Final scriptie

Green supply chain management: Its influence on customers’ intention to purchase

Bachelor thesis at “Faculty of Economics and Business Administration”. By: Léon Dassen Student number: 2525277 E-‐mail: [email protected] Supervisor: Dr. Y. Ghiami Program: Business Administration Specialization: Transport and Supply Chain

Management

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Table of Contents

Abstract .................................................................................................................................. 2

1. Introduction ...................................................................................................................... 3 2. Methods ............................................................................................................................. 6

2.1 Data Collection ....................................................................................................................... 6 2.2 Sample description ............................................................................................................. 7

3. Theoretical findings .................................................................................................. 10 3.1 Green Supply Chain Management .................................................................................. 10

3.1.1 SSCM ............................................................................................................................................... 10 3.1.2 CSR ................................................................................................................................................... 11 3.1.3 LSR ................................................................................................................................................... 11 3.1.4 GSCM .............................................................................................................................................. 11

3.2 Most common motivations to adopt GSCM .................................................................. 13 3.2.1 Financial performance ................................................................................................................ 13 3.2.2 Regulation ....................................................................................................................................... 14 3.2.3 Consumers ...................................................................................................................................... 15 3.2.4 Competitive advantage ............................................................................................................... 15 3.2.5 Collaboration with Suppliers .................................................................................................... 16 3.2.6 Reputational risk ........................................................................................................................... 16 3.2.7 Environmental performance ..................................................................................................... 16

3.3 Most common benefits ....................................................................................................... 18 3.3.1 Financial organizational performance ................................................................................... 18 3.3.2 Reputation ....................................................................................................................................... 19 3.3.3 Employees ...................................................................................................................................... 19 3.3.4 Competitive .................................................................................................................................... 19 3.3.5 Environmental performance ..................................................................................................... 20

3.4 Customer behavior/Customers’ intention to purchase ............................................... 21

4. Conclusion .................................................................................................................... 22 4.1 Discussion ........................................................................................................................... 22 4.2 Conclusion ........................................................................................................................... 24 4.3 Limitations and recommendations for future research ...................................... 24

5. Reference list ............................................................................................................... 25

Appendices ........................................................................................................................ 28 Appendix 1.1: Publications per Journal ........................................................................... 28 Appendix 1.2: Publications per year ................................................................................. 29 Appendix 1.3: Publications per country .......................................................................... 29 Appendix 1.4: Article ID’s ..................................................................................................... 30

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Abstract Because of the growing consciousness about the environment by customers last years, the

subject of green supply chain management (GSCM) has increased in attention by companies.

This thesis shows what influence implementation of GSCM activities has on the purchase

intention of customers. In order to do so it first provides an overview of the most common

motivators and benefits of GSCM activities and second it shows the influence of the

motivators and benefits on customer’s purchase intention. A dataset of 38 articles is used in

order to give this overview. Seven motivators and five benefits of adopting green supply

chain management are discussed. The most essential conclusion of this paper is that

companies have to have their main focus on those GSCM motivators or benefits that are,

directly or indirectly, related to the influence on customer’s purchase intention.

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1. Introduction

Supply chain management (SCM) is becoming much more important in our society, as

companies are continuing to compete with each other in ever different ways to create

competitive advantage. One way to achieve competitive advantage is to save cost, which can

be realized by a more efficient use of products in SCM. In addition, SCM is of great

importance because of the amount of jobs it creates. For example, in 2011 24 million people

in Europe were employed in the food supply chain; this is about eleven percent of the total

European Union (EU) employees (“Background on the EU food”, 2015). Note that this is

only one specific supply chain, which emphasizes the importance of supply chain

management in Europe.

Also it is of increasing necessity that people become more environmental sustainable,

“becoming green”, as for example from 2006 till 2011 the emissions of CO2 have increased

by almost ten percent (“CO2 Emission”, 2016). To address such problems the United Nations

(UN) organized a convention in Paris, which started on November 30, 2015 and lasted until

December 12, 2015. The ultimate goal of the convention was for countries to stop climate

change and become more environmental friendly; as a result multiple agreements were struck.

The need to stop climate change can be said to be self-evident, since climate changes have

already led to an increase in the average temperature of almost 1-Celsius degree between

1880 and 2012, in addition to overall rising sea levels (NASA Third national climate

assessment report, 2014).

Another subject discussed in this research is the purchase intention of customers. The

importance of customer purchase intention for a company is rather obvious. If customers

prefer products of a certain company, they will buy them at this company, which results in a

higher profitability according to Roehrich et al. (2014).

Green supply chain management (GSCM) can be divided in several activities, such as, green

production, green purchasing (Zhu and Sarkis, 2006) and green logistics (Srivastava, 2007).

Because these are activities of GSCM, the importance of these operations should be addressed

too. According to Eurostat (2016), green production has grown significantly during the last

decades, as is evidenced by the fact that the production of environmental goods and services

in the European Union has increased by more than fifty percent during these years. For

companies green procurement can be important because it realized up to twelve percent of

incremental savings (Bobis and Staniszewski, 2009) and as the European Commission has

found that the transport of passengers and goods over land and sea has been increasing with

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more than twenty percent since 1995, the importance of green logistics, of which

transportation is a key component, can be said to be obvious (European Union transport in

figures, Statistical Pocketbook, 2014).

The relevance of GSCM can best be illustrated with the following example. In its annual

report DHL (2015), a logistics company with a revenue of 14.8 billion euros during the first

quarter of 2015, states that the transport sector is guilty of twenty-three percent of all

greenhouse gas in the world. Besides gas emission, logistics has lots of other externalities,

such as ecosystem destructions and waste production (Ranaiefar and Amelia, 2011).

Transportation is one of the classifications of logistics according to the cross-functional

perspective of Logistics Social Responsibility (LSR), which is the socially responsible

management of the supply chain according to Ciliberti et al. (2008) and includes green supply

chain management (GSCM). In the article of Carter & Jennings (2002) they discuss some

consequences of LSR, which can be linked to the intention of customers purchase. According

to Eurobarometer 367 (2013) twenty-six percent of the citizens living in the EU often buy

environmentally friendly products and fifty-four percent occasionally does.

The article of Mann et al. (2010) some motivators for sustainable supply chain management

are discussed. Besides the arrangements made at the UN convention in Paris there is also an

increase of demand for “green” products by consumers. In the production of these products,

logistics was the missing aspect (Wu & Dunn, 1995). Carter & Rogers (2008) used a

conceptual theory in their literature review to link sustainability to logistics and create a

relationship between environmental, social and economic performance. According to

Bhattacharya & Sen (2004) the reputation of an organization, experienced by the customer,

increases when a company is engaging in sustainable activities. Note that this is only true

when the motivation of the organization is sincere (Becker-Olsen et al., 2006). The theory

will be further explained in chapter 3 of this research.

In literature about GSCM various motivators and benefits are given, which have effects on

customers’ behavior. An overview of the most relevant motivators and benefits will be listed

and reviewed. This review will lead to the main research question of this bachelor’s thesis:

What is the influence of green supply chain management on customer’s purchase intention?

To answer the research question it should first of all be clear what GSCM actually entails, the

first section will therefore give a clear definition of this term and the closely related terms.

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The second section will discuss some of the most common motivations of companies to adopt

GSCM activities. In the third section the benefits of such activities will be assessed. The last

section will explain the relationship between a company’s GSCM activities and customer

purchase intentions. As such the following sub questions to the main research question can be

formulated:

1. What is green supply chain management?

2. What are the most common motivations for companies to adopt GSCM activities?

3. What are the most common benefits of adopting GSCM activities for a firm?

4. What is the influence of the most common GSCM drivers and benefits on

customer’s purchase intention?

The sub-questions will be answered by studying literature about GSCM, with a focus on

customer’s purchase intention. This literature is found in several journals like the journal of

Physical Distribution & Logistics Management, UIP Journal of Operations Management and

the Journal of Cleaner Production, which were found by using Google Scholar and ISI Web

of Science. The aim of this paper is first of all to give a clear explanation of what green

supply chain management entails, secondly it expects to find a relationship between a

company’s GSCM activities and the purchase intention of customers.

In the next chapters the following will be discussed, chapter two will address the research

methods, it will discuss how literature has been found as well as give an overview of the used

literature. Chapter three will then use this literature to answer the sub questions of the

research. The final chapter will start with a discussion about these results and will use them to

answer the main research question. In addition some of the implications of these results will

be addressed as well as some recommendations for future research.

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2. Methods

2.1 Data Collection This chapter of the research will show the process of searching and screening literature, how

they are reviewed and why they were included. Two search engines were used to gather

relevant articles: Google scholar and ISI Web of Science.

First, multiple relevant terms were used in Google Scholar to find suitable results. These

terms were used to clearly define the main topic. The main terms that were used are:

Sustainable Supply Chain Management (SSCM); Green Supply Chain Management (GSCM);

Sustainable Logistics; Logistics Social Responsibility (LSR); Responsible Supply Chain

Management (RSCM); Environmental Supply Chain Management. Secondly after screening

these first results Corporate Social Responsibility (CSR) has been added to the list, since this

term was often used in the initially found literature. To decide whether or not literature was

relevant the title and the abstract of the literature have been reviewed with relation to the main

research terms. These results have been used to answer the first sub question of this research.

Thirdly, to answer the second and third sub questions a more specific search was needed.

Therefore the main terms were combined with words as drivers or motivators or

consequences or benefits. This has made the search more relevant for the remaining sub

questions. The resulting articles were screened for relevant information in addition forward

and backward citation was used. To answer the last sub question search terms like customers’

purchase intention or customer behavior were combined with words such as: company’s

reputation, customer satisfaction and employee satisfaction to relate the drivers and

consequences of GSCM to customer behavior. Using Google Scholar these search terms have

found 17 relevant articles.

In addition to Google Scholar the search engine ISI Web of science was used to find relevant

literature. The words Sustainable Supply Chain Management (SSCM) and Green Supply

Chain Management (GSCM) and Corporate Social Responsibility (CSR) or Sustainable

Logistics or Logistics Social Responsibility (LSR) of Responsible Supply Chain Management

(RSCM) or Environmental Supply Chain Management were used in combination with words

as, drivers, motivators, benefits or consequences. The research areas were reduced to

‘Business Economics’ and ‘Operations Research Management Science’ and ‘Environmental

Science Ecology’ to exclude irrelevant areas. The language was refined to ‘English’ and the

document type to ‘Article’. Still, this resulted in too many articles after which irrelevant

‘source titles’ were left out. These criteria resulted in 34 articles. The abstracts of the residual

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articles were screened and articles which were not closely enough related to the topic were

left out. This resulted in 21 relevant articles with the following journals:

- International Journal of Operation & Production Management

- Journal of Cleaner Production

- Resources, Conservations and Recycling

- International Journal Production Economics

- Journal of Purchasing and Supply Management

- Industrial Marketing Management

- International Journal of Production Research

A quick overview of how the ISI Web of Science has been used, will be given in this

paragraph: TOPIC: (sscm drivers) AND TOPIC: (csr drivers) OR TOPIC: (LSR drivers) OR

TOPIC: (sustainable logistics drivers) OR TOPIC: (rscm drivers) OR TOPIC: (environmental

supply chain management drivers) AND TOPIC: (csr consequences) OR TOPIC: (lsr

consequences) OR TOPIC: (sustainable logistics consequences) OR TOPIC: (rscm

consequences) OR TOPIC: (environmental supply chain management consequences) AND

TOPIC: (green supply chain management) Refined by: RESEARCH AREAS: (

Environmental Science Ecology OR Business Economics Or Operations Research

Management Science) AND DOCUMENT TYPES: ( ARTICLE ) AND LANGUAGES: (

ENGLISH ) AND SOURCE TITLES: (International Journal of Operation & Production

Management OR Journal of Cleaner Production OR Resources, Conservations and Recycling

OR International Journal Production Economics OR Journal of Purchasing and Supply

Management OR Industrial Marketing Management OR International Journal of Production

Research) Timespan: All years. Search language=Auto. This search was performed on the

first of May 2016.

2.2 Sample description The keywords, that were used in the search engines described in the previous section, have

given 38 relevant articles, which are shown in appendix 1.4. Figure 1 shows the amount of

publications per journal that were used in this research. This figure only shows 8 of the 24

used journals, because these 8 journals cover 57,9% of all articles used in this research. The

remaining journals can be found in appendix 1.1, such as the meaning of the abbreviations of

the journals used in the figure 1.

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Figure 1: Distribution of publications per journal Figure 2 shows the publication years of the literature used. The figure clearly shows most

literature used in this research is from after 2000, which is an indicator of the relevance of this

topic. An overview of the publications per year is given in appendix 1.2.

Figure 2: Distribution of publications per year

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In figure 3 the publications per country are given. The figure shows that most articles are

published in countries that can be classified as non-developing countries, which can mean this

topic might only be relevant in these countries. An overview per country is given in appendix

1.3.

Figure 3:Distribution of publications per country

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3. Theoretical findings In this section of the research the articles that were found and reviewed will be used to answer

the earlier mentioned sub-questions. The analysis of the literature has concentrated on four

different themes. First, the definition of GSCM will be given with an overview of other terms,

which are closely related to GSCM in order to give a better holistic view on the subject.

Secondly, the most common motivators of green supply chain management will be discussed.

Thirdly the most common benefits will be covered and last the connection between GSCM

and customers’ purchase intention will be made. Literature has also been accessed on

motivators for environmental issues in SSCM, RSCM and LSR, because these also include

GSCM

3.1 Green Supply Chain Management First, it is important to get a clear view of which terms and definitions were often found when

searching for information about green supply chain management. Before giving this definition

it is useful to get a more holistic view of the terms and dive deeper and deeper into the more

specific definition of GSCM. Table 1 shows the definitions used and their corresponding

article ID. The overview of the article ID’s can be found in appendix 1.4.

Definitions Article ID Sustainable Supply Chain Management 2,6 Green Supply Chain Management 3, 19,21,28,29 Corporate Social Responsibility 1,7 Sustainability 2,6 Logistic Social Responsibility 7,15 Table 1: Definitions and article ID’s

3.1.1 SSCM While reviewing the literature of GSCM the term sustainability in supply chain management

was mentioned often. BCSD Chairman Stephan Schmidheiny says in the article of Elkington

(1994, p.91) “sustainability requires that we pay attention to the entire life cycle of our

products and to the specific and changing needs of our customer.” These products should

fulfill the specific and changing needs of the customer. The most used definition of

sustainability though according to the World Commission on Environment and Development

(1987, p.8) (as cited in Carter & Rogers (2008) is: “development that meets the needs of the

present without compromising the ability of future generations to meet their need”. After

their literature review they imply that organizational sustainability improves three

performances, which contains natural environment, social and economic performance, also

known as the “triple bottom line”. To relate sustainability to supply chain management Carter

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and Rogers (2008, p.368) defined sustainable supply chain management (SSCM) as “the

strategic, transparent integration and achievement of an organization’s social,

environmental, and economic goals in the systemic coordination of key interorganizational

business processes for improving the long-term economic performance of the individual

company and its supply chain”.

3.1.2 CSR Another term used regularly, in the literature of GSCM, is corporate social responsibility

(CSR). In the article of Votaw and Sethi (1973) (as cited in Yang & Rivers, 2009) he state

CSR is a brilliant term, although different definitions are used interchangeably. For instance

CSR is often used to refer to social responsible behavior in an ethical sense, but it can also

imply legal responsibility or liability. That the term CSR often means something different in

different contexts can be confirmed by the definition stated in the article of Carter & Jennings

(2002), which identifies a specific set of activities or dimensions of CSR. These activities

include charitable and philanthropic donations, community considerations, the advancement

of gender, racial, and religious diversity in the workplace, human rights, safety and the

environment.

3.1.3 LSR In the same article of Carter & Jennings (2002) they focus only on the issues of CSR that

relate to socially responsible logistics, also known as Logistics Social Responsibility (LSR).

LSR include the processes of purchasing, transportation, packaging, warehousing and reverse

logistics. These can be classified into the topics: environment, ethics, diversity, working

conditions & human rights, safety, philanthropy and community involvement (Ciliberti et al.,

2008; Jennings & Carter 2002).

3.1.4 GSCM The more broad terms related to green supply chain management are presented in the three

paragraphs above. GSCM is covered in SSCM, CSR and LSR, but GSCM is much more

specific. Whereas SSCM, RSCM, CSR and LSR also have a social aspect, the natural

environment is the central topic in GSCM (Ahi and Searcy, 2013). The influence and

relationship between the natural environment and supply chain is referred to by the ‘green’

component in GSCM (Srivastava, 2007). This article also states that GSCM is the

combination of corporate environmental management and supply chain management. In the

article of Zhu et al. (2008a) they state that green purchasing, supply chain integration and

reverse logistics are GSCM practices, which are considered cross-organizational and closed

loop. Some other activities of GSCM according Srivastava (2007) are product design,

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material sourcing and selection, manufacturing processes, delivery of the final products to the

consumers, and end-of-life management of the product after its useful life.

Jabbour (2015) also includes environmental collaboration and environmental monitoring

actions in the definition of GSCM. Environmental collaboration with suppliers/customers has

as aim to solve problems mutually and the aim of environmental monitoring is to minimize

risk and inspect their supplier (Vachon and Klassen, 2006).

Regardless of the fact that some authors define GSCM more specific or included different

activities than others, most of the literature describe similar issues. In this research the

following definition of green supply chain management is used, because it includes a

combination of the most common aspects of the definitions that have been reviewed: GSCM

is the combination between the natural environment and cross-organizational supply chain &

closed loop practices, which classifies environmental monitoring and collaboration.

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3.2 Most common motivations to adopt GSCM The reviewed literature shows many different motivations that compel companies to get

involved in green supply chain management. The most common motivations will be given

here and an analysis of the similarities and differences between the literatures will be made.

An overview of the most common motivations and the corresponding article ID is shown in

table 2.

Most common drivers GSCM Article ID Financial performance 11,17,19,20,30,31 Regulation 4,7,11,14,17,18,19,20,31,32,33 Consumers 2,6,11,17,18,19,23,24,33,34,35 Competitive advantage 4,17,24,36 Supplier collaboration 2,4,21,25 Reputational risk 8,9,11,14 Environmental performance 11,14,18,19,21,23,24 Table 2: Drivers of sustainable supply chain management and article ID’s.

3.2.1 Financial performance

For a company to get involved with GSCM the financial aspect is an important driving force.

The future of the world economy will be shaped fundamentally by supply chain and energy

security, which includes natural resources. The supply chains are extremely dependable on

fossil fuels generated power. For example fossil fuels, such as oil, have risen in price and

make up 30 to 35 percent of the overall cost of some carriers (Thuermer, 2008, as cited in

Halldórsson & Kovács, 2010). Cost reduction is the most frequently occurring economic

driving force in the literature, appearing in different ways. According to Mollenkopf et al.

(2006) costs could be saved by reduce of packaging waste and the capability of developing

designs that can be reused. Porter and Linde (1995) state pollution in the product life cycle

comes with hidden cost such as wasted resources and effort, which companies want to avoid.

Zhu and Sarkis (2006) stated that, besides environmental improvements, engagement in

GSCM might result in tangible positive economic performance. GSCM is an idea to make the

supply chain more environments friendly and increase the economic performance, such as

higher profit (Srivastava, 2007). According to Mathiyazhagan et al. (2014) there are also

other financial factors that are motivators to adopt GSCM. Examples hereof are governmental

funds and bank loans. Though, these are not as important as for example regulations or

pressure of competition.

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3.2.2 Regulation Regulatory pressure is one of the main driving forces for companies to adopt GSCM (Porter

and Linde 1995; Srivastava, 2007), because they are more mandatory. Some issues, such as

product recall and supply chain disruptions, are managed more discrete than before, because

of the higher regulatory pressure from the government and media’s social regulations

(Halldórsson & Kovács, 2010). Companies that are not complying with regulation can expect

legal problems in most countries (Mann et al., 2010), such as penalties and fines (Davidson

and Worrell, 2001). As a result the way companies make decisions is greatly shaped by

compliance with rules and norms (Roehrich et al., 2014). Nevertheless, those companies that

are complying with environmental legislation do not have the security that their

environmental performance will improve. Proactive firms, which have environmental

concerns thoroughly into their value chain implemented and who comply with environmental

legislation, are more likely to realize GSCM with success than reactive companies (Carter and

Dresner, 2001).

Carter and Jennings (2002) stated in their article that eight out of twelve informants have

legislation as a driving force when talking about environment in LSR. According to

Mathiyazhagan et al. (2014) government policies and regulations have different important

pressures for GSCM. Central governmental regulations are the most important one of the

governmental policies and regulations, because of the forced environment management

system adoption of firms. The Second important pressure is the regional environmental

regulation. For the adoption of environmental consciousness, it is important to promote

environmental performance. The last important pressure is the certification of ISO 14001,

which gives firms special tax exemptions (Mathiyazhagan et al., 2014). The central

government regulations and regional environmental regulations are also ranked in this order

of importance in the article of Zhu and Sarkis (2006). Although the ISO 14001 certification is

also mentioned, it is not ranked.

Zhu and Sarkis (2006) say in their article regulations of foreign counties, which import

products, are also an influential motivation for GSCM. They have to comply with the

regulations of their customers, which results in pressure, to self-regulate environmental

performance, from national suppliers. Taiwan’s government even consults companies to

comply with the newest international environment regulations such as GSCM to meet their

foreign customers demand (Wu et al., 2012).

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3.2.3 Consumers Consumer pressure is a motivator to adopt GSCM activities (Srivastava, 2007). “Green

consumerism” has been a stimulus in which environmental challenges are viewed (Elkington,

1994). Environmental activities, which are correlated with cost and benefits, come as a result

of the greater transparency along the supply chain and out of pressure of customers to become

‘greener’ (Carter and Roggers, 2008). The enlarged environmental awareness increased

customer demand for products that are “green” (Bovea & Wang, 2003) and have a high

quality at a low cost (Mathiyazhagan et al., 2014), consumed from companies with a ‘green

image’. These requirements derive from better customer education concerning possible

benefits of reverse logistics, which makes efficient and effective SSCM systems more

necessary to optimize customer satisfaction (Mann et al., 2010).

Carter & Dresner (2001) and Lee et al. (2014) write in their articles that organizations are

driven by customers to adopt green supply chain practices and environmental management

systems. The way they motivate GSCM differs though, customer demand, which is a long-

term supply chain perspective, has better influence on environmental management than

customer requests, which implies a short-timeframe (Carter and Dresner, 2001). The motive

of customers to involve in GSCM also differs, Lee at al. (2014) states large high-profile

companies get lots of external pressure to improve the environmental performance, while

smaller suppliers have fewer stimuli. For example, large customers drive smaller suppliers to

stimulate their involvement in environmental performance and the end-customer in turn

drives the large customer to environmentally friendly initiatives. As a large customer you

have control over your suppliers. This also means you have to take responsibility for the

actions of your suppliers (Walker et al., 2008).

According to Govindan et al. (2016) the pressure from foreign customers in different

industries is the most dominant driving force together with competitive pressure and

government regulations to implement GSCM. Organizations in China even claim they were

forced to implement GSCM to establish a long-term relationship with foreign firms

(Mathiyazhagan et al., 2014) as well as the requirements of foreign customers to implement

the ISO 14001 certification (Zhu and Sarkis, 2006).

3.2.4 Competitive advantage GSCM was a method to achieve competitive advantage (Thun and Müller, 2010) and

according to Mathiyazhagan et al. (2014) together with regulations even the most dominant

motivator. Walker et al. (2008) as well as multiple other authors, classify competition as a

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driving force for GSCM activities. Adoption of GSCM can improve the competitive position

of a company as is stated by Mathiyazhagan et al. (2014). However this only is the case if

companies work with a proactive environmental strategy, only then they can achieve

competitive advantage through developments in the supply chain (Walker et al., 2008). In

Indian markets global competitiveness is a very important factor, but the local market

competition is of even bigger importance (Mathiyazhagan et al., 2014). In the article of Wu et

al. (2012) though, they state that competitive pressure made companies learn to get

competitive advantage through environmental management practices to get orders from

international brands.

3.2.5 Collaboration with Suppliers In the article of Jabbour (2015) the importance of supplier collaboration is accentuated when

structuring the GSCM, because it can lead to multiple benefits (Tachizawa et al., 2015).

According to Wu et al. (2012) when companies want to adopt GSCM activities they have to

decrease the information asymmetry between their supply chain partners by forming a social

network with them, which can eliminate opportunistic behavior (Carter and Rogers, 2008).

Cooperation by establishing long-term relationships, sharing of knowledge and have

confidence in each other are examples of important aspects of engaging in GSCM (Wu et al.,

2012).

3.2.6 Reputational risk In their article Roehrich et al (2014) state that reputational risk, which can be divided in short-

and long-term risks, compels companies to implement social and environmental SSCM. The

social and environmental responsibility business case focuses especially on reputational risk

reduction. Reputational risk first of all refers to the chance of the occurrence of a negative

event. Secondly reputational risk refers to the chances that stakeholders perceive a negative

event, which then influences their perception of the company (Roehrich et al., 2014).

Industries have been stimulated to improve the perception customers have of their firm by

implementing CSR (Zhu and Sarkis, 2006). However the intentions that lie behind a

company’s implementation of CSR will have effect on the customer’s purchase intention

(Ellen et al., 2006; Becker-Olsen et al., 2006).

3.2.7 Environmental performance It is often assumed that companies only take environmental issues in account because

legislation or customers force them. The expectations though are that firms, which have a

higher social responsibility, are in possession of systems that take environmental

sustainability into their interest (Mann et al., 2010). Moreover according to Walker et al.

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(2008) in some companies the environmental values are so deeply rooted that this is the

driving factor for involving in green supply chain management. For them the requirements of

environmental legislation are seen as the minimum to get involved.

GSCM is an environmental element that is taken into account when managing the supply

chain, which improves the environmental performance for a firm. Examples hereof are

achieving green production, by for example reducing material usage and becoming more

energy efficient, naturally these are also closely related to the company’s economic

performance (Govindan et al., 2016). Increasingly the “green consciousness” of companies,

which is the result of the disposal problem, has led to GSCM (Srivastava, 2007). One of the

key things regarding SSCM, supplier relationship and the strategic objectives is reducing the

carbon intensity and carbon tracks which can be traced back to the company, in order to

increase supply chains’ environmental standards (Roehrich et al., 2014). This effort can best

be regarded as an environmental target, another example of such an effort is for example

increasing the eco-efficiency between production units and the presence of a green product

line (Jabbour, 2015). These are all motivators, which are important to be more

environmentally conscious. However according to Zhu and Sarkis (2006) though,

environmental performance of suppliers is not as an important driver for GSCM as other

drivers.

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3.3 Most common benefits While the previous paragraphs have discussed several of the motivations to adopt GSCM, the

next section will discuss some of the benefits that GSCM can have. Some of the benefits that

will be discussed are a result of the drivers of GSCM that have been analyzed in the previous

sections. However other benefits cannot be related to drivers from the previous section. An

overview of the most common benefits plus the corresponding article ID’s is shown in table

3.

Most common consequences GSCM Article ID Financial organizational performance 2,11,14,18,22,24,25,26 Reputation 2,7,10,14,25,37 Employees 5,7,21,24 Competitive advantage 2,18,22,26,27 Environmental performance 20,25,26,27 Table 3: Most common consequences GSCM and article ID’s

3.3.1 Financial organizational performance

A major explanation of the impact of green supply chain management on a firms’

performance is that different GSCM activities have different benefits on a company’s

performance (Tachizawa et al., 2015). Roehrich et al (2014) state that a company’s driving

force is to avoid reputational risk. The consequences could be short-term and long-term. If a

company does not involve in SSCM this could result in negative customer behavior on a

short-time basis and thus in a los of profit. As the reputation of a company is linked with the

financial performance of a firm, this will have consequences for the company’s reputation. A

stronger reputation will however increase customer satisfaction and loyalty, which results in

higher profitability (Hoejmose et al., 2014). In the long run reputational risk could have

implications for market-shares and changing consumer preferences, which can be more

damaging for companies (Roehrich et al., 2014)

Another way of GSCM to improve a firms’ financials is preventing opportunistic behavior by

other suppliers that result in reduction of costs (Carter and Rogers, 2008). Adoption of GSCM

activities can also have as benefit the income of the company is positively influenced by

stakeholders, which have a direct impact on firms’ financials (Zhu and Sarkis, 2006). If

companies are not in line with the regulations concerning adoption of socially and

environmentally SSCM activities, this could have as consequence the market value can drop

(Roehrich et al., 2014).

19

According to Walker et al. (2008) the motivator competitive advantage of GSCM can result

in companies improving their financial performance by sales growth, which are an effect of

collaborative GSCM practices (Tachizawa et al., 2015). Mann et al. (2010) state that while

the adoption of SSCM can have as benefit a company’s organizational performance increases

by reducing costs (Carter and Rogers, 2008). This can be attributed to the fact that

environmental collaboration with customers can reduce several costs and increase customer

satisfaction (Laari et al., 2016).

3.3.2 Reputation

Sustainable behavior can enhance corporate reputation (Carter and Rogers, 2008). Involving

in LSR establishes trust with customers and suppliers (Carter and Jennings, 2002) and is

beneficial to the environmental reputation of a company such as CSR (Bhattacharya and

Senn, 2004) and supplier collaboration (Tachizawa et al., 2015). This is also the case when a

company reduces environmental risk by monitoring GSCM practices (Tachizawa et al.,

2015). On the other hand, according to Roehrich et al (2014), involving in environmentally

damaging practices and other socially unacceptable activities in the supply chain (child labor

etc.) could change the image of a company drastically. It can jeopardize the corporation’s

brand image and harm the trust they have built with their customer (Lee and Kim, 2009).

3.3.3 Employees

The relation between employees and GSCM can be diverse according to the literature. Langer

et al. (2007) state that SSCM can lead to better employee morale and that LSR can result in

employees being more satisfied about their job and having a good feeling about the firm they

work for (Carter and Jennings, 2002). They also state that it increases the motivation of the

employees. Whereas job satisfaction not always improves motivation, improved motivation

always increases job satisfaction. Another effect of GSCM on the relation between a company

and its employees is the increased involvement of employees in their job resulting from

environmental and operational improvements (Walker et al., 2008). Examples of the

increased involvement are that there started to exist sustainable committees and working

groups to discuss issues about water, energy, waste etc. (Jabbour, 2015).

3.3.4 Competitive

Mangla et al. (2015) state that GSCM practices are ways to achieve competitive advantages in

a market. By improving the corporate reputation, which is a driver for GSCM, competitive

advantage can be gained, as customers move away from the competition that does not address

environmental concerns (Laari et al., 2016). It is essential that their reputation is better than

20

their competition in order to maintain competitive reputational advantage (Hoejmose et al.,

2014) SSCM can also help to get technological advantage (Mann et al., 2010), which can be

seen as a competitive advantage. GSCM also makes it more difficult for competitors to

imitate the environmental practices, because of the complex inter-organizational relations

(Laari et al., 2016; Carter and Rogers, 2008).

3.3.5 Environmental performance In the article of Tachizawa et al. (2015) they say that the GSCM approaches, collaborative

approach and monitoring approach, have different impacts on environmental performance in

different industries. They state that sometimes environmental collaboration is significantly

associated with environmental performance of a company and sometimes environmental

monitoring is positively associated with environmental performance. Whereas Laari et al.

(2016) states that only environmental monitoring and internal GSCM is related to

environmental performance and internal GSCM activities are positively related with

environmental performance.

According to Halldórsson and Kovács (2010) SSCM has as a result that companies are trying

to be more energy efficient and reduce greenhouse gas emissions. The involvement in GSCM

thus helps to reduce environmental impact, which improves the environmental performance

of a company (Mangla et al., 2015).

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3.4 Customer behavior/Customers’ intention to purchase The literature gives a lot of motivators and benefits of GSCM practices. In section 3.2 and 3.3

the most common motivators and benefits are given. This section will connect some of those

motivators and benefits to the change of customer intention to purchase from companies that

have adopted GSCM.

Mann et al. (2010) stated in their article that reverse logistics, one of the activities of GSCM,

has become a basic customer requirement to achieve better customer service and acquire

maximum customer satisfaction. Firms focus more on implementing environmental friendly

logistics activities to achieve customer needs (Carter and Jennings, 2002).

Companies are stimulated to improve their customer perception about their firm with CSR

practices (Zhu and Sarkis, 2006), including GSCM. Involving in CSR practices have a

significant influence in customer’s intention to purchase (Ellen et al., 2006; Becker-Olsen et

al., 2006). If stakeholders, including customers, find negative incidents this perception will

change negatively. A stronger reputation is indirect related with the purchase intention of a

customer, because a stronger reputation increases customer satisfaction and loyalty, which

results in higher profitability (Hoejmose et al., 2014). Whereas customer satisfaction is

directly related to customer’s purchase intention, excluding the healthcare industry (Cronin et

al., 2000). Thus not involving in SSCM could change customer’s purchase intention

temporarily and cause a los of profit, but on a long-term basis, not involving in SSCM, could

result in losing market-shares and changing consumer preferences (Roehrich et al., 2014).

The involvement in SSCM can also have an influence on employees of a company. It actually

leads to a better employee morale (Langer et al., 2007) and LSR increases the satisfaction of

employees (Carter and Jennings, 2002). According to Chi and Gursoy (2009) there is a

significant relation between customer satisfaction and employee satisfaction. This means if

the SSCM activities become more efficient, customer satisfaction will be optimized (Mann et

al., 2010) which results in higher customer purchase intention (Cronin et al., 2000).

According to Zhu and Sarkis (2006) there is also pressure of customers from other countries

(export) to comply with their regulations. If selling companies do not comply with the

regulations of the buying country there will be no transaction. Chinese firms were forced to

implement the ISO 14001 certification and GSCM by foreign customers to pursue trade

(Mathiyazhagan et al., 2014). Thus, companies who do not implement SSCM practices, such

as GSCM, will experience customers turn to competitors who do implement such practices

(Roerich et al., 2013; Elkington, 1994).

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4. Conclusion

4.1 Discussion To get a better understanding of Green Supply Chain Management, this research has

performed a qualitative literature study. Four sub-questions have been posed to set a an

adequate foundation in order to give an answer to the main question ‘What is the influence of

green supply chain management on customer purchase intention?’ First these four sub

questions will be answered and afterwards an answer will be given to the main question.

1) ‘What is green supply chain management?’

First of all it should be said that there is not just one definition of green supply chain

management. Green supply chain management is a topic, which is a part of several terms:

CSR, SSCM, RSCM and LSR. Multiple authors specify GSCM in different activities. In this

analysis green supply chain management is defined as: the combination between the natural

environment, the cross-organizational supply chain activities and closed loop practices, which

classifies environmental monitoring and collaboration.

2) ‘What are drivers for companies to adopt GSCM?’

The review of the literature shows that there are seven common driving forces for adoption of

GSCM. However it cannot be said which driving force is the most important one, because

authors do not unanimous agree with each other about this, though the economic motivator is

mentioned often in the literature. Adoption of GSCM activities reduces costs, increases the

profit and firms are able to get government funds and bank loans. The improvement of the

environmental performance of companies is also a common factor to adopt GSCM, because

firms have become more conscious about the natural environment. A more mandatory

motivator is the regulations and legislations of firms and governments. Not complying with

regulations and legislation can result in legal problems, but complying does not mean

environmental performance will improve. Compliance with regulations of foreign countries is

also essential for export reasons, which is also closely related with customer pressure. Foreign

customers for example demand that their supplier has implemented the ISO 14001

certification before doing business with them. Customers, like companies, have also become

more environment conscious, which means they demand green products. The involvement in

GSCM activities also has competitive advantage as common driving force and it enhance

collaboration with suppliers. Collaboration has as result the information asymmetry

decreases. The last factor that motivates companies to implement GSCM is reputational risk.

Not implementing GSCM changes the perception customers have of a firm in a bad way.

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3) ‘What are benefits for firms after adoption of GSCM?’

According to the reviewed literature, GSCM has five notable benefits. Some of these benefits

are results of some of the discussed motivators. The motivator corporate reputation has as

result that a company increases their competitive advantage. Competitive advantage can also

be increased by GSCM, because it makes imitating environmental practices more difficult.

Competitive advantage, seen as a driving force, has as a benefit it improves financial

performance. A firm could lose profit because its reputation has been harmed or because of

stakeholders pressure when they decide not continuing to invest in the firm. Market value can

also drop when companies are not in line with regulations. Sustainable behavior has other

benefit as well. These are the enhancement of corporate reputation, employee satisfaction and

improvement of environmental performance.

4) ‘What was the influence of GSCM motivators and benefits on customer behavior?’

The motivators and benefits of GSCM contribute to the influence GSCM has on customer’s

purchase intention. There are multiple factors that have a positive influence on customer

satisfaction, which is in turn positively related to the intention of customers to purchase. A

factor that influences customer satisfaction is reverse logistics, because this has become a

basic customer requirement. Another factor that is related to the increase of customer

satisfaction is the improved customer perception of the firm. Not involving in GSCM will

change customer preferences negatively. Adopting GSCM on the other hand increases

employee satisfaction, which is positively related with customer satisfaction and ultimately

leads to purchases.

To conclude this analyses the final and main research question will be answered: ‘What is the

influence of green supply chain management on customer’s purchase intention?’ A unilateral

answer cannot be given. There are lots of different motivators and beneficial outcomes of

green supply chain management, as discussed in the sub questions. What influence these

motivators and outcomes of GSCM have on a customer’s purchase intention is difficult to

say. Whereas some motivators and outcomes are indirectly or directly related to a customer’s

purchase intention, some are not. Organizations have to focus on the driving forces and

benefits of GSCM activities that are indirectly or directly related to the purchase intention of

a customer to increase the influence on this intention to purchase.

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4.2 Conclusion This research gives a review about the motivators and benefits of implementing green supply

chain management and how this influences customer’s purchase intention. The aim of the

study is to find what the influence is between the adoption of GSCM activities and customers’

intention to purchase is. In order do so there were four sub-questions included. The research

made clear that there is not just one right definition of GSCM, but that it includes multiple

activities. Several motivators and benefits of GSCM were given in the previous chapters. The

authors of the used literature do not agree which motivator is most important. For example

some authors say regulations are the most important driving force, while others say that

environmental performance is more important, in compelling a company to adopt GSCM

activities. Benefits such as reputation and employee satisfaction are positively related to

customer satisfaction, which has a positive result on customer’s purchase intention.

4.3 Limitations and recommendations for future research As the number of articles that this research has worked with is limited, a generalization of the

results would not be appropriate. As the possibility exist that there is more literature about

GSCM and the influence on customers’ intention to purchase, yet these have not been found

in the limited time frame that was given for this research. Some articles only analyzed a

limited amount of industries, which means some of the results can only be applied to those

industries. As is shown in figure 3 the literature that is used in this research is all publicized in

developed countries. Therefor countries that are classified as under-developed counties

cannot interpret the results of this study. Moreover the literature used in this study was at

times not specifically about the GSCM topic, but on topics, which are closely related to

GSCM. Some of the results are therefore not only applicable to GSCM, but also for example

to LSR or environmental section of SSCM. The results would have been stronger, when all

literature was specific about GSCM. Another limitation was that some of the literature used,

did research in a particular country. Generalization of the topic is therefore not possible,

because countries differ from each other when adopting GSCM. For future research the

number of articles used to study this topic should be expanded. In addition the literature used

should be more specific to the green supply chain topic, as well as expanding this study to

every industry and country. This study focuses on the benefits of GSCM. To get a more

holistic view about the green supply chain topic the negatives should also be discussed.

25

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Ellen, P.S., Webb, D.J., Mohr, L.A., (2006), “Building Corporate Associations: Consumer Attributions for Corporate Socially Responsible Programs”, Journal the Academy of Marketing Science 34 (2) 147-157 Govindan, K., Muduli, K., Devika, K., et al., (2016), “Investigation of the influential strength of factors on adoption of green supply chain management practices: An Indian mining scenario”, Resources, Conservation and Recycling 107 (2016) 185-194 Halldórsson, Á., Kovács, G., (2010), “The sustainable agenda and energy efficiency”, International Journal of Physical Distribution & Logistics Management, 40 (1/2) 5-13 Hoejmose, S.U., Roehrich, J.K., Grosvold, J., (2014), “Is doing more doing better? The relationship between responsible supply chain management and corporate reputation”, Industrial Marketing Management 43 (2014) 77-90 Jabbour, A. B. L. S., (2015), “Understanding the genesis of green supply chain management: lessons from leading Brazian companies”, Journal of Cleaner Production 87 (2015) 385-390 Laari, S., Töyli, J., Solakivi, T., et al., (2016), “Firm performance and customer-driven green supply chain management”, Journal of Cleaner Production 112 (2016) 1960-1970 Langer, N., Forman, C., Kekre, S., et al., (2007), “Assessing the Impact of RFID on return centre logistics”, Interfaces 37 (6) 501-514 Lee, K., Kim, J., (2009), “Current status of CSR in the realm of supply management: the case of the Korean electronics industry”, Supply Chain Management: An International Journal 14 (2) 138-148 Lee, S., Klassen, R.D., Furlan, A. et al., (2014), “The green bullwhip effect: Transferring environmental requirements along a supply chain”, International Journal of Production Economics 156 (2014) 39-51 Mangla, S.K., Kumar, P., Barua, M.K., (2015), “Risk analysis in green supply chain using fuzzy AHP approach: A case study”, Resources, Conservation and Recycling 104 (2015) 375-390 Mann, H., Kumar, U., Kumar, V., et al. (2010), “Drivers of Sustainable Supply Chain Management”, IUP Journal of Operations Management 9 (4) 52-63 Mathiyazhagan, K., Govindan, K., Haq, A.N., (2014), “Pressure analysis for green supply chain management implementation in Indian industries using analytic hierarchy process”, International Journal of Production Research 52 (1) 188-202 Mollenkopf, D., Closs, D., Twede, D., et al., (2005), “Assessing the viability of reusable packaging: a relative cost approach”, Journal of Business Logistics 26 (1) 169-197 Porter, M.E., Linde, C., (1995), “Toward a New Conception of the Environment-Competitiveness relationship”, The Journal of Economic Perspective 9 (4) 97-118 Ranaiefar, F., Amelia, R., (2011), “Logistics Operations and Management: Freight-Transportation Externalties”, Logistics operations and management (2011) 333-358 Roehrich, J.K., Grosvold, J., Hoejmose, S.U., (2014), “Reputational risks and sustainable supply chain management: Decision making under bounded rationality”, International Journal of Operational & Production Management 34 (5) 695-719

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Srivastava, S.K., (2007), “Green supply-chain-management: A state-of-the-art literature review”, International Journal of Management Reviews 9 (1) 53-80 Tachizawa, E.M., Gimenez, C., Sierra, V., (2015), “Green supply chain management approaches: drivers and performance implications”, International Journal of Operations & Production Management, 35 (11) 1546-1566 Thun, J., Müller, A., (2010), “An empirical analysis of Green Supply Chain Management in the German Automotive Industry”, Journal of Business Strategy and the Environment 19 (2010) 119-132 Vachon, S., Klassen, R.D., (2006), “Extending green practices across the supply chain”, International Journal of Operations & Production management, 26 (7) 795-821 Walker, H., Di Sisto, L., McBain, D., (2008), “Drivers and barriers to environmental supply chain management practices: Lessons from the public and private sectors”, Journal of Purchasing & supply Management 14 (2008) 69-85 Wu, C., Ding, J.-H., Chen, P.-S., (2012), “The effects of GSCM drivers and institutional pressures on GSCM practices in Taiwan’s textile and apparel industry”, International Journal Production Economics 135 (2012) 618-636 Wu, H-J., Dunn, S.C., (1995), “Environmentally responsible logistics systems”, International Journal of Physical Distribution & Logistics Management 25 (2) 20-38 Yang, X., Rivers, C., (2009), “Antecedents of CSR practices in MNCs’ Subsidiaries: A Stakeholder and Institutional Perspective”, Journal of Business Ethics 86 () 155-169 Zhu, Q., Sarkis, J., (2006), “An inter-sectoral comparison of green supply chain management in China: Drivers and practices”, Journal of Cleaner Production 14 (2006) 472-486 Zhu, Q., Sarkis, J., Lai, K., (2008) “Confirmation of a measurement model for green supply chain management practices implementation”, International Journal of Production Economics 111 (2008) 261-273 “Background on the EU food supply chain: an important economic sector”, (December 2015). Retrieved May 19, 2016, from http://ec.europa.eu/competition/sectors/agriculture/overview_en.html “CO2 Emissions (metric tons per capita)” (2016), Retrieved May 19, 2016, from http://data.worldbank.org/indicator/EN.ATM.CO2E.PC?end=2011&start=2004 “Flash Eurobarometer 367: Attitudes of European towards building the single market for green products”, (July, 2013), Retrieved May, 2016, from http://ec.europa.eu/public_opinion/flash/fl_367_en.pdf “Environmental goods and services sector” (May 2016), Retrieved July 4, 2016, from http://ec.europa.eu/eurostat/statistics-explained/index.php/Environmental_goods_and_services_sector “EU transport in figures: statistical pocketbook 2014” (2014), Retrieved July 4, 2016, from http://ec.europa.eu/transport/facts-fundings/statistics/doc/2014/pocketbook2014.pdf

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“National Climate Assessment” (2014), Retrieved May 19, 2016, from http://nca2014.globalchange.gov/highlights

Appendices

Appendix 1.1: Publications per Journal Full Journal name Number of publications Abbreviations Journal of Cleaner Production

4 J. of Cleaner Production

International Journal of Production Economics

4 Int. J. of Production Econ.

International Journal of Operations & production Management

3 Int. J. of Op. & prod. Man.

International Journal of Physical Distribution & Logistics Management

3 Int. J. of Physic Distr. & Log. Man.

International Journal of Production Research

2 Int. J. prod. res.

California Management Review?

2 California Management Rev.

Resources, Conservation and Recycling

2 Res., Conserv. and Recycling

Journal of Business logistics

2 J. of Buss. Log.

UIP Journal of Operations Management

1

Journal of Retailing 1 Journal of the Academy of Marketing Science

1

Journal of Business and society

1

Journal of supply chain management

1

Journal of Purchasing & Supply Management

1

Journal of Economic perspective

1

Journal of Business Research

1

Supply Chain Management: An International Journal

1

Journal of Business Strategy and the Environment

1

Interfaces 1 Industrial Marketing 1

29

Management International Journal of Management Reviews

1

Internal Journal of Hospitality Management

1

Journal of Business Ethics 1 Logistics operations and management

1

Appendix 1.2: Publications per year Year of publication

Publications per year

1994 1 1995 2 2000 1 2001 2 2002 1 2003 1 2004 1 2005 1 2006 4 2007 2 2008 4 2009 3 2010 3 2011 1 2012 1 2013 1 2014 4 2015 3 2016 2

Appendix 1.3: Publications per country Country Publications

per country USA 17

UK 4

India 2

China 2

Germany 2

Spain 2

Canada 2

Italy 1

30

Taiwan 1

Brazil 1

Finland 1

Colombia 1

Denmark 1

Korea 1

Appendix 1.4: Article ID’s Article ID Author Year 1 Yang & Rivers 2009 2 Carter & Rogers 2008 3 Vachon & Klassen 2006 4 Wu et al. 2012 5 Langer et al 2007 6 Elkington 1994 7 Carter & Jennings 2002 8 Ellen et al. 2006 9 Becker-Olsen et al. 2006 10 Bhattacharya & Sen 2004 11 Zhu & Sarkis 2006 12 Chi & Gursoy 2009 13 Cronin et al. 2000 14 Roehrich et al. 2014 15 Ciliberti et al. 2008 16 Wu & Dunn 1995 17 Mathiyazhagan 2014 18 Mann et al 2010 19 Srivastava 2007 20 Halldórsson & Kovács 2010 21 Jabbour 2015 22 Hoejmose et al. 2014 23 Govindan et al. 2016 24 Walker et al 2008 25 Tachizawa et al. 2015 26 Laari et al. 2016 27 Mangla et al. 2015 28 Ahi and Searcy 2013 29 Zhu et al 2008a 30 Mollenkopf et al 2006 31 Porter and Linde 1995 32 Davidson and Worrell 2001 33 Carter and Dresner 2001 34 Bovea and Wang 2003 35 Lee et al. 2014 36 Thun and Müller 2010 37 Lee and Kim 2009 38 Ranaiefar & Amelia 2011

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