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Research paper
Drivers for the participation of small and
medium-sized suppliers in green supply chaininitiatives
Su-Yol Lee
nBiz Convergence Team, College of Business Administration, Chonnam National University, Gwangju, South Korea
AbstractPurpose This paper aims to describe what facilitates small and medium-sized suppliers in participating in green supply chain initiatives. Theseinitiatives are inter-organizational initiatives attempting to improve environmental performance throughout the entire supply chain. This paper seeks toexamine buyer green supply chain management practices, government involvement, and internal readiness of the suppliers themselves, as possibledrivers.Design/methodology/approach The research framework and hypotheses were examined by using a mail survey conducted in South Korea in 2005.
The empirical analysis used data from 142 small and medium-sized suppliers. Validity and reliability of the scales for the construct of interest wereassessed through a factor analysis and Cronbach-alpha test. To test the hypotheses for the drivers of suppliers willingness to participate in green supplychain initiatives, hierarchical linear regression was adopted.Findings The study finds that buyer environmental requirements and support were positively linked to their suppliers willingness to participate ingreen supply chain initiatives. The government can play an important role in motivating these suppliers. Finally, the paper reveals that the more slackresources and organizational capabilities suppliers had, the more willingly they were to participate in those initiatives.Originality/value This research is one of the few studies which explore the drivers of participation in green supply chain initiatives by consideringsmall and medium-sized suppliers and their most important stakeholders, including buyers and the government.
Keywords Environmental management, Supply chain management, Small to medium-sized enterprises, Suppliers, Korea
Paper type Research paper
1. Introduction
External pressures, such as European regulations on take-
back and on the use of certain hazardous substances, have
been driving firms and governments to turn towards including
small and medium-sized enterprises (SMEs) in the
environmental improvement process of entire supply chains
for mainly two reasons. First, disruption risks engendered by
environmental issues can pass on through suppliers. For
instance, in 2001, Sony had to bear extensive costs for
replacing parts, storing, and repackaging the nearly 1.3
million of its best-selling PlayStation, These PlayStations were
stopped at the Dutch border because unsafe levels of
cadmium were detected in the cables of the consoles
(Business Week, 2005). The problem-causing cables weremanufactured by Sonys suppliers. Second, a supply chain
base as well as a countrys industrial base might primarily
consist of SMEs. For example, 93.5 percent of the suppliers
in the Korean automobile industry are SMEs (Choi, 2003).
Therefore, the involvement of SME suppliers is vitally
important in achieving national or corporate environmental
targets (Holt et al., 2001).
Over the past decade, the green supply chain (GSC) has
emerged as an important component of the environmental
and supply chain strategies of a number of companies. The
GSC encompasses a broad range of practices from green
purchasing to integrated supply chains flowing from suppliers,
to manufacturers, to customers, and to the reverse supply
chain, which is closing the loop (Zhu and Sarkis, 2006; Rao
and Holt, 2005). Seen from a life-cycle perspective, initiatives
striving to achieve the goal of the G SC, a notable
environmental and economic gain of the entire supply, arehard to implement successfully without the deep involvement
of the supply chain partners. In other words, it is crucial to
i nc lu de S ME s up pl ie rs i n t he s up pl y c hai n- wi de
environmental improvement process.
The author, however, has seen very little research on the
issue of what motivates suppliers to take part in those green
supply chain initiatives. A growing number of green supply
chain management (GSCM) studies have dealt with the
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1359-8546.htm
Supply Chain Management: An International Journal
13/3 (2008) 185198
q Emerald Group Publishing Limited [ISSN 1359-8546]
[DOI 10.1108/13598540810871235]
The author would like to thank the Business Institute for SustainableDevelopment in Korea for assisting with the data collection.
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drivers for GSCM, its practices, and the relationships
between GSCM and its operational and/or economic
performance (e.g., Vachon and Klassen, 2006; Zhu and
Sarkis, 2006; Lamming and Hampson, 1996). However, these
scholarly works have primarily focused on large-sized buying
firms; so they scarcely took into account the drivers to
facilitate involvement of suppliers in green supply chain
programs that were likely to be initiated by the governmentand large buying firms. Likewise, some scholars addressed
environmental management in SMEs. For instance, Clark
(2000) pointed out the difficulty of SMEs in improving their
environmental performance. Hitchens et al. (2003) revealed
what factors lead to the adoption of advanced environmental
management of SMEs. However, they paid less attention to
the SMEs who were suppliers within the supply chains. As a
result, SME suppliers can be treated as missing links between
SME environmental management and green issues in supply
chain management. The author can say that this study
explored a research topic about what influenced the
involvement and/or participation of SME suppliers in green
supply chain programs led by their buyers or government.
Our research questions can be specified: What are the
important influential factors for the participation of SME
suppliers in GSC initiatives? In particular, how do buyers and
governments affect participation? How does participation vary
according to the internal capabilities of the SME suppliers?
For this purpose of study, we referred to several previous
studies conducted in different research areas, such as
environmental management, supply chain management and
small business management. The author integrated this
research for developing our research framework on the issue
of the involvement of SME suppliers in supply chain-wide
environmental improvement programs.
This paper is organized as follows. In the next section,
based on a synthesis of existing literature on green supply
chain management, environmental management, and small
business management, the author describes this researchframework and resulting hypotheses. Following the next
section, the research method, the author presents results of
the empirical analyses and a discussion. In the final section,
the author highlights implications from the results and
limitations of this study along with directions for future
research.
2. Literature review
2.1. A GSC initiative and SME suppliers
A GSC initiative can be defined as the programs striving to
transfer and disseminate environmental management, in
particular advanced environmental management practices,
through the entire supply chain, by using the relationships
between large-sized buying firms and their suppliers. The
GSC initiative includes all the programs driven by buying
firms and/or third parties, particularly the government, with
the purpose of improving the environmental performance of
suppliers through the buying firms influences.
When considering the buying firm-led GSC initiative,
which is considered the intersection of environmental issues
with supply chain management, several terms are commonly
used such as green supply (Bowen et al., 2001), GSC (Sarkis,
2003), GSCM (Zhu and Sarkis, 2004), environmental supply
chain management (Zsidisin and Siferd, 2001; Handfield
et al., 2005), and green supply chain practices (Vachon and
Klassen, 2006). Although these terms are used often with
subtle differences and within different contexts, they can be
understood as a buying firms intention to and activities that
integrate environmental issues into supply chain management
in order to improve the environmental performance of
suppliers and customers (Handfield et al., 2005; Bowen
et al., 2001). The third party-led GSC initiative is the
environmental program that facilitates environmentalimprovement of suppliers within the supply chain designed
by governments, non-for-profit organizations, and trade
associations. In particular, government-led environmental
programs are becoming popular in some countries. The
British governments Energy-Efficiency Best Practice
campaign, the United States Environmental Protection
Agencys (US EPA) Environmental Technology Best
Practice program, and the Korean governments Supply
Chain Environmental Management (SCEM) initiative are
good examples. Although these initiatives are initiated by
governments the core mechanism of utilizing the relationship
between large buying firms and their suppliers is almost
identical to the buying-firms-led GSC initiative.
Holt et al. (2001) identified seven types of GSC initiativeswhich support SMEs in improving their environmental
performance by classifying the organizations involved in
arranging them: governments, trade associations and sector
bodies, partnership groups, individual companies, business
support organizations, non-for-profit green business-support
organizations, and green business clubs. Although Holt et al.
used the term of environmental business-support services
interchangeably for green or GSC initiatives, the meanings of
the terms are exactly the same. In their classification, the
company-driven initiative is equivalent to the buying firm-led
GSC initiative and other organizations-driven initiatives are
equivalent to the third party-led GSC initiative in this paper.
Why are the governments as well as buying firms, in
particular large-sized companies paying more attention toSME suppliers? SME suppliers usually lack the information,
resources, or expertise to deal with environmental issues.
They have little know-how in bringing into effect the technical
and managerial changes that would enable them to meet
emerging environmental and social standards (Luken and
Stares, 2005). Worse, they often hesitate to reach out for help
without some external stimulus. As a result, SME suppliers
can be a source of environmental risk and a bottleneck in
pursuing the goal of a greener supply chain. In this situation,
GSC initiatives are thought to be one of the key mechanisms
used to diffuse more advanced environmental management to
less environmental capable SME suppliers (Lamming and
Hampson, 1996). These initiatives are inter-organizational
projects between the key-players in the supply chain: thelarge-sized lead companies and their upstream and
downstream suppliers. Many people have perceived that a
GSC initiative promotes efficiency and synergy among
business partners as well as their lead company (Rao and
Holt, 2005); however, a GSC initiative cannot improve one
players efficiency and performance individually because the
environmental performance of the supply chain can be
achieved only through the interaction of various activities
undertaken by each player. That is why the involvement and
participation of SME suppliers is important in GSC
initiatives.
Drivers in green supply chain initiatives
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2.2. The drivers for SME suppliers in GSC initiatives
There are mainly two streams of research that are related to
our work: GSCM and environmental management in SMEs.
In what follows, the author provides an overview of the two
research streams; however, the author note that the objective
here is to position this work relative to the existing literature,
rather than providing an exhaustive review. Table I illustrates
what the existing studies focus on, what their findings are, andhow these studies are referred to in this study.
Studies on GSCM address the definition, practices, drivers,
and consequence of GSCM. The practices relating to GSCM
encompass the monitoring-based approach. This approach
involves the activities of gathering and processing supplier
information, setting supplier assessment criteria, and
evaluating the environmental performance of incoming
goods and the suppliers that provide them. GSCM also
encompasses the collaboration-based approach. This
approach includes training and education programs given to
suppliers, environmental managerial information sharing, and
collaborative research with suppliers (e.g., Vachon and
Klassen, 2006; Min and Galle, 2001; Bowen et al., 2001;
Lippman, 1999). Those practices are known to begin mainly
with external stakeholder pressures, in particular customer
demands and regulations (Hall, 2000; Preuss, 2005). These
practices are enabled by intra- and/or inter-organizational
f actors such as top m anagem ent com mitm ent and
organizational capabilities including supply chain
management capabilities, cross-functional teams, and closer
cooperation with suppliers (e.g., Bowen et al., 2001; Theyel,
2001; Lippman, 1999). Furthermore, recent studies
increasingly try to probe the relationship between the
G SC M p ra ct ic e a nd i ts p er fo rma nc e i n t er ms o f
environmental and financial performance (Rao and Holt,
2005; Zhu and Sarkis, 2004). The focus in most of those
works is on the perspective of the buying firms and not on the
suppliers. Therefore, to my knowledge, no research has
directly addressed the drivers for SME supplier participationin GSCM initiatives that are initiated and/or managed by
large-sized buying firms.
In the SMEs environmental management stream, there are
some studies where the unique characteristics of SMEs in
adopting and implementing environmental management,
such as less awareness about environmental issues, less
environmental pressures from stakeholders, and lack of
human, technological, and financial resources required for
advanced environmental management, have been considered
( e.g., Clark, 2 00 0; Hall, 2 00 0) . A f ew studies on
environmental support programs, which were mainly case
studies, mentioned the importance of supply chain pressures
and support of partners such as in the form of industry
leaders and experts given to SMEs as drivers and facilitators
in improving their environmental performance (Luken and
Stares, 2005; Friedman and Miles, 2002; Holt et al., 2001). A
more comprehensive work performed by Hitchens et al.
(2003) focused on the major influential factors on adoption of
clean technology in SMEs. Those existing studies on SMEs
environmental management mentioned partially the
influential factors, such as regulations, external stakeholder
pressures, support from external stakeholders, and internal
organizational capabilities, to improve environmental
capabilities and/or performance in SMEs; however, in
general those scholarly and practical works barely
considered a circumstance of the supply chain specifically,
so their results missed the role of buying firms for involving
SME suppliers in green supply chain initiatives. Moreover, to
date, there have been no studies that proposed directly the
influencing factors of SME supplier participation in GSC
initiatives as well as have tested them.
2.3. GSC initiatives in South Korea
Social concern about the environment in Korea just began toemerge in the early 1990s. Before then, there was a high
priority on economic growth. This high priority enabled the
Korean economy to grow more than 500-fold for the three
decades (Lee and Rhee, 2006). However, significant
environmental accidents and controversial events such as the
phenol leakage in 1991 have driven Korean society to turn its
attention to the environment. Moreover, external pressures
resulting from regulations in the European Union, such as the
RoHS and WEEE Directives[1], have led the Korean
governm ent, as w ell as com panies, to consider the
environmental impact engendered by the entire supply
chain. The Korean economy heavily depends on overseas
markets. Korean companies increasingly rely on their
suppliers for gaining and sustaining competitiveness. For
instance, more than 65 percent of the total cars made in
Korea were exported[2]. The average purchase expenditure as
a percent of sales dollars of Korean companies is up to 59
percent[3]. The case of Sonys PlayStation has also served as a
reminder to the Korean government and industries of what
may go wrong in national and industrial competitiveness if the
supply chain is ignored.
As a result, the Korean government established a new
policy on expanding environmental management throughout
the entire supply chain, in particular the SME suppliers. A
national GSC initiative was started in 2003 based on this
policy. This national program was originally programmed and
supported, based on the benchmark of the Supplier
Partnership for the Environment in North America, by the
Korean government to encourage SME suppliers to improvetheir environmental performance utilizing relationships
between the key-players of large-sized buying firms and
their suppliers. It is called the supply chain environmental
management (SCEM) program because supply chain
management is adopted as a core tool to disseminate and
transfer environmental management know-how of the large
buying firms to the SME suppliers.
Under this program, the in-depth environmental supportive
programs and activities are given to the suppliers who
participate in this national project with their purchasing
companies. The environmental supports encompass the
transfer of the skills of hazardous material analysis, mass
balance management, product, and process environmental
data profiling, and the managerial support of the green
procurement implementation and the environmental
management system (EMS) buildup. All the supports are
provided through cooperation of key buying companies with
external expertise groups. This project has been implemented
with funds from the national budget and matching funds from
participating companies.
3. A conceptual model and hypotheses
Based on the existing studies into the streams of green supply
chain management and SMEs environmental management,
the author can articulate influencing factors for SME supplier
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participation in GSC initiatives with three categories: buyer,
third-party (specifically, the government), and the SME
supplier, itself. Although the author acknowledges that these
and other variables may account for variation in the
participation of SME suppliers in GSC initiatives, the
author limited this model to the following factors that were
thought to be more relevant to this issue.
3.1. Buyer influence
The catalyst for widespread recognition of environmental
responsibility by SME suppliers is thought to come from
supply chain pressure or regulations (Friedman and Miles,
2002). Smaller firms are relatively less exposed to the scrutiny
of regulatory enforcement on environmental issues than large
companies are; however, external environmental pressures are
increasingly transmitted to SME suppliers by their customers
along the supply chain (Noci and Vergandi, 1999). In
addition, more lead companies in supply chains increasingly
invest much time and energy in developing the environmental
capability of their suppliers because they have come to realize
their environmental goals cannot be accomplished by theirenvironmental capability alone. The buyer GSC practices
striving to improve the environmental performance of
suppliers encompass green procurement activities, such as
setting supplier assessment criteria and evaluating the
environmental performance of incoming goods and the
suppliers, as well as support activities, such as providing
training and education programs to their suppliers, sharing
information, and undertaking collaborative research and
development (Vachon and Klassen, 2006).
Without a doubt, buyers, particularly end-user product
manufacturers in supply chains, are the most important and
influential stakeholders for the suppliers. Therefore, changes
in procurement policies and practices of a buyer, which in
turn appear as environmental requests, can directly affect thebehavior of its suppliers by serving as an instigator in making
them turn their attention to environmental issues. Hall (2000)
predicted that a wave encouraging the greening of a supply
chain is likely to be triggered by some powerful final buyers
who reflect market pressures onto their suppliers. It is a well-
known fact that the dominance of a powerful buyer has
important implications for changes in the entire supply chain.
In addition, the suppliers who have experience receiving
technical and managerial assistance from their buyers when
improving their environmental performance are likely to
participate in cooperative environmental initiatives with their
business partners. Actually, suppliers can feel positive about
making the requested changes because they can likely expect
cost reductions, greater operational efficiencies, and enhancedvalue to customers by participating in GSC initiatives with
their buyers. For example, General Motors Company
provided their suppliers environmental training and
education in North America in the late 1990s, which, in
turn, contributed to the energy-efficiency improvement of its
suppliers, which then made them strong supporters of GMs
GSCM program (Lippman, 1999, 2001). All of these
arguments lead to the first hypothesis:
H1. Buyer GSC practices have a positive influence on the
willingness of SME suppliers to participate in GSC
initiatives.
3.2. Government involvement
The role of the government in GSC has been getting
increasing attention over the past decade. As global
environmental regulations shift emphasis from pollution
controls at manufacturing plants to the life cycle of the
products, more governments are becoming involved in GSC
initiatives. For instance, the British government has
undertaken the energy-efficiency best practice campaign,Making a Corporate Commitment, which provides free
advice and technical support to S MEs through the
Environmental Technology Best Practice Programme (Holt
et al., 2001). The US EPA utilizes a more indirect way in
comparison with the UK cases. The EPA focuses on
developing the best practices of GSC and bringing
awareness of those practices through guidebooks and
manuals (e.g., US EPA, 2000). In Korea, a similar
government-driven initiative started in 2003. This national
project was designed to encourage SME suppliers to develop
their own environmental management system by utilizing the
relationship between large-sized buying firms and their
suppliers (Lee and Jang, 2003).
Government involvement in these initiatives includes a
range of scope from direct technical and financial support to
indirect encouragement with tax-cut incentives and to
infrastructure development for environmentally friendly
industrial complexes. The question still exists whether the
government-driven initiatives are assisting the vast majority of
SMEs to move towards greener enterprises (Friedman and
Miles, 2002; Holt et al., 2001). The government, however, is
seen to play a more important role in driving SME suppliers
to be interested in GSC initiatives. Noci and Vergandi (1999)
claim that governmental support and regulations are a more
important trigger for environmental innovations in SMEs.
Accordingly, the above arguments lead to the following
hypothesis:
H2. Government involvement in GSC initiatives has a
positive influence on the willingness of SME suppliersto participate in GSC initiatives.
3.3. GSC readiness
Cooperating with business partners in GSC initiatives is not
an easy task. It requires many changes for SME suppliers;
therefore, the attitude towards these green initiatives may vary
depending on their internal characteristics. Although SME
suppliers, in general, tend to be negligent in dealing with
environmental issues and suffer from a lack of know-how and
resources (Luken and Stares, 2005; Schaper, 2002),
differences still exist among them.
Sharma et al. (1999) mentioned that the range of the
environmental strategy might differ depending on the
availability of resources of the firms and the managerial
interpretation of environmental issues. Likewise, the
willingness to participate in those GSC initiatives is
expected to be influenced by the internal characteristics of
the SME suppliers. These internal characteristics are referred
to as GSC readiness in this paper. This GSC readiness can be
measured by a range of diverse indicators, including manager
environmental awareness, cross-functional environmental
communication, and human, technical, and financial slack
resources. First, managers are heavily responsible for
identifying external challenges and deploying internal
resources to respond to them (Amit and Schoemaker,
Drivers in green supply chain initiatives
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1993). Environmental strategies and the response of a firm
are likely to differ, at least in part, with the managers
evaluation of external stakeholder requirements, and then
subsequent translation of their interpretation into specific
environmental practices, such as GSC initiatives (Bakker and
Nijhof, 2002; Sharma et al., 1999; Lippman, 1999; Jung and
Lee, 2004). Second, there is an argument that a firms
organizational capabilities facilitate the adoption of proactiveenvironmental management practices. For instance, existing
cross-functional teams and borderless communication among
departments based on total quality management principles
lead to pollution-preventive approaches in dealing with
environmental issues (Hart, 1995), GSCM (Lippman,
1999), and EMSs(Jung and Lee, 2004). Third, a series of
changes, including taking part in GSC initiatives, may require
human, technical, and financial resources to deploy even
though a large of portion of the needed resources can be
compensated for by buyers or by government support. In
actuality, the difference in the environmental strategies and
environmental innovation of the firms is strongly influenced
by financial slack resource, technical capabilities, and human
resources (e.g. Ramus and Steger, 2000; Sharma et al., 1999).
Each factor mentioned above may play an important role in
choosing and developing environmental strategies and
practices. However, we consider those factors as one
variable, GSC readiness, because the author expects that
the variation in each factor among SME suppliers is not
significant. All of these arguments lead to the following
hypothesis:
H3. The GSC readiness of SME suppliers has a positive
influence on the willingness of SME suppliers to
participate in GSC initiatives.
From all of this reasoning and the subsequent hypotheses, the
author can suggest a research framework of a study on the
determinants of the participation of SME suppliers in GSC
initiatives. As seen in Figure 1, the willingness of participation
mainly relies on three influential factors: buyer GSC
practices, government involvement, and the readiness of the
SME suppliers, themselves.
4. Research methodology
4.1. Sample selection
Consistent with the purpose of this study, small and medium-
sized manufacturing suppliers were sampled. A Korean
sample of 855 SME suppliers, with more than 20 employees
and less than 500, was complied from an exclusive source, the
Small and Medium Sized Enterprise Support Program
Directory[4]. The author chose SME suppliers who were
aware of at least what programs of the Korean government
exist and what programs were available. Restricting the
sample to this limited number of SME suppliers in Korea may
have limited the generalizability of the findings. The model
and findings should not be generalized without due
consideration of possible limitations. However, a restricted
sample can add more power to the findings, because it hasbeen said to be more difficult to uncover findings in a sample
in which the variance in the independent variables has been
restricted than with a large variance (Bansal, 2005).
The data were then collected through questionnaires mailed
to top-level executives (see the Appendix). The respondents
were mainly top managers; however, some respondents were
top-level managers of sales, production, or planning
departm ents w ho w ere well acquainted w ith buyer
requirements, government support, corporate strategies, and
environmental management of their firms. To encourage
responses, an initial mailing of surveys was followed one week
later by reminder phone-calls to the contact persons at the
companies that did not answer the survey. Data collection was
completed in May 2005. A total of 142 surveys were returned,
representing a response rate of 13.4 percent. In general,
response rates greater than 20 percent are recommended in
supply chain management research (e.g., Prahinski and
Benton, 2004; Pagell et al., 2004). However, this sample
size met the level of 100 and above that Hair et al. (1992)
recommended for providing valid results. Because of the
receipts of 13 incomplete responses, only 129 surveys were
used in our hierarchical regression analysis. Table II provides
a summary of the respondents.
Non-response bias was tested by comparing the responses
that were returned early with those returned late. The
responses were split into two groups based on if the surveys
were returned before or after the reminder phone-call. Seven
items were randomly selected from the survey and t-tests were
performed on the responses of the two groups (n1 53,n2 76). The t-tests yielded no statistically significant
differences among the seven survey items tested.
4.2. Research variables and measurements
A survey instrument to measure the constructs of interest
heavily relied on the previously tested and validated
instruments wherever possible. First, four items used to
measure buyer GSC practices were chosen and modified from
the questionnaires used in existing studies, such as Vachon
and Klassen (2006) and Zhu and Sarkis (2004). Second, we
developed five items to measure government involvement
Figure 1 Drivers for the willingness of SME suppliers to participate in GSC initiatives
Drivers in green supply chain initiatives
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based on the literature which addressed what roles the
government and other institutions expected to be taken in
improving the environmental performance of SMEs (e.g.,
Friedman and Miles, 2002; Holt et al., 2001; Freel, 2000).
Third, the scale for GSC readiness was compiled from a series
of previous studies on the determinants of proactive
environmental strategy (e.g., Bakker and Nijhof, 2002;
Sharma et al., 1999; Hart, 1995). A total of six items were
extracted. Finally, for a newly developed construct, the
willingness to participation in GSC initiatives (referred to
G SC participation) , f our items, including level of
understanding and awareness of GSC initiatives, intentionto participate and expectation of benefits, were employed. All
items were assessed using a five-point Likert scale.
To control the SME supplier characteristics, we considered
two variables: firm size and age. Firm size has been known to
be an important contextual variable to tell m ore
environmentally proactive companies from lesser ones (e.g.,
Grant et al., 2002; Klassen, 2000). In this study, firm size was
measured by the number of employees (full-time equivalent)
as of March 2005. The natural logarithm of this measure was
used in the regression analysis. The age of a SME supplier
was introduced as a proxy for the age of the process and
technology in plants in the previous research of Vachon and
Klassen (2006).
4.3. The validity of the measurement model
The author used three ways to support the content validity of
this survey:
1 an extensive literature review;
2 in-depth interviews with managers at a purchasing firm
and its suppliers which were participating in the Korean
national GSC initiative as well as a researcher from the
Korea National Cleaner Production Center (KNCPC),
who had designed this national project; and
3 a pre-test of the survey by the interviewees after designing
the survey.
Even though the author already had an understanding of GSC
initiatives because the author was also taking part in this
project as outside support experts where the authors role was
to assist the participant SME suppliers in adopting
environmental management, these interviews and the pre-
test provided better understandings and suggestions on
wording and improvements in format.
The unidimensionality and reliability of each scale for the
variables were tested by conducting a factor analysis and
Cronbachs alpha, respectively (Table III). For each, the items
loaded on only one factor in all cases, in spite of the low
extracted variance of around 50 percent. As for reliability, the
values of Cronbachs alpha exceeded the recommended cutoff
of 0.70 (Nunnally, 1978), except for the variable of
government involvement. Based on the one factor loading
and the reliability index approximately reaching to the
recommended level (Cronbachs alpha 0:67), we retained
all five items for the variable of government involvement.
5. Results and discussion
Bivariate correlations and descriptive statistics are presented
in Table IV. Hierarchical linear regression was used to test the
three hypotheses, which were the relationships between
buyers GSC practices, the governments involvement, the
GSC readiness of SME suppliers, and the participation
willingness of SME suppliers to GSC initiatives.According to the results in Table V, two of the three
hypotheses were strongly supported. Evidence of a positive
relationship between GSC participation and government
involvement was relatively weak, so the second hypothesis was
not supported with a usual cut-off p-value of 0.05; however,
according to other studies applying a cut-off p-value of 0.1
(e.g., Krause et al., 2000; Prahinski and Benton, 2004), it can
be said that overall the potential drivers suggested in this
paper were seen to have a positive impact on the participation
and involvement of SME suppliers in GSC initiatives. In the
regression model, the incremental variance, explained by the
three variables, was statistically significant (DR2 0:39,
p , 0:01).
First, the author saw strong evidence that buyers played acritical role in facilitating SME suppliers to take part in GSC
initiatives. For many firms, the key channel for receiving a
demand for more environmental friendly products is their
customers. The suppliers in this case, therefore, often
responded to a second-hand regulation conveyed through
the supply chain, in particular from their buyers (Green et al.,
2000). The result of this research was very consistent with
previous arguments that the supply relationship and the direct
involvement of buyers in supplier practices lead to greener
suppliers. For example, Rao (2002) addressed that
collaborative relationships between customers and their
suppliers as well as support from the customers can
contribute to high levels of advanced environmental
management practice of the suppliers. The environmental
pressures and support from the buyers were seen to drive
SME suppliers to improve their environmental capability,
and, in turn, to participate in GSC initiatives.
Second, the governments involvement was likely to be
linked with a greater willingness of SME suppliers to take part
in GSC initiatives. This result re-confirmed how important
the government role can be in diffusing environmental
management practices throughout industries, particularly for
SME suppliers. Governmental direct and/or indirect supports
were thought to be external sources of finance, know-how,
and technology for small firms; thus, these supports facilitated
innovations in those companies who were suffering from a
Table II Summary of responses
Industry Machinery Metal Electric and electronic Chemical and textile Others Total
Sample size 154 202 225 134 140 855
Respondents 21 29 32 22 25 129
Response rate (%) 13.6 14.4 14.2 16.4 17.9 15.1
Sales (US$ million) 26.0 21.8 38.3 24.9 11.3 24.5
No. of employees 125 82 154 111 48 104
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lack of internal resources. Actually, in the UK and Korea,
there w ere several support program s driven by the
government to help SMEs improve their environmental
performance (Holt et al., 2001; Lee and Jang, 2003). External
assistance, such as environmental management consultancy,
provided free of charge to SMEs through national government
funds, alleviated acknowledged internal resource constraints,
therefore encouraging SME suppliers to participate in GSC
initiatives. SME suppliers tended to expect that the
government be much involved in those initiatives through a
range of activities, including funding for environmental
management diffusion programs, building networks, and
national centers for information, knowledge, and best practice
sharing. The result suggested that the more governments were
involved in GSC initiatives, the more SME suppliers took part
in them.
Third, the GSC participation of SME suppliers was directly
related to their readiness. Contrary to our expectation that the
variation in the resources and capabilities of SME suppliers
was not significant, GSC readiness, consisting of internalslack resources and organizational capabilities, was shown to
be the most influential determinant for SME suppliers
becoming involved in GSC initiatives. This result suggested
that a resource-based view of the firm, which contended that
differences in a firms performance could be explained by the
specific resources and capabilities that they own (e.g.
Wernefelt, 1984; Barney, 1991; Grant, 1991), can be
applied to even SME suppliers. This result provided a
strong theoretical foundation in answering the question of
why firms showed different levels of environmental practice
and performance. For example, organizational capabilities,
such as continuous improvement, multi cross-functional
management, stakeholder integration, and manufacturing
innovation were antecedents for proactive environmental
management (e.g., Hart, 1995; Florida, 1996). GSC
readiness represented a series of organizational capabilities,
such as cross-functional communication and pervasive
environmental awareness among managers, as well as the
availability of internal resources, such as the firms financial,
human, and technical reserves. A GSC initiative has been a
relatively new and more advanced concept in environmental
management practices considering a life-cycle perspective.
Participating in this initiative may require firms to take a more
proactive stance in environmental management. Based on this
reasoning, the author concluded that the SME suppliers
participation in GSC initiatives was strongly influenced by its
Table III Validity and reliability analyses
GSC readiness Buyer GSC practices Government involvement GSC participation
Items Estimate Items Estimate Items Estimate Items Estimate
Ready1 0.59 Buyer1 0.81 Government1 0.70 Participation1 0.77
Ready2 0.74 Buyer2 0.80 Government2 0.67 Participation2 0.79
Ready3 0.85 Buyer3 0.62 Government3 0.60 Participation3 0.66
Ready4 0.85 Buyer4 0.71 Government4 0.72 Participation4 0.78Ready5 0.87 0.72 Government5 0.60
Ready6 0.78
Eigenvalue 3.69 2.18 2.18 2.25
Variance explained (%) 61.53 54.61 43.55 56.34
Cronbachs alpha 0.87 0.72 0.67 0.74
Table IV Correlation matrix
Mean SD 1 2 3 4 5
1. GSC Readiness 2.67 0.75
2. Buyer GSC practices 2.63 0.99 0.32 * * *
3. Government involvement 3.52 0.66 20.28 * * * 0.07
4. GSC participation 2.92 0.78 0.66 * * * 0.46 * * * 20.02
5. Firm sizea 4.11 1.25 0.16 * * 20.08 0.02 20.14 *
6. Age of firm 19.08 10.43 20.13 0.27 * * * 0.02 0.36 * * * 0.09
Notes: The number of observations varies from 130 to 142 because of missing data; a Natural logarithm of the number of employees (full-time equivalent);* p-value , 0.10, * * p-value , 0.05, * * * p-value , 0.01
Table V Results of hierarchical linear regression
Model 1 Model 2 Hypothesis
Beta Beta Support/reject
Control variables
Firm size 0.26 * * 0.17 * * *
Age of firm 20.02 20.01Independent variables
Buyer GSC practices 0.18 * * * H1 supported
Government involvement 0.13 * H2not supported
GSC readiness of suppliers 0.54 * * * H3 supported
Adj-R2 0.15 * * * 0.54 * * *
DR2 0.39
F statistics 12.67 31.46
No. of observations 129 129
Notes: * p-value , 0.1; * * p-value , 0.05, * * * p-value , 0.01
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GSC readiness, which was very consistent with a number of
previous studies claiming a positive relationship between
firm s resources and capabilities and its proactive
environmental management performance (e.g. Klassen and
Whybark, 1999; Ghobadian et al., 1998; Hart, 1995), or its
corporate sustainable development (e.g. Bansal, 2005).
This study controlled two variables of firm size and age
because these variables were known to have influence on theadoption of advanced environmental practices. As expected,
firm size proved to affect the GSC participation of SME
suppliers as important contextual variables. Even among
SMEs, which ranged from 20 to 300 employees, larger firms
were thought to be more willing to participate in GSC
initiatives, which were led by buying firms and/or the
government, than smaller firms. Even though GSC
initiatives were known to lead to operational performance as
well as environmental performance of both buying firms and
their suppliers, financial and human resources were required
to conduct the initiatives in the beginning stage. SMEs may
be more averse to expense the cost of adopting advanced
environmental management, which lead to this result that the
more resourceful, in other words, bigger suppliers were willing
to participate in the GSC initiatives. The other control
variable, firm age, was seen not to have any relationship with
GSC participation from the results. These additional results,
relating to the control variables, were very consistent with
environmental management and green supply chain
management literature (e.g., Vachon and Klassen, 2006;
Klassen, 2000).
The survey in this study was conducted based on a stratified
sample where SME suppliers were thought to be more aware
of external information on governmental support programs
than other SME suppliers excluded in this survey. Except for
this possible difference, the author expected other external
conditions that other SME suppliers in Korea encounter, such
as pressures and support from their buyers. There was likely
to be no significant differences in firm characteristics, in termsof firm size and age, between the surveyed SMEs and other
SMEs in Korea[5]. Therefore, we expect that the results of
this study can be generalized for other SME suppliers in
Korea if we consider a few of the possible specific differences
and limitations. The Korean industrial base, as with that of all
other countries, primarily consists of SMEs[6]. As the Korean
economy is heavily dependent on overseas markets, global
environmental regulations, which are usually transmitted by
large buying firms, have multifaceted implications for Korean
SME suppliers. The results of this paper also implied that this
model could apply to other countries, such as China and
other Asian countries whose economies heavily rely on SMEs
and export. For instance, environmental issues have risen
dramatically in China, which drove the Chinese government
to enforce a RoHS-like regulation. Environmental pressures
engendered by export and sales to foreign customers have
been increasingly intensified on Chinese enterprises and their
suppliers (Zhu and Sarkis, 2006).
6. Conclusion
Much attention has been paid to the importance of GSC
initiatives, which are inter-organizational projects striving to
improve environmental performance as well as economic
efficiency throughout the entire supply chain. These
initiatives, however, are successfully implemented only if the
participation of all the players, in particular SME suppliers, is
guaranteed. This study investigated what factors facilitate
SME suppliers to willingly take part in those initiatives.
According to the results, the willingness of SME suppliers
to participate in GSC initiatives heavily rested on two
influential factors: buyer GSC practices and supplier GSC
readiness. Also, government involvement in the initiatives
influenced the participation of SME suppliers. SME suppliersand large-sized buyers as well as governments who want to
improve their environmental performance throughout the
supply chain can obtain implications from this study. First,
consistent with our expectations, buyer GSC practices
mo ti vat e SM E s up pl ie rs t o p ar ti ci pa te i n in te r-
organizational GSC initiatives. The SME suppliers who are
under more environmental pressures and who are provided
with environmental support from their buyers are likely to be
involved in these initiatives. This implies large buying firms
who intend to reduce the environmental risk engendered by
their supply chains should enhance environmental
procurement and support to their suppliers, particularly
their SME suppliers. Second, we found that the suppliers with
a higher level of environmental awareness, cross-functionalcommunication, and financial, human, and technical slack
resources have a significantly higher willingness to take part in
GSC initiatives. SME suppliers should be aware that these
initiatives promote efficiency and synergy with their business
partners, such as their buyers. Furthermore, these initiatives
can provide very good external resources that they can easily
access and utilize. Even though SME suppliers are suffering
from a lack of slack resources, they need to put more effort
into improving their readiness. There are several activities
recom mended, such as increasing the m anagers
environmental awareness through training and education,
integrating environmental function into a strategic decision-
making process, and putting more resources into pollution
preventive solutions. Third, our research showed a slightsignificance in the effect that governments have on SME
suppliers participating in GSC initiatives. Governments also
m ust bear in m ind that S ME suppliers can have a
fundamental role in regional and national environmental
improvement as well as economic vitality. Therefore,
governments should keep encouraging SME suppliers to be
interested in GSC initiatives. Both a direct way of providing
financial and technical support and an indirect way of
coordinating buyers and their suppliers and building a
participative atmosphere and infrastructure are strongly
recommended.
By clarifying the limitations of this paper, we suggest
directions for future research. The sample used in this study
was extracted from a specific governmental directory, so itmay not represent all SME suppliers comprehensively.
Moreover, a relatively low response rate and a small number
of samples might have created grounds for bias. In addition,
the fact that each questionnaire was answered by only one
respondent can be seen as the third limitation because a single
respondent is likely to cause common method variance. This
paper awaits further refined studies considering these
limitations. In addition, another potentially important
variable, the consequence of GSC initiatives in terms of
economic and environmental performance of both buyers and
suppliers, remains to be explored.
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Notes
1 The European Unions directives on the restriction of the
use of certain hazardous substances (RoHS) and wastes of
electric and electronic equipment (WEEE).
2 Data in 2005 from the web site of the Korea Automobile
Manufacturers Association, www.kama.or.kr
3 Data in 2003 from the web site of the Korea National
Statistical Office,www.kosis.nso.go.kr
4 This is a list of the Korean small and medium-sized
enterprises which have been given financial and technical
support from the Korea Small and Medium Business
Administration.
5 The total number of small and medium sized enterprises
ranging from 20 to 500 employees in Korea were 8,473 in
2005. Average annual sales and an average number of
employees of these SMEs were US$28.2 million and 119,
respectively. However, the author is not sure how many
SMEs among them were suppliers or were selling their
products into the consumer markets directly.
6 For instance, SMEs represent over 90 percent of the
suppliers in the Korean automobile industry (Choi,
2003).
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Appendix. Questionnaire items
Supplier GSC readiness
(1 strongly disagree to 5 strongly agree)
Ready1 Our managers are aware of the importance of
environmental issues.
Ready2 Environmental issues are well communicated
between the environmental function and other
departments.
R eady3 A n environmental m anagem ent system is
established.
Ready4 Our firm has financial reserves to invest in advanced
technologies, including environmental solutions.
Ready5 Our firm has information and know-how relating to
emerging environmental issues in our industry.
Ready6 Our firm has human resources to deal with
emerging environmental issues in our industry.
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Buyer GSC practices
(1 strongly disagree to 5 strongly agree)
Our major buyers . . .
Buyer1 Incorporate environmental considerations in
selecting their supplies and suppliers.
Buyer2 Request us to have an environmental management
system (e.g. ISO 14001).
Buyer3 Have interest in greening the supply chain.Buyer4 Provide us with environmental training, education,
or technical assistance.
Government involvement
(1 strongly disagree to 5 strongly agree)
Local or central governments . . .
Government1 Coordinate the GSC initiatives.
Government2 Increase funds for the GSC initiatives.
Government3 Provide information and technical assistance
to small- and medium-sized firms.
Government4 Popularize knowledge of environmental
management.
Government5 Build infrastructure for facilitating GSC
initiatives.
Supplier willingness to participation
(1 strongly disagree to 5 strongly agree)
Our firm . . .
Participation1 Is aware of the GSC initiatives.
Participation2 Is willing to participate in the GSC
initiatives.
Participation3 Has managers who have interest in the GSC
initiatives.Participation4 Expects environmental and economic
benefits from the GSC initiatives.
Control variables
1 As of the beginning of May 2005, how many employees
(full-time equivalent) work at your company? (Firm size.)
2 When was your firm founded? (Age of the firm.)
Corresponding author
Su-Yol Lee can be contacted at: [email protected]
Drivers in green supply chain initiatives
Su-Yol Lee
Supply Chain Management: An International Journal
Volume 13 Number 3 2008 185198
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