Classification of External Stakeholders Pressures in Green Supply Chain Management

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Procedia Environmental Sciences 30 ( 2015 ) 27 – 32

Peer-review under responsibility of organizing committee of Environmental Forensics Research Centre, Faculty of Environmental Studies, Universiti Putra Malaysia.

doi: 10.1016/j.proenv.2015.10.005

ScienceDirect

International Conference on Environmental Forensics 2015 (iENFORCE2015)

Classification of external stakeholders pressures in green supply

chain management

Asrin Karimi

a, *

, Khalid Abdul Rahim

a

a_{Faculty of Economics and Management, University Putra Malaysia, 43400 UPM Serdang, Malaysia}

Abstract

The increasing importance of environmental issues requires efforts in different area of research and application. Green Supply Chain Management (GSCM) offers great potentials for the improvement of ecological performance of manufacturers.

The purpose of this paper is to explore the stakeholders' pressures on green supply chains, and to develop a taxonomy framework that can be used for green supply chain decision makers based on the characteristic dimensions for the green supply chain. The taxonomic framework is developed through (i) analysis of different dimension of green supply chain found in existing empirical work or case studies recorded in the literature, (ii) identification of key stakeholders' pressures that influence green supply chain management initiative.

Keywords:Environmental issues; green supply chain; stakeholder pressures;

1. Introduction

Environmental issues including climate change, global warming, waste of natural resources and pollution have become issues of mutual concern for businesses, governments and consumers due to increasing high levels of industrialization [1, 2]. The growing concern in the global market for “green” issues and the scarcity of natural resources have forced manufacturers to view supply chain strategies from an environmental perspective.

* Corresponding author. Tel.: +601123741507 E-mail address: asrin.karimi@gmail.com

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Environmentally sensitive industries, such as heavy engineering, automotive, chemical and plastics have always considered improvements in environmental performance as one of the basic competitive priorities, besides lower costs and quality [2]. In this development, the supply chain manager has a key role of selecting and developing appropriate green strategies with the objective of improving environmental, economic, and social performance as well as gaining a competitive advantage.

2. Research methodology

In this paper, we made a wide search of previous literature, databases, and bibliographical list to compile the relevant information on green supply chain initiatives. According to various publications and publication sources that have tried to address green issues, our literature search focused on the Business Source Complete Database, which offers access to relevant scholarly publications of interest. This involved searching for empirical case studies from published work in reputable journals concerned with GSCM initiatives, including Journal of Cleaner Production, International Journal of Production Economics, Journal of Environmental Management, and International Journal of Resources, Conservation and Recycling. The search criteria used included keywords such as “green supply chain”, “Eco- Design”, “green purchasing”, “revers logistic”, “investment recovery”, “green consumerism”, “green regulations”, and “internationalization”. Subsequently, we determine the major external stakeholders pressures behind the final implementation of specific green practices. In analyzing the contexts we identify the major stakeholders and green supply chain dimension to guide decision makers in selecting appropriate green strategies, given specific industrial situations.

3. Green supply chain management

The significance of Green Supply Chain Management (GSCM) has been extensively accepted by many researchers. GSCM has been investigated from a variety of viewpoints such as Corporate Social Responsibility (CSR), sustainable environment, human rights, and safety [3]. In addition, Srivastava [4] investigated preceding researches associated to GSCM and the sustainability, and separated them into two categories regarding the problem background or methodology. The primary category classified issues into three types: significance of GSCM, green design, and green operation. The second categorization classified supplementary issues into two types of approaches: empirical investigations and mathematical modeling.

The relationship between the environment and competitive advantage has been investigated in a numerous studies [5]. Recently, nonetheless, GSCM has been turned into a source of competitive advantage and benefits of executing GSCM have been maintained by a variety of researches [6]. In addition, a rising quantity of researchers has developed a number of methods to decrease cost and offered that GSCM absolutely affects organizational performance [7, 8]. Currently, there is a substantial need for improvement on the best way to select the most appropriate green strategy in a particular industry context. Very few researchers have considered the issue of identifying taxonomies for conventional green supply chain management. The purpose of this research is to develop a taxonomic framework for guiding decision makers when developing green strategies for their supply chain. In particular, the objectives of this study are to:

• Investigate GSCM dimensions based on previous literature • To identify various external stakeholders' pressures

3.1. Eco- Design

Eco-design, which is also called design for the environment and green design is defined as those activities which reduce environmental impact of manufacturing products during their whole life cycle, i.e.from sourcing materials, manufacturing, and buyers [9, 10]. Previous studies indicated there is a strong and positive relationship between Eco-design and GSCM [7, 9, 10]. Also, Eco-design plays a key role to reduce negative environmental impact. Eltayeb [11] identified different stages of eco-design which includes design for a decrease of environmentally hazardous materials [13], design for reuse of products [9], design for remanufacturing [10], and finally design for

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resource efficiency like use of renewable resources and energy [9].

Earlier studies demonstrated that there is a significant difference between practice and theory of Eco-design [10, 13]. Several studies show voluntary initiatives are not sufficient to overcome barriers to Eco-design and engaging firms with environmental issues. Hence by Eco design tools, like life cycle analysis it can provided efficient decision tools in design process [10,11,12].

3.2. Green Purchasing

Green purchasing is another main GSCM factor that is applied in environmental assessments not only to the immediate suppliers of firms, but also to the suppliers’ suppliers [9]. Lamming and Hampson [13] stated that the buying firm should apply environmental standards in purchasing so that suppliers are encouraged to carefully conduct their operations as well as to keep an eye on their own suppliers’ business activities.

Min & Galle [14] found that the larger the company is the bigger probability that it will adopt green purchasing strategies. Moreover, firms that engage more seriously in the environmental regulations are more likely to adopt green supplier selection. However, green criteria are rarely incorporated in purchasing decisions, unless there are clearly defined benefits for the buyer or there are strict governmental regulations [8].

3.3. Reverse Logistic

Reverse logistics is the transportation of recoverable goods received from customers to reprocessing center, inspection and disposition involves evaluating the product to determine the most appropriate dispositionalternative whereas reconditioning is the actual work carried out to recover value from products [15]. However, most authors equate reverse logistics to reconditioning [17]. Other author refers to reverse logistics as activities that closes the supply chain loop or as activities that reuse, recycling and reclamation of materials from products and packaging [12]. Hervani et al. [10] described reverse logistics as an important key factors in GSCM to make an envaironmental friendly products, by means of reuse, remanufacturing and recycling.

In normal circumstances, product recovery is common because products flow backwards for several purposes and they include manufacturing-related, distribution-related and customer-related returns [17] which contain a substantial residual value for resale at the primary or secondary marketplace.

Zhu et al. [8] showed that eco design and reverse logistics practices are green supply chain practices that are correlated at medium strength. Moreover, other studies have suggested the prospective assistance of Eco design towards product recovery [12] but theirinterrelationships required empirical testing. This is also supportedby Olugo et al. [17], who asserted that operational and strategicconsiderations of product design should be revised to address thecomplexity of product recovery operations.

3.4. Investment Recovery

Investment recovery is believed as the most significant approach for GSCM [8,9]. Investment recovery is deliberated by sale of overload inventories, scrap and overload capital equipment for GSCM strategies completion[19]. Investment recovery is to be finishedinternally, or for internal environmental causes comparing to supply chain causes. Furthermore, the recovery operation yet in developing countries can be mostly manual operations, which need considerably additional labor costs [8].

The developing countries, which have minor labor cost, may find out that resourcerecovery across the supply chain may supply its industries with an improved competitive advantage [8]. Therefore, in developing countries, it is probable that investment recovery across the supply chain will appear and be controlled, particularly in globally connected industries such as automobile and electronics industries. Investment recovery is a traditional business approach, but it can be believed to be a green approach as it can decrease waste that may have alternatively disposed. Despite the fact that investment recovery may not be the most sustainable approach, it extends the existence of the product or material wherever it can be recycled into other merchandise or materials [9].

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4. Taxonomic selection of GSCM stakeholders

A number of external and internal groups or ‘‘stakeholders’’ exert pressures for manufacturers to adopt environmental management practices. The literature has identified a number of potential groups that will influence organizational adoption of GSCM and other environmental management practices.

Stakeholder theory proposed that a firm will consider the actions of other organizations when they determine their organizational practices. In addition to competing for resources and customers, a firm will value political power and institutional legitimacy for social and financial rewards [20]. In the manufacturing context, a firm will seek to conform to norms and rules for the purpose of posetive reputation. Significant variations in organizational environmental management practices are associated with differences in stakeholder pressures [20].

4.1. Green Consumerism

Akenji [20] defined green consumerism as “the production, promotion, and preferential consumption of goods and services on the basis of their pro-environmental claims”. This definition brings out three interrelated concepts, depending on whether green consumerism is viewed from the perspective of the manufacturers, the marketers or the consumers.

Bostrm and Klintman [21] illustrated how eco-labels could be made more trustworthy to increase consumer participation in environmental labelling as a means to increase green consumerism. To provide insights into the challenges that consumers may face in embracing green consumerism, Moisander [22] developed a conceptual model of motivation to explain the limitations of framing and targeting environmental policy measures based on individual motivation and morally responsible decision making. Green consumerism is related to the market for products which demonstrated by the case of eco-labelled and energy efficient products. Connolly and Prothero [23] also addressed the same question by conducting in-depth interviews with green consumers in urban Ireland.

To understand how to target different types of consumers to increase their participation in green consumption, several studies have been carried out to profile consumers and determine their attitudes toward green consumerism [24]. Others have explored factors that affect specific types of green consumption intentions and behaviour, such as to recycle papers, glass and plastic containers, cardboard and motor oil; to consume organic vegetables [25]; to consume green food [10]; and to bring own shopping bags when visiting a supermarket [25].

4.2. Green Regulations

Over the last two decades, various environmental regulations and standards to promote green practices have been published and enforced by both private and public organizations. For example, the International Organization for Standardization (ISO) introduced ISO 14000, an environmental management standard that specifies requirements for environmental management, performance evaluation, labelling, and lifecycle assessment [26]. Porter van der Linde[8] argued in their classic analysis that stringent environmental regulations are one of the major driver toward supply chain management, which push firms to be more innovative and efficient.

Haufler [27] states that the objective of reducing political risk is a reason why firms adopt environmental codes. Friedman [28] has studied the role of environmental managers, and he concludes that, especially after 1970s, when regulation became financially significant, environmental management was upgraded to become a central focus within firms. Haufler [27] has stressed the role of policy entrepreneurs in explaining socially responsible purchasing policies.

Within the context of GSCM, actors in the supply chain operate in a way that fulfills both customer and legal requirements. Hence, pressures from government agencies and national/international regulators will influence the adoption of environmentally responsible behavior [27].

4.3. Internationalization

The internationalization of a company, understood as its integration as a subsidiary of a multinational corporation, also represents an important variable for explaining environmental pro-activity [28], possibly due to the significant environmental pressure that stakeholders, mainly external, exert on multinational corporations.

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has acquired and developed abroad can increase its response to international demand for environmental products, processes or technologies. Chenille et al. [30] found different results: studying a sample of small and medium Italian enterprises located in industrial clusters, they did not find a direct and clear relationship between the export propensity and their environmental innovation activities. De Marchi and Grandinetti [31] found similar results based on data on the Italian community innovation survey (CIS), a representative sample of large and small firms specialized in different manufacturing industries.

5. Concept of an Integrative Framework

One of the most important competitive sources in modern industry is environmental sustainability. Today a lot of effort has been directed towards encouraging firms and companies to take environmental issues into consideration. The effect of stakeholders such as green consumerism, regulations and international environment are often described as important driving forces in GSCM [8,12].One of the motivations for organizations to implement green practices is stakeholder pressures [10]. Zhu et al. [8] found GSCM help corporates to increase competitive advangate and obtain more market shares. Several researchers have described that green practices are considered as a competitive advantage when it is difficult for other manufacturers to be environmental friendly [8,13,26].

Fig. 1. Integrative GSCM Framework

This integrative (Fig. 1) GSCM framework arranges all elements that were identified in the state of the art review and brings them into an overall GSCM context.

6. Conclusion

Green supply chain decision makers should be able to identify the most appropriate green solution to meet various needs of different product-market characteristics. Moreover, the green supply chain managers should find ways to evaluate the impact of potential supply chain strategies for the natural environment and the environmental performance change, apart from the economic advantages expected from the strategy.

The study goes a long way in advancing the body of knowledge in GSCM. The integrative framework presented in this paper structures and, thus, unifies the GSCM dimensions and variouse stakeholders' pressures that were analyzed in the literature review. The assignment of elements to the steps within the general GSCM procedure indicates their relation and respective dependency.

This research offers a significant contribution to both academics and practitioners in green supply chain management. the study goes a long way in prepare a practical framework for decision makers when developing green supply chain strategies, given specific industrial contexts in which the strategies are to be applied. The taxonomic framework offers managerial insight into the implications of the choice of specific strategies on the operations policies of the supply chain.

External Stakeholder Pressure

Green Supply Chain

Management _Competetive Advantage -Green Consume -Green Regulation -Internationalization - Eco-design - Green Purchasing - Revers Logistics - Investment Recovery

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