Strategic Orientations, Sustainable Supply Chain Initiatives, and Reverse Logistics: Empirical Evidence from an Emerging Market

This article discusses the empirical evidence of strategic orientations, sustainable supply chain initiatives, and reverse logistics in an emerging market. It explores the impact of sustainable business practices on the economic development of emerging markets and the role of eco-reputation and eco-innovation in driving sustainable supply chain initiatives.

International Journal of Operations & Production Management
Strategic orientations, sustainable supply chain initiatives, and reverse logistics: empirical evidence
from an emerging market.
Chin-Chun Hsu Keah-Choon Tan Suhaiza Hanim Mohamad Zailani
Article information:
To cite this document:
Chin-Chun Hsu Keah-Choon Tan Suhaiza Hanim Mohamad Zailani , (2016),"Strategic orientations, sustainable supply
chain initiatives, and reverse logistics: empirical evidence from an emerging market.", International Journal of Operations &
Production Management, Vol. 36 Iss 1 pp. -
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http://dx.doi.org/10.1108/IJOPM-06-2014-0252
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Strategic Orientations, Sustainable Supply Chain Initiatives, and Reverse
Logistics: Empirical Evidence from an Emerging Market
1. Introduction
Outsourcing trends since the early 1990s have transformed emerging coun
significant players in the global economy. Global outsourcing thus has reshaped global
chain systems in significant ways, such that the globalized manufacturing network has
manufacturing jobs to emerging countries, which providing new opportunities for
the economic development of emerging markets. But a globalized manufacturing netwo
poses significant risks to individual health and safety, national economies, and local, re
and global environments (O’Rourke, 2005). Thus the question of whether manufacturin
in emerging countries can manage their profit growth and environmental sustain
effectively has important implications at both national and global levels.
Sustainable business practices can help create wealth for firms and raise the stan
living in emergingmarkets;unsustainableeconomicactivitieslead to environmental
degradation that can threaten an emerging country’s long-term prosperity and e
competiveness (Schmidheiny, 1992). Firms in emerging countries might adapt ec
friendly strategies and guidelines from their business clients or competitors in more ad
economies, though rapid business development and continuous environmental de
also have increased the emphasis on environmental sustainability. In particular, environ
concerns have prompted the governments of some emerging economies to regulate bu
practices and set broad environmental improvement objectives (Child and Tsai, 2005).
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flip side, profit pressures and weak ecological traditions can decrease firms’ ince
address the broader range of stakeholder interests associated with sustainable practice
In this context, we note three pertinent knowledge gaps. First, many studi
focused on green business approaches in advanced economies, but much less re
addressed the antecedents or outcomes of ecologically friendly business practices in em
markets (Blome et al., 2014; Fabbe-Costes et al., 2014). Second, despite the on
about the potential outcomes of ecologically friendly supply chain activities (Praj
2014), the benefits or outcomes of sustainable supply chain initiatives are poorly
(Roehrich et al., 2014), though outcome measures are essential for managing an
competitive global markets. In a related sense, surprisingly few empirical studies exam
impacts on reverse logistics (Aitken and Harrison, 2013), despite their promise for crea
value and providing competitive advantages (Jayaraman and Luo, 2007). Third, e
ecologically friendly supply chain commitments make sense, managers lack guidelines
to start greeningtheir firms’supplychain efforts.A few prior studiesidentifyexternal
“enablers,” derived from institutional or stakeholder theory (Zailani et al., 2012), but re
few cite strategically relevant factors. That is, research into sustainable supply chain in
tends to pertain to organizational capabilities, not the strategic orientation antec
precede the adoption of sustainable supply chain initiatives. By focusing on sust
practices, definitions, and decision frameworks, these studies ignore the need for insigh
how to develop sustainability strategies from an organizational perspective (Zhu
2007). The fragmented, incomplete knowledge in this area thus fails to address
which key strategic orientation forces will drive sustainable supply chain initiatives.
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In attempting to fill these knowledge gaps, this study makes three primary contri
First, we study emerging economies. Some manufacturing firms identify and target seg
ecologically conscious buyers, in an effort to position themselves as favorable green su
but most companies refuse to abandon their existing operations and production
regardless of the growing interest in sustainability (Größler et al., 2013). Thus, manufac
firms in emerging countries must find ways to execute existing supply chain strategies
sustainable initiatives that implement more ecologically friendly programs than a
their past supplychainefforts.In particular,we studyMalaysia,which is a memberof
Associationof SoutheasternAsian Nationsand an integralpart of the globaleconomy;
Malaysian suppliers have critical roles in global supply chains. The country repre
important manufacturing hub for global firms that seek to outsource the manufa
componentparts.The UnitedNationsConferenceon Tradeand Development(UNCTAD)
reports that FDI inflows to Malaysia increased from US$9.1 billion in 2010 to US$11.9 b
2011,an increaseof 30.8 percent(World InvestmentReport,2012),which also raised
Malaysia’s rank to 13 from 16 in the list of Top Prospective Host Economies for
(World Investment Report 2013). Thus, the UNCTAD report affirms Malaysia’s attractive
a foreign direct investment(FDI) destination.In this emergingeconomy,sustainable
development remains at an early stage, whereas profit maximization is the prior
manufacturing firms.
Second, we examine the reverse logistic effects of ecologically friendly pur
manufacturing, and packaging programs (De Leeuw et al., 2013; Hsu et al., 2013). Sust
supply chain initiatives can deliver reverse logistic benefits; our empirical evidence eve
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that firms can create competitive advantages for new value creation (Chavez et
Reverse logistics refers to returns of products or packaging, after their use, for reuse, r
or reclamationof materials(Kapetanopoulouand Tagaras,2011).By engagingin reverse
logistics, firms can recycle remanufactured parts or components, as well as dispose pro
those components that cannot undergo remanufacturing or recycling (Lo, 2014). In turn
constitute a substantial cost-driving area and may result in greater profitability and cus
satisfaction, as well as benefitting the environment (Hsu et al., 2013).
Third, this study considers specific strategic orientation drivers that engender suc
sustainable supply chain initiatives. Specifically, we identify and empirically examine tw
strategic orientation factors that have been overlooked: eco-reputation and eco-in
both of which integrate environmental concerns into the firm’s business strategies. This
thus offers evidenceof the criticalrole of eco-reputationand eco-innovationstrategic
orientations in deploying sustainable supply chain initiative programs, as well as of the
effects. Both antecedents may be important for understanding how firms respond to ec
challenges and derive sustainable supply chain initiatives, but neither has been the sub
prior research. We show that firms wishing to sustain their firm’s supply chain initiative
develop their eco-reputation and eco-innovation strategic orientations first.
In the next section, we present a theoretical framework for the strategic o
antecedents and reverse logistics outcomes of sustainable supply chain initiatives. Our
hypotheses reflect input from a wide array of literature. We discuss the research metho
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and the results of the data analyses. Finally, this article concludes by delineating the fin
their managerial implications, and limitations.
2. Literature Review
2.1 Strategic Orientations
Strategic orientation originally stemmed from the market orientation notion, whic
a popular means to measure firm performance. According to Manu and Sriram (19
strategic orientation refers to “how an organization uses strategy to adapt and/o
aspects of itsenvironmentfor a more favorablealignment.”Extendedversionsfocus on
customeror technologyorientations,and Narverand Slater(1990)arguethat strategic
orientationis an criticalcomponentof profitabilityfor both manufacturingand service
businesses,such that an orientationinfluencesbusinessdecisionsthroughits effectson
business profitability (Schniederjans and Cao, 2009).
Accordingto strategicchoicetheory(Child,1972),strategicdecisionsalso have a
determining role in a firm’s business survival, and the fundamental issue is the
orientation, with a foundational assumption that firms can enact and actively sh
environments. Strategic choice theory centers on decision making in organizations desi
achieve well-defined goals. Thus, managerial discretion, interpretation, and perspe
great influence in strategic decision making, over the span of shared organizational act
achieveorganizationaleffectiveness,firms must makeappropriatestrategicchoicesthat
“represent the competitive strategy implemented by a firm to create continuing perform
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improvements” (Morgan and Strong, 1998, p. 1055). Ultimately a strategic orient
firm’s overall direction and objectives, oriented toward an external business environme
driven by top management (Voss and Voss, 2000). Strategic choice theory focuses on m
strategic choices when their firms face external challenges (Child, 1972). If they have a
orientation, firms choose to leverage their strategy to adapt or change aspects of their
environment to ensure more favorable alignment. It also helps explain why firms take p
and committed actions to address urgent issues such as sustainability.
Firms do not interact with their operating environments in identical ways. For exa
in the same industry, some firms focus on a narrow, limited, product-market do
effort to protect their market share. Others search continuously for new market opportu
through innovation and new product development. Responses to the operating e
reflect firms’ strategic orientations; strategic orientations largely their choices, est
strategic positioning, affect their performance, involve multiple functions, are hig
and ambiguous,and demandsubstantialresourcecommitments.In addition,a strategic
orientation choice refers to the process of choosing one course of action rather than an
Thus a strategic orientation offers a means to comprehend the actions that firm
enhancetheir profitabilityand competitiveadvantage.This pattern of past, orintended,
decisions guides a firm’s ongoing alignment with its external environment and shapes s
policies and procedures (Hill and Cuthbertson, 2011; Minarro-Viseras et al., 2005).
From a sustainable supply chain perspective, firms’ strategic orientations a
because sustainable business practices demand substantial firm resources and are tech
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complex, such that they require diverse skills contributed by technical experts, organiz
experts, and top management (Saeed et al., 2014). From a strategic choice theory pers
Sharma (2000) examines how firms use freedom of choice (discretion, interpreta
perspective) to create strategies that influence firms’ orientation toward adopting susta
initiatives. Ketchen and Hult (2011) cite strategic choice theory as appropriate fo
strategic supply chain management. With its focus on the best value, strategic
seeks to identify supply chain models that can affect organizational outcomes an
environment. Strategic choice theory centers on the intra-organizational level and the p
of certain strategic capabilities (Ketchen and Hult, 2011). It also seeks to answers ques
challenges in extant supply chain management research. Finally, a strategic orientation
sustainable business practices is influenced by various external agents, including
governments, regulatory organizations, green social groups, and rapidly changing
(Shrivastava and Grant, 1985).
We examine two particular ecological strategic orientations: eco-reputation
innovation. An eco-reputation is a stakeholder’s overall perception of a company’
environmental protection over time. This evaluation reflects each stakeholder’s experie
the ecological commitment of the company, as well as images based on the company’s
beyond simple compliance with government regulations (e.g., Chen, 2010). This
consistent with Banerjee (2001), Banerjee et al. (2003), and Esty and Winston (
innovation instead refers to the development of products and processes that explicitly
for concerns about the natural environment in pursuit of the goal of sustainable develo
and ecological improvements (e.g., Menon et al., 1999). Thus eco-innovation con
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firm’s strategicresources,from ecologicallyfriendly technologicaladvancesto socially
acceptable innovative paths, consistent with the view that product development a
improvement can be designed and executed in ways that are less harmful to th
environment (Fussler and James, 1996; Segarra-Oña et al., 2014).
Hong, Kwon, and Roh (2009) define an ecological strategic orientation as a firm’s
term commitment to producing environmentally sound products and services by implem
environmentalimprovementgoals.Environmentallysoundproducts canpromotea firm’s
overall economic performance, through internal integration and external coordina
both major stakeholders, such as customers and suppliers. Moreover, to ensure a susta
orientation for the supply chain, the firm must maintain its successful past prac
promotingand encouragingthe implementationof consistentenvironmentalinnovative
initiatives that reinforce its long-term sustainability (Hong et al., 2009; Awaysheh and K
2010). The adoption of sustainable supply chain initiatives depends on the firm’s
orientation (Baines et al., 2005). An ecological strategic orientation, such as eco-reputa
eco-innovation, influences strategic choices, such that each ecological strategic orienta
influence the impact of the firm’s decision makers on the adoption of sustainab
practices throughout the firm (Chiang et al., 2012).
2.2 Sustainable Supply Chain Management
Supplychainmanagementencompasses“a set of three or more entitiesdirectly
involvedin the upstreamor downstreamflows of products,services,finances,and/or
information from a source to a customer” (Mentzer et al., 2001, p. 4). This definition se
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boundaries of the supply chain with the final customer. Traditional supply chains also a
on the production paradigm (Doran et al., 2007). In contrast, sustainable supply
inter-disciplinary,cross-cuttingissue. The 2005World Summit on Social Development
(http://www.un.org/ga/59/hl60_plenarymeeting.html) identified three pillars of sustai
economic development (profit), social development (people) and environmental p
(plant).Thesepillarsare not mutuallyexclusivebut can be mutuallyreinforcing.In the
contemporary accounting framework, the triple bottom line (TBL) provides the m
business sustainability, in terms of financial, social, and environmental performance. In
Peter Senge, in an interview byHarvard Business Review, identifies sustainable supply chains as
the core enablers of the next industrial revolution (Prokesch, 2010). The United Nations
Compact (UNGC) recently launched a guide for advancing sustainability in global supply
in four key areas: human rights, labour, environment and anti-corruption
(https://www.unglobalcompact.org).
With this study, we focus on the environmental perspective of sustainable supply
practices. Specifically, firms must to partner with members throughout their supply
improveenergyefficiencywhile reducingnatural resourceusage,waste and adverse
environmental impacts, which together lead to a stronger bottom line. Sustainab
chains account for the environmental impacts of products and services as they flow thr
the supply chain. These environmentally friendly extensions of traditional supply chains
activities to minimize the negative environmental impacts of a product or service throu
entire life cycle.
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Sustainable supply chains deal with environmental issues in both forward an
versions (Rao and Holt, 2005). A sustainable forward supply chain would address enviro
issues both upstream and downstream (Geyer and Jackson, 2004). Upstream, sus
supply chains can have significant effects in terms of improving suppliers’ enviro
performance (Sarkis, 2006). Downstream, these sustainable supply chains focus on red
environmental impacts of the products produced during their use and disposal. Such re
often offer significantenvironmentalbenefits,becauseproductsgeneratemost of their
environmental emissions and waste during their use, such that these detrimental impa
exceed those generated during the manufacturing stage. Through these outcomes, sus
supply chains provide both economic and environmental benefits (Carter, Kale an
2000; Rao and Holt, 2005).
2.3 Sustainable Supply Chain Initiatives
Supply chains encompass all activities associated with the process flow for transf
raw materials into goods for end users. The process cycle begins with purchasing, inclu
material purchasing activities by suppliers. Manufacturing activities follow, after w
productmust be distributedto customersor retailers(Hill et al, 2012).Accordingto
sustainability literature, the potential green elements in this cycle include vendor asses
environmental purchasing policies, green production policies, waste management,
cross-functionalintegration,effectivecoordinationbetween companiesand suppliers,
performance evaluation processes, the selection of suppliers, and leveraging rela
between suppliers and customers (Giovanni, 2012). We therefore conceptualize s
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supply chain initiatives as those designed to accomplish the firm’s strategic sup
functions—purchasing, manufacturing, and packaging—in ways that minimize their
impacts on the natural environment. This conceptualization is line with prior defi
sustainable supply chains (e.g., Hsu et al., 2013)
Green purchasing refers to an ecologically conscious purchasing initiative that a
ensure procured materials or components meet the firm’s eco-friendly goals. The
process can manifest the firm’s environmental preferences if it includes green p
criteria (Saghiri and Hill, 2014). Carter and Ellram (1998) argue that green purc
should reflect efforts to reduce, reuse, and recycle materials. Thus, purchasing decision
significantinfluenceson the sustainablesupplychain (Yanget al., 2013)throughthe
procurement of raw materials and components.
Green manufacturing entails the environmentally conscious production of a prod
with the goal of minimizing its negative environmental impacts throughout its entire life
as well as promoting positive ecological business operation practices, such as re
reusing products(Dam and Petkova,2014). That is, green manufacturingconsiders
environmental impacts in every stage of the product lifecycle (Giovanni, 2012), in an eff
minimize the environmental impacts of manufacturing processes, generate minim
and reduce environmental pollution. Pursuing green manufacturing also helps firms low
raw material costs, gain production efficiency, reduce environmental and occupat
expenses,and improve their corporateimage (Zhu and Sarkis, 2007). Thus, green
manufacturing helps firms achieve profit growth and increase their market share.
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Finally,green packaging is environmentallyconsciouspackagingof a product,to
minimize the associated negative environmental impacts. Packaging contributes d
product success in supply chains, because it can enable the efficient distribution of pro
well as lower environmental impacts due to spoilage or waste. Increased attenti
climate change has made green packaging a primary focus area, to reduce waste and i
air quality,becausedifferentpackagingcharacteristics(e.g.,size, shape,materials)have
different impacts. Hsu et al. (2013) indicate that green packaging includes consi
cost (materials and shipping), performance (adequate protection of the product), conve
(easy to use), compliance (with legal requirements), and environmental impact (Liu et a
Lin et al., 2013).
2.4 Reverse Logistics and Competitive Advantage
Dowlatshahi (2000) define reverse logistics as activities by which a produc
products and components to recycle, rebuild, or dispose of them properly. Rever
also might refer to the actual process of return or take-back, after the consumer has us
product or packaging, to reuse, recycle, or reclaim materials, or else provide safe refills
& Ellram, 1998). Using reverse logistics as a supply chain performance measure sugges
companies can obtain competitive advantages by quantifying the efficiency and effecti
their actions (Lehtinen and Ahola, 2010). Thus reverse logistics differentiate a firm, lead
market advantage and opportunities to build competitive advantages.
Specifically, reverse logistics create tangible and intangible value by helpin
extract value from used/returned goods instead of wasting manpower, time, and
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more raw materials,(2) createadditionalvaluethroughincreasing productlifecycles,(3)
improve customer satisfaction and loyalty by paying more attention to faulty go
merchandiserepairs,and (4) obtain feedbackto suggestimprovementsand enhance
understanding of the real reasons for product returns, which should lead to futu
improvements or new product designs (Aitken and Harrison, 2013). Through reverse log
manufacturing firms not only receive products back from the consumer but also collect
merchandise for the manufacturer to take apart, sort, reassemble, or recycle (Yu et al.,
Alternatively, the returned product might be resold in secondary channels and thus
revenue (Aitken and Harrison, 2013). Reverse logistics also might enhance custo
because customers respond positively to environmentally responsible actions by
goodwill generated by reverse logistics could be a source of firm competitiveness.
3. Hypotheses Development
We depict the key study constructsin Figure1. The two strategicorientation
antecedents, eco-innovation and eco-reputation, precede sustainable supply chain in
Sustainable supply chain initiatives then relate to the firm’s reverse logistics.
Insert Figure 1
3.1 Relationship of Eco-Reputation and Eco-Innovation Strategic Orientations
Accordingto strategicorientationliteratureand strategicchoicetheory,a firm’s
strategic orientations are critical, because they involve the commitment of a large amo
firm resources(De Toni and Tonchia,2003).They also tend to be technicallycomplex,
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demanding diverse skills gathered from technical experts, organizational experts,
management. Furthermore, strategic orientations depend on external agents, such as s
organizedlabor unions,and rapidlychangingtechnology(Shrivastavaand Grant, 1985).
Strategic orientation choice involves a process of choosing a particular course of action
helps explicate the actions that firms take to achieve enhanced profitability and
advantage. Because a strategic orientation is a pattern of past or intended decisi
the firm’s ongoing alignment with its external environment and shaping internal
and policies, a firm may apply multiple orientation decisions at the same time t
strategic goals.
Testa and Iraldo (2010) introduce two strategic orientations that favor the adoptio
green supply chain management practices by firms. We consider an eco-reputati
orientation, a strategy designed to make all stakeholders (customers, suppliers, society
of the firm’s efforts to implement eco-friendly systems and thus enhance its corporate
We also note an eco-innovation strategic orientation, a strategy that guides com
develop innovative products and operational processes that can improve their environm
performance. Companies that are frontrunners in developing eco-friendly product and p
innovations have an opportunity to strengthen their leadership and differentiate
more from their competitors.
An organization’secologicallyfriendly strategicorientationthus comprisesall
positioning strategies associated with a particular issue, such that greater integra
formulation of positioning strategies should enable them to influence the firm’s s
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business practices. That is, eco-reputation and eco-innovation strategic orientations sho
mutually interdependent.
H1: An eco-reputation strategic orientation correlates positively with an eco-innov
strategic orientation.
3.2 Eco-Reputation Antecedents of Supply Chain Initiatives
Organizations may adopt sustainable business practices in response to the expec
of stakeholders. For example, such efforts appeal to consumers as they become
aware of the need to protect the environment, such that they might expand the
unique selling points and boost corporate reputation. An eco-reputation strategic
also provides a buffer against short-term performance demands, such that managers ca
longer-term view and experiment with new strategies to enhance the firm’s repu
and Sarkis, 2007). Ecologically friendly investments are significant expenditures with lo
terms, so firms with an eco-reputation strategic orientation should be better able to ma
investments (Fabbe-Costes et al., 2014; Hoejmose et al., 2013).
Toyota enjoys a strong eco-reputation, considering its top position on the G
GreenBrandsList (Interbrand,2013).As an auto manufacturer,Toyotaregardsits eco-
reputation as its most important strategic resource; it has made large strides in reducin
consumption, water use, waste, and toxic emissions (Chan et al., 2012). Toyota also su
shares its eco-reputation strategic orientation with its suppliers; by working with them,
exploits eco-reputation to not only create a positive image among consumers bu
profit from them, as evidenced by the economic success of its hybrid-electric Pr
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collaboration to produce the all-electric Tesla. Half of all Americans consider the
impacts of the products and services they buy (Leiserowitz et al., 2013), and a
reputationrepresentsan importantcriterionfor purchasingdecisions.Many globalfirms
therefore strategize to develop and maintain environmental reputations. For exam
launched an ecologically friendly version of its Post-It notes made from recycled
started packaging large Post-It packs in recyclable cartons instead of plastic wrap.
An eco-reputation strategic orientation grants managers the ability to invest capi
sustain their supply chain programs and wait to reap longer-term reputation benefits fr
deployment (Huq et al., 2014). Eco-reputation is not an optional or low priority
orientation; it becomes the key to a company’s image. Therefore, this strategic orienta
some nice-to-have “add-on” but rather a core business philosophy that weaves through
company and radiates outward throughout the entire supply chain and its activities (Jer
et al., 2013). We posit:
H2: An eco-reputation strategic orientation has a positive effect on a firm’s deploy
of (a) green purchasing, (b) green manufacturing, and (c) green packaging.
3.3 Eco-Innovation Antecedent of Supply Chain Initiatives
According to Teece (2007), eco-innovation is the firm's ability to integrate, establ
reconfigureexternaland internal,environmentallyfriendlycapabilities.Specifically,eco-
innovationrequiresthe developmentof new valuethroughmore efficientand effective
environmentally friendly products, services, and processes. Product eco-innovation focu
the creation of new products or improvement of existing products to meet envir
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concerns; process eco-innovation focuses on the creation and implementation of innova
substantially improved production or delivery methods (Blome et al., 2014).
Many global enterprises and governments use the term eco-innovation to e
the contributions of business to sustainable development while also improving competi
For example, the European Commission launched the Eco-innovation Action Plan
2011 to promoteeco-innovationdevelopmentacrossEurope.The EcoAPis a significant
milestone, moving the European Union beyond ecologically friendly technologies
fostering a comprehensive range of eco-innovative business activities. The long-term o
will focus on initiating and maintaining stronger, broader eco-innovation awareness acr
beyond European Union.
In a supplychaincontext,an eco-innovationstrategicorientationguidesfirms to
develop products and improve processes using product life-cycle viewpoints, as we
stricter environmental requirements for suppliers. Such a strategy requires enviro
competencies and integrates relevant ecological activities, such as purchasing, manufa
and packaging, to improve current product and process developments (Chen and Hung
Therefore an eco-innovation strategy motivates firms to commit extra resources and cu
innovative capabilities to build supply chain sustainability. To reach this goal, fir
develop innovative technologies that reflect the industry-specific characteristics and na
the business,which likelydiffer from currentpractices,to improvetheir environmental
performance (Saeed et al., 2014; Hoejmose, et al., 2013). Therefore, we posit:
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H3: An eco-innovation strategic orientation has a positive effect on a firm’s deploy
of (a) green purchasing, (b) green manufacturing, and (c) green packaging.
3.4 Reverse Logistics Outcomes
Manufacturingcompanieshave become increasinglyresponsiblefor collecting,
dismantling, and upgrading used products and packaging materials (Zhu et al., 2012). R
logisticsis inherentlygreenand ecologicallyfriendly,becauserepairing,refurbishing,or
recycling a product instead of throwing it in a landfill protects the environment.
reverse logistics, returned goods can be put back into inventory again, re-sold a
centers, or broken down to component parts for sale (Aitken and Harrison, 2013
that can cut costs, increase profits, reduce negative impacts on the environmen
liabilities, and improve customer relationship (Chavez et al., 2013). Resource commitm
reverse logistics thus should be a priority (Zailani et al., 2012), because of thei
enhancing performance through new value creation and offering strategic means
lasting linkages with customers and positive firm images (Tan et al., 2003). These reve
differ from standard, outbound operations and need special handling, likely requiring ad
resource allocations throughout the product lifecycle. Allocating sufficient resources to
sustainable supply chain initiatives constitutes one of the principle antecedents o
reverse logistics programs. Reverse logistics also depend heavily on reversing th
supply chain, to enable firms to identify and categorize returned products, comp
packaging materials correctly for disposition, whether used or unused (Li et al., 2013).
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Reverse logistics is a continuous, embedded process, not just a one-time o
such that it entailsa built-inprocess(De Brito and Dekker,2004).By affectingmany
components of the manufacturing process, reverse logistics expands the responsibilitie
supply chain. Therefore, reverse logistics demands a thorough reexamination of
cycles to determine the amount of energy or waste consumed and generated by each p
in every stage. The successful implementation of reverse logistics requires a com
review of operationalprocessesat every level of the company—fromraw material
procurement to packaging (Meade and Sarkis, 2002; Murphy and Poist, 2003).
Accordingly, firms need to implement at least the following strategies into each s
chain activity to make their reverse logistics work:
(1) Green Purchasing. The procurement of environmentally friendly materials
purchasing requirements and expands the related criteria (Min and Galle
Green purchasing promotes recycling and the reclamation of purchased
which creates value if used or unwanted products can be recollected. Howeve
returnable products often are less expensive to produce, and virgin materials
to be priced equal to or lower than recycled materials (Walton, Handfie
Melnyk, 1998).
(2) GreenManufacturing.Researchand developmentcan designspecificationsfor
environmentally friendly products, and firms can reengineer their manufa
and production processes to rely on the addition of recyclable materials as par
the process. Green manufacturing considers environmental impacts throughou
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productlifecycle,includingthe sale of used, unsold,or returnedproductsin
secondary markets (Van Hoek, 1999).
(3) Green Packaging. Examining current packaging can reveal possible changes a
potential of gathering leftover packaging or using less packaging (Gonzál
Adenso-Dıaz, and Artiba, 2004). Green packaging addresses all packaging
including size, shape, and materials. Because reverse logistics entails a
continuously taking back products or packaging materials to avoid enviro
damages, it entails not just the use of recycled or recyclable materials but also
impacts of packaging on distribution arrangements, such as loading and
efficiency and space utilization. The packaging used must be less costly,
handle,and environmentallyfriendly(Wu and Dunn, 1995).Becausegreener
packaging can reduce reverse logistics costs, a positive relationship likel
between the deployment of sustainable supply chain initiatives and reverse lo
Adding sustainability concepts for reverse logistics leads to a comprehensive fram
for integrating green purchasing, green manufacturing, and green packaging (De
Dekker, 2004). This model also acknowledges that modern customers prioritize s
factors in their strategic agendas in both production and service sectors (Murphy
2000). Firms developing ecologically friendly reverse logistics networks can minimize th
returns, focus on designing recyclable packaging and pallets, reduce unnecessary deliv
exploit green materials for product design (Rogers and Tibben-Lembke, 2001). Th
hypothesize:
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21 | P a g e
H4: A firm’sreverse logistic outcomes are positively associated with the deploymen
(a) green purchasing, (b) green manufacturing, and (c) green packaging.
4. Methods
4.1 Sample
We conducted survey in Malaysia among all EMS ISO 14001–certified firms. By se
firms with this certification, we ensure that the respondents have embarked, at least to
extent, on the adoption of sustainable supply chain initiatives. Of the 2255 manufacturi
in Malaysia, 342 companies had obtained ISO 14001 certification. To obtain reliable dat
this limited sample, we applied census sampling methods and requested that all 342 co
participate by providing input about their practices.
4.2 Respondents
We received 125 completed questionnaires, for a response rate of approximately
We describe the responding firms in Table 1.
Insert Table 1
4.3 Measures
We used multiple indicators to measure each research construct based on
literature. Appendix I details the survey instrument.Eco-reputation strategic orientation is the
extent to which the firm maintains its environmental reputation throughout the p
lifecycle. The five measurement items came from Testa and Iraldo (2010).Eco-innovation
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22 | P a g e
strategic orientation is company awareness, as reflected by its adoption of new idea
strategies in its supply chain practices. These six measurement items came from
Iraldo (2010). For both eco-reputation and eco-innovation strategic orientations, res
used five-point Likert scales (1 = “strongly disagree,” 5 = “strongly agree”).Green purchasing
practicesincluderaw materialsand componentscontentrequirementsand restrictions,
content labeling or disclosure, supplier questionnaires, supplier EMS certification, and s
complianceaudits.Six measurementitems were adaptedfrom Hammer(2006).Green
manufacturing entails production activities applied to the process, such that inputs
relatively low negative environmental impact, are highly efficient, and generate little po
Seven relevant items were adopted from Ninlawanet al. (2010) and Zhuet al. (2007).Green
packaging includes characteristics such as size, shape, weight, and materials being
adaptedfour measurementitemsfrom Ninlawanet al. (2010).A five-pointLikertscale
measured the three sustainable supply chain initiatives (1 = “not at all,” 5 = “very high
Reverse logistics is the process of retrieving products from end consumers, to capture valu
ensure proper disposal. We took seven items from Ninlawanet al. (2010) and used a five-point
Likert scale (1 = “not at all,” 5 = “very high extent”) to assess the implementat
logistics in each firm.
5. Results
Figure 2 depicts the measurement models and Table 2 provides the descriptive s
and zero-order correlation matrix for the six latent variables. The Cronbach’s α statistic
constructs range from .904 (eco-reputation) to .975 (green manufacturing, reverse logi
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23 | P a g e
the scales appear sufficiently reliable. The composite reliability statistics range from .89
reputation) to .972 (green manufacturing); the minimum AVE of .619 (eco-reputa
exceeds the threshold value of .50.
Insert Table 2 and Figure 2
In Figure 2, the CFA results show that the large and significant standardized loadi
each measured item on its construct offer evidence of convergent validity. The
indicate excellent convergent validity. All the correlation coefficients are significa
than .5, in support of discriminant validity. A more rigorous structural equation model a
is the χ2 difference test between a constrained and unconstrained model for each
constructs. Table 3 summarizes the results of these χ2 difference tests, which confirm the
discriminant validity of the six constructs. Nomological validity also is supported, accord
the various model fit indices in Figure 3.
Insert Table 3 and Figure 3
Figure 3 also shows that eco-reputation strategic orientation has a positive
sustainable supply chain initiative components, in support of H2. Specifically, an eco-reputation
strategic orientation related strongly to the deployment of green purchasing (β = .33,p < .05),
green manufacturing (β = .22,p < .05), and green packaging (β = .28,p < .05). Our results also
offer broad supportfor H3; eco-innovationstrategicorientationrelatedpositivelyto the
deployment of green purchasing (β = .26,p < .05), green manufacturing (β = .35,p < .05), and
green packaging (β = .42,p < .05).
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24 | P a g e
The results provide strong evidence of the positive impact of reverse logistics in t
sustaining firms’ supply chain initiatives, though these effects differ according to the in
sustainable supply chain initiative components. Specifically, in line with H4B and H4C, green
manufacturing (β = .26,p < .05) and green packaging (β = .19,p < .05) initiatives positively affect
firms’ reverselogisticsoutcomes.However,greenpurchasing(β = .08,p > .05)initiatives
exhibited no significant relationship with reverse logistics outcomes, so we cannot confi4A.
These findings suggest that green manufacturing and packaging initiatives are more eff
differentiating firms’ reverse logistic outcomes than are green purchasing initiativ
green purchasedmaterialssimply are less visible in reverselogisticsthan are green
manufacturing and green packaging.
6. Discussion
Most emerging countries have undergone rapid economic development quic
downside to this rapid growth is the host of environmental pollution problems that have
and are of serious global concern. In response, this study makes three important contri
First, by collecting empirical data from Malaysia, a major emerging country, we demons
the first time the specific effects of each sustainable supply chain initiative on reverse l
in a developing economy. Second, we extend prior research on the role of perf
measuresin greensupplychain managementand uncoverhow reverselogisticscreate
competitive advantages. Third, we examine two unique, previously untested drive
supplychain initiatives,eco-reputationstrategicorientationand eco-innovationstrategic
orientation. The results offer useful theoretical and managerial implications.
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25 | P a g e
Advancing sustainable business practices has the potential to help manufacturing
in Malaysia manage their competing goals of profit growth and environmental pr
Although this model was developed in Malaysia, the findings should apply to firm
emergingcountriestoo. Most emergingcountriesremainin an earlystageof economic
development and face trade-offs between wealth creation and potential negative
social and environmental conditions. Manufacturing firms’ apparent efforts to pur
growth at all costs is the leading cause for a country’s dismal pollution record; un
business practices lead to an array of environmental problems. The information in this
can help business leaders in emerging markets develop sustainable supply chain activi
ensure their business success, through reverse logistics. Business leaders in emerging
also should strengthentheir eco-strategicorientationand developsustainablebusiness
practices to enhance their implementation of reverse logistics, which can help them ful
environmental responsibilities. Building a sustainable business culture is a long p
manufacturingfirms’ ability to advancesustainablebusinesspracticesultimatelycould
contributeto their competitivenessby enhancingtheir firms’ reputationand increasing
consumer confidence at both international and national levels.
Eco-reputation strategic orientation and eco-innovation strategic orientation can
sustainable supply chain initiatives. Our results show that eco-reputation strategic orien
positivelyassociatedwith sustainablesupplychaininitiatives;an eco-innovationstrategic
orientation suggests that sustainable supply chain initiatives are less risky than failing t
such practices. In addition, when the firm has both an eco-reputation and an ec
strategic orientation, the two strategic orientations positively affect each other. Most st
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26 | P a g e
the drivers of organizational sustainability efforts empirically examine only the in
effects of the antecedent variables; our results suggest the antecedents also can
their effects, so they enhance understanding of when and why firms engage in
activities. Incorporating bi-directional relationships thus can enhance knowledge of the
of organizational sustainable involvement. Furthermore, most sustainable supply chain
draw their conceptual framework from the notion of institutional theory, with the assum
that externalinstitutionalforces motivatea company’simplementationof sustainable
initiatives(Kauppi,2013).Our findingssuggestthat the enablersof sustainablebusiness
practices may not be as divergent as has commonly been assumed. Instead, en
sustainablesupply chain initiativesmight combinethe organization’soverall strategic
orientationswith respectto the naturalenvironmentand deliverenvironmentalbenefits
(Stonebraker and Liao, 2004).
The results highlightthe potentialvalue of simultaneouslyexaminingdifferent
components of sustainable supply chain initiatives. The limited research in developing e
domains tends to focused on a single aspect of sustainable supply chain initiatives. Our
reveal relatively strong positive correlations among the three different sustainable supp
initiatives(Table2) but also indicatethat each initiativecan have differentimpactson
outcomes in different conditions. Empirical research on sustainable supply chain manag
should allow for this possibility.
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27 | P a g e
7. Management Implications
This study also offers important new insights for managers. Figure 4 synth
results with their related managerial implications. Our findings offer needed empirical s
for investing in sustainable supply chain initiatives, and we offer strong evidence of the
obtained from reverse logistics in sustainable supply chain initiatives (Alblas et a
Managers can be confident that sustainable supply chain initiatives will benefit t
reverselogistics.Ecologicalrequirementsare key criteriafor productsand production,
particularlyfor companiesthat seek ways to ensureeconomicsustainabilityby staying
competitive and profitable. This study offers empirical evidence that implementing sust
supplychain initiativesleads to reverselogistics,creatingvalue and a new sourceof
competitive advantages (Jayaraman and Luo, 2007).
Insert Figure 4
For managers interested in developing sustainable supply chain initiatives,
also offer some alternatives. Decision makers in the firms attempting to nurture
supplychain initiativesshouldnot overlookthe importanceof eco-reputationand eco-
innovation strategic orientations, which our results identify as important enablers
and Klassen, 2010). In general, making sustainable supply chain investments is
ecological strategic orientation is a top priority within the firm or top managers emphas
friendly business practices as sources of the company’s image (Roehrich et al., 2014). H
managersalso need to attendcarefullyto the bi-directionalrelationshipbetweeneco-
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28 | P a g e
innovation and eco-reputation strategic orientation. In the presence of both, man
find it easier and more effective to emphasize green supply chain activities.
The significantreverselogisticsbenefitsstemmingfrom sustainablesupplychain
initiatives suggest that manufacturing companies can not only receive products b
consumers but also collect unsold merchandise, to take apart, sort, reassemble, or recy
returned product also can be resold in secondary channels and generate revenu
thus should emphasize the strategic benefits of sustainable supply chain initiatives, rat
regarding reverse logistics as a cost center. They also should place more empha
benefits of environmental sustainability, to encourage their firms to become enviro
sensitive.
8. Limitations and Future Studies
This research has some limitations, and our findings also suggest several a
research. First, we collected most of the data from a single key informant in ea
company.The potentialthus existsfor key informantcommonmethodbias, thoughwe
followed the recommendations by Phillips (1981) and used credible respondents (i.e., E
minimize this threat. Further research employing multi-informant designs or direct inve
observations might be useful though, to confirm our results. Second, our sample
manufacturing companies in Malaysia; we cannot guarantee that our results gen
different industries. This research was developed primarily among manufacturing
little consideration of the green supply chain behavior of service sectors. Thus, we enc
further research to examine the applicability of our findings to service sectors (Hill and
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29 | P a g e
2007). Third, though we identify three components of sustainable supply chain initiative
componentscould exist,and ongoingresearchshouldinvestigatethem. Forth, Internal
stakeholders, such as employers, are critical to drive sustainable purchasing. How
research design of our study focuses on the firm’s strategic orientations in general; we
aim to understand each stakeholder’s behavior. Noting the importance of internal stake
we now address this concern as a potential future study. Fifth, we collected our sample
certifiedmanufacturingfirms,whichtend to be largerand relativelyresourceabundant.
Excluding small and medium-sized enterprises (SMEs) from our study might bias our fin
The incentives for SMEs to develop sustainable supply chains thus may differ from thos
drive well-established firms. Moreover, with their limited resources, their ability to impl
reverse logistics is questionable. Further research should test our results and va
model using non-certified SMEs.
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Zhu, Q., Sarkis, J., & Lai, K. (2012). Examining the effects of green supply chain manage
practices and their mediations on performance improvements.International Journal of
Production Research, 50(5), 1377-1394.
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Figure 1: Research Model and Hypotheses
Strategic Orientations
(SO)
Eco-reputation SO
Eco-innovation SO
Sustainable Supply Chain
(SC)
Upstream SC
Green Purchasing
Downstream SC
Green Manufacturing
Green Packaging
Outcome
Reverse SC
Reverse Logistics
Strategic Choice Theory
• Firms have freedom of choice when formulating and implementing strategies.
• Strategic orientation focuses on firms’ strategic choices when facing external challenges.
• Strategic choice theory centers on the intra-organizational level and the provision of certain strategic capabilities.
• Firms use freedom of choice to influence firms’ orientation toward adopting sustainability initiatives.
• Ecological strategic orientation can influence the adoption of sustainable business practices.
Sustainable SCM Literature
• Sustainable SCs account for the environmental impacts
of products/services as they flow throughout the SC.
• Using reverse logistics as a SC business/environment
performance measure.
• Reverse logistics create tangible and intangible value.
• Firms obtain competitive advantages by quantifying
the efficiency/effectiveness of their SC actions.
Strategic Orientations Sustainable Supply
Chain Initiatives Outcome
Eco-Reputation
Strategic Orientation
(ERSO)
Eco-Innovation
Strategic Orientation
(EISO)
Green
Manufacturing (GM)
Green
Packaging (GK)
Green
Purchasing (GP)
Reverse Logistics
(RL)
H2A
H2B
H2C
H1
H3A
H3B
H3C
H4A
H4B
H4C
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37 | P a g e
GP
0.01
0.36
0.51
0.25
0.27
C1
C2
C3
C4
C5
0.99
0.80
0.70
0.87
0.86
0.02 C6
0.99
0.01
0.23
GM
0.00
0.09
0.27
0.16
0.35
D1
D2
D3
D4
D5
1.00
0.95
0.85
0.92
0.81
0.19 D6
0.90
0.11 D7
0.94
0.27
0.07
0.06
Eco-Reputation Strategic Orientation (ERSO) Eco-Innovation Strategic Orientation (EISO)
χ2/df = 0.74/3 = 0.25, p-value = .86, RMSEA = .000
NFI = 1.00, CFI = 1.00, RFI = 1.00, AGFI = .99
Cronbach’s α = .904, CR = .890, AVE = .619
χ2/df = 0.75/5 = 0.15, p-value = .98, RMSEA = .000
NFI = 1.00, CFI = 1.00, RFI = 1.00, AGFI = .99
Cronbach’s α = .969, CR = .964, AVE = .820
Green Purchasing Initiative (GP) Green Manufacturing Initiative (GM)
χ2/df = 7.60/7 = 1.09, p-value = .37, RMSEA = .026
NFI = .99, CFI = 1.00, RFI = .99, AGFI = .94
Cronbach’s α = .953, CR = .950, AVE = .764
χ2/df = 2.18/11 = 0.20, p-value = .998, RMSEA = .000
NFI = 1.00, CFI = 1.00, RFI = 1.00, AGFI = .99
Cronbach’s α = .975, CR = .972, AVE = .833
--Continued on next page--
ERSO
0.55
0.45
0.23
0.35
0.32
0.17
A1
A2
A3
A4
A5
0.67
0.74
0.88
0.80
0.82
0.23
EISO
0.16
0.16
0.49
0.11
0.00
0.13
B1
B2
B3
B4
B5
0.92
0.91
0.72
0.94
1.00
0.16 B6
0.92
0.07
0.08
0.15
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GK
0.12
0.06
0.28
0.04
E1
E2
E3
E4
0.94
0.97
0.85
0.98
RL
0.27
0.24
0.01
0.00
0.15
F1
F2
F3
F4
F5
0.85
0.87
0.99
1.00
0.92
0.23 F6
0.88
0.03
0.24
Green Packaging Initiative (GK) Reverse Logistics (RL)
χ2/df = 3.71/2 = 1.86, p-value = .16, RMSEA = .083
NFI = .99, CFI = 1.00, RFI = .98, AGFI = .93
Cronbach’s α = .964, CR = .966, AVE = .875
χ2/df = 3.79/7 = 0.54, p-value = .80, RMSEA = .000
NFI = 1.00, CFI = 1.00, RFI = .99, AGFI = .97
Cronbach’s α = .975, CR = .971, AVE = .850
Figure 2: Measurement Models
Notes: α = Cronbach’s α
CR = composite reliability = (ρс) = (Σλ)2/[(Σλ)2 + Σ(θ)]
AVE = average variance extracted = (ρv.) = (Σλ2)/[Σλ2 + Σ(θ)]
where λ = indicator loadings, and θ = indicator error variances.
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39 | P a g e
χ2/df = 780.14/504 = 1.548, RMSEA = .066, NFI = .94, NNFI = .97, CFI = .97, IFI = .97, RFI = .93, PGF
ECVI: Model = 7.76, Saturated Model = 9.60, Independence Model = 123.10
CAIC: Model = 1310.51, Saturated Model = 3467.85, Independence Model = 15395.17
Figure 3: Results of Structural Equation Model
Figure 4: Managerial Implications
Sustainable Supply
Chain Initiatives OutcomeStrategic Orientations
Eco-Reputation
Strategic Orientation
(ERSO)
Eco-Innovation
Strategic Orientation
(EISO)
Green
Manufacturing (GM)
Green
Packaging (GK)
Green
Purchasing (GP)
Reverse Logistics
(RL)
.33
.22
.28
.50
.26
.35
.42
.08
.26
.19
Significant at α = 2.5%
Insignificant path
Strategic Orientations
Sustainable Supply Chain Initiatives
Outcome
Eco-Reputation Strategic Orientation
(ERSO)
- Green or environmental responsibility
- Reputation/involvement in green initiatives
- Company policy promotes green initiatives
- Respect environmental welfare
- Develop green initiatives to enhance image
Eco-Innovation Strategic Orientation
(EISO)
- Allocate resources to promote innovation
- Process and product innovation for green
- Green life-cycle assessment
- Compete on innovation driven goals
- Innovation culture in firm
- Training in green innovation
Green Purchasing (GP)
- Green design specifications
- Green partner environmental standards
- Compliance with green regulations
- Suppliers’ EMS certifications
- Materials are free of hazardous contents
- Evaluation based on green criteria
Green Manufacturing (GM)
- Recycled contents in products
- Life-cycle assessment to gauge products
- Products are free of hazardous contents
- Design products with recyclable contents
- Products with less material consumption
- Products with less power consumption
- Higher product life-span
Green Packaging (GK)
- Packaging with renewable contents
- Packaging is reusable
- Packaging with minimum materials
- Packaging without hazardous contents
Reverse Logistics
- Collect used products from customers
- Collect used packaging from customers
- Suppliers to collect packaging materials
- Return used products to suppliers
- Return packaging to suppliers
- Return products to customers
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Description Categories Frequency Percent
Ownership of Firm Malaysian Fully Owned 26 20.8
Joint Venture 99 79.2
Number of Employees Less than 100 12 9.6
100 – 250 2 1.6
251 – 500 17 13.6
501 – 1000 20 16.0
More than 1000 74 59.2
Age of the Firm Less than 6 years 26 20.8
6 – 10 years 14 11.2
11 – 15 years 7 5.6
More than 15 years 78 62.4
Type of Products Consumer products 66 52.8
Industrial Products 48 38.4
Combination/Others 11 8.8
Major Source for Key
Materials and
Components
Domestic 11 8.8
Regional/Asian 20 16.0
Global 94 75.2
Number of Suppliers for
Key Materials and
Components
Single supplier 6 4.8
2 – 5 suppliers 31 24.8
6 – 10 supplier 9 7.2
More than 10 suppliers 79 63.2
Table 1: Respondent Profile Information (N = 125)
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Mean
(μ)
StdDev
(σ) ERSO EISO GP GM GK RL
ERSO
Correlation Coefficient
Significant (2-tailed)
3.122 0.889 1.000
EISO
Correlation Coefficient
Significant (2-tailed)
2.665 0.908 0.351
(.000) 1.000
GP
Correlation Coefficient
Significant (2-tailed)
3.031 1.033 0.396
(.000)
0.372
(.000) 1.000
GM
Correlation Coefficient
Significant (2-tailed)
2.898 1.027 0.291
(.000)
0.386
(.000)
0.281
(.000) 1.000
GK
Correlation Coefficient
Significant (2-tailed)
2.822 0.983 0.387
(.000)
0.439
(.000)
0.418
(.000)
0.362
(.000) 1.000
RL
Correlation Coefficient
Significant (2-tailed)
3.008 1.043 0.322
(.000)
0.330
(.000)
0.251
(.000)
0.284
(.000)
0.305
(.000) 1.000
Table 2: Descriptive Statistics and Correlations of the Constructs
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Constrained Model Unconstrained Model χχχχ2 Difference Test,
df = 1
Paired Analysis χχχχ2 df χχχχ2 df χχχχ2 Diff p-value
ERSO – EISO 50.42 38 39.16 37 11.26 .0008
ERSO – GP 108.65 40 100.82 39 7.83 .0051
ERSO – GM 50.51 49 39.40 48 11.11 .0009
ERSO – GK 49.43 25 39.60 24 9.83 .0017
ERSO – RL 60.11 40 51.52 39 8.59 .0034
EISO – GP 128.24 48 118.84 47 9.40 .0022
EISO – GM 53.46 58 43.58 57 9.88 .0017
EISO – GK 40.22 31 32.04 30 8.18 .0042
EISO – RL 59.17 48 49.00 47 10.17 .0014
GP – GM 73.49 60 63.56 59 9.93 .0016
GP – GK 61.41 33 55.61 32 5.80 .0160
GP – RL 149.83 50 140.58 49 9.25 .0024
GM – GK 36.17 41 26.00 40 10.17 .0014
GM – RL 46.19 60 36.71 59 9.48 .0021
GK – RL 55.58 33 44.82 32 10.76 .0010
Table 3 Discriminant Validity Test
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