Journal of Cleaner Production 229 (2019) 115e127

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

The mediating effect of green innovation on the relationship between

green supply chain management and environmental performance
Noor Aslinda Abu Seman a, Kannan Govindan b, *, Abbas Mardani c, Norhayati Zakuan c,
Muhamad Zameri Mat Saman d, Robert E. Hooker e, Seckin Ozkul e
a
Department of Business Management, Faculty of Technology Management and Business, Universiti Tun Hussein Onn Malaysia (UTHM), 86400, Parit Raja,
Johor, Malaysia
b
Center for Sustainable Supply Chain Engineering, Department of Technology and Innovation, University of Southern Denmark, Denmark
c
Azman Hashim International Business School (AHIBS), Universiti Teknologi Malaysia, 81310, Skudai, Johor Bahru, Johor, Malaysia
d
Department of Manufacturing & Industrial Engineering, School of Mechanical Engineering, Faculty of Engineering, Universiti Teknologi Malaysia (UTM),
Johor, 81310, Malaysia
e
Department of Marketing, College of Business Administration, University of South Florida, Tampa, FL, 33813, United States

a r t i c l e i n f o a b s t r a c t

Article history: The emerging environmental awareness of the public, as well as the implementation of governmental
Received 25 June 2017 regulations, force organisations to employ corporate environmental practices such as green supply chain
Received in revised form management (GSCM) and green innovation. Accordingly, both practices are crucial to achieve profes-
18 March 2019
sional improvement in the environmental performance of these organisations. However, research on the
Accepted 19 March 2019
Available online 19 April 2019
relationship of GSCM, green innovation, and environmental performance is relatively rare. Therefore, this
study is aimed to provide empirical evidence showing that GSCM and green innovation practices
significantly improve environmental performance in order to encourage organisations to implement
Keywords:
Environmental performance
these practices. In addition, this study investigates the relationship between GSCM and green innovation
Green supply chain management (GSCM) practices and the influence of these practices on the environmental performance in 123 manufacturing
Green innovation organisations with ISO 14001 certification. The results of PLS-SEM revealed that there is a significant and
Environmental positive relationship between GSCM and green innovation, and the environmental performance.
Manufacturing industry Moreover, green innovation had a positive effect on the environmental performance. Furthermore, green
innovation had a mediating relationship between GSCM and environmental performance. Therefore, the
present paper confirmed the significant influence of GSCM on boosting the green innovation of orga-
nisations and on the manufacturing establishments, which eventually improve the environment. In brief,
the outcomes of this study provide enhanced understanding about the significant role of green inno-
vation in the manufacturers for improving their GSCM and organisational environmental performance.
© 2019 Elsevier Ltd. All rights reserved.

1. Introduction industrialised economy, there is an urgent need to monitor the

The emerging environmental issues and resource depletion
problems have challenged the business organisations over the
recent years. Being a country in transition to a developing, indus-
trialised country in the Asia-Pacific region (UNDP Report, 2007;
Trading Economics, 2016), Malaysia has to cope with numerous
environmental issues and consumption problems due to the rising
economic growth. Since the manufacturing industry in Malaysia
has continuously served as an important driver for the highly
* Corresponding author
E-mail address: kgov@iti.sdu.dk (K. Govindan).
business operations and their impacts on the overall performance,
particularly on the environmental performance of these organisa-
tions. This is due to the substantial environmental risk posed by
these business operations, concerning the traffic congestion, the
emission of carbon monoxide, dispensable packaging materials, the
utilisation of scrapped toxic materials, and various pollutants from
the industrial sectors (Chin et al., 2015; Eltayeb and Zailani, 2009;
Eltayeb et al., 2011; Wisner et al., 2014). Therefore, environmental
practices such as green supply chain management (GSCM) and
green innovation are beneficial for these business organisations to
adopt in order to attain greener operations. The GSCM and green
innovation practices within the business operations are postulated

https://doi.org/10.1016/j.jclepro.2019.03.211
0959-6526/© 2019 Elsevier Ltd. All rights reserved.
116 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
to improve their business performance.
In fact, the GSCM, which is an effort towards environmental
sustainability, can be translated into increased market share and
profitability. Accordingly, Rao (2002) indicated that practicing the
techniques of greening the suppliers in the context of GSCM would
contribute to greener supplies and increasing their green innova-
tion. In brief, the implementation of GSCM enhances the quality of
green innovation activities that are performed to develop green
products. The adoption of these practices also can alleviate the
environmental pressures from the governmental regulations and
legislations as well as the public (including the customers, sup-
pliers, buyers, and communities) (Zailani et al., 2015).
Green innovation is another concept of environmental man-
agement, which has been recently promoted with the goal of
eliminating negative environmental consequences (Chen, 2008;
Chen and Chang, 2011). In order to boost the future growth of
business organisations, the green innovation is specifically desired
to establish new markets, given its anticipated astonishing growth
during the following decade, which offers numerous potentials and
opportunities (Walz and Eichhammer, 2012). The green innovation
concept promotes the implementation of GSCM with new ap-
proaches and ideas to manufacturers. Likewise, Chen et al. (2006)
asserted that green innovation may boost the implementation of
environmental management, specifically GSCM, to fulfil the envi-
ronmental requirements of organisations. The green innovation
also presents a common platform for the manufacturing organi-
sations and their suppliers to cooperate, which potentially in-
creases green innovation activities and enhances the green
products (Van den Berg et al., 2013). However, this requires con-
stant green innovation for the implementation of GSCM with
respect to the present environmental goals.
Accordingly, this study examined the influence of GSCM and
green innovation practices on the environmental performance of
organisations. Despite extensive studies on the positive relation-
ship of GSCM, green innovation, and environmental performance
(Geyer and Jackson, 2004; Zhu and Sarkis, 2004; Chen et al., 2006;
Seman et al., 2012; Chien and Shih, 2007; Chen, 2008; Zhu et al.,
2010; Chen and Chang, 2011), the effect of GSCM on the organisa-
tional environmental performance has still remained inconclusive
(Chien and Shih, 2007; Gollagher et al., 2010; Arimura et al., 2011;
Chiou et al., 2011; Eltayeb et al., 2011; Large and Thomsen, 2011;
Zailani et al., 2015; Sharma et al., 2017). Therefore, there is an
increasing need to focus on the Malaysian manufacturing industry.
To fill this gap, the present study attempts to find out how the
manufacturing organisations increase their environmental perfor-
mance through the GSCM and green innovation practices.
Addressing the GSCM and green innovation practices, this paper
provides empirical evidences to help the related organisations
determine their ideal environmental strategies.
In addition, this study examines both direct and indirect effects
of GSCM and green innovation on the organisational environmental
performance. Studies that emphasised on the indirect assessments
are limited, which contribute insufficient knowledge and analysis.
For instance, the relationship among GSCM, green innovation, and
environmental performance remains vague, particularly in the
Malaysian manufacturing industry. Essentially, there is a strategic
link between GSCM and green innovation when it comes to the
significance of the life cycle of products (Lee and Kim, 2011) to the
improvement of environmental performance. Furthermore, most
empirical studies only focused on the relationship between the
concepts of green innovation and green supplier as well as their
influence on the competitive advantages and environmental per-
formance (Chen, 2008; Chiou et al., 2011; Lee and Kim, 2011). Thus,
the relationship between GSCM and green innovation practices has
still remained in question. Nonetheless, green suppliers, which are
associated to the supplier environmental collaboration, are also
part of GSCM practices (Rao, 2002; Shang et al., 2010; Richey et al.,
2014). Consequently, the concept of green suppliers is rather
similar to the concept of green purchasing (Rao, 2002; Zhu and
Sarkis, 2004; Kannan, 2018). According to Chiou et al. (2011), it is
recommended to explore other GSCM practices as well as the re-
lationships of green managerial, green process, and green product
innovation. There have been limited empirical evidences to support
the capability of GSCM in producing green innovation and
improving the environmental performance. As a result, this study
explores the direct and indirect effects in order to comprehensively
evaluate these causal relationships.
Apart from that, this study also contributes to innovation ac-
tivities that potentially improve the green innovation of the orga-
nisations, hence presenting a comprehensive assessment with the
consideration of green innovation in the green supply chain stage
(which comprises internal environmental management, green
purchasing, customer environmental cooperation, and reverse lo-
gistics). In this study, green marketing innovation is assessed under
the concept of green innovation, wherein only green product
innovation, green process innovation, and green managerial inno-
vation were previously assessed in a single study. Green marketing
innovation is less emphasised in green innovation studies; thus,
there are inconclusive measurements for such innovation in the
operations of manufacturing organisations. However, the mea-
surement adopted by the previous studies in the context of mar-
keting innovation and green marketing served as the guideline for
this study, which was adapted to measure the green marketing
innovations in the context of green innovation. More specifically,
this study is aimed to examine the mediating effect of green
innovation on the relationship between GSCM and environmental
performance. In addition, this study also comprehensively dis-
cusses the GSCM and green innovation practices as well as the
environmental performance. Adding to that, the present paper is to
explore the underlying relationships of GSCM, green innovation,
and environmental performance. Finally, the paper is concluded
with a discussion on the obtained results.
2. Literature review
2.1. Green supply chain management
Green Supply Chain Management (GSCM) involves the practices
that potentially minimise the occurrence of environmental issues
during the production process of a final product in the
manufacturing organisations ( Teixeira et al., 2016; Zhu et al., 2016;
Sharma et al., 2017). GSCM significantly affects the environmental
impacts of the supply chain operations, which potentially enhances
the sustainability performance of the organisations. Most studies
conducted on GSCM are focused on diverse topics ranging from
organisational research to GSCM practices (see Xing et al., 2016;
Laari et al., 2017; Scur and Barbosa, 2017; Sharma et al., 2017;
Tramarico et al., 2017). Nonetheless, the field of green supply chain
has been only recently introduced, which explains the inconclusive
findings on the green supply chain practices, given that the per-
taining theories in this context are being developed in order to
facilitate successful implementation of GSCM practices (Kusi-
Sarpong et al., 2016). The primary objective of GSCM is to mini-
mise the detrimental environmental consequences, such as pollu-
tion, non-sustainable resource consumption, and improper product
disposal (Hervani et al., 2005; Kuei et al., 2015; Laari et al., 2016;
Sharma et al., 2017).
According to Srivastava (2007), the concept of GSCM has been a
subject of discussions since the revolution of quality in the 1980s
and the revolution of supply chain in the 1990s. Essentially, GSCM
 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
integrates green purchasing, reverse logistics, and the process cycle
(involving suppliers, manufacturers, and customers) into the sup-
ply chain (Zhu and Sarkis, 2004), wherein the process cycle com-
prises the reverse and forward chains in the supply chain
operations, or also known as “closing the loop”. Accordingly, it is
governed by the escalating adverse environmental impacts. Apart
from the environmental benefits, GSCM also offers beneficial con-
sequences to business operations (e.g., higher profitability)
(Wilkerson, 2005).
In principle, GSCM comprises several practices, including in-
ternal environmental management, green purchasing, customer
environmental cooperation, and reverse logistics that have been
adopted by several empirical studies (e.g., Zhu et al., 2005; Zhu and
Sarkis, 2006; Zhu et al., 2007a; Zhu et al., 2008a; Zhu et al., 2008b;
Zhu et al., 2010; Ninlawan et al., 2010; Shang et al., 2010; Zhu et al.,
2011; Eltayeb et al., 2011; Rusli et al., 2012). Through the GSCM
practices, business operators are able to withstand the demanding
environmental pressures from the governmental regulators as well
as the public (buyers, customers, and communities). The GSCM
practices prompt the organisations to improve their overall per-
formance through green innovation. However, there are limited
empirical evidences demonstrating the relationship between
GSCM and green innovation practices in improving the overall
organisational performance. Therefore, ongoing innovations are
necessary to successfully address the concerns of all stakeholders
(Porter, 2000).
2.2. Green innovation
Green innovation is referred to as the revolutionary environ-
mental innovation of practices, processes, managerial, and mar-
keting, which are elicited from the implementation of GSCM that
has brought about an improvement in organisations’ environ-
mental performance (Tseng et al., 2013; Cuerva et al., 2014; Lin
et al., 2014; Zailani et al., 2015; Zhu et al., 2016; Li et al., 2017).
Green innovation is another corporate environmental management
concept promoted among manufacturing organisations (Chen,
2008; Chen and Chang, 2013; Zailani et al., 2015), which is also
similar to the concept of GSCM. In addition, it contributes to the
outcomes of GSCM through boosting the performance of environ-
mental management with respect to the requirements imposed by
the present environmental regulations (Chen et al., 2006). Green
innovation not only reduces the production costs, but also im-
proves the consistency and standards of the products as well as the
resource productivity (Porter, 2000; Chen et al., 2006).
The internal and external practices of GSCM potentially set off
green innovation, which is necessary for the supply chain man-
agement (SCM) of the organisations in the competitive and dy-
namic environments with respect to the emerging environmental
issues (Chen, 2008) and increasing pressures from their competi-
tors, consumers, and regulators (Porter, 2000). Therefore, for suc-
cessful internal environmental, managers and top management of
organisations (Zhu and Sarkis, 2004; Zailani et al., 2015) propel the
necessary resource utilisation for the implementation of new
technologies and the acquisition of new knowledge (Eltayeb et al.,
2011). These innovations typically involve the process, product, and
marketing attributes to create product differentiation (Zhu et al.,
2008a). Accordingly, the concept of green innovation is pivotal for
successful implementation of GSCM.
Studies on green innovation practices in Malaysia are rather
limited, but significantly progressive in the developed countries,
e.g., the United States and Sweden (Gluch et al., 2009; Carrion-
Flores and Innes, 2010), and other developing countries (Chang,
2011; Zailani et al., 2011; Conding et al., 2012; Alhadid and Abu-
Rumman, 2014; Abdullah and Yaakub, 2015; Kucukoglu and Pinar,
117
2015; Lee et al., 2014; Weng et al., 2015; Zailani et al., 2015).
However, these studies only examined the general concept of green
innovation and were unable to highlight the multidimensionality of
green innovation practices comprehensively (Gluch et al., 2009;
Carrion-Flores and Innes, 2010; Zailani et al., 2011; Lee et al., 2014;
Weng et al., 2015). The following studies underlined the adoption of
multidimensionality of green innovation practices to improve the
financial and environmental performance of organisations, but
limited to green product innovation (Tseng et al., 2013; Cuerva
et al., 2014; Lin et al., 2014; Zailani et al., 2015; Li et al., 2017),
green process innovation (Tseng et al., 2013; Cuerva et al., 2014; Lin
et al., 2014; Zailani et al., 2015; Li et al., 2017), and green managerial
innovation (Tseng et al., 2013; Lin et al., 2014; Skjøndal Bar, 2015;
Huang et al., 2016).
Nonetheless, the green marketing innovation, as a subset of the
holistic concept of green innovation, has not received adequate
attention and it has remained underexplored in existing studies.
The green marketing innovation involves the incorporation of
environmental criteria into the product promotion, such as
voluntary eco-labelling, franchising, licensing, and pricing activ-
ities. The significance of green marketing innovation in the concept
of green innovation (Reid and Miedzinski, 2008) is multifaceted
(Richey et al., 2014; Fuentes, 2015; Peano et al., 2015; Avraham,
2016; Zhu and Sarkis, 2016), which has to be realistically emphas-
ised by organisations today with respect to the sustainable devel-
opment theory (Garg, 2015). Essentially, the green marketing
innovation represents a higher level of marketing, which requires
the organisations to integrate their distinctive characteristics with
marketing environment for the development of effective marketing
strategies (Qi and Meili, 2010). Thus, the present study was aimed
to empirically examine the multidimensionality of green innova-
tion practices in Malaysia.
2.3. Environmental performance
Environmental performance evaluates the positive impacts of
the implementation of GSCM and green innovation practices on
natural environment ( Luthra et al., 2016; Sharma et al., 2017;
Sharma and Vredenburg, 1998), which affect either the internal or
external environment of the organisations (Eltayeb et al., 2011).
There are significant prospects in improving the environmental
performance of manufacturing organisations through environ-
mental management strategies, such as GSCM and green innova-
tion practices. These environmental practices enable the
organisations to increase their power to stay in the industry. Or-
ganisations would become more resilient and adaptable to the
changes when they grasp how to continually improve their pro-
cesses, reduce the costs, comply with the regulatory requirements
and stakeholders' expectations, and explore new market opportu-
nities. When organisations encounter environmental problems,
inspiring sustainability values to them has direct impacts on
securing sustainable economic success. Apart from the recent
emerging environment issues, the environmental key performance
indicators and audits are critical components of environmental
management system (EMS) as these components determine the
long-term success of an organisation (Rossignol, 2014).
Since this study focused on the relationship of GSCM and green
innovation in the manufacturing organisations, the environmental
performance of these organisations was considered as the primary
consequence following the implementation of GSCM and green
innovation practices. Nonetheless, only few organisations are
willing to make their environmental performance information
accessible. Furthermore, standardised reporting measures are un-
clear. Therefore, the comparisons of facilities, firms, products, ser-
vices, and even countries become significantly challenging due to
118 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
various types of approaches adopted in reporting environmental
performance.
2.4. Hypotheses development
2.4.1. GSCM and environmental performance
Numerous studies have considered the relationship between
GSCM practices and environmental performance (Frosch, 1994;
Florida, 1996; Geffen and Rothenberg, 2000; Geyer and Jackson,
2004; Zhu and Sarkis, 2004; Chien and Shih, 2007; Zhu et al.,
2007b, 2010; Ninlawan et al., 2010; Azevedo et al., 2011). On the
other hand, literature consists of studies arguing over the rela-
tionship between these two issues (see Levy, 1995; Arimura et al.,
2011; Eltayeb et al., 2011). Therefore, the question of whether the
GSCM practices affects positively or negatively the environmental
performance has remained controversial. Through the imple-
mentation of GSCM practices, the organisations are encouraged to
improve and sustain their relationship with the suppliers and
customers to achieve enhanced environmental performance (Zhu
et al., 2007b). With that, the organisations have to ensure and
monitor their suppliers to provide environmentally friendly ma-
terials in a way to minimise negative environmental impacts during
the production processes. Besides, organisations have to perform in
a way to increase and fulfil the customers’ demands for environ-
mentally friendly products. Moreover, the interactions among
customers, suppliers, and partners, as well as joint research and
development will promote environmental performance (Zhu et al.,
2007b). Apart from improving the environmental performance, the
implementation of GSCM practices also ensure that the organisa-
tions and their suppliers conform to the environmental regulations
(Chien and Shih, 2007). In brief, the adoption of a sustainable
approach, such as GSCM, reduces waste and hazardous materials,
lowers the transaction and operational costs, encourages the
practices of reusing and recycling the raw materials, promotes
efficient utilisation of resources, and assists the organisations to
conform with the environmental regulations (Chien and Shih,
2007; Tsoulfas and Pappis, 2006; Sarkis, 2003). Accordingly, the
following hypothesis can be formulated:
H1. There is a positive and direct relationship between GSCM and
environmental performance.
2.4.2. GSCM and green innovation
The relationship between GSCM practices and green innovation
is supported by two theories, namely, evolutionary approach
(Nelson and Winter 1982) and innovation through co-creation
model (Prahalad and Ramaswamy, 2004). Both theories proposed
that the interaction between parties or stakeholders that are
involved in the companies’ supply chain process will create more
environmental innovation in order to comply with the great pres-
sures from external factors, especially from government legislation
and regulators. Rao (2002) posited that green suppliers contribute
to more green innovations, which suggests that the GSCM practices
are the key drivers in inducing green innovation practices. Several
studies have confirmed the role of GSCM in generating green
innovation, but they have not considered the comprehensive im-
pacts of GSCM on green innovation.
The study by Lee and Kim (2011) showed that green innovation
can be stimulated through the environmental cooperation among
companies and their important suppliers in developing a new
green product. The findings of Chiou et al., (2011) was confirmed by
other researches indicating that greening the suppliers will posi-
tively lead to green innovation (Rao, 2002; Porter and Linde, 1995;
Seman et al., 2012; Van den Berg et al., 2013). In addition, a study
conducted by Chang (2011) in Taiwan implied that business
environmental management such as GSCM is positively linked to
green product and process innovation. The rationale behind the
relationship between GSCM and green innovation can be justified.
The rising concern on environmental issues and regulations from
many stakeholders (such as suppliers, customers, and community)
urge companies to work closely with them in the product devel-
opment processes (Chiou et al., 2011). This collaboration will then
be beneficial to companies in creating innovation, enhancing the
product design and manufacturing process, and developing overall
compliance with environmental regulations (Chiou et al., 2011).
Green innovation concept can help the implementation of GSCM by
offering new ideas, approaches, and/or technologies to manufac-
turers in developing new products. Finally, green innovation is
believed to provide continuous ways to innovate each stage of
supply chain in order to gain competitive advantage and decrease
the environmental problems in the industry (Zailani et al., 2011).
Therefore, it is postulated that:
H2. There is a positive and direct relationship between GSCM and
green innovation.
2.4.3. Green innovation and environmental performance
In regard to green innovation, studies examining the environ-
mental performance as an outcome variable are limited. For
example, Chen et al. (2006), Chen (2008), and Chen and Chang
(2013) only considered how green innovation, of both process
innovation and product innovation, affects the organisations' green
image and competitive advantage. Thus, these empirical studies
were unable to consider how green process innovation and green
product innovation affect the organisations’ environmental per-
formance. Moreover, the extent to which green managerial inno-
vation influences the environmental performance was out of the
scope of these studies. On the other hand, Chiou et al. (2011)
included all three measures of green innovation, which revealed
an improved environmental performance through green process
innovation and green product innovation, but insignificant rela-
tionship was found between the managerial innovation and envi-
ronmental performance. Besides, green innovation is a significant
environmental performance driver, specifically to reduce toxic
pollution, which lowers the cost of stricter meeting between the
company and government, consumers, or NGO with the aim of
reducing the pollution in order to encourage successful demands
for environmental performance (Carrion-Flores and Innes, 2010).
The relationship between green innovation and environmental
performance has still remained inconclusive. Moreover, this
particular relationship has not been adequately established in the
existing literature. In practice, the implementation of green inno-
vation has the potential to significantly improve the environmental
performance bearing in mind that a number of researchers have
demonstrated enhanced performance of other businesses in terms
of competitive advantage and green image through this particular
implementation (Chen et al., 2006; Seman et al., 2012; Chen, 2008;
Chen and Chang, 2011). High concentration on green product
innovation, green process innovation, and green managerial inno-
vation will benefit these organisations through the increase of cost-
savings, improved environmental efficiency, and enhanced pro-
ductivity and product quality, which directly contribute to an
improved competitive advantage (Porter and Linde, 1995; Chen
et al., 2006; Chiou et al., 2011). Furthermore, the adoption of
green innovation potentially lowers the pollution, hazardously
toxic waste, and the cost of hazardous waste disposal, while
competently addresses the external environmental pressures from
other stakeholders (such as customers and suppliers) with respect
to the environmental regulations (Porter and Linde, 1995; Chen
et al., 2006; Chiou et al., 2011). Thus, it is posited that:
 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
H3. There is a positive relationship between green innovation
practices and environmental performance.
2.4.4. Mediating effect of green innovation
A review of literature suggests that the implementation of GSCM
practices in an organisation ultimately influence the organisational
environmental performance. However, in order to measure the
direct effect of GSCM on the organisational environmental perfor-
mance, it is necessary to take into consideration a third (mediating)
variable. Green innovation has been known as a mediator in the
relationship between GSCM and organisational environmental
performance. In other words, instead of a direct influence from
GSCM on organisational environmental performance, GSCM first
affects green innovation that, in turn, influences the organisational
environmental performance. These are known as the direct and
indirect effects (Preacher and Hayes, 2008). According to the Porter
hypothesis, strict environmental regulations that elicit innovation
may balance the costs of complying with these regulations and
positively affect the business performance of these organisations
(Eiadat et al., 2008). The Porter hypothesis recommends that the
environmental regulations not only affect the business perfor-
mance of organisations, but also indirectly encourage these orga-
nisations to adopt the green innovation strategy. Such indirect
effect is often referred to as the mediated effect. Thus, the Porter
hypothesis may be viewed as a mediation hypothesis, wherein the
green innovation strategy becomes the mediator between the
environmental regulation and environmental performance of or-
ganisations. Using this as a benchmark, this study assumed that the
green innovation is potentially a significant mediator between
GSCM and environmental performance.
Despite the limited number of studies performed in this context,
these studies considered different aspects of organisational busi-
ness performance and discussed the mediating role of green
innovation. Eiadat et al. (2008) examined the relationship between
the adoption of environmental innovation strategy and organisa-
tional business performance in the chemical industry in Jordan,
which confirmed that the environmental innovation strategy me-
diates the relationship between relevant environmental pressure
forces (such as governmental regulations, managerial environ-
mental concerns, and perceived importance of stakeholder
Fig. 1. Research conceptual framework.
119
pressures) and organisational business performance. Additionally,
Chang (2011) examined the positive effects of corporate environ-
mental ethics on the competitive advantage through the mediating
effect of green innovation performance in the manufacturing in-
dustry in Taiwan. The findings confirmed that green product
innovation mediates the positive relationship between corporate
environmental ethics and competitive advantage, with the excep-
tion for green process innovation. In other words, this suggests that
the competitive advantage is directly affected by the corporate
environmental ethics and indirectly affected through green product
innovation in the manufacturing industry.
Moreover, the mediation model proposed by Chiou et al. (2011)
revealed that the green suppliers contribute to internal green
product innovation, green process innovation, and green manage-
rial innovation, which in turn increases the environmental perfor-
mance and competitive advantage. This significant finding suggests
that greening the suppliers and green innovation may be highly
linked to the organisational environmental performance and
competitive advantage, which verifies the mediating role of green
innovation between GSCM and environmental performance.
Following that, this study extended the GSCM practices, which
involved (1) internal environmental management, (2) green pur-
chasing, (3) customer environmental cooperation, and (4) reverse
logistics. Likewise, this paper also extended the green innovation
strategy with the inclusion of green marketing innovation. Addi-
tionally, this study comprehensively explored the mediating effect
of green innovation on the enhancement of the organisational
environmental performance. Thus, the following hypothesis can be
formulated:
H4. Green innovation mediates the relationship between GSCM
and environmental performance.
3. Research method
For the purpose of this research, we adopted a quantitative
approach and conducted a survey via mails and emails using a
structured questionnaire set as the research instrument. The
research framework proposed in this study is shown in Fig. 1. The
significant strength of the survey as a quantitative data collection is
120 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
its flexibility in providing a quantitative description of opinions or
attitudes (Cooper and Schindler, 2003) by studying directly the
characteristics of large populations (Salkind, 2009). The sampling
frame was the manufacturing organisations with ISO 14001 certi-
fication in Malaysia because the business operations in these or-
ganisations are assumed to implement green practices (Sroufe,
2003; Zhu et al., 2008a). In the Malaysian context, organisations
with the ISO 14001 certification are able to improve their organ-
isational image and customer satisfaction, increase their em-
ployees' morale and awareness on the environmental aspects,
impacts, and regulations (Abdullah and Fuong, 2010), and boost
their business and operational performance (Nee and Abdul Wahid,
2010). Moreover, these organisations with this particular certifi-
cation are able to increase their environmental performance in the
business supply chain with respect to the increasing external
pressures from the emerging environmental issues. Therefore, this
study only focused on the manufacturing organisations with ISO
14001 certification.
The sampling list was obtained from the Directory of the
Federation of Malaysian Manufacturers (FMM) 2013. The FMM is
regionally recognised and acknowledged with the representation
of over 2,500 manufacturing and industrial service organisations of
different sizes. Therefore, the FMM directory was viewed as the
valid representation of the overall population of Malaysian
manufacturing organisations for this study. According to the
directory, there are 469 manufacturing organisations with ISO
14001 certification in Malaysia. Given the narrow sampling frame
and possibility of low response rate from the mail survey (Sekaran,
2003), the questionnaire sets were distributed to all 469
manufacturing organisations. Besides, this study targeted the
environmental management representatives (EMRs) of these
manufacturing organisations as the respondents for the survey
because these EMRs are familiar with the green issues of business
aspects, namely, the supply chain and innovation in their
manufacturing facilities. The sampling of this study was conducted
between May 2014 and December 2014. As a result, this study
successfully obtained a total of 123 questionnaire sets, which
accounted for a response rate of 26.23%.
To develop the measures, we included totally 63 items in the
structured questionnaire set, among which 27 items pertaining to
GSCM (Zhu et al., 2005; Carter et al., 1998; Min and Galle, 2001;
Zsidisin and Siferd, 2001; Eltayeb and Zailani, 2009; Eltayeb et al.,
2011; Carter and Ellram, 1998; Rogers and Tibben-Lembke, 2001;


Alvarez-Gil et al., 2007), 20 items to the green innovation (Chen
et al., 2006; Reid and Miedzinski, 2008; Bernauer et al., 2006),
and 16 items to the environmental performance (Sarkis, 2003;
Geyer and Jackson, 2004; Zhu and Sarkis, 2004; Rao and Holt, 2005;
Zhu et al., 2007b, 2008a; Chien and Shih, 2007; Chiou et al., 2011;
Eltayeb et al., 2011; Choudhary and Seth, 2011; Ageron et al., 2012).
In fact, these selected items were adapted from previously-
conducted studies displayed in Appendix 1. These items were
measured using the Likert scale of five-point with different mea-
surement scale for each section. In order to measure the GSCM
practices in the manufacturing organisations, the measurement
scale ranged as follows: [1] not considering it, [2] planning to
consider it, [3] considering it currently, [4] initiating implementa-
tion, and [5] implementing successfully. Meanwhile, the measure-
ment scale for the green innovation practices included endpoints of
“Strongly disagree/Strongly agree”. And for the environmental
performance, the measurement scale ranged as follows: [1] not at
all, [2] a little bit, [3] to some degree, [4] relatively significant, and
[5] significant.
This study utilised the Predictive Analytics Software (PASW)
(version 18), which was formerly known as the IBM SPSS statistics,
to perform descriptive statistics (such as means and frequencies) on
the preliminary data. This study also performed the partial least
square-structural equation modelling (PLE-SEM) using SmartPLS
(version 3.2.1) (Ringle et al., 2005) to test the previously stated
hypotheses. The PLS was selected due to the small sample size and
the exploratory nature of this study (Hair et al., 2011). The sample
size of 123 satisfied the minimum sample size requirement, as
recommended by the Roscoe's rule of thumb, which refers to the
sample sizes of larger than 30 and less than 500. This study also
performed the two-step approach recommended by Anderson and
Gerbing (1988) and Chin (1998) to analyse and interpret the PLS
results with respect to the hypotheses: (1) assessment of reliability
and validity of the measurement (outer) model and (2) testing of
the structural (inner) model. For this study, the reliability analysis
included both composite reliability and Cronbach's alpha co-
efficients, while the validity analysis included convergent validity
and discriminant validity. The mediating analysis was evaluated
using the bootstrapping results (i.e., with 123 observations per
subsample, 5000 subsamples, and no sign changes) to obtain the
direct and indirect path coefficients.
Based on a comprehensive review, the reflective constructs with
reflective indicators in specifying the path model for this study
were identified, which included GSCM, green innovation, and
environmental performance. The higher-order constructs of this
study were considered as the reflective constructs. Meanwhile, the
general concept was established based on several specific di-
mensions, which is also referred as the molecular approach (Chin
and Gopal, 1995). The construct of GSCM is operationalised as the
reflective second-order measurement model according to Zhu et al.
(2008b), with four reflective dimensions as first-order constructs:
(1) internal environmental management (IEM), (2) green pur-
chasing (GP), (3) customer environmental cooperation (CEC), and
(4) reverse logistics (RL). The constructs of green innovation were
also modelled as the reflective second-order measurement model,
with four reflective dimensions: (1) product innovation (PD), (2)
process innovation (PC), (3) managerial innovation (MN), and (4)
marketing innovation (MR). Essentially, the reflective measure-
ment model assumes that the measures or indicators work as the
reflection of the theoretical construct (Chin, 1998; Hulland, 1999).
Therefore, this study also considered the environmental perfor-
mance (EP) as the reflective construct with reflective measurement
items given that these items were not created or directly caused the
environmental performance (formative model), as indicated in the
previous literature.
4. Results
4.1. Demographic information of respondents
Majority of the respondents (37.4%) were from other types of
business activities such as aluminium, cement, oil and gas, etc.,
while respondents from the rubber business constituted the least
proportion (4.1%). Additionally, the number of employees reflects
the size of the organisations and classifies these organisations into
small and medium-sized enterprises (SMEs) and large enterprises.
This study considered the organisations with 50e250 employees as
SMEs (i.e., 46%) and the organisations with over 250 employees as
large organisations (i.e., 54.0%). In addition, majority of these re-
spondents were attached to foreign-based organisations (53.7%), in
which the Japanese-based manufacturing organisations accounted
for the majority (24.4%). In regard to the job position, 48.8% of the
total respondents were in the managerial positions. Majority of the
EMRs (47.2%) in the manufacturing organisations were attached to
the Environmental Health and Safety, which indicated that most
Malaysian manufacturing organisations employed their EMRs for
the related departments to deal with the environmental issues.
 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127 121

4.2. Measurement model
Prior to evaluating the measurement model, this study assessed
the reliability of individual measures, the reliability for the com-
posite of measures for each construct (internal consistency reli-
ability), and the validity of individual measures (such as convergent
validity and discriminant validity) as shown in Table 1. For this
paper, the first considered criterion was the internal consistency
reliability, which included both Cronbach's alpha coefficients and
composite reliability to ascertain the adequacy of the measurement
model. Following the recommendation of Nunnally and Bernstein
(1994), the obtained Cronbach's alpha values (ranged between
0.710 and 0.946) exceeded the threshold value of 0.70, which
indicated high internal consistency. In addition, the composite
reliability values ranged between 0.798 and 0.951 (above the
threshold value of 0.70), which demonstrated a high reliability
(Fornell and Larcker, 1981).
Meanwhile, Hair et al. (2011) recommended the removal of items

Table 1
Results of reliability analysis and convergent validity.

Construct Item Factor loading p-value AVE (Construct level) Cronbach's alpha Composite reliability

GSCM 0.565 0.926 0.798

IEM (reflective) 0.661 0.898 0.920

IEM1 0.574 **
IEM2 0.579 **
IEM3 0.636 **
IEM4 0.588 **
IEM5 0.499 **
IEM6 0.411 **

GP (reflective) 0.604 0.916 0.931

GP1 0.534 **
GP2 0.704 **
GP3 0.627 **
GP4 0.679 **
GP5 0.674 **
GP6 0.620 **
GP7 0.683 **
GP8 0.608 **
GP9 0.652 **

CEC (reflective) 0.606 0.864 0.900

CEC1 0.672 **
CEC2 0.694 **
CEC3 0.744 **
CEC4 0.653 **
CEC5 0.392 **
CEC6 0.408 **
CEC7 0.625 **

RL (reflective) 0.616 0.843 0.889

RL1 0.498 **
RL2 0.496 **
RL3 0.473 **
RL4 0.583 **
RL5 0.478 **

Green innovation 0.734 0.918 0.800

Product innovation (reflective) 0.547 0.719 0.826

PD1 0.700 **
PD2 0.645 **
PD3 0.428 **
PD4 0.633 **

Process innovation (reflective) 0.589 0.765 0.849

PC1 0.730 **
PC2 0.735 **
PC3 0.447 **
PC4 0.618 **

Managerial innovation (reflective) 0.539 0.710 0.822

MN1 0.706 **
MN2 0.730 **
MN3 0.575 **
MN4 0.530 **

Marketing innovation (reflective) 0.696 0.890 0.920

MR1 0.766 **
MR2 0.682 **
MR3 0.806 **
MR4 0.721 **
MR5 0.707 **

Environmental performance (unidimensional construct) 0.549 0.946 0.951

Note: ** denotes statistically significant (p > 0.05).

122 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127

with loadings between 0.40 and 0.70 and the inclusion of items with Table 2
loadings of at least 0.708. Thus, this study found that the loadings Discriminant validity: cross-loading method.

were acceptable and statistically significant. Apart from that, in this CEC EP GP IEM MN MR PC PD RL
research, the convergent validity was assessed based on the values of CEC1 0.662 0.208 0.568 0.384 0.371 0.320 0.335 0.327 0.374
average variance extracted (AVE). All AVE values in this study (ranged CEC2 0.887 0.230 0.403 0.384 0.361 0.274 0.324 0.261 0.453
between 0.539 and 0.734) exceeded the threshold value of 0.50, CEC3 0.874 0.306 0.519 0.376 0.378 0.344 0.378 0.329 0.466
which demonstrated a high convergent validity (Fornell and Larcker, CEC4 0.844 0.250 0.405 0.280 0.360 0.322 0.259 0.264 0.449
CEC6 0.571 0.079 0.104 0.246 0.120 0.146 0.207 0.082 0.417
1981). The factor loadings for the GSCM and green innovation con-
CEC7 0.778 0.254 0.331 0.268 0.325 0.276 0.282 0.227 0.562
structs, which indicated convergent validity at the item level. For the EP1 0.136 0.775 0.240 0.251 0.374 0.195 0.260 0.100 0.364
second-order loadings, only several items (GP2, CEC3, PD1, PC1, PC2, EP2 0.071 0.666 0.197 0.158 0.257 0.062 0.263 0.024 0.267
MN1, MN2, MR1, MR3, MR4, and MR5) obtained values of more than EP3 0.119 0.773 0.233 0.234 0.343 0.155 0.323 0.177 0.297
EP4 0.273 0.737 0.375 0.318 0.450 0.286 0.509 0.363 0.356
0.708 (p < 0.05), while the loadings of other items were between
EP5 0.068 0.640 0.098 0.170 0.232 0.069 0.220 0.031 0.211
0.40 and 0.70 (p < 0.05). This study particularly removed one item EP6 0.284 0.795 0.375 0.425 0.461 0.330 0.430 0.209 0.377
(CEC5) from the measurement model considering its loading of EP7 0.100 0.781 0.213 0.275 0.352 0.306 0.385 0.132 0.207
below 0.40 (0.392). Since the criteria for both composite reliability EP8 0.163 0.803 0.273 0.224 0.419 0.367 0.430 0.265 0.313
and convergent validity (AVE) exceeded the recommended EP9 0.079 0.659 0.217 0.370 0.255 0.116 0.240 0.011 0.214
EP10 0.238 0.742 0.297 0.258 0.325 0.282 0.280 0.199 0.278
threshold value, these items with the outer loadings of between 0.40
EP11 0.229 0.737 0.323 0.307 0.368 0.393 0.328 0.290 0.350
and 0.70 were retained in the measurement model. As suggested by EP12 0.002 0.541 0.102 0.194 0.188 0.046 0.162 0.025 0.193
Claver-Corte
s et al. (2012), certain scale items do not follow similar EP13 0.278 0.849 0.377 0.311 0.478 0.336 0.357 0.321 0.330
considerations when used in theoretical and research contexts other EP14 0.245 0.803 0.271 0.262 0.400 0.287 0.304 0.251 0.363
than those in which they were first developed. Therefore, this study EP15 0.383 0.695 0.433 0.382 0.531 0.505 0.358 0.448 0.348
EP16 0.341 0.791 0.467 0.353 0.422 0.443 0.331 0.462 0.376
included the items that did not fulfil the minimum requirements of GP1 0.261 0.298 0.627 0.482 0.355 0.399 0.232 0.339 0.112
between 0.40 and 0.70 (p < 0.05) as these loadings would not affect GP2 0.445 0.436 0.834 0.372 0.401 0.421 0.317 0.402 0.316
the reliability and validity. Conceptually, these items were consid- GP3 0.482 0.298 0.756 0.163 0.254 0.349 0.274 0.366 0.348
ered significant with respect to their respective constructs. Addi- GP4 0.440 0.285 0.820 0.347 0.393 0.355 0.374 0.311 0.269
GP5 0.445 0.301 0.831 0.305 0.404 0.369 0.324 0.415 0.282
tionally, this study was of an explanatory nature in regards to the
GP6 0.360 0.353 0.668 0.468 0.317 0.254 0.300 0.297 0.267
context of GSCM. In short, all items in the second order loadings were GP7 0.416 0.286 0.828 0.432 0.331 0.356 0.251 0.281 0.191
considered acceptable and statistically significant, which reaffirmed GP8 0.375 0.281 0.768 0.249 0.284 0.415 0.196 0.300 0.278
the convergent validity at the item level. It is worth noting that future GP9 0.422 0.375 0.829 0.251 0.347 0.411 0.275 0.352 0.271
studies may need to consider the suitability of assessing these IEM1 0.403 0.283 0.323 0.834 0.535 0.329 0.342 0.328 0.231
IEM2 0.384 0.272 0.351 0.818 0.513 0.315 0.336 0.345 0.241
important constructs in the context of GSCM. IEM3 0.409 0.375 0.406 0.831 0.482 0.304 0.398 0.373 0.328
This paper subsequently assessed the discriminant validity of IEM4 0.368 0.331 0.384 0.846 0.392 0.216 0.204 0.177 0.214
the measurement model using the cross-loading method and IEM5 0.250 0.346 0.369 0.798 0.295 0.179 0.144 0.064 0.089
Fornell-Larcker criterion. Essentially, the former method requires IEM6 0.186 0.343 0.278 0.744 0.268 0.139 0.161 0.065 0.045
MN1 0.398 0.365 0.302 0.427 0.810 0.515 0.640 0.507 0.301
that the outer loading of an indicator (also known as the first-order
MN2 0.381 0.301 0.310 0.317 0.807 0.622 0.563 0.518 0.306
loading) on the related construct exceeds all outer loadings of the MN3 0.220 0.499 0.268 0.307 0.692 0.377 0.482 0.486 0.289
other constructs, which is recognised as cross-loading (Hair et al., MN4 0.218 0.418 0.449 0.508 0.607 0.382 0.472 0.397 0.220
2016: p. 105). Otherwise, when the case of cross-loading exceeds MR1 0.303 0.390 0.387 0.307 0.595 0.851 0.541 0.540 0.221
the outer loading of the indicator, it indicates discriminant validity MR2 0.208 0.318 0.267 0.253 0.561 0.750 0.482 0.460 0.213
MR3 0.343 0.319 0.434 0.302 0.615 0.892 0.554 0.604 0.222
problem. This study performed the cross-loading method for the MR4 0.345 0.293 0.379 0.222 0.474 0.853 0.504 0.524 0.216
GSCM constructs (internal environmental management, green MR5 0.340 0.366 0.512 0.212 0.489 0.820 0.433 0.579 0.256
purchasing, customer environmental collaboration, and reverse PC1 0.330 0.439 0.362 0.259 0.623 0.502 0.823 0.619 0.241
logistics), the green innovation constructs (green product innova- PC2 0.363 0.336 0.334 0.251 0.638 0.545 0.834 0.544 0.298
PC3 0.165 0.293 0.117 0.252 0.386 0.322 0.593 0.253 0.290
tion, green process innovation, green managerial innovation, and
PC4 0.302 0.330 0.257 0.284 0.584 0.453 0.795 0.314 0.337
green marketing innovation), and the environmental performance PD1 0.270 0.342 0.460 0.341 0.550 0.520 0.594 0.797 0.199
construct. The results of cross-loading are presented in Table 2. This PD2 0.238 0.263 0.355 0.172 0.488 0.556 0.380 0.813 0.216
study determined the discriminant validity based on the loadings PD3 0.244 0.142 0.060 0.224 0.431 0.239 0.321 0.555 0.297
of indicators as compared to the cross-loadings of other constructs. PD4 0.246 0.211 0.338 0.131 0.460 0.550 0.416 0.765 0.217
RL1 0.488 0.299 0.216 0.238 0.290 0.196 0.259 0.238 0.729
For instance, CEC2 on CEC recorded the highest loading (0.887), RL2 0.460 0.303 0.218 0.210 0.293 0.184 0.267 0.206 0.793
while the cross-loadings with other constructs were considerably RL3 0.362 0.358 0.277 0.138 0.222 0.165 0.252 0.181 0.817
lower (CEC1 on GP recorded 0.568). Similar findings were found for RL4 0.503 0.346 0.358 0.209 0.329 0.234 0.316 0.292 0.837
other CEC indicators as well as the indicators of IEM, GP, RL, PD, PC, RL5 0.449 0.364 0.236 0.179 0.361 0.277 0.364 0.254 0.743
MN, MR, RLI, and EP. Notes: IEM denotes internal environmental management; GP denotes green pur-
In addition, this study also assessed the discriminant validity chasing; CEC denotes customer environmental cooperation; RL denotes reverse
based on the correlation matrix, as indicated in Table 3. Table 3 logistics; PD denotes green product innovation; PC denotes green process innova-
tion; MN denotes green managerial innovation; MR denotes green marketing
presents the results of the Fornell-Larcker criterion assessment innovation; EP denotes environmental performance.
with the square root of AVEs of the reflective constructs on the
diagonal column and the correlations between these variables in
the lower left triangle region. Overall, the square roots of AVEs for of these constructs. Accordingly, the measurement model in this
IEM (0.831), GP (0.777), CEC (0.778), RL (0.785), PD (0.740), PC study was deemed reliable and valid.
(0.767), MN (0.734), MR (0.835), and EP (0.741) were higher than
the correlations of these variables with other latent variables in the
path model. Given that, all the reflective variables in this study 4.3. Structural model
fulfilled both cross-loading method and Fornell-Larcker criterion,
which reaffirmed the convergent validity and discriminant validity This study subsequently performed the PLS analysis to examine
 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127 123

Table 3
Discriminant validity: Fornell Larcker criterion.

CEC EP GP IEM MN MR PC PD RL

CEC *0.778
EP 0.296 *0.741
GP 0.525 0.417 *0.777
IEM 0.422 0.398 0.436 *0.813
MN 0.426 0.525 0.443 0.521 *0.734
MR 0.370 0.404 0.476 0.312 0.657 *0.835
PC 0.390 0.458 0.366 0.336 0.730 0.604 *0.767
PD 0.334 0.335 0.439 0.293 0.652 0.650 0.588 *0.740
RL 0.579 0.425 0.336 0.249 0.382 0.270 0.372 0.301 *0.785

Note: * signifies √AVE.

the efficiency of the proposed model. The results of the PLS esti-
mation (direct effects) are shown in Fig. 2, which included the
explained variance (R2), statistical significance, and path co-
efficients. In addition, this study applied the bootstrapping method
to determine the significance of these paths. Furthermore, the R2
values were considered for the endogenous constructs as the pre-
dictive power of this proposed model. For instance, the green
innovation recorded the R2 value of 0.347, which indicated that the
GSCM accounted for approximately 35% of the total variance in
green innovation. Meanwhile, GSCM and green innovation
accounted for approximately 32% of the total variance in environ-
mental performance.
4.4. Results of direct effect and mediating effect
It was ascertained that GSCM had a strong direct relationship
with both environmental performance (H1; b ¼ 0.320; p < 0.05,
t ¼ 2.728) and green innovation (H2; b ¼ 0.589; p < 0.05, t ¼ 9.253).
Additionally, the relationship between green innovation and
environmental performance was significantly strong (H3;
b ¼ 0.313; p < 0.05, t ¼ 2.783), thus supporting H1, H2, and H3.
Subsequently, this study examined the mediating effect. In the
mediator analysis procedure suggested by Hair et al. (2016: p. 224),
the first step required the PLS path model to be estimated without
the potential mediator variable green innovation. The direct path
coefficients values are obtained using PLS Algorithm function,
while t-values that confirm their significance are obtained by
conducing the bootstrapping procedure (i.e., with 123 observations
per subsample, 5000 subsamples, and no sign changes). The rela-
tionship between GSCM and environmental performance is sig-
nificant (i.e., 0.504**). There is still no mutual agreement, and some
opinions differ as to whether the relationship between the exoge-
nous and endogenous variables has to be significant before the
inclusion of potential mediator (Zhao et al., 2010). The second step
requires the researcher to include the mediator variable to test
whether the indirect effect of GSCM, through the green innovation
mediator variable, on environmental performance is significant.
After including the mediator, a required condition is the

Fig. 2. PLS results for direct effects

Notes: ** indicates p < 0.05, t-value in the parentheses.
124 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
significance of the relationship between GSCM and green innova-
tion (i.e., 0.589**), as well as between green innovation and envi-
ronmental performance (i.e., 0.313**). This was confirmed by the
evaluation of the structural model results discussed in the previous
section. The indirect effect's size is 0.589  0.313 ¼ 0.184, and its
significance is again examined using the bootstrapping results (i.e.,
with 123 observations per subsample, 5000 subsamples, and no
sign changes). The bootstrapping results in the product of two path
coefficients with indirect effect via mediator.
The results indicated partial mediating effect of green innova-
tion on the relationship between GSCM and environmental per-
formance (H4; b ¼ 0.184; p < 0.05, t ¼ 2.429). This study then
determined the strength of the mediating effect by computing the
variance account for (VAF) as the ratio between the direct and in-
direct effects. Principally, the VAF complements the assessment of
mediation through the bootstrapping procedure, in which VAF of
above 80% indicates full mediation; VAF of between 20% and 80%
shows partial mediation, and below 20%, it demonstrates no
mediation. The calculation of VAF for this study is presented in the
following:
Direct effect of GSCM / EP ¼ 0.589  0.313 ¼ 0.184
Indirect effect of GSCM / EP via Green innovation ¼ 0.184
Total effect of GSCM / EP ¼ 0.184 þ 0.184 ¼ 0.368
VAF ¼ Direct effect / Total effect ¼ 0.184 / 0.368 ¼ 0.50
Consequently, 50% of the total effect of GSCM on the environ-
mental performance was explained via green innovation as the
mediator of partial mediation, which supported H4. Overall, all the
hypotheses of this study were accepted.
5. Discussion
This study examined the effect of GSCM and green innovation on
the enhancement of organisational environmental performance.
This study was specifically aimed to ascertain the relationship of
GSCM, green innovation, and environmental performance. More-
over, the model proposed in this paper was validated, which
demonstrated that successful implementation of GSCM and green
innovation practices enhances the organisational environmental
performance. More specifically, the resultant outcomes of this
study suggested that: (1) the implementation of GSCM increases
the value of green innovation; (2) the implementation of GSCM and
green innovation practices has strong positive influence on the
organisational environmental performance; and (3) organisations
are indeed compelled to adopt innovative green practices and
continuously strive to innovate to survive in highly competitive
markets.
In addition, this research revealed a strong relationship between
GSCM and environmental performance, which reaffirmed the
findings of existing studies and extended the corresponding
themes (Lee et al., 2014; Luthra et al., 2016; Sharma et al., 2017). The
relationship between GSCM and environmental performance is
expected to be positive based on the results of these studies. This
paper highlighted the importance of GSCM for manufacturing or-
ganisations in Malaysia to advance competitively and improve their
environmental performance. The positive, strong, direct effect of
GSCM on green innovation demonstrated the significance of GSCM
to the improvement of green innovation of these organisations; this
issue was also in line with existing studies (Chiou et al., 2011; Rusli
et al., 2012; Van den Berg et al., 2013; Mohd Rozar et al., 2015;
Teixeira et al., 2016; Sharma et al., 2017). This study also revealed
the significant, positive, direct effect of green innovation on
organisational environmental performance. Through the imple-
mentation of green practices, such as green innovation, organisa-
tions can withstand the demanding environmental pressures by
sustaining and improving their environmental performance
significantly. This also demonstrates the importance of developing
green innovation practices in the manufacturing organisations,
which serves as a novel strategic method for the involved
managers.
Apart from that, the present research exhibited indirect effect of
GSCM on the environmental performance through the mediating
role of green innovation; these findings were also confirmed by the
other existing studies focusing on the direct relationship of GSCM,
green innovation, and environmental performance (Chiou et al.,
2011; Van den Berg et al., 2013). Additionally, the standardised
regression weight for the direct relationship between green inno-
vation and environmental performance was found to be signifi-
cantly positive. Given that all the direct and indirect relationships
between GSCM and environmental performance were statistically
significant, the mediating relationship of green innovation and
environmental performance was ascertained, which implies that
the increase in GSCM potentially results in higher green innovation
and simultaneously boosts the organisational environmental
performance.
The emerging environmental issues prompt the organisations to
continuously improve their green capabilities within their supply
chain and adopt innovative green practices in a way to enhance
their environmental performance. This study has made various
contributions and implications of both theoretical and managerial
aspects. First, it proposed a model based on the relationship of
GSCM, green innovation, and organisational environmental per-
formance, which serves for the future studies on the sustainability
management, specifically those that will address the role of GSCM
and green innovation in the manufacturing industry. This paper
also provided empirical evidence for the effects of GSCM and green
innovation practices on improving the organisational environ-
mental performance. The findings of this study are expected to
provide essential insights in order to guide the manufacturing or-
ganisations in Malaysia as well as related practitioners to boost
their organisational environmental performance through the
implementation of GSCM and green innovation.
Second, the present paper extended the existing knowledge
base on GSCM and green innovation in the Malaysian context that
can represent the developing countries. As previously discussed,
the studies on GSCM and green innovation in the developing
countries are limited, which propelled this study to assess the
implementation of GSCM in Malaysia as well as the multidimen-
sionality of green innovation and its mediating effects. Existing
studies, particularly those conducted on green innovation, are
limited to the product, process, and managerial aspects. To fill this
gap, this study included another aspect of green innovation, namely
marketing innovation. In the present research, the existing green
innovation aspects in Malaysia were empirically explored, which
subsequently led to the proposed model. The results of the PLS-SEM
also showed the validity of the GSCM and green innovation con-
cepts in Malaysia. In fact, this pioneering study extended the
exploration of GSCM and green innovation in Malaysia, which is of
one of the developing countries.
Third, the present paper identified potential GSCM and green
innovation practices to enhance environmental performance,
which have to be further explored. It also derived a tested and tried
conceptual model, which can assist and simplify the implementa-
tion of GSCM and green innovation practices for local manufac-
turers and suppliers. Moreover, the developed model potentially
enables the manufacturers to recognise the existing gap between
 N.A. Abu Seman et al. / Journal of Cleaner Production 229 (2019) 115e127
their current practice and the ideal practice in comparison to their
competitors and develop the necessary strategy to fill the gap.
Based on the obtained results presented in, this research also
indirectly identified the practices that can have the highest impact
on the implementation of GSCM and green innovation as well as
the practices that require further improvement. Similarly, findings
of the present paper can help manufactures not only to identify the
key indicators of successful implementation as well as other in-
dicators that require further improvement, but also to strategically
improve the possible indicators or practices for effective imple-
mentation of GSCM and green innovation.
6. Limitations and recommendations for future studies
There were several limitations to this research. First, this study
depended on single environmental management representative
(EMR) of each Malaysian-based manufacturing organisation, which
raised potential common method bias. Therefore, the dependence
of this study on a single EMR from each organisation to examine the
green practices may be biased and subjective, as the respondents
may not have comprehensive perspective of the overall supply
chain of the organisation. In addition, the small sample size may
not reflect conclusive or generalised findings due to the exploratory
nature of this study. Therefore, it is recommended that for future
studies, it is better to consider two or more managers from each
organisation to minimise bias and increase the response rate.
Second, this research only utilised organisational environmental
performance to measure the implementation of GSCM and green
innovation practices. However, the measures participating in this
study are, after all, subjective in nature. For the purpose of this
paper, we adapted the scales of environmental performance
extracted from previous studies focusing on the concept of envi-
ronmental management. Thus, it was challenging to measure
objectively the environmental performance. Moreover, the sub-
jective measures were used to compose the constructs for the re-
spondents to respond conveniently. Future studies need to consider
the objective measures of environmental performance or capture
other dimensions of performance, such as economic performance,
operational performance, and competitive advantage.
Finally, the nature of the data was of cross-sectional, rather than
longitudinal. Cross-sectional studies of a series of dynamic con-
cepts (e.g., GSCM and green innovation) involve analysis at one
specific point in time and not overall conduct through a period of
time. Therefore, the cause-effect relationships cannot be concluded.
In the present research, the severity of this problem was minimised
to enable the dynamic characteristics and verification of cause and
effect when the relationships were based on theoretical ration-
alisations. Therefore, the results of this study were not necessarily
interpreted as evidence of underlying causal relationships, but
rather supported a prior casual scheme. Nonetheless, both results
and limitations of this study emphasised the need of performing
future studies in this context through a longitudinal approach.
Acknowledgements
The authors would like to thank the Research Management
Center (RMC) at Universiti Teknologi Malaysia (UTM) and Ministry
of Higher Education (Malaysia) for supporting and funding this
research under the Fundamental Research Grant Scheme (FRGS)
(FRGS/1/2018/SS03/UTM/02/3).
Appendix A. Supplementary data
Supplementary data to this article can be found online at
https://doi.org/10.1016/j.jclepro.2019.03.211.
125
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