Green Supply Chain Management Practices and Performance of ISO 14001 Certified Manufacturing Firms in East Africa

Abstract

Increasing levels of environmental degradation by manufacturing firms has resulted in heterogeneous pressures from various organizational groups on the need for them to conduct environmentally friendly operations. A viable option for these firms has been the implementation of green supply chain practices. The key concern however is whether the implementing these practices actually lead to improved performance. The main objective of this study therefore was to examine the relationship between the implementation of GSCM practices and performance of ISO 14001 certified firms in East Africa. Specifically, the study investigated the key institutional pressures that cause firms to implement these practices and how environmental performance, operational performance, relational efficiency and firm characteristics influence the relationship between implementing the practices and organizational performance. To achieve the objectives, five broad hypotheses were formulated. Through the use of positivist research paradigm and descriptive crosssectional research design, primary data was collected from persons in charge of environmental issues in ISO 14001 manufacturing firms in East Africa. The study achieved a response rate of 62%. Based on the objectives, the study findings are that, first, coercive and normative pressures are significant in causing the firms to implement GSCM practices, mimetic pressures are not significant; second, there is a statistically significant positive direct relationship between implementation of GSCM practices and organizational performance; third, environmental and operational performance fully mediate the relationship between GSCM practices and organizational performance. It was also noted that the inclusion of environmental and operational performance constructs increased the variance explained in organizational performance from 14.2% to 59%; fourth, relational efficiency does not mediate the relationships between GSCM practices and environmental performance, GSCM practices and operational performance and GSCM practices and organizational performance. Fifth, firm size, firm age and spatial scope of the market served by the firm do not positively moderate the relationship GSCM practices and organizational performance. The study therefore confirms existence of a positive link between GSCM practices and organizational performance thus helping to reduce the uncertainty which has arisen out of contradictory findings from past studies on whether it is beneficial to pursue these practices. In essence, it can be concluded that a firm will experience improved marketing and financial performance as a result of GSCM activities having a positive impact on its operations or are giving positive environmental impression to its customers who would eventually provide more business opportunities to the firm. The results support the natural resource based view that GSCM practices affords the firm an opportunity for competitive advantage and performance improvement through unique causally ambiguous and socially complex resources. The study recommends that manufacturing firms should implement environmentally sound practices in all phases of the supply chain, beginning with procurement of raw materials through to design, manufacture, packaging, distribution and end of life disposal of their products. Regulators can use the findings to scale up the level of implementation of GSCM practices by enforcing stricter environmental legislation and giving incentives to firms that have already implemented these practices. The findings also provide future researchers’ with a useful conceptual and methodological reference to pursue further studies in this under-studied GSCM area especially in the African context.