Green Logistics- Management and Performance

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Green logistics management and performance: Some empirical evidencefrom Chinese manufacturing exporters

Kee-hung Lai a,n, Christina W.Y. Wong b,1

a Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong b Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

a r t i c l e i n f o

Article history:

Received 3 August 2010Accepted 6 July 2011Available online 21 July 2011

Keywords:

Environmental protection

Logistics management

China

Regulatory pressure

Firm performance

a b s t r a c t

The value chain of many business enterprises is increasingly required to demonstrate the profitability

of their primary activities, starting from inbound logistics to operations, outbound logistics, marketingsales, and finally to services. The adoption of green logistics management (GLM) presents an

opportunity for Chinese manufacturing exporters to competently respond to the escalating expectation

of the international community for resources conservation and to achieve environmental performance

profitably. This study makes several important contributions to the literature on managing logistics

with environmental considerations. First, the authors identify the components of GLM: (i) procedure-

based practices, (ii) evaluation-based practices, (iii) partner-based practices, and (iv) general environ-

mental management practices. Second, they relate GLM to environmental and operational performance

in a developing country context. Third, they identify the institutional and operational antecedents that

prompt the adoption of GLM by export-oriented manufacturing enterprises in China. Fourth, they

examine the moderating effect of environmental regulatory pressure on the GLM-performance linkage.

The results are based on a survey of manufacturing exporters in China. The commonly held view that

economic motivation is related to the adoption of GLM is not supported. However, GLM positively

affects both environmental and operational performance, and regulatory pressure enhances the GLM-

performance relationship.

&

2011 Elsevier Ltd. All rights reserved.

1. Introduction

Business enterprises in newly industrialized countries such as

the BRICs (Brazil, Russia, India, and China) are increasingly

expected to comply with environmental standards such as the

Waste Electrical and Electronic Equipment (WEEE), the End of Life

Vehicle (ELV) Directive, and the Restriction of Hazardous Sub-

stances (RoHS) if their merchandises are to reach international

markets successfully. Such environmental-based trade barriers

have also aroused the awareness of customers, firms, and govern-

ment bodies for protecting the environment. Meanwhile, thereare growing international concerns on the environmental

damages associated with the accelerated industrial activities in

the BRICs and China in particular [1,2]. As global suppliers of

manufactured products, manufacturing enterprises in China need

to seek sustainable solutions such as green logistics management

(GLM) in pursuit of profitable growth without inflicting environ-

mental damages to other countries through managing the

logistics cycle of their merchandises, i.e., spanning sourcing,

manufacturing, distribution, and disposal [3]. Such a solution

should be able to improve business performance, while preser-

ving the local, as well as the global environment.

Nowadays, the majority of products consumed in developed

countries have their resource materials or part of their manu-

facturing processes served by developing countries. The globali-

zation of production highlights the importance of GLM on

prevention of environmental harm arising from product manu-

facturing and distribution activities. Serving as the world’s

factory, Chinese manufacturing exporters are encountering inter-national pressure to conserve resources and reduce their environ-

mental consequences [4]. The circular economy law in China,

which promotes conservation of resources, reflects organizational

responsibility towards achieving this goal [5]. According to the

China’s National Development and Reform Commission, a circular

economy is a scientific development model, where resources

become products and the products are designed in such a way

that they can be fully recycled for sustainable development of a

country with a focus on balancing economic development and

environmental protection. Resource depletion and an increasingly

detrimental environmental burden caused by organizational pro-

duction operations have led the Chinese government to impose

Contents lists available at ScienceDirect

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

Omega

0305-0483/$- see front matter & 2011 Elsevier Ltd. All rights reserved.

doi:10.1016/j.omega.2011.07.002

n Corresponding author. Tel.: þ852 2766 7920; fax: þ852 2330 2704.

E-mail addresses: [email protected] (K.-h. Lai),

[email protected] (C.W.Y. Wong).1 Tel.: þ852 2766 6415.

Omega 40 (2012) 267–282

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stricter regulatory policy. This law took effect on 1 January 2009

and China is one of the pioneer emerging countries implementing

circular economy-oriented legislation to redress the environmen-

tal harms arising from the rapid growth of its industrial activities

in recent decades. The circular economy initiative of China has

major strategic importance for Chinese enterprises, particularly

those in the manufacturing sector which are considered a major

polluting source to the environment. Thus, profitable growth,

increasing environmental awareness, and stringent regulatorypolicies all suggest that Chinese manufacturing exporters need a

management approach to tackle these challenges. Managing the

logistics cycle of products in an environment-friendly manner and

the different facets of these environmental management practices

are increasingly embraced as a source of lasting competitive

advantage by many Chinese manufacturers [6].

As China aspires to develop a circular economy to promote

continuous economic development without generating significant

environmental and resource challenges, GLM is congruent with

this goal featuring a focus on the three Rs (i.e., recycling, reuse,

and reduce) to improve internal procedures and external confor-

mances in managing product movements. To reach this circular

economy objective, the important role of logistics management

should not be neglected. Considerable opportunities exist along

the logistics chain to reduce a firm’s environmental impact; for

example, substituting chemicals that might reduce the generation

and handling of hazardous waste or by reducing the packaging

waste that must be managed and disposed. GLM is novel and

unique relative to concepts such as reverse logistics and closed-

looped supply chain, which are confined to an emphasis on

mitigating the environmental damages through managing the

forward and reverse physical movements of goods among trading

partners. Reverse logistics focuses on planning, implementing,

and controlling efficient flows of materials, in-process inventory,

finished goods from the point of consumption to production for

the purpose of recapturing value or conducting proper dispo-

sal [7]. Similarly, closed-loop supply chain consists of a forward as

well as reverse supply chain, such that the loops of product flow is

closed by reusing the product as itself, its components, or itsmaterials [8]. Although these concepts are helpful for environ-

mental protection by reducing the disposal to landfill with focus

on processes in handling end-of-life or returned products, e.g., by

recycling and remanufacturing, they neglect the management

practices that are useful for mitigating the environmental

damages caused by products throughout their life-cycle. In com-

parison, GLM is a management approach that considers product

return and recycling, environmental management systems, and

eco-efficiency as viable ways to comply with environment-based

regulations in international trade [9,10]. While environmental

impacts occur at all stages of a product’s life cycle [11], GLM can

contribute to integrate these factors in organizational logistics

operations particularly on meeting market expectations, mana-

ging environmental risks, complying with regulations, andimproving business efficiency. In particular, product distribution

requires partner participation and performance monitoring if the

recovery of products and materials in an environmentally sound

manner can succeed.

GLM reflects organizational ability to conserve resources, reduce

waste, improve operational efficiency, and satisfy the social expecta-

tion for environmental protection. Other than internal activities such

as product development and manufacturing processes, managing

physical product flows is considered essential for environmental

protection from the logistics and international business perspectives

[12,13]. While there are studies linking logistics elements including

procurement, distribution, packaging, reserve logistics, to environ-

mental preservation [14,15], the literature is void of a theoretical

construct that captures the key elements of GLM. Thus, this study

fills this research gap by developing GLM as a composite construct

reflecting an organization’s strive to balance economic growth and

environmental protection in logistics management as well as the

structure (i.e., the procedures), relevant processes (i.e., the evalua-

tion), and strategy (i.e., partner and management focus) that supple-

ment this goal. Thus, at the core of GLM is the belief that firms can

improve both environmental and operational performance by mana-

ging the logistics cycle of their products.

We examine two performance measures for evaluating theoutcomes of GLM: (1) environmental performance, which is

related to reduction in emission, waste, and pollution incurred

from logistics activities, and (2) operational performance, which

is concerned with improvement in product development and

delivery. Based on the theory of structuration, we investigate

the antecedent economic and institutional factors pressurizing

the adoption of GLM by Chinese manufacturing exporters. Finally,

we evaluate the effect of regulatory pressure moderating the links

between the antecedent factors and performance outcomes.

We develop new measurement items and adapt existing scales

for evaluating GLM in manufacturing as well as the antecedent

and outcome factors experienced by Chinese manufacturing

exporters. The survey-based data were analyzed using confirma-

tory factor analysis (CFA), structural equation modeling, and

multi-group analysis for moderating effect. Our empirical results

establish that GLM can be embraced as a manufacturing resource

to make the logistics cycle less wasteful and regulation plays a

role to strengthen the implementation of GLM due to customer

pressures as well as the performance outcomes in both economic

and operational aspects.

2. Conceptualization and developing the GLM construct

We conducted exploratory interviews to understand environ-

mental concerns of manufacturing enterprises in China. Specifically,

we explored attributes constituting GLM and the pressures that are

experienced by the manufacturers. The details of the exploratory

interviews are summarized in Appendix B. We now proceed toelaborate on these four attributes of implementing GLM.

Procedure-based practices: Policy guidelines are needed to

implement any organizational practices such as GLM. We

define procedure-based practices as the management practice

to perform GLM activities based on company structure and

reporting systems in manufacturing enterprises. The proce-

dure-based practices in GLM help manufacturers to detail and

rationalize the actions to be taken in GLM, and serve as a

communication tool between organizational functions on their

responsibility in GLM.

Evaluation-based practices: Periodic performance evaluation is

desired for manufacturing enterprises to identify areas for

improvement. These practices reflect organizational ability toevaluate, monitor, and improve performance on a continuous

basis. The purpose of evaluation-based practices is to provide

formal documents and reports to managers, reducing equivo-

cality on the success of GLM.Partner-based practices: A logistics chain requires the support

and knowledge of internal staff members to work beyond

organizational boundaries for any initiative such as environ-

mental management to take effect. Staff communication and

training on GLM is therefore needed to achieve the targeted

implementation outcomes. A firm should not act unilaterally

and partnership, backward with suppliers and forward with

customers, is instrumental to competently mitigate the envi-

ronmental impact arising from inter-organizational activities

and product flows. The partner-based practices reflect

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267–282268



organizational ability in coordinating with internal staffs and

external partners on the implementation of GLM. Such prac-

tices emphasize information sharing and communication on

the development of GLM with related parties in the logistics

chain.General environmental management practices: This component

of GLM requires visibility in the product development process

and that the activities are compliant with international envir-

onmental standards in a logistics chain. The general environ-mental management practices evaluate the extent to which

firms are visible in environmental protection actions that are

the responsibility of different stakeholders. Firms maintain

records in satisfying environmental standards with a formal

reporting system for stakeholder access, such as publishing

corporate social responsibility reports [16].

This conceptualization of GLM based on our interviews is in

line with the thoughts on environmental management and the

logistics literature. The term environmental management has

been conceptualized as encompassing managerial efforts to mini-

mize the environmental harms generated throughout the life

cycle of manufactured merchandises. Environmental manage-

ment, composed of product and operations technologies andinternational business management systems, is one important

determinant of environmental performance with the purpose to

develop, implement, manage, coordinate, and monitor organiza-

tional activities to reach compliance and waste reduction goals.

Acknowledging the environmental impact that stretches beyond

organizational boundary, some enterprises have begun to shift

from multiple sourcing and competitive bidding to more long-

term and traceable partnership as a preferred approach for

managing logistics [17]. Such approach involves the collective

efforts from different logistics parties including suppliers, trans-

porters, warehouses, and retailers to undertake environmental

management practices such as eco-design, product return, and

recycling to green the logistics chain [18]. In organizing inter-

organizational product flow activities, a well-structured manage-

ment practice is essential to improve logistical coordination

amongst partners, hence reducing potential wastes such as idle

facilities and excessive inventories [19]. Extending beyond these

concepts, GLM is defined in terms of these four specific attributes

and characterized as being specific and actionable by individual

firms to improve environmental and operational performance.

3. The antecedents of GLM

The notion of GLM resonates with the managers contacted in

our exploratory interviews, while they also believed that several

factors could affect the level of GLM a Chinese manufacturer

exhibits. These factors are broadly classified into customer pres-

sures, economic incentives, and regulatory requirements. Consis-tent with the theory of structuration [20], these factors reflect

organizational actions that are influenced and structured by a set

of resources, relations, and conditions in the implementation of

GLM. In addition to institutional legitimacy, the resources avail-

able and regulatory constraints can determine the actions of

manufacturing enterprises.

Specifically, the resources aspect of structuration theory high-

lights the available resources and inputs supportive of environ-

mental management practices. Examples of these resources

include governmental subsidies and material costs savings, which

provide economic incentives for green logistics operations. In

servicing the international markets, manufacturing enterprises

need to mitigate the environmental impact arising from the

development and distribution of their products while raising their

ecological efficiency. Such efficiency enhancements, which are

increasingly expected by international customers, can be struc-

tured by the environmental roles and expectations of their

partners along the logistics chain [21]. There are also regulatory

requirements, spanning from limiting materials used to waste

disposal, structuring the environmental management practices of

manufacturers.

Other than economic considerations, firms pursue GLM due to

customer pressures and institutional legitimacy [22,23]. A greenimage is favorable for manufacturers, particularly those with

export orientation, to gain acceptance in the global market. By

adopting GLM, there can be spill-over effects nurturing customer

preference for related products with avoidance for environ-

mental incidents and the consequential legal costs and fines.

While GLM facilitates and promotes such actions as product

return and recycling services for their products, GLM implemen-

tation improves environmental reputation of manufacturers

through news and feature stories, cultivating a positive publicity

and corporate image to attract environmentally conscious custo-

mers [4]. While plentiful products exist in the market labeling

their environmental consciousness, customers may switch if a

product violates environmental laws or pollutes the environment

[24,25]. Many anecdotes suggest that sourcing from environmen-

tally irresponsible manufacturers has negative impact on the

reputation of downstream customer firms, e.g., retailers, which

often interact directly with individual end consumers. This

phenomenon gives rise to an increasing trend for manufacturing

enterprises seeking ISO 14000 certification, environmental audit-

ing, and retrieving reusable products for reuse to satisfy the

environmental requests of their customers. GLM may serve to

‘signal’ the congruence of environmental management practices

with the ‘‘going green’’ expectation by the international commu-

nity. Doing so may lead to greater market acceptance and insulate

from criticisms by competitors [26]. GLM is helpful for Chinese

manufacturing exporters to showcase their environmental cre-

dentials and satisfy those increasingly better-informed and more

demanding international customers, enabling them to compete

effectively in export markets, especially in the longer term.

Hypothesis 1. The customer pressure for environmental protec-

tion encountered by a Chinese manufacturing exporter is posi-

tively related to its implementation of GLM.

GLM can be embraced as a valuable resource to satisfy the

growing organizational quest for productivity, while reducing

pollution and resources consumption. In addition to customer

expectation for cleaner production, there are two aspects of

economic pressures that are encountered by manufacturing

enterprises, namely dematerialization and decoupling [5], to gain

cost advantage in the global market. The former is concerned with

consuming less environmental resources for each unit of output,

while the latter refers to lower dependency on the input of natural resources for continuous productivity growth. Since

environmental impacts occur at all stages of a product’s life cycle,

GLM plays a role to address these concerns. For instance, product

distribution in an environmentally sound way would require

procedures and evaluations to govern the processes so that

efficient recovery of products can be achieved with partner and

compliance requirements fulfilled. A challenge for manufacturing

enterprises is to operate profitably while reducing their adverse

impacts on the environment. In particular, the Chinese economy

is showing signs of overheating with rise of inflation, manufac-

turers in China experiencing intense growth of raw material costs

are fraught with threats of eroded earnings [27]. On the other

hand, as a manufacturing driven economy fuelled by rapid

industrialization, China has become the world’s largest waste

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267–282 269



generator. To deter such enormous waste production, Chinese

government imposes higher fee of waste disposal and encourages

organizational adoption of environmental management practices

to retrieve reusable products in the hope of saving costs and

alleviating pollution problems. These situations lead to rising

costs for Chinese manufacturers to operate. In view of the eco-

nomic pressures, GLM can be a viable management approach to

resolve the cost challenge and respond the environmental request

by involving cross-functional efforts, and systematically monitor-ing and reporting the progress of GLM to allow productivity and

environmental improvement in managing the logistics activities

throughout the product life cycle.

Hypothesis 2. The economic pressure for environmental protec-

tion encountered by a Chinese manufacturing exporter is posi-

tively related to its implementation of GLM.

4. The consequences of GLM

There is growing interest on eco-efficiency and environmental

performance. The outcomes of such environmental management

systems as ISO 14001relating to gross profit margin and sales per

employee [28] as well as social and environmental performance

[29] have been examined. GLM is different with an emphasis oncustomer and supplier participation to implement by establishing

various complementary management practices to facilitate such

implementation. Yet it remains unclear whether firms adopting

GLM more intensively perform better. This study examines two

performance aspects of GLM relating to environmental perfor-

mance and operational performance. The former assesses perfor-

mance on pollution reduction, resources conservation, and

corporate environmental reputation, while the latter evaluates

performance on productivity gains.

When pollution arises, it reveals inefficient use of inputs and

eco-unfriendliness in one or more logistics activities, spanning

from product design, production, distribution, to disposal. Such

problems can be prevented through redesigning product and

production processes [30]. Implementing GLM practices can alsomake business less polluting. Examples of these practices include

substituting with less polluting inputs, recycling by-products of

processes, and innovating polluting processes. These practices are

helpful for reducing consumption of hazardous materials as well

as lowering disposal of waste water and solid wastes in the

production processes. The attributes of GLM are useful mechan-

isms to prevent environmental degradation caused by organiza-

tional activities through various managing, reporting, and

monitoring procedures to control the logistics processes involved

throughout a product lifecycle [31]. Such management efforts can

lessen disposal of products and parts with residual values,

redeploy reusable parts into new products, reduce carbon emis-

sion in production and distribution, and extend the product

lifecycle. The improved logistics efficiency and reduced resourcesconsumption due to GLM are important environmental pursuits

by Chinese manufacturing enterprises [32]. By implementing

GLM that aims to reduce adverse environmental impact caused

by production and distribution activities, Chinese manufacturing

exporters stand a better chance to market their products in

overseas markets with demanding environmental expectations

by customers and environmental regulations.

Hypothesis 3. The implementation of GLM by a Chinese manufac-

turing exporter is positively related to its environmental performance.

There is a general belief on the trade-off between environmental

management and productivity [33]. To pursue environmental goals,

firms will inevitably suffer from increased costs and reduced

productivity due to necessary investment in capital resources for

product and process changes which in turn will add costs and erode

profitability. Nevertheless, the eco-efficiency perspective argues

that pollution is a form of economic inefficiency, whereby pollution

reduction is beneficial to productivity [34]. GLM is oriented towards

eco-efficiency that proactively manages the same level or more of

product flows, but reduces environmental degradation, resource

consumption, and costs. It involves preventive approaches on

environmental protection spanning from materials sourcing to

end-of life product acquisition and processing. The collection anduse of reusable parts and components can lessen environmental

damages due to disposal in addition to reducing costs in materials

sourcing. Investigating end-of-life products also enables manufac-

turers to discern customer usage patterns and identify areas for

product quality improvements. In pursuit of pollution prevention,

complementary networks of suppliers and customers can be lever-

aged for productivity enhancement. For example, customers’ sup-

port for products acquisition facilitates product return for recycling

processes of manufacturers, improving the success of environmen-

tal initiative by manufacturers to reduce disposal. Chinese manu-

facturers advanced in supply chain cooperation perform better in

economic performance with regard to the cost for materials

purchasing, energy consumption, and waste treatment than their

laggard counterparts [5]. The procedure-, evaluation- and partner-

based focus of GLM necessitates the engagement of different func-

tions and participation of related parties to continuously improve

the logistics chain through reduction of task redundancy and waste.

GLM therefore offers a management structure to support environ-

mental-based logistics management coordinating the logistics chain

activities to reap operational performance gains.

Hypothesis 4. The implementation of GLM by a Chinese manufac-

turing exporter is positively related to its operational performance.

5. The moderating role of environmental regulations

Manufacturers need adaptation to the changing business envir-

onments [35,36], particularly environmental regulatory require-

ments, if their products are to compete in regulated markets.Environmental regulatory pressure is concerned with regulations

that are enacted by local or oversea regulatory bodies to control

environmental damages caused by organizational activities ran-

ging from production, transportation, to product disposal. In many

cases, these environmental regulatory pressures are mandatory for

enterprises to produce, distribute, and sell their products under

the legal requirements. There are many such environmental regu-

latory pressures encountered by Chinese manufacturing exporters

in their operations. The regulations directed at the manufacturing

sector can bring operations and performance implications. For

instance, a comprehensive set of environmental regulations for

developing a circular economy such as Clean Production Law and

Environmental Impact Assessment Law relevant to the manufac-

turing industry have been enacted in China. External regulatorypressures from the European Union (EU) have led many Chinese

manufacturing exporters to reconsider the environmental impact

engendered throughout their logistics chain. Exporting products

destined for the EU market must be free from hazardous sub-

stances (e.g., RoHS and REACH) and the original manufacturers are

mandated to undertake the responsibility for the collection,

treatment, and recycling of end-of-life products, for all electrical

and electronics equipment in the case of WEEE. Since the EU

constitutes a major market for manufacturing export, it is impor-

tant for manufacturers, especially those highly dependent on

export in China, to comply with these regulations or otherwise

suffer from massive export declines.

These regulatory pressures are reflective of the environ-

mental concerns by the local community and regulatory bodies




as negative externalities caused by imports [37]. In the wake

of increased public pressure and the growth of more stringent

environmental regulations, GLM as a proactive international

logistics management approach towards protecting the environ-

ment is a viable way for developing an environment-friendly

corporate image to compete for international trade. Such envi-

ronmental reputation can be a valuable resource for manufac-

turers, particularly those who are export-oriented, in emerging

countries to access overseas markets, to comply with, and toanticipate necessary changes with future legal environmental

standards in different countries. Manufacturers are often man-

dated to demonstrate their commitment for environmental pro-

tection and GLM can be leveraged for such purpose. Further to the

customer and economic pressures as antecedent drivers for GLM,

environmental regulatory pressure strengthens the implementa-

tion by providing guidelines on the environmental standards and

the export requirements of markets stipulating different environ-

mental conformances. The need for regulatory compliances also

intensifies the environmental dedication of manufacturers for

GLM implementation to signal their environmental and produc-

tivity achievements. We argue that Chinese manufacturing expor-

ters encountering higher environmental regulatory pressures are

more receptive to customer and economic concerns on environ-

mental protection with a more intensive implementation of GLM.

Hypothesis 5a. When the environmental regulatory pressure

experienced by a Chinese manufacturing exporter is high, the

positive effect of customer pressures for environmental protec-

tion on its implementation of GLM will be stronger.

Hypothesis 5b. When the environmental regulatory pressure


positive effect of economic pressures for environmental protec-

tion on its implementation of GLM will be stronger.

The noncompliance penalties and fines [38] as well as the

public disclosure are regulatory punishments for polluting firms.

In many instances, manufacturers are pressurized to be proactivein environmental protection in the hope of attaining both envi-

ronmental and productivity benefits, while gaining recognition by

their overseas markets on regulatory compliance. Such pressures

highlight the needs of manufacturing enterprises to improve their

environmental management practices in the logistics chain.

Regulatory requirements for pollution reduction guide the perfor-

mance of GLM as such pressure promote environmental aware-

ness and standards for manufacturers to integrate the need for

environmental protection in their production processes. A more

proactive step is to develop management practices such as GLM

for improving environmental performance while minimizing

costs throughout the product life cycle. Environmental regulatory

pressure reinforce the need for implementing GLM to achieve

environmental performance where the regulatory requirementsprovides guidance for manufacturers on practices useful for

preserving the environment. To gain competence in countries

stringent in environmental regulations, it requires greater effi-

ciency in the use of resources where GLM can contribute envi-

ronmental and operational benefits to offset the compliance costs.

In view of the higher environmental standards due to the need

for regulatory compliances, manufacturers implementing GLM

are urged for strengthening their environmental and operational

performance outcomes to establish their environmentally-

friendly position and showcase their performance achievements.

Fig. 1 depicts the research framework of this study.

Hypothesis 6a. When the environmental regulatory pressure


positive effect of its implementation of GLM on environmental

performance will be stronger.

Hypothesis 6b. When the environmental regulatory pressure


positive effect of its implementation of GLM on operational

performance will be stronger.

6. Methodology

6.1. Sample characteristics and data collection

This study uses Chinese manufacturing exporters as an empiri-

cal setting to test the hypotheses due to the following reasons.

First, China is a global production base, exporting a wide variety of

merchandises ranging from 4% to 40% of the world’s manufactur-

ing outputs of different products [39]. Second, the scale and speed

of China’s recent rise of industrialization has engendered many

environmental problems that have aroused international concerns

relating to its pollution impact not only on the environment, but

also on health issues such as birth defects and premature death

both locally and internationally [40]. What do we know about the

institutional and operational forces triggering the environmental

initiatives of Chinese manufacturing exporters is seriously lacking.

Third, environmental management has been observed as a critical

factor affecting the prosperity of Chinese manufacturing enter-prises [6]. Fourth, the environmental management issues arising

from product distribution by Chinese manufacturing exporters

provide a rich research setting appropriate for examining GLM

pertaining to its antecedents, measurement properties, and per-

formance outcomes. In particular, given the global importance of

‘‘made in china’’ merchandises, the environmental protection

pressures exerted by the international community, and the insti-

tutional reform for ecological modernization desired by the

Chinese government can be scrutinized to gain insights on the

effect of regulatory pressure as a contextual condition affecting

the extent of implementing GLM and its performance outcomes.

The respondents in this study were senior executives of

Chinese manufacturing enterprises. We did not constrain the

sample organizations to specific manufacturing industries withthe aim to improve the generalizability of our study findings, but

we controlled the product type in our analysis to take account of

different environmental issues that may arise from the manufac-

turing processes and logistics activities [41]. We randomly drew a

sample of Chinese manufacturing exporters from the database

Dun & Bradstreet . These Chinese manufacturing exporters locate

in the Pearl River Delta (PRD) in China, which is a major industrial

zone that accounts for one third of China’s export trade value.

Located in the world’s manufacturing center with support of

well-developed logistics infrastructure for international trade

activities, majority of these manufacturers are export-oriented,

servicing foreign customers with a wide variety of manufactured

products ranging from electronics and toys to garments and

textiles. These manufacturers in the PRD region encounter similar

Customer pressure

Economic pressure

GLM

Environmentalperformance

Operationalperformance

Environmentalregulatorypressure

H1

H2

H3

H4

H5 H6

Fig. 1. Research framework.




issues pertinent to their environmental management practices

due to the pressures induced by their international customers,

local and oversea regulatory bodies, and rising operating costs

in China. In addition to the executives’ contact information,

company name, address, phone number, and company’s business

profile, we collected archival data on annual sales volume,

product type, and company size in terms of number of employees

from the database as control variables. We identified a qualified

key informant in each sample firm knowledgeable in environ-mental and logistics-related management according to the infor-

mation provided by the database. Respondents were assured that

their answers are reported in aggregate with others, and their

identity and company details are kept confidential. A total of 800

sample manufacturers were contacted. Furthermore, a survey

package containing the questionnaire, a self-addressed pre-paid

reply envelop, and a cover letter explaining the purpose of this

study, was mailed to each of them in 2008. Given the job nature of

the key informant managers in handling foreign customers, we

were able to administer the questionnaire in English language.

Follow-up telephone calls were made or emails were sent two

days after the initial mailing to seek acknowledgement of receipt

and to emphasize the importance of their responses to this study.

We then sent another survey package to the non-respondents two

weeks after the follow-up calls and emails of the initial mailing

with a cover letter to solicit their participation. Two weeks after

the second mailing, in addition to dispatching a third survey

package to the non-respondents, we made follow-up telephone

calls or sent emails to urge their response. Our data collection was

concluded three weeks after the final mailing, with 134 com-

pleted questionnaires received for data analysis, representing a

response rate of 16.75%. We eliminated six returns due to

significant missing data and the resulting effective response rate

of 16%is comparable to other survey-based environmental man-

agement studies, e.g. [42]. Table 1 summarizes the profile of the

respondent manufacturers.

6.2. Common method variance

We took two steps to determine whether common method

variance (CMV) posed a serious threat to the study. First, Harmon’s

one-factor test was applied to assess whether a single latent factor

would account for all the constructs. The single-factor model yielded

a w2 value of 2090.71 (df ¼376). A w2 difference test was conducted

against the hypothesized six-factor model to assess CMV. A sig-

nificant difference between the w2 values of the two models

(Dw2¼1502.74; Ddf ¼21, po0.001) indicated that the fit in the

one-dimensional model was significantly worse than it was in the

measurement model. Such result provided preliminary evidence

that CMV was not a problem in this study. In addition, we followed

the procedures recommended by Lindell and Whitney [43] to exam-

ine CMV. We used the type of ownership of firm (i.e., publicly-

owned vs. privately-owned) as the marker variable to perform the

CMV analysis because the marker variable is theoretically unrelated

to the dependent variables (i.e., operational and environmental

performance). The type of organizational ownership is not signifi-

cantly correlated to operational performance with p¼0.21 and

environmental performance with p¼0.97. The correlations between

all constructs in the measurement model and the type of organiza-

tional ownership are summarized in Table 4. In addition, the partial

correlations between the constructs are significant after partialing

out the effect of CMV, and the partial correlations are reported in

Table 3. We concluded that the measurement model possessed

reasonable fit with the data, the constructs exhibited both con-

vergent and divergent validity, and CMV did not pose serious threat

to the interpretation of our study results.

6.3. Measurement development

We developed a structured survey instrument to measure the

practicing managers’ perception. Based on the conceptualization

of GLM according to the interviews results, we developed new

scales to operationalize the four attributes of GLM for evaluating

the extent of these environmental management practices imple-

mentation on managers’ perception. In addition, we included

measurement items on environmental protection for economic

pressure [44], customer pressure [45], operational and environ-

mental improvement [46], and regulatory pressure [45] after

suitably adopting existing scales.

We generated a pool of measurement items from the literatureon environmental and logistics management. These measurement

items were systematically amended to better reflect the manu-

facturing context. In the next step, we pretested these items with

six executives and five academics in the field for assessing the

comprehensiveness, logic, and relevancy of the measurement

items. On the basis of their feedback, we refined the items and

administrated the revised measurement items to 30 executives for

a pilot test. We conducted an exploratory factor analysis to purify

our scales. Based on the analysis results, we deleted two items

because of their lower corrected item-to-total correlation than the

threshold of 0.30, which left us 49 items for further analysis. The

number of indicators employed in this study are similar to those

other studies in the management literature examining latent

constructs with organizational key informants, e.g. [36].

Table 1

Profile of the respondents (n¼128).

Company characteristics Sampled

population

(percentage)

Respondents

(percentage)

Number of employees

1–10 17.8 14.8

11–50 35.5 33.6

51–100 31.7 35.9101–500 4.1 6.3

4500 7.4 2.3

Unknown 3.5 7.0

Total annual sales (million USD)

o$10 16.4 13.3

4$10–$20 53.7 31.3

4$20–$50 12.0 35.2

4$50–$100 9.6 10.9

4$100 5.9 2.3

Unknown 2.4 7.0

Product type

Tobacco products 8.3 4.7

P etrole um refining a nd related industries 7.8 1 .6

Rubber and miscellaneous plastic

products

6.5 7.0

Leather and leather products 4.6 1.6

S to ne, c lay, gla ss, and co ncre te products 9.3 25

Apparel and other finished products

made from fabrics and similar products

11.8 7.8

Lumber and wood products 4.5 2.3

Fabricated and metal products 5.6 6.3

Paper and allied products 4.9 3.1

Industrial, commercial, machinery, and

computer equipment

3.7 1.6

Printing, p ub lish ing, and allied ind us tries 9 .2 1 .6

Electronic and other electrical equipment

and components

3.2 3.1

Chemicals and allied products 4.6 3.1

Measuring, analyzing, and controlling

instruments; photographic

10.2 9.4

Mi scell aneous manufacturi ng industri es 4.3 7 .0

Others 2.9 12.5

Unknown 3.6 2.3




As discussed previously, GLM is conceptualized as a second-

order construct comprising four attributes: (1) procedure-based

practices, (2) evaluation-based practices, (3) partner-based prac-

tices, and (4) general environmental management practices. The

six ‘‘procedure-based’’ items reflect the extent to which manu-

facturers formally document, manage, and report on how theirGLM practices are conducted by the responsible organizational

functions. The four ‘‘evaluation-based’’ items record the extent

to which manufacturers monitor, report, and assess their GLM

practices. The ‘‘partner-based’’ scale consists of five items asses-

sing how well manufacturers communicate with their internal

staff and external partners on their implementation of GLM. The

general environmental management scale evaluates the extent to

which manufacturers comply with environmental standards and

record their activities for formal reporting via publication of

annual report, etc. With reference to Russo and Fouts [44], we

developed a four-item scale to measure the increasing economic

costs of landfill and potential economic gains of product return

compliance programs.

We adopted an existing scale [45] to provide a four-itemmeasure for evaluating the extent of customer pressure for

environmental protection engendered from customer require-

ments and expectations. We operationalized regulatory pressure

using a five-item scale based on Zhu et al. [45] to evaluate the

environmental regulatory pressures experienced by manufac-

turers. A five-item scale and another six-item scale were devel-

oped with reference to Sroufe [46] for evaluating environmental

and operational performance, respectively. The final scales are

summarized in Appendix A.

6.4. Measurement models analysis

We used a combination of SPSS 17.0 and AMOS 17.0 to examine

the univariate skewness and kurtosis of the variables and they

were considered within acceptable levels. We evaluated the

measurement properties of the theoretical constructs by conduct-

ing confirmatory factor analysis (CFA) on the four attributes of

GLM. Then, CFA was conducted on the two antecedents (i.e.,

customer and economic pressures) and the moderator (i.e., envir-

onmental regulatory pressure) variables. Following the guidelinesby Gerbing and Anderson [47], we used maximum likelihood

estimation with sample covariance matrix as input in the CFA.

The GLM construct

As GLM is conceptualized as a second-order construct, its four

attributes, namely procedure-based, evaluation-based, partner-based,

and general environmental management practices are first-order

factors and measured through their respective indicators. First, we

estimated the second-order factor of GLM by examining the target

coefficient T 2 [48]. The T indicates the extent to which the second-

order construct accounts for the variance amongst the first-order

constructs. The first-order constructs show the value of w2

¼336.37,while the second-order construct hasw2¼352.41, giving a high T ratio

of 0.95. This result indicates that the relationships amongst the first-

order constructs are sufficiently captured by the second-order con-

struct [49]. The second-order construct fit was considered acceptable

on the basis of the fit indices (w2¼352.41, df ¼145, CFI¼0.91;

RMR ¼0.05; IFI¼0.91; TLI¼0.90), which is consistent with Hu and

Bentler’s [50] recommendations. The path coefficients between the

indicators and the first-order factors are significant at po0.05, while

the path coefficients between the second-order construct (i.e., GLM)

and its four attributes are significant at po0.05. Table 2 summarizes

the results of the CFA for GLM and its respective first-order

Table 2

Results of CFA for GLM.

Indicator Direction Construct Standardized

loading

Unstandardized

loading

S.E. t -Value p

Panel A: Second order conceptualization of GLM

PMP1 ’ PMP 0.83 1.00 0.00

PMP2 ’ PMP 0.91 1.05 0.08 13.18 0.00

PMP3 ’ PMP 0.89 1.07 0.09 12.54 0.00

PMP4 ’ PMP 0.65 0.84 0.10 8.20 0.00PMP5 ’ PMP 0.81 0.94 0.09 10.78 0.00

PMP6 ’ PMP 0.73 0.93 0.10 9.32 0.00

EMP1 ’ EMP 0.78 1.00

EMP2 ’ EMP 0.92 1.22 0.10 12.15 0.00

EMP3 ’ EMP 0.97 1.20 0.09 12.89 0.00

EMP4 ’ EMP 0.90 1.17 0.10 11.79 0.00

PAMP1 ’ PAMP 0.57 1.00

PAMP2 ’ PAMP 0.63 1.06 0.12 8.61 0.00

PAMP3 ’ PAMP 0.93 1.47 0.20 7.36 0.00

PAMP4 ’ PAMP 0.81 1.31 0.19 6.80 0.00

CMP1 ’ CMP 0.75 1.00

CMP2 ’ CMP 0.79 1.08 0.12 9.22 0.00

CMP3 ’ CMP 0.77 1.06 0.12 8.98 0.00

CMP4 ’ CMP 0.83 1.24 0.13 9.74 0.00

PMPa’ GLMb 0.88 1.00

EMPa’ GLMb 0.85 1.08 0.13 8.12 0.00

PAMP

a’

GLM

b

1.02 0.98 0.12 8.34 0.00CMPa’ GLMb 0.97 0.89 0.14 6.21 0.00

Panel B: Using average scores for measuring the four dimensions of GLM

PMPa’ GLMb 0.81 1.00

EMPa’ GLMb 0.89 1.13 0.09 12.32 0.00

PAMPa’ GLMb 0.96 1.05 0.08 12.90 0.00

CMPa’ GLMb 0.84 1.00 0.09 10.95 0.00

a Second-order indicators of GLM.b Second-order factor.

2 The T is computed using the following formula: T ¼w2(first-order model)/

w2

(second-order model).




constructs. On the basis of theoretical and empirical grounds, the

conceptualization of GLM as a second-order construct is tenable.

We further examined the second-order factor structure by con-

ducting one-factor CFA on the average scores of the four respective

first-order constructs following prior studies, e.g. [51]. The model fit

is good (w2¼16.28, df ¼2, CFI¼0.97; RMR ¼0.02; IFI¼0.97;

TLI¼0.90). All the path coefficients are significant at po0.05. We

used the aggregated scale consisting of the average scores of the four

attributes as the indicators of GLM for further analyses.

The combined measurement model

We proceeded to fit a CFA on all the six latent constructs

before testing the path coefficients of the hypothesized structural

model. Composite reliability, Cronbach’s a, and average variance

extracted are summarized in Table 3. We assessed the unidimen-

sionality of the constructs by Cronbach’s a. The a values were well

above the threshold value of 0.70 in the range 0.89–0.92,

indicating that the construct measures are sufficiently reliable.

As shown in Table 2, composite reliability coefficients for the six

latent constructs fell in the range from 0.90 to 0.92, suggesting

internal consistency for each set of observed variables in its

respective latent construct [52].

The six-factor measurement model exhibits a good fit withthe data (w2¼587.97, df ¼355; CFI¼0.92; RMR ¼0.07; IFI¼0.92;

TLI¼0.90). The standardized factor loadings range from 0.59

to 0.96, and are statistically significant at the po0.01 level.

This evidence demonstrates that convergent validity exists for

the constructs. Table 3 summarizes the standardized loadings.

We examined discriminant validity following the proposed

guidelines by Fornell and Larcker [52], which is widely adopted

by other researchers, e.g. [53]. We compared the average variance

Table 3

Measurement model.

Panel A: Scale properties of the latent factors

Construct Cronbach’s a Composite reliability Average variance extracted

GLM 0.91 0.92 0.87

ERP 0.90 0.90 0.64

CP 0.89 0.89 0.62

EP 0.90 0.91 0.56

EPerf 0.92 0.92 0.70

OPerf 0.91 0.93 0.64

Panel B: CFA results of the latent factors

Indicator Direction Construct Estimate Standardized estimate S.E. t -Value p

PMP ’ GLM 1.00 0.81

EMP ’ GLM 1.13 0.88 0.09 12.14 0.00

PAMP ’ GLM 1.06 0.96 0.08 13.53 0.00

CMP ’ GLM 1.01 0.84 0.09 11.23 0.00

ERP1 ’ ERP 1.00 0.84

ERP2 ’ ERP 0.99 0.83 0.09 10.85 0.00

ERP3 ’ ERP 0.98 0.82 0.09 10.67 0.00

ERP4 ’ ERP 0.76 0.63 0.10 7.66 0.00

ERP5 ’ ERP 0.94 0.81 0.09 10.60 0.00

CP1 ’ CP 1.00 0.81

CP2 ’ CP 0.87 0.69 0.10 8.13 0.00

CP3 ’ CP 0.74 0.59 0.11 10.66 0.00

CP4 ’ CP 1.09 0.87 0.11 10.05 0.00

EP1 ’ EP 1.00 0.60

EP2 ’ EP 1.49 0.85 0.23 6.37 0.00

EP3 ’ EP 1.56 0.86 0.24 6.40 0.00

EP4 ’ EP 1.33 0.72 0.23 5.85 0.00

EP5 ’ EP 1.25 0.73 0.21 5.89 0.00

EPerf1 ’ EPerf 1.00 0.88

EPerf2 ’ EPerf 1.05 0.93 0.07 15.44 0.00

EPerf3 ’ EPerf 0.62 0.67 0.07 8.71 0.00

EPerf4 ’ EPerf 0.90 0.87 0.06 13.58 0.00

EPerf5 ’ EPerf 0.84 0.78 0.08 11.08 0.00

OPerf1 ’ OPerf 1.00 0.70

OPerf2 ’ OPerf 1.03 0.73 0.09 11.01 0.00

OPerf3 ’ OPerf 1.23 0.89 0.14 9.01 0.00

OPerf4 ’ OPerf 1.12 0.81 0.11 9.81 0.00

OPerf5 ’ OPerf 1.07 0.77 0.14 7.98 0.00

OPerf6 ’ OPerf 1.09 0.81 0.13 8.40 0.00

Table 4

Common method bias analysis.

GLM ERP CP EP EPerf OPerf

ERP 0.18

0.15

CP 0.39 0.43

0.35 0.39

EP 0.33 0.48 0.59

0.29 0.45 0.56

EPerf 0.27 0.24 0.19 0.27

0.25 0.22 0.17 0.23

OPerf 0.33 0.18 0.25 0.37 0.35

0.28 0.16 0.24 0.35 0.33

Type of ownership (MV) 0.06 0.09 0.20 0.05 0.01 0.12

Mean(SD) 2.85 3.20 2.05 2.35 3 .51 3.24

(0.71) (1.06) (0.99) (0.89) (0.85) (0.76)

MV¼marker variable. The first value in each cell is the correlation between the

constructs, and the second value is the correlation corrected for method bias.All

correlations are significant at po0.05, except for values in italics.




extracted (AVE) of each construct with the highest variance that

each construct shares with the other constructs in the model. The

AVE for each construct is higher than the highest shared variance,

suggesting that all constructs exhibit discriminant validity. In

addition, we examined discriminant validity using an alternative

procedure [54]. Since the w2 values for the unconstrained models,

where each pair of constructs co-varies freely, are significantly

lower than the constrained models (with the estimated correlation

for each pair of constructs constrained to one), the presence of discriminant validity for all the constructs is evidenced.

7. Hypothesis testing

7.1. The structural model testing

The structural model used to test the hypotheses consisted

of the six factors validated in the measurement model, excluding

the moderating variable (i.e., environmental regulatory pressure).

The model fit measures indicated acceptable agreement with

the covariance in the data (w2¼484.83, df ¼287; CFI¼0.91;

RMR ¼0.07; IFI¼0.91; TLI¼0.90; RMSEA¼0.07). The hypothesis

test results for H1–H4 are summarized in Table 5.We found that GLM was positively associated with operational

(b¼0.35, po0.01) and environmental (b¼0.36, po0.01) perfor-

mance, providing support for H3 and H4. In support of H1,

customer pressure was positively associated with GLM (b¼0.21,

po0.05). The prediction in H2 that economic pressure encoun-

tered by manufacturing enterprises is positively associated with

GLM implementation received no support (b¼0.28, p40.05). The

control variables, including annual sales volume, product type,

and company size in terms of number of employees, were

incorporated in the structural model as determinants to the

dependent variables (i.e., GLM, and environmental and opera-

tional performance). The control variables have no significant

impact ( p40.05) on the dependent variables. In sum, three of the

four hypotheses are accepted after testing the structural model.

For evaluating the impact of operational initiatives such asGLM, it is worthwhile to examine against objective measures

of performance, although prior research has found strong links

between perceptual measures of performance with objective

measures. While we believe that our findings hold for objective

measures of performance, we extracted sales volume as an

objective measure from our database. This measure corresponds

to the perceptual measure OPer6 we obtained through the survey.

A correlation of 0.70 between sales volume and OPer6 indicates

a close association between these measures in our data. We

repeated the test for the structural model by substituting sales

volume for OPer6, and the results we obtained were similar to the

results from the structural model that contained the OPer6

perceptual measure. To further validate the findings, we carried

out the analysis comparing the model fit of 10 randomly selected

subsamples, consisting of 100 respondents each, from our total

sample of 134. We found insignificant differences in the w2 value

when we specified equality for the parameters across two sub-

samples at a time. The results indicated no significant change in

the model fit, suggesting that the model was valid across different

subsamples.

Table 5

Results of hypothesis testing.

Panel A: Structural model: H1-H4

Construct Direction Construct Estimate Standardized estimate SE t -Value p Hypothesis Conclusion

GLM ’ CP 0.21 0.33 0.09 2.30 0.02 1 Supported

GLM ’ EP 0.29 0.17 0.24 1.16 0.25 2 Not supported

EPerf ’ GLM 0.35 0.25 0.13 2.70 0.00 3 SupportedOPerf ’ GLM 0.35 0.36 0.10 3.53 0.01 4 Supported

Panel B: Multigroup analysis: H5–H6 (high vs. low environmental regulatory pressure)

Models w2 df w2/df IFI TLI CFI RMSEA w2 Difference test

1. Baseline model 697.22 474 1.47 0.91 0.90 0.90 0.07

2. Constrained model 901.80 537 1.67 0.84 0.83 0.83 0.08 Dw2¼204.58, Ddf ¼63 po0.05

3. Constrained paths

3a. CP-GLM 701.89 475 1.48 0.92 0.91 0.92 0.07 Dw2¼4.67, Ddf ¼1 po0.05

3b. EP-GLM 698.77 475 1.47 0.91 0.92 0.92 0.07 Dw2 ¼1.55, Ddf ¼1 p40.05 (insignificant)

3c. GLM-EPerf 701.70 475 1.48 0.91 0.90 0.90 0.07 Dw2¼4.48, Ddf ¼1 po0.05

3d. GLM-OPerf 701.33 475 1.48 0.90 0.90 0.91 0.07 Dw2¼3.91, Ddf ¼1 po0.05

Path coefficients

Paths High environmental regulatory pressurea (n¼73) Low environmental regulatory pressureb (n¼55) Hypothesis Conclusion

CP-GLM 0.39 c

0.18 5a Supported(2.26)n (0.82)

EP-GLM 0.23 0.06 5b Not supported

(1.28) (0.28)

GLM-EPerf 0.44 0.07 6a Supported

(3.67)nnn (0.04)

GLM-OPerf 0.40 0.22 6b Supported

(3.01) nn (1.38)

t -Values are in brackets.

nnn po0.001.nn po0.01.n po0.05.a Firms were classified as encountering high environmental regulatory pressure if their score on the environmental regulatory pressure was greater than the median

score.b Firms were classified as encountering low environmental regulatory pressure if their score on the environmental regulatory pressure was lower than the median

score.c

Paths coefficients.




7.2. The rival model testing

In our hypothesized model, GLM performs a mediating role

between the antecedent (i.e., customer and economic pressures)

and the consequence (i.e., operational and environmental perfor-

mance) constructs. The hypothesized model does not include direct

paths from the antecedent factors to the consequent outcomes. In

the rival model, we allowed the two antecedent variables and GLM

to have direct effects on operational and environmental performance.As such, GLM is not modeled as a mediating construct. We compared

the hypothesized structural model with the rival model to test the

nomological status of GLM as a mediating variable [55]. The rival

model (number of distinct parameters to be estimated¼59) was less

parsimonious than the hypothesized model (number of distinct

parameters to be estimated¼57) with fit indices w2¼489.72;

df ¼285; CFI¼0.91; RMR ¼0.07; IFI¼0.91; TLI¼0.90; RMSEA¼0.08.

Since the two models used exactly the same covariance structure as

input, we compared the two models using w2 difference test. The w2

difference test results (Dw2¼4.89; df ¼2, p40.05) suggested that the

rival model did not explain the covariance structure better than that

of the hypothesized model. We also compared the two models based

on the percentage of the paths between the latent constructs. The

ratio of supported paths to the hypothesized paths was 3 of 4 (75%),

and the ratio of significant paths to examined paths was only 2 of 6

(33%) in the rival model. While we prefer a more parsimonious

hypothesized model to that of the rival model, these results imply

that GLM holds a mediating role and is influential in bringing about

operational and environmental performance for Chinese manufac-

turing exporters.

7.3. Moderating effect of environmental regulatory pressure

H5 and H6 are concerned with the moderating effect of

environmental regulatory pressure on the relationships among

economic pressure, customer pressure, GLM implementation,

environmental performance, and operational performance.

Following the procedures proposed by Byrne [56], we used

multi-group analysis within AMOS17.0 to assess the moderatingvariable effects (i.e., environmental regulatory pressure) on the

structural model. A single environmental regulatory pressure

index was formed by averaging the measurement items. We

divided the sample into two groups (i.e., high vs. low environ-

mental regulatory pressure groups) with median split. Manufac-

turers with a total score of 3.20 or less were classified as firms

operating under lower environmental regulatory pressure

(n¼55), and those with a total score of higher than 3.20 were

classified as firms operating under high level of environmental

regulatory pressure (n¼73). Although the sample size of each

group is relatively small compared to similar studies, e.g. [57], the

multi-group analysis enables us to examine the structural rela-

tionships of the variables under high and low levels of environ-

mental regulatory pressure. The multi-group analysis wasconducted in four steps. First, we developed a model where the

structural parameters vary freely across the two groups to form a

baseline model (Model 1). The baseline model has a value of

w2¼697.22 with df ¼474. Second, the structural parameters were

constrained to be equal across the two groups (Model 2), gene-

rating an estimated covariance matrix for each group and an

overall w2 value for the sets of sub-models as part of a single

structural system. The constrained model has the value of w2¼901.80 with df ¼537. Third, the moderator effects were tested

by assessing whether statistical differences exist between the two

w2 values. We conducted a w2 difference test to compare the

constrained model (Model 2) with the unconstrained one (Model

1). The w2 difference test results in w2M2w2M1¼204.58 with df ¼63

at po0.05, which is statistically significant. A significant change

in the w2 value indicates the moderator effect of environmental

regulatory pressure, such that invariance is found attributable to

environmental regulatory pressure. Fig. 2 depicts the results of

the high versus low environmental regulatory pressure groups.

Then, we examined the moderator effect of environmental

regulatory pressure on the paths in our research model by assess-

ing the equality across two groups using a w2 difference test

between a model with a specific path set to be equal across two

groups (a constrained model) and a model where path coefficient

varies freely (a baseline model). For example, to test Hypothesis

5a, we constrained the customer pressures-GLM path equally

across the high and low environmental regulatory pressure

groups, and obtained the w2(df ¼475)¼701.89. The Dw2(Ddf ¼1)¼4.37

( po0.05) suggests that across the two groups, the customer

pressures-GLM path is not equal. The significant path coefficient

is higher than that under low environmental regulatory pressure

(see Table 5 Panel B). The results support Hypothesis 5a, indicating

that the positive relationship between customer pressure and GLMis stronger when environmental regulatory pressure is high than

when it is low. Next, we tested Hypothesis 5b, the moderator

effect of environmental regulatory pressure on the economic

pressure-GLM path. The Dw2(Ddf ¼1)¼1.55 ( p40.05) suggests that

across the two groups, the economic pressure-GLM path is equal,

providing no support for Hypothesis 5b. We repeated the multi-

group analysis for testing Hypotheses 6a and 6b. The results

shown in Table 5 revealed that the GLM-environmental perfor-

mance path is significantly different across the high- and low-

environmental regulatory pressure groups, lending support for

Hypothesis 6a that the GLM-environmental performance path is

stronger when manufacturers encounter higher level of environ-

mental regulatory pressure. For Hypothesis 6b, the results show

that the GLM-operational performance path is stronger whenenvironmental regulatory pressure is higher than when it is low.

The results of the multi-group analysis are summarized in Table 5.

The plots of the relationships under high and low level of

environmental pressures in Figs. 3–6 suggest that the effects of

customer and economic pressures on GLM implementation, and

the effect of GLM on environmental and operational performance

are enhanced in the presence of higher environmental regulatory

pressure.

8. Discussion

There has been growing evidence of organizational willingness

to achieve improvements in the efficiency with which resources

High environmental regulatory pressure group

Low environmental regulatory pressure group

***p < 0.001, **p < 0.01, * p < 0.05

Customer pressure

Economic pressure

GLM



.39*

.23

.44***

.40**

Customer pressure

Economic pressure

GLM



.18

.06

.07

.22

Fig. 2. High versus low environmental regulatory pressure groups and the results.




are used, reduce specific environmental impacts of production

activities, and bring about environmental improvements. China’s

integration into the world’s economy began three decades ago

after its entry into the World Trade Organization (WTO). This

economic integration made China, particularly for those of the

manufacturing exporters, depends more upon the international

trade. Yet, China has evolved as an international manufacturing

powerhouse serving the global production demands. The com-

mensurate emissions that are produced during the manufacturing

processes have triggered substantial environmental burdens and

resource scarcity within China. These developments highlight

important implications for Chinese manufacturers who are con-

sidered as the major polluters and resources consumers. Increas-

ingly, there are international and domestic pressures urging

Chinese manufacturers to tackle the environmental issues caused

by their growing industrial activities. As a part of the world

factory, Chinese manufacturing exporters can contribute by

producing, distributing, and packaging merchandises with more

environment-friendly alternatives, increasing the efficiency of

materials use through waste minimization and recycling, and

changing the composition of output by using materials that are

less harmful to the environment. Investigation of the antecedents

Fig. 3. A plot on the predicted value of implementing GLM under low and high

environmental regulatory pressure levels when customer pressure (CP) is encoun-

tered by manufacturers at low and high levels.

Fig. 4. A plot on the predicted value of implementing GLM under low and high

environmental regulatory pressure levels when economic pressure (EP) is encoun-

tered by manufacturers at low and high levels.

Fig. 5. A plot on the predicted value of environmental performance under low and

high environmental regulatory pressure levels when GLM is implemented by

manufacturers at low and high levels.

Fig. 6. A plot on the predicted value of operational performance under low and

high environmental regulatory pressure levels when GLM is implemented by

manufacturers at low and high levels.




and consequences of adopting GLM will be helpful for Chinese

manufacturing exporters to understand the importance of green

logistics and overcome the trade barriers given the rising inter-

national concerns relating to the development and distribution of

products in world trade.

The literature has increasingly focused on the ability of firms

to ease environmental problems by making resources less waste-

ful and thus more sustainable, while retaining the basic system

of capitalist production and consumption. GLM can be seen bymanufacturing enterprises not as a ‘problem’, but more as an

‘opportunity’. Due to rising costs of materials and resources

scarcity such as rare metals, it can be a profitable source for

manufacturers to recycle expensive materials from used products

such as mobile phones and consumer electronics. The importance

of investment recovery for Chinese manufacturers through better

utilization of scrap and used materials has also been emphasized

in the literature [32]. Yet, understanding of how effectively manu-

facturers can reduce environmental impact in product distribu-

tion throughout the product life cycle to meet this goal lags

far behind. The limited empirical evidence on the links between

GLM and performance provides little clue on the motivations for

adopting GLM, and specifically how manufacturers can leverage

GLM as a part of their environmental strategy to improve

performance.

Environmental management and sustainable logistics is an

emerging research area tackling such issues as pollution and

waste reduction in manufacturing processes. Our study is one of

the first attempts to fill this void by identifying and specifying the

management practices that are attributable to GLM. Based on our

interviews and survey data, we have developed and empirically

validated the GLM construct characterized with four attributes,

namely procedure-based, evaluation-based, partner-based, and

general environmental management practices. These attributes of

GLM suggest the importance of developing formal procedure and

assessment on the effort of GLM practices that enables continuous

improvement, while communicating with stakeholders on its

performance impact. The four attributes of GLM that we offer

are unidimensional and actionable measures that can indicatewhere a manufacturer is headed in its efforts to manage logistics

in an environment-friendly manner. Understanding the four

attributes of GLM are essential for managers to develop proce-

dures, perform evaluation, involve partners, and adopt general

environmental practices integrating the environmental concerns

of the physical flows (from production, distribution, to disposal)

throughout the life-cycle of products in support of both environ-

mental and productivity improvements as envisaged in a circular

economy.

Prior work has shown that environmental management in the

supply chain does matter for performance [58]. Our empirical

results substantiate this argument and find that regulatory

pressure moderates the performance link. Specifically, GLM is

positively associated with environmental performance in redu-cing carbon emission, waste water, solid waste, and consumption

of hazardous materials. It also contributes to various operational

performance aspects covering product quality, shortened lead

time, and reduced waste in production, allowing manufacturing

enterprises a better cost position to compete in the international

market. The environmental and operational benefits of GLM are

highlighted with manufacturers implementing GLM more inten-

sively to experience productivity and reduced pollution in a

greater extent.

Our study findings indicate customer pressures for environ-

mental protection are positively related to the implementation of

GLM by Chinese manufacturing exporters. This result is consistent

with our theorization and echo the view that firms in emerging

countries pursue GLM in response to customer requirements such

as obtaining ISO 14000 certification [59] and retrieving reusable

products from the market with a view to keep customers for

continued businesses [60]. Government and other public pres-

sures, growth in environmentally savvy customers, and enhanced

export and sale to foreign customers after the entry of China into

the WTO have collectively led to an increasing number of Chinese

manufacturing exporters to begin implementing environmental

management practices such as GLM. In line with the structuration

theory, these social conditions can influence and shape theinternational logistics operations of Chinese manufacturing

exporters. With relative scarcity of resources and the potential

pressure of ‘‘green barriers’’ in international trade, both the

Chinese government and manufacturing enterprises have

had increasing reasons to initiate and take corporate and indus-

trial environmental management measures. Recently, China has

surpassed Japan as the second world’s largest economic entity

due largely to continuous internationalization of Chinese-made

products but this achievement also creates environmental con-

cerns. In response, the Chinese government has implemented the

circular economy law since 2009 so as to alleviate the contra-

diction between rapid industrialization and shortages of

resources, where GLM can be an answer for achieving this goal.

Other than domestic regulations, there are pressures attributable

to international forces stemming from foreign governments, non-

government bodies, consumers, and multi-national corporation

[32]. For example, extended producer responsibility has been

adopted in the European Union legislation for the reduction of the

amount of packaging waste, end-of-life vehicles, and electrical

and electronic wastes [61]. This trend for increased environmen-

tal responsibility to upstream manufacturers will accelerate

because a growing number of governments including China have

incorporated extended producer responsibility into their environ-

mental policy. However, economic pressures for environmental

protection as reflected by increasing cost of disposal, potential

savings from materials, and subsidies from government, are found

to have no association with implementing GLM by Chinese

manufacturing exporters. In the case of recycling mobile phone

in China, it recovers only materials, where no component,assembly or packaging energy is recovered at the end of product

life [62]. Even though rare metals such as palladium and tantalum

can be extracted from waste electronic appliances, efficient

collection is a significant hurdle to undertake recycling rendering

weak economic grounds for manufacturers to embark on GLM.

Another plausible reason is the lack of growth capacity through

cost reduction as they already command the status of low-cost

producers. The legitimacy to conform to the appeal of the inter-

national markets on environmental protection seems to be a more

salient incentive for Chinese manufacturing exporters to pursue

GLM. This is in line with the ex ante managerial belief of ‘‘it pays

to be green,’’ explaining the unattended economic opportunities

of green practices [34].

When Chinese manufacturing exporters are confronted withenvironmental regulatory pressures at a high level, the positive

effects of GLM on environmental and operational performance are

enhanced. These differential strengths of performance outcomes

suggest that environmental regulations appear to be useful as a

guideline to direct the GLM efforts of manufacturers to improve

performance. Similar moderating effect of environmental regula-

tory pressure is also found on the relationship between customer

pressure and GLM. As regulatory pressure is a contextual condi-

tion governing organizational actions, environmental regulations

reinforce customer pressure to accelerate the implementation of

GLM by Chinese manufacturing exporters. New insights are

obtained in that environmental regulations are valuable for

enhancing the institutional legitimacy on the implementation of

GLM by Chinese manufacturing exporters and strengthening their




performance outcomes. Nevertheless, the moderating effect of

environmental regulatory pressures is found insignificant on the

relationship between economic pressure and GLM, suggesting

that environmental regulations are less effective to bolster the

economic incentives for Chinese manufacturing exporters to

pursue GLM.

As a major manufacturing country, GLM has become more

critical for Chinese manufacturing exporters, which enjoy many

international business opportunities but also encounter substan-tial environmental burdens with this opportunity. The appropri-

ate development of the GLM concept and practices may indeed

aid Chinese manufacturing exporters by lessening the environ-

mental burden of development, distribution, and disposal of

products, while even potentially improving their efficiency and

economic positioning. The GLM construct encompasses a series of

managerial actions on environmental-based logistics manage-

ment with its four attributes to supplement these actions, which

can be developed into an inimitable bundle of resources for

superior performance. Thus, GLM as we conceptualize it can be

viewed as a composite of the underlying belief, environmental-

based logistics management, and the concurrent capabilities that

a manufacturer develops. One example to illustrate is Yidian, Inc.

that believes in preserving energy and resource consumption

through GLM. It is an aluminum plate Chinese manufactur-

ing exporters in Luoyang, Henan Province. For managing its

growing international sales network (spanning from USA, Russia,

Germany, to South Africa) and stringent environmental regula-

tions in overseas countries, Yidian considers it strategically

important to develop and adopt environmentally responsible

management practices. In reengineering its workflows, Yidian

has relocated the aluminum molding production line close to its

electrolysis factory, eliminated steps of transporting the alumi-

num solution from the factory to the production line. Subsequent

to this elimination of inbound logistics process, the production

cost per kilogram of each aluminum plate is lowered from RMB

410 to RMB 148, saving RMB 80 million per year and reducing the

annual emission of sulfur dioxide (a greenhouse gas that causes

acid rain) by 60%.The study results have implications for manufacturing enter-

prises to improve their GLM and hence performance. Like all

strategic international logistics operations, manufacturers need to

balance the costs of investment in the implementation of green

practices that may be offset by commensurate benefits in terms of

improved productivity and environmental performance. In view

of the growing customer expectations for environmental protec-

tion, our results suggest that manufacturers can meet such

pressure by implementing GLM which is conducive to environ-

mental and operational performance improvement. Although the

economic benefits of GLM implementation (e.g., disposal cost

increase and reduction of material cost) may not be realized as an

opportunity, manufacturers can benefit from such implementa-

tion by catering to the customer expectation through retrievingreusable products and participating in customers’ product return

program.

Our study also highlights that the importance for manufac-

turers to comply with environmental-based regulations to excel.

While implementing GLM can improve manufacturers’ environ-

mental and operational performance, such improvements are

more apparent when they comply with both the local and

international environmental regulations. Thus, manufacturers

adopting the four attributes of GLM should take account of the

regulations related to their products as well as international

logistics operations to strengthen their performance outcomes.

By using our measurement scale, manufacturers may assess and

identify the areas of their GLM for improvement actions. Those

who are new to adopting GLM can also make use of the scale in

structuring their assessment, reporting, and monitoring mechan-

isms of green logistics activities.

9. Limitations and future research

Although our study has validated the attributes of GLM and

established the links of implementing GLM with its antecedent

factors and consequent performance outcomes, longitudinal stu-dies would help understand whether the nature of the benefits

accrued is indeed long-term. Linkages within the attributes of

GLM, similar to the strengthening environmental-based logistics

management due to regulatory pressures, could also be examined

with longitudinal data. Richer insights might be available if future

studies are conducted across different and specific industrial

sectors such as telecommunication equipment component man-

ufacturing [63]. Factors such as knowledge management, infor-

mation integration, organizational innovation, and market

orientation can be influential determinants of a manufacturer’s

positional advantages [64]. Future studies are also encouraged to

analyze how the ratio of local and export sales volume by

manufacturing exporters is related to their level of environmental

regulation pressures encountered and hence the implementation

of GLM by them. Recently, Chinese manufacturing exporters are

presented with pressure of accelerated inflation and export price

due to rise of RMB exchange rate. GLM can be a valuable approach

for them to improve operational performance. Future studies may

investigate how GLM is financed under changing international

economic development. It is possible for the financial investments

in GLM contributed by partners in the global logistics chain,

including third party logistics providers, wholesalers, and retai-

lers, which operate in various geographic locations spanning

different countries. Future empirical studies could examine the

relative contribution of GLM to performance and the collective

contribution of all these factors together to a manufacturer’s

performance outcomes.

While this study focuses on the management practices of

physical product flow throughout a product life cycle, rather thanspecific environmental activities, such as recycling, recovery,

remanufacturing, and reuse, this study provides insights into

the dimensions of GLM that are instrumental to manage and

reduce damages caused to the environment. Future research may

identify and examine specific organizational environmental prac-

tices that are useful in mitigating adverse environmental impact

arising from industrial operations.

As an initial exploration of GLM in emerging countries, the

sample frame of this study is confined to export-oriented Chinese

manufacturers and we also encountered difficulty in empirical

data collection from them. Although our sample size and response

rate is similar to prior research that surveyed management

executives, such size may limit the generalizability of study

findings and the multi-group analysis result. The use of multi-group analysis also requires the split of our sample into high and

low environmental regulatory pressure groups. Although multi-

group analysis allows us to examine the structural pressure–

practice–performance relationships for the manufacturing firms

characterized with different levels of environmental regulatory

pressures encountered, rather than merely testing the perfor-

mance impact of environmental regulatory pressure as an inter-

action term with the pressures and GLM practices. The sample

size for each group is relatively small in comparison to prior

studies using this analytical method. Our study establishes an

important step for GLM research in emerging countries, where

the level of environmental regulatory pressure faced by the

manufacturing exporters may vary due to the extent of their

export orientation. It is worthwhile for further research to collect




data from other countries with larger sample size to validate the

role of environmental regulations.

Successful implementation of GLM requires active involvement

of various parties, e.g., suppliers and customers, in the logistics

chain. The leadership of manufacturing exporters in pioneering

and diffusing GLM at the upstream can determine the implemen-

tation success of the downstream partners. Leadership issues in

the logistics chain on the diffusion of environmental management

practices such as GLM are worthy of investigation to extend thisline of research. It is also useful to examine how GLM can be

integrated with total quality management principles to continu-

ously improve quality in all aspects of the product life cycle to

exceed market expectations.

Our study examines only the moderating impact of environ-

mental regulatory pressures on the antecedents and conse-

quences of GLM, and other factors such as market uncertainty

and turbulence could be examined in future studies. On the

regulatory pressure, we did not differentiate such pressure

related to local and international regulations, which can be

considered by future studies to gain deeper insights on the

GLM-performance relationship. While the Chinese government

is supportive of environmental protection through initiating

discussions on global warming in such international arena as

the 2009 United Nations Climate Change Conference in Copenha-

gen, future studies may examine how Chinese government may

influence the institutionalization of GLM in the manufacturing

sector and in other industrial contexts such as shipping [65],

transport logistics [66], and the service sector [67]. After the

financial tsunami in 2008, economic arguments of China with the

European Union and the United States on protectionism, trade

balance, and exchange rates become more frequent. There is also

rapidly growing industrial development at different Chinese

regions with varying investment efficiency [68]. How the inter-

national economic and political situations affect the investment

of Chinese manufacturing exporters on GLM and the coordination

among international logistics chain partners for the implementa-

tion are promising topics for investigation.

Acknowledgements

We would like to thank the two anonymous reviewers for their

constructive and insightful suggestions on the earlier versions of this

paper. We also thank the Editor-in-Chief, Prof. Ben Lev, for providing

us with helpful comments for improvements. This research is

supported in part by the Research Grants Council of the Hong Kong

Special Administration Region (GRF PolyU5500/10H).

Appendix A. Finalized survey questionnaire

See Table A1 for more details.

Appendix B. Exploratory interviews

Before administration of the mass survey to investigate the

research question of this study, we conducted interviews to

explore the environmental issues in China, the attributes of

GLM, and the contextually embedded pressures that influence

GLM implementation and its success. We followed the grounded

theory [69] and conducted qualitative research to explore and

understand the pressures faced by Chinese manufacturing expor-

ters and their implementation of GLM. While the Chinese man-

ufacturers in Pearl River Delta (PRD) of China are mostly export

oriented and contribute to one-third of China export trade, we use

replication logic for multiple case studies to guide the selection of

manufacturers. Specifically, the manufacturing exporters are

deliberately selected from one case to the next based on the

matching of the underlying theory – the pressures faced by a

manufacturer or the GLM practices of a manufacturer would serve

as the basis to identify the next sample manufacturer. This

approach enables identification of determinants that influence

GLM implementation and the attributes of GLM that are common

and important to the Chinese manufacturing exporters. Weconducted exploratory interviews with 35 managers from

exported-oriented manufacturing enterprises in Pearl River Delta.

To ensure the quality of the exploratory interviews, we fol-

lowed Yin’s [70] recommendations and used a case study protocol

and interview guide with interview questions to guide our collec-

tion of interview data. The key interview questions relate to: (1) Is

environmental concern more important in manufacturing than

before? (2) What capabilities are required for manufacturers to

implement GLM? and (3) What factors affect manufacturers most

in their implementation of GLM? We drafted the field report for

each interview and returned it to the corresponding interviewee

for their review and comments. We identified the key pressures

and attributes of GLM by counting the pieces of evidence with

common theme, e.g., customer demand for environmentally

responsible products, economic pressures due to increasing price

of raw materials, management practices involved in logistics

management, and so forth. We then compared the case evidence

with insights from the literature on various organizational the-

ories to confirm the determinants and attributes of GLM.

From the interview results, we identified four dimensions of

GLM practice with reference to the environmental management

and logistics literature. Most managers expressed the need for

environmental focus on their manufacturing outputs, especially

those targeted for export to developed nations with strict envi-

ronmental regulations. In the face of dwindling profits and the

incessant rise of environmental awareness by customers, some

managers identify the economic and environmental potentials of

GLM. These potentials can be leveraged during the production and

distribution of their products with waste reduction and resourcesconservation. Some managers mentioned that GLM needs formal

structures in organizational design with appropriate documenta-

tions and guidelines to successfully operate. Others noted that

management procedures, such as reporting systems, are required

to govern the implementation processes. We term this practice for

GLM as ‘‘procedure-based practices’’ that must be supplemented

with appropriate management practices to document and report

such green logistics activities as the percentage of used products

collected from the market and the percentage of those collected

items that are recycled. Managers also held the view that perfor-

mance outcomes must be monitored for firms to fully realize the

value of GLM. Thus, a firm should perform a periodic evaluation of

implementing GLM. As such, we term this practice as ‘‘evaluation-

based practices’’. Managers also commented that manufacturinglogistics involves partner relationships encompassing internal

staff as well as customers and suppliers where GLM requires their

participation to succeed. We term this practice as ‘‘partner-based

practices’’. Managers provided a further view that the GLM of a

firm should be transparent to its stakeholders and environmen-

tally responsible for its input and output processes in compliance

with the requirements of the international trade community by

implementing environmental management practices based on

international standards, e.g., ISO 14000. We term this practice as

‘‘general environmental management practices’’. Based on the

interview feedback, GLM is considered as a multi-dimensional

construct with these four attributes should we capture the basic

underlying managerial action and the management practices that

supplement this action.




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Table A1

.

Construct name (scale) Measurement items

Environmental regulatory

pressure(ERP)

(1—‘‘not at all’’ 5—‘‘to a great extent’’)

ERP1: Our products are sold to countries with specific environmental laws

ERP2: Environmental regulations governing our products are very strict

ERP3: The materials used in our products are controlled by regulations that limit the consumption of hazardous

materials

ERP4:We comply with regulations that limit the disposal of waste

ERP5: Our products comply with environmental regulations of many countries

Customer pressure (CP)


CP1: Our customers consider that it is our responsibility to retrieve reusable products from the markets

CP2: Our customers require us to be ISO 14000 certified

CP3: Our customers carry out environmental audits of our firm

CP4: Our customers take part in our product return program

Economic pressure (EP)


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markets

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products.

Procedure-based practices

PMP1: GLM procedures are formally documented

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PMP4: GLM procedures are widely available

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PMP6: GLM performance is formally reported

Evaluation-based management practices

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EMP3: GLM performance is periodically reported

EMP4: We look for improvement in our GLM from time to time

Partner-based management practices

PAMP1: Our customers consider our GLM highly effective

PAMP2: Our suppliers consider our GLM highly effective

PAMP3: Our staff consider GLM highly effective

PAMP4: The results of GLM performance are widely distributed

PAMP5: Green logistics procedures are included in training

General environmental management practices

CMP1: GLM of our firm is given prominent visibility in our annual reportCMP2: Our firm has a well-developed GLM database for tracking GLM performance

CMP3: We purchase from suppliers that are ISO 14000 certified

CMP4: We are ISO 14000 certified

Environmental performance (EPerf)


EPerf1: Reduction of carbon emission

EPerf2: Reduction of waste water

EPerf3: Reduction of solid wastes

EPerf4: Decrease in consumption of hazardous materials

EPerf5: Decrease in frequency of environmental accidents

Operational performance (OPerf)


OPer1: Significantly improved product quality

OPer2: Significantly improved lead time

OPer3: Improved position in marketplace

OPer4: Developed better products

OPer5: Reduced waste in production

OPer6: Improved selling products in international markets




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Green Logistics- Management and Performance

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