The Impact of Green Supply Chain Integration On Sustainable Performance

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The impact of
The impact of green supply green supply
chain integration on chain
integration
sustainable performance
Zhaojun Han 657
Institute of Systems Engineering,
Received 10 July 2019
Dalian University of Technology, Dalian, China, and Revised 17 October 2019
Baofeng Huo Accepted 11 December 2019

College of Management and Economics, Tianjin University, Tianjin, China

Abstract
Purpose – The purpose of this paper is to explore the impact of green supply chain integration (GSCI) on
sustainable performance which includes environmental, social and economic performance.
Design/methodology/approach – Based on data collected from 206 Chinese manufacturers, this study uses
structural equation modeling with the maximum-likelihood estimation method to test the theoretical model.
Findings – The results show that different dimensions of GSCI have different outcomes. Green internal
integration lays the foundation for green supplier integration (GSI) and green customer integration (GCI), and
is related to both environmental and social performance. GSI is positively related to economic performance,
whereas GCI is positively related to social performance.
Originality/value – Believing that “how to be green” matters, this study focuses on an integrative approach
to green supply chain management (GSCM), shedding new light on how GSCI influences performance and
providing practical guidelines for different stakeholders.
Keywords Green supply chain management, Supply chain integration, Sustainable performance
Paper type Research paper

1. Introduction
Green supply chain management (GSCM), which integrates environmental concerns into
supply chain management (SCM) (Srivastava, 2007), has emerged as an important strategy
for companies to respond to the growing public environmental awareness and the rising
government regulations (Laosirihongthong et al., 2013). Despite its prevalence, managers
and researchers are still being haunted by the question of “does it pay to be green” (Preuss,
2005; Schmidt et al., 2017; Wong et al., 2018). Previous studies have reported positive,
negative or insignificant relationships between GSCM practices and performance (Golicic
and Smith, 2013). Many efforts have tried to reconcile these inconsistent findings (e.g. Ahi
and Searcy, 2013; Geng et al., 2017; Golicic and Smith, 2013; Sarkis et al., 2011). Yet, few
studies have noted the possibility that how GSCM is implemented may make a difference.
Our study attempts to bring clarity to this ongoing debate on “does it pay to be green” by
adding a dimension of “how to be green.”
Several scholars have acknowledged that there are different approaches to GSCM
(e.g. Bowen et al., 2001; Tachizawa et al., 2015). The most common one is referred to as the
functional approach (Geng et al., 2017; Kirchoff et al., 2016; Vanalle et al., 2017), proposed by
Zhu and her colleagues (e.g. Zhu and Sarkis, 2007; Zhu and Sarkis, 2004; Zhu et al., 2005).
This approach encompasses five green practices and mainly focuses on green practices in
specific functional areas such as green purchasing or green design, and thus describes a
green transactional relationship between supply chain partners (Gunasekaran et al., 2015). Industrial Management & Data
Another common approach to GSCM is the collaborative approach proposed by Vachon and Systems
Vol. 120 No. 4, 2020
pp. 657-674
© Emerald Publishing Limited
This research was supported by the National Natural Science Foundation of China (Nos 71802039, 0263-5577
71525005, 71431002). DOI 10.1108/IMDS-07-2019-0373
IMDS Klassen (2006), which mainly focuses on jointly resolving environmental problems and
120,4 describes a collaborative relationship between supply chain partners.
The functional approach is the initial effort to extend green practices across supply
chains, while the collaborative approach highlights the importance of supply chain
collaboration (Wong et al., 2015). Yet, the level of supply chain involvement described in
these two approaches is too low, limiting the effectiveness of GSCM. Building on these two
658 approaches and the supply chain integration (SCI) literature, some recent studies propose an
integrative approach to GSCM (Song et al., 2017; Wong et al., 2015; Wu, 2013) and have
coined the term green supply chain integration (GSCI). This approach emphasizes strategic
collaboration and integration between supply chain partners in jointly managing intra- and
inter-organizational green processes (Flynn et al., 2010; Wong et al., 2015). It enables a
concerted and integrated effort of the entire supply chain (Wong et al., 2015), thereby may be
a more effective way of greening supply chains.
Though some scholars have recognized the importance of GSCI and have discussed its
implications for performance (e.g. Song et al., 2017; Wong et al., 2018), the conceptualization
and operationalization of GSCI are still ambiguous and inconsistent; the empirical evidence
on how GSCI influences performance is still scarce. To advance the understanding of this
integrative approach, our study draws on the SCI literature and the natural-resource-based
view (NRBV ) to develop a theoretical framework of GSCI and investigates how different
dimensions of GSCI influence sustainable performance which includes environmental, social
and economic performance.
Achieving sustainability has become a new strategic lever and been high on the agenda of
many leading firms and supply chains (Kang, 2018). Existing GSCI studies have not paid
attention to this important facet of performance. Even in the broad field of GSCM, the
predominant focus has been on how GSCM influences environmental or economic performance
(Golicic and Smith, 2013; Li et al., 2016; Zhang and Yang, 2016; Zhu and Sarkis, 2007). Social
performance has received scant attention (De Giovanni, 2012; Pagell and Wu, 2009). Our study
tries to fill this gap and shed new light on how the integrative approach to GSCM influences
sustainable performance. This is also important to the debate on “does it pay to be green” in
that we raise the concern that economic profits should not be the only metric.
Overall, by investigating the impact of GSCI on sustainable performance, our study
contributes to the understanding of “does it pay to be green” in two ways. First, we add a
dimension of “how to be green.” Second, we propose that sustainable performance may be a
more appropriate metric.

2. Theoretical background and hypotheses development


2.1 Literature review on green supply chain integration
GSCI can be defined as the extent to which a manufacturer builds a strategic relationship with
its supply chain partners and collaboratively integrates environmental concerns into the intra-
and inter-organizational processes (Lo et al., 2018; Sarkis et al., 2011; Wu, 2013). It has received
some scholarly attention. These studies demonstrate the importance of applying SCI
philosophy to GSCM (e.g. Dai et al., 2015; Wong et al., 2015). Yet, scholars are far from reaching
consensus on how GSCI should be grounded on SCI and how this integrative approach to
GSCM influences performance, leaving opportunities for further research.
The main problem of existing studies on GSCI is the incomplete conceptualization of
GSCI. Though scholars have commonly based their definitions and dimensions of GSCI on
SCI (Song et al., 2017; Wong et al., 2015), for instance, they classify GSCI into green supplier
integration (GSI), green customer integration (GCI) and green internal integration (GII), how
they conceptualize GSI, GCI and GII is rather different. Some studies view each dimension of
GSCI as an unidimensional construct (e.g. Dai et al., 2015; Lo et al., 2018; Song et al., 2017;
Wu, 2013; Yu et al., 2014), others operationalize GSI, GCI and GII as second-order constructs
(e.g. Wong et al., 2015, 2018). Some studies limit supplier involvement to upstream green The impact of
activities and limit customer involvement to downstream green activities (e.g. Wu, 2013; Yu green supply
et al., 2014), others highlight the importance of involving supply chain partners in all green chain
processes (e.g. Wong et al., 2015, 2018). In fact, SCI uses three components to highlight
strategic collaboration between supply chain partners at multiple levels: information integration
sharing, process coordination and strategic alignment (Flynn et al., 2010; Wong et al., 2011;
Xenophon et al., 2005). To the best of our knowledge, none of existing studies on GSCI has 659
incorporated all three components. Wong et al. (2015, 2018) are the first efforts trying to
capture the essence of SCI. Yet, they neglect the most important component: strategic
alignment. In this study, building on the NRBV, we argue that the three components of SCI
are particularly valuable in the environmental management field.
The NRBV posits that firms’ environmentally sustainable capabilities will generate
competitive advantage and that there are three related strategies: pollution prevention,
product stewardship and sustainable development (Hart, 1995; Hart and Dowell, 2011).
Pollution prevention seeks to prevent waste and reduce emissions by employing a
continuous-improvement method (Hart, 1995). Product stewardship highlights integrating
the voice of stakeholders into every step of the value chain (Hart, 1995). Sustainable
development posits that a shared vision is the key to generating constant enthusiasm
needed for green innovation or changes (Hart, 1995). These three strategies rationalize the
three components of GSCI.
Green information sharing (GIS) refers to sharing real-time green data, information and
requirements with supply chain partners (Wong et al., 2015). It enables firms to detect, analyze
and then eliminate hidden environmental problems in a timely way, and thus, can be viewed
as the pollution prevention strategy. Green process coordination (GPC) refers to involving
supply chain partners in all green processes from green purchasing, green designing, green
manufacturing to green delivering and waste disposal (Wong et al., 2015; Xenophon et al.,
2005). It integrates stakeholders, including suppliers and customers, into the entire value
chain, thus, can be viewed as the product stewardship strategy. Green strategic alignment
(GSA) refers to jointly making and revising green plans, strategies and objectives with supply
chain partners (Flynn et al., 2010; Vachon and Klassen, 2008). It facilitates achieving a shared
vision, thus, can be viewed as the sustainable development strategy.
According to the traditional resource-based view and the NRBV, a bundle of resources
and capabilities are more advantageous to generate competitive edge (Hart and Dowell,
2011; Peteraf, 1993). Therefore, in this study, we operationalize each dimension of GSCI (GSI,
GCI and GII) as a second-order construct: each incorporates GIS, GPC and GSA and thus
combines all three strategies of NRBV. From this perspective, our framework of GSCI is not
only simply applying the structure of SCI, but it also has a solid theoretical foundation
which may make GSCI more effective in generating competitive advantage.
Another issue regarding existing research is that the relationship between GSCI and
performance is less understood. Scholars have mainly focused on how GSCI influences
operational performance (e.g. Song et al., 2017; Yu et al., 2014), such as cost (e.g. Wong et al.,
2018) and innovation (e.g. Dai et al., 2015; Wu, 2013). Only Song et al. (2017) and Wong et al.
(2018) have investigated the effect of GSCI on economic performance. But their findings are
contrasting. Song et al. (2017) reported that all three dimensions of GSCI are positively
related to economic performance, whereas Wong et al. (2018) found that none of them
influences economic performance. In addition, only Wong et al. (2018) have examined the
effect of GSCI on environmental performance. They report that green integration with
suppliers and customers has no influence on environmental performance. This literature
review indicates that more research is needed to understand the benefits of GSCI.
In this study, we investigate the impact of GSCI on sustainable performance, which
encompasses environmental, social and economic performance. An integrative approach
IMDS enables a concerted effort of the entire supply chain (Wong et al., 2015). It is possible that
120,4 GSCI is able to generate a wide range of performance outcomes. In addition, how constructs
are operationalized may influence how they function (Flynn et al., 2010; Golicic and Smith,
2013). Our framework of GSCI is based on SCI and combines all three strategies of NRBV,
may shedding new light on how each dimension of GSCI influences environmental,
economic and especially social performance.
660
2.2 The impact of GII on GSI and GCI
Extant literature has showed that internal environmental management is the first step to
GSCM (e.g. Green, Zelbst, Bhadauria and Meacham, 2012; Green, Zelbst, Meacham and
Bhadauria, 2012). It lays the foundation for effective green collaboration with external
supply chain partners (Yang et al., 2013). The SCI literature also documents that internal
integration facilitates external integration (e.g. Xenophon et al., 2005; Zhao et al., 2011).
Building on these findings, we propose that GII is positively related to GSI and GCI. First,
internal green activities inevitably expand to supply chains. For example, GII allows
internal departments to track real-time green-related information about products and
processes (Wong et al., 2015). Having this information will spontaneously urge companies to
share it with supply chain partners, providing feedback to suppliers about whether they
meet the environmental standards (Hu and Hsu, 2010) and providing evidence to customers
that they are conforming to environmental requirements. Second, implementing GII requires
companies to leverage the resources of their supply chains, facilitating GSI and GCI (Wong
et al., 2015). For example, internal functions may detect that some environmental problems
can be better resolved by involving suppliers and customers. Therefore, we propose:
H1a. GII is positively related to GSI.
H1b. GII is positively related to GCI.

2.3 The impact of GSCI on sustainable performance


2.3.1 The impact of GSCI on environmental performance. Environmental performance
refers to pollution reduction and energy saving (Geng et al., 2017; Zhu et al., 2005). An
increasing number of studies have documented a positive relationship between internal
environmental management and environmental performance (Geng et al., 2017; Yang et al.,
2013). Similarly, our study argues that GII is positively related to environmental
performance. First, internal GIS implies that all departments have access to real-time
green-related information. This enables them to detect environmental problems in a timely
manner and immediately take initiatives to solve these problems. Second, internal GPC
enables different functions to voice their opinions, which will generate more solutions to
environmental issues and increase environmental performance. Third, internal GSA across
functions enables a concerted and integrated effort of all departments to achieve green
objectives. According to NRBV, the three components of GII represent three strategies
which help companies to gain competitive advantage (Hart, 1995). Therefore, we propose:
H2a. GII is positively related to environmental performance.
Some studies have reported that supplier and customer environmental collaboration
influences environmental performance (e.g. Fang and Zhang, 2018). In this study, we argue
that both GSI and GCI are positively related to environmental performance. First, GIS with
suppliers clearly communicates environmental requirements to suppliers. This forces
suppliers to follow the standards and to provide green raw materials, ensuring
environmental performance at the source of supply chains. Similarly, GIS with customers
enables companies to understand and conform to customers’ environmental standards,
which in turn enhances environmental performance. Second, GPC with suppliers and The impact of
customers means involving them in all the processes of the value chain. This integration will green supply
help companies advance their environmental management technologies and improve their chain
environmental management capabilities (Geffen and Rothenberg, 2000), leading to better
environmental performance. Third, GSA with suppliers and customers indicates that supply integration
chain partners jointly make green objectives and strategies (Wong et al., 2015). This means
that they have a common vision that greening supply chains is imperative and are willing to 661
put efforts to take environmental initiatives. Taken these three facets together, we propose:
H2b. GSI is positively related to environmental performance.
H2c. GCI is positively related to environmental performance.
2.3.2 The impact of GSCI on social performance. Social performance is associated with
improving the overall welfare of stakeholders and the community and protecting employee
health and safety (Geng et al., 2017). Only a few studies have investigated the effect of GSCM on
social performance. De Giovanni (2012) and Geng et al. (2017) both find that internal
environmental management has a positive effect on social performance. We argue that this
relationship still holds for GII. First, internal GIS means that internal employees are able to track
green-related information. This enables them to timely detect the environmental issues that may
endanger their safety and health and immediately take actions to protect themselves. Second,
internal GPC enables different functions to work together in all green processes including green
design (Flynn et al., 2010; Wu, 2013). This increases the likelihood that companies produce more
environmental-friendly or energy-saving products into the markets. These products may help to
improve the welfare of end consumers. Third, internal GSA indicates that all departments
understand the importance of going green. As a result, they may spread their environmental
philosophy and policy in the community, increasing people’s awareness of protecting
environment and society. The sustainable development strategy also suggests that companies
may enhance social performance by going green (Hart, 1995). Therefore, we propose:
H3a. GII is positively related to social performance.
Both De Giovanni (2012) and Geng et al. (2017) report that external environmental
collaboration has no significant relationship with social performance. In this study, we
argue that as a different approach to GSCM, green integration with suppliers and customers
may be able to increase social performance. Specifically, GIS with suppliers and customers
enables companies to get more information about the needs and requirements of
stakeholders, providing opportunities for companies to address these needs and improve the
well-being of stakeholders. In addition, GPC enables companies to solve environmental
problems together with suppliers and customers. This significantly improves their
problem-solving capabilities and efficiencies. As a result, severe pollutions may be reduced
before they can pose potential damage to stakeholders. GSA with suppliers and customers
indicates that supply chain partners share a common vision of going green (Wong et al.,
2015). Suppliers and customers may internalize this vision and influence more stakeholders
to participate in green activities. As a result, the welfare of the entire community can be
enhanced. Combining these three components makes GSI and GCI stronger drivers of social
performance. Therefore, we propose:
H3b. GSI is positively related to social performance.
H3c. GCI is positively related to social performance.
2.3.3 The impact of GSCI on economic performance. Economic performance generally refers
to profitability (Geng et al., 2017). Despite numerous studies, the findings concerning
IMDS whether GSCM improves economic performance are still mixed (Geng et al., 2017; Golicic
120,4 and Smith, 2013). Zhu and Sarkis (2004) and Zhu et al. (2005) found that for Chinese
manufacturers, GSCM practices are unable to generate better economic performance. On the
contrary, recent studies mainly report a positive effect of GSCM on economic performance
(e.g. Geng et al., 2017; Schmidt et al., 2017). In this study, we argue that each dimension of
GSCI is positively related to economic performance because all three components are able to
662 do so. First, internal GIS facilitates communication among different functions, reducing the
cost of communication. It also allows internal functions to detect the environmental issues
timely, avoiding the heavy cost of remedy afterwards. Second, internal GPC establishes a
coordinated mechanism for different functions to work together to solve environmental
problems. This reduces the cost of coordination and avoids the cost of repetitive work.
Third, internal GSA is a signal to end consumers that this company commits to
environment, which may motivate them to buy more products. Therefore, we propose:
H4a. GII is positively related to economic performance.
Li et al. (2016) report that green supply chain processes play an important role in improving
financial performance. Yang et al. (2013) also find that external collaboration with supply
chain partners positively influences firm competitiveness. Similarly, we argue that GSI and
GCI are positively related to economic performance. First, GIS with supply chain partners
enables companies to have real-time information about how suppliers are operating,
reducing supervision cost. Second, GPC with supply chain partners promotes joint problem
solving, which may generate more economical solutions. It also encourages supply chain
partners to share the risks and costs when solving environmental problems, leading to
better economic performance. Third, GSA with suppliers and customers indicates that
companies view greening as a strategic objective, which may help companies build a good
reputation and attract more customers. As a result, sales will be improved. According to
NRBV, combining all three strategies generates more competitive advantage (Hart and
Dowell, 2011). Therefore, we propose:
H4b. GSI is positively related to economic performance.
H4c. GCI is positively related to economic performance.
Figure 1 shows our conceptual model for the proposed relationships.

3. Methodology
3.1 Sampling and data collection
Given the uneven economic development in China, we collected data from manufacturing
companies located in both economically developed regions, including Bohai Bay Economic
Rim, Pearl River Delta and Yangzi River Delta, and other regions that are less economically
developed, including northeastern, central and western China. In the selected regions, we
used the directory provided by National Bureau of Statistic of China as our sampling pool.
We called each randomly selected company to identify a key informant and his/her
agreement to participate. The key informant should be knowledgeable about their supply
chain’s green activities; thereby, they should have a title such as supply chain manager,
purchasing manager, marketing manager, vice president or CEO/president.
We mailed the questionnaire, along with a cover letter explaining the objectives of this
study. We also highlighted potential contributions to the participating companies in the
cover letter. To improve response rate, we made follow-up phone calls and reminding
e-mails (Chen et al., 2016). Out of 2,820 companies contacted, 812 companies agreed to
participate. There were 206 usable questionnaires returned, yielding a response rate of
25.4 percent based on the questionnaires distributed. Table I provides the profile of the
S-GIS The impact of
Green supplier Environmental green supply
S-GPC H2b
integration performance chain
S-GSA H3b integration
H1a H4b
I-GIS
H2a 663
Green internal Social
I-GPC
integration H3a performance
I-GSA H4a

H1b H2c
C-GIS
H3c
Green customer Economic
C-GPC H4c
integration performance
C-GSA
Figure 1.
Notes: S, supplier; I, internal; C, customer; GIS, green information sharing; Conceptual model
GPC, green process coordination; GSA, green strategic alignment

Distribution variables Percentage Distribution variables Percentage

Industries Region
Metal, mechanical and engineering 40.8 Bohai Bay Economic Rim 35.4
Electronics and electrical 19.4 Yangzi River Delta 24.8
Textiles and apparel 10.2 Pearl River Delta 19.9
Chemicals and petrochemicals 7.8 Other areas in China 19.9
Food, beverage, alcohol and cigarettes 6.3
Building materials 4.9
Publishing and printing 4.4
Rubber and plastics 3.9
Pharmaceutical and medicals 2.4
Number of employees Ownership
o50 1.0 State owned 16.0
50–99 1.0 Privately owned 53.9
100–199 23.3 Foreign owned 19.4
200–499 34.0 Joint venture 10.7
500–999 18.0 Table I.
1,000–4,999 18.4 Profiles of responding
5,000 or more 4.4 companies

sample companies. It shows that the sample represents a variety of industries and firm sizes.
Table II provides the information about the respondents. Most of them were middle or top
managers and had been in their positions for six or more years. Thus, they should be
knowledgeable about their companies’ GSCI activities and performance.

3.2 Measures
All our measures were developed based on previous studies. First, we searched the previous
literature to develop valid measures for our constructs. Second, since the initial
questionnaire was developed in English, we transferred it into Chinese by a SCM professor
IMDS Distribution variables Percentage
120,4
Tenure of current position in firm (years)
⩽1 0
2–5 23.3
6–10 39.8
11–15 18.9
664 ⩾16 18.0
Position of respondent
Top manager (e.g. presidents, CEO, director and deputy of these positions) 22.3
Table II. Middle manager (e.g. manager of purchasing, marketing, production and other
Respondent operations-related positions) 76.2
characteristics Others (e.g. purchaser and salesman) 1.5

in China. The Chinese version was then back-translated into English by the other two SCM
professors to check against the original English version for equivalence. Finally, we ran a
pilot test with 18 companies and conducted in-depth interviews with managers in the
meanwhile to refine the questionnaire. Based on their feedback, we modified the wording of
some items to guarantee that all items were understandable and relevant to GSCI practices
in China. The measures for our constructs are shown in Table AI.
We used a seven-point Likert scale to capture respondents’ perception of the levels of
their GSCI practices and performance. As we stated before, we define each dimension of
GSCI (GSI, GII and GCI) as a second-order construct, composing of GIS, GPC and GSA. The
measures for these three first-order constructs were adapted from Vachon and Klassen
(2006), Flynn et al. (2010) and Wong et al. (2015). Respondents were asked to rate the extent
to which their companies had implemented these practices, with “1” indicating the practices
were not at all implemented and “7” indicating they were extensively implemented. The
measures for environmental performance were adopted from Zhu and Sarkis (2004). The
measures for economic performance were adopted from Flynn et al. (2010). The measures for
social performance were adopted from De Giovanni (2012). The respondents rated the
performance measures compared with their major competitors, with “1” meaning “much
worse” and “7” meaning “much better.”

3.3 Non-response bias and common method bias


We followed two steps to check for the potential non-response bias. First, we compared the
means of the theoretical constructs for the first and last 30 responses with t-test (Armstrong
and Overton, 1977). The results showed no significant differences. Second, using
information obtained from the websites of non-responding firms, we compared the values of
number of employees, ownership, fixed assets and firm age for non-responding and
responding firms (Schilke, 2014). The results of t-test found no significant differences,
further indicating that non-response bias was not a big concern in this study.
Because there was only one respondent for each questionnaire, common method bias
might be a problem. We tried to reduce the potential common method bias before data
collection. Specifically, when designing the questionnaire, we carefully arranged the order of
items and kept conceptually related variables far away to reduce respondents’ consistent
tendency. This reduces common method bias to a certain degree (Podsakoff et al., 2003;
Podsakoff and Organ, 1986). After data collection, we conducted Harman’s single-factor test
using exploratory factor analysis to check for the potential common method bias (Podsakoff
et al., 2003; Podsakoff and Organ, 1986). The results showed eight distinct factors with
eigenvalues above 1.0, explaining 73.96 percent of the total variance. The first factor
explained 42.29 percent of the variance, which is not the majority of the total variance. This The impact of
is acceptable for our study where first-order constructs are conceptually related. green supply
chain
3.4 Construct validity and reliability integration
Confirmatory factor analysis (CFA) was conducted to assess the overall model fit, validity
and reliability of both first- and second-order constructs. We ran a CFA model, linking each
item to its corresponding first-order construct and each first-order construct to its 665
corresponding second-order construct. The model fit indices were χ2 ¼ 2758.72 with
df ¼ 1574, RMSEA ¼ 0.060, NNFI ¼ 0.98, CFI ¼ 0.98, standardized RMR ¼ 0.12, indicating
that the model was acceptable (Hu and Bentler, 1999). All factor loadings for both first- and
second-order constructs were greater than 0.50 and all t-values were greater than 2.0
(see Table AI), ensuring convergent validity (Fornell and Larcker, 1981). The average
variance extracted (AVE) value of each first- and second-order construct was higher than
the suggested cut-off point of 0.50 (Fornell and Larcker, 1981), further demonstrating
convergent validity. We also examined the discriminant validity. Table III shows that the
square roots of AVEs of all constructs were higher than any correlation of any pair of
constructs, indicating that discriminant validity was ensured (Fornell and Larcker, 1981).
The composite reliability and Cronbach’s α values of all constructs were above 0.80
(see Table AI), demonstrating adequate reliability (Flynn et al., 1990).

4. Results
We employed structural equation modeling (SEM) to test our hypotheses, using LISREL
8.54 with the maximum-likelihood estimation method. The goodness of fit indices of our
model were acceptable ( χ2 (1,575) ¼ 2,841.96, NNFI ¼ 0.98, CFI ¼ 0.98, RMSEA ¼ 0.062
and SRMR ¼ 0.11), according to the suggested threshold values (Hu and Bentler, 1999).
Figure 2 shows the SEM results with standardized coefficients for the significant paths.

5. Discussion
5.1 Major findings
In line with both the literature on GSCM and SCI (e.g. De Giovanni, 2012; Wong et al., 2018;
Zhao et al., 2011), our results find that GII is positively related to GSI and GCI. This
strengthens the important role of internal integration in the GSCM field that how green
activities are implemented within companies may expand across supply chains.
Our results also find that, out of the three dimensions of GSCI, only GII is positively
related to environmental performance, whereas the effects of GSI and GCI are
nonsignificant. These findings contradict with those of studies adopting a functional or
collaborative approach, which report a positive relationship between external
environmental collaboration and environmental performance (De Giovanni, 2012;

Construct 1 2 3 4 5 6

1. Economic performance 0.789


2. Environmental performance 0.138* 0.743
3. Social performance 0.291** 0.450** 0.761
4. Green internal integration 0.244** 0.428** 0.427** 0.914
5. Green supplier integration 0.319** 0.249** 0.325** 0.573** 0.902
6. Green customer integration 0.245** 0.332** 0.426** 0.619** 0.737** 0.872
Mean 4.380 5.857 5.300 5.014 4.407 4.638 Table III.
SD 1.176 0.832 1.030 1.100 1.395 1.303 Descriptive statistics
Notes: Square roots of AVEs are shown in the diagonal in italic. *p o0.05; **po 0.01 and correlations
IMDS S-GIS
0.98
120,4 Green supplier Environmental
S-GPC 0.88
integration performance
0.91
S-GSA 0.31** 0.47***
0.65***
666 I-GIS
0.92
Green internal Social
I-GPC 0.86 0.36**
integration performance
0.92
I-GSA
0.70***
C-GIS 0.30**
0.94
Green customer Economic
C-GPC 0.82
integration performance
0.90
C-GSA

Notes: S, supplier; I, internal; C, customer; GIS, green information sharing;


Figure 2.
SEM results GPC, green process coordination; GSA, green strategic alignment.**p < 0.01;
***p < 0.001

Tachizawa et al., 2015). Yet, our findings are consistent with the findings of Wong et al.
(2018), which also adopts the integrative approach and only finds internal sustainable
development to influence environmental performance. This suggests that the integrative
approach is indeed different from the functional and collaborative approach. Integration
with suppliers and customers is much more complex and difficult. It requires suppliers and
customers to devote more resources and to participate at multiple levels. It is possible that
the current level of GSI and GCI is too low to enhance environmental performance. Yet, we
acknowledge that such a statement warrants more evidence.
In terms of social performance, our results find that GII and GCI are positively related to
social performance, whereas GSI is not. These findings are partially supported by previous
studies. For example, De Giovanni (2012) and Geng et al. (2017) both find that internal
environmental management has a positive relationship with social performance and the
effect of external environmental collaboration is nonsignificant. The reason why we find
GCI to positively influence social performance may be that customers are always assumed
to hold responsibilities for their upstream parties’ unsustainable behaviors (Lee et al., 2012;
Vanalle et al., 2017). For example, Apple and Nike were blamed for their suppliers’
sweatshop labor conditions. As such, when having opportunities, customers want
guarantees that their manufacturers behave properly. GCI offers customers such
opportunities to work closely with manufacturers at multiple levels, so that customers
can demand manufacturers to improve workplace safety and employee health and also help
them in the process. Apparently, a loosely connected relationship with customers is not
sufficient to offer customers such opportunities. On the contrary, suppliers care less about
manufacturers’ social performance. Though having the opportunity to help manufacturers
address workplace safety or community welfare, suppliers are not motivated. Thus, GSI
does not have a significant impact on social performance.
In terms of economic performance, we find that out of the three dimensions, only GSI
leads to better economic performance. These results are in line with the previous literature.
For example, Zhu and Sarkis (2007), Green, Zelbst, Meacham and Bhadauria (2012) and
Schmidt et al. (2017) all point out that working with suppliers on green practices is less
costly than the other green practices. This is especially true with respect to the integrative The impact of
approach. The integrative approach indicates that supply chain partners are supposed to green supply
share risks and costs of going green (Zhu et al., 2005). Since downstream parties are chain
normally more powerful than upstream parties (Ha et al., 2011), it is more likely that
upstream suppliers share more costs. Therefore, green integration with suppliers is integration
positively related to focal firms’ economic performance, whereas GII and GCI are not. In fact,
it is acknowledged that green activities, such as GII and GCI, may need more time to 667
generate profitability (Golicic and Smith, 2013; Wong et al., 2018).

5.2 Theoretical contribution


Our study contributes to the literature on the link between GSCM and performance
and advances the understanding of “does it pay to be green.” First, we propose that
“how to be green” matters and provide empirical evidence that the integrative approach to
GSCM, namely GSCI, is indeed different from and advantageous over the traditional
functional or collaborative approach. It makes suppliers share more costs and
provides customers more opportunities to help address social issues. Moreover, considering
that previous conceptualization of GSCI is incomplete and difficult to be distinguished from
the collaborative approach (e.g. Wu, 2013; Yu et al., 2014), our study builds a comprehensive
framework of GSCI based on the dimensions and components of SCI, and more importantly,
incorporating all three strategies of NRBV. This structure of GSCI combines both values of
SCI and NRBV, thereby representing an advanced integrative approach.
Second, our study enriches the understanding of how the integrative approach to GSCM
influences performance. We find that different dimensions of GSCI have different outcomes.
GII generates environmental performance; GSI helps to improve economic performance; GII
and GCI are positively related to social performance. These results reconcile previous mixed
findings. More importantly, they provide evidence that the integrative approach indeed
generates a wide range of performance outcomes and that when implemented together,
GSCI can be an approach to achieve sustainability. As sustainability is becoming more
critical to companies’ long-term success (Goebel et al., 2018; Paulraj, 2011), we suggest that
sustainable performance should be considered when evaluating “does it pay to be green.”
Our study also contributes to the literature on SCI. GSCI can be viewed as an application
of SCI in the environmental management field. Yet, our study suggests that the nature or
behavior of suppliers and customers may differ in GSCI and SCI. For instance, we find that
only green integration with suppliers enhances economic performance, whereas SCI
literature generally reports that customer integration has a stronger effect on improving
performance (e.g. Flynn et al., 2010). The reason may be that customers normally exert
pressure and demand in the process of going green, whereas suppliers are normally in a
position of subordination and are forced to share costs. From this perspective, by applying
SCI in GSCM, we suggest that suppliers and customers may play different roles in different
types of integration.

5.3 Practical implication


Companies are still struggling to implement and benefit from GSCM (Wong et al., 2018). Our
study may help to resolve this situation. First, we point out that how to implement GSCM
matters. We suggest supply chain managers to take an integrative approach to GSCM. This
approach aligns green thinking and objectives between supply chain partners and enables a
concerted effort of the whole supply chain. Specifically, the integrative approach should be
implemented at multiple levels. At the strategic level, companies should jointly make green
strategies and objectives with supply chain partners; at the tactic level, they should share
green-related information with each other; at the operational level, companies should involve
supply chain partners in the entire value chain.
IMDS Second, companies normally lack internal motivation to go green (Zhu et al., 2005).
120,4 They are more likely to talk the green talk rather than walk the green walk, which in turn
limits their ability to gain profits from GSCM. Our study finds that the integrative
approach to GSCM can help companies increase sustainable performance. This may
promote companies’ internal motivation to adopt GSCI and walk the green walk. We also
provide guidelines for managers to better arrange resources to achieve the targeted
668 performance. GII generates environmental and social performance. Suppliers and
customers play distinctive roles. Suppliers may share costs of going green, enhancing
economic performance, whereas customers may exert more demands, concerning social
issues. That is, GII and GSI are enough to achieve sustainability. Whether or not to
integrate with customers is an open question.
Our study also has some implications for other stakeholders. For example, supplier
firms should be aware that their involvement in downstream parties’ green activities
might be a burden for themselves. They should let downstream parties know their
sacrifices and values, getting compensation elsewhere. Customer firms should closely
integrate with upstream parties in green activities because they can also help upstream
parties address social issues which are another big concern for them. In addition, we
suggest employees to take GSCI seriously and devote to it because green activities may
improve their workplace safety and overall welfare. We also suggest end consumers to
shop the green walk, providing more motivation for companies to go green, which may
benefit the entire society.

6. Conclusion and limitation


Our study adopts an integrative approach to GSCM, builds a comprehensive framework of
GSCI based on SCI and the NRBV, and examines the different effects of the three dimensions
of GSCI on sustainable performance. Our results show that GII is positively related to GSI
and GCI. It is the only dimension that improves environmental performance. It also
positively influences social performance, so does GCI, whereas GSI is the only dimension
that improves economic performance.
Despite the significant theoretical and managerial contributions, this study still suffers
some limitations which may provide directions for future research. First, cross-sectional
data were used to test the conceptual model. This only provides a snapshot of the
relationship between GSCI and sustainable performance. Future research should use the
longitudinal data. Second, we only focused on the performance of focal firms. This limits our
understanding of the benefits of GSCI from the supply chain perspective. Future studies
could collect performance data from manufacturers, suppliers and customers. Third, we
only used one respondent to answer the questionnaire, which may lead to potential common
method bias. Though our test showed that common method bias was not a big concern,
collecting data from multiple sources is highly recommended.

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IMDS Appendix
120,4

Items Loadings t-value

Environmental performance (AVE ¼ 0.552; composite reliability ¼ 0.827; Cronbach’s α ¼ 0.819)


672 ENP1: our company reduces waste (air, water and/or solid) emission 0.79 –
ENP2: our company decreases the consumption of hazardous/harmful/toxic materials 0.84 12.07
ENP3: our company decreases the frequency of environmental accidents 0.78 11.35
ENP4: our company decreases energy consumption 0.52 7.15
Social performance (AVE ¼ 0.579; composite reliability ¼ 0.872; Cronbach’s α ¼ 0.875)
SP1: our company improves overall stakeholder welfare or betterment 0.68 –
SP2: our company improves community health and safety 0.81 10.09
SP3: our company reduces environmental impacts and risks to general public 0.83 10.32
SP4: our company improves occupational health and safety of employees 0.68 8.70
SP5: our company improves awareness and protection of the claims and rights of people
in community served 0.80 10.02
Economic performance (AVE ¼ 0.622; composite reliability ¼ 0.890; Cronbach’s α ¼ 0.886)
ECP1: growth in sales 0.72 –
ECP2: growth in profit 0.88 12.00
ECP3: growth in ROI 0.83 11.37
ECP4: growth in return on sales 0.89 12.16
ECP5: growth in market share 0.58 8.04
Internal-green information sharing (AVE ¼ 0.753; composite reliability ¼ 0.924; Cronbach’s α ¼ 0.922)
IIS1: green data sharing among internal functions (e.g. emission data; energy
consumption data) 0.86 –
IIS2: internal functions establish communication channels to share green information 0.88 16.68
IIS3: internal functions can search for green-related operational data in real time 0.88 16.94
IIS4: internal functions can track green information of products ( from raw materials to
end products) in real time 0.85 15.79
Internal-green process coordination (AVE ¼ 0.680; composite reliability ¼ 0.914; Cronbach’s α ¼ 0.913)
IPC1: internal functions incorporate environmental issues in product design process (e.g.
reduce material/energy consumption; increase the use of environment-friendly materials) 0.83 –
IPC2: internal functions incorporate environmental issues in manufacturing process 0.85 15.04
IPC3: internal functions incorporate environmental issues in delivery process 0.85 14.91
IPC4: internal functions establish a recycling process for used and defective products 0.78 13.00
IPC5: internal functions improve the process to better manage the disposal of industrial
wastes (e.g. waste water, gas and residue) 0.81 13.95
Internal-green strategic alignment (AVE ¼ 0.713; composite reliability ¼ 0.925; Cronbach’s α ¼ 0.920)
ISA1: functional green strategies are well aligned with corporate green strategy 0.85 –
ISA2: fur company has cross-functional green goals and objectives 0.85 17.45
ISA3: functional green strategies and goals are communicated to all employees 0.81 15.68
ISA4: functional green strategies are frequently reviewed and revised together 0.86 17.91
ISA5: environmental policies (e.g. green objectives, actions, performance measurements)
are established for internal departments 0.85 17.43
Customer-green information sharing (AVE ¼ 0.761; composite reliability ¼ 0.941; Cronbach’s α ¼ 0.948)
CIS1: green data sharing between our major customer and us (e.g. emission data; energy
consumption data) 0.85 –
CIS2: our company and our major customer establish communication channels to share
green information 0.92 18.54

Table AI.
Survey items (continued )
Items Loadings t-value
The impact of
green supply
CIS3: our company and our major customer can search for green-related operational data chain
in real time 0.88 17.12
CIS4: our major customer shares green requirement information with us 0.86 16.16 integration
CIS5: our company shares green information of products with our major customer 0.85 15.95
Customer-green process coordination (AVE ¼ 0.687; composite reliability ¼ 0.916; Cronbach’s α ¼ 0.919) 673
CPC1: our company and our major customer work together to incorporate environmental –
issues in our product design process (e.g. reduce material/energy consumption; increase
the use of environment-friendly materials) 0.85
CPC2: our company and our major customer work together to incorporate environmental
issues in our manufacturing process 0.88 16.13
CPC3: our company and our major customer work together to incorporate environmental
issues in our delivery process 0.90 16.94
CPC4: our company and our major customer work together to establish a recycling
process for used and defective products 0.77 13.10
CPC5: our company and our major customer work together to better manage the disposal
of industrial wastes (e.g. waste water, gas and residue) 0.73 12.10
Customer-green strategic alignment (AVE ¼ 0.726; composite reliability ¼ 0.930; Cronbach’s α ¼ 0.943)
CSA1: our company and our major customer jointly make each other’s green strategy 0.82 –
CSA2: our company and our major customer have a good understanding of each other’s
green objectives 0.84 16.15
CSA3: our company and our major customer continuously revise green plans to adapt to
changes 0.85 16.73
CSA4: our company and our major customer jointly make green plans 0.89 18.43
CSA5: our company and our major customer jointly make environmental policies (e.g.
environmental objectives, actions, performance measurements) 0.86 17.15
Supplier-green information sharing (AVE ¼ 0.747; composite reliability ¼ 0.937; Cronbach’s α ¼ 0.948)
SIS1: green data sharing between our major supplier and us (e.g. emission data; energy –
consumption data) 0.85
SIS2: our company and our major supplier establish communication channels to share
green information 0.87 16.37
SIS3: our company and our major supplier can search for green-related operational data in
real time 0.89 17.25
SIS4: our major supplier shares green requirement information with us 0.87 16.54
SIS5: our company shares green information of products with our major supplier 0.84 15.59
Supplier-green process coordination (AVE ¼ 0.712; composite reliability ¼ 0.925; Cronbach’s α ¼ 0.934)
SPC1: our company and our major supplier work together to incorporate environmental –
issues in our product design process (e.g. reduce material/energy consumption; increase
the use of environment-friendly materials) 0.87
SPC2: our company and our major supplier work together to incorporate environmental
issues in our manufacturing process 0.91 19.00
SPC3: our company and our major supplier work together to incorporate environmental
issues in our delivery process 0.87 17.41
SPC4: our company and our major supplier work together to establish a recycling process
for used and defective products 0.79 14.57
SPC5: our company and our major supplier work together to better manage the disposal
of industrial wastes (e.g. waste water, gas and residue) 0.77 13.75
Supplier-green strategic alignment (AVE ¼ 0.751; composite reliability ¼ 0.938; Cronbach’s α ¼ 0.952)
SSA1: our company and our major supplier jointly make each other’s green strategy 0.80 –
SSA2: our company and our major supplier have a good understanding of each other’s
green objectives 0.87 17.24

(continued ) Table AI.


IMDS Items Loadings t-value
120,4
SSA3: our company and our major supplier continuously revise green plans to adapt to
changes 0.89 17.81
SSA4: our company and our major supplier jointly make green plans 0.90 18.29
SSA5: our company and our major supplier jointly make environmental policies
(e.g. environmental objectives, actions, performance measurements) 0.87 17.06
674
Green internal integration (AVE ¼ 0.835; composite reliability ¼ 0.938; Cronbach’s α ¼ 0.904)
Internal-green strategic alignment 0.95 –
Internal-green information sharing 0.92 15.03
Internal-green process coordination 0.87 13.23
Green supplier integration (AVE ¼ 0.813; composite reliability ¼ 0.929; Cronbach’s α ¼ 0.926)
Supplier-green strategic alignment 0.87 –
Supplier-green information sharing 0.98 15.94
Supplier-green process coordination 0.85 13.78
Green customer integration (AVE ¼ 0.761; composite reliability ¼ 0.905; Cronbach’s α ¼ 0.898)
Customer-green strategic alignment 0.87 –
Customer-green information sharing 0.95 15.28
Table AI. Customer-green process coordination 0.79 11.80

Corresponding author
Baofeng Huo can be contacted at: baofeng@tju.edu.cn

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