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IMDS
112,8 Green supply chain management
and organizational performance
Sang M. Lee
1148 Management Department, University of Nebraska-Lincoln,
Lincoln, Nebraska, USA
Received 13 January 2012 Sung Tae Kim
Revised 9 April 2012
Accepted 9 April 2012
International Business Department, SolBridge International School of Business,
Daejeon, South Korea, and
Donghyun Choi
Management Department, University of Nebraska-Lincoln,
Lincoln, Nebraska, USA

Abstract
Purpose – The purpose of this study is to explore green supply chain management (GSCM) practices
and their relationship with organizational performance. More specifically, this research explores the
effect of GSCM efforts and other organizational factors on firm performance of small and medium
enterprises (SMEs) that serve as suppliers to large customer firms in the electronics industry.
Design/methodology/approach – This study developed a research model relating GSCM practice
and business performance through three organizational variables (employee satisfaction, operational
efficiency, and relational efficiency) as moderators. Statistical analyses were based on the data
collected, through survey questionnaires, from 223 SMEs in the electronics industry in Korea.
Reliability, validity, and goodness-of-fit of the research model were tested by the widely accepted
statistical tools. To test the hypotheses relating GSCM practice implementation and business
performance, structural equation modeling was used.
Findings – The most anticipated finding of the study was a direct link between GSCM practice
implementation and business performance. However, no statistical significance was found. Instead,
significant indirect relationships were found between GSCM practice implementation and business
performance through mediating variables of operational efficiency and relational efficiency. This
result indicates that business performance will be improved when GSCM enhances operational
efficiency and operational efficiency.
Research limitations/implications – Research on GSCM is still at the early stage. Further
refinement of the questionnaire is needed. Generalizability of the findings is also limited because of
data collected from electronics firms in Korean. This study shed several important insights. The
findings of this study are generally consistent with prior studies in other parts of the world. SMEs in
the Korean electronics industry believe that GSCM practices help generate new opportunities to attract
clients in addition to complying with the buyer firms’ demand. It was also found that implementation
of GSCM practices help improve operational and relational efficiencies of supplier firms.
Originality/value – Few empirical studies have been done in GSCM based on the conceptual footing
of resource dependence theory. Also, this study was conducted from the supplier’s perspective in
examining the weaknesses of SME suppliers. Thus, the authors emphasize the importance of support
from large buying firms for improving SME suppliers’ green management capabilities.
Industrial Management & Data Keywords Green supply chain management, Electronics industry, Small and medium enterprises,
Systems
Vol. 112 No. 8, 2012
Business performance, Small to medium-sized enterprises, Supply chain management, Republic of Korea
pp. 1148-1180 Paper type Research paper
q Emerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571211264609
Introduction GSCM and
Globalization has changed not only the range of potential competitors but also the organizational
possible horizon of expansion and organizational structures. Krueger (1998) argued for
the following benefits of globalization: performance
.
contractors in developing countries may gain more knowledge from the
interactions with their foreign buying firms and as a result attain higher
productivity; and 1149
.
exporters benefit from trade liberalization by achieving higher levels of
efficiency more rapidly and economies of scale which are limited in protected
nations.

In the past couple of decades, multinational enterprises (MNEs) began to accept the
necessity of environmental management and started to implement environmental
management programs to compete in the global market.
In the resource dependence perspective, establishing inter-organizational
collaboration is essential to gain competitiveness, especially as risks in firms’ global
supply chains have been amplified and relying solely on internal resources is not
sufficient to compete with other global firms (Pfeffer and Salancik, 1978). As a matter
of fact, while making major efforts in greening their supply chains to maintain
competitiveness in the global market, MNEs have paid less attention to their upstream
members in the supply chain (Lee and Klassen, 2008; Lee, 2009). One of the major reasons
that focal firms should be interested in supply management is that it is still the firms’
responsibility to the public even if incidents occur in the upstream of the firms’ supply
chains. Some of the best known cases are: Mattel’s Fisher-Price recalled over 10 million
lead-painted toys (Burke, 2007), McDonald’s fiasco with 12 million drinking glass gift
sets (Pepitone, 2010), and 1.3 million Sony PlayStations seized by The Netherlands
Government because of excessive cadmium detected from the game consoles (Franklin,
2004; Carlton, 2006). Many studies argue that the main reason that suppliers cause such
problems is because they are mostly small- and medium-sized enterprises (SMEs) which
often lack human resources with expertise on Restriction of Hazardous Substances
(RoHS) Directive compliance, as well as financial resources to initiate expensive
environmental management systems (EMSs) such as ISO 14001 (Lee, 2009).
In the supplier firms’ perspective, the current situation could create potential
business opportunities. Supplier firms that have already implemented EMSs are in a
better position to win more business from large customer firms. Many buying firms are
demanding that their suppliers implement green supply chain management (GSCM)
practices and fulfill even additional environmental requirements ( Jabbour and Jabbour,
2009; Lee, 2009). On the other hand, because large manufacturers have been adopting
environmental audit programs to better control their vendors, these suppliers have
been able to keep and extend their current contracts (Lee, 2009). In fact, suppliers will
be hard pressed to find any business opportunities elsewhere without initiating GSCM
practices (Nishitani, 2010).
This study focuses on GSCM practice of SMEs in the electronics industry. We aim
to explore the direct and indirect paths of related factors between the implementation
of GSCM practices and the firm’s business performance outcome. The results of
statistical analyses of the collected data from operations managers will enrich this
research on GSCM. Furthermore, the results of this research will provide new insights
IMDS to SMEs, which are planning or currently implementing GSCM practices, toward
112,8 enhancing their green operations for better performance outcomes.
This paper is organized as follows. Second section provides background of the
study. It describes the fast changing environment in which firms compete and the
characteristics of SMEs. In Third section, we develop hypotheses based on previous
studies. Fourth section describes research methods including data collection and test of
1150 hypotheses. Fifth section presents the results and sixth section discusses the findings
of the study.

Literature review
RDT and organizational performance
Organizations are highly dependent on their environments and tend to continuously
adapt to external change dynamics (Hage and Aiken, 1967). Cook (1977) explained that
dependencies in a business relationship are developed among trading partners, and
through such dependencies the partners have impact on each other’s business practices
and eventually business performance. In the resource dependency perspective, few
organizations are internally self-sufficient with respect to their strategically critical
resources (Heide, 1994), and they depend on external resources to secure their
competitiveness (Pfeffer and Salancik, 1978). In other words, organizations that lack
vital resources to accomplish their goals must seek competitiveness by building
relationships with partner organizations to obtain required resources (Pfeffer and
Salancik, 1978).
According to resource dependence theory (RDT), firms also seek to reduce
uncertainty and manage dependence by purposely structuring their exchange
relationships, establishing formal and semiformal linkages with other firms (Ulrich and
Barney, 1984). Pfeffer and Salancik (1978, p. 145) discuss four fundamental benefits of
the formal linkages with other organizations, as it:
(1) provides information about the activities of that organization which may have
influence on the focal organization;
(2) provides a communication channel for information;
(3) offers an important first step in obtaining commitments of support from
important elements of the environment; and
(4) has a certain value for legitimating the focal organization.

In practice, firms can reduce uncertainty through negotiations and agreements with
collaborating firms (Koberg and Ungson, 1987; Cai and Yang, 2008). What plays an
important role, in addition to the formal linkages, is semiformal linkages (Pfeffer and
Salancik, 1978) such as maintaining a social bond between interdependent others, so
that they can establish trust-based relationships.
In summary, through such interdependence, firms can synergistically combine their
own resource sets with the complementary resources of their partners and thus develop
a resource bundle that is unique and hard to imitate (Harrison et al., 2001). By cultivating
such relationship-specific capabilities that become superior to what the organizations
may possess on their own (Dyer and Singh, 1998; Harbison and Pekar, 1998), firms can
obtain sustainable competitive advantage and improved organizational performance
(Sambharya and Banerji, 2006; Paulraj and Chen, 2007).
RDT and SCM GSCM and
In the traditional supply chain, each member organization attempts to avoid becoming organizational
overly dependent on others for fear of being exploited. Firms usually believe that they
could ignore component dependencies in the supply chains. They also make efforts for performance
effective decision-making with their existing facilities and business processes (Thomas
and Griffin, 1996). At the same time, they believe that making others dependent on them
could possibly create a position of strength (Ketchen and Hult, 2007). However, the focus 1151
of the definition of SCM has shifted. The early definition of SCM took into consideration
the integration of a firm’s internal functional groups, such as purchasing,
manufacturing, and distribution (Harland, 1996). Currently, the definition of SCM
pays attention to the interdependence in the broader, global perspective. For example,
the Global Supply Chain Forum defines, “Supply chain management is the integration of
key business processes from end-user through original suppliers that provides products,
services, and information that add value for customers and other stakeholders”
(Lambert et al., 1998).
In the past decades, firms moved their production facilities and business
departments offshore to benefit from lower production and service costs (Gupta, 2009;
Kumar et al., 2009). Hence, many global firms have managed global supply chains that
consist of manufacturing and distribution units throughout the world. Due to the
distance and cultural diversity, it is challenging for the focal firms to develop and
execute integrated strategic, tactical and operational manufacturing, as well as
distribution plans of plants scattered over the world (Ueltschy et al., 2007; Miller and de
Matta, 2008). Manuj and Mentzer (2008) argue that risks and challenges occur along the
entire global supply chains and the new extended supply chains hide a number of
potential risks as well. Such unresolved issues as product quality, inventory control,
lead time, and buyer-supplier trust could be amplified by new risk factors – distance,
language, and cultural diversity besides supply chain disruption by natural disasters.
Thus, many firms have attempted to overcome strategic weakness in SCM through
inter-organizational dependencies. In this aspect, RDT is a relevant theory to SCM
because it can help elaborate organization-environment boundary spanning activities,
implying that a single firm can hardly achieve sustainable growth. Therefore, firms
need to depend on the buyer-supplier relationship which helps improve cooperation
and coordination among supply chain members (Dyer, 2000).

RDT and GSCM

For SCM to be strategic in nature, it is imperative that buyer firms adopt strategic
initiatives (i.e. implementation of GSCM practices) that foster an effective relationship to
provide mutual benefits (Paulraj and Chen, 2007). In the context of GSCM,
inter-organizational collaboration is even more important for managing the internal
and external coordination and cooperation to have the system successfully implemented
throughout the whole supply chains (Zhu et al., 2010).
The European Union (EU) and the USA introduced new regulations on
environmental management several years ago. The EU established strong regulatory
systems especially in the electronics and electrical industry, such as the RoHS Directive
in electrical and electronic equipment, the directive on Waste Electrical and Electronic
Equipment (WEEE); restriction, evaluation, and authorization of chemicals (REACH);
and eco-design for energy using products (EuP) (Goodman, 2008; Lee, 2009;
IMDS Schneiderman, 2009). The Korean Government also followed the blueprint of the EU’s
112,8 environmental policy with regard to regulating materials to assemble and build
electronics, as well as producers’ recycling responsibilities (Spiegel, 2008). The life cycle
of electronic products is becoming very short. The US Environmental Protection Agency
(EPA) reports that about 500 million PCs became obsolete and were thrown away
between 2000 and 2007 (www.epa.gov/region8/recycling/ecycling.html). According to
1152 the US EPA, electronic waste (e-waste) shows a faster growing trend than any other
waste stream, such as paper. This is the major reason that green practices are important
in the electronics industry.
To successfully adopt GSCM-related practices, such as green purchasing,
eco-design, and cooperation with customers, large manufacturers need not only good
internal environmental management but also external cooperation and coordination
with suppliers and customers in their supply chain. As discussed above, industries pay
attention to the “ecologically responsible design of new products” (Gonzalez-Benito,
2008). The fate of a product, whether or not it produces any pollution or unsafe levels of
certain chemicals, is decided “at the design stage when materials and processes are
selected” in the product life cycle (Zhu and Sarkis, 2006). Green purchasing practice is
comprised of environment-based initiatives, such as supplier environmental audit and
assessments and supplier’s environmental certification (Hsu and Hu, 2008), so that the
buyer firms can receive safe materials. To adopt more proactive strategic SCM, it is
essential for manufacturers make collaborative efforts with both the first- and the
second-tier suppliers to establish green systems and comply with environmental
regulations in producing parts and components (Lamming and Hampson, 1996). For
suppliers, cooperation with buyer firms is a critical element in terms of GSCM if buyer
firms export and sell their products in the global market. SME suppliers may not be
knowledgeable about the environmental requirements in foreign countries. Thus,
buyer firms should support suppliers regarding complex regulations that must be
complied in various international markets (Lee and Klassen, 2008; Lee, 2009).

SME suppliers and GSCM

In Europe, 76 percent of all corporations are SMEs. These SMEs are responsible for
60-70 percent of all industrial pollution, 40-45 percent of CO2 emissions, 40 percent of
water and energy consumption, and 70 percent of industrial waste production in Europe
(Heras and Arama, 2010). As of 2007, South Korean SMEs represent almost 99 percent in
the manufacturing industry. Small firms (less than equal to 50 employees) account for
92.7 percent (SBC Research Department, 2009). Most of these SMEs are suppliers to large
manufacturers and they are struggling to cope with changes in their business
environment. To comply with new environmental regulations, such as WEEE and EuP,
leading global corporations in the electronics and information and communication
technology (ICT) industries, including Samsung, LG, Sony, and Dell, have implemented
EMSs and standards in their SCM. However, a number of suppliers have failed to attain
the satisfactory grade on their environmental performance by their buying firms as well
as consumers (Peres and Stumpo, 2000; Shi et al., 2008; Cordano et al., 2010).
SMEs often lack human resources, for example few knowledge workers with
expertise on RoHS compliance, as well as financial resources to initiate expensive
EMSs (Lee, 2009; Adams et al., 2012). Kim (2011) compares the project management
maturity levels between SMEs and large enterprises in Korea. The results of his study
clearly show the different project management capabilities of the firms in different GSCM and
scales. Due to lack of human resources and internal innovation capability, SMEs organizational
experience difficulties in achieving satisfactory performance in their projects
(i.e. implementing quality management or SCM systems). For example, large firms performance
were achieving excellent outcomes in all knowledge areas of project management
maturity, such as time management, cost management, quality management, risk
management, and so on. Certainly, some medium-sized firms have developed good 1153
infrastructure with high levels of expertise and resources to cope with external
pressures and changes in the market. However, as we addressed earlier, a number of
SMEs are struggling with implementing new requirements of their buying firms
mainly because of lack of knowledge, expertise, and financial and human resources.
SMEs often have inadequate proactive environmental strategy, environmental
awareness, and environmental management techniques (Shearlock et al., 2000; Sarkis
and Dijkshoorn, 2007). They are often ineffective in dealing with environmental
management issues. Thus, these SME suppliers can obstruct the progress of customer
firms’ GSCM practices (Lee and Klassen, 2008).

Hypotheses development
Figure 1 outlines the theoretical model that guides this research. We propose a
mediated model where implementation of GSCM practices has a positive influence on
the firm’s business performance (BP) directly and through firm’s operational efficiency
(OE), relational efficiency (RE), and employee job satisfaction (SAT). Definitions of the
constructs employed in this study are provided in Table I.

Implementation of GSCM practices and business performance

Madsen and Ulhøi (2003) argue that corporate adoption of environmental management
is to harmonize an environmental strategy with other strategic issues such as
corporate goals and product positioning. They also state that the result of proactive
pollution prevention programs could actually reduce production cost and improve
product value or the image of the company. Thus, effective environmental programs
can help make the firm more competitive in the market (Porter and van der Linde,
1995). Moneva and Ortas (2010) also discovered that environmental performance has

Employee Job
Satisfaction
H2a H2b
H2c

GSCM H3a Operational H3b Business

Implementation Efficiency Performance
H4b
H4a H3c

Relational
Efficiency
Figure 1.
The research model
H1
IMDS
Construct Definition Reference
112,8
GSCM practice Adoption of environmentally friendly SCM practices Zhu et al. (2008)
implementation including internal environmental management, green
purchasing, cooperation with customers, and eco-design
for developing corporate and operational strategies for
1154 the firm’s environmental sustainability
Employee job The feeling that employees have on their jobs related to Homburg and Stock
satisfaction the relationship with their supervisors and working (2004), Zhou et al. (2008)
environment, which could lead to better performance
outcomes
Operational The ability of supplying firms to reduce costs and cycle Rusinko (2007), Zhu et al.
efficiency time, improve product quality, and create greater (2008), Zacharia et al.
customer value (2009)
Relational The ability of supplying firms to increase transparency Pfeffer and Salancik
efficiency and openness in the business processes working jointly (1978), Zacharia et al.
with buyers so that suppliers can build trust and (2009)
credibility in the relationship with buyers
Business Financial and non-financial performance of the Zhu et al. (2008),
performance organization as a result of the implementation of GSCM Zacharia et al. (2009)
Table I. practices as well as improvement in operational/
Construct definitions relational efficiency and employee job satisfaction

a positive correlation with financial performance of the firm. In their event study,
the authors analyzed corporate environmental performance (CEP) in 2004 and
corporate financial performance (CFP) in the 2005-2007 periods. Then, they tested the
three relationships between:
(1) CEP in 2004 and CFP in 2005;
(2) CEP in 2004 and CFP in 2006; and
(3) CEP in 2004 and CFP in 2007.

The results of the tests in this research present that CEP enhances firms’ internal
efficiency and their CFP in the future periods.
Khanna and Anton (2002) believe that corporate environmental management is a
self-regulatory business approach not only to protect the environment, but also to
strategically integrate environmental considerations into corporate strategic decisions.
This study is based on the premise that a major part of the corporate environmental
management initiative is to implement green management systems, such as ISO 14001
or the Eco-Management and Audit Scheme (EMAS). The test results of Khanna and
Anton (2002) support the importance of proactive environmental management that is
actually a cost saving proposition in the long-run (Klassen and Whybark, 1999;
Madsen and Ulhøi, 2003). Otherwise, compliance with restrictions results in high costs
and public pressures on the corporation.
Companies adopting environmental management or GSCM are viewed as socially
responsible firms (Borger and Kruglianskas, 2006; Montiel, 2008; Cruz and Pedrozo,
2009). Many studies have asserted that corporate social responsibility (CSR) and the
firm’s business performance are positively related. According to McGuire et al. (1988),
CSR is positively related to a firm’s business performance, such as stock market returns
and accounting-based measures. That result may be because socially responsible GSCM and
corporations can stand in a better economic position than socially irresponsible ones. organizational
Thus, the following hypothesis is proposed:
performance
H1. The implementation of GSCM practices is positively related to the business
performance at the firm level.
1155
Employee job satisfaction, GSCM practices, operational efficiency, and business
performance
It is an argument consistently made by a number of prior studies that one of the results
of CSR is improved employees’ goodwill and job satisfaction (McGuire et al., 1988;
Valentine and Fleischman, 2008). In addition, according to Lee and Chang (2008),
innovative spirit in the organizational culture and group-oriented teamwork show a
positive impact on job satisfaction of the employees. It is expected that all personnel in
the production lines would feel safer and be more satisfied with their operations and
the working environment when unsafe toxic materials are removed from the
production process. It may be true that both GSCM and TQM practice implementation
create a similar atmosphere in the workplace and result in similar organizational
outcomes. Subsequently, GSCM practice implementation and employee satisfaction
may have a similar positive relationship as that observed between TQM practice
implementation and employee job satisfaction (Jun et al., 2006).
Job satisfaction is a measure of the degree of employee pleasure that leads to better
task performance (Edwards et al., 2008). Harrison et al. (2006) found that job attitude,
including job satisfaction and organizational commitment, is a strong precursor of
employees’ organizational behavior and performance based on meta-analysis.
In addition, Patterson et al. (2004) examined the connection between the company
climate and organizational performance, and revealed an indirect relationship between
them. They tested how the company climate, measured by employees’ perceptions
concerning the organization’s policies and practices, is associated with productivity.
Their study results show that the link between the company climate and productivity
is mediated by the workers’ job satisfaction. Thus, the following three hypotheses are
suggested:
H2a. The implementation of GSCM practices is positively related to employee job
satisfaction.
H2b. Employee job satisfaction is positively related to business performance at the
firm level.
H2c. Employee job satisfaction is positively related to the operational efficiency of
the firm that implemented GSCM practices.

Operational efficiency, GSCM practices, relational efficiency, and business performance

RDT conceptualizes the effects of environments on organizations using external and
internal perspectives (Pfeffer and Salancik, 1978). The internal perspective is
associated with organizational efficiency that accounts for the “internal evaluation of
the amount of resources consumed in the process of doing this activity” (Pfeffer and
Salancik, 1978). Leading global firms, such as Samsung and LG Electronics, claim that
they have executed their operations more effectively and efficiently in all dimensions
IMDS since they implemented GSCM practices (Lee, 2007). For firms that successfully
112,8 implement and utilize GSCM practices, the main benefit is the development of internal
operations that assist in improving decision-making processes for cleaner production
(Lee, 2011). Lippman (2001) advises that based on his interviews with small supplying
firms, organizations experience increases in their operational outcomes, such as
reduction in cycle time and cost, and in a few cases increases in sales by adopting
1156 GSCM practices. Lee (2009) conducted case studies on green management of SMEs.
The outcomes of his studies present that systematic green management helps reduce
production costs by enhancing operational efficiencies such as less water consumption,
reduced waste water generation and saved material usage.
Inter-organizational relationships may be built based on economic benefits which
are related to trust-based relationships (Ireland and Webb, 2007). That is the reason
why buying firms emphasize the excellence in partner firms’ operational outcomes or
performance. In this regard, Zacharia et al. (2009) claim that a firm can gain more trust
and credibility from a collaborating counterpart when it proves its excellence in its
operations, and the relationship effectiveness will be enhanced when the partner firm
continuously accomplishes success in their joint efforts. Hence, relational efficiency can
also be affected by operational efficiency (Zacharia et al., 2009). Based on the discussion
here, the following three hypotheses are proposed:
H3a. The implementation of GSCM practices is positively related to the operational
efficiency of the firm.
H3b. Operational efficiency is positively related to business performance at the
firm level.
H3c. The improved supplier’s operational efficiency has a positive impact on the
relational efficiency between the supplier and the large customer firm.

Relational efficiency, GSCM practices, and business performance

Manuj and Mentzer (2008) argue that risks in the global supply chain occur as the
extended supply chain hides a number of potential threats. Many of the problems
existed in the original supply chain would remain in the global supply chain and those
unresolved issues involving product quality, inventory control, and buyer-supplier
trust could be amplified by new risk factors – distance, language, and cultural
differences besides supply chain disruptions by unforeseen natural disasters. In the
resource dependence perspective, buying firms manage to secure the flow of inputs to
their organizations by forming stable, long lasting relationships with international
suppliers (Pfeffer and Salancik, 1978; Kaufmann and Carter, 2006). Since firms become
reliant on partner firms for needed inputs, establishing good inter-organizational
relationships has become the key to minimizing such environmental uncertainty
(Pfeffer and Salancik, 1978; Ketchen and Hult, 2007).
According to RDT, if an organization gains successful outcomes from a relationship,
the organization more highly values the relationship (Pfeffer and Salancik, 1978). In this
regard, we can expect that the more the buying firm and suppliers make collaborative
efforts in implementing GSCM practices, the higher the levels of trust, credibility, and
relationship effectiveness between the partners (Lamming and Hampson, 1996; Simpson
et al., 2007; Ryu et al., 2009; Zacharia et al., 2009). In fact, Lippman’s (2001) study shows
that corporate customers demand high levels of environmental performance from their GSCM and
suppliers. Hence, they mandate the suppliers to use environmental regulatory programs. organizational
Prior studies suggest that inter-organizational trust in supply chains should be a
“prerequisite” to the success of inter-organizational collaboration (Sahay, 2003; Ryu et al., performance
2009; Fawcett et al., 2004). Higher levels of inter-organizational trust in supply chains
help establish integrated goals and plans smoothly, improve product quality, and create
greater customer value (Monczka et al., 1998; Wong et al., 2005). Similarly, it is suggested 1157
that joint efforts between manufacturers and suppliers in various areas, such as
developing cleaner technology, ecological product/process design, and integrated
information systems between the two parties, create the best results. Lamming and
Hampson (1996) assert that this collaboration would offer “better market opportunities
for the suppliers to embed its business in the customer’s value chain.” Moreover, studies
show that well established, long-term relationship between buyer and supplier firms
helps suppliers improve their performance (Kaufmann and Carter, 2006; Liao, 2010;
Rhee et al., 2011). Thus, the following two hypotheses are developed:
H4a. The implementation of GSCM practices has a positive influence on the
relational efficiency between the supplier and the large customer firm.
H4b. Relational efficiency between the supplier and the large customer firm is
positively related to the supplier’s business performance.

Mediation effects
As discussed earlier, a number of studies showed that suppliers can increase the levels of
credibility and effective working relationship with their buyer firms by implementing
GSCM practices (Lamming and Hampson, 1996; Simpson et al., 2007; Ryu et al., 2009;
Zacharia et al., 2009). In addition, Liao (2010) asserts that trust-based inter-organizational
relationship is positively associated with the firm’s performance. We expect that
operational efficiency is also to be influenced by newly implemented GSCM practices.
Zacharia et al. (2009) examine whether business performance is significantly correlated
with both operational and relational outcomes. Their results show that both have
statistically significant positive relationships. Even though there may be many other
factors that affect an organization’s business performance, in the context of supply chain
collaboration, these empirical tests are important. Previous studies also present that there
is a link between business performance and employee job satisfaction. Zhou et al. (2008)
offer evidence in Chinese manufacturing companies that firm performance has a positive
correlation with employee job satisfaction. Thus, we posit the following hypothesis:
H5. Employee job satisfaction and operational efficiency in the supplier firm, and
relational efficiency between the supplier and the large buyer firm mediate the
relationship between GSCM practice implementation and the supplier’s
business performance.

Research methodology
Questionnaire development
Zhu and Sarkis (2006) developed and tested a measurement model for GSCM practice
implementation. They found five underlying constructs which show the dimensions of
GSCM practices. In this study, however, only four dimensions of GSCM practices –
internal environmental management (IEM), green purchasing (GP), cooperation with
IMDS customers (CC), and eco-design (ECO) – are selected focusing on the following three
112,8 aspects of GSCM practice adoption:
(1) internal environmental management such as top management support,
environmental compliance programs, inter-departmental cooperation for
environmental improvements;
(2) external relationships such as green purchasing and customer cooperation over
1158 environmental concerns; and
(3) broader-based interactions involving green (or eco-) design practices, which
would incorporate cooperative design and delivery of those designs.

We adopted these measurement items of Zhu and Sarkis (2006), with modifications for
the “internal environmental management” and “green purchasing” constructs. For
“cooperation with customers” and “eco-design”, we utilize additional items that are
found in other studies (Homburg and Stock, 2004; Chen, 2005; Matos and Hall, 2007; Hsu
and Hu, 2008; Paulraj et al., 2008; Zacharia et al., 2009; Zhou et al., 2008). Manipulation of
the measurement variables is presented in the Appendix. For the measurement items, we
used a five-point scale (1 – not considering it, 2 – planning to consider, 3 – considering it
currently, 4 – initiating implementation, and 5 – currently implementing). In assessing
other variables in the structural equation model, questions were on another five-point
scale (1 – strongly disagree, 2 – disagree, 3 – neutral, 4 – agree, 5 – strongly agree).
In developing the questionnaire, the double translation protocol was used. The
questionnaire was developed in English first and then was translated into Korean.
After the translation, the questionnaire was presented to a panel of experts from
academia as well as those in the electronics industry to solicit their comments and
suggestions regarding the survey items. Then, the Korean version was translated back
into English. The two English versions did not have any major difference.

Population and data sources

The population of interest for this study is operations/supply chain managers of small-
and medium-sized electronics firms in Korea. The operations/supply chain managers
are chosen because:
.
the study is about a major activity of SCM; and
.
they are in “a critical position to influence the size of the overall environmental
footprint of a company” (Walton et al., 1998).

The population has three distinct characteristics that impact the generalizability of this
study and as a result will be addressed in the remainder of this section:
(1) small- and medium-sized suppliers;
(2) only in the electronics industry; and
(3) only Korean firms.

The reason that we pay attention to small- and medium-sized suppliers is that
their lack of environmental management capability can have a negative impact on
financial performance and brand image of the customer firm, as they represent the
“invisible link” in supply chains (Shearlock et al., 2000; Sarkis and Dijkshoorn, 2007;
Lee and Klassen, 2008).
 There are two reasons for selecting the electronics industry. First, this industry is GSCM and
changing rapidly due to globalization and technological advances. Consequently, organizational
environmental issues and concerns develop fast, and many significant regulatory acts
have been and will be enforced globally for this industry. Second, we took the sample performance
only from the electronics industry in order to control for any potential confounding
factors, such as variations in market conditions or environmental regulations.
Lastly, the reason that Korean firms were chosen is that Korea is one of the 1159
emerging developed nations with the government’s strong environmental enforcement.
Also Korean electronics firms such as Samsung and LG Electronics are global leaders
in the industry (Hsu and Hu, 2008; Bicheno, 2009; Maisto, 2010). Their products are also
popular in European countries where the strict environmental regulations are enforced.

Sample selection
The questionnaire was administered to a subset of the population of interest –
operations/supply chain managers of small- and medium-sized electronics companies
in Korea. The actual survey was conducted in cooperation with a Korean research
consulting firm. The list of the SMEs in the electronics industry was provided from the
Korea Investor Service (KIS), which is the first credit rating agency in Korea. The survey
team of the consulting firm first called the contact numbers of 756 companies, with
more than 20 employees and less than 500, to ask whether they were aware of any
environmental systems or programs. Then, the questionnaire was sent to the
operations/supply chain managers of 223 SME suppliers that were willing to participate
in the survey and all of them mailed the questionnaires back to the researchers. If any
omitted questions were found, the survey team called the manager to complete the
questionnaire. The surveys were conducted from May 10, 2010 to May 28, 2010.

Results
Responding firms’ characteristics
Table II represents the characteristics of the responding companies as well as
respondents’ job titles and work experience. Respondents’ job titles ranged from the
employee in charge of GSCM to the top executive. Middle (51.1 percent) and senior
(27.8 percent) managers were the most frequently reported job titles in charge of GSCM.
This result indicate that GSCM practices often require the supervision of higher-level
management team and also demonstrate that these SME supplier firms strive to succeed
in implementing GSCM practices. In addition, majority of the respondents (83.9 percent)
have worked less than ten years. One thing that needs to be pointed out is that the
question on the work experience might have been confusing to the respondents as to
whether it asked for work experience in the industry or only in the current company.
Hence, it is possible that many of the respondents with work experience less than five
years might actually have had longer careers in the industry.
All responding firms were classified as small- and medium-sized companies. Here is
the distribution: 91 firms (40.8 percent) with less than 50 employees, 65 firms
(29.2 percent) with 50-99 employees, 43 firms (19.3 percent) with 100-199 employees, and
24 firms (11.8 percent) with 200-500 employees. Regarding industry classifications of
their buyer firms (multiple answers were allowed), 238 (92 percent) firms answered that
their buyer firms were in the electronics industry, 11 (5 percent) in telecommunications,
nine (3 percent) in automotive, and only one (0.4 percent) was in the retail industry.
IMDS
Frequency %
112,8
A. Respondents’ job title
Employee in charge 33 14.8
Middle manager 114 51.1
Senior executive 62 27.8
1160 Top executive 14 6.3
Total 223 100.0
B. Respondents’ work experience (years)
Less than 5 123 55.2
5-10 64 28.7
11-15 27 12.1
More than 15 9 4.0
Total 223 100.0
C. Firm size (no. of employees)
Less than 50 91 40.8
50-100 65 29.2
101-200 43 19.3
201-300 10 4.5
301-400 6 2.7
401-500 8 3.5
Total 223 100.0
D. Industry classification of the buying firms (multiple answers)
Electronics 238
Telecommunication 11
Automobile 9
Retail 1
Total 223 100.0
E. Firm’s primary business goal in supply chain
First-tier supplier to major firms 148 66.4
Second-tier supplier 64 28.7
Table II. Supplier to government 10 4.5
Characteristics of Other 1 0.4
responding firms Total 223 100.0

SME suppliers can be classified based on their primary business goals in the supply
chain. It was reported that 148 firms (66.4 percent) were “suppliers to major buying
companies”, 64 firms (28.7 percent) “second-tier suppliers”, ten firms (4.5 percent)
answered that they “supply to government agencies” and one firm (0.4 percent) checked
“others” (Table III).

Adoption of EMSs
The survey asked the operations/supply chain managers several questions related to
the environmental management: first, “are you aware of such EMSs and programs?”
As shown in Table IV, most of them (98.7 percent) knew what ISO 14000 series were
and about one-half of the respondents recognized the electronic product environmental
assessment tool (45.3 percent) and total quality environmental management
(48.4 percent). However, less than 40 percent of the managers have heard about
other programs such as the European EMAS (30.0 percent), EU eco-label award scheme
(24.2 percent), environment, health and safety (EHS) programs (36.3 percent), and life
cycle assessment (LCA) (32.3 percent).
 GSCM and
Awareness Adoption
EMSs Yes No Yes No organizational
ISO 14000 series 220 (98.7) 3 (1.3) 215 (96.4) 8 (3.6)
performance
Electronic product environmental assessment tool 101 (45.3) 122 (54.7) 42 (18.8) 181 (81.2)
European EMAS 67 (30.0) 156 (70.0) 20 (9.0) 203 (91.0)
EU eco-label award scheme 54 (24.2) 169 (75.8) 14 (6.3) 209 (93.7) 1161
EHS programmers 81 (36.3) 142 (63.7) 35 (15.7) 188 (84.3)
LCA 72 (32.3) 151 (67.7) 24 (10.8) 199 (89.2)
Total quality environmental management 108 (48.4) 115 (51.6) 60 (26.9) 163 (73.1) Table III.
Awareness and
Note: Percentage values are in parenthesis adoption of EMSs

Factors IEM GP CC ECO ES OE RE BP

Internal environmental management (IEM) 1.00

Green purchasing (GP) 0.58 1.00
Cooperation with customers (CC) 0.52 0.65 1.00
Eco-design (ECO) 0.53 0.47 0.44 1.00
Employee job satisfaction (ES) 0.62 0.47 0.42 0.43 1.00
Operational efficiency (OE) 0.49 0.31 0.26 0.40 0.35 1.00 Table IV.
Relational efficiency (RE) 0.56 0.44 0.40 0.33 0.46 0.65 1.00 Correlation between
Business performance (BP) 0.46 0.32 0.35 0.44 0.48 0.66 0.62 1.00 theoretical constructs

The second question was, “which EMS has your company already adopted?” The most
popularly used one was ISO 14000 series – 215 out of 223 firms (96.4 percent) have
implemented it. Yet, the survey result shows that there was limited use of other than
ISO 14000 series from the major buying firms in the Korean electronics industry. Only
four firms mentioned that they built a system to comply with the EU’s RoHS Directive
(Table V).

Analysis of reliability and validity

We tested the measurement properties of the constructs using reliability and
item-to-total correlation analysis, followed by confirmatory factor analysis (CFA). Based
on the covariance matrix for the variables, the standardized factor loadings and t-values
were obtained. As shown in Table VI, both standardized loadings (. 0.60) and t-values
( p , 0.01) for the individual paths were significantly related to their underlying
theoretical constructs. In addition, all of the average variance extracted (AVE) estimates
of constructs were greater than the cutoff point (0.5) (Fornell and Larcker, 1981). These
tests, thus, exhibit convergence validity.
We also compared the squared correlation coefficients between two latent
constructs to their AVE estimates (Fornell and Larcker, 1981). According to this test,
discriminant validity exists if the items share more common variance with their
respective construct than any variance the construct shares with other constructs.
Thus, the squared correlation coefficient between each pair of constructs should be less
than the AVE estimates for each individual construct. Comparing the correlation
coefficients given in Table IV with the AVE estimates reported in Table V, all of the
squared correlations were smaller than the AVE for each individual construct.
IMDS
Item Item-to-total Cronbach’s
112,8 Factors no. Mean SD correlation a AVE CR

Internal environmental IEM1 3.84 0.837 0.642 0.882 0.586 0.875

management IEM2 3.37 0.986 0.584
IEM3 3.51 0.981 0.784
1162 IEM4 3.72 0.985 0.790
IEM5 3.66 0.991 0.799
Green purchasing GP1 3.65 0.970 0.747 0.891 0.678 0.893
GP2 3.75 1.034 0.714
GP3 3.69 0.958 0.750
GP4 3.69 0.954 0.834
Cooperation with customers CC1 3.68 1.062 0.719 0.919 0.748 0.922
CC2 3.75 1.022 0.851
CC3 3.74 1.010 0.833
CC4 3.69 1.009 0.858
Eco-design ECO1 3.88 1.123 0.653 0.858 0.551 0.844
ECO2 3.28 1.202 0.731
ECO3 3.42 1.201 0.666
ECO4 4.04 1.067 0.616
ECO5 3.48 1.126 0.704
Employee job satisfaction ES1 3.37 0.771 0.704 0.908 0.667 0.909
ES2 3.55 0.836 0.757
ES3 3.39 0.797 0.810
ES4 3.36 0.804 0.774
ES5 3.48 0.740 0.800
Operational efficiency OE1 2.89 1.044 0.833 0.937 0.709 0.936
OE2 2.90 1.088 0.816
OE3 3.18 1.077 0.881
OE4 3.27 1.070 0.812
OE5 2.88 1.052 0.834
OE6 3.44 1.011 0.702
Relational efficiency RE1 3.47 1.043 0.887 0.971 0.833 0.968
RE2 3.48 1.026 0.888
RE3 3.41 1.043 0.887
RE4 3.42 1.027 0.915
RE5 3.44 1.011 0.927
RE6 3.45 1.021 0.926
Table V. Business performance BP1 3.06 0.980 0.745 0.914 0.733 0.916
Summary of BP2 3.30 0.976 0.752
measurement results of BP3 3.12 1.042 0.870
reliability and validity BP4 3.11 0.999 0.809

Therefore, these results collectively provided evidence of discriminant validity among

the theoretical constructs.
Reliability estimation was left for last because in the absence of a valid construct,
reliability would not be meaningful (Koufteros, 1999). Item-to-total correlation analysis
results provided in Table V suggest a reasonable fit of the latent factors to the data
collected. Cronbach’s a values for all factors were greater than 0.85, which ensure the
internal consistency and validity of the constructs as they were well above the suggested
value of 0.70 (Nunnally and Vernstein, 1994). The item factor loadings were
 GSCM and
Factors Item no. Standardized loading t-value
organizational
Internal environmental management IEM1 0.711 18.439 performance
IEM2 0.645 14.628
IEM3 0.860 33.569
IEM4 0.790 24.759
IEM5 0.804 26.399 1163
Green purchasing GP1 0.788 26.355
GP2 0.742 21.756
GP3 0.833 34.200
GP4 0.920 53.205
Cooperation with customers CC1 0.749 23.318
CC2 0.892 50.886
CC3 0.898 54.395
CC4 0.912 59.603
Eco-design ECO1 0.710 17.605
ECO2 0.710 17.583
ECO3 0.625 12.921
ECO4 0.713 17.734
ECO5 0.839 27.458
Employee job satisfaction ES1 0.725 20.453
ES2 0.788 26.788
ES3 0.860 39.105
ES4 0.844 35.709
ES5 0.859 38.622
Operational efficiency OE1 0.830 34.352
OE2 0.815 32.149
OE3 0.921 66.466
OE4 0.860 42.304
OE5 0.852 39.331
OE6 0.765 25.138
Relational efficiency RE1 0.853 44.527
RE2 0.855 45.329
RE3 0.873 51.599
RE4 0.948 123.304
RE5 0.972 195.882
RE6 0.967 174.995
Business performance BP1 0.761 24.916
BP2 0.771 26.057 Table VI.
BP3 0.941 81.295 Measurement
BP4 0.934 76.874 model results

all acceptable, i.e. all were much greater than 0.5 (Nunnally and Vernstein, 1994).
Alternatively, composite reliability (CR) scores were computed to assess construct
reliability. According to Koufteros (1999), a CR greater than 0.80 would imply that the
variance captured by the factor is significantly more than the variance indicated by the
error components. As reported in Table V, all factors showed CRs greater than 0.84,
which ensure the construct reliability of all constructs.

Goodness-of-fit of the research model

Dimensionality of the GSCM practice implementation scale. Zhu et al. (2008) developed
both first- and second-order measurement models for GSCM practice implementation.
IMDS We examined the two measurement models and adopted them with some modification
112,8 as discussed previously. The goodness-of-fit indices of the first-order model were
within the commonly accepted limits. CFI ¼ 0.958 ($ 0.90) and SRMR ¼ 0.050 (# 0.06)
satisfied the cutoff points (Bentler, 1988). x 2 statistics of 242.481 at 128 degrees of
freedom implies that x 2/df ¼ 1.89, which is less than the benchmark of 2.0 (Koufteros
and Marcoulides, 2006). Thus, as presented in Table VII and Figure 2, the test results
1164 confirmed the unidimensionality of these scales, i.e. items constituting the GSCM
practice implementation represent the same theoretical construct.
To examine whether or not there is internal fit among the GSCM practices, we
performed CFA including GSCM practice implementation as a second-order latent
factor underlying the first-order latent variables corresponding to the GSCM practice
implementation dimensions. As Figure 3 shows, all underlying constructs of GSCM
practice implementation were well correlated and governed by the higher-order factor.
In addition, as summarized in Table IX, the values for the model fit indices in this
higher-order model also showed that the model fit data very well. x 2 statistics of
248.178 at 130 degrees of freedom implies that x 2/df ¼ 1.91, CFI ¼ 0.957 and
SRMR ¼ 0.053 satisfied the cutoff points as well (Bentler, 1988; Koufteros and
Marcoulides, 2006).
As such, this study established the validity and reliability of the measurement scale
in both the first- and second-order models as Zhu et al.’s (2008) empirical study did.
Before deciding which one to use for the empirical tests, the x 2 statistics of both
models were compared to evaluate the efficacy of the two (Marsh and Hocevar, 1985).
The x 2 test is usually used to confirm whether the difference between the expected and
the observed frequencies in one or more categories is a real, statistically significant
difference (Sirkin, 1999). The x 2 test result in this study showed that there was no
statistically significant difference between the two models because the difference between
the x 2 statistics of both first- and second-order models was 5.697, smaller than 5.991
where the degree of freedom is 2 at p # 0.05. Beltrán-Martı́n et al. (2008) showed that
covariation among the first-order factors and the observable variable is fully explained by
their regression onto the second-order factor. Therefore, in this study we used the
higher-order measurement model for testing the hypothesized structural equation model.
Dimensionality of the scales of employee job satisfaction, operational efficiency,
relational efficiency, and business performance. We verified the unidimensionality of all
four constructs: employee job satisfaction, operational efficiency, relational efficiency,
and business performance. As reported in Table VIII and Figure 4, all fit indices were
satisfied vis-á-vis cutoff points. CFIs of all four constructs ranged from 0.957 to 0.994,
and SRMRs were all less than 0.60. Regarding x 2 statistics, even though all x 2/df
ratios of these four constructs were greater than 2.0, Medsker et al. (1994) suggested
that x 2/df ratios less than 10 can be interpreted as indicating a good fit to the data.

Model statistics First-order Second-order

2
x 242.481 248.178
df 128 130
Table VII. x 2/df 1.89 1.91
Statistics of first- and CFI 0.958 0.957
second-order models SRMR 0.050 0.053
 GSCM and
0.708
0.498 IEM1 organizational
performance
0.568 IEM2 0.657
IEM

0.242 IEM3
0.871 1165
0.396 IEM4
0.777
0.576
0.787
0.381 IEM5

0.521
GP

0.790
0.376 GP1

0.655 0.506
0.744
0.446 GP2
0.831
0.310 GP3
CC
0.454
0.154 GP4 0.920

0.405

0.441 CC1 0.748

0.800
0.210 CC2 ECO

0.192 CC3 0.899

0.165 CC4 0.914

0.509 ECO1 0.701

0.361 ECO2 0.800

0.462 ECO3 0.733

0.536 ECO4 0.681

Figure 2.
First-order factor
0.384 ECO5 0.785 measurement model for
Notes: Fit indices: (128) = 242.481 (p < 0.001); x2/df = 1.89;
x2 GSCM practice
implementation
CFI = 0.958; SRMA = 0.050
IMDS 0.709
112,8 0.498 IEM1

0.567 IEM2 0.658

IEM 0.715
0.868
0.246 IEM3
1166
0.391 IEM4
0.780
0.380 IEM5 0.788

0.788
0.380 GP1

0.449 GP2 0.742 0.830

GP
0.832
0.308 GP3

0.151 GP4 0.921

GSCM

0.749
0.439 CC1

0.207 CC2 0.890 0.760

CC
0.898
0.194 CC3

0.166 CC4 0.913

0.703
0.506 ECO1

0.361 ECO2 0.799

0.577
0.734 ECO
0.461 ECO3
0.535 ECO4
Figure 3. 0.682
Second-order factor
measurement model for 0.387 ECO5 0.783
GSCM practice Notes: Fit indices: x2 (130) = 248.178 (p < 0.001); x2/df = 1.91;
implementation
CFI = 0.957; SRMA = 0.053
Taken all together, the results from the instrument development process showed that GSCM and
the theoretical constructs exhibit good psychometric properties. organizational
performance
Hypotheses testing
Direct effects
The results of the structural model are shown in Table IX and Figure 5. All fit indices
were indicative of a decent fitting model. The most anticipated finding in this study, 1167
a statistically significant direct link between GSCM practice implementation and
business performance, did not materialize, not supporting H1 (b ¼ 0.084; t ¼ 0.782;
p ¼ 0.484). This result leads to further discussion on indirect or mediating effects in the

Model x2 df p x 2/df CFI SRMR

GSCM practice implementation first-order 242.481 128 0.000 1.89 0.958 0.050
GSCM practice implementation second-order 248.178 130 0.000 1.91 0.957 0.053
Employee job satisfaction scale 25.772 4 0.000 6.44 0.971 0.025 Table VIII.
Operational efficiency scale 20.059 6 0.003 3.33 0.988 0.019 Fit indices for the
Relational efficiency scale 16.816 6 0.010 2.80 0.994 0.007 confirmatory factor
Business performance scale 19.695 2 0.000 9.85 0.975 0.025 analysis

Business Performance Employee Job Satisfaction

0.689
0.757 0.526 ES1
0.427 BP1 0.753
0.758 0.432 ES2
0.425 BP2 0.856
0.951 BP 0.267 ES3 ES
0.096 BP3 0.868
0.247 ES4
0.911
0.134 BP4 0.865
0.252 ES5
(a) (b)
Operational Efficiency Relational Efficiency
0.781 0.873
0.390 OE1 0.322 RE1
0.785 0.860
0.383 OE2 0.308 RE2
0.944 0.866
0.110 OE3 0.272 RE3
0.870 OE 0.974 RE
0.243 OE4 0.102 RE4
0.811 0.986
0.342 OE5 0.046 RE5
0.767 0.984
0.412 OE6 0.068 RE6 Figure 4.
(c) (d) Confirmatory factor
analyses of employees’ job
Notes: Fit indices: (a) x2 (2) = 19.695 (p < 0.001); x2/df = 9.85; CFI = 0.975; SRMA = 0.025; satisfaction, operational
(b) x2 (4) = 25.772 (p < 0.001); x2 /df = 6.44; CFI = 0.971; SRMA = 0.025; (c) x2(6) = 20.059 efficiency, relational
(p < 0.001); x2 df = 3.33; CFI = 0.988; SRMA = 0.019; (d) x2(6) = 16.816 (p < 0.001); efficiency, and business
performance
x2 /df = 2.80; CFI = 0.994; SRMA =0.007
IMDS
Direct effects Indirect effect Hypotheses test
112,8 Path (from-to) (t-value) (t-value) results

H1. GSCM implementation ! business 0.084 (0.782) Not supported

performance (direct)
H2a. GSCM implementation ! employee job 0.720 (15.353) * Supported
1168 satisfaction
H2b. Employee job satisfaction ! business 0.161 (1.877) Not supported
performance
H2c. Employee job satisfaction ! operational 0.024 (0.204) Not supported
efficiency
H3a. GSCM implementation ! operational 0.444 (3.688) * Supported
efficiency
H3b. Operational efficiency ! business 0.423 (6.578) * Supported
performance
H3c. Operational efficiency ! relational 0.447 (7.886) * Supported
efficiency
H4a. GSCM implementation ! relational 0.410 (6.858) * Supported
efficiency
H4b. Relational efficiency ! business 0.233 (3.022) * Supported
performance
H5. GSCM implementation ! business 0.455 (5.407) * Supported
performance (indirect)
Table IX.
Results of path analyses Notes: Significant at: * p , 0.01; fit indices: x 2 ¼ 1615.675 (df ¼ 689), x 2/df ¼ 2.345, CFI ¼ 0.887,
and hypotheses tests SRMR ¼ 0.071

Employee Job
Satisfaction
0.720** 0.161
H2a 0.024 H2b
H2c
0.444** 0.423**
GSCM H3a H3b Business
Operational
Implementation Efficiency Performance

0.447**
0.410 ** H3c 0.233**
H4a H4b
Relational
Efficiency

Figure 5.
Hypothesized structural 0.084
model results H1
** p < 0.01
succeeding section. H2-H4, linking GSCM practice implementation and the three GSCM and
constructs (employee job satisfaction, operational and relational efficiencies), all showed organizational
positive and statistically significant results ( p , 0.01). Specifically, the paths from the
implementation of GSCM practices to the following showed significant positive results: performance
(1) employee job satisfaction (b ¼ 0.72; t ¼ 15.353; p , 0.01);
(2) operational efficiency (b ¼ 0.444; t ¼ 3.688; p , 0.01); and
1169
(3) relational efficiency (b ¼ 0.41; t ¼ 6.858; p , 0.01).

H5 and H7, the relationships of employee job satisfaction – operational efficiency and
employee job satisfaction – business performance, were not supported in this study:
employee job satisfaction on operational efficiency (H5) with b ¼ 0.024; t ¼ 0.204;
p ¼ 0.839 and employee job satisfaction on business performance (H7) with b ¼ 0.161;
t ¼ 1.877; p ¼ 0.061. That is, even though the implementation of GSCM practices has
a positive influence on employee job satisfaction (H2), job satisfaction may not have a
statistically significant direct impact on operational outcome and/or business performance.
Operational efficiency is purported to be conducive to relational efficiency between
the buying firm and SME suppliers. H6 states that the improved operational efficiency in
the supplier has a positive impact on the relational efficiency between the supplier
and the large customer firm. The test result indicated that the two factors have a positive,
statistically significant relationship with a t-value of 7.886 at p , 0.01. Hence, in addition
to having a direct effect from GSCM practice implementation (H4), relational efficiency
also has an indirect effect via operational efficiency (H6). It was posited that both
improved operational efficiency of the supplier (H8) and relational efficiency between the
supplier and its customer company (H9) would positively affect the supplier’s business
performance. Both effects as hypothesized by H8 and H9 were statistically significant:
H8 (b ¼ 0.423; t ¼ 6.578, p , 0.01) and H9 (b ¼ 0.233; t ¼ 3.022; p , 0.01).

Mediation analysis
To examine the mediating effects between GSCM practice implementation and business
performance, structural equation modeling (SEM) was used following the commonly used
Baron and Kenny (1986) method. In the previous section, the direct link between GSCM
practice implementation and business performance was found to be non-significant.
Meanwhile, the results of hypotheses tests presented that the initial variable GSCM
practice implementation was positively correlated with all three mediators: employee job
satisfaction, operational efficiency, and relational efficiency. Then, the test results showed
that two mediators except employee job satisfaction had direct, positive and statistically
significant relationships with the outcome variable, business performance.
As proposed by H10 (employee job satisfaction, supplier’s operational efficiency,
relational efficiency between the supplier and the large customer firm mediating the
relationship between GSCM practice implementation and the supplier’s business
performance) was estimated and supported (b ¼ 0.455; t ¼ 5.407; p , 0.01). This
means, firms’ business performance will improve when they accomplish operational and
relational efficiencies as well as secure employee job satisfaction after adopting GSCM
practices. More specifically, the results showed that this mediating effect (b ¼ 0.455)
were more than five times greater than the direct effect (b ¼ 0.084). The significant paths
in the research model are shown in Figure 4 and the results of overall hypotheses tests
are summarized in Table IX.
IMDS Conclusion
112,8 Implications of the study
The results of this study suggest a number of interesting insights concerning GSCM.
First, this paper adopted conceptual footing from RDT for GSCM practice
implementation to investigate the effects of collaboration effort between SME
suppliers and large buying firms. We took the supplier’s perspective in explaining the
1170 weaknesses of SME suppliers in order to emphasize the importance of the support from
large firms for improving suppliers’ environmental management capabilities and
business performance. Krause et al. (2000) argued, in general, the necessity and
importance of buying firms’ involvement to help enhance suppliers’ performance
because buying firms’ such efforts would have a positive influence on the business
performance of the supplier firms. More specifically, prior studies asserted that to
prevent any environmental accidents made by SME suppliers and to improve their own
GSCM practices, large buying firms need to be involved with their suppliers’ GSCM
activities (Lee, 2008; Lee and Klassen, 2008). Moreover, SME suppliers perceive that the
implementation of GSCM practices helps improve the relational efficiency with their
buyers and eventually achieve better business performance.
Second, this research extends the literature on the implementation of GSCM practices.
The measurement model of GSCM practice implementation employed in this study
was developed and tested mostly in China (Zhu and Sarkis, 2004; Zhu et al., 2008). The
contribution of this research is significant in that it is one of a few empirical studies that
used the measurement items and scales for evaluating GSCM practice implementation
among Korean electronics firms and attempted to refine the measurement items
with modification. Zhu et al. (2008) developed the construct of GSCM practices
implementation and tested a higher-order measurement model. Our results also show
that all underlying constructs of GSCM practices implementation are governed by the
second-order factor. This result supports the study of Zhu et al. (2008). One other
meaningful outcome of our study is that newly added measurement items in our
research, such as “cooperation with customers for developing environmental database of
products,” “design of products for disassembly,” and “design of products considering
life cycle assessment,” were also well correlated for the constructs.
Third, the findings of this study are largely consistent with the observation of Zhu
and Sarkis (2006). Zhu and Sarkis (2006) discussed that since the EU’s new directives on
electronic equipment and substances became in effect, the electronics industry has been
more mature in adopting GSCM practices in China. Table III shows a good acceptance
rate of ISO 14001 among Korean SMEs in the electronics industry. Most of the suppliers
(96.4 percent) surveyed have implemented ISO 14001. This indeed is a huge
improvement in Korean electronics industry in terms of environmental quality
management, compared to only 82 out of all Korean SMEs that adopted ISO 14001 in
2002 (Jang, 2004). This evidence clearly presents that the ISO 4001 is required for
suppliers in getting contracts with buying firms (Lee and Cheong, 2011). Furthermore,
according to our survey, many medium-sized first-tier suppliers have been utilizing LCA
and EMAS (EMAS) from the designing stage of their new products.
Fourth, companies that implement GSCM practices must ensure that both the
organization and its employees accomplish the overall organizational objectives, such as
cost saving, cycle time reduction, improved environmental quality, and overall greater
customer values as well as individual goals of the employees. The mediation analysis
shows that business performance can be enhanced through the achievement of GSCM and
operational efficiency after a company adopts GSCM practices. In addition, our study organizational
argues that employees who are currently satisfied with GSCM practices could later
become dissatisfied. As large buying firms become more proactive concerning performance
environmental issues, they will begin to extend the list of the environmental
requirements for the products that they purchase from their suppliers. Then, the
employees of these suppliers will realize the pressure from external stakeholders 1171
(i.e. buyer firms and governments) as well as from management, and will probably
become resistant to such changes.

Limitations and future research needs

This study has some limitations that would provide opportunities for further research.
First, the survey instrument should be reinforced and refined. Studies on GSCM are
still at the early stage in developing proper measurements on GSCM practices and
organizational performance. Developing good assessment tools on GSCM is critical,
especially for SME suppliers. SME supplier firms are in need of self-diagnostic tools to
check their environmental management capabilities. Academia should provide such
diagnostic tools or a checklist to help the firms identify their problem areas and create
solutions. To this end, we will continue this research to refine the survey instrument
and correct any measurement errors.
Second, we chose electronics firms in Korea for data collection and analysis as this
industry is under stringent environmental regulations. Hence, the results may not have
strong external validity. To increase generalizability of the research, repeating this
study for comparative analysis in different industries as well as in different countries
will be another research direction.
Third, we assessed organizational performance using rather general factors such as
asset utilization, competitive position in the market, and profitability. In the future
research, more specific measurement items should be used to evaluate an organization’s
business performance – financial indices, innovation, detailed environmental
performance measures, and the like.
This study has made an initial effort to explain the direct and indirect effects of
employee job satisfaction, operational and relational efficiencies on the link between
GSCM practice implementation and business performance for small- and medium-sized
electronics firms. As GSCM is playing an increasingly important role in sustaining
competitive advantage (Rao and Holt, 2005; Testa and Iraldo, 2010), firms should
seriously investigate how to leverage GSCM practices to facilitate both operational and
relational efficiencies and eventually gain greater competitiveness in the dynamic
global market place.

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IMDS About the authors
Sang M. Lee is the University Eminent Scholar and Regents Distinguished Professor at the
112,8 University of Nebraska-Lincoln. He is President of the Pan-Pacific Business Association, an
international scholarly society of over 4,000 members in 35 countries. He also served as President
of the Decision Sciences Institute. Currently, he is a Fellow of the Academy of Management,
Decision Sciences Institute, and Pan-Pacific Business Association. He has authored or
co-authored 60 books and more than 300 journal articles. He is the Editor-in-Chief of Service
1178 Business: An international Journal and on the editorial board of 23 journals. He is listed in more
than 50 Who’s Who publications, including Who’s Who in America. He has received five
honorary degrees.
Sung Tae Kim is an Assistant Professor at the SolBridge International School of Business in
the Republic of Korea. He received his PhD in Operations and Supply Chain Management and
Master’s in Economics from the University of Nebraska-Lincoln. His research interests include
green supply chain management, service quality management, and outsourcing
decision-making. His articles have appeared in such journals as International Journal of
Information Technology and Management, International Journal of Information and Decision
Sciences, International Journal of Web-based Learning and Teaching Technologies and
International Journal of Service Sciences. Sung Tae Kim is the corresponding author and can be
contacted at: [email protected]
Donghyun Choi is a PhD candidate in Operations and Supply Chain Management at the
University of Nebraska Lincoln. His research interests include supply chain management,
innovation, social network theory, and green operations. He has published in International
Journal of Information and Decision Sciences, Production and Inventory Management Journal
and Management Decision.

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Factors Measurement items

Internal environmental management (IEM) IEM1: senior managers’ commitment on GSCM

IEM2: mid-level managers’ support of GSCM
IEM3: cross-functional cooperation for environmental improvements
IEM4: environmental compliance and auditing programs
IEM5: ISO 14001 certification
Reference: Zhu et al. (2008)
Green purchasing (GP) GP1: eco labeling of products
GP2: cooperation with suppliers for environmental objectives
Appendix. Survey questionnaires

GP3: environmental audit for suppliers’ internal management

GP4: suppliers’ ISO 14000 certification
References: Chen (2005), Zhu et al. (2008)
Cooperation with customers (CC) CC1: cooperation with customers for eco-design
CC2: cooperation with customers for cleaner production
CC3: cooperation with customers for green packaging
CC4: cooperation with customers for developing environmental database of products
References: Hsu and Hu (2008), Zhu et al. (2008)
Eco-design (ECO) ECO1: design of products for reduced consumption of material/energy
ECO2: design of products for reuse, recycle, recovery of material, component parts
ECO3: design of products to avoid or reduce use of hazardous products and/or their manufacturing
process
ECO4: design of products for disassembly
ECO5: design of products considering LCA
References: Matos and Hall (2007), Rusinko (2007), Zhu et al. (2008)
Notes: A five-point scale: 1 – not considering it, 2 – planning to consider it, 3 – considering it currently, 4 – initiating implementation, and
5 – currently implementing
organizational
performance

for GSCM practice

Measurement items
GSCM and

implementation
Table AI.
1179
 112,8
IMDS

1180

Table AII.

the mediators and

business performance
Measurement items for
Factors Measurement items

Employee job satisfaction (SAT) SAT1: most employees like their jobs in the present operations
SAT2: most employees think their supervisor treats them well
SAT3: most employees in our firm like their jobs more than many employees of other firms
SAT4: most employees in our firm do not intend to work for a different company
SAT5: overall, our employees are quite satisfied with their jobs
References: Homburg and Stock (2004), Zhou et al. (2008)
Operational efficiency (OE) OE1: cycle time has been reduced
OE2: overall, costs have been lowered
OE3: overall, products’ quality has been improved
OE4: customer service has been improved
OE5: project duration has been reduced
OE6: our firm has delivered greater value to our customers
References: Rusinko (2007), Paulraj et al. (2008), Zhu et al. (2008), Zacharia et al. (2009)
Relational efficiency (RE) RE1: an increased respect for the skills and capabilities of customers
RE2: an improved level of honesty
RE3: more open sharing of information with our customers
RE4: a more effective working relationship with our customers
RE5: an enhanced commitment to work with our customers in the future
RE6: an overall more productive working relationship with our customers
Reference: Zacharia et al. (2009)
Business performance (BP) BP1: better asset utilization
BP2: stronger competitive position
BP3: improved profitability
BP4: overall improved organizational performance
References: Zhu et al. (2008), Zacharia et al. (2009)
Notes: A five-point scale: 1 – strongly disagree, 2 – disagree, 3 – neutral, 4 – agree, and 5 – strongly agree