Integrated green supply chain management and operational

performance

Wantao Yu
Norwich Business School
University of East Anglia
102 Middlesex Street
London, E1 7EZ
Wantao.Yu@uea.ac.uk
Tel.: +44(0)2070594479

Roberto Chavez
Facultad de Economía y Empresa
Universidad Diego Portales
Av. Santa Clara 797, Huechuraba, Santiago, Chile
Email: roberto.chavez@ucd.ie
Tel: +56(0)222130131

Mengying Feng1
School of Management
Chongqing Jiaotong University
Xufu Dadao, Nanan District
Chongqing, China
Email: fengmengying@cqjtu.edu.cn
Tel: +86(0)2386079717

Frank Wiengarten
ESADE School of Business, Ramon Llull University
Av. de Pedralbes, 60-62
Barcelona, Spain
Email: frank.wiengarten@esade.edu
Tel: +34(0)932806162

Integrated green supply chain management and operational performance

1
Corresponding author

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Abstract
Purpose – The purpose of this paper is to extend previous green supply chain management
(GSCM) research by developing and empirically testing a conceptual framework that
investigates the relationships between three dimensions of integrated GSCM (iGSCM) and
multiple dimensions of operational performance.
Design/methodology/approach – The study is based on survey data collected from 126
automotive manufacturers in China. The relationships between theoretical constructs are
analysed using structural equation modelling.
Findings – This study generates important findings of the significant and positive relationships
between iGSCM (internal GSCM, GSCM with customers, and GSCM with suppliers) and
operational performance in terms of flexibility, delivery, quality, and cost.
Practical implications – It is important for managers to simultaneously consider internal GSCM
and GSCM with customers and suppliers when implementing environmental sustainability in the
supply chains. Overlooking either internal GSCM or external GSCM may hinder their efforts to
improve operational performance.
Originality/value – This study contributes to the literature by defining iGSCM that combines
three main dimensions, namely internal GSCM, GSCM with customers, and GSCM with
suppliers, and empirically testing its impact on multiple operational performance dimensions.
Keywords Integrated green supply chain management; Operational performance; China
Paper type Research paper

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 Integrated green supply chain management and operational performance

1. Introduction
In recent years, green supply chain management (GSCM) has been evolved as the intra
and inter-firm management of the upstream and downstream supply chain, which has the
capability to minimise the overall environmental impact of both the forward and reverse flows
(Zhu and Sarkis, 2004; Klassen and Johnson, 2004; Zhu et al., 2008a; Green et al., 2012). It has
been argued that in order to contribute to the efficient integration of the entire supply chain
process, supply chain management (SCM) activities cannot be applied independently but rather
simultaneously (Kim, 2006). Accordingly, suppliers, manufacturers, customers and disposal
companies must be integrated in implementing GSCM practices (Thun and Müller, 2010).
Despite this argument, previous research exploring environmental initiatives have focused
predominantly on selected functional areas (Sarkis, 1999; Rao and Holt, 2005). Furthermore,
incomplete and evolving conceptualizations have generated inconclusive results about the
relationship between GSCM and firm performance (Rao and Holt, 2005; Vachon and Klassen,
2006; Green et al., 2012; Zhu et al., 2007; Lai and Wong, 2012; Zailani et al., 2012). To explore
the conceptualisations of GSCM and its impact on performance, there is a need to investigate
how individual dimensions of GSCM are related to selected dimensions of operational
performance (Vachon and Klassen, 2008).
In order to fully understand GSCM, it is important to focus GSCM research on the
totality of the supply chain from both upstream and downstream sides and internal processes
(Rao and Holt, 2005; Vachon and Klassen, 2006). Cross-functional integration within a firm and
integration with suppliers and/or customers on implementing environmental management
practices is required to achieve sustainable firm performance (Green et al., 2012; Vachon and
Klassen, 2006; Zhu and Sarkis, 2004). Thus, we define integrated GSCM (iGSCM) as internal
environmental management practices within a company and external green integration of the
company’s sustainable supply chain initiatives with those of its customers and suppliers (Rao
and Holt, 2005; Van Hoek, 1999; Vachon and Klassen, 2006; Vachon and Klassen, 2008).
Internal GSCM is defined as the implementation of environmental management practices within
a company (Rao and Holt, 2005; Vachon and Klassen, 2006). In order to address stakeholders’
concerns, manufacturers have adopted different strategies that focus on internal GSCM,

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including environmental management systems and certification (e.g., ISO14000/ISO14001
certification) and cross-functional cooperation for environmental improvements (Lai and Wong,
2012; Melnyk et al., 2003; Green et al., 2012; Zhu and Sarkis, 2004; Zhu et al., 2008a, b; Zhu et
al., 2005). External GSCM is defined as the direct involvement of an organization with its
suppliers and customers in planning jointly for GSCM initiatives and environmental
management practices (Bowen et al., 2001b; Min and Galle, 1997; Walton et al., 1998; Vachon
and Klassen, 2006; Vachon and Klassen, 2008). All these activities, related to SCM, require
varying degrees of integration with supply chain partners, either upstream with suppliers or
downstream with customers (Vachon and Klassen, 2008). The above definitions are distinct from
those in the existing literature that ignore the integrated process of GSCM. Thus, we argue that
iGSCM linking internal GSCM initiatives and external GSCM with suppliers and customers will
provide an impetus for companies managing their supply chains.
In recent years, there has been an increasing interest in understanding the role of GSCM
practices in improving operational performance; however, empirical examinations of the
relationship are still ambiguous (e.g., Green et al., 2012; Zhu et al., 2007; Lai and Wong, 2012;
Zailani et al., 2012; Vachon and Klassen, 2008). The inconclusive and, at times, contradictory
results demand further investigation of the association between GSCM practices and operational
performance. Furthermore, few of these studies have conceptualized operational performance as
a multidimensional construct. As an exception, Vachon and Klassen (2008) investigated and
found support for the positive links between environmental collaboration with customers and
suppliers and multiple operational performance measures, namely quality, delivery, flexibility
and cost. However, their conceptualization of GSCM is limited, leaving out the important central
link of internal GSCM – one important dimension of iGSCM. Considering the above argument
and empirical work, there is a need for research to investigate the links between multiple
dimensions of iGSCM (i.e., internal GSCM, GSCM with customers, and GSCM with suppliers)
and different operational performance dimensions (i.e., cost, quality, flexibility, and delivery).
Thus, we develop and test an integrated framework, which encapsulates multiple dimensions of
operational performance in order to help explain the mixed findings in the GSCM literature
(Turkulainen and Ketokivi, 2012).
Subsequently, this study extends the literature on GSCM by exploring the role of
iGSCM in improving the operational performance of an organization. This study contributes to

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the GSCM literature by: 1) defining iGSCM that combines elements of internal GSCM and
external GSCM with customers and suppliers; and 2) exploring the effects of three dimensions of
iGSCM on four dimensions of operational performance, which contributes to the building of a
holistic understanding of the relationship between iGSCM and multiple operational performance
dimensions. Further, by disaggregating operational performance into its constituent parts, this
paper will be also able to identify the potentially different effects of iGSCM, and thus elaborate
more on inconclusive empirical findings. Finally, this paper is important for practitioners to
understand what iGSCM efforts (internal and/or external) could be more effective for the
operational performance objective they choose to compete.

2. Literature review and research hypotheses

2.1. Integrated GSCM (iGSCM)
Interest in sustainable supply chains has been growing in the literature for over a decade
(Pagell and Wu, 2009). The most common conceptualization of sustainability by the Brundtland
Commission suggest the use of resources to meet the needs of the present generations without
compromising the ability of future generations to meet their own needs (UN, 1996). A more
specific and measurable conceptualization of sustainability takes into consideration the social,
ecological and economic dimensions, which contribute to sustainability and are commonly
referred as the triple bottom line (Elkington, 1998). Further, complementing the triple bottom
line concept, the Wuppertal prism model considers too the institution dimension including the
organization and its mechanisms and orientations (Valentin and Spangenberg, 2000).
Accordingly, sustainable supply chains are the ones that consider multiple dimensions of
sustainability; however, it has been suggested that excelling through all dimensions is a rather
difficult task to achieve (Pagell and Wu, 2009). For instance, the literature suggests trade-offs
between environmental practices (e.g., green manufacturing and remanufacturing, reverse
logistics and network design and waste management) (Srivastava, 2007) and economic
competitiveness, which are often in conflict (Kleindorfer et al., 2005). Others have suggested
compatibility between sustainability dimensions such as environmental protection practices and
profitability (Porter, 1991; Porter and van der Linde, 1995). Despite the inherent complexity of
the sustainability concept and the ongoing debate on whether or not synergies exist between the
different sustainability dimensions, it has been argued that the question for companies in supply

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chains should not be whether to become truly sustainable (across all sustainability dimensions)
but to use concepts such as the triple bottom line to measure progress towards being truly
sustainable as the ultimate objective (Pagell and Wu, 2009). This study is concerned with the
environmental or green dimension of SCM (GSCM) as the intra and inter-firm management of
the upstream and downstream supply chain, which has the capability to minimise the overall
environmental impact of both the forward and reverse flows (Rao and Holt, 2005; Vachon and
Klassen, 2006; Green et al., 2012; Zhu and Sarkis, 2004; Klassen and Johnson, 2004).
To enhance environmental sustainability, manufacturers implement internal
environmental management practices and work in concert with their upstream suppliers and
downstream customers (Green et al., 2012; Rao and Holt, 2005; Vachon and Klassen, 2006).
Handfield et al. (1997) suggested that environmental sustainability efforts should be integrated
throughout the value chain. The scopes of GSCM practices has ranged from green purchasing to
integrated supply chains flowing from supplier, to manufacturer, to customer and reverse
logistics, which is “closing the loop” as defined by the SCM literature (Zhu and Sarkis, 2004;
Zhu et al., 2008a). Companies seeking to reap the greatest benefits from their environmental
management processes must integrate cross-functional efforts and other supply chain members
(such as suppliers and customers) into these processes (Walton et al., 1998; Rao and Holt, 2005).
Furthermore, Walton et al. (1998) stated that companies will only thrive in the final phase of
environmental management when they act as a whole system, which includes customers,
suppliers and other players in the supply chain. They further suggested that a supply chain
approach requires that cross-functional and cross-company processes are integrated, including
product design, suppliers’ processes, evaluation systems and inbound logistics. Accordingly, in
the present study, we identify and define from the literature (e.g., Rao and Holt, 2005; Vachon
and Klassen, 2006; Zhu and Sarkis, 2004) three main dimensions of iGSCM: internal GSCM,
GSCM with customers, and GSCM with suppliers. Although we define iGSCM in the context of
China’s automotive industry, many of the environmental management practices that we
investigate in this study are broader in scope covering numerous dimensions of corporate
environmental sustainability in the general manufacturing industry (Zhu et al., 2007).

2.1.1. Internal GSCM

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 Internal GSCM is defined as the environmental management practices conducted within
a company (Rao and Holt, 2005; Vachon and Klassen, 2006). GSCM crosses all departmental
boundaries within and between organizations, and the cooperation and communication is
important to successful environmental practices (Zhu and Geng, 2001; Aspan, 2000). Similarly,
the coordination across functional departments along with the entire supply chain is the most
influential factor for improving environmental management (Zhu et al., 2008a, b). Implementing
internal GSCM practices in the automotive industry is influenced through partner relationships
(Zhu et al., 2008b). For example, international automobile manufacturers in China (e.g., GM,
Ford, Toyota and Honda) exert internal management pressures on Chinese automobile
companies to close the loop in their supply chains (Zhu et al., 2007; Zhu et al., 2008b). Much of
the previous research on environmental issues in business has investigated internal operations
that a company adopts, such as eco-labelling of products, environmental auditing of departments,
environmental management systems, environmental reports for internal evaluation, and ISO
14001 certification (Bowen et al., 2001a; Klassen and Johnson, 2004; Zhu and Sarkis, 2004; Zhu
et al., 2010; Zhu et al., 2008a, b).

2.1.2. GSCM with customers

GSCM with customers is defined as environmental collaboration between a focal firm
and its customers that aims to fulfil customer environmental requirements (Vachon and Klassen,
2008). It focuses on the downstream side of the supply chain. Previous studies (e.g., Lai et al.,
2005; Zhu et al., 2010; Vachon and Klassen, 2008) have identified various opportunities for
manufacturers to conduct environmental collaboration with their customers. Building close and
long term working relationships with downstream customers is important for the successful
implementation of GSCM practices (Zhu and Sarkis, 2004; Green et al., 2012). Research in the
Chinese context has shown that customer pressure is a primary driver for Chinese enterprises to
improve their environmental image and practices (Christmann and Taylor, 2001). Understanding
the needs of the end customer is also part of GSCM as it acts as a crucial aspect in creating
value. Given the increasing environmental pressures from customers, it is critical for firms to
conduct environmental cooperation with customers for green packaging, achieving
environmental goals collectively, and developing joint environmental planning (Vachon and
Klassen, 2008; Zhu et al., 2010). In the Chinese automotive supply chain, due to motivational

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drivers such as exports and sales to foreign customers, automobile manufacturing firms have
focused their efforts on building strategic environmental collaboration with their downstream
customers (Zhu et al., 2007).

2.1.3. GSCM with suppliers

GSCM with suppliers is defined as environmental collaboration between a focal firm
and its suppliers in implementing environmental management practices (Vachon and Klassen,
2008; Walton et al., 1998). It focuses on the inbound or upstream segment of a product’s and
organization’s supply chain (Zhu and Cote, 2004). Companies should include their suppliers in
view of the implementation of environmental friendly practices in terms of purchasing processes
and material management procedures (Walton et al., 1998; Rao and Holt, 2005). Companies are
increasingly managing their suppliers’ environmental performance to ensure that the materials
and equipments supplied by them are environmentally-friendly and are produced through
environmental-friendly processes (Rao and Holt, 2005). In the context of the Chinese automotive
industry, international automobile manufacturers (e.g., Ford, GM and Toyota) have required their
Chinese suppliers to obtain the ISO 14001 certification (GEMI, 2001). Suppliers are considered
as the crucial partners in supply chains as they can be in a position to support the environmental
initiatives of the organisations and to provide assistance in improving the environmental
performance of the supply chain (Bowen et al., 2001a; Seuring and Muller, 2008).

2.2. iGSCM and operational performance

Operational performance refers to the strategic dimensions by which a company
chooses to compete (Narasimhan and Das, 2001). In other words, manufacturing capabilities and
resources should focus on developing competitive priorities, as the achievement of competitive
advantage depends on the effective translation of competitive priorities into strategic capabilities
(Ho et al., 2002). There is a general agreement in the literature that quality, delivery, flexibility
and cost are the core and most often mentioned competitive areas (Ward et al., 1998;
Narasimhan and Jayaram, 1998; Pagell and Krause, 2002). These dimensions can be extended to
the area of SCM (Pagell and Krause, 2002).
Integrating environmental concerns into SCM has become increasingly important for a
firm to achieve competitive advantages and superior firm performance (Van Hoek, 1999; Rao

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and Holt, 2005; Zhu et al., 2008a). It has been identified that environmental management is
effective in reinforcing manufacturing competitiveness in terms of cost, delivery and quality for
managing the supply chains (Yang et al., 2010). Firms adopting collaborative activities with their
suppliers and customers can develop organizational capabilities (Lorenzoni and Lipparini, 1999),
which can be expected to translate into improved operational performance, such as cost and
quality (Hart, 1997; Porter and van der Linde, 1995). Furthermore, it has been argued that SCM
activities cannot contribute to the efficient integration of the entire supply chain process if
applied independently, and success can only be achieved through the interaction of different
SCM activities applied simultaneously (Kim, 2006). In the present study, we examine the impact
of the three dimensions of iGSCM (i.e., internal GSCM, GSCM with customers, and GSCM with
suppliers) on operational performance (i.e., cost, delivery, flexibility, and quality). Figure 1
illustrates our proposed theoretical model.
--------------------------------- Insert Figure 1 about here ---------------------------------

2.2.1. Internal GSCM and operational performance

Internal environmental management is an important GSCM practices that firms have to
adopt in order to improve performance outcomes (Green et al., 2012; Zhu et al., 2008a). Internal
GSCM practices (such as environmental management systems and certification) are increasingly
being recognized as systematic and comprehensive internal mechanisms for achieving superior
firm performance (Zhu and Sarkis, 2004; Zhu et al., 2010; Zhu et al., 2008a, b). Environmental
management practices are embedded in business operations and, thus, may also lead to some
benefits for firms, such as cost savings and improvements in firms’ efficiency and product
quality improvements (Alvarez-Gil et al., 2001; Welford, 1995; Porter and van der Linde, 1995).
Similarly, it has been suggested that the link between internal environmental management and
quality management systems has been established in the literature (Chen, 2001; King and Lenox,
2001). For instance, Sroufe (2003) found that an environmental management system (EMS)
positively affects operational performance measures, such as quality, cost, and production waste
reduction. A formal EMS plays an important role in improving operational performance, such as
cost efficiency, quality, delivery, flexibility, and enhanced reputation (Gupta, 1995; Melnyk et
al., 2003). Further, Yang et al. (2010) investigated the relationship between environmental
management practices and manufacturing competitiveness, and found that proactive

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environmental management programs (such as formal, well-defined and written environmental
objectives and policies) not only improve cost but delivery competitiveness. Lai and Wong
(2012) also identified that implementing green logistics management (such as internal general
environmental management practices) can improve manufacturers’ operational performance such
as product quality and delivery aspects such as lead time. Based on these previous results, we
propose the following hypotheses:
H1: Internal GSCM is positively related to a) operational flexibility, b) delivery, c) product
quality, and d) production cost.

2.2.2. GSCM with customers and operational performance

Environmental cooperation with customers has become extremely important for closing
the supply chain loop (Zhu et al., 2008a). Companies should integrate ecological aspects into
both product and process design in order to respond to customer demand (Thun and Müller,
2010). GSCM with customers help firms to integrate technological organizational innovations,
thus providing for concurrent improvements in operational performance (Lai et al., 2010).
Environmental collaboration with customers usually generates benefits in terms of cost, quality,
flexibility and delivery (Klassen and Vachon, 2003; Klassen and Whybark, 1999; Vachon and
Klassen, 2008). With regard to cost, customers’ support for product acquisition facilitates
product return for recycling processes of manufacturers. Thus, improving the success of
environmental initiatives by manufacturers through improving material disposal (Lai and Wong,
2012). With regard to quality, GSCM with customers lead to product-based performance in the
form of conformance to specifications and durability. Vachon and Klassen (2008) found that
environmental collaboration with customers is significantly and positively associated with
greater quality improvement. If quality performance is manufacturing’s primary strategic
objective, then GSCM with customers can offer a further synergistic mechanism to achieve
competitive quality gains (Vachon and Klassen, 2008). With regard to flexibility and delivery,
Vachon and Klassen further identified a positive relationship between GSCM with customers
and flexibility, but environmental collaboration with customers becomes insignificant when
upstream collaboration is introduced in their model. Customer collaboration appears to make on-
time delivery worse, Vachon and Klassen explained that this spurious result is caused by
collinearity. On the contrary, based on an empirical analysis of 89 Chinese automotive

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manufacturers, Zhu et al. (2007) found no significant relationship between environmental
cooperation with customers and operational performance such as product quality, cost and
delivery, but their study examined operational performance as an aggregated construct. The
mixed support in the above studies indicates that the relationship between GSCM with customers
and multiple operational performance dimensions needs further investigation. However, based
on previous results, we argue that GSCM with customers provide a management structure to
support environmental-based logistics management coordinating the supply chain activities to
obtain operational performance gains. Thus, we propose the following hypotheses.
H2: GSCM with customers is positively related to a) operational flexibility, b) delivery, c)
product quality, and d) production cost.

2.2.3. GSCM with suppliers and operational performance

Environmental collaboration with suppliers contributes to competitive advantage and
business success (Vachon and Klassen, 2008). From the “inbound” perspective of the supply
chain, it is argued that greening the supply chain has numerous benefits to an organization,
ranging from cost reduction, to integrating suppliers in a participative decision-making process
that promotes environmental innovation (Bowen et al., 2001a; Hall, 2003; Rao, 2002). The
involvement and support of suppliers’ is crucial to achieving such benefits (Rao and Holt, 2005).
GSCM with suppliers can address issues such as reduction of waste produced, material
substitution through environmental sourcing of raw materials, and waste minimization of
hazardous materials, which in turn can yield improved operational performance, such as quality
and cost (Vachon and Klassen, 2007; Vachon and Klassen, 2008; Zhu and Sarkis, 2004). For
example, changes in inbound logistics processes can significantly reduce waste and cost (Walton
et al., 1998). Suppliers should support buying firms by changing inbound logistics processes to
reduce waste (e.g., packaging), which in turn can yield an operational advantage (e.g., cost and
ease of assembly) (Walton et al., 1998). On the other hand, a buying firm can help its supplier in
adopting an environmental management system, thereby assuring a more environmental source
of material or components (Vachon and Klassen, 2007).
There is empirical evidence that suppliers are instrumental in complementing the
environmental management practices of their downstream partners by offering environmentally
friendly inputs and facilitating pollution prevention processes (Corbett and Klassen, 2006). For

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instance, Walton et al. (1998) suggested that firms need to involve suppliers and purchasers in
improving the environmental performance of the whole supply chain, and thus addressing the
purchasing function’s impact on the environment. They found that GSCM with suppliers can
help firms to reduce emissions and monitor the waste streams from suppliers. However, their
work focused on case studies of five firms in the furniture industry, which may potentially
decrease the generalizability of their results. Vachon and Klassen (2008) found that collaboration
with suppliers on environmental issues is linked to improvement in three traditional dimensions
of manufacturing performance, namely quality, delivery, and flexibility. Similarly, Zailani et al.
(2012) found that GSCM with suppliers (such as environmental purchasing) has a positive effect
on operational performance improvement, such as reducing manufacturing operating cost,
quickly responding to market changes, and fulfilling perfect order. However, investigating the
effect of GSCM on operational performance (measured as a unidimensional construct) of
Chinese automotive manufacturers, Zhu et al. (2007) found no significant association between
green purchasing and operational performance improvement. The mixed findings in the above
studies suggest the need for further investigation of the relationship between GSCM with
suppliers and different dimensions of operational performance. Accordingly, we address the
direct association between GSCM with suppliers and quality, delivery, flexibility and cost in the
following hypotheses.
H3: GSCM with suppliers is positively related to a) operational flexibility, b) delivery, c)
product quality, and d) production cost.

3. Methodology
3.1. The research context of China’s automotive industry
We tested our theoretical framework using a survey data collected in the Chinese
automotive industry for several reasons. Firstly, China’s automotive industry, the world’s largest
automobile market, has been experiencing unprecedented development over the past decade (Zhu
et al., 2007). According to China Association of Automobile Manufacturers (CAAM) (2013),
most foreign automakers have formed joint ventures with Chinese companies and set up their
production facilities and operations, including Volkswagen, Mercedes-Benz, Ford, General
Motors, Honda, Nissan, and Toyota. Secondly, the auto industry, however, is one of the high
energy consuming industries and key polluting industrial sectors in China (Zhu et al., 2010; Zhu

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et al., 2011; Zhu et al., 2007). The Chinese automotive industry is characterized with relatively
higher levels of resource consumption and waste production if compared to other industries such
as electrical/electronics industry and food, beverage and alcohol industry in China (Zhu et al.,
2011; Zhu et al., 2007; CAAM, 2013). Automakers throughout the world are working on similar
environmental issues such as reducing fuel consumption, CO2 emissions, end-of-life waste, and
the use of recycled materials (Sarkis et al., 2010), which is also true of the Chinese automotive
industry. Due to the increasing environmental pressures from major stakeholder groups such as
government and customers, Chinese automakers are under pressure to consider and adopt GSCM
practices to reduce environmental harms caused by their operations and supply chains (Zhu et al.,
2007; Zhu et al., 2010). GSCM has become an emergent ecological modernization tool for
Chinese automakers to balance environmental performance with productivity and business
performance gains (Zhu et al., 2007; Zhu et al., 2011). Thirdly, the appropriate implementation
of GSCM initiatives may indeed aid developing countries (such as China) by lessening the
environmental burden of both automakers and disposal of products, while even potentially
improving their economic positioning (Zhu et al., 2005; Rao, 2002). Furthermore, it is hoped that
empirical results obtained from our study and their related managerial implications provide
valuable insights for not only automotive manufacturers in China but also manufacturing firms in
other industrial nations, such as the EU and USA, where the automobile industry is typically
internationally integrated and automotive manufactures might be more culturally or politically
sensitive to environmental issues (Sarkis et al., 2010). Despite the increasing research interests in
the GSCM practices in China (e.g., Zhu and Sarkis, 2004; Zhu et al., 2005; Zhu et al., 2007; Zhu
et al., 2010; Zhu et al., 2011; Lai and Wong, 2012), none of them have simultaneously
investigated the effects of individual dimensions of iGSCM on different dimensions of
operational performance, especially in the automotive manufacturing context. Finally, focusing
on a single industry such as automotive will ensure high internal validity (Wong et al., 2011).
Thus, the Chinese automotive industry provides a good research setting for study of how firms
implement iGSCM practices to improve operational performance, which is the main purpose of
our study.

3.2. Sampling and data collection

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 The sample for this study was identified from the 2010/2011 directory of China’s
automotive industry manufacturers, which was jointly edited by the Wheelon Autoinfo, China
Association of Automobile Manufacturers (CAAM), and Society of Automotive Engineers of
China (SAEC). The directory is the official China automotive industry users guide.
Geographically, survey respondents comprise firms in a number of regions and provinces, e.g.,
Chongqing and Sichuan province, Shanghai and Jiangsu province, Hubei province, and
Guangdong province. According to CAAM (2013), most large automobile manufacturing bases
in China are located in these geographic areas. We first drew a random sample of 1000
automotive manufacturing plants (e.g., automakers and first- and second-tier automotive
suppliers) from the 2010/2011 directory of China’s automotive industry manufacturers. For each
randomly selected automotive manufacturer, we then identified a key informant with the help of
guanxi networks (e.g., personal connections with automakers, industrial authorities, and local
universities). Previous survey-based studies in the Chinese context has revealed that accessing
personal guanxi networks is an essential tool to ensure success in collecting research data (Peng
and Nunes, 2008; Zhao et al., 2006). With the help of guanxi networks, we contacted the
informants by telephone and email in order to obtain their preliminary agreement to participate
(Dillman, 2000). One of the authors of this study who has more than 15 years of work experience
in the Chinese automobile industry used her personal networks with automakers to ask whether
the informants (e.g., general managers or directors of the selected firms) were willing to
participate in our survey or introduce another potential informants who may be able to complete
the questionnaire. With the help of guanxi networks, the questionnaires were sent to 600
informants who agreed to participate in our study. Our respondents typically hold titles such as
general manager, director, supply chain manger, operations manager, and sales and marketing
manager. Most of our respondents were corporate managers with an average of more than eight
years of work experience in the same company. It is thus reasonable to expect that the
respondents could offer a deep insight into the GSCM initiatives and be knowledgeable about
their respective firms so as to ensure the quality of the collected data.
We attempted to improve the response rate using several ways suggested by studies on
survey research (e.g., Dillman, 2000; Frohlich, 2002; Zhao et al., 2006). Each questionnaire was
accompanied by a cover letter indicating the purpose of the study and potential contributions.
The letter also assured complete confidentiality to the respondents. Follow-up calls were made to

14
encourage completion, return of the questionnaires, and to clarify any questions that potentially
had arisen (Frohlich, 2002; Zhao et al., 2006). After several reminders by phone calls and emails,
we received 126 completed and useable questionnaires. The response rate was 21%, which can
be regarded as satisfactory in this type of survey-based study (Malhotra and Grover, 1998;
Frohlich, 2002). A profile of the respondents is reported in Table 1.
------------------------------- Insert Table 1 about here -------------------------------

3.3. Non-response bias and common method bias

We checked for non-response bias by conducting a t-test to check whether there is any
significant difference on demographic characteristics of annual sales and number of employees
between early and late responses (Armstrong and Overton, 1977). The t-test results indicate no
significant statistical differences (p < 0.05), which suggests that received questionnaires from
respondents represent an unbiased sample. Because we obtained data from a single respondent
per firm using the self-reported questionnaire, common method bias might be an issue
(Podsakoff et al., 2003). To evaluate whether common method bias was present, several steps
were taken. First, Harmon’s single-factor test of common method bias was used to ensure that no
one general factor accounted for the majority of covariance between the predictor and criterion
variables (Podsakoff et al., 2003). The results of exploratory factor analysis (EFA) show six
distinct factors with eigenvalues above 1.0, explaining 67.431% of total variance. The first factor
explained 35.666% of the variance, which is not majority of the total variance. The finding
suggests that the common method bias does not appear a problem. Second, to further assess
common method bias, confirmatory factor analysis (CFA) was applied to Harman’s single-factor
model (Flynn et al., 2010; Podsakoff et al., 2003). The model fit indices of χ 2/df (831.444/275) =
3.023, CFI = 0.626, IFI = 0.633, and RMSEA = 0.127 were unacceptable and significantly worse
than those of the measurement model. This suggests that a single factor model is not acceptable
and that common method bias is unlikely. Third, a latent factor representing a common method
was added to the measurement model, which is the strongest test of common method bias
(MacKenzie, et al., 1993; Podsakoff et al., 2003; Zhao et al., 2011). The resulting fits were not
significantly different from those of the measurement model (RMSEA = 0.053 vs. 0.042 for the
model with the common method factor; CF1 = 0.940 vs. 0.966; IFI = 0.941 vs. 0.968). Also, the
item loadings for their factors are still significant in spite of the inclusion of a common latent

15
factor. Based on the analysis results, we conclude that common method bias is not a serious
concern in this study.

3.4. Measures and questionnaire design

We surveyed the literature to identify valid measures for our theoretical constructs. The
measures we used and their sources are reported in Table 2 and Appendix 1. As noted above, we
conceptualized iGSCM as a multidimensional construct that includes internal GSCM, GSCM
with customers, and GSCM with suppliers. The measures for internal GSCM were adapted from
Zhu et al. (2010) and Zhu and Sarkis (2004), which focused on the internal environmental
management practices implemented by the manufacturers, such as cross-functional cooperation
for environmental improvements, environmental management certification, environmental
management systems, and environmental compliance and auditing systems. The measures for
GSCM with customers and suppliers were adapted from Vachon and Klassen (2008) and Zhu et
al. (2010), which focused on building environmental collaboration with supply chain members,
including working together with customers to reduce environmental impacts, cooperation with
suppliers for environmental objectives, and selecting suppliers using environmental criteria. A
five-point scale (where 1 = no plan to implement and 5 = full implementation) was also used for
all these items. Four traditional dimensions of operational performance (i.e., flexibility, delivery,
quality, and cost) were used in our study (Flynn et al., 2010; Wong et al., 2011). Our respondents
were asked to assess their operational performance relative to the performance of main
competitors over the last three years. The indicators were measured using a five-point Likert
scale (ranging from 1 “much worse than competitors” to 5 “much better than competitors”),
where higher values indicated better performance.
Since the measurement scales adapted from the literature were in English, the original
scales were first developed in English and then translated into Chinese, in order to ensure the
reliability of the questionnaire (Zhao et al., 2011). A number of questions were reworded to
improve the accuracy of the translation and to make it relevant to environmental management
practices in China. Before executing the survey, we sent the questionnaire survey to academics
from the field of operations management to review and provide feedback. We then conducted a
pilot-test with six supply chain and production managers at automakers in China. One of the
authors of this study held several discussions with those manages to clarify the meaning of the

16
questions (O’Leary-Kelly and Vokurka, 1998). Based on the feedback, we modified the wording
of some questions when there was any confusion.

4. Data analysis and results

4.1. Measurement model analysis
We assessed the measurement properties of the constructs using CFA. As depicted in
Table 2, the measurement model (χ2/df = 1.354; RMSEA = 0.053; CFI = 0.940; IFI = 0.941) is
acceptable and unidimensionality is confirmed (Byrne, 2009; Hair et al., 2006; Hu and Bentler,
1999; Kline, 2005). Cronbach’s alpha coefficient and composite reliability (CR) were used to
examine the reliabilities among the items within each factor. Table 2 indicates that the
Cronbach’s alpha and CR of all the constructs exceed the widely recognized rule of thumb of
0.70 (Fornell and Larcker, 1981; Nunnally, 1978; O’Leary-Kelly and Vokurka, 1998), which
suggests adequate reliability of the measurement scales.
------------------------------- Insert Table 2 about here -------------------------------
We evaluated the convergent validity of each measurement scale by conducting CFA
using the maximum likelihood approach (O’Leary-Kelly and Vokurka, 1998). As shown in Table
2, all indicators in their respective constructs have statistically significant (p < 0.001) factor
loadings greater than 0.50, which indicate convergent validity of the theoretical constructs
(Anderson and Gerbing, 1988). Additionally, the CFA results also reveal that the standardized
coefficients for all items are greater than twice their standard errors and that the t-values are all
larger than 2 (Zhao et al., 2011; Flynn et al., 2010), which further demonstrate convergent
validity. While the average variance extracted (AVE) values for some constructs are marginally
less than the cut-off point of 0.50 suggested by Fornell and Larcker (1981), we satisfied the more
detailed criteria set by several other studies as indicated above. Some empirical studies have used
AVE values below 0.50 to establish convergent validity (e.g. Zhao et al., 2011; Flynn et al.,
2010; Sarkis et al., 2010). Based on these results, we conclude that the constructs and scales have
convergent validity.
Discriminant validity was examined by comparing the correlation between the construct
and the square root of AVE. Discriminant validity is indicated if the AVE for each multi item
construct is greater than the shared variance between constructs (Fornell and Larcker, 1981). As
shown in Table 3, the square root of AVE of all the constructs is greater than the correlation

17
between any pair of them, which provides evidence of discriminant validity (Fornell and
Larcker, 1981). Table 3 also reports the means, standard deviations, and correlations of all the
theoretical constructs.
------------------------------- Insert Table 3 about here -------------------------------

4.2. Structural model and hypothesis testing

Following Wong et al. (2011), we tested the hypotheses by conducting separate
structural models. The results of structural model using AMOS 21 are reported in Table 4. The
overall fit indices of all three structural models are good (Byrne, 2009; Hair et al., 2006; Hu and
Bentler, 1999; Kline, 2005). Table 4 indicates that internal GSCM is positively and significantly
associated with four dimensions of operational performance, which provides supports for H1a-
H1d. Similarly, GSCM with customers is positively and significantly related to four operational
performance dimensions. Hence, H2a-H2d are supported. The same holds for GSCM with
suppliers, which lends supports for H3a-H3d.
------------------------------- Insert Table 4 about here -------------------------------

5. Discussion and conclusion

Our study extends the supply chain literature by defining iGSCM from the upstream,
internal, and downstream supply chain perspective. The three main dimensions of iGSCM (i.e.,
internal GSCM, GSCM with customers, and GSCM with suppliers) investigated in this study are
broader in scope covering numerous dimensions of corporate environmental sustainability. Our
study also extends prior GSCM research by developing and empirically testing a comprehensive
research model that explores the relationships between multiple iGSCM and operational
performance dimensions. We found that internal GSCM and GSCM with customers and
suppliers are significantly and positively associated with flexibility, delivery, quality, and cost
(full support to H1-3). Thus, the empirical findings support our conceptual framework presented
in Figure 1, which indicates that academics and practitioners should assess GSCM through the
reconciliation of both internal GSCM and external GSCM with customers and suppliers. From a
practical view, the theorized and empirically supported model provides a valuable structured
approach to the development of an iGSCM strategy for manufacturing managers. Although we

18
empirically test the research model in the context of China’s automobile industry, the empirical
results provide an overview of the general industry and its environmental management practices.

5.1. Theoretical implications

As an important environmental initiative, GSCM has attracted more and more attention
in the literature (Zhu et al., 2008a, b; Green et al., 2012; Lai and Wong, 2012). However, the
existing GSCM research is characterised by evolving definitions and dimensions. The
clarification of the impact of multiple iGSCM dimensions on different operational performance
dimensions is important for extending our understanding of GSCM research on two main fronts.
First, some studies in recent years (e.g., Lai and Wong, 2012; Zhu and Sarkis, 2004; Zhu et al.,
2005; Yang et al., 2010) have combined internal operations and upstream and downstream
activities in an aggregated construct. Others have focused on individual dimensions of GSCM
(e.g., Zailani et al., 2012; Vachon and Klassen, 2008; Walton et al., 1998), in particular
environmental collaboration with customers and suppliers. While conceptually correct, this
approach may hide some important research contributions (Vachon and Klassen, 2008) as
suggested by the results of this present study. Therefore, the first contribution of this study is to
provide and test an integrated framework, which incorporates various GSCM dimensions
simultaneously as a collective effort. Second, because of the inherent complexity and
interdependence of supply chains, choosing the appropriate performance measures is challenging
(Flynn et al., 2010). Ketokivi and Schroeder (2004) further argued that operational performance
is usually measured as a composite of several performance dimensions, which suggests a bias
towards the universal applicability of manufacturing practices. Therefore, since operational
performance is multi-dimensional in nature it must be analysed as such. Many studies that
examine the effect of GSCM on operational performance improvement (e.g., Green et al., 2012;
Lai and Wong, 2012; Zailani et al., 2012; Zhu et al., 2007) pulled together different dimensions
of operational performance within one organizational performance construct, which can lead to a
similar shortcoming in the findings (Vachon and Klassen, 2008).
The results enrich our understanding of how important dimension of iGSCM such as
internal GSCM affects operational performance in terms of flexibility, delivery, quality, and cost.
Although some studies (e.g., Green et al., 2012; Lai and Wong, 2012; Sroufe, 2003) have
examined the important role of internal environmental management in improving operational

19
performance and identified a positive link, there are still studies (e.g., Zhu et al., 2007) that found
no significant association between internal environmental management and operational
performance. The mixed support in the above studies suggests that the relationship between
internal GSCM and multiple operational performance dimensions needs further investigation.
Our study clearly shows that internal GSCM (such as cross-functional cooperation for
environmental improvements, environmental management systems and certification, and
environmental reports for internal evaluation) is significantly and positively associated with
multiple areas of operational performance. Our findings reinforce the proposition that internal
environmental management is central to improving operational performance (Melnyk et al.,
2003; Zhu et al., 2008a). The main implication of our result is that, internal GSCM facilitates
information sharing across functional areas to simultaneously improve green operations and
process designs, which are instrumental to reducing production cost and improving product
quality. Further, firms that implement GSCM initiatives internally such as introducing
environmental management systems can obtain better coordination of operations capacity to
improve flexibility and delivery performance.
Our findings also suggest that manufacturers with the broadest arcs of green supply
chain integration with upstream suppliers and downstream customers can achieve high levels of
operational performance (Frohlich and Westbrook, 2001). Observing the external GSCM
dimensions (upstream and downstream integration) on different operational performance
variables is important to extend the GSCM literature (Vachon and Klassen, 2008; Rao and Holt,
2005). Because each focal company acts as a buying organization to its suppliers and as a
supplier to its customers, such collaboration can take place simultaneously upstream with the
suppliers, as well as downstream with the customers (Vachon and Klassen, 2008). Our study
explores how the two key aspects of iGSCM in both upstream and downstream sides affect
operational performance in terms of flexibility, delivery, quality, and cost. Although several
recent studies have examined the relationship between GSCM with customers and suppliers and
operational performance, empirical evidence that investigates the link has generated mixed
results (e.g., Green et al., 2012; Lai and Wong, 2012; Vachon and Klassen, 2008; Zhu et al.,
2007; Zailani et al., 2012). Furthermore, this mixed support in the SCM integration literature has
been attributed to operational performance being often measured as an aggregated construct
(Turkulainen and Ketokivi, 2012). In contrast, our study extends the existing work by means of

20
incorporating a multidimensional measure of operational performance, and thus identifying the
relationship between GSCM with customers and suppliers, as two important iGSCM dimensions,
and improvement in four traditional dimensions of operational performance measures (i.e.,
quality, delivery, flexibility and cost). Our results show that two important dimensions of
iGSCM – GSCM with customers and suppliers – are significantly linked to multiple operational
performance dimensions, which adds further support to the growing body of literature espousing
the natural-resource-based view of the firm (Hart, 1995). External GSCM will help
manufacturers develop joint environmental planning and share environmental know-how or
knowledge with their suppliers and customers (Vachon and Klassen, 2008). The main reason for
the implementation of GSCM with customers is the demand from foreign customers and
subsequently the new international business for the carmakers (GEMI, 2001). Additionally,
Chinese consumers are increasingly interested in green vehicles. According to a survey by Ernst
& Young’s Global Automotive Centre (2010), about 60% of Chinese consumers would consider
purchasing plug-in hybrids or electric vehicles. Building collaborative relationships with
customers enable a automotive manufacturer better understand customer requirements and better
forecast customer demand, thus allowing the manufacturer to provide better quality and more
innovative products at lower cost and more flexibly. On the other hand, integration with
suppliers allows the automobile manufacturer to be rapidly updated on the progress of its orders
at the supplier’s plant and to decide jointly with the supplier the most appropriate plan
modifications in order to accommodate final customer requests (Danese and Romano, 2011).
Hence, GSCM with suppliers is also essentially linked to operational performance in the form of
lower production cost, fast and reliable deliveries, and greater ability to cope with unforeseen
events (Vachon and Klassen, 2008). The causal relationship, based on discussions with
management, between the implementation of iGSCM practices and operational performance
becomes more evident. Thus, it is our belief that the relationship will also exist in other
industries (such as the Chinese electronic industry) and their supply chains.
As mentioned above, few GSCM studies have measured operational performance as
multidimensional constructs. As a notable exception, Vachon and Klassen (2008) investigated
the relationship between environmental collaboration with customers and suppliers and multiple
operational performance measures, namely quality, delivery, flexibility, and cost. Our finding of
the positive link between GSCM with customers and suppliers and different operational

21
performance dimensions is somewhat contrary to the work of Vachon and Klassen (2008), who
found that environmental collaboration with suppliers contributes to a relatively broad range of
competitive benefits (such as quality, delivery, and flexibility improvement), while collaboration
with customers offers a comparably narrower set (such as quality improvement). A possible
explanation for this contrasting result is that our study conceptualises iGSCM as a combination
of both internal GSCM as well as external GSCM with customers and suppliers. Vachon and
Klassen’s (2008) conceptualization of GSCM integration lacks its internal dimension. Previous
studies generally excluded from consideration either internal GSCM or external GSCM with
supply chain partners. Our results hence complement the existing work and suggest that
overlooking either internal GSCM or external GSCM may miscast the true relationships. Thus,
we argue that researchers should investigate an integrated supply chain through the reconciliation
of both internal GSCM and external GSCM with customers and suppliers.

5.2. Managerial implications

The findings of this study have a number of managerial implications that could provide
valuable insights for manufacturers to develop an iGSCM strategy from the upstream, internal,
and downstream supply chain perspective. The major managerial implication of this study is that
firms should develop iGSCM that combines three important elements, namely internal GSCM,
GSCM with customers, and GSCM with suppliers. In doing so, managers can develop an
effective comprehensive environmental strategy, which requires that manufacturers implement
internal environmental management initiatives and work directly with both suppliers and
customers to achieve desired results – an improved operational performance in terms of
flexibility, delivery, quality, and cost. In practice, many manufacturers fail to recognize the
importance of external efforts to build environmental collaboration with their supply chain
partners when implementing internal environmental management practices (Vachon and Klassen,
2006; Vachon and Klassen, 2008; Rao and Holt, 2005). From a very practical view, our study
suggests that manufacturers should extensively integrate their environmental management
practices with suppliers and customers by pursuing an environmental strategy with a broad arc of
green integration. Our proposed and empirically supported model provides more specific
direction to manufacturers seeking to extend environmental practices throughout their supply
chains. Thus, we believe that this iGSCM framework can give operations and supply chain

22
managers a new way to understand the risks and opportunities that business faces in the light of
growing environmental and sustainability demands. Our study results clearly show that it is
important for managers to simultaneously consider internal GSCM, GSCM with customers and
GSCM with suppliers when implementing environmental sustainability in the supply chains.
Overlooking either internal GSCM or external GSCM may hinder their efforts to improve
operational performance. The implications could also provide valuable insights for companies in
other developing countries that have economic conditions similar to those of China. GSCM has
become one of the most important environmental and social issues that are gaining popularity in
the South East Asian region, and many leading companies in this region are realizing a
competitive dimension to having a green supply chain (Rao, 2002; Rao and Holt, 2005).
Furthermore, we hope that empirical results and their related managerial implications are useful
not only for China’s manufacturing industry but also, to a certain extent, for manufacturers in the
other industrial nations such as the EU and USA, where the automotive industry is typically
more internationally integrated. Companies in developed countries may be more culturally or
politically sensitive to environmental issues and adopt iGSCM practices.

5.3. Limitations and future research

The results of our study should be interpreted with taking the following limitations into
consideration. First, our study results imply that the implementation of iGSCM practices should
be considered within the context of the existing functioning business processes that extend
throughout the supply chain, including upstream with the suppliers and downstream with the
customers. Thus, future research may assess constructs representing other operations
improvement programs such as just in time, total quality management, lean and agile operations
as potential antecedents to iGSCM practices (Green et al., 2012; Lai and Wong, 2012). Second,
there are some factors that may influence the degree of internal GSCM and external GSCM with
customers and suppliers in the iGSCM patterns, such as market uncertainty and turbulence,
relationship commitment, and trust (Zhu et al., 2007; Zhao et al., 2011). Future research may
investigate how these factors influence iGSCM. Third, firms are facing increasing environmental
pressures from different stakeholders, such as customers, suppliers, and governments (Sarkis et
al., 2010; Kassinis and Vafeas, 2006). Future study may identify relevant stakeholder pressures
and examine their potential effects on the implementation of iGSCM initiatives. Fourth, this

23
study focuses on a single industry sample. Although the focus of a single industry has its own
advantages, omitting other industries may bias the sample and limit generalizability of the results
(Sarkis et al., 2010; Wong et al., 2011). Thus, it is recommended that further cross-industry
research should be undertaken to investigate the value of an integrated green supply chain on
performance improvement. Additionally, our sample is based in the Chinese context. For cross-
country validation purposes future research may also test our proposed model in different
countries. We empirically tested a conceptual model linking iGSCM and operational
performance using survey data collected from the single-industry and single-country, it is hoped
that the empirical findings may also exist in other industries (e.g., textiles and apparel or
chemicals and petrochemicals) and countries (e.g., the EU and USA). However, it is true that our
findings are limited because our study examined only China’s automotive industry. To overcome
the drawback of this study, future research should test the applicability and also confirm the
validity of our empirical findings in different cultural settings. In particular, studies that compare
iGSCM in developed versus developing economies will be of particular interest.

Appendix 1: Questionnaire
Integrated Green Supply Chain Management
1. Internal GSCM
 Cross-functional cooperation for environmental improvements
 Environmental compliance and auditing programs
 Environmental management certification e.g. ISO14000/ISO14001 certification
 Environmental management systems exist
 The internal performance evaluation system incorporates environmental factors
 Generate environmental reports for internal evaluation
2. GSCM with customers
 Cooperation with customers for green packaging
 Cooperation with customers for using less energy during product transportation
 Working together with customers to reduce environmental impact of our activities
3. GSCM with suppliers

24
  Providing design specification to suppliers that include environmental requirements for
purchased item
 Cooperation with suppliers for environmental objectives
 Environmental audit for suppliers’ internal management
 Suppliers are selected using environmental criteria
Operational Performance
4. Operational flexibility
 Quickly modify products and services to meet our customer’s requirements
 Quickly introduce new products and services into the market
 Quickly respond to changes in market demand
5. Delivery
 An outstanding on-time delivery record to our customer
 Provide reliable delivery to our customers
 The lead time for fulfilling customers’ orders (the time which elapses between the receipt
of customer’s order and the delivery of the goods) is short
6. Product quality
 High performance products that meet customer needs
 Produce consistent quality products with low defects
 High reliable products that meet customer needs
7. Production cost
 Produce products with low costs
 Produce products with low overhead costs
 Offer price as low or lower than our competitors

25
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 Table 1: Demographic characteristics of respondents
Number of firms Percentage of samples (%)
Automotive industry
Automaker 38 30.2
First-tier supplier 68 54.0
Second-tier supplier 12 9.5
Others 8 6.3
Total 126 100.0

Annual sales (in million Yuan)

Below 10 2 1.6
10-50 12 9.5
50-100 16 12.7
100-500 32 25.4
500-1,000 14 11.1
More than 1,000 50 39.7

Number of employees
1-99 5 4.0
100-199 16 12.7
200-499 32 25.4
500-999 13 10.3
1,000-4,999 33 26.2
5,000 or more 27 21.4

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 Table 2: Construct reliability and validity analysis
Construct Factor loadings Reliability and validity
(t-values)
1. Internal GSCM (Zhu et al., 2010) α = 0.846; CR =
0.848; AVE = 0.482
Cross-functional cooperation for environmental improvements 0.688 ( – )
Environmental compliance and auditing programs 0.722 (7.184)
Environmental management certification e.g. ISO14000/ISO14001 certification 0.714 (7.110)
Environmental management systems exist 0.755 (7.462)
The internal performance evaluation system incorporates environmental 0.651 (6.546)
factors
Generate environmental reports for internal evaluation 0.628 (6.326)
2. GSCM with customers (Vachon and Klassen, 2008; Zhu et al., 2010) α = 0.720; CR =
0.713; AVE = 0.455
Cooperation with customers for green packaging 0.670 ( – )
Cooperation with customers for using less energy during product transportation 0.597 (5.553)
Working together with customers to reduce environmental impact of our 0.749 (6.562)
activities
3. GSCM with suppliers (Zhu et al., 2010) α = 0.791; CR =
0.791; AVE = 0.488
Providing design specification to suppliers that include environmental 0.667 ( – )
requirements for purchased item
Cooperation with suppliers for environmental objectives 0.793 (7.249)
Environmental audit for suppliers’ internal management 0.680 (6.456)
Suppliers are selected using environmental criteria 0.644 (6.167)
4. Operational flexibility (Flynn et al., 2010) α = 0.805; CR =
0.807; AVE = 0.583
Quickly modify products and services to meet our customer’s requirements 0.804 ( – )
Quickly introduce new products and services into the market 0.713 (7.855)
Quickly respond to changes in market demand 0.771 (8.494)
5. Delivery (Wong et al., 2010; Flynn et al.,, 2010) α = 0.869; CR =
0.874; AVE = 0.699
An outstanding on-time delivery record to our customer 0.874 ( – )
Provide reliable delivery to our customers 0.859 (12.053)
The lead time for fulfilling customers’ orders (the time which elapses between 0.771 (10.247)
the receipt of customer’s order and the delivery of the goods) is short
6. Product quality (Wong et al., 2010) α = 0.860; CR =
0.866; AVE = 0.685
High performance products that meet customer needs 0.742 ( – )
Produce consistent quality products with low defects 0.860 (9.321)
High reliable products that meet customer needs 0.874 (9.428)
7. Production cost (Wong et al., 2010) α = 0.798; CR =
0.811; AVE = 0.594
Produce products with low costs 0.871 ( – )
Produce products with low overhead costs 0.810 (8.441)
Offer price as low or lower than our competitors 0.607 (6.649)
Model fit statistics: χ2/df (343.999/254) = 1.354; RMSEA = 0.053; CFI = 0.940; IFI = 0.941

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 Table 3: Descriptive statistics
Mean S.D. 1 2 3 4 5 6 7
1. Internal GSCM 3.796 0.733 0.694a
2. GSCM with customers 3.971 0.651 0.532** 0.675
3. GSCM with suppliers 3.790 0.672 0.599** 0.587** 0.699
4. Operational flexibility 3.884 0.759 0.407** 0.362** 0.331** 0.764
5. Delivery 4.177 0.691 0.476 **
0.383 **
0.459** 0.644** 0.836
6. Product quality 4.034 0.751 0.459 **
0.357 **
0.330** 0.514** 0.622** 0.828
7. Production cost 3.653 0.769 0.315 **
0.218 *
0.306** 0.308** 0.408** 0.374** 0.771
Note: a Square root of AVE is on the diagonal.
**
p < 0.01; * p < 0.05. (2-tailed).

Table 4: Results of hypotheses 1–3 tests using SEM

Structural paths Standardized coefficient t-value Hypothesis test
Internal GSCM and operational performance
Internal GSCM → operational flexibility (H1a) 0.641*** 5.205 Supported
Internal GSCM → delivery (H1b) 0.692*** 5.977 Supported
Internal GSCM → product quality (H1c) 0.630*** 5.139 Supported
Internal GSCM → production cost (H1d) 0.439*** 3.967 Supported
2
Model fit statistics: χ /df (240.596/131) = 1.837; RMSEA = 0.082; CFI = 0.901; IFI = 0.903
GSCM with customers and operational performance
GSCM with customers → operational flexibility (H2a) 0.827*** 4.230 Supported
GSCM with customers → delivery (H2b) 0.888*** 4.415 Supported
GSCM with customers → product quality (H2c) 0.745*** 4.054 Supported
GSCM with customers → production cost (H2d) 0.515*** 3.574 Supported
Model fit statistics: χ2/df (158.069/86) = 1.838; RMSEA = 0.082; CFI = 0.920; IFI = 0.921
GSCM with suppliers and operational performance
GSCM with suppliers → operational flexibility (H3a) 0.748*** 4.880 Supported
GSCM with suppliers → delivery (H3b) 0.847*** 5.411 Supported
GSCM with suppliers → product quality (H3c) 0.692*** 4.647 Supported
GSCM with suppliers → production cost (H3d) 0.528*** 4.118 Supported
2
Model fit statistics: χ /df (184.642/100) = 1.846; RMSEA = 0.082; CFI = 0.911; IFI = 0.913
***
p < 0.001.

35
 Figure 1: Research model

Operational
Flexibility
GSCM with
Customers

Delivery

Internal
GSCM

Product
Quality

GSCM with
Suppliers

Production
Cost

36