Sustainability 14 04944

sustainability
Article
Assessing the Benefit of Adopting ERP Technology and
Practicing Green Supply Chain Management toward
Operational Performance: An Evidence from Indonesia
Ruben Wahyu Santoso 1 , Hotlan Siagian 1, * , Zeplin Jiwa Husada Tarigan 1 and Ferry Jie 2
1 Master of Management Department, Petra Christian University, Surabaya 60236, Indonesia;

[email protected] (R.W.S.); [email protected] (Z.J.H.T.)
2 School of Business and Law, Edith Cowan University, Joondalup, WA 6027, Australia; [email protected]
* Correspondence: [email protected]
Abstract: The recent concern on the environmental protection and COVID-19 issue is increasingly
affecting the manufacturing industry. This research assessing the benefit of adopting ERP technology
and practicing green supply chain management toward operational performance in manufacturing
industry. The study is essential to provide insight for the manufacturing industry regarding the
consequences and benefits of practicing the green supply chain and adopting ERP technology amid
the current constraints of the environmental protection issue and the COVID-19 pandemic. The study
has surveyed 122 companies domiciled in Indonesia. Data collection used a questionnaire designed
with a seven-point Likert scale. Questionnaire created in Google form, printed and distributed using
social media and postal mail. Data analysis used SmartPLS software version 3.0. The result revealed
that ERP adoption enables green purchasing, production, distribution, and operational performance.
Citation: Santoso, R.W.; Siagian, H.;
Furthermore, operating performance is directly affected by green purchasing and green production.
Tarigan, Z.J.H.; Jie, F. Assessing the
However, operating performance was not supported by green distribution. In addition, ERP adoption
Benefit of Adopting ERP Technology
indirectly improves operational performance through green purchasing and green production. But
and Practicing Green Supply Chain
Management toward Operational
ERP adoption did not affect operational performance through green distribution. This result provides
Performance: An Evidence from essential insight for the manager in the manufacturing industry that adopting ERP in the era of
Indonesia. Sustainability 2022, 14, the COVID-19 pandemic and practicing environmental protection such as green purchasing, green
4944. https://doi.org/10.3390/ production enhances operational performance. In summary, the result of this study encourages
su14094944 the practitioner to adopt environmental protection in running their business since it benefits the
company. While there are very few studies examining the relationship between ERP adoption, green
Academic Editors:
Yoshiki Shimomura and
supply chain practices, and operational performance, this study is essential in terms of exploring
Shigeru Hosono the mediating role of green supply chain practices on the effect of ERP adoption on operational
performance. Thus, these research findings could enrich the current research in the supply chain
Received: 22 March 2022
management context.
Accepted: 18 April 2022
Published: 20 April 2022
Keywords: green purchasing; green production; green distribution; enterprise resource planning;
Publisher’s Note: MDPI stays neutral operational performance
with regard to jurisdictional claims in
published maps and institutional affil-
iations.
1. Introduction
Environmental protection has come to the world’s attention in recent years, and sci-
Copyright: © 2022 by the authors.
entists have been emphasizing the need to limit planetary warming. As a result, world
Licensee MDPI, Basel, Switzerland. leaders from 40 countries have participated in the world climate summit. The Summit
This article is an open access article has highlighted how these climate ambitions would create jobs with good incomes, accel-
distributed under the terms and erate technological innovation, and help countries in need to adopt the effects of climate
conditions of the Creative Commons change [1]. Based on the suggestion conveyed by [2], many organizations began to show
Attribution (CC BY) license (https:// concern for maintaining the environment due to the emergence of global awareness about
creativecommons.org/licenses/by/ the importance of preserving the environment. This eco-friendly mindset to nurture the
4.0/). source of the earth has reached peak momentum so that the organizations feel pressured
Sustainability 2022, 14, 4944. https://doi.org/10.3390/su14094944 https://www.mdpi.com/journal/sustainability

Sustainability 2022, 14, 4944 2 of 21
to start thinking critically in building environmentally friendly business practices. Green

supply chain practices (GSCP) are believed to have a potential contribution throughout
the entire supply chain process, from suppliers, manufacturers, customers, and until the
disposal of the product [3]. According to [4], companies need to compete through the
implementation of information technology to contribute to the efficiency of the company
by helping retailers to manage material management. In this way, system management in
the company can be fully integrated and effective to compete optimally in terms of speed,
production with high capacity, high quality, low cost and have a minimum inventory.
The green supply chain practices can reduce the cost of purchasing raw materials, energy
consumption, waste management, and environmental damage and improve the company’s
operational performance. Therefore, the nature of sustainable development in economic
terms can enhance its operational performance [5]. Environmental protection in Indonesia
is contained in law No. 32 of 2009 in Management and Protection of the Environment.
This law regulates the implementation of environmental regulations and the provisions
warnings for those who violate the rules [6].
On the other hand, previous research in Indonesia has assessed the supply chain
performance of companies which are using cloud information technology. This research has
surveyed companies listed in the Indonesian Logistics Association (ALI) and the Indonesia
Stock Exchange [7]. It has been found that cloud technology can facilitate the supply chain
process to reduce paper usage, pollution, and excess fuel use. It can also improve its
operational performance [7]. Enterpise resources planning (ERP) is one of the information
technology which has a significant influence in enhancing the company’s performance [8].
Today, the manufacturing companies have constant pressure to improve their operations
by delivering high-quality products at the lowest possible price and delivery as quickly as
possible. One of the solutions to this problem is performing supply chains activities using
information technology [9]. Then the company seeks to implement business practices while
reducing the risk of environmental damage through the company’s products, services, and
operations [10].
Manufacturing behavior also changes due to consumer behavior. The product devel-
opment and production processes related to green products become popular issues for
manufacturers. For example, the incandescent lamp from Phillips Alto II has the lowest
mercury level, up to 1.7 milligrams per lamp [10,11]. Green purchasing plays a signifi-
cant role in manufacturing companies’ environmental-friendly business strategies. With
the growing awareness of the environment, the demand for ecological-friendly products
increases. A survey of 1005 retailer consumers in Rumania indicated that they are envi-
ronmentally concerned consumers, displaying an increased awareness of their essential
role in impacting sustainable production and consumption by adopting green purchase
behavior. The study also points out that retailers reinforce their brand perception on
sustainability issues [12]. Green purchasing can increase the value of a product alone,
but it also helps manufacturing companies improve their good environmental image. In
addition, green purchasing allows manufacturing companies to collaborate with suppliers
to design supply chain processes upstream and downstream, creating efficiency in the
company’s operations [13]. ERP implementation process, that runs stable, perform data
alignment, and continuously improves the systems can improve the company’s operational
performance [14]. Green supply chain management (GSCM) interest is essential due to the
company’s growth and increased recognition from manufacturers and consumers; however,
there is a wide gap in the existing literature and corporate regulations regarding GSCM. The
fact remains that there is no comprehensive theoretical model to support the accelerated
demands of the GSCM [15].
Besides, the current COVID-19 pandemic has also caused severe disruption in the
supply chain. The disruption in demand and supply has resulted in a downturn in manufac-
turing performance, as indicated by the purchasing manufacturing index (PMI). However,
for specific sectors such as pharmaceuticals products, the demand has significantly in-
creased, particularly for COVID-19 treatment, such as sanitizers, masks, and medicines.
While the need for other goods such as sporting goods and automotive has decreased
drastically. Overall, manufacturing companies have experienced a decline in performance
during this pandemic. The decreased performance of manufacturing companies is indi-
cated by the Purchasing Manufacturing Index (PMI), which declined from 45.3 in April
2020 to 27.5 in August 2021, the worst record since 2011 [16]. According to the Industrial
Ministry, manufacturing industry performance has declined up to 50 percent, caused by
the COVID-19 pandemic. PMI is calculated based on a percentage of five influencing
factors: cost, new product, time to market, flexibility, and delivery [17]. PMI also reflects the
extent to which manufacturing sector performance achievements, such as manufacturing
operational performance. Therefore, the manufacturing companies need to take immediate
initiatives to balance the economic growth while avoiding the spread of COVID-19. The
essential question is what strategy the companies should adopt or have adopted to keep
in operation while dealing with the COVID-19 pandemic. The principal response is that
the company should keep doing business while obeying the pandemic health protocol
and cope with any uncertainty in supply and demand. One solution that could solve the
problem of obeying the health protocol is using information technology such as enterprise
resources planning (ERP).
The discussion above shows that the company’s operational performance can be
improved by adopting ERP technology, practicing green purchasing, green production,
and green distribution. However, previous studies only looked at or noticed the direct
relationship between the two variables. To the extent of the author’s knowledge, no study
had looked at these five variables together. This research creates a model addressing these
five constructs simultaneously to examine the benefit of ERP adoption on operational
performance through the mediation of green purchasing, green production, and green
distribution. The main objectives of this study are to examine: (1) whether ERP adoption
by the manufacturing company affects the green supply chain practices, including green
purchasing, green production, and green distribution, (2) whether the green practices,
namely, green purchasing, green production, and green distribution affect the operational
performance, (3) whether ERP adoption indirectly affects operational performance through
the mediating role of green practices. The novelty of this study is the creation of a research
model which has never existed before and examines the mediating role of green supply
chain integration consisting of green purchasing, green production, and green distribution.
Therefore, the findings of this study could contribute in terms of managerial implication
and theoretical enrichment. For managerial implication issues, the results are expected
to provide an insight to the manufacturing industry practitioner that adopting ERP and
practicing ecological protection will benefit the company’s operational performance. Fur-
thermore, in terms of theoretical contribution, this study could enrich the current research
in two forms: (1) the extended acceptance of previous studies to be applied in the manufac-
turing industry in Indonesia, (2) the new findings on the mediating role of the green supply
chain in enhancing the operational performance. It could enrich the current research in
supply chain management.
The following order describes how the rest of the paper is organized. First, the theories
relating to the definition of research constructs and the development of hypotheses are
discussed in Section 2. The research methodology is then described in Section 3, followed
by the results of data analysis and discussion in Section 4, a discussion of the analysis
results in Section 5, and lastly, the study’s conclusions in Section 6.
2. Literature Review
2.1. Construct Definition
2.1.1. Green Supply Chain Practices (GSCP)
GSCP is defined as the supply chain management (SCM) oriented on practicing supply
chain activities corresponding to the interests of the environment protection through the
design, acquisition, production, and distribution of the company’s goods and services.
GSCP is also concerned with the reuse, recycling, and disposal of the company’s goods to
avoid any damaging impact on the environment. It simply lays out green practices, but
more consistently, holistic improvement and environmental practices performance in all
management and factory areas [18]. GSCP includes planning, execution, and controlling
practices, approaches, and tools that help companies be socially responsible and sustainable
through environmental protection [19]. In addition, supply chain integration has been
proved to improve the manufacturing company’s business performance through supply
chain resilience, flexibility, and responsiveness [20]. The supply chain integration includes
the supplier, production, and distribution integration interconnection to achieve the same
goal of serving customer demand.
2.1.2. Green Purchasing

Green purchasing also refers to purchasing practices that focus on reducing waste
sources and realizing recycling and reclamation regarding product purchases without hin-
dering environmental needs by destroying certain materials. On the other hand, choosing
environmentally friendly suppliers, green purchasing also focuses on evaluating environ-
mental performance in suppliers and providing advice on how to improve their perfor-
mance. Green purchasing can then play a role in ensuring that suppliers can also develop
environmentally friendly orientation capabilities [21]. Furthermore, green purchasing is in-
cluded in sourcing-reduction and recycling activities in the supply chain; green purchasing
can minimize waste and support product recycling. Further findings state that green pur-
chasing activities reduce pollution control costs and improve organizations’ environmental
performance [2]. In addition, [22] stated that environmental friendliness, green purchasing,
or procurement could also be interpreted as integrating environmental-related issues into
purchasing standard requirements to reduce waste and help achieve GSCP. In this study,
the authors adopted green purchasing indicators from previous research conducted by [23].
Here are the green purchasing indicators: (1) buy environmentally friendly products from
suppliers, (2) prioritize suppliers who implement environmentally friendly management
systems, (3) require that suppliers be certified by ISO 14001, (4) prioritize the purchase of
recyclable products, (5) avoid buying environmentally unfriendly materials such as lead or
toxic materials, (6) applying environmental friendliness criteria is one of the requirements
in evaluating suppliers.
2.1.3. Green Production

The concept of green extends to almost every process, from acquiring raw materials,
production, storing, packaging, shipping, and product distribution [24]. The primary
purpose of green production is sustainability. Every manufacturing sector should nurture
natural resources for future generations. The manufacturing industry should know where
its responsibilities will end and how toxic emissions have affected the environment [25].
According to [26], friendliness and social quality. The development of green products has
long been an essential topic in sustainable supply chain management, as demonstrated by
various works of literature. Companies use tools such as design for environment (DFE),
design for dissembling (DFD), and life cycle analysis (LCA) to reduce the impact of the
product on the environment. From the review of green production-related literature, this
study adopted the indicator of green production suggested by [27] as follows: (1) attempt
to eliminate waste in the production process, (2) trying to reduce environmental pollution,
(3) trying to implement the recycling process, (4) implementing environmentally friendly
production processes, (5) reduce material costs on target, (6) the production process runs
efficiently or quickly, (7) improve the timely delivery of goods, (8) not using toxic materials,
(9) using technology to make the production process environmentally friendly.
2.1.4. Green Distribution

The green distribution addresses the transportation services that do not harm human
health or environmental ecology, regardless of short-term or long-term effects. The four
principal roles of green distribution are: (1) reduce the burden of emissions and waste;
(2) the use of renewable resources must be below the speed of production, and the useful-
ness of non-renewable resources below the speed at which they can be re-created; (3) reduce
the impact of land use and noise; and (4) the company should pay a certain amount of social
costs to its corporate activities that have an impact on the environment [28]. Companies
such as Pepsi, Nestlé, and L’Oreal collaborate with Tesco, one of the largest retail partners,
to form the Supply Chain Leadership Coalition, which promotes ways to reduce the carbon
footprint from suppliers to distribution activities to customers [29]. The author adopted
previous research indicators on green distribution from [30] from the green distribution
literature presentation. There are six green distribution indicators as follows: (1) reduce the
use of packaging materials/packaging goods, (2) use environmentally friendly packaging
materials, (3) use packaging materials that can be recycled and reusable, (4) use environ-
mentally friendly transportation, (4) apply delivery with maximum volume according to
the transportation capacity used, (5) delivering goods via the fastest route.
2.1.5. Enterprise Resource Planning (ERP)

Enterprise resources planning (ERP) systems integrate information flow within com-
panies ranging from financial accounting, human resources, supply chain management,
and customer information [31]. ERP system is a technology system used to develop the
company’s competitive nature because it will enhance its excellent operations. ERP systems
rely on information technology that can combine business functions more efficiently. The
company always tries to adapt to ERP based on the needs and uniqueness of the company’s
operations and the relationships and consumers that are quite influential on the company.
However, changes to the ERP configuration system will bring huge costs, and implementa-
tion will pose risks [8]. In this study, ERP adoption was studied using several indicators
of previous research by [32], is as follows: (1) ERP provides accurate information about
operations, (2) ERP provides quality and useful information, (3) Easy ERP usage procedure,
(4) the intensity of ERP usage is very high, (5) ERP users feel very satisfied, (6) ERP features
are easy to understand, (7) ERP can help user works faster.
2.1.6. Operational Performance (OP)

Operational performance is the company’s operational achievement, measured pri-
marily in cost, quality, flexibility, and delivery. The operational performance also indicated
the company’s competitive position among companies in the supply chain. Each company
in the supply chain needs to improve overall operational efficiency in enhancing perfor-
mance. Supply chain management (SCM) has an independent effect and positively impacts
business performance. However, operational performance also depends on operational and
financial factors. Combining SCM and business performance is also expected to positively
impact financial performance, such as increased sales and profits [33]. Operational perfor-
mance is performance related to the company’s internal operations, such as productivity,
product quality, and customer satisfaction. Operational performance is also an indication of
the capabilities and resources of manufacturing companies that should focus on increasing
priority improvements that impact strategic capabilities [11]. This study used five measure-
ment items for operational performance adopted from [34] as follows: (1) improved the
quality of the product, (2) reduced lead time or faster delivery process, (3) improved its
position to compete in the market, (4) improved product development, (5) increased sales
in international markets
2.2. Hypotheses Development

2.2.1. Enterprise Resource Planning (ERP) Adoption and Green Purchasing
The basis enabler for coordination and cooperation in information sharing can be
facilitated comprehensively using information communication and technology (ICT) or,
for example, the adoption of ERP [35]. Ref. [36] expressed their opinion that the envi-
ronmentally friendly purchasing function is facilitated by information technology as an
instrument for streamlining and promoting the process of purchasing. The environmentally
friendly goods from supplier to the company improve the company performance. For
more than 30 years, systems such as material requirements planning, called enterprise
resource planning (ERP), have helped companies manage their changing business activities
throughout the ages by integrating information into the supply chain network. Green pur-
chasing is applied as a valuable tool to mitigate environmental damage through excessive
consumption and realizing clean production technology. The technology will then provide
the information needed by the companies to align all activities within the supply chain
network [37]. Based on the above argument, the first hypothesis is proposed as follows:
Hypothesis 1 (H1). ERP adoption affects green purchasing.
2.2.2. Enterprise Resource Planning (ERP) Adoption and Green Production

A study by [31] explained the role of ERP support for production planning so that the
company can achieve an environmentally friendly production process. Ref. [8] suggest that
information technology integration can open up integration between sup-pliers and compa-
nies in ecologically friendly production planning and capacity, delivering environmentally
friendly goods from suppliers. Furthermore, information technology integration can use
ERP as a means for companies to develop effective systems to improve user satisfaction
in executing enterprise strategies to be more environmentally friendly. Ref. [19] suggest
that six steps need to be implemented against green production as follows: (1) overview,
(2) eco-profile, (3) inter-departmental network, (4) quantification, (5) conceptualization,
(6) green production. Information technology through ERP plays a significant role to
accommodate the movement of these six process steps, especially step number 3, namely
networking between departments. Based on the above discussion, the second hypothesis
is proposed.
Hypothesis 2 (H2). ERP adoption affects green production.
2.2.3. Enterprise Resource Planning (ERP) Adoption and Green Distribution

Solutions from green information and communication technologies have solutions
to achieve automation, simplification, and network optimization of supply chain de-sign
such as location, distribution, reverse logistics, inspection/sorting of used products, etc.
GrICT has solutions to improve communication and achieve coordination, cooperation,
and integration between supply chain partners, both from suppliers/trading partners
and distribution or delivery of goods to customers [19]. By adopting ERP, customers can
execute orders and record sales orders. “The delivery scheduling and calculation of the
working time need to be recorded before placing the order or request of material. Then,
ERP system will issue a production schedule and request for material packaging and
shipment from supplier or warehouse. So that through ERP, documents will be issued to
the warehouse, and reservations can be packed and shipped”. Companies can control how
goods are distributed to customers through ERP and effective delivery [31]. Researchers
have previously stressed the positive impact of using information systems and technology
on reverse logistics to achieve service quality and economic performance [38]. Hence, the
third hypothesis is formulated.
Hypothesis 3 (H3). ERP adoption affects the green distribution.
2.2.4. Green Purchasing and Operational Performance

Green purchasing is also considered a strategic function in manufacturing com-panies.
Green purchasing practices are also responsible for acquiring environmentally friendly
materials of appropriate quality at the right price. Then green purchasing evaluates vendors
and management to reduce the cost of materials to improve the quality of environmental
friendliness as a manufacturing process at the beginning [39]. Ref. [37] stated that most
internal suppliers from manufacturing and retail apply significant pressure to outside
suppliers to practice environmentally friendly supply chain activities effectively. Various
case studies from companies in Europe and Australia have shown that green procurement
practices are used as a tool to achieve a competitive advantage to improve operational and
financial performance. A study on the 351 supply chain management professionals from
different manufacturing companies in Saudi Arabia found that green supply chain man-
agement practices, including green purchasing, green manufacturing, and green logistic,
directly and positively affect operational performance in the manufacturing industry [40].
Green purchasing also minimizes raw materials, develops suppliers, and reduces
sources to create efficiency in green supply chain practice activities that will improve
the company’s operational performance [41]. Furthermore, a study by [20] surveyed
81 manufacturing companies in East Java, Indonesia, and found that green purchasing
improves operational performance. Based on this discussion, the following hypothesis
is proposed.
Hypothesis 4 (H4). Green purchasing affects operational performance.
2.2.5. Green Production and Operational Performance

The green production and innovation processes reduce the impact on the environment
and increase the company’s competitive advantage and green image [42]. The company’s
competitive advantages include the quality of the production process that produces en-
vironmentally friendly goods. Another study also argues that green manufacturing and
green production consist of design processes, product design, and high efficiency [41].
The company’s production capacity increases and improves the company’s operational
performance. Green manufacturing can have the ability to reduce costs, introduce new
technologies and improve the work environment. Furthermore, the company can improve
its performance through environmentally friendly production from its factories and the
entire production chain process [43]. Hence, the fifth hypothesis is determined as follows:
Hypothesis 5 (H5). Green production affects operational performance.
2.2.6. Green Distribution and Operational Performance

Green distribution is an important activity that impacts the performance of the en-
vironmentally friendly supply chain. Green distribution includes all activities that re-
duce/eliminate environmental damage, and waste in waste in shipping, such as gasoline
consumed by product transportation to customers, can be reduced. A study on the manu-
facturing industry in Turkey found that green distribution positively affects operational
performance [30]. The following green distribution factors will impact the company’s oper-
ational performance: ecological materials for primary packaging, recyclable or reusable
packaging/containers in logistics, selection of cleaner transportation methods, effective
shipment consolidation, and full vehicle loading. Moreover, a study by [44] found that
environmental friendliness performance can be improved with effective transportation
planning and distribution network strategy. This method will then impact the efficiency
of faster delivery to customers. Furthermore, [11] stated that the company’s operational
performance reflects the distribution and manufacturing efficiency, thus impacting opera-
tional performance.
Hypothesis 6 (H6). Green distribution affects operational performance.
2.2.7. Green Purchasing and Green Production

Green purchasing focuses on working with suppliers to develop environmentally
friendly products and ensuring purchased products meet the company’s environmental
friendliness criteria. The criteria include reducing or eliminating hazardous items, reduc-
ing waste of natural resources, and helping to realize recycling and recovery of material
purchases (or reusable materials) [27]. Similarly, a study result suggests that green pur-
chasing can also be defined as an environmental purchasing initiative that aims to ensure
the purchase of products and materials that comply with the company’s environmental
friendliness criteria [45]. The criteria include reducing excessive use of natural resources,
recycling, reusing, and life-cycle costs of a product [23]. Based on the above discussion, the
seventh hypothesis is postulated.
Hypothesis 7 (H7). Green purchasing affects green production.
2.2.8. Green Production and Green Distribution

In an environmentally friendly context, distribution networks play an essential role
in marketing and supply chain relationships. As the rotation of product flows, the carbon
footprint is also a parameter to describe the “greenness” of a production process that is
environmentally friendly or not [46]. Environmentally practices of goods and services
distribution are influenced by the response rather than marketing to environmental impacts
ranging from design, environmentally friendly production, packaging, labeling, and use
of these goods. Many eco-friendly production strategies are recycling, using spare parts
of such products, reducing packaging, making the product more durable, repairable,
compostable, good for health, and safe for shipping distribution [38]. Companies need
hard work to record reciprocity from customers to develop more environmentally friendly
products or eco-products. Moreover, companies need to adopt environmental practices in
manufacturing processes and use environmentally friendly packaging. This effort requires
the company’s coordination of green production and distribution processes to strive for the
application of customer response and advice [11].
Hypothesis 8 (H8). Green production affects green distribution.
2.2.9. Enterprise Resource Planning (ERP) Adoption and Operational Performance

ERP plays a role in working on a person’s tasks, and the organization can reduce the
duration of the activities. Moreover, ERP can also calculate large amounts of data and
produce useful information in decision-making. Therefore, ERP can also be related to
business process improvement (BPI), and enables the company to improve operational
performance [47]. Implementing information communication and technology (ICT) such as
ERP can improve organizational performance in terms of reduced cost, improved quality,
faster delivery, more product variety, and time to introduce new products to the market
from other competitors [35]. A survey of 57 manufacturing companies in East Java, Indone-
sia, showed that information technology application affects organizational performance
significantly [48]. Furthermore, previous research has also stated that companies that
efficiently use the sources of information presented by ERP can improve the company’s
operational performance in areas such as process standardization and timely delivery of
goods [14]. The study surveyed 111 manufacturing companies (medium and large) in
Indonesia and found that IT capability plays an essential role in enhancing firm perfor-
mance [49]. Besides, a survey of 61 respondents representing 61 manufacturing companies
domiciled in the region of East Java, Indonesia, also found that ERP adoption by the
manufacturing company improves the firm performance [50]. Besides enhancing the opera-
tional performance, ERP also con-tributes to the improved competitive advantage, which
reflects the operating performance of the manufacturing industry [51]. Therefore, the ninth
hypothesis is deter-mined
Hypothesis 9 (H9). ERP adoption affects operational performance.

through the Mediation of Green Purchasing
The ERP can indirectly affect the company’s operational performance through green
purchasing [39]. E-procurement practices with internet practices and technologies such
as ERP can provide success for green purchasing. Green purchasing strategies consist
of hazardous material substitution and can then improve the quality of raw materials to
impact the quality performance of goods expected by the company [19,41,52].
Ref. [43] suggest that ERP responds to the competitive pressures of companies to
maximize the internal resources of their organizations, such as green purchasing, green
purchasing will become more efficient. Then the company can compete to im-prove
its operating performance. So it can be concluded from the previous paragraph that
the adoption of information technology such as ERP can indirectly affect the company’s
operational performance through green purchasing. Based on the above argument, the
tenth hypothesis is postulated as follows:
Hypothesis 10 (H10). ERP adoption affects operational performance through green purchasing.

through the Mediation of Green Production
Green production process applications can benefit from competitive environ-mental
friendliness, which can finally satisfy its customers and bring the company to grow more
rapidly in implementing its company operations [19]. Moreover, adopting technology
programs such as ERP for green production can minimize energy and re-sources. Green
production can reduce the cost of energy consumption to improve products through their
quality [42]. Ref. [53] argues that adopting technological processes against green supply
chain management and green production can lead companies “to reduce waste, usage of
water, and energy consumption during the production process.”. The company can gain a
competitive advantage through green products be-cause it can sell by-products at relatively
lower prices, or companies can modify them to be products with good quality. In the same
way, the company can increase flexibility and reduce the company’s production costs. From
the previous paragraph, adopting information technology such as ERP can indirectly affect
the company’s operational performance through green production.
Hypothesis 11 (H11). ERP adoption affects operational performance through green production.

through the Mediation of Green Distribution
Information technology such as ERP integrates environmental friendliness issues
in green distribution such as packaging, transportation, and logistics activities. Green
distribution can reduce packaging costs, fuel consumption, noise, pollution, and con-
gestion by revamping better relationships with customers [54]. By adopting ERP, com-
panies can control how goods are distributed with environmentally friendly processes.
An environmentally-friendly distribution process will also have the impact of reducing
lead times [33,55]. Furthermore, the role of technology adoption and telecommunications
(telematic applications) can help the distribution process be environmentally friendly to
reduce the distance of truck routes in the process of shipping goods as well as have better
routes. So that green distribution can reduce transportation costs and then speed up ship-
ping [19]. Hence, the adoption of information technology such as ERP can indirectly affect
the company’s operational performance through green distribution.
Hypothesis 12 (H12). ERP adoption affects operational performance through green distribution.
Based on those hypotheses developed above, the research framework is depicted in
Figure 1.
Figure 1. Research framework and the relationship between constructs. Note. (1) black color line
indicates the direct relationship, (2) colored dot line indicates the indirect relationship.
3. Methods
3.1. Study Design, Population, and Sample
This study used a cross-sectional design and collected empirical data through an
online and paper-based survey in East Java, Indonesia. The population of this study is
manufacturing companies engaged in manufacturing industries such as food, beverage,
textile, and pharmacy domiciled in East Java, Indonesia. The list of companies was obtained
578 companies from the East Java Bureau of statistics 2020 considered eligible as they meet
the criteria categorized as limited companies status registered in the Trade and Legal
Department [56]. The minimum number of samples required for this study is 85, obtained
using the Slovin formula with a tolerance error of 10%. However, this study tries to obtain
as many samples as possible to increase the accuracy of the research. Sampling technics
used a stratified sampling method to provide all the population members an equal chance
to be selected as a sample. The stratified sampling divides the population into exclusively
relevant, appropriate, and meaningful groups to research or study science [57]. Data
collection used a questionnaire designed with a 7-point Likert scale with 1: strongly disagree
up to 7: strongly agree. The questionnaires were distributed through mail and online. The
online distribution used a Google Form Link sent through email and social media to the
companies. The study respondents are determined as in charge at the managerial level,
such as Supervisor, Manager, General Manager, and Director. This requirement implies
that they are knowledgeable in its strategy and decision-making. In addition, the letter
from the institution was attached to let the respondents understand the purpose of this
research. Of the 578 questionnaires distributed, 133 were returned and correctly fulfilled.
However, only 122 (21% response rate) questionnaires were considered valid, and the
other 11 questionnaires were excluded due to not meeting the criteria as engaged in the
predetermined manufacturing sector.
3.2. Measurement Item

The questionnaire’s items lists are separated into two parts: the screening process
and the main statement item adapted from the previous literature. The questionnaire is
designed with a seven-point Likert scale (1 = strongly disagree, 2 = disagree, 3 = somewhat
disagree, 4 = neutral, 5 = somewhat agree, 6 = agree, 7 = strongly agree. The respondents
were requested to respond to every statement based on their agreement or disagreement
with their objective opinion. Each construct is measured using measurement items or
indicators defined in the literature review. ERP adoption instruments adopted research
by [32] with green purchasing instruments use [23]. Green production instruments use [27],
green distribution instruments use [30], and operational performance instruments use [34].
Green purchasing with six items, green distribution with five items, green production with
nine items, ERP with seven items, and operational performance with five items.
3.3. Data Analysis

Collected data is analyzed using the partial least square (PLS) technique. This tech-
nique assesses the data in two steps. The first step is to evaluate the measurement model
or construct indicator validity and reliability. The validity assessment consists of conver-
gent validity and discriminant validity. Convergent validity is satisfied when the factor
loading value of the indicator exceeds 0.5. While the discriminant validity is evaluated
using the Forner-Larcker criterion. Furthermore, the reliability of construct indicators is
evaluated using composite reliability and averaged variance extracted (AVE). The block
of indicators of each construct is considered reliable when the composite reliability value
exceeds 0.70 and the AVE value exceeds 0.5. Once the measurement model satisfies the
predetermined criteria, further analysis, namely, inner model analysis, can proceed. The
second step of the analysis is the inner model evaluation, which assesses the relationship
between constructs in terms of path coefficient, T statistics value, and p-value. Finally, the
model is assessed for the goodness of fit by looking at the R square and Q square values.
4. Results
4.1. Respondent Demographic Profiles
The first stage of analysis is descriptive analysis to observe the profile of the respon-
dents in terms of gender, job position, and working experiences. Table 1 illustrates the
composition of respondents’ profiles. The respondents consist of males and females. The
majority of them are male, indicating that it is in line with the current social culture in the
manufacturing industry that most employees are male.
Table 1. Respondent Demographic Profiles.
Category Frequency Percentage

Gender
Males 87 71
Females 35 29
Total 122 100
Job position
Supervisor 73 60
Manager 47 38
General Manager 1 1
Director/CEO 1 1
Total 122 100
Working experiences (in years)
1–2 12 10
3–5 62 51
6–10 40 33
>10 8 6
Total 122 100
Based on the job position, the respondents have a position involved in the company’s
strategic decision-making ranging from supervisor to director. This composition indicated
that they are eligible as respondents and capable of responding to the statements in the
questionnaire. In addition, respondents have sufficient working experience within one up
to 10 years more. This result indicated that most of the respondents are familiar with the
company’s operation and decision-making.
Based on the department of the respondents, Table 2 showed that most respondents
are in charge of the department related to this research requirement, such as purchasing,
procurement, warehousing, logistic/distribution, PPIC, production, Quality control, and
Engineering. These departments are directly involved in supply chain activities. This
composition implies that the respondents understand the function of the supply chain in
the company.
Table 2. Department Profile.
Departement Frequency Percentage (%)

Purchasing 7 7%
Procurement 11 9%
Warehousing 8 8%
Logistics/Distribution 12 10%
PPIC 12 10%
Production 25 20%
Marketing 6 5%
Quality Control 16 13%
Engineering 10 9%
Others department 11 9%
As has been noticed, this study requires that respondents are from the manufacturing
company using the ERP software. Table 3 demonstrates the type or brand of ERP the
company is using, which implies that those respondents have used ERP in their daily
operations. Furthermore, the manufacturing companies used various types of software
available in the market. This finding implies that all respondents recognize the ERP
technology and could provide information regarding ERP adoption. However, this study
did not detail the extent to which they adopted the ERP since it contains several modules
in its software package.
Table 3. ERP software used by the Company.
ERP Software Frequency Percentage (%)

SAP 39 32%
Oracle 9 7%
BAAN 13 11%
MFG Pro 17 14%
JD Edwards 11 9%
People Soft 6 5%
Others brand 27 22%
4.2. Measurement Validity and Reliability

Further analysis is to assess the validity and reliability of the measurement model
using smartPLS software version 3.0. The validity test assesses the factor loading for
convergent validity and the Forner-Larcker criterion for discriminant validity. An indicator
is considered valid in convergent validity once it has a factor loading value exceeding
0.50. Table 4 demonstrated the value of factor loading for each indicator and reliability for
each construct. The indicators are considered reliable if the composite reliability exceeds
0.70 and the average variance extracted (AVE) exceeds 0.50 [58]. Based on these criteria
and the result indicated in Table 4, it is concluded that all indicators are valid convergent,
and also reliable. Table 4 also indicated the mean score of each item of measurement. As
has been stated before, the scale used a 7-point Likert scale. The mean score value on those
indicators demonstrated that those indicators have the mean score in the range of 5.36 up
to 6.50, which means it is on a high level. This result indicated that those respondents have
practiced the construct addressed in this study.
In addition, the value of the outer variance inflation factor (VIF) addresses the collinear-
ity between indicators, with the VIF value requirement being less than 5.0 [59]. The result
indicated that VIF is in the range of 1.540–4.201, which implies that those indicators satisfy
the VIF requirement values.
Besides convergent validity, the measurement item needs to examine the discriminant
validity to ensure that all indicators correlate higher with its construct than other constructs.
The Forner-Larcker criterion is used to address the discriminant validity, as shown in
Table 5. The square root value of AVE of each construct (written in bold) is greater than its
correlation with other constructs (other values on the same column); hence the discriminant
validity of the construct indicators is satisfied [58].
Table 4. Validity and reliability of the variables.
Item Factor Composite

Construct Mean Outer VIF AVE
Number Loading Reliability
ER1 5.93 0.80 2.308
ER2 5.97 0.75 2.036
ER3 5.62 0.85 2.956
ERP adoption ER4 5.67 0.78 2.019 0.92 0.65
ER5 5.73 0.86 3.071
ER6 5.5 0.83 3.251
ER7 5.84 0.78 2.062
GP1 5.92 0.76 2.371
GP2 5.8 0.76 2.631
Green GP3 5.49 0.73 1.754
purchasing 0.89 0.57
GP4 5.52 0.79 1.932
GP5 6.03 0.67 2.174
GP6 5.51 0.79 2.818
GPR1 5.43 0.81 4.169
GPR2 6.07 0.77 2.247
GPR3 5.77 0.77 2.165
GPR4 5.97 0.87 3.723
Green
GPR5 5.82 0.83 4.201 0.92 0.58
production
GPR6 6.1 0.62 1.784
GPR7 6.11 0.8 2.502
GPR8 5.96 0.61 1.521
GPR9 6.04 0.7 2.130
GD1 5.25 0.62 1.518
GD2 5.77 0.83 2.336
Green GD3 5.7 0.79 2.040
0.86 0.51
distribution GD4 5.36 0.76 1.771
GD5 6.12 0.63 1.476
GD6 6.21 0.61 1.273
OP1 6.32 0.79 1.731
OP2 5.84 0.58 1.237
Operational
OP3 6.16 0.84 2.098 0.87 0.58
performance
OP4 6.31 0.76 1.609
OP5 6.13 0.81 2.001
Table 5. Discriminant validity.
Green Green Operational

Variable ERP Adoption Green Purchasing
Distribution Production Performance
ERP Adoption 0.807
Green Distribution 0.617 0.712
Green Production 0.618 0.688 0.760
Green Purchasing 0.569 0.696 0.735 0.753
Operational Performance 0.671 0.551 0.652 0.622 0.761
The further analysis addresses the inner model assessment of coefficient of determi-
nation (R2 ) and predictive relevance denoted as Q2 . Table 6 shows the results of R square
measurements with values in the moderate range (0.30–0.60) [58]. The value of R square is
the value obtained using research data from the survey results, while adjusted R square
is the value of R square corrected based on the number of samples adjusted. The value
of R square is the extent to which the variance of the influencing variable explains the
variance of the variable in question. For example, operational performance has a value of R
square 0.562 which means the variance of operational performance can be explained by
ERP adoption, green purchasing, green production, and green distribution variables up to
56.20%. The rest of the variance, which was not explained in the study, was explained by
other variables.
Table 6. R2 and Q2 assessment result.
Variable R Square Q Square

ERP Adoption - -
Green Purchasing 0.324 0.170
Green Production 0.600 0.340
Green Distribution 0.533 0.250
Operational Performance 0.562 0.310
Table 6 also shows the value of Q2 , which is greater than zero. According to [58], the
value of Q2 greater than zero indicates that the model has a good predictive relevance.
Therefore, the research model involving the five constructs, namely, green purchasing,
green production, green distribution, and operational performance, have good predictive
relevance. Finally, Goodness-of-fit (GoF) in PLS-SEM has no standard statistic like in CB-
SEM. The calculation of goodness of fit (GoF) uses the square root of multiplication between
the mean of the determination coefficient (R2 ) and AVE [60], as shown in Equation (1). The
result indicated the value of 0.548, which is good fit (>0.36) [61].
p √
GoF = R2 × AVE = 0.505 × 0.578 = 0.540, (1)
4.3. Hypothesis Testing

The previous discussion indicated that the first step of the analysis, measurement
model assessment, has satisfied the requirement set in the partial least square (PLS) tech-
nique. Further analysis can proceed to hypothesis testing to examine whether the empirical
data support the direct and indirect hypotheses. Table 7 shows the test result of the hy-
potheses examination that has been formulated in the previous section. The hypotheses
consist of nine direct hypotheses and three indirect hypotheses. Eight hypotheses (H1–H5,
H7–H9) were supported, and one hypothesis was not supported (H6). A hypothesis is
supported if the T statistics value exceeds 1.96 or the p-value less than 0.05. The sign of the
path coefficient value (negative or positive) indicated the direction of the influence. The
positive value indicates the positive direction of influence.
Table 7. Direct hypothesis Testing Result.
Relationship Path Coefficient T Statistics p Values Remark

ERP Adoption -> Green Purchasing (H1) 0.569 9.33 0.000 supported
ERP Adoption -> Green Production (H2) 0.296 3.44 0.001 supported
ERP Adoption -> Green Distribution (H3) 0.310 3.17 0.002 supported
Green Purchasing -> Operational Performance (H4) 0.225 2.05 0.042 supported
Green Production -> Operational Performance (H5) 0.261 2.34 0.021 supported
Green distribution -> Operational Performance (H6) −0.034 0.31 0.760 not supported
Green Purchasing -> Green Production (H7) 0.567 7.29 0.000 supported
Green Production -> Green Distribution (H8) 0.497 5.92 0.000 supported
ERP Adoption -> Operational Performance (H9) 0.403 4.46 0.000 supported
Table 7 shows that all direct hypotheses, the direct causal relationship between two
constructs, are positive and significant for the significant level of 0.05 (or 5%). As shown,
ERP adoption affects green purchasing with a path coefficient value of 0.569, a T statistic
value of 9.33, and a p-value of 0.000. This finding implies that ERP adoption positively
affects green purchasing, and the influence is significant for the significant level of 0.05
or a T-value of 1.96. Furthermore, ERP adoption positively affects green production (H2)
with a patch coefficient of 0.296, a T statistic value of 3.44, and a p-value of 0.001. Moreover,
ERP adoption affects green distribution (H3) with a coefficient of 0.310, T value of 3.17, and
p-value of 0.002. Green purchasing also influences operational performance (H4) with a
coefficient value of 0.225, T value of 2.05, and p-value 0.042. Similarly, green production
influences operational performance (H5) with a coefficient value of 0.261, T value of
2.34, and p-value of 0.021. However, green distribution does not affect the operational
performance (H6) since the t statistic value is 0.31, less than 1.96, or p-value is 0.760 greater
than 0.05. Instead, green purchasing positively affects green production (H7) with a
coefficient value of 0.567, T value of 7.29, and p-value of 0.000. Green production also
influences green distribution (H8) with a coefficient value of 0.497, T value of 5.92, and
p-value of 0.000. The last direct hypothesis is the influence of ERP adoption on operational
performance (H9), which is supported with a coefficient value of 0.403, T value of 4.46, and
p-value of 0.000.
Furthermore, the indirect hypotheses assessment result is indicated in Table 8. Three
indirect hypotheses were proposed, and the result shows two hypotheses (H10, H11) were
supported while one was not supported (H12).
Table 8. Indirect Hypothesis testing Result.
Indirect Relationship Path Coefficient T Statistics p Values

ERP Adoption -> Green Purchasing -> Operational Performance (H10) 0.128 2.012 0.045
ERP Adoption -> Green Production -> Operational Performance(H11) 0.077 2.096 0.036
ERP Adoption -> Green Distribution -> Operational Performance (H12) −0.011 0.289 0.773
The ERP adoption indirectly influences operational performance through the mediat-
ing role of green purchasing (H10) with a coefficient of 0.123, T value of 2.012, and p-value
of 0.045. Besides, the ERP adoption also indirectly affects operational performance through
the mediating role of green production with a coefficient of 0.077, T value of 2.096, and
p-value of 0.036. However, ERP adoption did not indirectly affect operational performance
through the mediating role of green distribution.
Figure 2 shows a summary of the research model with the results of analysis using
smartPLS software. The yellow box is an indicator of the variable. The value lies on the
line between the variable, and the indicator is the factor loading. Furthermore, the value
inside the circle indicates the average variance extracted (AVE), and the value of the line
between variables is the path coefficient.
Figure 2. Research model and analysis result.

5. Discussion
The results of the first hypothesis test (H1) stated that ERP adoption has a positive
effect on green purchasing. This finding means that if the company adopts ERP, such as
providing accurate information with the relevant supplier about the company’s needs, such
as material needs that meet the standard with environmental protection criteria, it will
allow the supplier to be able to provide the intended requirements. These results support
previous research that adopting information technology such as ERP can improve supplier
capabilities by increasing business relationships between companies and suppliers to create
increasingly environmentally friendly purchases [35–37]. The second hypothesis (H2) that
ERP adoption affects green purchasing was also supported in this study. Implementing
ERP in the company allows effective coordination and enables the company to adopt green
production. Green production eliminates waste, pollution, recycling, material provision-
ing, and technology in preparing environmentally friendly production processes. The
research is also following previous research [8,21,33], which states that ERP adoption affects
green production. This result means that if the company intensively uses ERP technology in
providing and sharing quality information, they could benefit from more environmetally
friendly production process.
Furthermore, the result showed that the third hypothesis (H3), ERP adoption has
a significant effect on green distribution because it has a positive statistical value result
with a significance value of 5%. These results support previous research [21,33,40], stat-
ing that adopting information technology such as ERP that provides information about
the company’s operations is the main key in green distribution success. It enables mini-
mizing the use of packaging, load optimization, reduction of material consumption, and
use of integrated transportation systems to reduce the impact of environmental damage
from transportation.
In addition, the results of the fourth hypothesis (H4) test showed that green pur-
chasing affects operational performance. The manufacturing companies are interested
in collaborating on environmentally friendly purchases with suppliers to create positive
profits, supported by case studies from manufacturing companies in Europe and Australia
showing that ecologically friendly purchasing practices are used to improve company
operations. These results also follow previous research [22,39,41,43], which states that
green purchasing affects operational performance. As expected, test results revealed that
green production is positive improves operational performance (H5). These results support
previous research that environmentally friendly production innovation processes reduce
the impact of environmental damage and improve the quality of production processes
capable of producing environmentally friendly goods [41–43].
However, the hypothesis (H6) test showed that green distribution had no direct effect
on operational performance. Therefore, these results do not support the proposed hypoth-
esis. However, previous research has also demonstrated that the logistics or distribution
industry is very closely related to environmental friendliness performance rather than
operational performance that tends to be related to increasing profits or quality of goods.
This finding is evident from implementing green distribution to the operating performance
that is not satisfactory enough in developed city areas such as Beijing and Shanghai. These
results are also under previous research. In the context of Indonesia, the underlying reason
for green distribution may not affect operational performance is the condition of infrastruc-
ture in Indonesia that has not been able to improve operational performance. In addition to
infrastructure problems, bureaucratic processes regulated by regulations and legislation
have not been effective and efficient. Such as, shipping by land and sea requires a long
waiting time compared to neighboring countries. This result is evident from the logistic
cost in Indonesia, which still reaches 23% of the total cost. While in neighboring countries
reached 12 to 15%.
Instead, the seventh hypothesis (H7) is supported that green purchasing influences
green production. Companies practice environmentally friendly production by reducing
or eliminating hazardous materials or materials, reducing excessive use of sources, and
encouraging recycling and purchasing reusable materials [25,29,47]. A company using en-
vironmentally friendly products enables it to practice environmentally friendly production.
Moreover, the hypothesis (H8) test result showed a significant impact of green production
on green distribution. This study supports the previous research stating that green produc-
tion support green distribution [11,40,48]. However, green production should not stand
alone in practicing the green concept. Green production requires green distribution, such
as coordination and collaboration between the company and its distributor to transport the
green product using fuel-efficient transport, recyclable and reused packaging, eliminating
waste, and optimizing the route. The company tries to implement the recycling process
in its production process. At the same time, the company will also transport or store the
product using packaging materials that can be recycled and reused.
The hypothesis (H9) test revealed ERP adoption improves operational performance
in the manufacturing industry. Successful adoption of ERP can enhance organizational
performance such as cost, quality, delivery, product variation, and company time to intro-
duce new products to the market from other competitors. Adopting ERP into the company
operation can help the company make a decision quickly. In addition, the company will
potentially reduce lead time so that the delivery process can be more responsive. This
finding extends the acceptance of previous research stating that ERP adoption improves
operational performance [14,37,49–52]. The hypothesis (H10) test showed a significant
influence of ERP adoption on operational performance mediated by green purchasing.
Companies adopting ERP enables integration between departments to be more intense and
fruitful such as decision-making in purchasing the green product from the supplier. Compa-
nies that carry out ecologically friendly purchasing processes can improve manufacturing
operational performance, such as environmentally friendly product development. These re-
sults are also in line with previous research [21,41,43,45,54] stated that ERP adoption affects
operational performance through green purchasing. Suppliers who have implemented an
environmental friendliness management system supported by accurate information enable
the company to improve its product development.
Furthermore, the hypothesis (H11) showed a significant impact of ERP adoption on
operational performance mediated by green production. The ERP will enhance environmen-
tally friendly production processes such as water utilization and energy. As a result, first,
it can produce green products and sell relatively cheaper. The company can also develop
the following products to further increase its competitiveness in the market. These results
align with previous research, which states that ERP adoption affects green production
operational performance. However, hypothesis (H12) shows that green distribution does
not significantly mediate the influence between ERP adoption and operational performance
(H12). The finding is the consequence of hypothesis (H6) stating that green distribution
did not improve operational performance. The possibility of the underlying reason ERP
adoption does not affect operational performance through green distribution, the imple-
mentation of green distribution has not been able to contribute to a delivery with the fastest
route. This result is likely to happen because the infrastructure system in Indonesia is still
slow and has not been able to improve operational performance.
6. Managerial Implication and Theoretical Contribution

The managerial implication of this study is highlighted as follows. Firstly, the findings
have indicated that ERP adoption is essential for the company in enhancing its operational
performance. ERP is an information technology that enables the organizations involved in
a supply chain to communicate seamlessly in coordinating all activities related to fulfilling
customer orders. Furthermore, during the COVID-19 pandemic, adopting information
technology such as ERP allowed the organization to operate without exposing the people to
the risk of being infected. ERP technology facilitates the provision of accurate and quality
information for daily operations. This information is shared among the supply chain part-
ners on the downstream and upstream sides. Based on the shared information, the supply
chain partners could collaborate in real-time and efficiently, such as collaborative planning,
forecasting, and replenishment. This kind of collaboration is highly essential for eliminating
the bullwhip effect and, at the same time coping with demand fluctuation. Therefore, the
companies currently using ERP are enjoying the benefit during the pandemic. Finally, this
study suggests that companies who are not using ERP consider it since they could benefit
from adopting ERP, particularly during the current pandemic. Indeed, adopting the ERP
technology requires an expensive investment, and it takes time to achieve the break event
point. However, ERP will enable manufacturing companies to achieve a competitive advan-
tage in the long run. Secondly, as noticed previously, environmental protection is becoming
an essential issue in global trade. In contrast, fulfilling ecological protection regulations and
adopting green practices requires a considerable capital investment, such as investment in
green technology. As part of the green supply chain practices, green purchasing concerns
buying environmentally friendly products from suppliers and prioritizing suppliers who
implement environmentally friendly management systems and are certified by ISO 14001.
Green purchasing is also concerned with avoiding buying ecologically unfriendly products
such as lead and toxic material. Applying these green purchasing criteria in many cases
is not easy work. It may require a drastic change in company policy, or it may need a
company to develop its supplier, which is costly for the company. Besides, green production
concerns eliminating waste in the production process, reducing environmental pollution,
implementing the recycling process, adopting environmentally friendly production pro-
cesses, not using toxic materials, and using technology to make the production process
environmentally friendly. Green production adoption requires new innovative technology
such as new machines, equipment, production processes, and new skills, enabling the
organization to meet the green production criteria. Like ERP technology, green purchasing
and green production stipulate the organization to invest in capital-intensive resources.
Indeed, this capital-intensive investment requirement makes the company management
doubt whether the investment will benefit the company. However, this research indicated
that practicing the green concept such as green purchasing and green production could
benefit the company’s operational performance. Hence, the company management of the
manufacturing industry is encouraged to adopt green purchasing and green production
based on their capability in providing the budget requirement. In addition, the global
attention on environmental issues has advocated the manufacturer to practice ecological
protection as a predetermined condition in the worldwide market. It requires a considerable
investment; however, it enables the company to access a broader market globally. In return,
the company will benefit from potential opportunities. The company will benefit from
wider opportunities, gain a competitive advantage, and improve operational performance
in the long term.
Furthermore, this study also contributes to the current supply chain management
theories. Firstly, the findings of this study have proved the extended acceptance of the pre-
vious research in the population of the manufacturing industry in Indonesia. Furthermore,
such previous studies show that adopting ERP technology benefits the companies, particu-
larly in the ongoing pandemic, to improve operational performance. Besides, the study
also enriched the current research that practicing a green approach in the manufacturing
industry contributes to enhancing the operational performance even though the doubt is
due to high capital investment requirements. The second contribution to the theoretical
issue is the findings showing that green practicing mediates the indirect impact of ERP
technology adoption in improving operational performance.
7. Conclusions
This research has assessed the benefit of adopting ERP and practicing green supply
chain management toward operational performance in the manufacturing industry in In-
donesia. The result has revealed that adopting ERP technology and practicing green supply
chain management could enhance operational performance, particularly amid the current
COVID-19 pandemic and increasing society’s concerns about environmental protection.
Based on the research model and proposed hypotheses, a more detailed conclusion is also
presented. The study has developed thirteen hypotheses to be examined, consisting of nine
hypotheses of direct relationships and three of indirect relationships between constructs.
The adoption of ERP technology enhanced the adoption of green purchasing (H1), green
production (H2), green distribution (H3), and operational performance (H9). Furthermore,
operational performance is directly affected by green purchasing (H4) and green produc-
tion (H5). However, operational performance was not supported by green distribution
(H6). Moreover, green purchasing support green production (H7), and Green distribution
supports green production (H8). In addition, ERP adoption indirectly improves operational
performance through green performance (H10) and green production (H11). But ERP
adoption did not affect operational performance through green distribution (H12).
This result provides essential insight for the manager in the manufacturing industry
that adopting ERP and practicing environmental protection such as green purchasing,
green production enhances operational performance. Furthermore, this research extends
the acceptance of previous research related to ERP adoption, green purchasing, green
production in improving operational performance. The novelty of this study is the rev-
elation of mediating role of green purchasing and green production in the influence of
ERP adoption on operational performance. Hence, this study contributes to enriching the
current research in supply chain management. Finally, this research has a limitation in
methodology and population coverage, which focuses on the manufacturing companies
in East Java, Indonesia. This study used an online questionnaire as a survey instrument,
which could be exposed to a biased response due to the arbitrary attitudes of respondents.
The usage of online questionnaires should be verified, to some extent, for some responses
by phone call or direct interview to make sure the online responses are valid. However,
this idea is not affordable given the pandemic situation. The second limitation issue is the
population coverage that focused on specific industry sectors, namely food and beverage,
textile, and pharmacy. For future research, the author suggested covering a broader popula-
tion and industrial sectors such as the service industry and including additional constructs
such as top management commitment and customer relationship management.
Author Contributions: Conceptualization, R.W.S. and H.S.; methodology, R.W.S. and H.S.; software,
R.W.S. and H.S.; validation, H.S., Z.J.H.T. and F.J.; formal analysis, R.W.S. and H.S.; investigation, H.S.,
Z.J.H.T. and F.J.; resources, R.W.S. and H.S.; data curation, R.W.S. and H.S.; writing—original draft
preparation, R.W.S.; writing—review and editing, H.S. and R.W.S.; visualization, R.W.S.; supervision,
Z.J.H.T. and F.J.; project administration, R.W.S.; funding acquisition, H.S. and Z.J.H.T. All authors
have read and agreed to the published version of the manuscript.
Funding: The APC was funded by Petra Christian University, Surabaya, Indonesia with the Funding
No. 32/HB-PENELITIAN/LPPM-UKP/XII/2021.
Institutional Review Board Statement: Not applicable.
Informed Consent Statement: Not applicable.
Data Availability Statement: Not applicable.
Acknowledgments: The authors are highly thankful to all the associated personnel who, in any
reference, contributed to the completion of this study.
Conflicts of Interest: The authors declare no conflict of interest.
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sustainability

1 Master of Management Department, Petra Christian University, Surabaya 60236, Indonesia;

Sustainability 2022, 14, 4944. https://doi.org/10.3390/su14094944 https://www.mdpi.com/journal/sustainability

to start thinking critically in building environmentally friendly business practices. Green

2.1.2. Green Purchasing

2.1.3. Green Production

2.1.4. Green Distribution

2.1.5. Enterprise Resource Planning (ERP)

2.1.6. Operational Performance (OP)

2.2. Hypotheses Development

2.2.2. Enterprise Resource Planning (ERP) Adoption and Green Production

2.2.3. Enterprise Resource Planning (ERP) Adoption and Green Distribution

2.2.4. Green Purchasing and Operational Performance

2.2.5. Green Production and Operational Performance

2.2.6. Green Distribution and Operational Performance

2.2.7. Green Purchasing and Green Production

2.2.8. Green Production and Green Distribution

2.2.9. Enterprise Resource Planning (ERP) Adoption and Operational Performance

2.2.10. Enterprise Resource Planning (ERP) Adoption and Operational Performance

2.2.11. Enterprise Resource Planning (ERP) Adoption and Operational Performance

2.2.12. Enterprise Resource Planning (ERP) Adoption and Operational Performance

3.2. Measurement Item

3.3. Data Analysis

Category Frequency Percentage

Table 2. Department Profile.

Departement Frequency Percentage (%)

ERP Software Frequency Percentage (%)

4.2. Measurement Validity and Reliability

Item Factor Composite

Table 5. Discriminant validity.

Green Green Operational

Variable R Square Q Square

4.3. Hypothesis Testing

Relationship Path Coefficient T Statistics p Values Remark

Indirect Relationship Path Coefficient T Statistics p Values

Figure 2. Research model and analysis result.

6. Managerial Implication and Theoretical Contribution

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