sustainability

Article
The Influence of Green Supply Chain Management Practices on
Corporate Sustainability Performance
Mohammed Taj Hejazi 1, *, Bader Al Batati 2 and Ahmed Bahurmuz 1

1 College of Business Administration, University of Business and Technology, Jeddah 21448, Saudi Arabia
2 College of Advertising, University of Business and Technology, Jeddah 23435, Saudi Arabia
* Correspondence: [email protected]

Abstract: Sustainability is a major concern for several industries in Saudi Arabia, especially those in
the industrial sector. By using green methods, many businesses intend to become sustainable. Green
practices provide staff with instructions regarding how to maintain business sustainability while
performing necessary production tasks. Accordingly, the purpose of this study was to investigate
how green practices affect the sustainability performance of businesses. Partial least squares (PLS)
analysis was used to examine data from 250 sets of completed onnaires. Our findings showed that
green practices significantly impact corporate sustainability performance.

Keywords: green supply chain; corporate sustainability performance; economic performance; social
performance; environmental performance

1. Introduction
Rapid globalization and industrialization in the last ten years have had negative
impacts on the environment, contributing to issues such as global warming, air and wa-
ter pollution, and chemical and hazardous explosions [1]. In recent years, researchers,
Citation: Hejazi, M.T.; Al Batati, B.;
the government, NGOs, consumers, and industries have all adopted green supply chain
Bahurmuz, A. The Influence of Green
management (GSCM) as a sustainability pillar in response to growing environmental con-
Supply Chain Management Practices sciousness [2]. Researchers have long addressed the advantages of GSCM techniques [3],
on Corporate Sustainability including their ability to enhance economic performance, enhance organizational competi-
Performance. Sustainability 2023, 15, tiveness, and reduce environmental impacts [4].
5459. https://doi.org/10.3390/ As a result of its adverse impacts on the environment, global warming has gener-
su15065459 ated widespread alarm [5] as environmental challenges such as rapid resource depletion,
pollution, and losses in species diversity have deteriorated the ecological equilibrium [6].
Academic Editors: Yi-Chung
The pressing task facing governments worldwide is to reduce this largely human-
Hu, Jingci Xie, Hang Jiang and
Peng Jiang
caused negative environmental impact [5]. Due to growing environmental awareness,
businesses face even larger obstacles than in years past [7], as their human impacts on
Received: 21 January 2023 the climate include supply chains. Consequently, manufacturers are the primary focus of
Revised: 12 March 2023 all energy-conservation and pollution-reduction regulations and programs [8]. Therefore,
Accepted: 15 March 2023 it is vital to regulate industrial supply chain operations so that they do not negatively
Published: 20 March 2023
affect the environment [9]. Environmental concerns and government globalization policies
have driven many manufacturing enterprises to adopt specific tactics that will aid in the
adoption of sustainability [10]. Green supply chain management (GSCM) refers to the
Copyright: © 2023 by the authors.
activities undertaken to achieve this objective. GSCM broadens the standard notion of
Licensee MDPI, Basel, Switzerland. supply chain management within the context of more eco-friendly management [11].
This article is an open access article Both primary and secondary stakeholders demand that businesses implement policies
distributed under the terms and and strategies to address the adverse effects of their operations on the environment and
conditions of the Creative Commons societal safety due to the environmental concerns raised by their engagement in business
Attribution (CC BY) license (https:// activities. These demands have encountered resistance since some scholars and academics
creativecommons.org/licenses/by/ argue that a firm’s primary role is to increase shareholders’ profits and that the government
4.0/). is responsible for social and environmental issues [12].

Sustainability 2023, 15, 5459. https://doi.org/10.3390/su15065459 https://www.mdpi.com/journal/sustainability

Sustainability 2023, 15, 5459 2 of 16

The Earth’s sustainability and humanity’s existence are jeopardized due to supply
chain operations, particularly logistics activities, which are among the crucial tasks per-
formed by businesses. These activities increase energy consumption, waste, and hazardous
gas emissions into the environment. Ineffective logistics management may result in in-
creased energy use, waste use, and greenhouse gas emissions, resulting in excessive pol-
lution [13]. Since the 1970s, there has been a noticeable increase of 90% in global carbon
emissions [14], with industrialization and the combustion of fossil fuels responsible for
around 78% of these emissions [15].
Many organizations have implemented eco-friendly techniques into their logistics
services, resulting in the formation of green logistics management techniques to meet
stakeholders’ environmental demands and enhance societal safety. Environmental practi-
tioners and researchers are currently investigating the success of environmental measures
in protecting the environment while also sustaining enterprises by increasing profitability
and shareholder value [12]. This research has produced contradictory findings about the
effect of environmentally friendly supply chain approaches on environmental and financial
performance [16]. More research is necessary to contribute to the continuing discussion to
help managers make informed decisions about adopting green practices that might ensure
enhanced performance and sustainability.
The majority of existing work has been conducted in specific industries, particularly
manufacturing enterprises [17], at the expense of other businesses that considerably con-
tribute to environmental degradation, which limits the generalization of currently available
results [12]. The impact of GSCM on all elements of sustainability performance and their
interconnections has received little attention, particularly in Saudi Arabia. Additional
research is required to fill the identified severe gaps, thus motivating this study.
Manufacturers are required by law in many industrialized nations in North America
and Europe to collect, recover, and/or dispose of used goods and packaging, which has
sparked the development of concepts (or terms) such as “reverse logistics”, “closed-loop
supply chains”, and “green supply chains” [18]. Industries, governments, and consumers
are becoming more aware of the need to protect the environment and reduce pollution [8].
However, according to [19], the demand for GSCM adoption is stronger in the less en-
vironmentally conscious companies of developing countries (such as India, China, and
Brazil). These countries are competing for quicker economic growth, and their economies
are expanding due to rapid industrialization [20]. Accordingly, they are already emerging
as the world’s leading polluters of the future [19]. Regarding the environmental damage
caused by industrial development, China has been at the forefront among developing
nations [21]. Saudi Arabia has not demonstrated much regard for environmental protection
while pursuing economic expansion [22–24]. Companies in Saudi Arabia are reluctant to
commit to sustainability issues unless they are legally required to do so. As a result, GSCM,
which has already matured in some rich countries, is still a relatively new idea in India and
other emerging nations [25]. We were encouraged by this fact to consider Saudi Arabian
manufacturers as our study object.
Considering the significant gaps in the existing literature and the need to broaden
its scope regarding small and medium-sized firms in Saudi Arabia, this study was con-
ducted to evaluate the efficacy of green supply chain practices in achieving higher levels
of environmental, social, and economic performance in manufacturing industries. In this
study, we created a complete model (shown in Figure 1) that describes how green supply
chain strategies affect social, environmental, and economic performance. The results of this
study contribute to industry managers’ jobs and add to the existing body of knowledge on
sustainability performance.
bility 2023, 14, x FOR PEER REVIEW 3 o

Sustainability 2023, 15, 5459 3 of 16

Figure 1. Proposed model.

To test our proposed hypotheses, we surveyed Saudi Arabian manufacturing firms

to ascertain the extent of the adoption of green supply chain management techniques and
their impact on corporate performance. The study was primarily focused on employees
Figure 1. Proposed model.
responsible for each organization’s ISO paperwork or environmental management system.
The sampling strategy employed in the study was cluster sampling. Of the 540 surveys
Todistributed
test our proposed
via electronichypotheses,
mail, 250 were wereturned
surveyed
to theSaudi Arabian
authors manufacturing
by respondents. The fi
findings demonstrated that using green supply chain management techniques
to ascertain the extent of the adoption of green supply chain management techniques favors and
significantly influences economic, social, and environmental performance.
their impact on corporate performance. The study was primarily focused on employ
The rest of the paper is structured as follows. Section 2 describes the related literature;
responsible
Sectionfor each hypotheses
3 provides organization’s ISO paperwork
development; or methodology;
Section 4 presents environmental Sectionmanagem
5
system. The sampling strategy employed in the study was cluster sampling.7Of the
reports data analysis and results; Section 6 describes discussion; and finally, Section
surveysprovides conclusions,
distributed limitations, mail,
via electronic and future
250 work
wereoutlooks.
returned to the authors by responde
The findings demonstrated
2. Literature Review that using green supply chain management techniques fav
2.1. Green Supply
and significantly Chain Management
influences economic, (GSCM) Practices
social, and environmental performance.
GSCM has attracted much corporate attention
The rest of the paper is structured as follows. Section during the past three decades
2 describes [26]. literat
the related
SectionVarious characteristics
3 provides hypothesesof GSCM practices haveSection
development; been described in earlier
4 presents studies [27]. Sectio
methodology;
According to [28], GSCM techniques are fundamentally green initiatives that focus on
reportsminimizing,
data analysis and
reusing, andresults; Section and
recycling materials 6 describes discussion;
energy to enhance and finally,
environmental impacts Sectio
provides conclusions,
at every limitations,
phase of the manufacturingand future
process, work outlooks.
including design, procurement, production,
distribution, and product recovery [29].
2. Literature According
Reviewto [30], GSCM refers to the distribution of goods and services from sup-
pliers and manufacturers to end users while accounting for monetary, informational, and
2.1. Green Supplyflows
material ChaininManagement (GSCM)
the environment. GSCMPractices
integrates an environmental viewpoint with
GSCM has attracted much corporate attention during the past three deca
[26].Various characteristics of GSCM practices have been described in earlier studies [
According to [28], GSCM techniques are fundamentally green initiatives that focus
Sustainability 2023, 15, 5459 4 of 16

SCM, spanning material sourcing and selection, product design, manufacturing processes,
finished item distribution to clients, and product disposal after expiration [31]. Due to
consumer demands and legal requirements, monitoring and assessing environmental man-
agement comprise the initial stage of GSCM, which culminates in the adoption of proactive
measures involving several reverse activities such as refurbishing, recycling, reworking,
reusing, and remanufacturing [32].
GSCM can also be categorized as a collaboration and monitoring-based set of proce-
dures for achieving economic and environmental objectives [33].
All organizational departments and upstream and downstream supply chain partners
must work in unison to accomplish these goals [2].
There has been a rise in interest in GSCM approaches from many supply chain and op-
erational management practitioners and scholars. Expanding environmental deterioration
through losses in raw material resources, overflows of waste sites, and population increases,
among other processes, is the primary driver of GSCM’s growing significance [34]. How-
ever, the use of GSCM is aimed to increase returns, improve business sense, and offer
environmentally sustainable products, i.e., to improve an organization’s business value
performance [33,34]. Companies must integrate environmental standards throughout the
whole supply chain for sustainable performance since they are held liable and charged for
the environmental liabilities of their suppliers.
We identified three GSCM techniques after conducting a thorough analysis of the
literature: internal environmental management (IEM), eco-design (ED), and customer
cooperation (CC).
Internal environmental management (IEM) is the process of integrating global sus-
tainability and corporate social responsibility (GSCR) into an organization’s strategy and
proving their commitment through top management vision, middle management involve-
ment, and the development of cross-functional teams [35]. Proactive businesses have
highlighted IEM as the cornerstone of the GSCM transformation process. Eco-design (ED)
is used to build a product with the least possible environmental impact through product
life-cycle analysis [36]. Eco-design provides pollution prevention compliance during a
product’s life cycle and comprises a proactive approach to environmental degradation. It
also helps reduce potential future repair expenses [37]. This strategy considers the envi-
ronment from the conception of ideas to the design of items that consume fewer resources,
consume less energy, and emit fewer dangerous gases, all of which can improve both
environmental and economic performance [38].
Businesses must adapt to the present environment and consider customers valuable
partners in collaborative efforts to address environmental concerns. Customer service and
green training for eco-design, green manufacturing, and green packaging are examples of
customer cooperation (CC) activities [39]. CC engages people in everything from eco-design
to distribution, packaging, and product returns [40]. To exchange real-time information
and effectively carry out all of the above-mentioned procedures, it is necessary to maintain
a long-term, trust-based relationship [41].

2.2. Corporate Sustainability Performance (CSP)

Measuring organizational performance is an important step in obtaining crucial details
about a company’s goals and its level of accomplishment [42]. Companies that operate well
may attract investors who often evaluate an organization’s entire performance before con-
sidering any investment-related choices, such as whether to begin, continue, or discontinue
investments [42].
The phrase “corporate sustainability” is not well-defined [43]. Corporate sustainability
can refer to the company strategies and investment models that use business methods
to satisfy and stabilize the requirements of present and future shareholders, according
to the UN General Assembly (1987). Similarly, [44] defined corporate sustainability as
meeting current stakeholder requirements while preserving an organization’s capacity to
meet future stakeholder needs. According to [45], the process through which firms manage
 sustainable future must be realized through the effort and responsibility of executi
stakeholders, and employees [48]. In this context, corporate sustainability performa
refers to an organization’s capacity to effectively and efficiently utilize its lim
Sustainability 2023, 15, 5459resources over time, such as by minimizing waste and considering 5 of 16 econo

environmental, and social sustainability performance [42]. In short, the triple bottom
(as shown in Figure 2), which incorporates social, environmental, and econo
their financial, ecological, and social–commercial risks, obligations, and possibilities is
sustainability performance, means “business sustainability performance” [49,50].
known as sustainability in the business world. Corporate sustainability is broadly and
According to previous
similarly defined research
[46] as the practiceon the triple operations
of conducting bottom line idea,tobusiness
in order meet presentsustainab
sits at requirements without of
the crossroads risking future generations’
economic, demands while
environmental, and evaluating
social how company
performance [51
operations affect community well-being. “Business sustainability”
According to [53], corporate sustainability performance refers to how well a comp is the capacity to engage
in commerce to protect the health of the economy, the ecosystem, and society [47].
integrates governance, social, environmental,
Corporate sustainability and
is critical for realizing economic concerns
an organization’s intojeop-
vision without its operat
and their effects
ardizing on the
its market organization
advantage and society.
while meeting the demandsCorporate
of economic sustainability
growth, environ- requires
mentalism,
collaboration of and social responsibilities
an organization’s [43]. An organization’s
stakeholders regarding transition
presentto and
a sustainable
future econo
future must be realized through the effort and responsibility of executives, stakehold-
social, and environmental demands [54]. An organization with a high CSP has competi
ers, and employees [48]. In this context, corporate sustainability performance refers to
benefitsanthat boost efficiency,
organization’s capacity to revenues,
effectively and and savings,
efficiently providing
utilize its limitedadvantages
resources overover ri
[48]. It time,
can such as by minimizing
be difficult waste and considering
for organizations economic, environmental,
to simultaneously advance and social
social and hum
welfare, sustainability
lessen theirperformance
influence[42]. In
onshort,
the the triple bottom line
environment, and(as shown in Figure
guarantee the2), succes
which incorporates social, environmental, and economic sustainability performance, means
accomplishment of their goals [55].
“business sustainability performance” [49,50].

Figure 2. Triple bottom line for corporate sustainability performance.

Figure 2. Triple bottom line for corporate sustainability performance.
According to previous research on the triple bottom line idea, business sustainability
sits at the crossroads of economic, environmental, and social performance [51,52]. Accord-
2.3. Descriptions of the CSP Triple Bottom Line
ing to [53], corporate sustainability performance refers to how well a company integrates
governance,Sustainability
2.3.1. Economic social, environmental, and economic concerns into its operations and their
Performance
effects on the organization and society. Corporate sustainability requires the collaboration
The primary
of an purpose
organization’s of a business
stakeholders is to generate
regarding present stakeholder
and future economic, social,value via finan
and envi-
sustainability
ronmental performance
demands [54]. [56]. The primary
An organization with focuses
a high CSPfrom an economic
has competitive viewpoint
benefits that are
boost efficiency, revenues, and savings, providing advantages over rivals
production and distribution of goods and services in relation to wants and desires [48 [48]. It can be
well asdifficult for organizations to simultaneously advance social and human welfare, lessen
how businesses manage their cash flow [45]. According to [57], an organizati
their influence on the environment, and guarantee the successful accomplishment of their
economicgoalsperformance
[55]. reflects its influence on the economic condition of its stakehol
and the economic system at the domestic, national, or international level. Econo
2.3. Descriptions of the CSP Triple Bottom Line
performance at the organizational level represents the impact of a company on
2.3.1. Economic Sustainability Performance
economic condition of stakeholders and the domestic and international sustainabilit
The primary purpose of a business is to generate stakeholder value via financial
sustainability performance [56]. The primary focuses from an economic viewpoint are the
production and distribution of goods and services in relation to wants and desires [48], as
well as how businesses manage their cash flow [45]. According to [57], an organization’s
economic performance reflects its influence on the economic condition of its stakeholders
and the economic system at the domestic, national, or international level. Economic
Sustainability 2023, 15, 5459 6 of 16

performance at the organizational level represents the impact of a company on the economic
condition of stakeholders and the domestic and international sustainability to remain
competitive in the market [57], [58] as economic sustainability adds to the fulfillment of
shareholders and the organization itself.

2.3.2. Environmental Sustainability Performance

Environmental difficulties such as global warming, climate change, and sustainability
concerns have been the principal focuses of study for the past two decades. They are now
the foremost focuses of many organizations [42]. Environmental sustainability must be
incorporated into strategic planning and models for firms to effectively compete in the
international market [56].
Like other types of capital, the environment offers critical inputs for both consumption
and production; this could be called natural capital [59]. Ref. [60] established a link between
long-term environmental quality and sustainability. Recycling, emission reduction, and
waste treatment programs are examples of sustainable organizational practices [61].
Green supply chain management is often used to achieve the environmental goals of
company sustainability by controlling energy usage and exhaustible resources, reducing
manufacturing waste output, and adopting safe and legal disposal strategies [58]. Environ-
mental performance represents an organization’s capacity to minimize water pollution, air
pollution, and soil degradation; its capacity to implement appropriate waste management
practices and avoid or lessen the use of toxic and dangerous materials; and its capacity to
implement any advancements aimed at reducing the regularity of environmental disasters
and accomplishing energy savings [25].

2.3.3. Social Sustainability Performance

The social side of corporate sustainability is concerned with protecting or improving
future generations’ social well-being [58]. The impact of corporate behavior on society is
measured in terms of social performance [62]. In essence, social performance or the social
bottom line is the accomplishment of an organization’s social mission in terms of societal
interests through the incorporation of recognized social ideals and the fulfillment of social
obligations [56].
Social sustainability in human capital is exemplified in behaviors such as maintaining
and providing a safe workplace environment, employment practices, benefits, salary, and
development and training [58]. Employees’ well-being is typically assessed based on
whether they obtain a basic wage and properly functioning benefits (such as medical
benefits, annual leave, clean drinking water, and a safe workplace) specified by labor
legislation, as well as whether they are subjected to ill treatment, bullying, or violence at
work [62]. Beyond what is required by law, socially responsible organizations link their
operational activities with social, ethical, and environmental challenges, perhaps resulting
in a better quality of life for the majority of stakeholders [42].

3. Development of the Hypotheses

Green Logistics/Supply Chain Management Impact on Sustainable Performance
Going green fundamentally means seeking information, pursuits, and lifestyles that
improve environmental well-being. Green practices are eco-friendly activities [61], and
green business techniques help organizations become more competitive while enhancing
their financial and environmental performance [63]. Green practices are widely recognized
to improve an organization’s brand image, save costs [64], and increase competitiveness by
enabling expansion into new markets and the achievement of complete compliance with
existing standards [65]. Basically, greater investment in environmental practices favors an
organization’s competitive edge and improves its operational performance [66]. According
to several studies, environmental management or performance and business performance
are positively correlated [67]. Organizations can significantly reduce costs by using green
Sustainability 2023, 15, 5459 7 of 16

practices, resulting in cost advantages over rivals [68]. Consequently, adopting green
practices can demonstrate a commitment to environmental sustainability [69].
Ref. [32] evaluated the efficacy of green practices in the context of the Indian manufac-
turing industry. They discovered that green techniques such as lowering particulate matter
emissions, specific effluent discharge, carbon dioxide intensity, and water consumption
minimized environmental harm while improving company performance. In another study,
adopting green manufacturing processes, purchasing energy-efficient products and equip-
ment, working with suppliers to guarantee uniform packaging, and engaging in reverse
logistics by accepting customer returns all demonstrated beneficial effects on the study’s
sample of chemical manufacturing enterprises [70]. According to the authors’ findings,
green practices (such as green purchasing) had favorable and significant impacts on the
performance of large chemical manufacturing enterprises in Kenya [70].
According to [71], a strong and favorable correlation exists between green business
practices and company sustainability performance. In addition, [72] evaluated the applica-
tion of green practices in the Brazilian electrical and electronics industry and discovered
that green practices, specifically those related to green strategy and green innovation, influ-
ence competitiveness in the sector by minimizing environmental impacts. Moreover, [73]
successfully demonstrated how green practices affect an organization’s social and environ-
mental sustainability performance. Ref. [63] Studied the effectiveness of green practices in
the context of the Indian manufacturing sector [32] and found that green practices lessened
environmental harm and enhanced business performance, as evidenced by lower emis-
sions of particulate matter, specific effluent discharge, carbon dioxide intensity, and water
consumption. In another study, [74] showed that green practices benefited the operational
performance of Brazilian industrial organizations and that businesses could benefit from
green practices by working with upstream providers of environmentally friendly produc-
tion technologies (such as by sharing environmental information) and considering green
customers’ preferences when conducting business.
Moreover, [65] conducted empirical research that reinforced the significance of green
practices for Chinese manufacturing companies’ environmental performance. Organiza-
tions are more likely to perform better to improve their corporate sustainability respon-
sibility image for their stakeholders when they adhere to the environmental aspect of
sustainability [65].
We developed inquiry statements in response to the following problem question: What
connection exists between green business practices and the sustainability performance of
corporations? We assumed that green supply chain management has a favorable effect on
social, economic, and environmental performance, and we formulated three hypotheses as
follows:
H1: Green supply chain management has a positive impact on economic sustainability performance.
H2: Green supply chain management has a positive impact on environmental sustainability perfor-
mance.
H3: Green supply chain management has a positive impact on social sustainability performance.

4. Methodology
To test the given hypotheses, this study relied on a survey of Saudi Arabian manufac-
turing companies to determine the level of adoption of green supply chain management
methods and their effects on corporate performance. The development of the survey instru-
ment, data collection methods, respondent profiles, data collation methods, and reliability
and validity analyses are described here.
We used cluster sampling in this study. The sample size was established using the five
methods recommended by [75]. The population, or the total number of enterprises, was first
identified. The size of the population sample was then calculated using the table created
by Krejcie and Morgan in 1970 [76]. As one of the most potent statistical tools in social
Sustainability 2023, 15, 5459 8 of 16

research, SEM allows for the simultaneous testing of several associations [77]. Even though
earlier studies were primarily focused on covariance-based approaches (CB-SEM) such as
SMART PLS [77], a variance-based approach (or PLS-SEM), with a unique methodological
feature, was chosen as a viable alternative. We sent a total of 540 questionnaire forms via
electronic mail to operational and production managers of manufacturing companies with
operations in Saudi Arabia. The study specifically concentrated on the staff members in
charge of or accountable for the organization’s environmental management system or ISO
documentation. Out of the 540 questionnaires, respondents returned 250 surveys to the
study authors.
The survey questionnaire’s items (GSCM practices and performance) and scales were
modified from the existing literature [35] to fit the Saudi Arabian context. A five-point
Likert scale was used to evaluate each response as indicated in Table A1.
The sample comprised manufacturing facilities that were randomly chosen from a list
of 500 known manufacturing businesses that may have used GSCM techniques. This list
was created using a database of all Saudi Arabian manufacturing companies after checking
each company’s website. The manufacturing sector was then divided into four main areas.
Factor analysis, confirmatory factor analysis, and structural equation modeling (SEM)
were used to examine the obtained data. The study’s constructs’ validity and dependability
were evaluated with exploratory factor analysis (EFA). In order to evaluate construct
reliability, convergent and discriminant validity, and the overall fit of the measurement
model, a confirmatory factor analysis (CFA) was also conducted. To test the proposed
hypotheses, structural equation modeling was used. Software-wise, smart PLS v.3 was
utilized for SEM and confirmatory factor analysis (CFA) while SPSS 22 was used for
exploratory factor analysis (EFA).

5. Data Analysis and Results

Examining the construct reliability, convergent validity, and discriminant validity
allowed for the evaluation of the measurement model [77]. We first evaluated the construct’s
composite reliability and Cronbach’s alpha to gauge the model’s dependability. Our
measurements showed that the first-order construct’s composite reliability ranged from
0.858 to 0.927 (Table 1). Second, the convergent validity was evaluated using the average
variance extracted (AVE) measure [24]. All of the construct’s AVE values were found to be
above the threshold value of >0.50 and within the range of 0.564 to 0.644, indicating that
our model’s convergent validity was acceptable [77]. Additionally, the Cronbach’s alpha
range was above the threshold value of 0.7, specifically between 0.792 and 0.910, indicating
that our measurement model design was trustworthy and appropriate for the model [77].

Table 1. Confirmatory factor analysis (CFA).

Cronbach’s Composite Average Variance

rho_A
Alpha Reliability Extracted (AVE)
Economic Performance 0.792 0.856 0.858 0.564
Environment Performance 0.817 0.823 0.878 0.644
GSCM 0.910 0.919 0.927 0.590
Social Performance 0.821 0.832 0.874 0.583

Furthermore, the cross-loading matrix (Table 2) and [78]’s criterion were employed to
assess the test’s discriminant validity. To pass a cross-loading test, the outer loadings of the
measurement items on a linked construct must be greater than all of their outer loadings
on other constructions. According to our study’s cross-loading matrix data, all assessment
items had higher loadings on their target constructs. According to [78]’s criterion, the
square root of each construct’s AVE should be greater than its highest correlation with
any other construct [24]. The FornellLarcker criterion was satisfied in our study because
the square root of the AVE, which served as a diagonal element, was greater than the
Sustainability 2023, 15, 5459 9 of 16

off-diagonal correlation in the rows and columns. Consequently, the combined findings of
the cross-loading and Fornell–Larcker criteria demonstrated that the data’s discriminant
validity was fulfilled.

Table 2. Cross-loading matrix.

Economic Environment Social

GSCM
Performance Performance Performance
CC1 0.719 0.588 0.801 0.641
CC2 0.738 0.651 0.849 0.680
CC3 0.701 0.540 0.780 0.792
ED1 0.708 0.490 0.854 0.686
ED2 0.744 0.508 0.875 0.712
ED3 0.720 0.560 0.821 0.664
Econ1 0.719 0.440 0.595 0.615
Econ2 0.853 0.566 0.764 0.673
Econ3 0.362 0.183 0.217 0.241
Econ4 0.826 0.559 0.725 0.639
Econ5 0.872 0.526 0.783 0.696
Envi1 0.508 0.814 0.574 0.544
Envi2 0.507 0.827 0.548 0.561
Envi3 0.433 0.775 0.431 0.474
Envi4 0.573 0.793 0.597 0.640
IEM1 0.526 0.409 0.637 0.529
IEM2 0.515 0.452 0.596 0.512
IEM3 0.593 0.457 0.640 0.519
Soca1 0.678 0.482 0.701 0.744
Soca2 0.690 0.560 0.760 0.828
Soca3 0.558 0.557 0.565 0.757
Soca4 0.503 0.500 0.533 0.697
Soca5 0.569 0.576 0.592 0.785

Discriminate validity, developed by Fornell and Larcker, is a potent and frequently

used metric that measures the interrelationship between reflective variables and their
indicators. With this metric, the operationalization of a collection of variables that are
connected or unconnected to a case study is estimated, and a reliability index’s value
should ideally be greater than 0.70. Cross-loadings differ if there is a correlation between
constructs, but our study’s cross-loading values matched the outer loadings. Therefore, as
indicated in Table 3, we evaluated our study’s discriminatory validity.

Table 3. Discriminant validity.

Economic Environment Social

GSCM
Performance Performance Performance
Economic Performance 0.751
Environment Performance 0.636 0.802
GSCM 0.870 0.678 0.768
Social Performance 0.795 0.698 0.838 0.763
 Sustainability 2023, 15, 5459 10 of 16

Our next step was to evaluate the structured relationships among the variables after
examining the instrument’s reliability and validity. The advantage of SEM-PLS over other
algorithms is that it can be used to examine all assembled relations at once compared to
other algorithms that compute them separately. As a result, we examined both direct and
indirect impacts in our structural equation model. Figure 3 shows the structural model of
the current study. To determine the significance of the claimed association, a bootstrapping
procedure was applied to 1000 observations; p-values were considered during this process
(as shown in Table 4). The significance of the hypotheses was examined using p-values 11 of 17
ustainability 2023, 14, x FOR PEER REVIEW
with a threshold level of 0.05. The findings revealed that all hypotheses had p-values of less
than 0.05. Therefore, H1, H2, and H3 were acceptable.

Figure 3. Structural model.

Figure 3. Structural model.
Table 4. Hypothesis testing results.
6. Discussion
Original Sample Mean Standard Deviation T Statistics
p-Values
Sample (O)
Regarding (M) manufacturing
the Malaysian (STDEV) (|O/STDEV|)
sector, [79] discovered that green practices
GSCM -> Economic improved corporate
0.870 sustainability
0.875 performance.
0.027 Moreover, [80]
32.675sent out self-administered
0.000
surveys and
GSCM -> Environment received responses
0.678 0.681 from 178 significant
0.056 ISO14001-certified
12.159 manufacturers
0.000 in
GSCM -> Social Malaysia; according
0.838 to their
0.837 study, adopting
0.031 green practices
27.047 improved
0.000 firms’
sustainability performance in terms of their economic, environmental, and social
sustainability. Additionally, [32,64,70,71,73,79,81] concluded that green practices help
organizations perform well in terms of sustainability. Organizations are more likely to
improve their corporate sustainability responsibility reputation for their customers when
they are devoted to the environmental aspect of sustainability according to [64], who used
Sustainability 2023, 15, 5459 11 of 16

6. Discussion
Regarding the Malaysian manufacturing sector, [79] discovered that green practices
improved corporate sustainability performance. Moreover, [80] sent out self-administered
surveys and received responses from 178 significant ISO14001-certified manufacturers in
Malaysia; according to their study, adopting green practices improved firms’ sustainability
performance in terms of their economic, environmental, and social sustainability. Addi-
tionally, [32,64,70,71,73,79,81] concluded that green practices help organizations perform
well in terms of sustainability. Organizations are more likely to improve their corporate
sustainability responsibility reputation for their customers when they are devoted to the
environmental aspect of sustainability according to [64], who used empirical evidence to
show the value of green practices for Chinese manufacturing companies’ environmental
performance. Finally, our findings also showed that green supply chain management
practices have positive impacts on environmental, social, and economic performance. In
short, many empirical studies have validated the beneficial relationship between green
practices and corporate sustainability performance at the organizational level.
In this study, we developed inquiry statements in response to the following problem
question: What connection exists between green business practices and the sustainability
performance of corporations? We assumed that green supply chain management posi-
tively affects social, economic, and environmental performance, and our hypotheses were
ultimately validated.

7. Conclusions, Limitations, and Future Work

In an effort to encourage Saudi Arabian manufacturing companies to maintain en-
vironmental friendliness while consistently working to improve social, economic, and
environmental corporate performance, we aimed to illuminate the green supply chain
management practices currently used by these companies and their impact on corporate
sustainability performance in this study. According to this study’s findings, eco-design,
corporate environmental management, and customer participation are all examples of
green supply chain management methods.
Items (GSCM practices and performance) and scales from our survey questionnaire
were adjusted based on previously published research to fit the Saudi Arabian context. Each
response was scored on a five-point Likert scale. Our sample comprised manufacturing
facilities that were randomly chosen from a list of 500 known manufacturing businesses
that may have used GSCM techniques. This list was created using a database of all
Saudi Arabian manufacturing companies after checking each company’s website. The
manufacturing sector was then divided into four main areas.
Global scholars and practitioners have been seriously concerned about sustainability,
particularly regarding the importance of green company development [82]. Our findings
demonstrate how green supply chain management techniques greatly impact economic,
environmental, and social performance. Our measurements of sustainable performance that
consider social, environmental, and economic factors are significant theoretical contribu-
tions to the body of available knowledge on the green practices and corporate sustainability
performance of Saudi Arabian manufacturing organizations.
Despite its importance in the business setting, the connection between green practices
and corporate sustainability performance has only been researched by a small number of
studies [79]. In the context of the industrial sector, this study offers empirical support for
the relationship between GSCM and sustainability. The Saudi Arabian industrial sector
and the manufacturing industries of other emerging and developed countries (particularly
the managers of manufacturing organizations) are anticipated to benefit from the thor-
ough understanding of the linkages between green practices and corporate sustainability
performance described in this study. For organizations to remain competitive, they must
consider the impact of their environmental activities on sustainable global supply chain
management [83], as manufacturing businesses can save significant amounts of money
by successfully implementing green practices, which will eventually boost operational
Sustainability 2023, 15, 5459 12 of 16

performance. Moreover, a high level of environmental performance or management is

linked to better corporate performance, and green habits can demonstrate a dedication to
environmental sustainability. Ultimately, our study’s conclusions and findings are antici-
pated to guide workers in industrial organizations to favorably regard green operations as
a crucial duty.
Employing workers as participants in our study had benefits and drawbacks. On
the one hand, employees are regarded as a practical sample that can produce initial and
generalizable results. On the other hand, employees could display carelessness and a lack
of focus on a study’s objectives. This problem is most obvious in studies when participants
can self-administer surveys at their own convenience; individuals might not carefully read
the information or answer questions, especially at the end of extensive questionnaires.
Monitoring how long it takes each respondent to complete a questionnaire and removing
any responses that took much less time than anticipated are two ways to lessen this type of
impact. The cutoff point for completion should differ depending on the instrument and
subject groups, and it was established using standard deviation and average completion
time values in the current study. Another disadvantage of using an employee sample in our
study was the differing level of GSCM understanding shown by participants depending on
their education or experiences.
To accurately represent levels of green practice and corporate sustainability perfor-
mance, we recommend that future studies consider manufacturing organizations in other
countries and expand their number of samples to ensure the generalizability of results.
Following these practices will allow researchers to provide further insights into how green
practices affect businesses’ sustainability performance while establishing and maintaining
competitive advantages.

Author Contributions: Conceptualization, M.T.H.; Methodology, M.T.H.; Investigation, B.A.B.;

Resources, B.A.B.; Writing—review & editing, A.B. All authors have read and agreed to the published
version of the manuscript.
Funding: This research received no external funding.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Not applicable.
Conflicts of Interest: The authors declare no conflict of interest.

Appendix A
Table A1. Questionnaire.

Strongly Strongly
Environmental Performance Disagree Neutral Agree
Disagree Agree
The company reduction of solid wastes
The company reduced waste and emissions from the
operations
The company decreased consumption of
hazardous/harmful/toxic materials
The company decreased of frequency environmental
accidents
The company’s improvement of an enterprise’s
environmental situation
Sustainability 2023, 15, 5459 13 of 16

Table A1. Cont.

Strongly Strongly
Economic Performance Disagree Neutral Agree
Disagree Agree
The company decreased the cost of materials purchasing
The company decreased the cost of energy consumption
The company decreased of fee for waste treatment
The company decreased of fee for waste discharge
Strongly Strongly
Social Performance Disagree Neutral Agree
Disagree Agree
The company improved health and safety for employees
or the community.
The company protected the claims and rights of
aboriginal people or localCommunity.
The company showed concern for the visual aspects of
the organization‘s facilities and operations
The company communicated the organizational
environmental impactsand risks to the general public.
The company considered the interests of stakeholders in
investment decisionsby creating a formal dialogue.
Strongly Strongly
Green Supply Chain Management Practices Disagree Neutral Agree
Disagree Agree
The company Commitment of GSCM from senior
managers (IEM1)
The company has a support for GSCM from mid-level
managers (IEM2)
In the company, there are environmental compliance
and auditing programs (IEM3)
In the company there is cooperation with customers for
eco-design (CC1)
In the company, there is cooperation with customers for
cleaner production (CC2)
In the company, there is cooperation with customers for
green packaging (CC3)
In the company, there is design of products for reduced
consumption of material/energy (ED1)
In the company, there is the Design of products for
reuse, recycling, recovery of material, and parts (ED2)
In the company, there is Design of products to avoid or
reduce the use of hazardous products and/or theirthe
manufacturing process (ED3)

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