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ISSN : 1598-7248 (Print)
ISSN : 2234-6473 (Online)
Industrial Engineering & Management Systems Vol.18 No.1 pp.116-131
DOI : https://doi.org/10.7232/iems.2019.18.1.116

Green Supply Chain Management Practices in SME Manufacturers: Key Drivers and Organizational Performance

Pittawat Ueasangkomsate*, Pongsa Pornchaiwiseskul
Department of Management, Kasetsart Business School, Kasetsart University, Bangkok, Thailand
Faculty of Economics, Chulalongkorn University, Bangkok, Thailand
Corresponding Author, E-mail: pittawat.u@ku.th
April 10, 2018 August 12, 2018 November 12, 2018

ABSTRACT


This research is aimed at investigating the drivers influencing the adoption of green supply chain management practices (GSCM practices), whilst also exploring the linkage between the GSCM practice and organizational performance of SME manufacturers in the food industry. For the study, qualitative research was conducted by first reviewing the academic literature and then, obtaining comments from experts in the field, with the purpose of developing of a survey instrument. The questionnaires were sent to entrepreneurs or representatives of Thai SMEs applying GSCM practices in the food industry, with 148 valid responses being returned. PLS-SEM was applied to assess the measurement model, which indicated that the reliability and validity were acceptable. To test the relationship among the drivers, GSCM practices and organizational performance were evaluated based on the structural model. The findings reveal that regulations, customer pressure, socio-cultural responsibility as well as competitive pressure have a positive significant effect on the implementation of GSCM practices for Thai SME food manufacturers. It is concluded that, Thai SMEs in food manufacturing could gain significantly higher organizational performance from GSCM practices in four different dimensions including environmental, economics, intangible, and operational performance.



초록


    1. INTRODUCTION

    In last two decades, many organizations have increasingly come to realize the important role of environmental management and sustainability, thereby applying this approach as one of business strategies for their organizations (Luzzini et al., 2015). Environmental issues include CO2 emissions from business operations, leading to global warming and natural disasters. In this regard, there is much evidence that the problem is getting worse, such as increasing average temperatures, uncertainty regarding the quantity of rain, and decreasing air quality (Ministry of Resource and Environment 2014). Emerging industrial nations, like Thailand face the environmental pressures (Xu et al., 2013). National Statistical Office in Thailand has reported that 70.4% of people in 2010 faced environmental problems in their communities, including drought, flood, air pollution, deforestation and loss of soil (National Statistical Office Thailand, 2010). Stakeholders including consumers, stockholders, the government and NGOs recognize the importance of environmental impact caused by the production and services of the business sector. Hence, they have shown their concern and have put pressure on business organizations to take charge of environmental management (Hsu et al., 2013). With this perspective, the integration of the environmental issue and supply chain management has been applied by organizations (Sarkis, 2012), leading to green supply chains in terms of product design, supplier sourcing material selection, product, packaging, distribution, and disposal management (Sundarakani et al., 2010).

    GSCM practices have received increasing attention in emerging economic countries applying this concept in organizations with ISO certification, such as in Malaysia, Thailand and China (Green et al., 2012;Laosirihongthong et al., 2013;Zhu et al., 2005). However, environmental management and sustainability are mainly being pursued by larger enterprises, rather than small and medium enterprise (SMEs) (Williamson and Lynch-Wood, 2001;European Commission, 2012;Madsen and Ulhøi, 2016). That is, the corporate sector is becoming aware of sustainability and environmental aspects, whereas SMEs are lagging behind (Jansson et al., 2017). Taylor et al. (2003) highlighted how SMEs have poor knowledge of the natural environment and lack expertise in regards to its management. Moreover, many SME owner-managers consider their firms as having no impact on the environment (Lewis et al., 2015). It has also been claimed that the overall environmental impact from SMEs is higher than for large enterprise (Hillary, 2000).

    In this research, the focus is on manufacturing in the Thai food industry since this contributes the most to GDP (17.2% of the total manufacturing sector in 2015) by SMEs, standing at around 66.78% (Office of SMEs Promotion, 2016). However, approximately 30-50% food produced is waste in processing and this accounts for 25% of water consumption worldwide (Baldwin, 2009;Boye and Arcand, 2012). Food processing requires high levels of energy consumption for key activities including food preservation, sanitation, and storage (Lee and Okos, 2011). Moreover, the food industry system producing customized products generates waste and emissions that can harm the environment (Kroyer, 1995). Hence, food processing firms need to be more concerned about being secure, environmentally sustainable, and delivering healthy supplies of food as well as being competitive (Murphy et al., 2014).

    Previous studies have indicated a relationship among drivers, GSCM practices and organizational performance. Nevertheless, there has not been much research in relation to SMEs in emerging markets, especially regarding food manufacturing (Rao, 2007;Lee and Klassen, 2008;Lee, 2008;Lee et al., 2012). Furthermore, there have been few studies involving in the area of GSCM practices in Thailand (Salam, 2008;Ninlawan et al., 2010;Thongplew et al., 2014). Hence, this research is aimed at investigating SME Thai food manufacturers currently implementing GSCM practices to provide more understanding about the key drivers behind these practices and their relationship with organizational performance based on institutional theory. As abovementioned, this paper also serves to shed light on how GSCM practices are being pursued in the emerging country context. It is organized as follows: A literature review is provided in Section 2, whilst the research hypotheses and methodologies are explained in Section 3. Next, the results are presented in Section 4. Section 5 contains the conclusion, including discussion, managerial implications, respectively. Finally, the limitations and future research are explained in Section 6.

    2. LITERATURE REVIEW

    2.1 Institutional Theory

    Institutional theory provides a theoretical lens for explaining how external pressure influences promote the survival and legitimacy of organizational practices (Hirsch, 1975;Glover et al., 2014;Varsei et al., 2014). It focuses on the pursuit of legitimacy referred to as the adoption of sustainable practices seen by societal stakeholders (Zsidisin et al., 2005;Glover et al., 2014). As introduced by DiMaggio and Powell (1983) and explained above, under institutional theory three external drivers, namely, coercive, normative, and mimetic pressure are exerted, which leads to isomorphism, whereby organizations move towards adopting similar strategies, structures and processes (Zsidisin et al., 2005).

    Coercive isomorphism occurs from pressures exerted by those with powerful constituency (e.g. regulators) that can influence organizational practices (Sarkis et al., 2011;Varsei et al., 2014). Coercive pressure is a crucial factor driving environmental management practices and sustainability (Zhu et al., 2013;Glover et al., 2014). Developing countries, such as China have legislated rigorous environmental regulations forcing manufacturers to implement GSCM practices (Sarkis et al., 2011;Zhu et al., 2013). Accordingly, regulations in this study are defined as the coercive isomorphism driving the implementation of GSCM practices. Mimetic isomorphism results due to uncertainty of the business environment that encourages organizations to imitate the pattern exhibited by other successful competitors in the industry (Zsidisin et al., 2005;Hsu et al., 2013). That is, competitive pressures motivate firms to replicate the path of a competitor’s success (Sarkis et al., 2011), for example, dedicated sustainable milk supply for supermarkets has led to producers adopting practices in line with these dominant players (Glover et al., 2014) or joint ventures in a developing country may lead a domestic firm to implement GSCM practices by imitating their parent corporations and then, circulate their knowledge and skill to other organizations (Sarkis et al., 2011). Competitive pressure is considered as a driver towards mimetic isomorphism to foster GSCM practices in this study. Normative isomorphism is associated with professionalism and organizational shared norms driving organizations to conform to social legitimacy concerns (Zhu et al., 2013;Varsei et al., 2014). Normative pressure entails expectations in a certain organizational environment (e.g. those of customers, social groups) about what constitutes appropriate and legitimate practices (Hsu et al., 2013). A study by Ball and Craig (2010) revealed that normative pressure forces organizations to be more environmentally aware and to have more social obligations. For example, some Chinese manufacturers have been implementing GSCM practices to respond to their customer and market’s expectation (Zhu et al., 2013). Moreover, socio-cultural responsibility exerted through normative pressure has a significant influence on GSCM practices (Hsu et al., 2013). Regarding which, a review by Hsu et al. (2013) explained how many firms in emerging countries, such as Malaysia, have socio-cultural responsibility steering them towards implementing GSCM practices. For example, key stakeholders in developed countries, such as the USA, have been forcing General Mills in Malaysia that uses palm oil as key ingredient for manufacturing processes to seek more sustainable sources so as to prevent deforestation. Hence, normative isomorphism involving customer and socio-cultural responsibility puts pressure on firms to ensure the implementation of GSCM practices.

    2.2 GSCM Practices

    The growing of GSCM practices has been recognized as necessary increasingly due to higher pressure of environmental concern. GSCM practices involve the way of supply chain management and industrial purchase, considering in the context of the environment (Green et al., 1996). GSCM practices were initially studied by Zhu and Sarkis (2004) for general manufacturing in China. For dimensions of GSCM practices in electronic manufacturing in South Korea, the researchers used them based on Zhu et al. (2008) (Lee et al., 2012). Whilst when studying the GSCM practices of various manufacturing industries in the USA, Green et al. (2012) considered the measurement based on Zhu et al. (2008), Green and Inman (2005), and Esty and Winston (2006) work. Perotti et al. (2012) explored the GSCM practices of third-party logistics in Italy. In addition, Laosirihongthong et al. (2013) and Hsu et al. (2013) investigated the GSCM practices of manufacturing certified by ISO14001 in Thailand and Malaysia. Whereas, Mitra and Datta (2014) surveyed the GSCM practices of ISO9000 certified manufacturing firms from many sectors in India. Choi and Hwang (2015) investigated the GSCM practices of manufacturing with ISO14001, ISO9001 or ROHS certification in South Korea. Kirchoff et al. (2016) determined that the GSCM practices of large manufacturing firms in the USA. In sum, previous studies on the GSCM practices of manufacturing for both developed and developing countries, then they have been summarized in terms of dimension as shown in Table 1. However, the constructs of GSCM practices proposed for this research include the following seven dimensions: 1) internal environmental management; 2) green purchasing; 3) customer cooperation; 4) eco-design; 5) investment recovery; 6) reverse logistics; and 7) transportation/ distribution.

    2.3 Organizational Performance

    Organizational performance can be measured in various dimensions, including environmental operation, finance, economics, marketing and competitiveness aspects (Mitra and Dalta, 2014). Environment, operation, and economic performance of manufacturing in China were evaluated in the context of GSCM practices by Zhu and Sarkis (2004), Zhu et al. (2005), Zhu and Sarkis (2007), Zhu et al. (2007) and Zhu et al. (2013). Rao and Holt (2005) evaluated the economic performance of firms certified by ISO14001 in ASEAN. Green et al. (2012) studied the performance of manufacturing in USA, covering the environment, economic, operation and organization aspects. Perotti et al. (2012) measured performance in terms of environment, economic, and operation of third-party logistics in Italy. While Laosirihongthong et al. (2013) evaluated the performance of ISO14001 manufacturing in Thailand in relation to environmental, economic, and intangible factors. Mitra and Datta (2014) investigated the performance of manufacturing in India consisting of economic dimension and competitiveness, whereas Choi and Hwang (2015) measured the performance in relation to the environment and finance after the implementation of GSCM practices in Korean manufacturing. Finally, Kirchoff et al. (2016) investigated the organizational performance, in terms of cost, customer and environment dimensions. Drawing on previous studies, organizational performance in this research proposed to be measured along four dimensions, including: the environment, economics, intangibility and competitiveness.

    3. RESEARCH HYPOTHESES AND METHODOLOGIES

    3.1 Drivers Fostering GSCM Practices

    Institutional pressures are forcing firms to pursue GSCM practices (Zhu et al., 2013). A study by Laosirihongthong et al. (2013) found strong evidence that firms were influenced by external drivers. Zhu et al. (2005) have argued that customers in developed markets needed enterprises to satisfy their environmental requirements. Zhu and Sarkis (2007) revealed how institutional pressures influenced Chinese manufacturing to adopt GSCM practices. Moreover, Zhu et al. (2007) have contended that relevant environmental laws and regulations forced the implementation of GSCM practices in Chinese enterprises. Lee (2008) showed that purchasers’ requirements and support in for the environment led to their suppliers adopting green supply chain initiatives. In addition, governments can motivate suppliers to become involved in GSCM initiatives. Lee and Klassen (2008) pointed out how customer pressure via buyer mechanisms in South Korea led to GSCM initiatives being set up. Walker et al. (2008) studied drivers of GSCM in the UK including showing that external drivers had more influenced on environmental supply chain management practices. Holt and Ghobadian (2009) examined the driver influencing GSCM practices in the UK manufacturing, revealing that legislative drivers exerted the most perceived pressure on manufacturing. Hu and Hsu (2010) explored the critical factors for implementing GSCM practices in the Taiwanese electrical and electronics industries that were required to follow European Union directives. Zhu et al. (2010) reporting that all institutional pressures, according to the research by DiMaggio and Powell (1983), had an influence on organizations adopting GSCM practices. Diabat and Govindan (2011) provided a model of the drivers affecting the implementation of GSCM in southern India. Many companies in emerging markets are involved in green supply chain management in response to social and environmental outcomes throughout their global supply chains (Parmigiani et al., 2011). Sarkis et al. (2011) reported that laws/regulations drive environmental management practices. Industries in developed country have been forcing suppliers in developing markets to follow new regulatory standards, while consumer demand for green products is also increasingly putting pressure on manufacturers to improve their performance by developing green supply chains (Hitchcock, 2012).

    Drivers of sustainable SCM practices, in Chinese manufacturing were studied. The results revealed that customers and competitors have a positive impact on sustainable SCM practices (Zhu and Geng, 2013). Lee et al. (2013) explained that GSCM practices are affected by various pressures. Hsu et al. (2013) revealed drivers positively affected the GSCM practices of ISO14001 certified firms from Malaysia. Zhu et al. (2013) explored the relationship between institutional drivers and GSCM practices for Chinese manufacturers, finding that drivers had positively affected eco-design and internal environmental management. Mathiyazhagan et al. (2014) showed that government policies and regulations, global competitiveness, and customers were the most important pressures for the adoption of GSCM practices in Indian industries. Dubey et al. (2015) investigated the institutional pressures, which were found to drive GSCM adoption of rubber goods manufacturing in India. Tachizawa et al. (2015) explored the environmental drivers associated with GSCM practices of firms in Spain, discovering that the key drivers, based on institutional theory, had a significant impact on GSCM practices.

    Institutional theory can be utilized to provide an explanation as to how external drivers promote GSCM practices (Sarkis et al., 2011). These drivers, according prior research, include regulations, customer pressure, sociocultural responsibility, and competitive pressure. Moreover, when firms are steered by these drivers towards adopting GSCM practices, they take the form of the seven dimensions set out in the previous paragraph. Accordingly, the hypotheses for this study are constructed as:

    • H1a1-7. Regulations foster GSCM practices according to seven dimensions by SME manufacturers;

    • H1b1-7. Customer pressure fosters GSCM practices according to seven dimensions by SME manufacturers;

    • H1c1-7. Socio-cultural responsibility fosters GSCM practices according to seven dimensions by SME manufacturers;

    • H1d1-7. Competitive pressure fosters GSCM practices according to seven dimensions by SME manufacturers.

    3.2 The Linkage between GSCM Practices and Organizational Performance

    The relationship between GSCM practices and organizational performance has been investigated in several studies. Zhu and Sarkis (2004) found that GSCM practices led to improved environmental performance of Chinese manufacturing. Zhu et al. (2005) also indicated that Chinese manufacturing was under pressure from stakeholders to implement GSCM practices, thereby enhancing their environmental and operational performance. Also, firms implementing GSCM practices have realized their benefits in the form of lower costs and waste as well as higher productivity (Rao and Holt, 2005). Manufacturing employing GSCM practices had better economic, environmental, and operational performance for Chinese firms (Zhu and Sarkis, 2007;Zhu et al., 2007). Adoption of GSCM practices by suppliers in developed countries reduced the environmental impact as well as improving intangible performance of organizations, according to a study by the Organization for Economic Cooperation and Development in seven countries (Testa and Iraldo, 2010). Green et al. (2012) revealed that the GSCM practices of manufacturing in the USA positively influence environmental and economic performance. Perotti et al. (2012) argued that higher GSCM practices lead to higher environmental and economic performance of third party logistics in Italy. Laosirihongthong et al. (2013) showed that the GSCM practices of Thai ISO14001 certified organizations are positively associated with organizational performance in terms of the economic, intangible, and environment dimensions. Collaboration with customers and internal environmental management were found to enhance environmental and operation performance of Chinese manufacturing (Zhu et al., 2013). From a survey of GSCM practices in India, it was discovered that collaboration with suppliers and eco-design lead to better economic performance (Mitra and Datta, 2014). Choi and Hwang (2015) studied the GSCM practices of Korean manufacturing and found that eco-design and investment recovery positively affect environmental and economic performance. Kirchoff et al. (2016) revealed that focusing on GSCM practices leads to higher efficiency in terms of cost, environmental performance and customer satisfaction. Hence, this discussion leads to the following hypotheses:

    • H2a1-7. GSCM practices comprising seven dimensions have an influence on the environmental performance of SME manufacturers;

    • H2b1-7. GSCM practices comprising seven dimensions have an influence on the economic performance of SME manufacturers;

    • H2c1-7. GSCM practices comprising seven dimensions have an influence on the intangible performance of SME manufacturers;

    • H2d1-7. GSCM practices comprising seven dimensions have an influence on the operational performance of SME manufacturers.

    In accordance with the hypothesis development above, the structural model of this research is proposed as shown in Figure 1.

    3.3 Development of the Survey Instrument

    This study is focused on sampling the drivers of GSCM implementation, GSCM practices and organizational performance of SME manufacturers in the Thai food industry. Regarding the development of the survey instrument, which involved semi-structure interviews being carried out with fifteen experts, being enough for qualitative study (Guest et al., 2006), from the government sector (6), universities (3) and food manufacturing (6) to obtain their opinions in relation to the indicators of GSCM practices based on a literature review (Zhu and Sarkis, 2004;Zhu et al., 2005;Zhu and Sarkis, 2007;Zhu et al., 2008;Green et al., 2012;Perotti et al., 2012;Laosirihongthong et al., 2013;Hsu et al., 2013;Mitra and Datta, 2014). For our proposed structural model in Figure 1, 32 indicators of GSCM practices were identified and used for questionnaire development in this model. Regarding the drivers of GSCM implementation, 35 indicators from Walker et al. (2008) and Hsu et al. (2013) were adopted, which covered four dimensions: 1) regulations; 2) customer pressure; 3) socio-cultural responsibility; and 4) competitive pressure. Whilst 21 indicators of organization performance, encompassing environment, economic, intangibles, and operational performance, based on Zhu and Sarkis (2004), Rao and Holt (2005), Zhu et al. (2005), Zhu and Sarkis (2007), Zhu et al. (2007); Green et al. (2012), Lee et al. (2012), Perotti et al. (2012), Laosirihongthong et al. (2013), Zhu et al. (2013), Mitra and Datta (2014), Choi and Hwang (2015), Kirchoff et al.’s (2016) work, were also included in this structural model.

    Next, the content validity was analysed using the averaged scores of the index of item-objective congruence (IOC) in three parts by five experts. The questionnaires of each part were subsequently revised, leading to 20, 24, 30 indicators of drivers of GSCM implementation, GSCM practices, and organizational performance, respectively. Reliability testing was then carried out for each part of the questionnaire. That is, Cronbach’s alpha coefficient was used to test the reliability of the measurement scales from the first 20 completed questionnaires, showing the ranges of such values for the drivers of GSCM implementation, GSCM practices, and organizational performance. These were acceptable, being higher than 0.7 (Nunnally and Bernstein, 1994), ranging from 0.863-0.971, 0.712-0.925, and 0.958-0.969 for the three factors, as shown in Table 2.

    The questionnaire was developed to ask the respondents, who were entrepreneurs/representatives of SME manufacturers, to rate each item of the three parts on a seven-point Likert-type scale, providing a more accurate measurement (Finstad, 2010), where 1 indicated the least agreement/practices and 7 the most agreement/practices, according to their opinion. The average scores were divided into seven equal-sized categories: 1) very low level [1.000-1.857]; 2) low level [1.858-2.714]; 3) quite low level [2.715-3.571]; 4) moderate [3.572-4.428]; 5) quite good level [4.429-5.285]; 6) good level [5.286-6.142]; and 7) very good level [6.143-7.000]. The average scores of the three factors in Table 2 were employed to test the hypothesized relationships illustrated in the structural model.

    3.4 Sample and Data Collection

    Because there was an unknown population size, showing the number of SMEs in food manufacturing implementing GSCM practices in Thailand from overall 117,205 SMEs in this industry (The Office of SMEs Promotion, 2016), thus, this research was focused on a total sample of 408 enterprises in Thai food manufacturing, which were known to have already implemented GSCM practices. That is, they were participating in a project of the National Food Institute regarding eco-products and/or green productivity, with some also being involved in a project of the Thailand Greenhouse Gas Management Organization for the certification carbon footprints. Contact information was obtained from these two public organizations and the questionnaires were sent to 341 enterprises by email as an online survey /or by post with a hard-copy. The remaining 67 enterprises could not be reached, because of out-date contact information. The questionnaires were returned between August 3 and September 6, 2017, comprising 177 (51.9 percent response rate), with the online and postal numbers standing at 145 and 32, respectively. Then, the survey from enterprises between SMEs and large enterprises was classified by the number of employees (1-200, > 200) based on criteria of Ministry of Industry in Thailand (Ministry of Industry, 2002), thus, in total, there were 148 valid surveys, representing SMEs in food manufacturing at the 0.0735 level of significance (Daniel, 1995), because the remainder, were classified as large enterprises.

    3.5 Data Analysis

    For the analysis, the partial least squares structural equation modelling (PLS-SEM) by SmartPLS 3.2.7 software was employed to investigate the hypothesized relationships based on the structural model. This is because PLS-SEM, which is non-parametric technique, is recommended for achieving high levels of statistical power with small sample sizes without distributional assumptions being required (Hair et al., 2016).

    4. RESULTS

    4.1 Characteristics of Thai SMEs in Food Manufacturing

    Most respondents (62.84%) from the sample of Thai SMEs in food manufacturing were female and the majority (62.16%) were between 25 and 45 years old. The majority (42.57%) were entrepreneurs of SMEs and most of them (77.7%) had an education to at least bachelor degree level. Regarding their work experience, 75.65 percent of the respondents had been employed in the industry for more than 6 years. Most of the 148 SMEs in Thai food manufacturing were located in the North and Bangkok Metropolitan Area (40% and 17%, respectively) and 61 percent had run the firm more than 10 years. 45 percent of the total had a revenue higher than 11 million THB (1 USD = 31.31 THB). The types of food manufacturing in the survey mainly involved rice/cereal/flour processing, fishery processing, and meat processing, (22% 9% and 9%, respectively), whereas other related to beverage, milk, fresh food, spices/condiments/source, dessert, and herbal/ dietary supplement.

    4.2 Descriptive Statistics and Assessment of the Measurement Model

    Multicollinearity was tested for before assessment of the measurement model. The results from the variance inflation factor (VIF) indicate that some indicators of drivers (one, two, three indicators of D2, D3, and D4, respectively), GSCM practices, and Organizational Performance (three, four, three, two indicators of OP1, OP2, OP3 and OP4, respectively) have values of VIF over 5, thus being eliminated, so as to have no multicollinearity. Then, the assessment of the measurement model of fifteen constructs was examined involving an evaluation of the reliability and validity, with two types of validity containing convergent and discriminant validity. Based on this examination, some measurement items were eliminated, including one indicator of D4, and two of OP2 and OP3. Table 3 presents the list of updated results regarding the revised structural model with explanations of the measurement items.

    The descriptive statistics also shown in Table 3 were measured according to the average scores for each dimension in relation to the three investigated factors. The results show that the overall average score for the drivers of GSCM implementation is 4.412, which puts it in the moderate category. The average for socio-cultural responsibility is highest driver for GSCM implementation of Thai SMEs in food manufacturing (4.868), followed by regulations (4.677), competitive pressure (4.284), and customer pressure (3.615), respectively. The results regarding the GSCM practices of SMEs in the industry demonstrate that the overall average score is 4.039, thus being situated at a moderate level. The findings reveal that Thai SMEs in food manufacturing undertake transportation/ distribution (4.597) in accordance with GSCM practices better than the other six dimensions, with internal environmental management (4.382), green purchasing (4.350), and customer cooperation (4.198), coming second, third and fourth, respectively. Whilst investment recovery (3.997), eco-design (3.763) and reverse logistics (2.892) are rated as being the least engaged in GSCM practices for Thai SMEs in food processing. The overall average score of organizational performance is 4.893, which puts this in the quite good category. In terms of the performance dimension, environmental performance is rated at 5.028, followed by operational performance (4.990), then intangible performance (4.803), and finally, comes economic performance (4.628).

    Regarding convergent validity, the statistical indicators show satisfactory values that are above the minimum levels of reference (Chin, 2010;Hair et al, 2011). That is, the loading for each indicator is higher than 0.7; the minimum value of AVE is higher than 0.5; the composite reliability is higher than 0.7; and the Cronbach’s alpha is higher than 0.6. This means that the measurement model’s convergent validity is acceptable. In addition, each indicator associated with the fifteen constructs, as shown in Table 3, has a loading greater than 0.6, and both CR and the Cronbach’s alphas for the constructs are greater than 0.8, thus reporting the construct reliability as being acceptable (Chin, 2010;Kock, 2013).

    To assess the discriminant validity, the three criteria proposed by Gaski and Nevin (1985) and Fornell and Larcker (1981) were utilised. In Table 4, the results indicate that the correlational coefficient of the two dimensions is less than one and less than the individual Cronbach’s alpha coefficients, thereby indicating that the two dimensions possess discriminant validity. While the square root of the AVE for each construct, as shown in Table 4, presents that the square root of the AVE is higher than the highest correlational coefficient between the construct and other constructs in the model. In addition, The Heterotrait-Monotrait Ratio (HTMT) has been applied for reliably detecting discriminant validity. The HTMT values of each construct, ranging from 0.305 to 0.846 are lower than 0.85, which is the relevant threshold level (Hair et al., 2016) and thus, the model possesses acceptable discriminant validity. In sum, the measurement model satisfies both the validity and reliability.

    4.3 Assessment of the Structural Model

    Regarding the goodness-of-fit test for the structural model, the finding reveals that the SRMR of the structural model is 0.067, which is less than 0.08, thus indicating a suitable fit (Henseler et al., 2016). Then, hypotheses testing with respects to the structural model was undertaken. Table 5 shows the results of the effects of the four drivers of GSCM implementation on the GSCM practices with seven dimensions of Thai SMEs in food manufacturing (H1a1-7, H1b1-7, H1c1-7, and H1d1-7), where the row order includes the standardized coefficients and p-value in brackets for each driver on GSCM practices with the seven dimensions. The findings show a positive significant effect of regulations on internal environmental management and transportation/distribution regarding GSCM practices, while the effect of customer pressure on ecodesign, and reverse logistics is also significant at the 0.05 level. The results also support there being a significant positive effect of socio-cultural responsibility on internal environmental management and transportation/distribution. In addition, the findings indicate a positive significant effect of competitive pressure on green purchasing regarding GSCM practices of SMEs in the industry.

    The hypotheses testing between each of the dimensions of GSCM practices and organizational performance for the four aspects (H2a1-7, H2b1-7, H2c1-7, and H2d1-7) is presented in Table 6, where the row order comprises the standardized coefficients and p-value in brackets for each dimension of GSCM practices on organizational performance. The results indicate that GSCM practices in the internal environmental management dimension have a positive effect on environmental and economic performance, while the customer cooperation dimension has a positive influence on intangible and operational performance, all at the 0.05 significance level. The findings also reveal a significant positive effect of transportation/ distribution on environmental and operational performance for Thai SMEs in food manufacturing.

    5. CONCLUSIONS AND DISCUSSION

    The results in this research reveal that the overall average of GSCM practices for SMEs in Thai food manufacturing adopting GSCM practices is at the moderate level, thereby indicating that there is much room for improvement. The findings also show that reverse logistics and eco-design with regards to the average scores of GSCM practices performed by SMEs need to be developed to a higher level. Regarding organizational performance, the results of this study indicate that SMEs adopting GSCM practices have the highest environmental performance, whereas economic performance is at the lowest. In respect of the drivers of GSCM practies by SMEs, the results exhibit that socio-cultural responsibility is driver situated at the highest average score compared to other factors based on institutional norms, followed by regulations, and competitive pressure, respectively.

    For measurement model, the findings indicate that the measurement’s model is realiable. In addition, the model posseses acceptable convergent validity and discriminant validty. In addition, the study of the goodnessof- fit test for the structural model reveals that is a suitable fit. The findings of path analysis in this study provide statistical evidence for GSCM practices by SME manufacturers in the Thai food industry in respect of the drivers of GSCM implementation and organizational performance. It has been elicited that such implementation is driven by regulation, customer pressure, socio-cultural responsibility and competitive pressure, which is in accordance with the previous studies (Holt and Ghobadian, 2009;Zhu et al., 2010;Zhu and Geng, 2013;Hsu et al., 2013;Zhu et al., 2013;Mathiyazhagan et al., 2014;Dubey et al., 2015). In addition, the results provide evidence for the positive influence of GSCM practices on organizational performance. That is, the findings are in line with research by Laosirihongthong et al. (2013), Zhu et al. (2013) and Hsu et al. (2013). In particular, transportation/ distribution, customer cooperation and internal environmental management are critical practices performed by SMEs to enhance their organizational performance. Moreover, the findings based on the structural model in this study reveal that two drivers, namely, socio-cultural responsibility and regulations can steer Thai SMEs in food manufacturing towards implementing GSCM practices. These aspects impact transportation/distribution and internal environmental management, which when improved increase environmental, economic and operational performance concurrently.

    With regards to the theoretical implication, institutional theory can explain how external pressures with three mechanisms of drivers (coercive isomorphism, mimetic isomorphism, and normative isomorphism) are significant in fostering Thai-SME manufacturing firms in food industry adopting GSCM practices within their environment. Insitutional theory can elucidate how SMEs in the food manufacturing respond to the institutional pressures in order to secure position and legitimacy regarding environmental management. The discovery of this study through institutional theory indicates that normative isomorphism, including customer pressure and socio-cultural responsibility, is the most crucial driver in persuading Thai SMEs to implement GSCM practices. This is consistent with work by Hsu et al. (2013), Zhu et al. (2013) and Sarkis et al. (2011), revealing that customer and sociocultural responsibility can explain environmental management practices among manufacturers in developing countries. These findings provide empirical support for institutional theory and strengthen the argument in the context of SMEs in Thailand as an emerging country.

    Regarding managerial implications, entrepreneurs or management team of SMEs could increase their economic performance by higher implementation of Total Quality Management (TQM) and Environmental Management Systems (EMS). In addition, they should focus more on transportation/distribution activities, particularly collaborating with customers and/or suppliers for transportation scheduling and planning, which could lead to improvement in environmental performance. Moreover, SMEs should work with their customers on product design, ecofriendly packaging as well as communicate with them to boost their intangible and operational performance. Furthermore, the findings of the linkage between institutional pressures and GSCM practices can help the relevant public/ private institutes to recognize the key drivers, which will hopefully encourage more SMEs to adopt such practices and thus, take responsibility for environmental management. In addition, the results confirm that Thai SMEs in food manufacturing will gain benefits from GSCM practices as well as suggesting to them that implementing GSCM practices in their firms will lead to higher organizational performance in the industry.

    6. LIMITATIONS AND FUTURE RESEARCH

    In this study, there are limitations that should be considered. First, this research focuses on Thai SMEs in food manufacturing, which have already implemented GSCM practices, using a sample reliant upon on the databases from the National Food Institute and the Thailand Greenhouse Gas Management Organization. Clearly, this does not represent all Thai SME manufacturing using GSCM practices. Hence, future research should involve using further samples from other sources to determine whether the results based on this structural model can be generalized. Second, the authors have SMEs located in the North (40%) and Bangkok Metropolitan Area (17%), whereas others including Northeast, South, East, Central and West have only 15% 11% 9% 7% and 1%, respectively. Thus, further research should survey data from SMEs with similar proportion from each region for better being as the representative of SMEs in Thailand. While the survey in this research indicated that Thai SMEs in food manufacturing had a revenue higher than 11 milllion THB (45%), whereas other was presented at 55%, however, SMEs in Thailand relating to manufacturing industry are classified by the number of employees (1-200), which were used in this study, not in the revenue (Ministry of Industry, 2002), thus, the sample can be used as the representative of SMEs in Thailand. Next, the study is limited to Thai SMEs in food manufacturing sector. Thus, the authors recommend that future research should replicate this study in different industries and countries across developing and developed markets in the SME context, thereby increasing the knowledge regarding this level of industry in terms of its GSCM practices. Finally, the extent study of other drivers fostering GSCM practices based on the results of this research, for example, customer cooperation, in enhancing the organizational performance of SMEs in the food industry should be considered for further examination.

    ACKNOWLEDGEMENT

    The authors would like to thank Kasetsart University Research and Development Institute (KURDI) for providing the research funding (P-YD166.60). The authors are also grateful to the National Food Institute, and Thailand Greenhouse Gas Management Organization for their helpful support in providing the sample data. In addition, the authors would like to express his gratitude to all Thai food manufacturing enterprises for their responses contributing to this study.

    Figure

    IEMS-18-1-116_F1.gif

    Structural model.

    Table

    Dimensions of GSCM practices

    a: Internal environmental management; b: Green purchasing; c: Customer cooperation; d: Eco-design; e: Investment recovery; f: Reverse logistics; g: Transportation/distribution; h: Legislation and regulatory practices; i: Environment information system.

    Reliability test of the questions on the questionnaire

    Convergent validity and reliability

    Discriminant validity

    The square root of AVE is shown diagonally in bold.

    Results of the hypotheses testing between the drivers of GSCM implementation and GSCM practices

    Significant at: *<i>p</i>-value < 0.05; First line indicates the standardized coefficient; Second line indicates <i>p</i>-value in brackets.

    Results of the hypothesis testing between GSCM practices and organizational performance

    Significant at: *<i>p</i>-value < 0.05; First line indicates the standardized coefficient; Second line indicates <i>p</i>-value in brackets.

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