible confounding effect relates to the impor- tance senior management places on the environmental issues. This top management importance conferred to environmental

Table 1 Construct measures assessment: reliability and convergent validity.

Standardized loading

Composite reliability

AVE (%)

Supply management .92 69.4 Supplier development programs

.837

Suppliers evaluation .842 Suppliers’ facilities auditing activities

.826

Suppliers recognition .826 Suppliers certification process

.834

Lean management .88 70.6 Just-In-Time (JIT) .732 Manufacturing throughput time reduction

.921

Setup time reduction .857 Total Quality Management (TQM) (dropped)

Environmental practices .86 66.6 ISO 14001 certification .771 Pollution prevention .872 Recycling of materials .802 Waste reduction (dropped)

Environmental performance .88 65.6 Air emissions .832 Waste water generation .840 Solid wastes disposal .757 Consumption of hazardous/ harmful/toxic materials

.808

Energy consumption (dropped)

Table 2 Correlations.

Mean SD SM LM EPr EPe PS

Supply management 3.34 1.35 e Lean management 4.28 1.42 .31 e Environmental practices 3.77 1.45 .42 .58 e Env. Performance 4.77 .79 .30 .42 .49 e Plant size 214 208 .07 .17 .24 .09 e Imp. of Env. issues 13.6 9.5 .06 .11 .36 .23 .13

S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e9390

issues is an indicator of the willingness of the organization to invest in environmental management and improve its envi- ronmental performance (Klassen, 2001). Top management importance is measured as the relative importance of environ- mental performance against five other performance goals (i.e., manufacturing cost, quality, delivery speed and timeliness, manufacturing flexibility, new product design/innovation).

4. Data analysis and results

The model examines whether the adoption of lean and supply management practices within an organization directly improves its environmental performance, or if the relationship is mediated by the adoption of environmental practices. Because the sample size of 85 does not allow using structural equation modeling based on the covariance matrix, a path analysis using Partial Least Squares (PLS) and more specifically SmartPLS 2.0 (beta) (Ringle et al., 2005) was adopted to test the hypothesized relationships between the con- structs. The general rule of thumb regarding an appropriate sample size when using PLS is to multiply by ten the highest between (i) the greater number of formative indicators for a block (a construct in our model) and (ii) the greater number of paths leading to a dependent variable (Braunscheidel and Suresh, 2009; Chin and Newsted, 1999). In this study, the highest number of paths lead- ing to a dependent variable is five (i.e., environmental perfor- mance) meaning that a minimum sample size of 50 cases would be necessary.

4.1. Assessment of construct measures

The PLS method tests the theoretical hypotheses and the properties of the underlying measurement model at the same time. Before testing the different hypotheses from the model, an assessment of the constructs’ psychometric properties including convergent validity, discriminant validity, and reliability was per- formed. In the process, three items were dropped (one for lean management, one for environmental practices, and one for envi- ronmental performance) because of cross or low loadings. As shown in Table 1, the remaining items indicate adequate conver- gent validity as per their strong standardized loadings (individual item reliabilities) which are all above .70 (Anderson and Gerbing, 1988; Fornell and Larker, 1981; Johnston et al., 2004). Another in- dicator of convergent validity is that the average variance extracted (AVE) is above 50% for each of the constructs, indicating that the items share at least half of their variance with the construct (on average).

Discriminant validity can be assessed by comparing the AVE of each construct and the shared variance between each pairs of constructs (Anderson and Gerbing, 1988; Morgan et al., 2007). In PLS, if the square root of the average variance extracted is greater than all of the inter-construct correlations, it is evidence of suffi- cient discriminant validity. Looking at Tables 1 and 2, we note that each construct has an AVE that is superior to all of the inter- construct correlations.

In PLS, alternative ways of judging multiple-item consistency other than the Cronbach’s alpha, are used. Composite reliability (comparable to Cronbach’s a) assesses the inter-item consistency, which should have a minimum value of .7. All of the scales demonstrate acceptable performance on this basis (see Table 1).

4.2. Estimation of the structural model

The PLS structural model was assessed by examining the path coefficients (similar to the standardized beta weights in regression analysis) and their statistical significance. Bootstrapping was used

to test their statistical significance. This procedure entails gener- ating 500 sub-samples of cases randomly selected, with replace- ment, from the original data. Path coefficients are then generated for each randomly selected subsample. T-statistics are calculated for all coefficients, based on their stability across the subsamples, indicating which links were statistically significant. Table 3 shows the path coefficients and the explained construct variances. The variance explained for each of the endogenous variables is adequate with 28% for environmental performance and 50% for the environmental practices.

The results indicate a positive and significant path between environmental practices and environmental performance which supports H1 (b ¼ .292; p < .05). It is noteworthy that when esti- mating the model, the direct paths from lean management and supply management to environmental performance were not sig- nificant, providing no evidence to support hypotheses H2a and H3a of a direct impact on environmental performance.

Lean management was significantly linked to environmental practices (b ¼ .449; p < .01) providing support to hypothesis H2b. In order to test the possible mediating effect, in the study, the pro- cedure proposed by Baron and Kenny (1986) was adopted. First, an assessment of the path between lean management and the medi- ating variable (environmental practices) is needed: that path is

Table 3 PLS structural model results.

Standardized coefficient t-Value

Environmental practices / Environmental performance .292 2.07* Lean management / Environmental performance .212 1.49 Supply management / Environmental performance .104 .99 Plant size / Environmental performance �.040 .52 Importance of environmental issues / Environmental performance .098 .88

Lean management / Environmental practices .449 5.25** Supply management / Environmental practices .255 2.74** Plant size / Environmental practices .111 1.71 Importance of environmental issues / Environmental practices .286 3.70**

Lean management / Supply management .311 2.98**

Variance explained in the endogenous variables Environmental performance R2 ¼ .28 Environmental practices R2 ¼ .50 Supply management R2 ¼ .10

*p-value < .05; **p-value < .01.

S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e93 91

positive and significant (p < .01). The second step is to assess the direct path from lean management to environmental performance when there is no path between lean management and environ- mental practices (the suspected mediator) in the model: the path is also positive and significant (p < .01). The result in Table 3 indicates that the path between lean management and environmental per- formance in the full model (with all the paths) is not significant: when combined with the result of the first two steps, it can be concluded that environmental practices are mediating the impact of lean management on environmental performance. A Sobel test was conducted to confirm this mediating effect (Holcomb et al., 2009; Sobel, 1982). The Sobel test was significant (p < .05) corroborating the mediating effect and providing support for H2c.

A similar procedure was applied to supply management. When the direct path between supply management and environmental performance was assessed without any path to environmental practices, it was positive but marginally significant (p < .10). The fact that the direct path becomes non-significant with the intro- duction of environmental practices in the model indicates a mediating effect. The Sobel test was marginally significant (p < .10) supporting the hypothesis H3c albeit in a weak way.

It is also noteworthy that hypothesis H4 is supported as the path from lean management to supply management was positive and significant. Hence, finding support for the idea that supply management activities can be a part of lean systems (Shah and Ward, 2007). The importance of environmental issues for top management was significantly linked to environmental practices but not environmental performance. It suggests that the top management support is associated with increased effort to improve the environmental position of the plant but that such support might not be effective as no direct impact on performance is detected.

5. Discussion

Looking at the findings of this research, it becomes clear that environmental practices are the main driver in reaching better environmental performance as the direct links from lean manage- ment and supply management were found to be non-significant. Thus, consistent with the findings of Klassen and Whybark (1999a) and Pullman et al. (2009), it can be concluded that any in- vestment in environmental practices including management sys- tems (software or infrastructural elements) or pollution prevention (hardware or structural elements), is linked with the reduction in hazardous pollutants and energy consumption.

While empirical results in the literature either directly validate the link between lean management and environmental perfor- mance or between lean management and environmental practices, an analysis comprising both linkages simultaneously allows a bet- ter delineation of the expression “lean and green”. The literature is rather straightforward about the similarities between lean man- agement and environmental practices in terms of operational ca- pabilities (Rothenberg et al., 2001; Simpson and Power, 2005) and on the similarities in the performance outcome from both lean and environmental management (Florida, 1996; King and Lenox, 2001): however, no study, to our knowledge, has evaluated lean man- agement, environmental management, and environmental perfor- mance together.

The results indicate that the link between lean management, as it concentrates on minimizing or eliminating various kinds of waste within plants, and environmental performance is fully mediated by environmental practices (i.e., activities related to environmental management). Such a result suggests that the skills and know-how gained when applying lean management principles are conducive to the adoption of environmental practices and make those prac- tices more effective as suggested by Simpson and Power (2005) and Rothenberg et al. (2001). Such a result is important for interpreting the true meaning of “lean and green”. For instance, the well-cited work of King and Lenox (2001) has linked lower levels of in- ventory (an indicator of lean management) to better environmental performance e the results of this study suggest a skipped link in their conclusion. Skills and know-how developed and applied in inventory reduction had likely eased the adoption and imple- mentation of environmental initiatives that then improved the environmental performance.

Supply management, taking the form of control and monitoring activities and formalization of the interactions with suppliers, was positively linked to the extent of environmental practices. This result is in contrast with other research in the literature where supply chain integration (Vachon and Klassen, 2007) and supplier evaluation (Klassen and Vachon, 2003) did not have an impact on the extent of environmental investments. However, the link from supply management to environmental practices supports Hall’s (2000) claim that the starting point for environmental supply chain is information exchange with suppliers and a good under- standing of their operations. Therefore, one conclusion is that supply management can ease the adoption of green technologies or implementation of new green procedures as supplier’s know-how becomes accessible to the buying organization (Klassen and Vachon, 2003).

Survey items used in the multi-item scales.

Supply management In the last two years, to what extent has your plant invested resources (money,

time and/or people) in programs in the following areas? (1 ¼ not at all, 7 ¼ great extent) SM1 Supplier development programs

SM2 Suppliers evaluation

SM3 Suppliers’ facilities auditing activities

SM4 Suppliers recognition

SM5 Suppliers certification process

Lean management In the last two years, to what extent has your plant invested resources

(money, time and/or people) in programs in the following areas? (1 ¼ not at all, 7 ¼ great extent) LM1 Just-In-Time (JIT)

LM2 Manufacturing throughput time reduction

LM3 Setup time reduction

LM4 Total Quality Management (TQM)

Environmental practices In the last two years, to what extent has your plant invested resources (money,

time and/or people) in programs in the following areas? (1 ¼ not at all, 7 ¼ great extent) EI1 ISO 14001 certification

EI2 Pollution prevention

EI3 Recycling of materials

EI4 Waste reduction

Environmental performance In the last two years, to what extent has your plant’s environmental

performance changed in the following areas? (1 ¼ much worse, 7 ¼ much better) EP1 Air emissions

EP2 Waste water generation

EP3 Solid wastes disposal

EP4 Consumption of hazardous/harmful/toxic materials

EP5 Energy consumption

Plant size Approximately, how many employees (full-time equivalent) work for

the plant?

Relative importance of environmental issues Manufacturing plants have many different requirements placed on them.

For each of the following competitive goals, please indicate the importance senior management places on each for your plant. Allocate 100 points across the six performance goals below to indicate their relative importance.

(i) Manufacturing cost, (ii) quality, (iii) delivery speed and timeliness, (iv) manufacturing flexibility, (v) new product design/innovation, (vi) environment/safety.

S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e9392

The relationship between the supply management processes and environmental performance was weaker than unexpected, as only marginal significance was found. This result differs from the one found for lean management which can be somewhat puzzling. The fundamental distinctions between supplyand lean management are twofold and can explain the difference in the result. First, there is a sharp contrast with know-how and capabilities emerging from lean management d those capabilities are essentially internal to the plant. Second, the outcome from lean management is usually close to the overall objective set by environmental management (e.g., reduce waste) (Chapman and Green, 2010). In other words, supply management processes are not as close to environmental goals making it insufficient to substantially affect the green performance.

For managers, the implications of the results are important. Although environmental practices taking the form of manage- ment systems (ISO 14001), pollution prevention, and recycling of material were positively linked with both lean and supply activ- ities; the implementation of lean management and supply man- agement does not directly impact environmental performance. Improved environmental performance necessitates the allocation of resources (investments, operating expenses) directly into environmental management which can be implemented more effectively with lean capabilities in place and interaction with the suppliers.

6. Conclusions, limitations and future research

Research in three literature streams (i.e., lean management, supply management and environmental management) provided the theoretical foundation for a model linking lean and supply ac- tivities to environmental performance. Earlier literature on envi- ronmental management within lean and supply chain contexts indicated that environmental investment plays an important role. However, no comprehensive model has integrally examined both the antecedents and the outcomes of environmental practices simultaneously. The hypothesized model suggests that supply management as well as lean activities provide means by which environmental actions can be encouraged leading then to improved environmental performance. Thus, the primary focus was to explore, first, the relationship between environmental perfor- mance and lean management, and, next, environmental perfor- mance and supply management. Furthermore, based on a sample of Canadian manufacturing plants, this study provides the first empirical evidence, to the authors’ knowledge, that the extent of environmental practices mediates the relationship between lean management and environmental performance.

On the practical level, the results indicate that a suitable route to facilitate the implementation and adoption of environmental practices and to improve the plant’s environmental performance is by setting an adequate operating context based on lean and supply management principles.

Nevertheless, several limitations of this study are important to note. First, financial performance was not controlled for, which might influence the degree of organizational slack available for environmental investment (Klassen and Vachon, 2003). Second, while the sample size was reasonable compared to earlier research in operations management (e.g. Klassen, 2001), the statistical po- wer for the hypotheses, which was not supported by the study’s outcomes, could have been increased by a larger sample. It is also noteworthy that most of the manufacturing organizations in the sample were of medium size which can hamper the generalizability of the results. Third, the supply chain activities examined were only with suppliers, leaving an important set of supply chain actors e the customers. Future study of these activities in both directions (upstream and downstream) and with both supply chain parties

(suppliers and customers) might offer new insights. Fourth, the study used a perceptual scale for environmental performance which should be validated by quantitative “hard” data like the in- formation found in the National Pollutant Release Inventory (NPRI). Finally, in this study there was a focus on the environmental dimension of sustainability, whereas future studies could be extended to examine the effect of lean and supply management activities on the social performance of the firm and specifically on their safety performance.

Appendix 1

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