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Collaborative
Collaborative green innovation green innovation
in emerging countries:
a social capital perspective
347
Ping-Chuan Chen and Shiu-Wan Hung
Department of Business Administration, Received 11 June 2012
National Central University, Jung-Li City, Taiwan Revised 23 September 2012
15 December 2012
Accepted 7 March 2013
Abstract
Purpose – The new paradigm for green innovation has already shifted to a collaborative model. This
study aims to examine how environmental collaboration across organizational boundaries affects
green innovation from the social capital perspective.
Design/methodology/approach – This study used structural equation modeling method to
analyze the innovation performance of 237 Taiwanese firms. Non-response bias was also assessed
statistically and appropriate measures taken to minimise the impact of common method variance.
Findings – The empirical results showed that: structural capital and cognitive capital have a positive
influence on relational capital, relational capital plays a significant role in green management and in
turn leads to greater innovation. To achieve effective green innovation, companies should leverage
their social capital in order to produce additional competitive advantages through environmental
collaboration.
Originality/value – With the relative scarcity of resources and the increased pressures for
environmental sustainability, there is an increasing interest in studying collaborative green innovation
in emerging countries. Unlike many other empirical studies, this study makes an important
contribution to the literature by examining how environmental collaboration in emerging countries
affects green innovation from the social capital perspective in a detailed manner.
Keywords Collaboration, New product development, Knowledge management,
Environmental management, Capabilities
Paper type Research paper

1. Introduction
Under the trends of international green management, the competition in global
industries has become more complex and uncertain. Most product and technology
developments are moving towards a green-based structure. Such accounting for
environmental impacts in business strategies has resulted in significant changes in the
social system and competitive arena (Schiederig et al., 2012; Rao and Holt, 2005;
Azzone et al., 1997; Welford, 1995). The new paradigm for green innovation has already
shifted to a collaborative model (Dangelico and Pujari, 2010; Pujari, 2006). Due to the
environmental collaboration’s need for more exchanges of resources, organizations
should execute collaboration activities across organizational boundaries in order to
acquire information, resources, and knowledge (Noci and Verganti, 1999). Therefore,
how efficiently utilization of corporate innovative capacities from inter-organization International Journal of Operations &
activities can enhance green innovation is an important issue that organizations cannot Production Management
Vol. 34 No. 3, 2014
afford to overlook. pp. 347-363
The impact of green management on innovation has recently received much q Emerald Group Publishing Limited
0144-3577
attention (Zhu et al., 2011; Qi et al., 2010; Eiadat et al., 2008; Rehfeld et al., 2007; DOI 10.1108/IJOPM-06-2012-0222
IJOPM Noci and Verganti, 1999; Porter and van der Linde, 1995). Companies have no choice but
34,3 to implement strategies to reduce the environmental impacts of their products and
services and take into account the operations of collaborators (Costantini and Mazzanti,
2012; Zhu et al., 2005; Biondi et al., 2002). The traditional view among managers
concerning environmental issues is that the incorporation of environmental
considerations into the improvements of operations has mainly sunk costs for
348 companies. Strict environmental regulation raises an addition cost imposed on firms,
which may reduce their competitiveness. Porter and van der Linde (1995) argued,
however, that properly designed environmental standards can trigger innovation that
may partially or fully offset the costs of complying with them. Ever since, various
studies have examined this new concept of an environment-competitiveness
relationship (Lanoie et al., 2008; Arimura et al., 2007; Popp, 2006; Brunnermeier and
Cohen, 2003; Berman and Bui, 2001; Klassen, 2000).
Although most studies have pointed out the trade off between environmental and
industrial competitiveness, they have neglected to discuss the role of emerging countries
and their impact on triggering green innovation on the global market. Given the limitation
of country-specific resources, there is an increasing interest in studying collaborative
green innovation in emerging countries. While companies in developed countries use
innovations to command price premiums for green products and open up new market
segments (Porter and van der Linde, 1995), the companies in emerging countries play
important roles as major manufacturers in the international markets. As parts of supply
chains, emerging countries have many opportunities, but they also face substantial
environmental burdens, which may erode their global competitiveness. For example,
Taiwan is a well-known electronic and information technology manufacturer. Taiwanese
companies have produced many electronic products for multinational organizations and
collaborated with developed countries in order to meet environmental requirements. The
environmental improvements of operations, however, come at additional costs imposed
on these companies. With the relative scarcity of resources and the increased pressures
for environmental sustainability, how to build corporate capacities from environmental
collaborations with developed countries becomes of primary concern to Taiwanese
companies. Given the competitive environment faced by emerging industries, this study
takes the Taiwan industry as an example to analyze how environmental collaboration
with supply chain partners affects green innovation from the social capital perspective.
Social capital refers to the set of social resources embedded in not only the
relationships, but also interactions among the different actors and the processes derived
from those relationships (Min et al., 2008; Nahapiet and Ghoshal, 1998). Companies can
acquire information, resources, and knowledge (Ahuja, 2000) by combining direct or
indirect interfirm network interactions with relationship development. In the context of
green management, much valuable knowledge is socially embedded in the form of
institutional practice. This may prevent required information from being transmitted
between green partners (Tsoukas and Vladimirou, 2001; Cousins and Stanwix, 2001;
Blackler, 1995). In this study, we argue that social capital may affect companies in
exchanging green technological knowledge with their partners, and in turn boost an
organization’s capacity for green innovation effectively. Organizations require complex
green technology and knowledge from multinational organizations and developed
countries by lessening the environmental burden of their products. Hence, they need to
obtain external resources through environmental collaboration. These companies also
should increase access opportunities to exchange environment-related information Collaborative
through the interactive relationship with their partners. Previous studies have green innovation
introduced the idea that social capital may contribute to a firm’s ability to create value in
the form of innovations (Byosiere et al., 2010; Inkpen and Tsang, 2005; Lesser, 2000).
No previous research, however, has explored social capital’s contribution to green
management. In the context of green management, companies with an existing
collaborative system are more adept at grasping customer’s environmental performance 349
requirements (Simpson et al., 2007; Geffen and Rothenberg, 2000) and can rapidly obtain
the required key resources. Furthermore, when partners join a common environmental
project and share common interests, these established relations also may benefit the
organizations. Through established relations, organizations could seek to solve new
project-specific problems by sharing green technological knowledge more easily. Hence,
building these valuable relational resources plays a significant role in the green
management.
In the following section, we discuss how social capital embedded in the
environmental collaboration across organizational boundaries affects green
innovation, and then we develop our hypothesis. In Section 3, we present our research
methodology and results, including our data collection process, samples, and the
variables in this study. Section 4 presents the empirical results obtained by using
the structural equation modeling (SEM) method. We also present a further discussion of
the results. In Section 5, we provide a conclusion and suggestions for future research.

2. Literature review and hypothesis development

2.1 Social capital theory
Social capital refers to the set of social resources embedded in not only relationships,
but also interactions among different actors and the processes derived from those
relationships (Min et al., 2008; Nahapiet and Ghoshal, 1998). Social capital is the set of
resources created through exchange. This type of resource is embedded in various
relationships, including interpersonal and organizational networks (Bourdieu, 1986;
Burt, 1992; Coleman, 1990; Nahapiet and Ghoshal, 1998). Social capital could facilitate
the exchange/combination of resources in the social unit and also provide the rationale
for the existence of the organization. Social capital, as it is commonly used in
organization literature, refers to the quantity and quality of social relationships such as
formal and informal social connections that exist in the social units. Social capital is
understood in various disciplines as a fundamental factor in increasing the efficiency of
information diffusion through minimizing redundancy, reducing transaction costs, and
encouraging cooperative behavior thereby facilitating the development of new forms of
innovative organization.
Previous studies have explored at length the impact of social capital on
organizational performance (Byosiere et al., 2010; Inkpen and Tsang, 2005; Lesser,
2000), but none thus far have explored social capital’s contribution to green
management. In order to fill this research gap, this study investigates how social capital
affects access to partners for exchanging green technological knowledge, and in turn
boosts an organization’s capacity for green innovation. When implementing green
management, organizations have to involve many environmental collaboration
activities. Social capital could be an important channel for the exchange and
integration of green knowledge. For example, when companies improve the recyclability
IJOPM of new products by choosing appropriate materials from their suppliers, they can obtain
34,3 green knowledge and external resources through collaboration, accelerating
enhancements to environment-related performance. This study emphasizes the idea
that the stock of social capital can potentially build an interactive relationship with a
company’s partners to enhance the sharing of green knowledge and also motivate
partners to accelerate the reform of green management.
350 In the context of green management, there is a complex interrelation between
systemic changes in an organization’s R&D strategy and green innovation (Noci and
Verganti, 1999). Organizations need to incorporate environmental considerations into
their corporate strategies on product and process innovations. Hence, knowledge
sharing and exchanges based on environmental requirements is a critical issue of green
innovation. Under strict environmental regulations, organizations have to build their
capacity for managing green knowledge. When organizations have greater social
capital, it will improve their innovation performance through the process of sharing
knowledge related to green management. In this study, we identify the interrelationship
among the different types of social capital and examine the way in which social capital
affects knowledge sharing and innovation performance related to green management.

2.2 The interrelationship among the three types of social capital

This study adopts the classification of social capital proposed by Nahapiet and Ghoshal
(1998) in terms of structural capital, relational capital, and cognitive capital. Structural
capital refers to the overall pattern of relationships among social actors (Nahapiet and
Ghoshal, 1998). Previous studies have shown that strong ties influence the level of
knowledge exchange between actors (Renzl, 2008). Structural capital offers
opportunities for exchanging green knowledge and resources through the structural
environment mechanism. When organizations can easily obtain critical information
with greater structural capital, they can rapidly understand the impact of environmental
regulations on partners, and in turn improve environmental performance. Relational
capital refers to the assets that are created and leveraged through relationships
(Nahapiet and Ghoshal, 1998). Previous studies have indicated that greater supply chain
relationships can assist companies in reducing production costs, increasing flexibility,
and improving the efficiency of supply chain operation (Shi et al., 2012; Vachon and
Klassen, 2006). Relational capital could possibly make partners become more willing to
share knowledge and their resources. Interactive relationships based on trust and
reciprocity can help inspire partners to take the initiative to exchange green knowledge.
Cognitive capital refers to the resources providing shared representation,
interpretations, and systems of meaning among parties (Nahapiet and Ghoshal, 1998).
This kind of social capital endows partners with willingness and capacity for collective
action, creating critical resources for organizations (Tsai and Ghoshal, 1998). Cognitive
capital can assist partners in fully understanding each other’s considerations and
enhancing green technology or knowledge combination to improve performance
(Lee, 2008). Having a consistent consensus between partners contributes to achieving
environmental goals that are beneficial to green knowledge exchange.
Identifying the interrelationship among the three different dimensions of social capital
is useful in deciding how to manage the collaborative relationships in green management.
Previous studies have mentioned that relational capital evolves from the interaction
between two parties (Gabarro, 1978). As members interact over time, their trust
relationships will become more concrete, and the actors become more likely to perceive Collaborative
each other as trustworthy. In the context of green management, companies must elicit, green innovation
organize, and disseminate information and resources from their team members,
customers, suppliers, and partners. The more sophisticated a company’s organizational
capabilities, information management system, and managerial mechanisms regarding
environmental management are, the more easily its partners can interact and exchange
information and resources relating to green management with them. Thus, companies 351
with greater structural capital have more opportunities to develop relational capital.
Moreover, a trusting relationship is rooted in value congruence (Sitkin and Roth, 1993).
When companies and their partners all work towards collective goals regarding green
management, it encourages the development of a trusting relationship. Hence, the stock of
cognitive capital with team members, customers, suppliers, and partners may contribute
to the development of relational capital. In order to respond to strict environmental
regulations and international environmental trends, organizations can build a higher
level of relational capital through a stock of structural and cognitive capital. Therefore,
we propose the following hypotheses:
H1a. Structural capital is positively related to relational capital embedded in
environmental collaborations.
H1b. Cognitive capital is positively related to relational capital embedded in
environmental collaborations.

2.3 The relationship among relational capital, knowledge sharing, and innovation
Previous research has pointed out that higher levels of relational capital facilitate social
exchange, communication, and cooperation among individuals, and also enhance teamwork
performance (McAllister, 1995). In this study, we argue that relational capital may affect
environmental collaboration. A firm’s developing inter-organizational environmental
practices would involve trust, commitment, and joint goal setting among multiple supply
chain members (Simpson et al., 2007). Rackaham and Ruff (1995) indicated that when two
entities agree to integrate their operational modes and share common interests, it will
constitute a partner relationship. Hence, existing relationships based on trust and
reciprocity between suppliers help inspire partners to take the initiative to exchange
knowledge. Greater relational capital with partners would facilitate the sharing of green
knowledge as trusting relationships build. Therefore, we propose the following hypothesis:
H2. Relational capital is positively related to knowledge sharing in environmental
collaborations.
Knowledge exchange aids companies in comprehending green knowledge and
applying it into an organizational knowledge system (Grandori and Soda, 1995; Popper
and Lipshitz, 1998). Through adequate exchange processes of green knowledge, it will
assist R&D teams in identifying their requirements and facilitate the development of
specific action plans for green innovation. Because green product development
activities need more exchange of green knowledge, companies can enhance innovation
performance through the sharing of knowledge regarding environmental
requirements. Therefore, we propose the following hypothesis:
H3. Knowledge sharing in environmental collaborations is positively related to
innovation.
IJOPM 3. Methodology and measurement
34,3 3.1 Data collection and samples
The data collection in this study was conducted by distributing the survey instrument
in the form of questionnaires to firms in Taiwan. The samples were randomly selected
from Taiwanese manufacturing companies, which are listed in the 2010 survey of the
top 1,000 enterprises by the Common Wealth Magazine. These selected samples have
352 the end-product manufacturing, and all their clients are enterprise customers. Several
steps were taken to ensure data validity and reliability by refining and rigorously
pre-testing the questionnaire. Experts who have green management experiences in the
manufacturing industry were interviewed to further validate whether the survey
questionnaire satisfied practical developments in the first pretest stage. The
questionnaire was then pre-tested by ten managers in the manufacturing industry.
Survey packages were sent out to each company that had worked on a specific
environmental collaboration with foreign partners. Prior to mailing the questionnaire
out, we called each company to explain the objectives of our research confirm the names
and job titles of the respondents. The respondents were asked to return the completed
questionnaires. Questionnaires were then mailed to the respondents, who are
executives and managers of manufacturing, R&D, or environmental protection
departments of these manufacturing companies that have contact experiences with
their suppliers or enterprise customers. To improve the valid survey response rate, we
further reminded the respondents again after one month. The survey was conducted
for about four months. A total of 390 questionnaires were distributed. After excluding
incomplete questionnaires, there were 237 valid questionnaires, and the effective
response rate was 60.8 percent.
Table I lists the characteristics of the sample. The sampling population consisted of
20.7 percent in the semiconductor industry, 21.9 percent in electronics, 16.5 percent in
manufacturing, 12.7 percent in information technology, 13.9 percent in communication,
8.4 percent in energy, and 5.2 percent in other industries. Among the respondents in
these selected samples, there were 167 males (70.5 percent) and 70 females (29.5 percent).
The age raged from 21 to 60 years old. 60.3 percent were over 30 years old. 54.4 percent of
the respondents have more than six years of working experience and most of them were
senior mangers. To detect any potential non-response bias, Armstrong and Overton
(1977) and Kanuk and Berenson (1975) recommend assuring that the last quartile or
second wave of respondents’ responses is similar to that of non-respondents. We divided
selected samples into two groups (one consists of 34 samples that were returned within
two weeks, and the other is 26 samples which returned within one month). There are no
significant differences in the two groups’ perceptions of the implementation level of the
various items presented in the questionnaire. The results thus suggested that
non-response bias was not a problem in this study.

3.2 Measurements of variables

The research questions devised were based on previous literature. To ensure consistent
interpretation of the questionnaire, the meaning of green partners in the context of the
environmental collaborations, including green supply chain members or collaborators
for the environmental improvement activities, was illustrated in the preface of the
questionnaire. The questions used for measuring each variable are listed in Table II.
The constructs utilized in this study are measured with the seven-point Likert scale,
 Collaborative
Characteristics n ¼ 237 %
green innovation
Gender
Male 167 70.5
Female 70 29.5
Age
21-30 years 94 39.7 353
31-40 years 118 49.8
41-50 years 22 9.3
51-60 years 3 1.2
Tenure
2 years or less 35 14.8
3-5 years 73 30.8
6-10 years 66 27.9
11-15 years 48 20.3
16-20 years 9 3.8
21 years or above 6 2.4
Industry type
Semiconductor 49 20.7
Electronics 52 21.9
Manufacturing 39 16.5
Information technology 30 12.7
Communication 33 13.9 Table I.
Energy 20 8.4 Characteristics of the
Other 14 5.2 sample

from 1 to 7 rating, from strong disagreement to strong agreement. Following the

definition of social capital provided by Nahapiet and Ghoshal (1998), this study
classifies the social capital constructs into relational capital, structural capital, and
cognitive capital. The relational capital was assessed by a scale proposed by Morgan
and Hunt (1994), McAllister (1995) and Tsai and Ghoshal (1998), including four items
relating to trust and commitment between the focal firm and its green partners. The
structural capital was evaluated using a three-item scale developed by Smith et al.
(1994) and Tsai and Ghoshal (1998), which is comprised of social relationships,
network interaction, and communication frequency with green partners in the
environmental collaboration. The cognitive capital was assessed using a scale
proposed by Tsai and Ghoshal (1998) and Chiu et al. (1999), including three items
relating to shared vision, shared values, and shared language. Knowledge sharing was
adapted from four items by Bock et al. (2005), including the sharing of work reports,
official documents, experience, and know-how with partners frequently in the
environmental collaboration. Innovation performance was evaluated by a scale by
Lovelace et al. (2001), comprised of four items to evaluate innovativeness and three
items to evaluate constraint adherence relating to green management.

3.3 Methodology
After data collection, we used the SEM method for data analysis. In the SEM method,
we can examine the mutual relationships simultaneously among a set of posited
constructs, which are measured by the observed variables. It includes the analysis of
two models: the structural model and the measurement model.
IJOPM
Constructs Measurement item Reference
34,3
Relational capital RC1: whether green partners deal with each other honestly Morgan and
(RC) and open-heartedly in environmental collaboration Hunt (1994)
RC2: whether green partners pay attention to the McAllister (1995)
confidentiality of green concepts given by each other in
354 environmental collaboration
RC3: whether green partners abide by their mutual Tsai and
commitment in environmental collaboration Ghoshal (1998)
RC4: whether the cooperative relationships with green
partners in environmental collaboration are stable
Structural capital SC1: my company maintains close social relationships with Smith et al.
(SC) green partners in environmental collaboration (1994)
SC2: my company spends a lot of time interacting with green Tsai and
partners in environmental collaboration Ghoshal (1998)
SC3: my company has frequent communication with green
partners in environmental collaboration
Cognitive capital CC1: whether green partners have the same views on green Tsai and
(CC) concepts in environmental collaboration Ghoshal (1998)
CC2: whether green partners have the same values regarding Brashear et al.
green concepts in environmental collaboration (2003)
CC3: whether green partners use the same professional Chiu et al. (2006)
language to communicate with each other regarding green
concepts in environmental collaboration
Knowledge KS1: the sharing of work reports with green partners Bock et al. (2005)
sharing (KS) frequently in environmental collaboration
KS2: the sharing of official documents with green partners
frequently in environmental collaboration
KS3: the sharing of experiences with green partners
frequently in environmental collaboration
KS4: the sharing of know-how with green partners frequently
in a more effective way in environmental collaboration
Innovation P1: the innovativeness of the company’s green product Lovelace et al.
performance (P) compared with other companies’ innovativeness (2001)
P2: the number of green innovations or new ideas introduced
by the company compared with other companies
P3: overall green management performance compared with
other companies
P4: adaptability to changes compared with other companies
related to green management
P5: progress compared with initial expectations related to
green management
Table II. P6: adherence to schedules related to green management
Questions for measuring P7: adherence to budgets related to green management
each variable

The structural model specifies the relationship among the posited constructs.
The equation of the structural model is presented below:

h ¼ B h þ Gj þ 6 ð1Þ

The measurement model specifies the relationships between the observed variables
and their underlying constructs, which are allowed to inter-correlate with
other constructs. The equation of the measurement model is presented below as Collaborative
equations (2-1) and (2-2):
green innovation
y ¼ Ly h þ 1 ð2-1Þ
x ¼ Lx j þ d ð2-2Þ
In this study, a two-step SEM process proposed by Anderson and Gerbing (1998) was 355
employed to test our hypotheses with AMOS 16.0. First, employing the confirmatory
factor analysis (CFA), we evaluated the scale validity of the measured constructs from
the measurement model. After measurement model testing, we used the structural
model testing to examine the hypotheses.

4. Results and discussions

4.1 Measurement model testing
The reliability of the constructs was measured by the composite reliability indicator.
Reliability can reflect the internal consistency of the indicators measuring a given
factor. As shown in Table III, all constructs exceeded 0.9, satisfying the general
requirement of reliability. To test the convergent validity, all factor loadings for
indicators measuring the same construct are statistically significant. The results of
Table III show that all indicators effectively measure their corresponding construct
and support convergent validity (Anderson and Gerbing, 1998).
In this study, the average variance extracted (AVE) for each construct exceeds 0.50,
suggesting that the hypothesized items capture more variance in the underlying
construct than any attributable to measurement error. In all, the above results of
Table III show that instruments used for measuring all indicators of the construct in
this study reached a statistically adequate level. In addition, we also tested the
discriminant validity. An assessment of discriminant validity among the constructs
support the model fit. Table III summarizes the assessment results of the measurement
model.

4.2 Structural model testing

Following the first step of measurement model testing, the second step is to analyze the
structural model. The overall fit of the structural model reaches an acceptable level
(x2 ¼ 68.49, df ¼ 28, x2/df ¼ 2.446, GFI ¼ 0.95, AGFI ¼ 0.90, CFI ¼ 0.99, NFI ¼ 0.97,
RFI ¼ 0.96, IFI ¼ 0.98, TLI ¼ 0.97, RMR ¼ 0.05, RMSEA ¼ 0.07). The fit indices

Construct Indicators Standardized loading R2 CR AVE

Relational capital RC1 0.91 0.83 0.95 0.82

RC2 0.98 0.96
RC3 0.87 0.76
RC4 0.86 0.74
Structural capital SC1 0.81 0.65 0.90 0.74
SC2 0.96 0.92
SC3 0.81 0.66 Table III.
Cognitive capital CC1 0.94 0.88 0.95 0.85 Standardized loadings
CC2 0.93 0.86 and reliabilities for
CC3 0.90 0.81 measurement model
IJOPM showed reasonable fit values with no substantive differences. Therefore, the path
34,3 diagram for the research model was an adequate representation of the entire set of
causal relationships.
Figure 1 shows the estimated path coefficients and their significance in the structural
model. The results in Figure 1 support H1a (path coefficient ¼ 0.37, p , 0.005), which
implies that the greater structural capital the focal firm has with their partners, the
356 greater relational capital is embedded in the green network. Thus, if the companies
increase access opportunities to the structural supply system through environmental
collaborations, it would create an interactive platform for social capital transactions. As
actors interact over time, relational capital develops (Nahapiet and Ghoshal, 1998). All
actors have an incentive to develop a greater network of green partners, as not only are
they called upon to share their own knowledge or experience, but also stand to benefit
from others’ expertise (Simpson et al., 2007). According to the opinions of the industry
experts interviewed in the pretest stage, only when green partners are willing to provide
proprietary information and business operations based on the trusting relationship, can
the levels of environmental commitment increase, and in turn lead to a greater likelihood
of improving environmental performance. For example, Taiwan Semiconductor
Manufacturing Company (TSMC), which provides largest integrated circuit technology
and manufacturing services in the world, endeavor to promote environmental
collaboration criteria on new objectives, including environmental management systems
(EMS) complying with ISO 14000 standards and certification to ISO 14000, to help his
partners determine effective solutions to environmental problems. They also organize
supply chain management forum every year to build interactive relationship with their
partners. Hence, building better structural capital within supply chain network would
help companies open more channels of communication and gain additional
opportunities to manage supply relationship effectively.
Consistent with H1b, the empirical results of this study showed that cognitive
capital has a positive and significant effect upon relational capital, with a path

The Development of The Exchange of The Creation of

Social Capital Green Knowledge Green Innovation

Structural
Capital
0.37***
0.27*** 0.20*
Relational Knowledge Innovation
Capital Sharing Performance

Cognitive 0.42***
Capital

Figure 1. Notes: Significant at: *p < 0.05, **p < 0.01 and ***p < 0.005; x2 = 68.49, df = 28,
Parameter estimates for x2 /df = 2.446, GFI = 0.95, AGFI = 0.90, CFI = 0.99, NFI = 0.97, RMR = 0.05,
the structural model
RMSEA = 0.07
coefficient of 0.42 ( p , 0.005). This result can be explained by the fact that when actors Collaborative
share common goals for green management, they can avoid possible green innovation
misunderstandings in their interactions and have more opportunities to exchange
their knowledge freely. Furthermore, they will also tend to commit themselves more to
their relationships when they have a higher level of cognitive capital. Greater cognitive
capital provides intrinsic motivation for the actors involved in the green network
(Wei et al., 2010). Because shared values enable one member to understand other 357
member’s goals better, such harmony of purpose contributes to cultivate trust among
members (Sahay, 2003). For example, the incorporation of environmental
considerations into the supply chain often requires long-term allocation of resources,
and whether the selected partners can commit to a continual investment of resources is
crucial to their survival. These findings are consistent with the experts’ experience.
One of the industry experts, who is in charge of risk management, labor safety and
environmental health affair in TSMC, suggested that companies should avoid complex
environmental initiatives with their partners when they do not have environmentally
conscious practices to implement them. Inter-organizational collaboration appropriate
for green supply chain needs to be developed by a proactive corporate environmental
stance. It provides the foundation to align the organizations’ goal of social
responsibility and further communicate supply chain members’ commitment to such
goals. Hence, integrating commonly recognized goals for green management would
help partners be more aware of the customer’s environmental concerns and value
system and enhance positive customer-supplier relationship.
Consistent with H2 and H3, the empirical results indicate that relational capital is an
important antecedent of knowledge sharing, with a path coefficient of 0.27 ( p , 0.005),
and in turn, knowledge sharing leads to greater innovation performance, with a path
coefficient of 0.20 ( p , 0.05). This result is in accordance with previous studies finding
that social relationships provide a motivational source of social capital (Alder and Kwon,
2002). This can be explained by the fact that greater relational capital will motivate
partners to share their knowledge, because they will not be afraid of being taken
advantage of. When organizations have more interactive green relationships with their
partners, they will have more opportunities to leverage relational capital in order to
facilitate inter-organizational activities (Dyer, 1997). Furthermore, if companies do not
have much control over their suppliers, working to build trust within the relationship
also can cause greater performance gains for both partners involved in the exchange
(Handfield and Bechtel, 2002). For example, companies which are serious about their
improving environmental performance should work towards building greater levels of
trust with key-input partners and exploring opportunities for knowledge sharing on a
regular basis. Greater levels of relational capital would be helpful in improving
inter-organizational activities and enhancing greater green performance within an
organization (Buysse and Verbeke, 2003; Bowen et al., 2001). These finding are
supported by preliminary discussion with industry experts who have green
management experiences in the manufacturing industry. One response in particularly
illustrated the relationship perspective of those interviewed: companies need to make
efforts on relationship-specific investment with green partners. These kinds of
investment on relationship management would not only increase partners’ strategic
environmental collaboration, but also provide the minimum assurance of risk
management. Hence, to achieve effective knowledge sharing, the relevant parties should
IJOPM establish and reinforce collaborative relationships regarding green innovation, geared
34,3 towards achieving greater competitive advantages.

5. Conclusion and limitations

The results of this study indicated that social capital facilitates knowledge sharing
regarding green management, and in turn leads to greater green innovation. The three
358 kinds of social capital had significant effects, directly or indirectly, on knowledge
sharing regarding green management. The social capital approach can be considered as
strategies for companies, which leads to a new paradigm for green innovation and/or
business operations. Companies have to consider environmental issues as a major
source of strategic change, due to growing social and regulatory concerns for the
environment. Particularly in emerging countries, the appropriate development of green
concepts and practices may indeed aid these countries by lessening the environmental
burden of the manufactured products, while even potentially improving their economic
positioning. However, the development process of green management for developing
countries is complex and dynamic, because their industries must face global
competition. Hence, companies should leverage their social capital in order to produce
additional competitive advantages through environmental collaboration with developed
countries.
This study also offers a frame of reference for those who wish to facilitate knowledge
sharing and innovation in green management. Organizations need to pay more attention
to the issues of environmental management and sustainable development. However,
many companies with damages for failing to comply with the international
environmental protection regulations have few resources to deploy in this regard.
If organizations are able to manage and leverage their social capital effectively, they can
open more channels of communication and gain additional opportunities to exchange
green information and resources. For example, when partners were willing to make
environmental commitments in the form of capacity and equipment, higher levels of
trust were developed. In addition, when companies do not have a large degree of control
over partners, working with them to improve levels of trust may be helpful in improving
inter-organizational learning, and in turn trigger greater green innovation. The benefits
from investment in social capital building have some upper limits. For example,
technology investment may make it possible to stretch the limitation of networks for
green innovation. Although it takes time and money to build social capital, more
interactions with green partners could provide the unplanned opportunities for the
accidental coming together of ideas that may lead to the development of green
innovation within organizations. In addition, relationship stability and durability are
key network features associated with high levels of norms of cooperation (Nahapiet and
Ghoshal, 1998). Thus, building a stable network relationship may serve to reduce some
transaction costs of environmental collaborations with partners. Therefore, it is
suggested that managers consider the investment of social capital as one of the green
strategies for companies, which are influential in the development of new green
intellectual capital. To achieve effective green innovation, companies should leverage
their social capital in order to produce additional competitive advantages through
environmental collaboration.
However, there are some limitations in this study, due to its empirical data and
methods. First, this study did not measure how social capital and knowledge sharing
change over time. All measures were taken at a single point in time. Hence, future Collaborative
studies might aim for a longitudinal study to examine the differences of knowledge green innovation
sharing in the different development stages of social capital. Second, the findings of
this study may only reflect the situation of Taiwanese companies. Further studies
might focus on other countries for comparison’s sake with this study. Third, companies
should not only manage the accumulation of external knowledge for triggering green
innovation, but also adapt their absorptive capabilities in order to succeed with 359
strategic innovation. It is suggested therefore that further studies can focus on how
absorptive capacity affects the inter-organizational learning process in the context of
green innovation. The framework of this study may serve as a starting point for future
theoretical and empirical research in exploring possible factors impacting
environmental – competitiveness relationship.

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About the authors

Ping-Chuan Chen is currently a Senior Project Manager in the Industrial Technology
Research Institute (ITRI), the largest non-profit research organization in Taiwan. Mr Chen is
also a PhD candidate at the Department of Business Administration of National Central
University, Taiwan. He received his LLB from the National Chung-Hsing University and MS
from Yuan-Ze University of Taiwan. His research interest focuses on leveraging advanced Collaborative
technology for economic improvement and industrial development based on his practice
experience.es on leveraging advanced technology for economic improvement and industrial green innovation
development based on his practice experience.
Shiu-Wan Hung is currently the Professor at the Department of Business Administration of
National Central University, Taiwan. She received her PhD from the Institute of Business and
Management of National Chiao Tung University, Taiwan. Before this, Dr Hung earned her MS
from the University of Wisconsin-Madison in the USA and completed her BS from the National 363
Chengchi University of Taiwan. Her researches mainly focus on the areas of technology
management, knowledge management and performance management. Dr Hung has had
articles published in the Information & Management, Scientometrics, Technovation, Computers
& Operations Research, European Journal of Operational Research and other journals.
Shiu-Wan Hung is the corresponding author and can be contacted at: shiuwan@mgt.ncu.edu.tw

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