Reprint of Lean management and supply management: their role in green practices and performance q Sara Hajmohammad a , Stephan Vachon a, * , Robert D. Klassen a , Iuri Gavronski b a Richard Ivey School of Business, Western University, London, Canada b Universidade do Vale do Rio dos Sinos, Programa de Pós-Graduação em Administração, Brazil article info Article history: Received 30 August 2010 Received in revised form 21 June 2012 Accepted 13 July 2012 Available online 27 June 2013 Keywords: Environmental performance Environmental management Supply management Lean management abstract Organizations are faced with increasing pressure to engage in sustainable development and to integrate environmental and social dimensions into their traditional performance metrics. Prior research suggests that lean management and supply management are potentially important determinants of environ- mental performance and can be seen as capabilities that ease the adoption of environmental practices. To help understand the roles of lean and supply management in regards to improving the firm’s environ- mental performance, a conceptual model proposes that the magnitude of environmental practices me- diates the relationship between lean and supply management with environmental performance. To test the model, plant-level survey data from a sample of Canadian manufacturing plants is used. The results indicate that supply management and lean activities provide means by which resources are invested in environmental practices. The empirical analysis also confirms that the impact of lean management, and to a lesser extent supply management, on environmental performance is mediated by environmental practices. Ó 2013 Elsevier Ltd. All rights reserved. 1. Introduction As manufacturing corporations develop know-how and capa- bilities for cleaner production, research must continue in its quest to better understand potential linkages between operations/supply chain systems and environmental performance. This paper aims to examine how two of these systems, namely lean management and supply management, impact environmental performance. In particular, a conceptual model is developed suggesting that lean management and supply management can have an indirect effect on environmental performance by supporting the development of environmental practices which in turn impact performance d that is environmental practices mediate the impact of lean and supply management on environmental performance. Several studies fall under the label of “lean and green” (Florida, 1996; King and Lenox, 2001) or “green supply chain” (Vachon and Klassen, 2006a; Vachon and Mao, 2008), but only a few have analyzed both issues simultaneously (Mollenkopf et al., 2010). For instance, some studies have looked at the synergy existing between lean management and environmental management practices (Florida, 1996) while others concentrated more on the link between lean management and environmental performance (King and Lenox, 2001; Rothenberg et al., 2001). Similarly, a segment of the literature has linked supply man- agement activities with environmental management (Bowen et al., 2001; Vachon, 2007) while another segment has focused on the link between supply chain management and environmental per- formance (Rao, 2002; Vachon and Klassen, 2006b). For instance, Vachon and Klassen (2007) present empirical evidence indicating that buyeresupplier integration is related to the type of environ- mental investment made in the buyer’s plant. Building on evidence from case studies in the United Kingdom and Japan, Hall (2000) concludes that a buying organization’s understanding of its sup- pliers’ operations and capabilities is key in developing a green supply chain and that such understanding can only be achieved by a sound supply management. DOI of original article: http://dx.doi.org/10.1016/j.jclepro.2012.07.028. q This article is a reprint of a previously published article. Due to an error, this article has been published in the wrong issue. The article is reprinted here for the reader’s convenience and for the continuity of the special issue. For citation pur- poses, please use the original publication details: Hajmohammad, S., et al., Lean management and supply management: their role in green practices and perfor- mance, Journal of Cleaner Production, 39 (2012) pp. 312e320. * Corresponding author. E-mail addresses: [email protected](S. Hajmohammad), svachon@ ivey.ca (S. Vachon), [email protected](R.D. Klassen), [email protected](I. Gavronski). Contents lists available at SciVerse ScienceDirect Journal of Cleaner Production journal homepage: www.elsevier.com/locate/jclepro 0959-6526/$ e see front matter Ó 2013 Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.jclepro.2013.06.038 Journal of Cleaner Production 56 (2013) 86e93
Reprint of Lean management and supply management: their role ingreen practices and performanceq
Sara Hajmohammad a, Stephan Vachon a,*, Robert D. Klassen a, Iuri Gavronski b
aRichard Ivey School of Business, Western University, London, CanadabUniversidade do Vale do Rio dos Sinos, Programa de Pós-Graduação em Administração, Brazil
a r t i c l e i n f o
Article history:Received 30 August 2010Received in revised form21 June 2012Accepted 13 July 2012Available online 27 June 2013
DOI of original article: http://dx.doi.org/10.1016/jq This article is a reprint of a previously published
article has been published in the wrong issue. The arreader’s convenience and for the continuity of the sposes, please use the original publication details: Hmanagement and supply management: their role inmance, Journal of Cleaner Production, 39 (2012) pp. 3* Corresponding author.
0959-6526/$ e see front matter � 2013 Elsevier Ltd.http://dx.doi.org/10.1016/j.jclepro.2013.06.038
a b s t r a c t
Organizations are faced with increasing pressure to engage in sustainable development and to integrateenvironmental and social dimensions into their traditional performance metrics. Prior research suggeststhat lean management and supply management are potentially important determinants of environ-mental performance and can be seen as capabilities that ease the adoption of environmental practices. Tohelp understand the roles of lean and supply management in regards to improving the firm’s environ-mental performance, a conceptual model proposes that the magnitude of environmental practices me-diates the relationship between lean and supply management with environmental performance. To testthe model, plant-level survey data from a sample of Canadian manufacturing plants is used. The resultsindicate that supply management and lean activities provide means by which resources are invested inenvironmental practices. The empirical analysis also confirms that the impact of lean management, andto a lesser extent supply management, on environmental performance is mediated by environmentalpractices.
� 2013 Elsevier Ltd. All rights reserved.
1. Introduction
As manufacturing corporations develop know-how and capa-bilities for cleaner production, research must continue in its questto better understand potential linkages between operations/supplychain systems and environmental performance. This paper aims toexamine how two of these systems, namely lean management andsupply management, impact environmental performance. Inparticular, a conceptual model is developed suggesting that leanmanagement and supply management can have an indirect effecton environmental performance by supporting the development ofenvironmental practices which in turn impact performance d that
.jclepro.2012.07.028.article. Due to an error, thisticle is reprinted here for thepecial issue. For citation pur-ajmohammad, S., et al., Leangreen practices and perfor-12e320.
is environmental practices mediate the impact of lean and supplymanagement on environmental performance.
Several studies fall under the label of “lean and green” (Florida,1996; King and Lenox, 2001) or “green supply chain” (Vachon andKlassen, 2006a; Vachon and Mao, 2008), but only a few haveanalyzed both issues simultaneously (Mollenkopf et al., 2010). Forinstance, some studies have looked at the synergy existing betweenlean management and environmental management practices(Florida,1996) while others concentratedmore on the link betweenlean management and environmental performance (King andLenox, 2001; Rothenberg et al., 2001).
Similarly, a segment of the literature has linked supply man-agement activities with environmental management (Bowen et al.,2001; Vachon, 2007) while another segment has focused on thelink between supply chain management and environmental per-formance (Rao, 2002; Vachon and Klassen, 2006b). For instance,Vachon and Klassen (2007) present empirical evidence indicatingthat buyeresupplier integration is related to the type of environ-mental investment made in the buyer’s plant. Building on evidencefrom case studies in the United Kingdom and Japan, Hall (2000)concludes that a buying organization’s understanding of its sup-pliers’ operations and capabilities is key in developing a greensupply chain and that such understanding can only be achieved by asound supply management.
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The literature appears to have parallel paths for the research thathave addressed the leanegreen and supplyegreen linkages: oneseries of studies focuseson thefit between lean/supplymanagementand environmental practices and another examines the link withenvironmental performance. Building on the fact that environ-mental practices aregenerally linked to environmental performance(Klassen and Whybark, 1999b; Melnyk et al., 2003), the questionbecomes, is the link between lean/supply management and envi-ronmental performance a direct relationship or is it a relationshipmediated by environmental practices. Despite a fair number ofstudies on these topics, very fewstudies (if any)have simultaneouslyaddressed environmental management practices, operation/supplychain systems, and environmental performance. Hence, this paper’smain objective is to empirically assess the effect of lean and supplymanagement on the extent of environmental practices and envi-ronmental performance in manufacturing organizations.
This paper contributes to the operations management literaturein three ways. First, a theoretical model is developed linking thefour constructs of interest for this study: lean management, supplymanagement, environmental practices, and environmental perfor-mance. Another contribution is to empirically assess the mediatingeffect of environmental practices on the relationship between leanmanagement, supply management and environmental perfor-mance. Such a mediating effect has not been assessed in the liter-ature and is important in clarifying the role of lean managementand supply management regarding environmental management orperformance: are lean management and supply managementdirectly linked to environmental performance? Finally, the paperhas a managerial contribution because its results can guide man-agers in setting a suitable operating context for adopting andimplementing environmental practices within their organization.
Therearefiveadditional sections to thispaper. First, the literaturestreams on lean management, supply management, and environ-mental management (practices and performance) are reviewedleading to the development of the conceptual model and hypothe-ses. Next, in Section 3, the survey methodology and constructmeasurement are detailed. The results are presented in Section 4. InSection 5, the results are contextualized and the research implica-tions are discussed. A synthesis of the paper including the limita-tions of the study makes up the concluding section.
2. Literature review and conceptual model
Drawing from lean management, supply management andenvironmental management literatures, the four constructs of in-terest as well as a series of hypotheses linking these constructs arepresented in this section. According to the research question andobjective of this paper, lean management as well as supply man-agement can lead to improved environmental performance, buttheir influence can be mediated by the level of a firm’s environ-mental practices.
2.1. Environmental practices and environmental performance
An overview of the different environmental technologiespotentially adopted by manufacturing organizations can help tobetter appreciate the notion of environmental practices. Environ-mental technologies, widely defined to include managerial tech-niques and procedures which control or eliminate the negativeimpacts of products or services on the natural environment(Shrivastava, 1995), have been classified in the literature into threemutually exclusive categories of pollution prevention, pollutioncontrol, and management systems (Klassen and Whybark, 1999a).The profile of environmental investments can take the form of anycombinations of these three technologies; it is important to note
that the total investment (the level of resources invested) is inde-pendent of its form (Klassen and Vachon, 2003; Klassen andWhybark, 1999b; Vachon and Klassen, 2007). While all three cat-egories aim at improving environmental performance, technologiesthat address pollution at the source are generally recognizedgenerating other benefits such as cost reduction and the develop-ment of valuable resources (Hart, 1995). This type of technology isof interest for this paper and would generally be associated withpollution prevention (structural investments to reduce pollution atthe source) andmanagement systems (infrastructural investments)(Klassen and Whybark, 1999a,b; Vachon and Klassen, 2007).Therefore, we define environmental practices as the level of re-sources invested in activities and know-how development that leadto pollution reduction at the source. It includes efforts to imple-ment environmental management systems (e.g., ISO 14001), reducewaste, or recycle materials.
Environmental practices and organizational performance(including environmental performance) have been theoreticallylinked through the natural resource-based view (NRBV) of the firm(Hart, 1995). The NRBV proposes that organizations, through properenvironmental management, can develop capabilities that are valu-able, rare and difficult to replicate by competitors (Russo and Fouts,1997). Therefore, according to the NRBV, a firm can gain competi-tive advantage by pursuing environmental strategies such as pollu-tion prevention or minimizing emissions, effluents and waste (Hart,1995; Russo and Fouts, 1997). Within the NRBV framework, severalstudies have provided empirical evidence to support the linkagebetween investment in and adoption of environmental practiceswithin a firm or across its supply chain and its environmental per-formance. For instance, manufacturing structural investments aim-ing to reduce pollution at the source (Klassen and Whybark, 1999b),facility-level resource conservation practices (Pullman et al., 2009)and environmental proactivity (Russo and Fouts, 1997) were allpositively linked to environmental performance.
H1: The extent of environmental practices is positively associatedwith environmental performance.
2.2. Lean management and the environment
The term leanproduction is associatedwith theToyotaProductionSystem where it is integrated with just-in-time tactics in order toimprovequality anddelivery time.Many researchers argue that leanmanagement encompasses a set of inter-related, complementaryand mutually reinforcing operating practicesd often referred to asbundles d that aim at reducing or eliminating non-value-addedactivities throughout a product’s entire value stream, within an or-ganization and along its supply chain network (Narasimhan et al.,2006; Shah and Ward, 2003, 2007; Vonderembse et al., 2006).They also suggest that the implementation of these practices isassociatedwithhigheroperational performance, such as a reductionin customer lead time, manufacturing cycle time or manufacturingcosts, and an improvement in labor productivity and quality (DeTreville and Antonakis, 2006; Hopp and Spearman, 2004; Sherrer-Rathje et al., 2009; White et al., 1999).
Given that manufacturing operations through product designand process technologies can critically influence environmentalperformance (Hart, 1995), the relentless pursuit of waste minimi-zation embedded in lean management practices (Womack andJones, 2003), opens doors for continued efforts in reducing the riskfor the environment (Florida, 1996). In fact, waste is the commondenominator for lean and green management (Porter and van derLinde, 1995). The continuous effort through lean management toreduce operational waste either from discarded materials,
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consumption of energy, or water usage translates into lower envi-ronmental harm, thus enhancing environmental performance (Kingand Lenox, 2001).
A recent review of just-in-time manufacturing studies indicatesa robust link (through meta-analysis) between set-up time reduc-tion and manufacturing performance (i.e., cost and quality)(Mackelprang and Nair, 2010): that is better use of resources perunit produced and fewer defects leading to a reduction of wastehence better environmental performance. King and Lenox (2001)found that lower level of inventory was positively linked withlower waste generation and lower emissions. Interestingly,empirical evidences in the automotive industry do not indicatesuch a correlation: Rothenberg et al. (2001) found that inventorylevels were not statistically linked to VOC emissions level. Theysuggest that in some instances environmental performance andlean management can be traded-off.
Despite these mixed results, the lean and green paradigm hasgrown both in organizations and academia (Chapman and Green,2010; Mollenkopf et al., 2010; Taubitz, 2010). Ultimately, somescholars argue that going lean leads inadvertently to environmentalefficiency due to its core principle of “zero waste” (Florida, 1996;Rothenberg et al., 2001).
H2a: The level of lean management activities is positively associ-ated with environmental performance.
The lean and green literature has also suggested that lean andgreen shared similar capabilities. In fact, lean management canreduce the marginal costs of a firm’s environmental practices, eitherby lowering their implementation costs or by providing new insightsinto their actual value, which will in turn result in improved envi-ronmental practices (King and Lenox, 2001; Simpson and Power,2005). Building on the above discussion, a context marked by anextensive application of lean management helps organizations todevelop capabilities in rethinking their processes with reduction oftransportation/movement, material used, and defects inmind. Thesecapabilities are transferable to environmental management. Forexample, these capabilities can ease process and product redesignwhich aims to reduce the likelihood of adverse environmental im-pacts by the production processes (Klassen, 2000). As such, the ca-pabilitiesdeveloped through leanmanagement canassist in initiatinggreen activities within the operations. In other words, lean manage-ment is contributing to the adoption of environmental practices.
H2b: The level of lean management activities is positively associ-ated with the extent of environmental practices.
Given hypotheses H2a and H2b, the question becomes to whatextent lean management contributes to environmental perfor-mance directly. In fact, the link between lean management andenvironmental performance can be the result of the increase inenvironmental practices that is sparked by lean management.
H2c: The impact of the level of lean management activities onenvironmental performance is mediated by the extent of environ-mental practices.
2.3. Supply management and the environment
Inter-organizational activities between a buying organizationand its supplier are generally termed supply management. In fact,from a tactical function in an organization, supply management hasattracted a lot of operationsmanagement researchers’ attention as ithas become more strategic over the last two decades (Krause et al.,
2007, 2009). The integration of environmental issues into supplymanagement has been the topic of numerous studies (Vachon andKlassen, 2006a; Zhu and Sarkis, 2004). For example, previousstudies have shown that development and deployment of supplymanagement capabilities d such as internal integration of themanufacturing firm’s functions, collaborative approach with sup-pliers, or detailed purchasing policies and procedures d facilitatethe implementation of green activities within the supply chain(Bowenet al., 2001). Also, Klassen andVachon (2003) found that twotypes of supply chain activities, namely collaboration and evalua-tion, are associatedwith the level and formof a plant’s investment inenvironmental technologies. The joint collaborative activities be-tween a plant and its suppliers drive great investment in environ-mental technologies through knowledge sharing and introducing agreater variety of options addressing particular environmentalchallenges (Bonifant et al., 1995; Purdy and Safayeni, 2000).
We define supply management here as a series of interactionswith suppliers that pertain to supplier development (Krause et al.,2000) and communication (Prahinski and Benton, 2004) such assupplier evaluation, supplier award and recognition. It is importantto note that these interactions are not necessarily directed toenvironmental issues. For instance, a certification process related toa quality specification would be considered as part of supplymanagement. Thus, supply management helps buying organiza-tions to achieve essentially two goals: (i) communicate their pri-orities to suppliers and (ii) gain a better understanding of thesuppliers’ operations and capabilities.
From an environmental perspective, one outcome from supplymanagement is the adoption of environmental practices and tech-nologies by the buying organizations. An organization can benefitfrom more intense interaction with suppliers by identifying andbringing in external know-how that is housed at the supplier plant(Vachon and Klassen, 2006b). For example, such external know-how can extend the capacity of a buying firm to effectively imple-ment radical innovation beneficial for the environment (Florida,1996; Geffen and Rothenberg, 2000). Also, an organization cangain a better understanding of their suppliers’ existing capabilitiesleading to potential avenues for synergydwithout the synergy, theenvironmental practices may have not been adopted.
The buying organization can also improve environmental per-formance from supply management. By guiding suppliers toimprove manufacturing capabilities (for greater efficiency or qual-ity), the buying organization reduces their own waste significantly.Walmart’s packaging scorecard is a supplier evaluation tool gaugingsuppliers’ efforts in reducing packaging. By reducing packaging, thesuppliers’ eco-efficiency increases and Walmart’s ecological foot-print is reduced (e.g., energyefficiency in transportation) (Plambeck,2007; Stundza, 2006). Similar to lean management, the linkage be-tween supply management and environmental performance can bepartially or fully mediated by environmental management e hencethe following hypotheses:
H3a: The level of supply management activities is positively asso-ciated with environmental performance.H3b: The level of supply management activities is positively asso-ciated with the extent of environmental practices.H3c: The impact of the level of supply management activities onenvironmental performance is mediated by the extent of environ-mental practices.
2.4. Lean and supply management
The conceptual model presented in Fig. 1, includes a link fromlean management to supply management. While issues of supplier
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development and feedback are usually incorporated in a largerview of lean management (Shah and Ward, 2007), it is generallyrecognized that a dichotomy exists between internal and externalpractices in manufacturing organizations (Bozarth et al., 2009;Schroeder et al., 2002; Shah and Ward, 2007). A model havinglean management (essentially an internal set of practices) andsupply management as separate constructs is theoretically(Simpson and Power, 2005) and empirically (Gavronski et al., 2012)supported in the literature.
A recent study suggests a link from JIT production to JIT pur-chasing (Inman et al., 2011). Also, boundary spanning activitiessuch as strategic supply management were found to be driven byinternal quality management implementation (Yeung, 2008).Therefore, evidence from the literature suggests a link from theinternal operating practices (e.g., lean management) towardexternal practices such as supply management.
H4: The level of lean management activities is positively associatedwith the level of supply management activities.
3. Methodology
3.1. Data collection
Data from a sample of Canadian manufacturing plants wascollected through amail survey conducted between September andDecember 2007, following a procedure inspired by Dillman (2000).The plant was chosen as the level analysis because it is generallywhere many environmental issues are evaluated and operationaldecisions are implemented. Using the National Pollutant ReleaseInventory (NPRI) and the Canadian Scott’s Directory, a sampleframe of 503 randomly selected plants with more than 100 em-ployees in the North American Industrial ClassificationSystems (NAICS) codes 332e335.1 A total of 94 usable responseswere collected from that effort, leading to a response rate of18.7%. Out of 94 plants, 22 have reported that they had morethan 250 employees. Unfortunately due to missing data in somequestionnaires, the sample was reduced to 85 for this study.
To minimize key-informant bias, each plant was contacted byphone prior to sending the survey in order to identify the individualmost knowledgeable about the production, environmental andsupply practices andperformance (Kumar et al.,1993). Furthermore,although responses from multiple informants may have beenpreferred, the informants chosen for this study were positioned tomake the assessment asked of them. In addition, the study wastested for common method bias, which could pose problems for
1 These four industries are fabricated metal products (NAICS 332), machinerymanufacturing (NAICS 333), electronics (NAICS 334), and electric appliances (NAICS335).
survey research that relies on self-reported data d especially if thesame person provides the data at the same time. One importantconcern in such cases is that common method bias may artificiallyinflate observed relationships between variables. To minimizecommon method variance, the dependent variables were placedafter the independent variables in the survey; which helps todiminish, if not avoid, the effects of consistency artifacts (Podsakoffet al., 2003). A Harman’s single factor test was also conducted(Harman,1967; Shah andWard, 2007). If commonmethod varianceexisted, a single factor would emerge from a factor analysis of allquestionnaire measurement items, or one general factor thataccounted for most of the variance would result. The exploratoryfactor analysis revealed four factors with eigenvalues greater than1.0 that accounted for 66.8% of the total variance. Thefirst factor onlyaccounted for 36.73% of the variance. These results suggested thatcommon method variance was not a serious problem in our study.
3.2. Survey questionnaire and measures
The survey instrument used for this research was part of theCanadian segment of the Global Manufacturing Research Group(international survey, fourth round). The survey included multiplescale items for each of the constructs. Appendix 1 provides therelevant survey questions for each construct of interest.
Lean management d as noted earlier, lean management com-prises a set of operating practices that aims at reducing non-value-added activities within the organization. Thus, our four-item scale measures the extent to which firms deploy resources(money, time and/or people) to (i) just-in-time manufacturing,(ii) lead time reduction, (iii) set-up time reduction, and (iv) totalquality management.Supply management d a five-item scale captures the degree ofactivities that aim to improve supplier performance and todevelop their capabilities, such as suppliers’ evaluation, certifi-cation, recognition and development programs as well asauditing of suppliers’ facilities.Environmental practices and performance d the extent of envi-ronmental practices is assessed by using a four-item, seven-point scale which captures the extent to which resources havebeen invested in four programs related to environmental man-agement over the previous 2 years: ISO 14001 certification,pollution prevention, recycling of materials and waste reduc-tion. Environmental performance is measured by a five-item,seven-point scale, in terms of improvements in the amount ofair emissions, waste water generation, solid waste disposal,consumption of hazardous/harmful/toxic materials, and energyconsumption.Control variables d to avoid any unjustifiable influence ofalternative factors, other than those included in our model, onthe plant’s environmental performance, two control variablesare included while analyzing the model. First, there is a controlfor plant size because the environmental performance gains orfailures observed may be explained by this factor, as opposed tothe mechanisms modeled. On one hand, larger firms may havegreater adverse environmental impacts and consequently beunder more external pressure to improve their environmentalperformance; on the other hand, theymight have larger resourcepools to invest in environmental technologies and consequentlyhigher levels of environmental improvement. In the study, plantsize is measured as the natural logarithm of the number ofemployees (Grant et al., 2002; Vachon and Klassen, 2006a).The second possible confounding effect relates to the impor-tance senior management places on the environmental issues.This top management importance conferred to environmental
Environmental performance .88 65.6Air emissions .832Waste water generation .840Solid wastes disposal .757Consumption of hazardous/harmful/toxic materials
.808
Energy consumption (dropped)
Table 2Correlations.
Mean SD SM LM EPr EPe PS
Supply management 3.34 1.35 e
Lean management 4.28 1.42 .31 e
Environmental practices 3.77 1.45 .42 .58 e
Env. Performance 4.77 .79 .30 .42 .49 e
Plant size 214 208 .07 .17 .24 .09 e
Imp. of Env. issues 13.6 9.5 .06 .11 .36 .23 .13
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issues is an indicator of the willingness of the organization toinvest in environmental management and improve its envi-ronmental performance (Klassen, 2001). Top managementimportance is measured as the relative importance of environ-mental performance against five other performance goals (i.e.,manufacturing cost, quality, delivery speed and timeliness,manufacturing flexibility, new product design/innovation).
4. Data analysis and results
The model examines whether the adoption of lean and supplymanagement practices within an organization directly improves itsenvironmental performance, or if the relationship is mediated bythe adoption of environmental practices. Because the sample size of85 does not allow using structural equation modeling based on thecovariance matrix, a path analysis using Partial Least Squares (PLS)and more specifically SmartPLS 2.0 (beta) (Ringle et al., 2005) wasadopted to test the hypothesized relationships between the con-structs. The general rule of thumb regarding an appropriate samplesize when using PLS is to multiply by ten the highest between (i)the greater number of formative indicators for a block (a constructin our model) and (ii) the greater number of paths leading to adependent variable (Braunscheidel and Suresh, 2009; Chin andNewsted, 1999). In this study, the highest number of paths lead-ing to a dependent variable is five (i.e., environmental perfor-mance) meaning that a minimum sample size of 50 cases would benecessary.
4.1. Assessment of construct measures
The PLS method tests the theoretical hypotheses and theproperties of the underlying measurement model at the same time.Before testing the different hypotheses from the model, anassessment of the constructs’ psychometric properties includingconvergent validity, discriminant validity, and reliability was per-formed. In the process, three items were dropped (one for leanmanagement, one for environmental practices, and one for envi-ronmental performance) because of cross or low loadings. Asshown in Table 1, the remaining items indicate adequate conver-gent validity as per their strong standardized loadings (individualitem reliabilities) which are all above .70 (Anderson and Gerbing,1988; Fornell and Larker, 1981; Johnston et al., 2004). Another in-dicator of convergent validity is that the average variance extracted(AVE) is above 50% for each of the constructs, indicating that theitems share at least half of their variance with the construct (onaverage).
Discriminant validity can be assessed by comparing the AVE ofeach construct and the shared variance between each pairs ofconstructs (Anderson and Gerbing, 1988; Morgan et al., 2007). InPLS, if the square root of the average variance extracted is greaterthan all of the inter-construct correlations, it is evidence of suffi-cient discriminant validity. Looking at Tables 1 and 2, we note thateach construct has an AVE that is superior to all of the inter-construct correlations.
In PLS, alternative ways of judging multiple-item consistencyother than the Cronbach’s alpha, are used. Composite reliability(comparable to Cronbach’s a) assesses the inter-item consistency,which should have a minimum value of .7. All of the scalesdemonstrate acceptable performance on this basis (see Table 1).
4.2. Estimation of the structural model
The PLS structural model was assessed by examining the pathcoefficients (similar to the standardized beta weights in regressionanalysis) and their statistical significance. Bootstrapping was used
to test their statistical significance. This procedure entails gener-ating 500 sub-samples of cases randomly selected, with replace-ment, from the original data. Path coefficients are then generatedfor each randomly selected subsample. T-statistics are calculatedfor all coefficients, based on their stability across the subsamples,indicating which links were statistically significant. Table 3 showsthe path coefficients and the explained construct variances. Thevariance explained for each of the endogenous variables isadequate with 28% for environmental performance and 50% for theenvironmental practices.
The results indicate a positive and significant path betweenenvironmental practices and environmental performance whichsupports H1 (b ¼ .292; p < .05). It is noteworthy that when esti-mating the model, the direct paths from lean management andsupply management to environmental performance were not sig-nificant, providing no evidence to support hypotheses H2a and H3aof a direct impact on environmental performance.
Lean management was significantly linked to environmentalpractices (b¼ .449; p< .01) providing support to hypothesis H2b. Inorder to test the possible mediating effect, in the study, the pro-cedure proposed by Baron and Kenny (1986) was adopted. First, anassessment of the path between lean management and the medi-ating variable (environmental practices) is needed: that path is
Variance explained in the endogenous variablesEnvironmental performance R2 ¼ .28Environmental practices R2 ¼ .50Supply management R2 ¼ .10
*p-value < .05; **p-value < .01.
S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e93 91
positive and significant (p < .01). The second step is to assess thedirect path from lean management to environmental performancewhen there is no path between lean management and environ-mental practices (the suspected mediator) in the model: the path isalso positive and significant (p< .01). The result in Table 3 indicatesthat the path between lean management and environmental per-formance in the full model (with all the paths) is not significant:when combined with the result of the first two steps, it can beconcluded that environmental practices are mediating the impactof lean management on environmental performance. A Sobel testwas conducted to confirm this mediating effect (Holcomb et al.,2009; Sobel, 1982). The Sobel test was significant (p < .05)corroborating the mediating effect and providing support for H2c.
A similar procedure was applied to supply management. Whenthe direct path between supply management and environmentalperformance was assessed without any path to environmentalpractices, it was positive but marginally significant (p < .10). Thefact that the direct path becomes non-significant with the intro-duction of environmental practices in the model indicates amediating effect. The Sobel test was marginally significant (p < .10)supporting the hypothesis H3c albeit in a weak way.
It is also noteworthy that hypothesis H4 is supported as thepath from lean management to supply management was positiveand significant. Hence, finding support for the idea that supplymanagement activities can be a part of lean systems (Shah andWard, 2007). The importance of environmental issues for topmanagement was significantly linked to environmental practicesbut not environmental performance. It suggests that the topmanagement support is associated with increased effort toimprove the environmental position of the plant but that suchsupport might not be effective as no direct impact on performanceis detected.
5. Discussion
Looking at the findings of this research, it becomes clear thatenvironmental practices are the main driver in reaching betterenvironmental performance as the direct links from lean manage-ment and supply management were found to be non-significant.Thus, consistent with the findings of Klassen and Whybark(1999a) and Pullman et al. (2009), it can be concluded that any in-vestment in environmental practices including management sys-tems (software or infrastructural elements) or pollution prevention(hardware or structural elements), is linked with the reduction inhazardous pollutants and energy consumption.
While empirical results in the literature either directly validatethe link between lean management and environmental perfor-mance or between lean management and environmental practices,an analysis comprising both linkages simultaneously allows a bet-ter delineation of the expression “lean and green”. The literature israther straightforward about the similarities between lean man-agement and environmental practices in terms of operational ca-pabilities (Rothenberg et al., 2001; Simpson and Power, 2005) andon the similarities in the performance outcome from both lean andenvironmental management (Florida, 1996; King and Lenox, 2001):however, no study, to our knowledge, has evaluated lean man-agement, environmental management, and environmental perfor-mance together.
The results indicate that the link between lean management, asit concentrates onminimizing or eliminating various kinds of wastewithin plants, and environmental performance is fully mediated byenvironmental practices (i.e., activities related to environmentalmanagement). Such a result suggests that the skills and know-howgained when applying lean management principles are conduciveto the adoption of environmental practices and make those prac-tices more effective as suggested by Simpson and Power (2005) andRothenberg et al. (2001). Such a result is important for interpretingthe true meaning of “lean and green”. For instance, the well-citedwork of King and Lenox (2001) has linked lower levels of in-ventory (an indicator of leanmanagement) to better environmentalperformance e the results of this study suggest a skipped link intheir conclusion. Skills and know-how developed and applied ininventory reduction had likely eased the adoption and imple-mentation of environmental initiatives that then improved theenvironmental performance.
Supply management, taking the form of control and monitoringactivities and formalization of the interactions with suppliers, waspositively linked to the extent of environmental practices. Thisresult is in contrast with other research in the literature wheresupply chain integration (Vachon and Klassen, 2007) and supplierevaluation (Klassen and Vachon, 2003) did not have an impact onthe extent of environmental investments. However, the link fromsupply management to environmental practices supports Hall’s(2000) claim that the starting point for environmental supplychain is information exchange with suppliers and a good under-standing of their operations. Therefore, one conclusion is thatsupply management can ease the adoption of green technologies orimplementation of new green procedures as supplier’s know-howbecomes accessible to the buying organization (Klassen andVachon, 2003).
Supply managementIn the last two years, to what extent has your plant invested resources (money,
time and/or people) in programs in the following areas? (1 ¼ not at all,7 ¼ great extent)
SM1 Supplier development programs
SM2 Suppliers evaluation
SM3 Suppliers’ facilities auditing activities
SM4 Suppliers recognition
SM5 Suppliers certification process
Lean managementIn the last two years, to what extent has your plant invested resources
(money, time and/or people) in programs in the following areas?(1 ¼ not at all, 7 ¼ great extent)
LM1 Just-In-Time (JIT)
LM2 Manufacturing throughput time reduction
LM3 Setup time reduction
LM4 Total Quality Management (TQM)
Environmental practicesIn the last two years, to what extent has your plant invested resources (money,
time and/or people) in programs in the following areas?(1 ¼ not at all, 7 ¼ great extent)
EI1 ISO 14001 certification
EI2 Pollution prevention
EI3 Recycling of materials
EI4 Waste reduction
Environmental performanceIn the last two years, to what extent has your plant’s environmental
performance changed in the following areas? (1 ¼ much worse,7 ¼ much better)
EP1 Air emissions
EP2 Waste water generation
EP3 Solid wastes disposal
EP4 Consumption of hazardous/harmful/toxic materials
EP5 Energy consumption
Plant sizeApproximately, how many employees (full-time equivalent) work for
the plant?
Relative importance of environmental issuesManufacturing plants have many different requirements placed on them.
For each of the following competitive goals, please indicate theimportance senior management places on each for your plant. Allocate100 points across the six performance goals below to indicate theirrelative importance.
(i) Manufacturing cost, (ii) quality, (iii) delivery speed and timeliness,(iv) manufacturing flexibility, (v) new product design/innovation,(vi) environment/safety.
S. Hajmohammad et al. / Journal of Cleaner Production 56 (2013) 86e9392
The relationship between the supplymanagement processes andenvironmental performance was weaker than unexpected, as onlymarginal significance was found. This result differs from the onefound for lean management which can be somewhat puzzling. Thefundamental distinctions between supplyand leanmanagement aretwofold and can explain the difference in the result. First, there is asharp contrast with know-how and capabilities emerging from leanmanagement d those capabilities are essentially internal to theplant. Second, the outcome from lean management is usually closeto the overall objective set by environmental management (e.g.,reduce waste) (Chapman and Green, 2010). In other words, supplymanagement processes are not as close to environmental goalsmaking it insufficient to substantially affect the green performance.
For managers, the implications of the results are important.Although environmental practices taking the form of manage-ment systems (ISO 14001), pollution prevention, and recycling ofmaterial were positively linked with both lean and supply activ-ities; the implementation of lean management and supply man-agement does not directly impact environmental performance.Improved environmental performance necessitates the allocationof resources (investments, operating expenses) directly intoenvironmental management which can be implemented moreeffectively with lean capabilities in place and interaction with thesuppliers.
6. Conclusions, limitations and future research
Research in three literature streams (i.e., lean management,supply management and environmental management) providedthe theoretical foundation for a model linking lean and supply ac-tivities to environmental performance. Earlier literature on envi-ronmental management within lean and supply chain contextsindicated that environmental investment plays an important role.However, no comprehensive model has integrally examined boththe antecedents and the outcomes of environmental practicessimultaneously. The hypothesized model suggests that supplymanagement as well as lean activities provide means by whichenvironmental actions can be encouraged leading then to improvedenvironmental performance. Thus, the primary focus was toexplore, first, the relationship between environmental perfor-mance and lean management, and, next, environmental perfor-mance and supply management. Furthermore, based on a sample ofCanadian manufacturing plants, this study provides the firstempirical evidence, to the authors’ knowledge, that the extent ofenvironmental practices mediates the relationship between leanmanagement and environmental performance.
On the practical level, the results indicate that a suitable route tofacilitate the implementation and adoption of environmentalpractices and to improve the plant’s environmental performance isby setting an adequate operating context based on lean and supplymanagement principles.
Nevertheless, several limitations of this study are important tonote. First, financial performance was not controlled for, whichmight influence the degree of organizational slack available forenvironmental investment (Klassen and Vachon, 2003). Second,while the sample size was reasonable compared to earlier researchin operations management (e.g. Klassen, 2001), the statistical po-wer for the hypotheses, which was not supported by the study’soutcomes, could have been increased by a larger sample. It is alsonoteworthy that most of the manufacturing organizations in thesamplewere of medium sizewhich can hamper the generalizabilityof the results. Third, the supply chain activities examined were onlywith suppliers, leaving an important set of supply chain actors e
the customers. Future study of these activities in both directions(upstream and downstream) and with both supply chain parties
(suppliers and customers) might offer new insights. Fourth, thestudy used a perceptual scale for environmental performancewhich should be validated by quantitative “hard” data like the in-formation found in the National Pollutant Release Inventory (NPRI).Finally, in this study there was a focus on the environmentaldimension of sustainability, whereas future studies could beextended to examine the effect of lean and supply managementactivities on the social performance of the firm and specifically ontheir safety performance.
Appendix 1
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