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Institutional
Exploring firm performance pressures
by institutional pressures driven GSCM
practices
driven green supply chain
management practices 415

Waqar Ahmed Received 17 April 2018

Revised 16 December 2018
Department of Management Sciences, Iqra University, Karachi, Pakistan 15 February 2019
6 April 2019
Arsalan Najmi 24 May 2019
Department of Management Sciences, Iqra University, Karachi, Pakistan and Accepted 27 May 2019

Department of Operations and Management Information Systems,

University of Malaya, Kuala Lumpur, Malaysia
Muhammad Arif
Department of Management Sciences, Iqra University, Karachi, Pakistan, and
Muhammad Younus
Centre for English Language, Iqra University, Karachi, Pakistan

Abstract
Purpose – Environmental concerns are rapidly increasing in the industries across the world. They are a
more serious issue, especially, in the developing countries due to the prevalence of old practices and outdated
technology. The purpose of this paper is to understand the role of institutional pressure and environmental
orientation of the firm in adopting green supply chain management (GSCM) practices, and thereon the effect
of GSCM on the firm’s performance.
Design/methodology/approach – By employing survey methodology using purposive sampling
technique, the data were collected from 229 respondents who were working as supply chain management
professionals in various manufacturing firms. The hypotheses were tested through partial least square
structural equation modeling (PLS-SEM).
Findings – The findings reveal that both institutional pressures and environmental orientation significantly
impact GSCM practices. The result further shows that GSCM practices have a positive effect on the
environmental and economic performance as well as customer effectiveness.
Originality/value – Industries in the developing economies like Pakistan are reluctant to implement GSCM
practices due to the perception of ambiguous financial implications. This study signifies that institutional
pressures act as an effective driving force for change management and compliance.
Keywords Green supply chain management, Environmental performance, Economic performance,
Environmental orientation, Institutional pressure, Customer effectiveness
Paper type Research paper

1. Introduction
Supply chain management is considered an important factor in environmental
management (e.g. Wu and Dunn, 1995; Florida, 1996; Min and Galle, 1997). The recent
years have witnessed a substantial shift in the use of organizational strategies for
enhancing the social and environmental performance of organizations (Hart and Milstein,
2003). Due to the increased environmental awareness, organizations are increasingly
inclined toward adopting the green supply chain management (GSCM), which is a process
Smart and Sustainable Built
in which products or services are sourced, produced and delivered by eco-friendly Environment
processes in order to fulfil the stakeholders’ concerns (Ahmed et al., 2018). Moreover, Vol. 8 No. 5, 2019
pp. 415-437
studies on GSCM recommend that the authorities and decision makers need to © Emerald Publishing Limited
2046-6099
considerably improve efficiency and effectiveness of their work (Chen and Lu, 2016). DOI 10.1108/SASBE-04-2018-0022
SASBE Recent research has found that the environment-friendly practices enhance organizations’
8,5 efficiency and increase their profits by reducing the wastage (Khan et al., 2019).
GSCM is evolving as the new managerial philosophy that organizations can adopt to
attain their economic objectives by reducing their effects on environment and improving
their environmental efficiency (Van Hoek, 1999). Moreover, greening the supply chain
and operations increases competitive and cooperative advantages, leading to increased
416 competitiveness and economic performance (Rao and Holt, 2005; Choi and Hwang, 2015).
Several studies have highlighted the potential advantages of GSCM, such as enhancement
of perceived reputation of organizations, increasing efficiency and effectiveness, process
differentiation and revenue growth, to motivate managers for its adoption (Rao and Holt,
2005; Wu and Pagell, 2011; Golicic and Smith, 2013). Therefore, to maintain equilibrium
between both economic and environmental performance, the managerial approach of GSCM
needs to be developed and adopted (Felice et al., 2013). Moreover, key factors that have been
leading the integration of environmental management and sustainability are compliance
with rules and regulations, and legislation (Green et al., 2012). Companies need to develop
their capabilities to manage and control the environmental performance of their operations
to tackle strict institutional protocols along with an increase in customer demand.
The impact of institutional pressures can be a driving factor to bring behavioral shift in the
focal firm to become socially responsible by adopting GSCM practices in order to meet
environmental objectives (Ciliberti et al., 2011).
Zhu et al. (2012) stated that GSCM is still a new idea in many manufacturing
industries. Recent studies in this area have revealed that most of the businesses in
developing Asian countries will face serious environmental issues in the next couple of
decades due to environmental degradation and scarcity of resources (Zhu et al., 2005;
Shipeng and Linna, 2011; Wu et al., 2011; Diabat and Govindan, 2011; Zhu et al., 2012).
According to US Census Bureau, Pakistan is the sixth most densely populated country in
the world (www.census.gov). Water scarcity and environmental degradation are some of
the major concerns in this region (Khan et al., 2019). Developing countries have to change
and design their supply chain to make it environment friendly (Mudgal et al., 2009).
Industries, especially in Pakistan, are reluctant to implement green chain management
practices due to the perception of negative financial implications (Ahmed et al., 2018),
which hinders their self-motivated adoption of green practices. Institutional pressure,
therefore, acts as an effective driving force for change management and compliance in
such scenarios.
The results of the past studies specially conducted in the context of developing countries to
explore the influence of green practices on various performances outcomes of the
organizations, have reported mixed outcomes (Vijayvargy et al., 2017; Ahmed et al., 2018;
Wu et al., 2015; Zhu et al., 2013, Zhu and Sarkis, 2006). These studies also reflect that
organizations sometimes consider the implementation of GSCM practices to be a burden on
their limited resources (Ahmed et al., 2018). GSCM activities performed by an organization are
considered crucial for the improvement of organizational performance (Zailani et al., 2012).
Moreover, flexibility of resources and redundancies help a firm’s operations in building up
customer effectiveness by increasing agility and adaptability (Ahmed et al., 2019), but GSCM
practices are more effective in making the process leaner and waste free (Mumtaz et al., 2018).
According to Teixeira et al. (2016), GSCM has started to be considered as an important
management tool in the recent years, but its implementation and execution remain a problem
mostly in developing countries, owing to the lack of motivation and understanding on the part
of managers and administrators. Industrialists and investors feel that implementation of
GSCM practices has no significant impact on engaging customers. In addition, the research
conducted in the developing countries has found GSCM to have an ambiguous effect on
various performance outcomes (Teixeira et al., 2016; Geng et al., 2017; Ahmed et al., 2018).
Some research works on the subject of green supply chain have found significant impact of Institutional
GSCM practices on the economic and environmental outcomes of the organizations (Golicic pressures
and Smith, 2013). However, financial benefits or cost‒benefit trade-offs related with the GSCM driven GSCM
are still not clear in the literature. For instance, Younis et al. (2016) found that none of the
GSCM practices have any significant impact on environmental performance. Similarly, the practices
impact of green supply chain practices over economic performance is still not clear (Zhu et al.,
2012). Therefore, it is highly important for the managers and practitioners to understand the 417
driving forces for implementing GSCM practices and their subsequent effects on performance,
especially in the context of a developing country like Pakistan.
Considering the conflicting results of the past studies, the objective of the current
research is to investigate the role of organizations and stakeholders as motivators in the
adoption and implementation of green supply chain management practices. Additionally,
this study will explore the effects of implementing common practices of green supply chain
on different aspects of corporate performance. The contribution of this study is
multifaceted: first, it contributes to the literature on GSCM domain by evaluating the impact
of GSCM on economic and environmental aspects. Second, this study provides insight into
the performance outcomes by deploying GSCM practices. Third, it contributes important
implications to the industry by providing guidance to the managers to develop and
implement successful GSCM practices in their organizations.
Therefore, this study aims to answer primarily two research questions:
RQ1. What are the driving forces in the implementation of GSCM practices in a firm?
RQ2. What is the impact of GSCM practices on various dimensions of firm performance?
The rest of the research paper is organized in the following sections: Section 2 deals with
review of the relevant past studies and hypotheses development, Sections 3 and 4 include
methodology and data analysis, whereas the final section contains discussion, conclusion
and managerial implications.

2. Literature review
2.1 Theoretical background
The research model in the current study is based on two theories: the resource-based theory
(RBT) and the institutional theory. The RBT gives the basis for identifying organizational
orientations toward the environment, which set supply chain relationships with
environmental responsibility and GSCM practices as a strategic step to create value
(Hart and Dowell, 2011). Moreover, the RBT states that firms compete in the market on the
basis of unique strategic capabilities, and it is assumed that differences in the capabilities
of the competing firms help in maintaining differences in performance (Choi et al., 2018;
Kirchoff et al., 2016; Barney, 1991; Sirmon et al., 2007). GSCM is an advantage that
cannot be easily nullified, and it is considered to be a valuable asset for any organization
(Barney, 1986; Guang Shi et al., 2012; Choi et al., 2018). However, it is an intangible
advantage, so it is difficult to be replicated (Chan et al., 2012).
Firms tend to take initiatives that can make them acceptable in the society.
Consequently, the adoption of some organizational policies may increase a firm’s legitimacy
to be operated by the external factors and/or stakeholders. Therefore, institutional theory
that deals with pressures on the organizations to adopt environment-friendly practices is
used in the current study (Agarwal et al., 2018). According to this theory, environmental
configuration is influenced by three factors: normative pressure, coercive pressure and
mimetic pressure (DiMaggio and Powell, 1983). The normative pressure deals with external
pressure of customers, suppliers and similar forces that have invested their interest in the
organization (Yang, 2018). The coercive pressure is exerted by powerful entities such as
SASBE government authorities (Rivera, 2004; Agarwal et al., 2018), whereas mimetic pressure is the
8,5 one that a firm takes from its competitors (Saeed et al., 2018), such as the pressure to adopt
the best practices from the organizations that are working in the same industry.

2.2 Green supply chain management

There are several definitions of GSCM available in the literature. In the current study, GSCM
418 is defined as a strategic capability that contains strategies, practices, and policies that will
concentrate on managing the environmental impact of supply chain operations (Rauer and
Kaufmann, 2015).

2.3 Hypotheses development

2.3.1 Environmental orientation. “Recognition by a manager about the importance of
environmental issues faced by their firms” is defined as environmental orientation (Banerjee
et al., 2003, p. 106). Environment-oriented firms reduce the environmental impact through
proactively driven reconfiguration in their business practices (Menon and Menon, 1997).
Environmental orientation can be divided into two dimensions of “internal orientation and
external orientation” (Banerjee, 2002). An internal environmental orientation is defined as
intra-organizational learning, knowledge sharing and environmental responsibilities among
organizational members (Chan et al., 2012), whereas an external environmental orientation
deals with legitimizing a firm’s activities to stakeholders by combining its green practices in
order to achieve firm’s financial performance objectives (Banerjee et al., 2003; Fraj-Andrés
et al., 2009). However, an organization needs to manage complex and changing business
environment to develop successful green supply chain practices. In this regard,
environmental orientation helps managers to develop processes that are considered
socially complex, innovative and strategically valuable (Russo and Fouts, 1997; Gabler et al.,
2015). Having an environmental orientation provides strategic support within the
organization for implementing green supply chain practices (Kirchoff et al., 2016).
Furthermore, it has been reported that aforementioned two dimensions of environmental
orientation have a positive impact on corporate green supply chain practices (Chan et al.,
2012). Thus, it is hypothesized that internal and external orientations have a significant
impact on organizational GSCM practices:
H1. The environmental orientation as strategic capabilities directly and positively
influences the GSCM practices.
2.3.2 Institutional pressures. Institutional theory’s three institutional isomorphic pressures,
namely coercive, normative and mimetic pressures, can affect an organization’s competitive
environmental position (DiMaggio and Powell, 1983; Sarkis et al., 2011). Environmental
management practices can be driven by coercive pressure, which is an important factor
among manufacturers in developing countries. Managers of manufacturing firms receive
the coercive pressures from regulatory authorities for the implementation of green supply
chain practices in pursuance of improved performance (Agarwal et al., 2018). Implementing
GSCM practices is a core normative pressure from customers and the market because of
their increasing environmental expectations from manufactures (Yang, 2018). Especially,
exports and foreign sales directly pressurize the organizations to adopt and implement
green supply chain practices in order to meet their customers’ terms and conditions
(Christmann and Taylor, 2001; Lai et al., 2012). However, following a market trend
and/or benchmarking the market competitors also help in excelling in operational and
manufacturing domain (Saeed et al., 2018).
Lai et al. (2011) stated aforementioned pressures as motivators for green practices.
On the contrary, due to the depletion of resources and degradation of human health and
environment, manufacturers are regularly being pressurized from end consumers and Institutional
governments to implement green practices (Vanalle et al., 2017). However, literature has pressures
contrasting evidence with reference to the presence of these pressures. For instance, Lin and driven GSCM
Ho (2011) reported the presence of regulatory pressure for the adoption of green logistics on
the service providers; however, they questioned the presence of customer pressure. practices
As theoretically discussed, institutional pressure should have an impact on GSCM practices.
Therefore, the following is hypothesized: 419
H2. The institutional pressure has a direct and positive impact on green supply
chain practices.
2.3.3 Customer effectiveness. Customer effectiveness refers to efficiently meeting customer
demand for improved customer loyalty and long-term relationships (Clifford Defee and
Stank, 2005; Carter and Rogers, 2008; Johnson and Templar, 2011). Customer effectiveness is
mainly concerned with customer satisfaction (Mentzer et al., 2001; Fugate et al., 2010). GSCM
practices improve customer effectiveness through continuous product availability that
meets specific environmental criteria, order fulfillment and high level of customer services
(Golicic and Smith, 2013). Customers are getting more concerned with respect to possible
damage caused to environment (Najmi et al., 2019), and they are urging manufacturers to
align their manufacturing operations as per GSCM (Vanalle et al., 2017). Although
customers consider GSCM as a competitive factor among manufacturers, but there is a
possibility that in order to be environment friendly, manufactures may have adverse
effects on customer effectiveness (Ahmed et al., 2018). According to Kirchoff et al. (2016),
improvement through environmental quality management, customer and vender
coordination on environmental products and manufacturing processes, and designing
and redesigning of products are the factors associated with customer effectiveness.
Therefore, the following is hypothesized:
H3. The GSCM practices positively and directly influence the customer effectiveness.
2.3.4 Economic performance. Economic performance is one of those outcomes that force an
organization to be environmentally oriented. Researchers are in agreement that in order to
avail the opportunities in a competitive environment, businesses need to address
environmental problems (Hansmann and Kroger, 2001; Wagner and Schaltegger, 2006;
Lai et al., 2010). Moreover, most of the previous research works have determined that there is
a positive relationship between an organization’s internal and external GSCM practices and
its economic performance (Gil et al., 2001; Montabon et al., 2007; Rao and Holt, 2005; Wong
et al., 2012). ISO 14001-certified companies can gain internal performance advantages by
adopting green environmental practices (Ahmed et al., 2018; Segarra-Ona et al., 2012;
Prajogo et al., 2012). Dyer and Singh (1998), Leung et al. (2011) and Najmi and Khan (2017)
found that an organization’s internal relationships can provide formal or informal
mechanisms that promote trust, reduce risk and increase innovation and profitability.
These intra-organizational relationships include cross-functional collaboration for creating
environmental awareness, promotion of optimum utilization of resources for countering
adverse effects on human health and environment, and integration for implementing
environment auditing programs (Zhu et al., 2013). Having GSCM practices will eventually
reduce the waste from the operations, which help manufacturers to achieve economies of
scale (Ahmed et al., 2018). Moreover, through GSCM, an organization will have long-term
benefits in terms of profitability and sales performance (Bowen et al., 2001). Specifically in
the context of developing countries, it helps to explore new business avenues and enhances
a manufacturer’s competitive capabilities (Esfahbodi et al., 2016). It also increases a firm’s
efficiency by improving energy consumption, reducing operations waste, optimizing
SASBE material purchases and countering manufacturing waste (Zailani et al., 2012). Furthermore,
8,5 GSCM practices are directly associated with economic performance (Zhu et al., 2013;
Vanalle et al., 2017). Thus, the following is hypothesized:
H4. The GSCM practices have a significant influence on economic performance.
2.3.5 Environmental performance. According to some scholars, environmental performance
420 is seen as the means to the twin goals of accessing economic and environmental
sustainability, which improves and maintains life style of people without damaging
environmental resources (Yusuf et al., 2013). Changes in the production process of products
and services in order to decrease effects on environment for better life quality result in
improvement of environmental performance (Honkasalo et al., 2005). The sustainability of
green supply chain practices is imperative for environmental and social benefits (Carter and
Rogers, 2008; Hutchins and Sutherland, 2008; Govindan, 2015). Environmental performance
outcome consists of environmental risk reduction, corporate image improvement and
contribution to environmental protection. An organization can increase environmental
performance through adopting green production practices within its production process
(Halme, 2002). Therefore, the following is hypothesized:
H5. The GSCM practices positively and directly influence the organizational
environmental performance.

2.4 Conceptual model

As per the aforementioned discussion, the proposed conceptual model is presented in Figure 1.

3. Research methods
The current study adopted quantitative research approach that provides the advantage of
producing a more general picture of a population through sampling and the use of statistical
techniques (Kelle, 2006). The survey methodology was adopted wherein a self-administered
questionnaire was used to collect data from the respondents.

IEM SCP GED

Environmental Economic
Orientation Performance

GSCM Environmental
Practices Performance

Institutional Customer
Pressure Effectiveness

Figure 1.
Conceptual framework IPC IPN IPM
3.1 Measures Institutional
For the purpose of data collection, a self-administered questionnaire was developed. It was pressures
divided into two parts: the first part consisted of measuring items adapted from previous driven GSCM
research works, whereas the second part consisted of questions related to demographic
details of the respondents. The details of the measuring items are summarized in Table I. practices
The present study has two higher order constructs, namely institutional pressure
(normative, coercive and mimetic pressures as first orders) and GSCM practices (eco-design, 421
supply chain partnering and internal environment management). All measuring items were
on a five-point Likert scale, ranging from 1: Strongly Disagree to 5: Strongly Agree. Prior to
the data collection, the questionnaire was validated by industry and academic experts, and
their suggestions were incorporated to ensure its face and content validity.

3.2 Sample
In order to meet the objective of this study, supply chain professionals and managers from ISO
14000 and ISO 14001-certified companies from Karachi, Pakistan, were selected. The purposive
sampling technique was used for data collection and the respondents were assured of data
protection and anonymity. During the first quarter of 2017, around 800 questionnaires were
distributed, but after data screening, the final sample size of the research was of 229 respondents,
with the response rate of 28 percent. The sample size of the current study met the threshold of
minimum sample size based on 10 times rule method, recommended by Hair et al., (2011).
In order to counter the common method biasness, the procedural guidelines as discussed
by MacKenzie and Podsakoff (2012) were followed, especially at the stages of designing
questionnaire and administering it to the respondents. Due to non-response bias, late
respondents were considered as non-respondents as per their behavior (Saeed et al., 2018);
therefore, the sample was divided into two groups of early and late respondents.
Both groups’ means were compared through independent t-tests, and the results were found
to be insignificant at 5 percent level. This result supports the absence of non-response bias
in our study.
The demographic profiles of the respondents are summarized in Table II.

4. Data analysis and results

The softwares used for the data analysis were SPSS 22 and SmartPLS 3.2.4. The gathered
data were screened through SPSS to detect missing data and identify multi- and uni-variate
outliers. Partial least square structural equation modeling (PLS-SEM) by using SmartPLS
3.2.4 was applied after data screening. In comparison to the conventional covariance-based

No. of
Constructs items Source

Environmental orientation (EO)
Internal E-Management (IEM)
Supply Chain Partnering (SCP)
Eco-design (GED)
Institutional pressure ‒ Coercive (IPC)
Institutional pressure ‒ Normative (IPN)
Institutional pressure ‒ Mimetic (IPM)
Economic performance (EP)
Environmental performance (ENP)
Customer Effectiveness (CE)
6 Banerjee et al. (2003) and Fraj-Andrés et al. (2009)
4 Zhu et al. (2008) and Bowen et al. (2001)
6 Zhu and Sarkis (2004), Zhu et al. (2008) and Melnyk
et al. (2003)
4 Zhu and Sarkis (2004), Zhu et al. (2008), and Melnyk
et al. (2003)
3 Zhu et al. (2013)
4 Zhu et al. (2013)
3 Zhu et al. (2013)
4 Zhu et al. (2013)
4 Zhu et al. (2013) Table I.
2 Fugate et al. (2010) and Min et al. (2007) Details of measures
SASBE Parameters Categories Frequency %
8,5
Firm size 50‒150 employees 30 13
151‒250 employees 65 28
251Wemployees 134 59
Firm nature of business Textile 35 15
Garments 48 21
422 Automotive 24 10
Pharmaceutical 32 14
Others 90 39
Working experience 1‒4 years 44 19
5‒9 years 116 51
10 and above 69 30
Current designation Asst. Manager 93 41
Deputy Manager 81 35
Table II. Manager 40 17
Respondents’ profile Above the Manager 15 7

structural equation modeling (CB-SEM), PLS-SEM has the tendency to explain more
variance of the data, and it is strongly recommended for testing the hypotheses in theory
exploration involving complex models with relatively small sample size (Hair et al., 2017);
therefore, it has been termed “Silver Bullet” (Hair et al., 2011). Many GSCM-related previous
studies have also applied PLS-SEM (Ahmed et al., 2018; Saeed et al., 2018; Agarwal et al.,
2018; Vanalle et al., 2017), hence justifying the robustness of this technique in the similar
context. The current study adopted the two-step method, discussed by Hair et al. (2016),
which includes the assessment of outer and inner models.

4.1 The measurement of the outer model

For the purpose of measuring the validity and reliability of the outer model, content validity,
convergent validity and discriminant validity were tested.
4.1.1 The content validity. To measure the content validity, factor loadings and cross
loading were analyzed. For the strong loading of content validity, factor loading items
within a construct should be greater than loading items outside the construct model
(Chin, 1998; Hair et al., 2013). The factor loading items within the construct loading items
that were lower than the items outside the model were removed. However, majority of the
factor loadings were found to be greater than 0.7, which confirms the content validity of
the outer model. Tables III and IV provide the evidence of the content validity of the
proposed model.
4.1.2 The convergent validity. The collective convergence of a group that supports to
achieve a level of validity toward a conceptual measurement is known as convergent
validity (Hair et al., 2013). Three dimensions mutually contribute to achieve the level of
convergent validity. First, factor loadings should be higher than 0.7 and need to be
statistically significant (Hair et al., 2017; refer to Table III). Second, as per Fornell and
Larcker (1981), the value of average variance extracted (AVE) should be more than
0.5. Third, the composite reliability must be greater than 0.7 (Hair et al., 2017) to support
convergent reliability. All the convergent validity criteria are met by our model, as
depicted in Table V.
4.1.3 The discriminant validity. When the set of items of a variable differentiates with the
items of the other variables, discriminant validity is established. There are three measures to
evaluate discriminant validity. First, the difference of the loadings of all the items within the
construct and outside the construct must be greater than 0.1 (Gefen and Straub, 2005).
Constructs Items Loadings SE t-statistics p-values
Institutional
pressures
CE CE1 0.655 0.201 3.257 0.001 driven GSCM
CE2 0.939 0.049 19.180 0.000
EO EO1 0.752 0.047 16.107 0.000 practices
EO2 0.837 0.031 26.667 0.000
EO3 0.676 0.050 13.587 0.000
EO6 0.632 0.072 8.819 0.000 423
EP EP1 0.706 0.093 7.581 0.000
EP3 0.935 0.023 39.944 0.000
EP4 0.674 0.101 6.692 0.000
GED GED1 0.762 0.119 6.407 0.000
GED2 0.759 0.107 7.103 0.000
GED3 0.744 0.118 6.316 0.000
GED4 0.777 0.103 7.549 0.000
IEM IEM2 0.777 0.051 15.317 0.000
IEM3 0.716 0.063 11.443 0.000
IEM4 0.739 0.042 17.739 0.000
IPC IPC1 0.873 0.022 40.350 0.000
IPC2 0.794 0.043 18.584 0.000
IPC3 0.669 0.070 9.621 0.000
IPM IPM1 0.824 0.031 26.311 0.000
IPM2 0.902 0.014 66.323 0.000
IPM3 0.647 0.065 9.905 0.000
IPN IPN1 0.823 0.037 22.080 0.000
IPN2 0.863 0.022 39.095 0.000
IPN3 0.653 0.045 14.499 0.000
IPN4 0.777 0.033 23.377 0.000
SCP SCP1 0.704 0.051 13.788 0.000
SCP2 0.839 0.027 30.665 0.000
SCP3 0.682 0.056 12.102 0.000
SCP4 0.778 0.032 24.563 0.000
SCP6 0.667 0.064 10.412 0.000
ENP ENP2 0.695 0.064 10.794 0.000 Table III.
ENP4 0.942 0.018 51.047 0.000 Factor loadings
Source: Authors’ estimation and significance

Second, a method advised by Fornell and Larcker (1981), a correlational matrix, which is the
square root of AVE with the absolute value of the correlational of the construct in rows and
columns, as shown in Table VI. According to the suggested test, the value of the diagonal of
each construct (represents square roots of AVE) is higher than its own column and row
(represents correlations among constructs). Third by heterotrait‒monotrait ratio (HTMT)
test, in which all the values of construct should be less than 0.9 (Hair et al., 2017), as
mentioned in Table VII.

4.2 Measurement of inner model

The inner model consists of evaluating predictive relevance of the model followed by testing
recommended hypotheses (Ringle et al., 2015).
4.2.1 Predictive relevance of the model. The predictive power of a variable is studied
through f2, R2 and Q2. According to Cohen (1988), for the strong value of R2, it should be
close to 0.26 and for the weak, the value should be between 0.02 and 0.13. Predictive power
can be identified if the value of Q2 is greater than 0 or higher than the different
between R2 and Q2. Table VIII represents the predictive relevance power of all constructs as
per the mentioned grounds. Moreover, the effect size of the structural relationships
SASBE Constructs Items CE EO EP GCD IEM IPC IPM IPN SCP ENP
8,5
CE CE1 0.655 0.102 0.307 0.188 0.075 0.034 0.167 0.094 0.261 0.013
CE2 0.939 0.137 0.455 0.201 0.108 0.315 0.428 0.251 0.355 0.192
EO EO1 0.124 0.752 0.116 0.264 0.410 0.325 0.216 0.372 0.335 0.408
EO2 0.178 0.837 0.052 0.202 0.314 0.326 0.172 0.231 0.209 0.239
EO3 0.041 0.676 0.085 0.236 0.328 0.165 0.438 0.113 0.367 0.068
424 EO6 0.203 0.632 0.012 0.144 0.316 0.100 0.228 0.326 0.289 0.170
EP EP1 0.218 0.205 0.706 0.043 0.022 0.121 0.118 0.040 0.311 0.124
EP3 0.502 0.090 0.935 0.050 0.239 0.308 0.472 0.456 0.509 0.278
EP4 0.315 0.002 0.674 0.358 0.082 0.085 0.176 0.047 0.303 0.010
GED GED1 0.054 0.347 0.071 0.762 0.171 0.130 0.061 0.132 0.079 0.136
GED2 0.016 0.253 0.069 0.759 0.081 0.268 0.016 0.151 0.135 0.278
GED3 0.065 0.102 0.161 0.744 0.134 0.225 0.093 0.107 0.038 0.320
GED4 0.249 0.198 0.079 0.777 0.181 0.217 0.176 0.168 0.171 0.213
IEM IEM2 0.005 0.439 0.142 0.129 0.777 0.206 0.028 0.081 0.566 0.300
IEM3 0.130 0.205 0.112 0.173 0.716 0.472 0.111 0.297 0.371 0.381
IEM4 0.147 0.407 0.141 0.126 0.739 0.409 0.351 0.487 0.451 0.480
IPC IPC1 0.333 0.173 0.188 0.240 0.384 0.873 0.353 0.274 0.303 0.232
IPC2 0.131 0.387 0.122 0.315 0.425 0.794 0.149 0.294 0.402 0.307
IPC3 0.135 0.199 0.151 0.070 0.299 0.669 0.242 0.187 0.189 0.247
IPM IPM1 0.462 0.227 0.410 0.030 0.239 0.292 0.824 0.413 0.468 0.369
IPM2 0.252 0.361 0.259 0.118 0.108 0.253 0.902 0.540 0.336 0.277
IPM3 0.270 0.329 0.305 0.003 0.187 0.231 0.647 0.219 0.478 0.024
IPN IPN1 0.207 0.354 0.208 0.199 0.236 0.260 0.379 0.823 0.205 0.164
IPN2 0.096 0.407 0.199 0.139 0.220 0.252 0.503 0.863 0.240 0.283
IPN3 0.225 0.102 0.336 0.099 0.364 0.258 0.406 0.653 0.425 0.310
IPN4 0.001 0.239 0.261 0.146 0.380 0.250 0.299 0.777 0.226 0.411
SCP SCP1 0.279 0.198 0.398 0.062 0.474 0.254 0.357 0.290 0.704 0.276
SCP2 0.377 0.248 0.358 0.096 0.495 0.382 0.487 0.222 0.839 0.293
SCP3 0.294 0.466 0.281 0.454 0.395 0.320 0.335 0.209 0.682 0.352
SCP4 0.125 0.508 0.439 0.074 0.591 0.205 0.384 0.333 0.778 0.324
SCP6 0.361 0.095 0.406 0.034 0.334 0.255 0.330 0.207 0.667 0.215
ENP ENP2 0.063 0.155 0.103 0.044 0.276 0.228 0.397 0.398 0.211 0.695
Table IV. ENP4 0.173 0.323 0.238 0.365 0.523 0.312 0.199 0.282 0.409 0.942
Cross loadings Source: Authors’ estimation

can be examined through p-values, but these only provide significance. For effect size,
Hair et al. (2017) defined the thresholds of 0.02 as weak, 0.15 as moderate and 0.35 as strong
effect. The values of the effect sizes ( f2) are shown in Table IX.
4.2.2 Hypotheses testing. As per Table IX, there is a significant effect of environmental
orientation on GSCM at the 0.01 level of significance (β ¼ 0.33, t ¼ 4.55, p o 0.01).
Moreover, institutional pressure also has a significant impact on GSCM at the 0.01 level of
significance (β ¼ 0.43, t ¼ 6.24, p o 0.01). Consequently, GSCM has a significant and
positive impact on customer effectiveness at the 0.01 level of significance (β ¼ 0.32,
t ¼ 4.88, p o 0.01). Similarly, GSCM has a positive effect on economic performance
(β ¼ 0.38, t ¼ 8.38, p o 0.01) and environmental performance at the 0.01 level of
significance. Therefore, all the proposed hypotheses from H1 to H5 were supported. The
hypotheses testing results are presented in Figure 2.

5. Conclusion, discussion and recommendations

5.1 Conclusion
This study was conducted to investigate the role of strategic environmental orientation, which
is self-motivated urge to become environment friendly, and institutional pressures, which are
Constructs Items Loadings CR AVE
Institutional
pressures
CE CE1 0.655 0.786 0.655 driven GSCM
CE2 0.939
EO EO1 0.752 0.817 0.531 practices
EO2 0.837
EO3 0.676
EO6 0.632 425
EP EP1 0.706 0.820 0.609
EP3 0.935
EP4 0.674
GED GED1 0.762 0.846 0.579
GED2 0.759
GED3 0.744
GED4 0.777
IEM IEM2 0.777 0.789 0.554
IEM3 0.716
IEM4 0.739
IPC IPC1 0.873 0.824 0.613
IPC2 0.794
IPC3 0.669
IPM IPM1 0.824 0.838 0.637
IPM2 0.902
IPM3 0.647
IPN IPN1 0.823 0.863 0.613
IPN2 0.863
IPN3 0.653
IPN4 0.777
SCP SCP1 0.704 0.855 0.543
SCP2 0.839
SCP3 0.682
SCP4 0.778
SCP6 0.667
ENP ENP2 0.695 0.810 0.685 Table V.
ENP4 0.942 The convergent
Source: Authors’ estimation validity analysis

Construct CE EO EP GCD IEM IPC IPM IPN SCP ENP

CE 0.809
EO −0.148 0.729
EP 0.480 0.003 0.780
GCD 0.093 0.300 −0.057 0.761
IEM 0.115 0.480 0.178 0.189 0.745
IPC 0.267 0.318 0.198 0.275 0.473 0.783
IPM 0.408 0.377 0.400 0.070 0.214 0.322 0.798
IPN 0.168 0.362 0.315 0.187 0.376 0.325 0.511 0.783
SCP 0.383 0.427 0.509 0.147 0.629 0.385 0.516 0.345 0.737 Table VI.
ENP 0.160 0.312 0.226 0.305 0.515 0.331 0.304 0.369 0.401 0.828 Fornell‒Larcker
Source: Authors’ estimation criterion

the influences of governmental institutions, competitors and customers, in fostering successful

implementation of GSCM. It also investigated the impact of GSCM practices on performance
indicators of organizations. This study is significant in the context of deteriorating
environmental conditions in the sixth most populated country of the world, Pakistan.
SASBE Construct CE EO EP GCD IEM IPC IPM IPN SCP ENP
8,5
CE
EO 0.310
EP 0.720 0.257
GCD 0.354 0.400 0.317
IEM 0.328 0.713 0.341 0.331
426 IPC 0.342 0.487 0.307 0.392 0.760
IPM 0.609 0.525 0.462 0.171 0.437 0.462
IPN 0.334 0.473 0.391 0.243 0.593 0.445 0.654
Table VII. SCP 0.594 0.537 0.628 0.295 0.896 0.523 0.719 0.456
Heterotrait‒Monotrait ENP 0.353 0.434 0.283 0.429 0.811 0.518 0.543 0.607 0.540
Ratio (HTMT) Source: Authors’ estimation

Construct R2 Q2

GSCM 0.42 0.13

CE 0.10 0.06
Table VIII. EP 0.15 0.07
Predictive power of ENP 0.28 0.17
the construct Source: Authors’ estimation

No. Hypothesis Estimation SE t-statistics p-values f2 Remarks

H1 EO→GSCM 0.333 0.073 4.551 0.000 0.153 Supported

H2 IP→GSCM 0.428 0.069 6.241 0.000 0.252 Supported
H3 GSCM→CE 0.318 0.065 4.875 0.000 0.112 Supported
H4 GSCM→EP 0.384 0.046 8.382 0.000 0.173 Supported
Table IX. H5 GSCM→ENP 0.528 0.051 10.391 0.000 0.387 Supported
Hypotheses testing Source: Authors’ estimation

The findings of this research reveal that both strategic orientation and institutional pressures
are important to influence organizations to adopt green supply chain practices, with
institutional pressure exhibiting a higher effect size. The findings further reveal that among
different types of institutional pressures, normative pressure exerted by customers and
supply chain partners has the highest effect, followed by mimetic and coercive pressures.
Organizations that adopt GSCM practices are found to be mostly focused on building supply
chain partnerships with stakeholders in order to reap maximum benefits. On the performance
front, this study found very positive outcomes on triple bottom line. It was also found that
GSCM practices strongly impact the environmental performance as a corporate social
responsibility, which is quite beneficial for gaining customers’ attention. Moreover, GSCM
practices were also found to have a significant impact on firms’ economic performance and
customers’ effectiveness.

5.2 Discussion
Majority of the manufacturers in the developing countries like Pakistan try to avoid
penalties imposed by the government authorities and trading organizations on account
of environmental violation to avoid economic loss. This makes organizations and
decision makers willing to adopt GSCM practices that can save them from such unwanted
 SCP1 SCP2 SCP3 SCP4 SCP6 Institutional
13.471 32.083
12.734 25.058 9.877
pressures
GED1 GED2 GED3 GED4
IEM2 IEM3 IEM4 driven GSCM
5.370 5.876 6.409 7.695
11.984
practices
16.474 19.978

SCP

427
GCD
IEM

0.917 (0.000)

EO1 0.409 (0.001) EP1

0.825 (0.000)
7.707
15.737 39.600 EP3
EO2 26.120 7.073
14.961
IPC1 EO3 EP4
9.334
0.384 (0.000) EP
IPC2 43.777 0.333 (0.000)
EO6 EO
18.936 [+] ENP2
IPC3 9.859 10.432
0.528 (0.000)
55.314
ENP4
IPN1
IPC 0.351 (0.000) 0.428 (0.000) 0.318 (0.000)
GSCM ENP
IPN2 21.281 CE1
[+]
38.259 3.523
IPN3 15.617 0.536 (0.000) 18.688 CE2
25.088
IPN4
IPN IP CE
0.399 (0.000)

IPM1
27.697
IPM2 65.573
10.120
IPM3
IPM Figure 2.
SEM output
Note: Path coefficients and t-statistics

losses (Vanalle et al., 2017). This study has further shown that institutional pressures,
which include normative, mimetic and coercive pressures, force Pakistani firms to
implement GSCM practices. Such firms tend to apply GSCM practices due to the
institutional pressure, unlike the firms from developed countries that implement
the GSCM policies mainly to uphold laws and due to media and non-governmental
organizations (NGOs; Zhu et al., 2010; Zailani et al., 2012).
As environmental concerns are on the rise, the policy makers and environmentalists
must exert more institutional influence on the industries in order to meet the requirements
for environment-friendly practices. Moreover, internal motivation and strategic focus on
environmental protection from top‒bottom approach are important for effective
implementation of GSCM practices (Ahmed et al., 2018). Therefore, managers and
strategists must also work on their strategic environmental orientation through clear
communication to all the stakeholders regarding the goals and expectations from each other
to get better GSCM operations in place to get maximum benefits out of it (Kirchoff et al.,
2016). Finally, this research also proves that GSCM practices can directly lead to
improvement in the firm’s performance, which must be the motivating factor for all
stakeholders and decision makers to adopt these practices in letter and spirit.

5.3 Recommendations
In the light of aforementioned discussion, this research provides practical implications for
organizations and policy makers. It has important implications for manufacturers who can
achieve improved economic performance by implementing green supply chain practices.
Manufacturers need to understand the structural relationships between internal and
SASBE external aspects of implementing GSCM practices and should ensure the coordination of
8,5 the firm’s activities for better environmental and operational performance. The findings
also have practical implications for public policy makers and regulators who need to
motivate manufacturers and managers of firms to implement green supply chain practices
within their organizational activities, as mimetic and normative forces of institutional
pressure have been found to be influential antecedents affecting the implementation of
428 GSCM practices in operations. Government bodies should also promote the importance of
green environment and create awareness of its benefits among the manufacturers and
managers, as they have the authority to force the organizations to bring eco-friendly
changes in their operations.
This study also provides guidance to managers about the prerequisites of developing
and implementing successful and valuable green supply chain practices in an
organization. The important role of strategic organizational orientation, such as
environmental orientation, should be kept in mind to control and follow the strategic
direction of GSCM practices, rather than simply responding to outer pressures.
Furthermore, the significant impact of GSCM on three performance outcomes of an
organization can allow managers to achieve more balanced performance. In the
light of our findings, by adopting environment-friendly practices, managers can enhance
both efficiency and effectiveness of their organizations in the pursuit of sustainable
competitive advantages.

5.4 Future research agenda

The current study opens several avenues for future research. Due to the dynamic nature of
GSCM, cross-sectional survey data can be used in future research to determine the nature of
strategic changes in response to the organizational environment. A longitudinal research in
future can provide insight into performance implications of GSCM that could not be
investigated in a short duration in the present study. A longitudinal study in future may
also disclose how mangers’ attitudes toward GSCM practices are affected by the changes in
regulation, corporate culture, state of the economy, stakeholder demand and the competitive
position of the firm. (Bansal and Roth, 2000).
As multinational firms deal with varying regulations and network structures, the future
researchers should study different geographical issues related to green supply chain
practices in these firms in order to gain a more universal perspective of the linkage between
environmental initiatives and supply chain performance. Furthermore, a comparative future
study of green supply chain practices of firms from different regions of the world will also
provide important implications, as green supply chain practices differ due to culture,
economic stature and the ethical practices of a region.
Finally, future research should investigate further dimensions of performance outcomes
that are related to GSCM practices. Researchers may use complete triple bottom line
approach to explore the performance dimensions that focus on economic, environmental and
social performance.

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SASBE Appendix
8,5
Environmental Orientation (EO)
• Employees in our business unit understand the importance of environmental responsibility.
• Our business unit focusses on environmental awareness in our operations.
436 • Environmental responsibility is important to our business unit.
• The ability of our business unit to create a positive image of environmental responsibility
is important.

GSCM: Internal E-Management (IEM)

• Environmental performance metrics are used regularly by corporate management.
• Cross-functional cooperation is practiced to create environmental improvements in the
supply chain.
• Environmental compliance and auditing programs in all departments are executed periodically.

GSCM: Supply Chain Partnering (SCP)

• Joint decisions with our supplier about ways to reduce overall environmental impact of
our products.
• Joint decisions with our supplier about ways to reduce overall environmental impact of logistics
operations.
• Cooperation with our customers to reduce the environmental impact of our products.
• Joint decisions with our customers about ways to reduce overall environmental impact of
logistics operations.
• Cooperation with our customers to anticipate and/or resolve environment-related problems.

GSCM: Eco-Design (GED)

• Our business unit concentrates on design or redesign of products to reduce consumption of
material and/or energy.
• Our organization focusses on design or redesign of products for recovery, reuse, recycling, and/
or remanufacturing.
• We work on the design or redesign of products to avoid or reduce use of hazardous substances.
• We work hard on the design or redesign of products to reduce the overall environmental impact
of the product.

Institutional pressure (IP) (Coercive)

• The green environmental management of our firm will be influenced by national environmental
regulations (such as waste emission, cleaner production, etc.)
• The green environmental management of our firm will be influenced by regional environmental
regulations (such as waste emissions, cleaner production, etc.).
• The green environmental management of our firm will be influenced by regional resource
saving and protection regulations.
Institutional pressure (IP) (Normative) Institutional
• In order to respond to the green environmental protection tendency, our firm will consider the pressures
effect on export. driven GSCM
• In order to respond to the green environmental protection tendency, our firm will consider the practices
effect on sales to foreign customers.
• In order to respond to the green environmental protection tendency, our firm will consider the
effect on environmental requirements from domestic customers.
437
• For our firm, establishing company’s green image is extremely important.

Institutional pressure (IP) (Mimetic)

• The green environmental management of our firm will be affected by competitor’s green
environmental management protection strategy.
• The green environmental management of our firm will be affected by substitution product
green environmental strategy.
• The green environmental management of our firm will be affected by professional environ-
mental protection group.

Economic performance (EP)

• Implementing green practices has improved productivity in our organization.
• Opting green practices has increased profitability in our organization.
• Green practices have helped our firm to increase market share.

Environmental Performance (ENP)

• GSCM practices have helped our firm to reduce environmental emission.
• We have improved our corporate image by applying green supply chain practices.

Customer Effectiveness (CE)

• GSCM practices help us to have a consistent stock availability.
• GSCM practices help us to handle customer emergencies (i.e. stock outs).

Corresponding author
Arsalan Najmi can be contacted at: arsalan-najmi@hotmail.com

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