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IBIMA Publishing

Journal of Southeast Asian Research


http://ibimapublishing.com/articles/JSAR/2018/497926/
Vol. 2018 (2018), Article ID 497926, 10 pages, ISSN : 2166-0832
DOI: 10.5171/2018.497926

Research Article
The Influence of Green Supply Chain Practices towards
Environmental Development: The Malaysian
ISO14001 Certified Manufacturing
Companies Perspective

Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai

School of Management, Universiti Sains Malaysia, Penang, Malaysia

Correspondence should be addressed to: Marini Nurbanum Mohamad; [email protected]

Received date: 30 August 2017; Accepted date: 10 December 2017; published date: 13 July 2018

Academic Editor: Tan Booi Chen

Copyright © 2018. Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai. Distributed under
Creative Commons CC-BY 4.0

Abstract

This study examines the influence of green supply chain practices towards environmental
development. There has been an increasing interest among scholars concerning the influence of
green supply chain practices towards environmental development in the manufacturing
industry due to its vast environmental effect and the rising pressure from consumers that
companies should ‘go green’. A questionnaire was posted to 621 Malaysian ISO 14001 certified
manufacturing companies. A total of 146 usable questionnaires were received and the response
rate was 23.51%. This study identified that green purchasing and eco-design has a positive
effect towards environmental development. These findings provide significant proof of the
relationship between green supply chain practices and environmental development. Therefore,
the acceptance and application of green supply chain practices in manufacturing firms should be
required, not merely based on moral grounds, but also the progressive performance outcomes
companies’ gain.

Keywords: environmental development, green purchasing, eco-design, reverse logistics

Introduction attention to the issue as there are escalating


challenges revolving around balancing
In recent years, the issue of sustainability between environmental and business
and the environment has become a key requirements. In view of the challenges faced
managerial concern. Presently, businesses, by organisations, green supply chain
societies and governments are giving more practices have emerged as an approach that
______________

Cite this Article as: Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018)," The Influence
of Green Supply Chain Practices towards Environmental Development: The Malaysian ISO14001 Certified
Manufacturing Companies Perspective ", Journal of Southeast Asian Research, Vol. 2018 (2018),
Article ID 497926, DOI: 10.5171/2018.497926
Journal of Southeast Asian Research 2
_____________________________________________________________________________

extends the environmental responsibility of 2010). Yet, the most vital and vigorous
organizations throughout their entire supply debate related to sustainable development is
chain. There has been an increasing interest the method and utility of assessment for
among scholars concerning the influence of future needs and desires by an organisation
green supply chain practices towards (Saaty, 2008). The requirements of upcoming
corporate sustainable development in the generations are an attached component of
manufacturing industry due to their vast the sustainable development idea (Orlitzky,
environmental effect and the rising pressure 2008). Thus, the primary worry to CSD is
from consumers that companies should go concerning the decision for forthcoming
green. generations’ essentials, where sustainability
decisions must have more than a superficial
Although green practices are well founded in assessment of upcoming necessities, because
developed nations, however, they are not intergenerational fairness is a difficult, vital
well established in developing countries and emotional notion that is important for
(Gonzales et al., 2010). Little is known about corporate sustainable development
the potential of green supply chain practices dimensions (Yam, 2012).
towards corporate sustainable development
in the Malaysian context. The increasing One of the broadly recognised CSD
number of ISO 14001 certification shows that frameworks explains the paradigms of CSD
Malaysian corporations aim to endure in the through three linked dimensions, identified
current highly-competitive contemporary as environmental, economic and social
business setting (Rahman, 2012). Hence, this developments (Erol et al., 2009). These three
paper seeks to investigate the effect of green extents of CSD are recognised respectively,
supply chain practices (green purchasing, environmental development through
eco-design, reverse logistics) towards cooperate environmental management for
environmental development. refining the ecosystem, economic progress
through firm value creation by refining the
Literature Review efficiency and effectiveness of services and
products, finally, social development through
Corporate Sustainable Development corporate social responsibility in terms of
increasing social wellbeing and encouraging
The WCED defined sustainable development
better societies (Bansal 2005). This study
as development that meets the requirements
adopts the works of Chow and Chen (2012)
of present-days without conceding with the
and defines CSD as the extent to which firms
abilities of the forthcoming generations to
are willing to adopt environmental, economic
meet their essentials which are concerning
and social development in their operations.
the integration of economic, environmental
This paper presents findings on the effect on
and social impacts of development (WCED,
environmental development.
1987). There are various viewpoints of
analysis in studies on Corporate Sustainable Environmental Development
Development (CSD). CSD is recognised as an
extensive notion because it comprises of an In general, the complexity in measuring
entire set of normative concerns associated environmental development is evident
with both the function of businesses in through the assortment of information
society and the natural setting (Sharma and utilized, from subjective indications, case
Ruud 2003). studies, and surveys to proprietary
information sources (Montabon, Sroufe and
The main purpose of CSD ought to be for the Narasimhan, 2007). Numerous researches
achievement of a firm’s economic have resolute to environmental development
performance at the same time considering by utilizing a survey due to its extensive and
the societal wellbeing and environmental merely perceptual view (Montabon, Sroufe
constraints (Sharma 2002; Osterle et al., and Narasimhan, 2007). But countless

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
Asian Research, DOI: 10.5171/2018.497926
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studies have identified a list of items to As establishments that form a supply chain
measure environmental development, such become conscious of customer requirements
as decreasing water usage (Erol et al. 2009), for goods and services delivered without
recycling waste, reversing logistics and harming the environment, administrators
redesigning products (Prahinski and will make choices that support the
Kocabasoglu, 2006) and making green incorporation and organisation of GSC
purchases (Diabat and Govindan, 2011). practices along the supply chain (Vachon and
Klassen, 2008). It is commonly thought that
This study identified the characteristics of supply chains and establishments can
present dimensions and measured achieve competitive advantage by being the
environmental development from a rather pioneers to embrace environmental
broad and fundamental view. Numerous sustainability and adopt GSC practices (Green
taxonomies depict environmental et al., 2012). This study adopts the green
development, extending from reactive to supply chain practices that were identified by
proactive advances (Pradeep, 2012). In a Eltayeb (2009). They conducted a study by
majority of cases, the reactive advancement reviewing twenty one literatures on green
entails activities that could reduce the supply chain practices and determined that
environmental effect of products and the green supply chain practices can be
services through proper waste disposal categorised into three main practices,
(Schianetz and Kavanagh, 2008). On the namely; (1) green purchasing, (2) eco-design
other hand, the proactive advancement and (3) reverse logistics.
entails alternate fabrication procedures that
reduce waste and emissions (Bansal, 2005). Green Purchasing
Alternative processes includes, utilizing
minimum conventional fuels and reducing Green products purchasing is one of the
negative effects towards animals and the responses towards addressing
natural environments (Lindgreen et al., environmental concerns. As green goods are
2009). Also, they are practices that reduce somewhat new for Malaysian industries,
procurement of non-renewable resources, there are limited recognized studies about
chemicals, components and decrease energy green consumers, green marketing and green
utilization (Baumgartner and Ebner, 2010). product in Malaysia (Shahnaei, 2012).
Previous literatures in Malaysian identified
Green Supply Chain Practices cost reductions, marketing prospects and
financial earnings from the trade of green
In the 21st century, Green Supply Chain (GSC) goods, to be the key reasons organisations
has appeared as a significant element of the are implementing green practices (Eltayeb,
environmental and supply chain approaches Zailani and Jayaraman, 2009). Currently,
in many companies. GSC practices can be companies are gradually dealing with their
defined as applied organisational activities environmental performance to ensure the
motivated to allocate and circulate supplies and machinery utilized by them are
environmental management, in specific environmentally-friendly and are fashioned
progressive environmental managing from environmentally-friendly procedures.
practices, through the whole supply chain, by
extending relationships between large-sized Largely, green purchasing concentrates on
buying organisations and their suppliers assisting organisations attain savings in the
(Lee, 2008). In this context, supply chains long run by keeping them from any possible
attempt to preserve internal wellbeing and losses to their brand value (Shi et al., 2012).
environmental sustainability by the ability to In a wider context, green purchasing
self-regulate based on data from the external guarantees the commitment of supply chain
environment (Vachon and Klassen, 2006). managers towards sustainable development
by obtaining or purchasing environmental
friendly inputs to address the general

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
Asian Research, DOI: 10.5171/2018.497926
Journal of Southeast Asian Research 4
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environmental concerns (Kumar et al., 2009). to close the supply chain by managing
Subsequently, when the virtuous of the product practicality while decreasing the
company overlaps with the benefit of the environmental effects of product life-cycle
society in which it functions, there is a (Zhu et al., 2008). Hence, environmentally
synergistic consequence. Therefore, the accountable design or eco-design is a crucial
company would benefit from improved GSC practice that assists firms towards
operations management combined with realizing their goals such as replacing
increased sales as the society shifts toward harmful and hazardous materials with
sustainability and consciousness for greener environmentally friendly substances,
products. decreasing resource usage, and increasing
organizational obligation towards their
In addition, green purchasing specifically products.
addresses the environmental concerns of
manufacturing firms and is intended to Due to standards and consumers’ increasing
significantly influence environmental consciousness of environmental concerns,
management (Diabat and Govindan, 2011). firms must change their daily actions from
Also, a study by Green et al. (2012) identified design to eco-design to remain competitive.
that green purchasing provides enhanced According to Lauring and Thomsen (2009),
economic and environmental management, the only manner to enhance corporate
this leads to enriched operating and sustainable development is to improvise.
organizational outcomes. Owing to this, That is, to move to more sophisticated types
businesses are aiming for green purchasing such as product differentiation and
among their consumers and implementations innovation through eco-design. However, a
of environmental management concepts in substantial reduce in environmental effect is
their manufacturing processes for not attained by merely including a ‘green’
sustainable development (Hajli and Hajli, limitation but then again environmental
2013). effect is reflected from the designing stage.

Eco-Design Reverse Logistics

Eco-design includes activities that change the The concept of reverse logistics has been
resources and materials utilized throughout discussed in many past literatures and was
the manufacturing procedures to be less initially defined as “the function of logistics in
harmful and more environmentally friendly. product recovery is to decrease resources,
The main purpose of eco-design is to reduce reuse, substitute resources, recycle materials,
an item’s environmental effect throughout its discard waste, restore, remanufacture and
entire life cycle. The eco-design practise amend” (Lee, 2008). This decrease in
assimilates environmental features into the resources takes account of both the
product designing processes, keeping in reduction of resources utilized in goods and
mind the complete movement of the product the reduction of waste and energy attained
in its supply chain (Handfield et al., 2002). through the design of environmentally-
friendly goods (Gupta et al., 2013).
Eco-friendly or ecological design places Previously, when the alternative of
importance on investment recapture and is decreasing resource has been used
identified to positively affect environmental extensively, the subsequent intention was to
outcomes. This has been proven in a study by recycle materials, and to reuse discards
Cheng and Shiu (2012) where they identified, through reverse logistics. Yet in
in the manufacturing industry, teamwork organizations, reverse logistics was typically
with retailers and suppliers’ resulted in the last option employed (Gupta et al., 2013).
better environmental performance.
Therefore, eco-design facilitates corporations Through the changes of time, in the existing
to increase environmental performance and business setting, companies are not solely

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
Asian Research, DOI: 10.5171/2018.497926
5 Journal of Southeast Asian Research
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competing on a producer to producer basis, large extent. The items were adopted from
but also on supply chain to supply chain Chow and Chen (2012). For green
basis. Somewhat, the real competitive purchasing, eco-design and reverse logistics,
encounter is between supply chains (Gupta this study uses a 5-point Likert scale. The
et al., 2013). Hence, establishments globally scales are from 1= not at all to 5= very high
have started understanding the significance extent. The items were adopted from Eltayeb
of reverse logistics towards corporate (2009).
sustainable development. Thus, companies
are required to deal with the reverted goods The questionnaires were e-mailed to the
in an efficient fashion to gain consumer's respondents. After three reminder emails,
relationship and reduce the related expenses two postal mails and in-person surveys, 146
(Yacob et al., 2012). Consequently, the completed questionnaires were received.
encouraging findings of reverse logistics With a total of 146 usable questionnaires, the
among businesses through waste response rate was 23.51%. The response rate
management provide hope to commercialize is considered adequate, given the low levels
this idea and are increase practical executed. of reply from mail and electronic mail
In a quantifiable manner, reverse logistics surveys (Sekaran and Bougie, 2013) and
are beneficial for the enhancement of generally low response rate for this sort of
sustainable development both at the correlational study in Malaysia. The response
individual businesses and supply chains level rate of this study is also recognised to be
(Starostka-Patyk and Grabara, 2010). satisfactory in relation to similar studies in
Malaysia, such as Eltayeb (2009) whose
Research Design and Methodology research on green supply chain initiatives
stated a 23.9% response rate and Vachon and
A survey was sent to 621 Malaysian ISO Klassen (2006) whose research on green
14001 certified manufacturing companies supply chain initiatives attained a response
from the Federation of Malaysian rate of 23%.
Manufacturers (FMM) directory 2014 of
Malaysian Industries (FMM, 2014). This SPSS (Statistical Package for Social Science)
research was carried out using a 7-point software for Windows release 21.0 was used
Likert scale for environmental development. to analyse the data. The profile of responding
The scales are from 1= a small extent to 7= a
firms are shown in
Table 1. The table indicates that most and apparels and finally the other industries.
organisations (32.9%) are from the electrical From the table, it can also be observed that
and electronics industry and the second there are only a few newly started up
highest being from the wood and furniture organisations (5.5%) and most of the firms
industry at 17.1%. The remaining are well established and have been functional
percentages were distributed between the for more than 15 years (83.6%). Likewise,
metal and machinery, chemicals, food and most organisations are noticeably large firms
beverage, rubber and plastic, paper, textile with exceeding 250 employees (75.3%).
Table 1: Profile of Responding Firms

VARIABLE CATEGORIES FREQUENCY PERCENTAGE


INDUSTRY Electrical & Electronics 48 32.9
TYPE Wood & Furniture 25 17.1
Metals & Machinery 15 10.3
Chemicals 11 7.5
Food & Beverage 8 5.5
Rubber & Plastic 3 2.1

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
Asian Research, DOI: 10.5171/2018.497926
Journal of Southeast Asian Research 6
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Paper 2 1.4
Textile & Apparels 1 0.7
Others 33 22.6
AGE OF FIRM Less than 5 years 8 5.5
5 – 9 years 5 3.4
10 – 15 years 11 7.5
More than 15 years 122 83.6
NUMBER OF Less than 100 14 9.6
EMPLOYEES 100 – 250 22 15.1
251 – 500 40 27.4
501 – 1000 40 27.4
More than 1000 30 20.5

Results and Discussion


H2. Eco-design has a positive effect towards
A study by Chiarini (2013) reported that, environmental development.
components of social influence,
environmental concern, green product The concept of reverse logistics has been
knowledge, and environmental labeling are defined as “the part played by logistics in
significantly related toward green purchase merchandise returns, decreasing sources,
behavior by organizations. Therefore, recovering, materials replacement, reuse of
towards pursuing sustainable development materials, waste removal and restoring,
goals and preserving the environment, mending, and remanufacturing” (Lee, 2008).
implementing green purchasing practices in It is essential for manufacturers to handle the
organizations is essential (Su et al., 2008). reimbursed merchandises in an optimal
Thus this study hypothesizes that: manner to improve customer's relationship
and reduce the related charges (Yacob et al.,
H1. Green purchasing has a positive effect 2012). Reverse logistics aids the practical
towards environmental development. application of sustainable development both
at individual business and supply chain levels
This design for “green” is sometimes referred (Starostka-Patyk and Grabara, 2010). Thus
to or defined as design for the environment. this study hypothesizes that:
Whereby, the purpose of eco-design is to
reduce products’ environmental effect H3. Reverse Logistics has a positive effect
without causing an undesirable trade-off towards environmental development.
with other design standards, such as prices
and utility for sustainability. Thus, eco- Regression analysis was conducted to test
design emphasises investment recovery and the hypotheses. Results of the regression
will positively influence the sustainable analysis of green supply chain practices on
development of organisations by decreasing environmental development are shown in
the environmental effect of designs (Green et Table 2
al., 2012). Thus this study hypothesizes that:
Table 2: Multiple Regression Result: Effect of Green Supply Chain Practices on
Environmental Development

DV: Environmental Development


Variables Standard Beta t-value p-value
Green purchasing 0.215* 2.531 0.012

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
Asian Research, DOI: 10.5171/2018.497926
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Eco-design 0.264** 3.070 0.003


Reverse logistics -0.038 -0.453 0.651
F value 4.476**
0.140
Adjusted 0.109
change 0.127
F change 6.721**
Significant levels: *p<0.05, **p<0.01

Referring to Table 2, green purchasing (β= outcomes which includes enhanced


0.215, p<0.05) showed a significant effect on operational and organizational productivity.
environmental development. By Green Jr et al. (2012) also further stated that
implementing green supply chain practices, eco-design targets to meet the requirements
firms generally gain a competitive advantage of consumers for eco-friendly products and
by adapting their internal and external services fashioned from green design.
aspects of their firm. In this study, it has been
identified that green purchasing does not The results of this study also identified that
only provide internal benefits to the firm but there were no significant relationships
also external benefits to their suppliers. In between reverse logistics towards
other words, green purchasing practices in environmental development. This finding can
firms reflect on their suppliers, besides the be explained through the fact that the
focal firm. This view is supported by Rao government does not play the central role of
(2006), where he stated that generally, green a facilitator to provide structured
purchasing encourages effectiveness and responsibilities and obligations for the
cooperation amongst business partners and diverse components involved for
their main companies. In addition, green environmental conservation and a better
purchasing also has a significant effect on the social living standard. Therefore, firms are
company’s commitment to the society, not embracing reverse logistics wholly,
environmental development, decreasing instead, reverse logistics are viewed as an
waste and attaining cost savings. optional practice in firms. This finding is
supported in past literature by Kersten
This study also identified that eco-design (β= (2008), where most firms do not embrace
0.264, p<0.01) has a significant effect on reverse logistics whole-heartedly because
environmental development. Results from there is no strong government enforcement
this study identified a significant effect for reverse logistics to be practiced in all
between eco-design and environmental firms. Therefore, the ultimate potential of
development. Eco-design, in contrary to reverse logistics for the environment, society
green purchasing and reverse logistics, is an and the nation is yet to be achieved.
internally-focused type of green supply chain
practice. This means, firms try to improvise Conclusion
the environmental qualities of their goods
internally, with some collaboration or This study identified that there exists a
interface from external groups, such as statistically significant positive effect of
suppliers and consumers. Therefore, the green purchasing and eco-design towards
impact is directly linked to the internal environmental development. The findings of
productivity and gains to the company. A this study is supported by past literature by
past study by Green Jr et al. (2012) Chiou et al. (2011), where they determined
recognized that effective adoption of green that greening the supply chain within firms
supply chain practices like eco-design, would lead to noticeable benefits towards the social
lead to better environmental and social standpoint, environmental outcomes and

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
Asian Research, DOI: 10.5171/2018.497926
Journal of Southeast Asian Research 8
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added advantages to the corporation. Firms measuring eco innovation: An


with green supply chain practices can implementation perspective,’ Technovation,
position themselves to gain opportunities 32, 329-344.
and influence the effect of environmental
development by concentrating on green 4. Chiarini, A. (2013) ‘Designing an
purchasing and eco-design, in order to meet environmental sustainable supply chain
environmental requirements encouraged by through ISO 14001 standard,’ Management of
the government. Also in this research, the Environmental Quality, 24(1), 16-33.
Natural Resource Based View theory was
used to shed light concerning the current 5. Chiou, T. Y., Chan, H. K., Lettice, F. and
business environment and how firms seek to Chung, S. H. (2011) ‘The influence of greening
attain competitive advantage by the suppliers and green innovation on
implementing green supply chain practices environmental performance and competitive
for competence in forthcoming years. The advantage in Taiwan,’ Transportation
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managers in Malaysian manufacturing
companies have to comprehend that green 6. Chow, W. S. and Chen, Y. (2012)
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in terms of satisfying the increasing demands a new scale based on the mainland Chinese
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managers in the Malaysian manufacturing 7. Diabat, A. and Govindan, K. (2011) ‘An
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Acknowledgement 8. Eltayeb, T. K. (2009) ‘Adoption of green


supply chain initiatives by ISO 14001
certified manufacturing firms in Malaysia:
The authors would like to express their Key drivers, outcomes, and moderating effect
appreciation to Universiti Sains Malaysia of relationship orientation,’ (Doctoral
Research University (RU) Grant dissertation). Retrieved from USM
(1001/PMGT/816262) for the financial Dissertations and Theses database. (Call No.
support to carry out this research. HD38.5. T236 2009 f rb)

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Marini Nurbanum Mohamad and Charis Samuel Solomon Koilpillai (2018), Journal of Southeast
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