GREEN PURCHASING AND SUPPLY: A LITERATURE REVIEW AND FUTURE RESEARCH

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1 GREEN PURCHASING AND SUPPLY: A LITERATURE REVIEW AND FUTURE RESEARCH Mariana Nicolae, Management Science Department, Moore School of Business, University of South Carolina, 1705 College St., Columbia, SC 29208, (803) , mariana.nicolae@grad.moore.sc.edu Abstract: This is a conceptual paper that is intended to offer an integrated and fresh look into the area of green purchasing and supply as per the extant literature. Research proposals are then made based on the findings from the literature review. 1. Introduction Although firms experience increasing stakeholder pressure on their environmental performance, only few of them go beyond their regulatory requirements. Yet, the natural environment should be a solid justification for going beyond the usual ways of doing things. In this sense, the purchasing role could be significant. Its evolution from a tactical orientation to a more strategic, integrative one has been widely recognized (Carter and Narasimhan, 1996; Carr and Pearson, 2002). Purchasing professionals are no longer confined to paperwork processing and nonvalue-adding activities (Monczka et al., 2004). The purchasing function is today an important contributor to strategic success, helping firms meet the challenges of an increasingly competitive and dynamic environment. Suppliers not only are instrumental in the value creation of the firm, they also significantly influence its environmental impact (Paulraj, 2011). Because purchasing is at the beginning of a green supply chain, a firm s environmental efforts cannot be successful without integrating environmental goals into purchasing activities. Given its gate-keeper role, purchasing could foster green product or process innovation among supply chain members (New et al., 2000). 1

2 A green multiplier effect of purchasing and supply management has been suggested, given the potential links between supply chain members and customer (Preuss, 2007). Recognizing the growing need for integrating environmentally sound choices into supply chain management research, Srivastava (2007) offered a review of Green Supply Chain Management (GrSCM) literature. However, his review did not focus on the literature on green purchasing. Consequently, an integrated and fresh look into the area of green purchasing and supply is warranted, as we are not aware of a similar work. Table 1 represents a succinct classification of the extant research. Our literature review revealed that terms such as green purchasing, green procurement, green supply, environmental purchasing, environmental procurement and environmental supply are used to characterize environmental aspects of upstream supply chain. For instance, environmental purchasing can be defined as purchasing s involvement in supply chain management activities in order to facilitate recycling, reuse, and resource reduction (Carter and Carter, 1998). Bowen et al. (2001b, p. 42) expanded on this definition and defined green supply as supply management activities that are attempts to improve the environmental performance of purchased inputs, or of the suppliers that provide them. They might include activities such as co-operative recycling and packaging waste reduction initiatives, environmental data gathering about products, processes or vendors, and joint development of new environmental products or processes. In this paper we use green purchasing and supply terminology. Thus, in the next sections we review the three streams of green purchasing and supply research, i.e. (1) green purchasing and supply practices; (2) implications of green purchasing and supply; and (3) influencing factors of green purchasing and supply. Based on the review of extant research, we then elaborate our research proposal. [Insert Table 1 about here] 2

3 2. Literature review 2.1. Green purchasing and supply practices Early on researchers looked for potential areas that would increase the impact of supply on environmental results. Based on case studies of five firms in the furniture industry, Walton and Handfield (1998) identified five such areas, as follows: materials used in product design for the environment; product design processes; supplier process improvement; supplier evaluation; and inbound logistics processes. Among these, the most prevalent green supply practices were productbased initiatives such as waste reduction at the customer-supplier interface, and the least prevalent were advanced green supply initiatives such as building environmental criteria into risk-sharing and reward-sharing agreements, as reported by Bowen et al. (2001b) based on a sample of UK business units. However, interviews conducted by Preuss (2001) with purchasing managers of Scottish manufacturing firms revealed that, in terms of environmental protection initiatives, the purchasing function in manufacturing firms was far from being employed to full capability. Given the mismatch between the increasing importance of purchasing in financial terms and a rather low involvement in environmental initiatives, it was encouraging to find that purchasing managers did want more involvement in environmental issues pertaining to hazardous materials, investment recovery, product design, and supply chain relationships (Zsidisin and Hendrick, 1998). Yet, perhaps owing to differences in government legislation, Zsidisin and Hendrick (1998) found differences between levels of involvement of purchasing managers in Germany, UK, and US. The Chinese state-owned enterprises (SOEs) also provided their own perspective. Given that GrSCM was a new concept in China, Zhu and Geng (2001) found that the understanding of green purchasing was high among senior managers in large and medium SOEs (LMSOEs), but they were lacking ways of integrating it into green supply chains. On the other hand, mid-level managers and employees were found as having poor understanding of green 3

4 purchasing. In addition, it was reported that most LMSOEs cared little about some aspects of green purchasing such as evaluation of second-tier suppliers and product packaging. That was because green purchasing practices of Chinese firms were still in the early stages, lagging behind practices in developed countries, as Zhu and Sarkis (2006) noted. As green purchasing is somewhat a new concept, purchasing managers might face some challenges if no appropriate support from the firm s specific departments exists to bridge the gap between environmental considerations and cost-down strategies. Chen (2005) proposed some guidelines and principles for green purchasing practices and procedures. Similarly, Handfield et al. (2002) noticed the gap in the assessment of suppliers as to their environmentally responsible processes and products, and thus proposed an Analytical Hierarchy Process (AHP) system to help integrating environmental criteria in the sourcing decision process. Given the difficulty of making a decision for different suppliers when considering all the environmental criteria, Lu et al. (2007) presented an AHP method with simple and efficient procedures, to measure a multi-objective project. Also, Kannan et al. (2008) analyzed the interaction of criteria used to select the green suppliers which addressed environmental performance using AHP and Interpretative Structural Modeling. They found that quality and flexibility had very low dependence and high driving power, whereas cost and service had high dependence and low driving power. Cousins et al. (2004) noted that firms perceptions of environmental threats and opportunities combined with the strategic level of the purchasing function to predict the extent to which environment-related supplier initiatives were undertaken. Hence, they proposed four generic categories of environment-related supplier initiatives, based on the perceived losses and available resources, as follows: why bother, no choice, go first, and enthusiasts. However, further investigation is required to determine the effects of environment-related supplier initiatives over time, which will affect the exposures faced, the losses perceived by managers, and the strategic 4

5 level of the purchasing function. Bowen et al. (2001b) had also proposed four archetypal patterns of green supply practices and shown how each approach was a rational response to a variety of corporate environmental and purchasing and supply contexts. They had found evidence suggesting that a proactive green supply approach could prepare firms for superior longer-term performance through improved management of environmental risks and the development of capabilities for continuous environmental improvement. For instance, more extensive logistical and technological integration with suppliers, and a smaller, more focused supply base was found by Vachon and Klassen (2006b) as favoring greater collaborative environmental practices. Their sample of US and Canadian plants in the package printing industry revealed a weak positive relationship between both logistical and technological integration, and environmental monitoring of suppliers. Further, Vachon (2007) reported that, as environmental collaboration with suppliers increases, a greater proportion of environmental investment is made toward pollution prevention. On the other hand, no positive relationship was found between increased environmental monitoring of suppliers and environmental investment for management systems (away from pollution prevention). In the Australian automotive industry, Simpson et al. (2007) did not find that the supplier s level of environmental commitment was related to the environmental performance requirements of its major customer. They did find that supplier s environmental performance is influenced by its customer s environmental performance requirements when relationship-specific investments are present. Using a public university (The Universitat Autonoma de Barcelona) as case study, Bala et al. (2008) analyzed the effectiveness of introducing green initiatives to suppliers of goods and services such as office materials, recycled toner cartridges, fair trade coffee, reusable glass bottles and catering services. The existence of a regular pattern for predicting success when implementing a suppliers greening program in public universities was not found. However, contract 5

6 specifications, process implementation, market characteristics, supply chain profiles, and supplier characteristics were identified as factors to be considered. Finally, given the prevalence of survey-based research in green purchasing and supply, Zhu et al. (2008b) investigated the GrSCM practices construct and its defining measurement items. GrSCM practices considered were internal environmental management, green purchasing, cooperation with customers including environmental requirements, eco design, and investment recovery. As the scales were developed using survey data provided by Chinese manufacturers (mainly in the automobile, power generating, chemical/petroleum, and electrical and electronic industries), researchers should be cautious when applying them in other countries settings Implications of green purchasing and supply Anecdotal evidence suggests that green purchasing and supply, by reducing disposal and liability costs, conserving resources, and improving public image, improves a firm s economic position. Carter et al. (2000) provided the first empirical examination of the relationship between environmental purchasing and firm performance. Using questionnaires from original equipment consumer products manufacturers and Compustat-reported financial data, they found that environmentally friendly purchasing policies led to increased firm performance as measured by net income. This contradicted Min and Galle s (1997) previous findings according to which the two most highly rated obstacles to effective green purchasing were purchasing managers' perceptions that environmental programs were costly and that recycling was uneconomical. Given that globalization has resulted in both pressures and drivers for supplier firms in emerging countries to meet both quality and environmental requirements of their customer firms in developed countries, researchers investigated the above relationship in the Chinese context. As such, Zhu and Sarkis (2004) considered both green purchasing and cooperation with customers 6

7 regarding environmental requirements as external GrSCM, and investigated them along with other practices, i.e. internal environmental management, investment recovery, and eco design. Using a sample of manufacturing firms in various industries in China, these researchers reported positive relationships of external GrSCM with environmental performance, positive economic performance, and negative economic performance. However, these findings did not hold true when green purchasing was considered an individual GrSCM practice. Based on surveys in the Chinese automotive industry, Zhu et al. (2007) found that green purchasing had a negative influence on environmental performance, whereas no significant impact was detected on other performance aspects, i.e. positive economic, negative economic, and operational performance. A more detailed discussion on these works is provided in Section 3. Besides the direct relationship between the adoption of green purchasing and performance, some researchers examined whether other organizational practices serve as moderators of the relationship. The reduction of environmental impact by means of pollution prevention is nevertheless linked to the operational activities of the firm (Hart, 1995). Thus, the use of operations management techniques might play a role in moderating the relationship between green purchasing and performance. Given that Quality Management (QM) practices serve as the foundation for environmental programs, Zhu and Sarkis (2004) did find that QM practices are a positive moderating factor for the relationship between external GrSCM (i.e. green purchasing and cooperation with customers regarding environmental requirements) and environmental performance, respectively economic performance. Unlike QM practices, it has been argued in the literature that Just-In-Time (JIT) practices are a double-edged sword with respect to their influence on environmental and economic performance. In their study, Zhu and Sarkis (2004) found JIT practices as positively moderating the relationship between external GrSCM and economic performance, but negatively moderating the relationship with environmental performance. 7

8 Building on the positive relationship between green purchasing and environmental performance, respectively economic performance, Zhu and Sarkis (2007) questioned whether various institutional pressures (i.e. market, regulatory, and competitive pressures) act as moderators. Survey data provided by Chinese manufacturers in various industries indicated that both environmental pressure from customers and environmental regulation pressure weakly affected the positive relationship between green purchasing and environmental performance. However, environmental competitive pressure was found as a strong moderator of the positive relationship between green purchasing and positive economic performance. That is, with low trade barriers and increasing foreign competition, Chinese manufacturers in the automotive industry are more compelled to improve their environmental practices and environmental performance. In addition to the relationship between purchasing function and performance, Rao and Holt (2005) investigated the links between greening certain functions within the organizations, i.e. inbound, production, and outbound. As a major portion of the world s manufacturing takes place in Southeast Asia and, thus, GrSCM practices are increasingly important; these researchers conducted a multi-country study on ISO certified firms in Philippines, Indonesia, Malaysia, Thailand, and Singapore. No evidence was found to argue that the greening of the inbound function leads to green production, perhaps due to the small sample size (52 firms). However, Rao and Holt (2005) found that greening the inbound function led to economic performance (new market opportunities, product price increase, profit margin, sales, market share) both directly and indirectly (i.e. greening inbound led to greening outbound, which led to competitiveness, which in turn led to economic performance). Researchers focused on other GrSCM practices as well. For instance, Vachon and Klassen (2006a) assessed the impact of environment-related or green project partnerships, i.e. the extent of interaction between a plant and its primary suppliers and major customers in developing and 8

9 implementing pollution prevention technologies, at the plant level. Using US and Canadian plants in package printing industry, they reported that, as the extent of green project partnership with primary suppliers increased, delivery performance and environmental performance improved. However, no significant relationship was found regarding other dimensions of manufacturing performance, such as cost, quality, and flexibility. Using case studies of seven Small- and Medium-Sized (SME) suppliers in Korean automobile industry, Lee and Klassen (2008) examined how the GrSCM strategy of a large buying firm influences the development and deployment of suppliers environmental capabilities. These researchers conjectured that buyers monitoring-based GrSCM positively influenced the initial development of suppliers internal environmental management capabilities (EMCs), and that buyers support-based GrSCM was positively related to improvement of suppliers internal EMCs. Further, Lee and Klassen (2008) proposed that buyers monitoring-based GrSCM combined with external resources positively influenced the development of external EMCs for SME suppliers. Anecdotal evidence has suggested that firms that encourage their suppliers to adopt environmental measures are able to improve their environmental performance. Recently, Testa and Iraldo (2010) surveyed facility managers from all manufacturing sectors in seven countries (Canada, France, Germany, Hungary, Japan, Norway, and US), and found that making specific requests to suppliers to assure a certain performance level, and involving them in GrSCM practices could enable a firm to better manage its own environmental performance. Also, Lee (2008), using a sample of SME suppliers in Korea, found that buyer GrSCM practices had a positive influence on the willingness of SME suppliers to participate in GrSCM initiatives. Bai and Sarkis (2010) introduced a formal model using rough set theory for evaluating the results of green supplier development programs relationship to environmental or economic performance in an organization. 9

10 2.3. Influencing factors in green purchasing and supply Almost two decades ago, a survey addressed to National Association of Purchasing Management (NAPM) members in various industries identified the high cost of environmental programs, uneconomical recycling and uneconomical reuse as the three most important barriers to green purchasing (Min and Galle, 1997). Green purchasing professionals appeared as not fully recognizing the potential economic benefits of green purchasing. However, the finding was contradicted by Carter et al. s (1998) study on the role of purchasing in environmental endeavors at the organization level in the US and Germany. Their study revealed that environmental purchasing was positively influenced by the level of training that personnel received in buying environmentally friendly inputs and the setting of clear goals for environmental purchasing. On the other hand, the extent to which purchasing managers were evaluated on environmental purchasing was found as negatively related to environmental purchasing. A similar result was reported with regards to the inclusion of environmental factors in a firm's mission statement. Although support from top and middle management was expected to have a positive influence on environmental purchasing, Carter et al. (1998) did not find evidence in that sense. However, a decade later and in a different context, Zhu et al. (2008a) found that management support and organizational learning levels were positively related to the extent of green purchasing engaged in by Chinese manufacturing firms. More recently, Bjorklund (2011) found that environmental awareness and priorities among the top/middle management as well as the character of the environmental management are important drivers in the environmental purchase of transportation services. However, one cannot argue the same about the importance of knowledge and priorities of employees. The characteristics of the product expressed in terms of financial value, and the characteristics and availability of substitutes represent a low focus as well, according to Bjorklund s (2011) study. It appeared that 10

11 firm resources, with the exception of the financial resources, have little or no influence on the environmental purchasing of transportation services in Swedish firms in food and forestry sectors. According to Bjorklund (2011), the findings were supported by the difference between environmental purchasing and other forms of purchasing, i.e. the greater emphasis on the reputation and image of the firm and its products. Investigating green purchasing practices of US firms in various industries, Min and Galle (2001) found that the firm size measured as the number of employees positively influenced the decision to adopt a green purchasing strategy. However, the finding did not hold true when the number of purchasing employees or annual purchasing volume defined the firm size. Further, Min and Galle (2001) reported that the buying firm s waste separation activities positively affected its frequency of usage of recycling and reusing as a source reduction strategy. As expected, the concern over perceived high environmental costs limited the buying firm s degree of involvement in green purchasing. Bowen et al. (2001a) provided a first analysis of the role of supply management capabilities in green supply. Thus, they found that the extent to which the firm possessed appropriate supply management capabilities was positively related to the implementation of product-based green supply, but not of process-based green supply. In addition, a positive relationship was identified between the proactivity of the firm s environmental approach and the likelihood of implementing green supply (both product- and process-based). However, the same green supply implementation did not appear as being influenced by the strategic level of purchasing and supply activity in the firm. As regards the external factors that may positively or negatively influence environmental purchasing, Carter and Carter (1998) provided an early study in this sense. Based on a sample of original equipment consumer products manufacturers, their study did not indicate that the 11

12 perceived influence of the regulatory sector on environmental purchasing activities was significantly greater than the output, input, and competitive sectors. Similarly, the quality of environmentally friendly inputs was not found as positively associated with the level of environmental purchasing. However, Carter and Carter (1998) found that the output sector (i.e. buyers) impacts the level of environmental purchasing activities to a significantly greater degree than do the input (i.e. suppliers) and competitive (i.e. competitors) sectors. Also, the vertical coordination between suppliers and buyers was found as positively influencing the level of environmental purchasing activities. One difference between environmental purchasing and other forms of purchasing is the influence of government and authorities (Bjorklund, 2011). Indeed, buying firm s perceived importance of state and federal environmental regulatory compliance was found by Min and Galle (2001) as significantly influencing its green purchasing efforts. Bjorklund (2011) also reported that environmental purchasing of transportation services is greatly influenced by external factors such as the means of control applied by government and other authorities, in addition to customers and carriers. In addition, customers environmental and non-environmental demands are important. In the Chinese context of automobile, thermal power generating and electronic industries, Zhu and Sarkis (2006) found that environmental performance of suppliers was considered a less important driver for GrSCM practices when compared to the regulations, marketing, and internal drivers. Further, drivers and pressures from suppliers were generally perceived as different amongst the three industries. However, it was not clear from this study which pressures were truly tied to which practices, and thus the drivers/pressures of green purchasing (one of the GrSCM practices examined) remained unidentified. On the other hand, Zhu et al. (2007) found that GrSCM pressures/drivers (i.e. regulative, market, suppliers, internal) had no significant impact on the green purchasing in the Chinese automotive industry. They explained their finding by the fact that 12

13 Chinese firms may face similar and very early pressures/drivers, but react at a different pace when adopting GrSCM practices (green purchasing being one of them). Since most of these firms were at early adoption stages in implementing GrSCM practices, the impact of pressures/drivers on the extent of implementation may become more obvious as the pressures become more prevalent and adoptions mature. 3. Research proposals Among the literature on green purchasing and supply reviewed in the above sections, two papers have drawn our attention. First, Zhu and Sarkis (2004) investigated whether GrSCM practices are worth the effort made by early adopting firms in Chinese manufacturing industries in terms of performance. More specifically, these researchers examined four integrative GrSCM practices, as follows: internal environmental management, external GrSCM, investment recovery, and eco-design (or design for environment). External GrSCM encompassed both suppliers and customers. Thus, green purchasing practices such as providing design specifications to suppliers that include environmental requirements for purchased items, cooperation with suppliers for environmental objectives, environmental audit for supplier internal management, suppliers ISO certification, and second-tier supplier environmentally friendly practice evaluation, were considered. Cooperation practices with customers for eco-design, cleaner production, and green packaging were considered as well. Regarding performance, three types were examined, i.e. environmental performance, positive economic performance, and negative economic performance. The environmental performance was assessed by the reductions of air emissions, waste water, and solid wastes, decreases of consumption for hazardous/ harmful/ toxic materials and of frequency for environmental accidents, and the improvement of the firm s environmental situation. The positive economic performance was measured by the decrease of costs for materials purchasing 13

14 and for energy consumption, of fees for waste treatment and waste discharge, and of fines for environmental accidents. The negative economic performance was measured by the increase of investments, operational costs, training costs, and cost of purchasing environmentally friendly materials. Zhu and Sarkis (2004) reported that the extent of adopting each GrSCM practice was positively associated with all three types of performance. However, these researchers failed to explain the positive relationship with both economic performances. On the contrary, Zhu and Sarkis (2004, p. 282) state: The economic performance is a plus and the strong relationship exists between GrSCM practice and positive economic performance, but the lack of a significant relationship with negative economic outcomes evidences this positive relationship between GrSCM and economic performance even further. Second, using firms operating in the Chinese automotive industry, Zhu et al. (2007) explored the relationships between GrSCM practices such as internal environmental management, green purchasing, customer cooperation regarding environmental issues, investment recovery, and eco-design, and performance. In comparison with Zhu and Sarkis (2004) work, this paper decomposed the external GrSCM construct to perceive green purchasing and customer cooperation regarding environmental issues as individual practices. Also, in addition to Zhu and Sarkis (2004), operational performance, as measured by the increase of amount of goods delivered on time, scrap rate, product line, decrease of inventory levels, improvement of capacity utilization and products quality, was examined. Thus, Zhu et al. (2007) found that green purchasing was negatively associated with environmental performance, whereas customer cooperation had a marginally significant (p<0.10) positive impact on environmental performance. In addition, neither green purchasing nor customer cooperation was found associated with positive economic performance, negative economic performance, or operational performance. 14

15 Given that the above studies reported positive, non-significant or even negative associations of green purchasing adoption to performance, it seems that the relationship between green purchasing and supply, and performance warrants further investigation. For instance, in order to justify the positive impact of external GrSCM on both types of economic performance reported by Zhu and Sarkis (2004), the relationship with positive economic performance has to be stronger than the relationship with negative economic performance. How firms manage to implement green purchasing and supply so that to obtain a net economic benefit is an interesting question. Building on the opposite results reported by Zhu and Sarkis (2004) and Zhu et al. (2007) regarding green purchasing, we posit that customer cooperation focused on environmental issues is an important complement to the green purchasing and supply practice. That is, customer cooperation can be viewed as a complementary asset to green purchasing and supply adoption. According to Teece (1986), a complementary asset is a resource or capability that allows firms to capture the profits associated with a strategy, technology, or innovation. The role of complementary assets has been previously studied in the operations management literature, e.g. Swink and Nair (2007) examined the role of design-manufacturing integration as complementary asset in explaining how AMT adoption contributes to manufacturing performance. By viewing green purchasing and supply as a sourcing innovation, we posit that cooperation with customers regarding environmental requirements serves to strengthen the advantages that derive from green purchasing and supply capabilities. Anecdotal evidence has suggested that although customers make environmental requests to their suppliers, they may fail to integrate these expectations into their purchasing decisions (Business for Social Responsibility, 2001). Although customers can pressure their suppliers with environmental requests, more collaborative processes for addressing environmental issues can lead to better policies which may yield greater environmental and financial benefits. For instance, suppliers can work with their customers to change product 15

16 specifications that ruled out prevention activities they wanted to engage in. We thus suggest the following hypotheses, as per Figure 1: H1a: Green purchasing and supply is positively associated with environmental performance. H1b: Green purchasing and supply is positively associated with financial performance. H2a: Customer cooperation regarding environmental requirements positively moderates the relationship between green purchasing and supply, and environmental performance. H2b: Customer cooperation regarding environmental requirements positively moderates the relationship between green purchasing and supply, and financial performance. H3: Environmental performance is positively associated with financial performance. [Insert Figure 1 about here] In order to test the aforementioned hypotheses, a cross-sectional study could be conducted based on data collected from US manufacturing firms via an Internet-based survey. Thus, the scales developed by Zhu et al. (2008b) could be tested in an US context. In addition, we posit that initially, the adoption of green purchasing and supply is negatively associated with financial performance, due to higher training costs, greater transaction costs regarding environmentally friendly materials, increased operational costs, and higher investments. However, we expect that these effects eventually translate into high financial performance. Thus, a longitudinal study could be conducted to test the following hypothesis, as per Figure 2: H4: In the long run, there is a U-shaped relationship between green purchasing and supply, and financial performance. [Insert Figure 2 about here] 16

17 References: Bai, C., & Sarkis, J. (2010). Green supplier development: analytical evaluation using rough set theory. Journal of Cleaner Production, 18(12), Bala, A., Muñoz, P., Rieradevall, J., & Ysern, P. (2008). Experiences with greening suppliers. The Universitat Autònoma de Barcelona. Journal of Cleaner Production, 16(15), Bjorklund, M. (2011). Influence from the business environment on environmental purchasing Drivers and hinders of purchasing green transportation services. Journal of Purchasing & Supply Management, 17, Bowen, F.A., Cousins, P.D., Lamming, R.C., & Faruk, A.C. (2001a). The role of supply management capabilities in green supply. Production and Operations Management, 10(2), Bowen, F. E., Cousins, P. D., Lamming, R. C., & Faruk, A. C. (2001b). Horses for Courses. Greener Management International, (35), 41. Business for Social Responsibility (2001). Supplier s perspectives on greening the supply chain - A report on suppliers views on effective supply chain environmental management strategies. Prepared by Business for Social Responsibility Education Fund, San Francisco, CA. Carr, A.S. and Pearson, J.N., (1999). Strategically managed buyer supplier relationships and performance outcomes. Journal of Operations Management, 17 (5), Carter, C. R., & Carter, J. R. (1998). Interorganizational Determinants of Environmental Purchasing: Initial Evidence from the Consumer Products Industries. Decision Sciences, 29(3), Carter, C. R., Ellram, L. M., & Ready, K. J. (1998). Environmental Purchasing: Benchmarking Our German Counterparts. International Journal of Purchasing & Materials Management, 34(4), Carter, C. R., Kale, R., & Grimm, C. M. (2000). Environmental purchasing and firm performance: an empirical investigation. Transportation Research: Part E, 36(3), 219. Carter, J.R. and Narasimhan, R., (1996). Is purchasing really strategic? International Journal of Purchasing and Materials Management, 32 (1), Chen, C. (2005). Incorporating green purchasing into the frame of ISO Journal of Cleaner Production, 13(9), Cousins, P. D., Lamming, R. C., & Bowen, F. (2004). The role of risk in environment-related supplier initiatives. International Journal of Operations & Production Management, 24(6), Handfield, R., Walton, S. V., Sroufe, R., & Melnyk, S. A. (2002). Applying environmental criteria to supplier assessment: A study in the application of the Analytical Hierarchy Process. European Journal of Operational Research, 141(1),

18 Hart, S.L., (1995). A natural-resource-based view of the firm. Academy of Management Review 20 (4), Kannan, G. G., Noorul Haq, A. A., Sasikumar, P. P., & Arunachalam, S. (2008). Analysis and selection of green suppliers using interpretative structural modelling and analytic hierarchy process. International Journal of Management & Decision Making, 9(2), 1. Lee, S.-Y. (2008). Drivers for the participation of small and medium-sized suppliers in green supply chain initiatives. (2008). Supply Chain Management, 13(3), Lee, S.-Y., & Klassen, R. D. (2008). Drivers and Enablers That Foster Environmental Management Capabilities in Small- and Medium-Sized Suppliers in Supply Chains. Production & Operations Management, 17(6), Lu, L. Y., Wu, C. H., & Kuo, T. C. (2007). Environmental principles applicable to green supplier evaluation by using multi-objective decision analysis. International Journal of Production Research, 45(18/19), Min, H., & Galle, W. P. (1997). Green Purchasing Strategies: Trends and Implications. International Journal of Purchasing & Materials Management, 33(3), Min, H., M., & Galle, W. P. (2001). Green purchasing practices of US firms. International Journal of Operations & Production Management, 21(9/10), 1222 Monczka, R., Trent, R., & Handfield, R. (2004), Purchasing and Supply Chain Management, 3rd ed., Southwestern College Publishing, Cincinnati, OH. New, S, K Green and B Morton (2000). Buying the environment: The multiple meanings of green supply. In The Business of Greening, S Fineman (ed.). London: Routledge. Paulraj, A. (2011). Understanding the relationships between internal resources and capabilities, sustainable supply management and organizational sustainability. Journal of Supply Chain Management, 47(1), Preuss, L. (2001). In Dirty Chains? Purchasing and Greener Manufacturing. Journal of Business Ethics, 34(3/4), Rao, P., & Holt, D. (2005). Do green supply chains lead to competitiveness and economic performance?. International Journal of Operations & Production Management, 25(9), Simpson, D., Power, D., & Samson, D. (2007). Greening the automotive supply chain: a relationship perspective. International Journal of Operations & Production Management, 27(1), Srivastava, S. K. (2007). Green supply-chain management: A state-of-the-art literature review. International Journal of Management Reviews, 9(1), Swink, M., & Nair, A. (2007). Capturing the competitive advantages of AMT: Design-manufacturing integration as a complementary asset. Journal of Operations Management, 25(3),

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20 Table 1. Green purchasing and supply - Literature review Study Methodology Context/Industry Country Practices Walton and Handfield (1998) case studies (five firms) furniture US Zsidisin and Hendrick (1998) survey (200 responses) US, UK, Germany Bowen et al. (2001b) survey (70 responses); interviews operating units of public limited companies UK Preuss (2001) interviews (30 firms) industries: electronics, mechanical engineering, hydraulic equipment and electronic motors, cables and antennae, plastics, paper labels, textiles, tyres, chemicals, quality paper, ships for nonmilitary use UK Zhu and Geng (2001) survey (302 interviews), interviews manufacturing and processing enterprises China Handfield et al. (2002) Delphi study; Analytical Hierarchy Process; three case studies Cousins et al. (2004) conceptual Chen (2005) conceptual Zhu and Sarkis (2006) survey (118 responses) automobile, power generating, electronic/electrical China Vachon and Klassen (2006b) survey (56, respectively 28 responses) package printing US, Canada Lu et al. (2007) Analytical Hierarchy Process; fuzzy logic process Vachon (2007) survey (56, respectively 28 responses) package printing US, Canada Simpson et al. (2007) survey (56 responses) automotive Australia Kannan et al. (2008) Interpretative Structural Modeling; Analytic automotive India Hierarchy Process; case study (one firm) Bala et al. (2008) case studies (five suppliers) suppliers of office material, recycled toner cartridges, fair trade coffee, reusable glass bottles and catering services to The Universitat Autònoma de Barcelona Spain Zhu et al. (2008b) survey (341 responses) automobile, power generating, chemical/petroleum, electrical and electronic China 20

21 Table 1 (continued). Green purchasing and supply - Literature review Study Methodology Context/Industry Country Implications Min and Galle (1997) survey (527 responses) chemical, food, printing, paper, oil/gas extraction, textiles, furniture, petroleum refineries, lumber, and apparel US Carter et al. (2000) survey (437 responses) original equipment consumer products manufacturers US Zhu and Sarkis (2004) survey (186 responses) manufacturing and processing China Rao and Holt (2005) survey (52 responses) ISO certified organizations Philippines, Indonesia, Malaysia, Thailand, Singapore Vachon and Klassen (2006a) survey (56, respectively 28 responses) package printing US, Canada Zhu et al. (2007) survey (89 responses); case study (one plant) automotive supply chain enterprises China Zhu and Sarkis (2007) survey (341 responses) (mainly) automobile, power generating, chemical/petroleum, electrical and electronic China Lee and Klassen (2008) case studies (seven suppliers) automotive Korea Lee (2008) survey (142 suppliers) automotive Korea Testa and Iraldo (2010) survey (4188 facility managers with varying response rates) Canada, France, Germany, Hungary, Japan, Norway, US Bai and Sarkis (2010) multistage rough set theory Influencing factors Min and Galle (1997) survey (527 responses) chemical, food, printing, paper, oil/gas extraction, textiles, furniture, petroleum refineries, lumber, and apparel US Carter et al. (1998) survey (437, respectively 125 responses) original equipment consumer products manufacturers US, Germany Carter and Carter (1998) survey (437 responses) original equipment consumer products manufacturers US Min and Galle (2001) survey (527 responses) chemical, food, printing, paper, oil/gas extraction, textiles, furniture, petroleum refineries, lumber, and apparel US Bowen et al (2001a) surveys (70 responses), interviews operating units of public limited companies UK Zhu and Sarkis (2006) survey (118 responses) (mainly) automobile, power generating, and electronic/electrical China Zhu et al. (2007) survey (89 responses); case study (one plant) automotive supply chain enterprises China Zhu et al. (2008a) survey (314 responses) manufacturing China Bjorklund (2011) survey (50 responses) food and forestry sectors Sweden 21

22 Figure 1. Proposed research model (1) Customer Cooperation regarding Environmental Requirements H2a (+) H2b (+) H1a (+) Environmental Performance Green Purchasing and Supply H3 (+) H1b (+) Financial Performance 22

23 Figure 2. Proposed research model (2) Financial Performance H4 Green Purchasing and Supply 23