IMPACT OF GREEN SUPPLY MANAGEMENT PRACTICES ON FIRM’S

PERFORMANCE: AN EMPIRICAL STUDY FROM THE PERSPECTIVE

OF PAKISTAN

2. LITERATURE REVIEW
2.1 ABSRACT:

There are 5 factors of the green supply chain practices on organizational performance in Pakistan
manufacturing firms. These factors including green manufacturing, green purchasing, green
information systems, cooperation with customers and eco-design. The result indicates that except
green purchasing, rests of the four independent variables have been statistically significant to
predict organizational performance. However, the eco-design followed by green information
systems has displayed the greatest impact on organizational performance. Therefore, the mangers
should not only implement only on eco-design system but should also concentrate on
implementing green information system to increase their firm’s performance. The key
contribution of this study from theoretical side is that it is possible to sign a negative impact of
green purchasing on organizational performance in the context of Pakistani manufacturing
industry. While, in other countries green purchasing of materials improves firm’s performance.
The main reason behind insignificant effect of “green purchasing” is scarcity of green vendors in
Pakistan, and many organizations import green materials from other countries which
substantially incur costs into the system, and governmental bodies have no supportive role,
governmental bodies have no interest in green purchasing and show relaxation for green projects
in terms of subsidies, lower import duties on green materials, and tax exemption on green
manufacturers.

2.2 KEYWORDS:
 Green supply chain management
 Organizational performance
 Green manufacturing
 Cooperation with customers
 Eco-design
 Green purchasing

2.3 FACTORS OF GREEN SUPPLY CHAIN MANAGEMENT PRACTICES

ON ORGANIZATIONAL PERFORMANCE:

2.3.1 GREEN MANUFACTURING:

Green manufacturing involves adoption of the best resources in the best possible way, which in
the long run can lead to competitive edge through its high-level quality of products in the lowest
possible way of the cost. Similarly companies reduced their cost and eliminate waste from the
system by using green manufacturing technologies. Green manufacturing are working for the
reduction of waste, fewer manufacturing steps, and increasing the efficiency of production along
with an enhanced firm reputation and image.

H1: Green manufacturing directly and positively impacts on organizational performance.

2.3.2 GREEN PURCHASING:

Green Purchasing refers to the procurement of products and services that have a reduced effect
on human health and the environment when compared with competing products or services that
serve the same purpose. This comparison can consider raw materials acquisition, production,
manufacturing, packaging, distribution, reuse, operation, maintenance, and disposal of the
product or service. The role of green purchasing is the involvement of recycling, sourcing
reduction activities in the supply chain. Green purchasing as the role of reducing sources of
waste encourages recycling activities. The green purchasing builds competitive advantage, and
meanwhile, it protects resources and improves the firm performance. Green purchasing protects
the environment from hazardous and toxic materials, and also, it creates significant impact on
firm’s performance.

H2: Green purchasing directly and positively impacts on organizational performance.

2.3.3 ECO-DESIGN:

The firms who focused on Eco-design can reduce usage of hazardous materials in products and
also reduce resource consumption in the manufacturing products. External stakeholders into the
eco-design development stages through the life cycle analysis; environment-friendly product can
measure the product impact on environment till its end life. There is no doubt that eco-design
practices are heavily dependent on customer management, supplier management, customer
management, and internal management. Environment friendly design practices significantly
reduced the negative effect on the environment and also improved firm’s contribution towards
sustainability. The eco-design products have a positive relationship with environmental
performance build competitive advantage, and adoption of eco-design practices improves firm
reputation and enhances best image in the market.

H3: Eco-design directly and positively impacts on organizational performance.

2.3.4 CO-OPERATION WITH CUSTOMERS:

Customers are the key stakeholders in the supply chain, and customers probably put pressure on
organization to reduce harmful or negative effects in their activities. In simple words, customer
can influence organizational practices. Generally, the customer pressure plays a positive role for
adopting green supply chain practices. Close collaboration and coordination with suppliers and
customers resulted in better environmental performance. Strong customer relationship leads to
enhanced financial and marketing performance and competitive pressure meaningfully enhances
economic performance due to adoption of more green supply chain practices.

H4: Cooperation with customers directly and positively impacts on organizational performance.

2.3.5 GREEN INFORMATION SYSYTEM:

Green information systems refer to the use of information systems that can promote sustainable
development and environment-friendly operations. It optimizes enterprise activities towards
green innovation and green practices. The implementation of green information systems supports
information sharing about environment-friendly initiatives in terms of coordination. The result
shows that companies implement green information system in the hope of improvement in
competitiveness and environmental performance including, quality, efficiency, and reducing
cost. When companies use green technology to exploit and explore relational opportunities,
greater operational and strategic benefits arise. The green information systems not only
positively impacts on coordination and integration with supply chain members but also
significantly enhances environmental and economic performance of enterprise. Recent
researches significantly emphasize the importance of green IT in manufacturing firms and the
usage of green information technology develops competitive advantage and enhances
performance, and besides, it is not easy for competitors to replicate. The successful
implementation of green information systems in supply chain can improve efficiency of
enterprise in terms of operation. Green information systems positively impact organizational
performance.

H5: Green information systems positively impact on organizational performance.