1. Introduction
The attainment of environmental sustainability is relevant to the coordination and collaboration between partners of the entire supply chain [
1]. Supply chain activities such as design, purchasing, production, transportation, and packaging are all related to sustainability. Green supply chain management (GSCM) has accordingly gained increasing popularity recent years as it aims to integrate environmental sustainability into the management of the supply chain, including the internal issues within a company and external relationships across partners [
2]. To this end, deep and close partnerships between supply chain stakeholders are essential [
3,
4]. Managing environmental sustainability beyond corporate boundaries and integration with different stakeholders, such as suppliers and customers, are the core concepts of green supply chain research.
The core concept of GSCM raises the importance of supply chain integration (SCI) in achieving environmental sustainability. At the core of the SCI concept is the strategic coordination and collaboration of a company with its suppliers and customers to streamline core business process to fulfill customers’ and other stakeholders’ needs [
5]. Over the previous two decades, SCI has been a hot subject of research in operations and supply chain fields [
6,
7] and has been proven to have positive and significant impacts on business performance [
8,
9]. SCI is also gaining growing significance in the fields of sustainable/green supply chains to coordinate and aid in the collaboration of suppliers and customers in achieving environmental sustainability. Recently coined terms such as green supply chain integration [
10] and sustainable supply chain management integration [
11] explicitly demonstrate the growing awareness of the significance of integration along the supply chain to achieve environmental sustainability.
However, little effort has been made in empirically testing the influence of SCI on the adoption of GSCM practices or its potential impact on business performance. SCI and GSCM are both multidimensional constructs [
12]. SCI typically involves upstream integration with suppliers and downstream integration with customers [
13], and GSCM involves external green supply chain management practices with suppliers and internal green supply chain management practices within the boundary of a focal company [
14]. Multidimensionality may cause relationship complexity [
15]. Each dimension has its distinctive role due to the involvement of different functions and stakeholders, or the requirement of investment in various resources and capabilities. For example, Zhu et al. (2012) [
16] examined the sequential relationship between internal GSCM and external GSCM and found that internal GSCM mediated the impacts of external GSCM on performance in most occasions. Flynn et al., (2010) [
17] found that different dimensions of SCI have different effects on firm performance as they involve different supply chain partners. Golicic and Smith (2013) [
18] found that working closely with the supplier on environmental sustainability would have a more significant impact on firm performance than working with the customer. Therefore, the manner by which different dimensions of SCI affect those of internal and external GSCM is an important question for scrutiny. These relationships may differ depending on the specifics of both SCI and GSCM. Exploring such nuanced relationships can bring sophisticated insights into the management of supply chain activities.
Besides this, the specific economic consequence of GSCM remains ambiguous, although many pieces of evidence support a positive contribution [
19,
20,
21]. Implementing initiatives of GSCM may incur economic costs, resulting in a negative effect on business performance. However, a green supply chain is only sustainable when it is economically viable and financially justified. There has been a misgiving about the potentially negative relationship between sustainability and business performance [
11]. As internal and external GSCM practices involve different functions and partners, they may have a specific impact on business performance. The consideration of the multidimensionality of GSCM thus offers a more nuanced investigation into how different dimensions of GSCM relate to business performance and hence provides a novel way to explore the contribution of GSCM to business performance.
The above issues are particularly pressing for Chinese manufacturing firms. The rapid economic growth in China over the past 40 years has caused serious sustainability challenges for the country [
22]. Government agencies are enforcing rigorous regulations in an attempt to mitigate the undesirable effects of industrial activities on the natural environment [
23]. Community and market stakeholders are putting increasing pressure on companies to implement environmental initiatives [
24,
25]. This trend forces companies to find ways to balance economic benefits with environmental performance [
22,
26]. There are important issues which are still to be addressed by Chinese manufacturing firms regarding how they can be more proactively involved in sustainability development; i.e., whether costly sustainability activities are only carried out to meet regulatory requirements but at the expense of business performance, and how businesses can collaborate with different stakeholders to achieve their green objectives. Chinese manufacturing firms are ideal subjects to examine these urgent questions.
This study focuses on the impact of different dimensions of SCI on the adoption of GSCM practices and the impact of different dimensions of GSCM on business performance. The aims are (1) to explore the effect of both supplier integration and customer integration on external GSCM beyond a company and internal GSCM within a company, and (2) to examine the impact of GSCM on business performance. We attempt to determine how companies might use supply chain integration to achieve environmental sustainability along the supply chain and eventually improve their business performance. Considering the multidimensionality of both SCI and GSCM constructs and the still mixed relationship between GSCM and business performance, this study offers a nuanced insight of the effects of different dimensions to uncover the role of different partners (i.e., supplier and customer) and different relationships (i.e., internal and external) in achieving a green supply chain. These are the contributions of this study.
The paper is structured as follows: After the introduction, a brief review of SCI and GSCM literature presents the nature of multidimensionality and its effect on construct relationships. Hypotheses are then proposed to elaborate on the relationships between SCI, GSCM, and business performance. Survey data from Chinese manufacturing companies are analyzed using partial least square structural equation modeling, and
Section 4 presents the results. Theoretical and practical implications are then discussed. The paper ends with a discussion about limitations and suggestions for future research.
6. Discussions and Implications
This paper empirically tests the impact of supply chain integration on internal and external GSCM practices and business performance in Chinese manufacturing companies. The results show that integration with suppliers only supports external GSCM, while integration with the customer supports both internal and external GSCM. It is also found that external GSCM has no direct relationship with business performance, but it supports internal GSCM, which positively influences a company’s business performance. This study pays a great deal of attention to the multidimensionality of both SCI and GSCM and explores the distinctive role of each dimension, which may be a new contribution to the GSCM field with further implications and trigger new future research.
6.1. The Impact of SCI on GSCM
The results show that integration with upstream and downstream partners would have different roles in applying GSCM. Supplier integration positively affects the implementation of external GSCM practices between a company and its suppliers, while customer integration positively affects both internal GSCM practices within the boundary of the focal company and external GSCM practices across the interface of the focal company and its supplier.
This result shows that customer integration is essential and has a distinctive role in GSCM practices. Although the initiation of environmental sustainability commonly starts with governmental regulations on environment protection, environmental issues are ultimately evaluated by customers who use the products. Government regulations usually address only pollution issues, whereas customers are concerned with safety, cost, and reputation from an environmental perspective. The customer is therefore essential in improving levels of sustainability and in upholding environmental sustainability standards. Through intensive customer integration, manufacturing companies gain more awareness of the environmental issues of their customers and will consequently implement environmental programs in internal operations processes to meet customers’ requirements, such as product or process stewardship. Besides this, as the value to the customer is supplied via a supply chain, the requirement from customers will then transfer upstream to its suppliers to implement collaborative green practices [
74]. Therefore, as our results showed, customer integration has positive effects on both internal and external GSCM. Customers may therefore be the critical force steering manufacturing companies toward environmental sustainability. Previous studies of GSCM have focused primarily on the role of the upstream supplier [
75,
76]. The impact of downstream customer engagement on sustainability initiatives is a potential area for further investigation.
The result also implies that integration with suppliers leads to collaborative green practices between a focal company and its upstream partners. However, supplier integration does not affect the practices of internal GSCM. This means that suppliers may not be involved when a focal company starts to implement internal GSCM. This result is consistent with previous conclusions that internal GSCM starts as an internal strategic imperative and top-management commitment [
77]. Internal GSCM is then extended to the interface with suppliers. Then, integration with a supplier is essential to implement external GSCM.
Comparing the different effect of supplier and customer integration, we find that the multidimensionality of SCI matters in affecting the adoption of GSCM. The customer is the driving force in adopting GSCM, as some authors argue that customer pressure is the primary driver to stimulate firms to engage in sustainability [
78]. This driving force can also translate into external practices with suppliers. Integration with customers therefore facilitates information sharing and trust-building that stimulates the focal company to implement internally oriented green practices. Supplier integration, however, is important when adopting external GSCM.
6.2. The Impact of GSCM on Business Performance
The relationship between GSCM and business performance has been tested empirically, and internal GSCM has a positive and significant impact on business performance. This gives hints to the manufacturing companies that environmental sustainability should not only be implemented for environmental protection but also helps companies to improve their business performance, such as their market share and return on sales. Hence, the business performance and competitiveness of manufacturing companies could be enhanced. This supports the argument that “greener is cheaper”.
Sustainable initiatives are often seen as social responsibility initiatives that do not necessarily lead to financial rewards [
1], and thus the evidence that “greener is cheaper” may provide managers with a clear framework to incorporate business performance into sustainable management. At the core of sustainability is the intersection of environmental, economic, and social performance [
79], which explicitly illustrates that engagement in GSCM need not be simply a reactive action designed to meet regulations, but should be proactively planned as a strategic action to gain sustainable competitive advantages.
External GSCM does not directly contribute to business performance but enhances internal GSCM. Its effect on business performance is fully mediated by internal GSCM. Therefore, working with suppliers to achieve firm-level sustainability is necessary but not sufficient in improving business performance. Supply-side sustainability should be absorbed by internal operations and contribute to demand-side value creation. The mediating effect of internal GSCM on the external supplier relationship is an often-mentioned and explored topic [
16]. Nevertheless, the direct impact of supply-side sustainability on business performance is assumed by neglecting the mediating effect [
2,
6]. Our findings supplement previous wisdom, offering a more profound understanding of the role of supply-side activities. More research is therefore needed to more rigorously explore the relationship between supply-side sustainability, internal operations and business performance.
6.3. Managerial Implications
The results also present several useful management suggestions for firms and managers in advancing towards a green supply chain. First, the results suggest managers should build a substantial relationship with customers in green advancement. Firms are usually reactive to customer’s green requirements; however, as the role of the customer is recognized by this study and others (e.g., [
74]), an active or even proactive strategy to integrate customers will help firms in their green journey. The integration with customers can start with information sharing with respect to products, production, and logistics. Firms should then collaborate with customers in product and process design to incorporate green objectives into supply chain management. Second, our results remind managers to pay a good deal of attention to the distinctive role of different partners in achieving a green supply chain. The supplier can offer supply-side advantages, while a customer’s influence can move upstream to contribute to the whole supply chain. Therefore, managers should be aware of the different improvement opportunities provided by different partners and tactically manage these relationships for effective performance improvement. Third, firms should invest first in internal operations to achieve green objectives. Internal GSCM provides the basis of the green supply chain in that firms will have the capability to absorb upstream green outcomes from suppliers. Without a substantial internal capability, firms will find it difficult to transfer benefits from external collaboration to contribute to the green supply chain. Fourth and finally, we suggest a proactive strategy in the green supply chain since the contribution of the GSCM to business performance is supported by the results. A proactive strategy means rethinking the product and process compared with the requirements of sustainable development and redesigning the product and process (or even business model) strategically to capitalize on green-related opportunities.
7. Limitations and Future Research
Our paper also has some limitations which may offer new opportunities for future research. First, the conceptualizations of sustainability cover three dimensions: Economic, social and environmental. Like most existing GSCM studies, this paper focuses only on the environmental dimension. Future research can be extended to the other two dimensions or all three dimensions.
Second, the previous results were controversial regarding the impact of GSCM on business performance. This paper reveals that internal GSCM has a positive relationship with business performance while external GSCM has no direct effect on business performance. There is literature reporting a nonlinear and/or conditional relationship or a bi-directional relationship between environmental sustainability and business performance (e.g., [
80]). Therefore, the relationship between GSCM and business performance might be complex and based on contingent factors. This should be investigated further with more advanced methods such as non-linear correlation.
Third, in the past ten years, supply chain management has been studied from several perspectives, such as the manufacturing process, new product development, quality management, and technology transfer. Environmental sustainability will be a new trend in supply chain management research and will be enhanced in the future. The external GSCM may even be separated from supplier and customer perspectives and may provide insight into upstream and downstream environmental issues. Multidimensionality in supply chain management and specifically GSCM should be further explored. Recently, some authors have started to examine the role of customers [
74,
78,
81]. More studies are needed to explore the different roles of suppliers and customers in GSCM.
Finally, this paper is based on data from Chinese manufacturing companies, and the results may not be able to be extended to other countries. For example, it is found that supplier integration only influences the external GSCM but has no direct impact on internal GSCM; is this because Chinese companies do not involve suppliers in internal environmental issues yet, or is it a generic pattern for all companies? Considering that Chinese companies are only beginning to implement GSCM [
82], this result may only apply to the start-up stage when companies start their internal commitment to green practices. A comparison between developed and developing countries or emerging economies may provide more nuanced insights, especially for joint ventures and global companies which produce in one country, purchase raw materials in another and sell products in others.