International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –INTERNATIONAL JOURNAL OF MECHANICAL ENG...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) V...
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An empirical study of the investigation of green

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An empirical study of the investigation of green

  1. 1. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –INTERNATIONAL JOURNAL OF MECHANICAL ENGINEERING6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEME AND TECHNOLOGY (IJMET)ISSN 0976 – 6340 (Print)ISSN 0976 – 6359 (Online)Volume 3, Issue 3, September - December (2012), pp. 654-668 IJMET© IAEME: www.iaeme.com/ijmet.aspJournal Impact Factor (2012): 3.8071 (Calculated by GISI)www.jifactor.com ©IAEME AN EMPIRICAL STUDY OF THE INVESTIGATION OF GREEN SUPPLY CHAIN MANAGEMENT PRACTICES IN THE PHARMACEUTICAL INDUSTRY AND THEIR RELATION DRIVERS, PRACTICES AND PERFORMANCES Ajay Verma*, Dr. Anshul Gangele** * [Research Scholar] Department of Mechanical Engineering, Suresh Gyan Vihar University, Jaipur (Raj.) 302025 E-mail: vajay9@yahoo.co.in **Institute of Technology & Management, Gwalior (M.P.) 474001 E-mail: anshulgangele@gmail.comABSTRACT This paper aim is Green Supply Chain management (GSCM) of investigation strategy.A study of GSCM can help of economic, social, national security, and environmental goals.Also this study to investigation the green supply chain management practices likely to beadopted by the pharmaceutical industry in India. Which is dominated by reduces, reuse, andrecycle, Manufacturing manufacturers, after the implementation of the Restriction ofHazardous Substances and Waste pharmaceuticals material. The relationship between greensupply chain management practices and environmental performance and operationalperformance, as well as financial performance, is studied. The approach of the presentresearch includes a literature review, in depth interviews and questionnaire surveys. Thecompanies in the pharmaceutical industry approved by the International Organization forStandardization 14001 certification in India before January 2012 were sampled for empiricalstudy. Based on a literature review, twelve propositions are put forward. The surveyquestionnaire was designed with 54 items using literature and industry expert input. Anexploratory factor analysis was conducted to derive results from the survey data whichincluded 27 responses. The data analyzed using statistical package for the social sciences, andstructural equation modeling was used as a path analysis model to verify the hypotheticalconstruction of the study. The results indicate that the pharmaceutical industry have adoptedgreen supply chain practices in response to the current wave of international green issues andhave generated favorable environmental, operational and financial performances for therespective companies. 654
  2. 2. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEMEKEYWORDS: Green supply chain, environmental performance, green procurement, greenmanufacturing.1. INTRODUCTION GSCM has become an important environmental practice for companies to achieveprofit and increase market share in such a way that environmental risks are lowered andecological efficiency are raised. [46,51] Realizing the significance of the GSCMimplemented by the organizations, developed a strategic decision framework that aidsmanagerial decision making in selecting GSCM alternatives, and product life cycle,operational life cycle (including procurement, production, distribution and reverse logistics(RL)), organizational performance measurements and environmentally conscious businesspractices serve as the foundations for the decision framework. [36, 50] Indias pharmaceutical industry is now the third largest in the world in terms ofvolume. Its rank is 14th in terms of value. Between September 2009 and September 2011, thetotal turnover of Indias pharmaceuticals industry was US$ 21.05 billion. The domesticmarket was worth US$ 12.29 billion. [28, 42] As per a report by IMS Health India, the Indianpharmaceutical market reached US$ 10.05 billion in size in July 2011. The severalestablished companies which have operations in the world’s major pharmacy markets. Overthe last few years, contribution in the growth of India’s pharmaceutical industry has beensignificant. The state commands 42 percent share of India’s pharmaceutical turnover and 22percent share of exports. [28] The Pharmaceutical Supply Chain (PSC) is a special SC in which medications areproduced, transported and consumed. Academic researchers and practitioners believe that“pharmaceuticals are different; they cannot be treated like other commodities.” [38] Thereasons for this sentiment were the high cost and long duration for research and developmentand the repercussions of the product not being available, hence again its criticality. Otherunsupported perception-based factors that appear to make this supply chain distinctiveinclude; the level of regulation in the product production, storage, distribution, consumptionand the complexity of the fabric of this supply chain. [21] Disposal of medication can be veryharmful to the environment and costly. Globally, in 2003 at least £0.56 billion worth ofunused drugs are flushed down the toilet. [45] From an economic point of view, efficienciescan be made in the form of potential savings in the pulling back of stock from patients.Medication retrieved from patients cannot be reused and must be disposed. It does howeverprovide vital information and can encourage more prudent prescribing. Safety is alsoparamount when broaching pharmaceutical management and storage. Accidents can happenif products fall into the hands of children or individuals who wish to abuse the productthemselves or support a “grey” market for product exchange/sales. Global and domesticpressures on environmental, economic and safety considerations drive us to manage PSCgreening, i.e., improve the PSC economic and environmental performance by recycling theunused/unwanted medications and reducing medications that need disposal. However, there isvery little research and practice on drug recycling or green PSC (GPSC). [3, 32] The fate ofunused consumer pharmaceuticals is an issue that has reached public consciousness morerecently. There is emerging concern about the potential impact of medicine that reaches lakesand rivers via sewage plants and other sources. [25] Increasing pressures from a variety ofdirections have caused the Indian Pharmaceutical supply chain managers to consider andinitiate implementation of green supply chain management (GSCM) practices to improveboth their economic and environmental performance. Current environmental awareness, 655
  3. 3. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEMEpractices, and performance of GSCM in general and in pharmaceutical enterprises sets thefoundation for various issues (propositions) that will be evaluated using the empirical data.Expanding on some earlier work investigating general GSCM practices in India, this paperexplores the GSCM drivers, initiatives and performance of the pharmaceutical supply chainusing an empirical analysis of selected pharmaceutical enterprises. In particular, therelationships between green supply chain management dimensions and firm performance areexamined in this study.2. LITERATURE REVIEW “Green Supply Chain practices (SCM components) adopted is functions of external(open system view of organization) and internal environment (management component). Inanother word the totality of inputs to the system (including agent, mechanism, and functions)results in outputs (practices). These outputs are measured by considering GSCM practicesfrom within the whole system.” [13]2.1 External pressures The importance of external factors is borrowed to illustrate the complementary natureof the factors for Chinese companies to adopt GSCM practices at the early stage ofenvironmental policy transformation. Besides the requirements of governmental regulations,the domestic and foreign clients, competitors and neighboring communities may exertpressures on the companies. [15] These external pressures have jointly prompted thecompanies to become more aware of their environmental problems and to practice certainGSCM activities. External pressures are believed to be the important factors affecting afirm’s GSCM practices. [15, 35, 55]2.2 Internal factors As is well known, the institutional theory neglects certain fundamental issues ofbusiness strategy. It is argued that the firms adopt heterogeneous sets of environmentalpractices also due to their individual interpretations of the objective pressures from theoutside. The difference between the ‘objective’ and ‘perceived’ pressures may lead to diverseresponses from the firms. Therefore, the analytical model adds two internal organizationalfactors, namely support of top managers and a firm’s learning capacity, to jointly explain afirm’s GSCM practices. Top management support can affect new initiatives success byfacilitating employee involvement or by promoting a cultural shift of the company, etc. AsGSCM is a broad-based organizational endeavor, it has the potential to benefit from topmanagement support. Meanwhile, a firm’s learning capacity is viewed as especiallyimportant in a resource-based framework. GSCM practices are amenable to the benefitsderived from learning since they are human resource intensive and greatly rely on tacit skilldevelopment by employee involvement, team work and shared expertise. [16] The capacityfor implementing innovative environmental approaches is normally enhanced by employeeself-learning, professional education and job training. The education level of employees andthe frequency of internally environmental training are often used as proxies of a firm’slearning capacity. [48] To implement GSCM, organizations should follow GSCM practiceswhich consist of environmental supply chain management guidelines. Numerous studies havetried to identify GSCM practices in organization which are referred to such internal systemsas environmental and quality management systems. Internal environmental management iscritical to improving the organization’s environmental performance. [56] Performance is a 656
  4. 4. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEMEmeasure for assessing the degree of a corporation’s objective attainment. [10] Corporationsadopting GSCM practices may generate environmental and business performances. [47, 54]A green supply chain, for example, can improve environmental performance (reducing wasteand emissions as well as increasing environmental commitment) andcompetitiveness(improving product quality, increasing efficiency, enhancing productivity andcutting cost), thereby further affecting economic performance, a new marketing opportunitiesand increasing product price, profit margin, market share and sale. [30] Expert’s opinion areorganizational performance is considered to include environmental, operational and economicperformance. [30, 47, 54]3. RESEARCH METHODOLOGY After surveying the environmental performance assessment in the ISO environmentalmanagement system, as well as comments from experts and academics in the chemical andmachine engineering, a questionnaire was created as the tool of the present study. [30, 35, 36,51, 53,] The items in the questionnaire were then taken as research variables according to theconceptual model of the study. [28] The data used in this study consist of questionnaireresponses from employees in Indian manufacturing and processing industries that haveprofound impact on the environment. Structural equation modeling was used as a pathanalysis model to verify the hypothetical construction of the study. The questionnairecontains three sections: • General Information: This contains gender, and job title of the respondents from the organization as well as annual sales of the company and number of persons employed. This information is gathered only for a glance of an industry and its size. • Basic Green Supply Chain Management Information: This includes questions regarding company’s step towards GSCM. It also contains reasons for adoption and no implementation of GSCM. If company has not yet implemented the GSC practices then in this section respondents can provide maturity period for GSCM as per their company policies. • Impact of drivers on implementation of GSCM practices and relation to organizational performance part includes items affecting implementation (pressures/drivers), current practices and corresponding performance.In this section twelve different variables (Environment Regulation, Market, Suppliers,Internal drivers, Internal Management, Green Supply, Cooperation with Customers,Investment recovery, Eco-design and reverse logistics, Environment Performance,Operational Performance and Economical Performance) were tested with fifty four subvariable. All twelve items in this part were based on a number of sources from the literatureand divided in three different parts. Questions were answered using a seven-point Likert-typescale (e.g.1 = Very Strongly Disagree; 2 = Strongly Disagree; 3 = Disagree; 4 = Neutral; 5 =Agree; 6 = Strongly Agree; 7 = Very Strongly Agree). To avoid confusing respondents onthree different seven-point Likert scales, we provided a brief explanation of the three groupsof items at the beginning of each survey section. 27 companies in the pharmaceutical industryapproved by the International Organization for Standardization 14001 certification in Indiabefore January 2012 were sampled for empirical study. The data were then analyzed usingstatistical package for the social sciences (Predictive Analytics Soft-Ware-PASW) andLISREL (SIS Inc.) 657
  5. 5. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEME3.1 Variables From the literature analysis, twelve different variables introduced according to themethodology of structural equation modeling are described as follows: Environmentalregulations, market pressure, suppliers and internal drivers are four exogenous latentvariables used in this study. Environmental regulation reflects factors like regional laws,exporting country’s regulations etc. The exogenous latent variables of market are reflected inexports, sales, domestic consumers’ awareness towards environmental issues etc. Items likecost of hazardous materials, environment friendly goods and green packages are revealed ininternal drivers. The endogenous latent variables are divided into interpretative and outcomevariables. Internal management, Green supply, cooperation with customers, investmentrecovery, eco-deign and reverse logistics are variables which are defined as interpretativeendogenous latent variables. Outcome endogenous latent variables include economicperformance, environmental performance and operational performance.3.2 HypothesisH1: Environmental regulations have a positive relationship with Green Supply ChainPractices.H2: External stakeholders have a positive relationship with GSCM practices.H3: GSCM practices have a positive relationship with environmental performance.H4: GSCM practices have a positive relationship with financial performance. Table1: Elementary data analysisElementary Measure No. of companies %FactorGender Male 27 100 Female 0 0Job Title General Manager 11 40.75 Site Head 1 3.7 Environment Department 14 51.85 Head Assistant Manager 1 3.7 Other 0 0No. of Less than 100 3 11.1Employees 100-200 10 37 200-500 9 33.3 500-1000 5 18.6 Greater than 1 0 0Annual Sales Less than 10 crore 2 7.4 10-50 Crores 3 11.1 50-100 Crores 11 40.8 100- 500 Crores 8 29.6 Greater than 500 crores 3 11.1Environment Yes 26 96.3Department No 1 3.7Age of GSCM < 1 Year 1 3.7 1-3 Year 7 25.9 3-5 Year 6 22.2 >5 years 13 48.1 658
  6. 6. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEME4. ANALYSIS Table1 presents a detailed analysis of the demographic characteristics of respondents’firms. There was no female representative throughout the survey. More than 50% respondentswere head of the environment department. 40.75 % respondents were general manager fromdepartments like supply chain, purchase, marketing etc.As regards employees, 18.6 percent of respondents’ firms had over 500-1000 employees,while one third companies have employed persons in range of 200-500. About 37%companies have employed between 100 and 200 full-time workers.Firms’ sales varied considerably. Just over a quarter (29.6percent)of firms’ sales was betweenRs. 100 500 Crores and 40.8 percent reported sales of Rs. 50-100 Crores. Almost half of theindustries surveyed have replied that their organizations are active players in GSCM fieldsince last 5 or more years. Almost every organization have environmental department in theirorganizations.4.1 Offending estimate In the evaluation of model variables, there is unlikely to be a negative error varianceor a very large standard error, and the standardized coefficient cannot be larger than 0.95. [1]As can be seen from Table 3, all error variances are positive; standard errors are small,ranging from 0.01 to 0.24, and standardized coefficients range from 0.50 to 0.95, which isless than 0.95 and lies below the significance level, suggesting that the effect of offendingestimate was absent.4.2 Reliability test As can be seen from Table 4, the 13 observable variables’ R2 are between 0.57 and0.90, conforming to the recommendation that the confidence R2 of an individual observablevariable should be larger than 0.50. Also, the construct reliability of the five latent variablesis between 0.75 and 0.94, complying with the requirement that the value should be larger than0.6. [2]4.3 Validity test4.3.1 Convergent validity: The factor loadings (λ1“0λ13) of the observable variables shownin Table 3 range from 0.76 to 0.95, which achieve significance and are higher than thethreshold, 0.45, indicating that all observable variables can reflect the latent variablesconstructed. The extracted average variances of the latent variables are 0.78, 0.85, 0.81, 0.60and 0.79, all of which are larger than 0.5, indicating that the amount contributed to the latentvariables is larger for the observed variables than for the error in measurements. [2]4.3.2 Discriminate validity: The latent variables shown in Table 5 have all reached thesignificance level, indicating that there is a discrepancy between the model in which thecorrelation between any two latent variables is set to be 1.00 and the model in which thecorrelations for all latent variables are arbitrarily estimated. This discrepancy suggests thatthe correlation between latent variables can be distinguished, i.e., the discriminate validity issupported.4.3.3 Test for overall model fit: The overall model fit is required to adopt at least thefollowing three fit tests [1]: 659
  7. 7. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEME4.3.4 Absolute fit test:1. GFI (Goodness of fit index)A good fit requires the GFI to be larger than 0.90. The theoretical model fit of the presentstudy is 0.91, indicating a good fit. Table 2: Averages, standard deviations, skewness coefficients and kurtosis coefficients of observed variables Dimension Average SD Skewness Kurtosis coefficient Coefficient Environmental regulationsDomestic environmental regulations 5.69 0.90 -0.55 -0.57Government environmental policy 5.33 0.73 -0.09 -0.36International environmental agreements 5.30 0.80 -0.14 -0.15 External stakeholdersSupplier 5.90 0.64 -0.68 -0.13Customer 5.84 0.73 -1.51 2.69Community stakeholders 5.88 0.68 -1.12 1.32 GSCM practicesGreen procurement practices 5.69 0.84 0.01 -0.85Green manufacturing practices 5.08 0.67 -0.03 -1.12 Environmental performanceManagement performance 6.19 0.57 -1.19 0.78Operational performance 6.16 0.67 -0.21 -1.20 Financial performanceCost reduction 5.41 0.61 -0.34 -0.30Market share growth 5.41 0.69 -0.21 -0.42Profit increase 5.72 0.68 -0.96 0.012. RMR (Root mean square residual)Good fit demands the RMR to be smaller than or equal to 0.05. The theoretical model fit is0.046, and thus it qualifies as a good fit.3. RMSEA (Root mean square error of approximation) RMSEA smaller than or equal to 0.05is considered a good fit and the theoretical model fit here is 0.06, indicating that it is a goodfit.4.3.5 Relative fit test:1. NNFI (Non nor-med fit index)NNFI, larger than 0.9 is generally considered acceptable. The value is 0.97 for the presenttheoretical model, indicating that the present model is acceptable.2. CFI (Comparative fit index)CFI, larger than 0.9 is generally considered acceptable. The CFI is 0.97 for the presenttheoretical model, indicating that the present model is acceptable.Parsimonious fit test:1. PNFI (Parsimony nor-med Fit Index)A PNFI larger than 0.5 is generally considered as a good model. The value is 0.72 for thepresent theoretical model, indicating that the present model is acceptable. 660
  8. 8. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEME2. PGFI (Parsimony Goodness of Fit Index)A PGFI larger than 0.5 is generally considered as a good model. The value is 0.60 for thepresent theoretical model, indicating that the present model is acceptable.3. nor-med Chi-SquareAn index of less than 3 is considered as a good fit. The value of the present model is 1.51,indicating a good overall fit. Tests for overall model fit were performed in order tounderstand the fit between the observed data and the hypothesized model. [19] Table 3: Estimation of model parametersParameter Un-standardized Standard error t-value Standardized Parameter estimate Parameter estimateλ1 1.00 - - 0.89λ2 0.88 0.048 18.39 0.95λ3 0.93 0.053 17.54 0.93λ4 1.00 - - 0.86λ5 1.21 0.084 14.35 0.90λ6 1.12 0.078 14.37 0.90λ7 1.00 - - 0.92λ8 0.76 0.067 11.42 0.88λ9 1.00 - - 0.76λ10 1.23 024 5.14 0.80λ11 1.00 - - 0.85λ12 1.27 0.083 15.32 0.95λ13 1.13 0.083 13.61 0.86γ1 0.28 0.08 3.39 0.28γ2 0.39 0.12 3.22 0.27β1 0.29 0.06 4.68 0.51β2 0.30 0.06 5.12 0.45δ1 0.11 0.02 6.44 0.27δ2 0.10 0.02 4.95 0.19δ3 0.09 0.02 4.92 0.18δ4 0.17 0.03 6.67 0.21δ5 0.05 0.01 3.94 0.10δ6 0.09 0.02 5.33 0.14ε1 0.11 0.04 2.47 0.15ε2 0.10 0.03 3.59 0.22ε3 0.14 0.04 3.78 0.43ε4 0.17 0.06 3.03 0.37ε5 0.10 0.02 6.58 0.27ε6 0.05 0.02 2.87 0.10ε7 0.12 0.02 6.47 0.26 661
  9. 9. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEME5. DISCUSSION AND CONCLUSION GSCM is a relatively new green issue for the majority of India corporations. From theperspective of management, GSCM is a management strategy, taking into account the effects of theentire supply chain on environmental protection and economic development. However, the feasibilityof reaching the right balance between the environmental performance and financial performance is aserious concern for corporations implementing GSCM. The present empirical study investigated theGSCM practices adopted by the OEM and ODM-dominated pharmaceutical and electronic industry inIndia in response to the EU ROHS and WEEE directives. The pressures or drives to implementGSCM practices and the relationship between GSCM practices and environmental performance aswell as financial performance were also studied. The approach adopted in the present study included aquestionnaire and in-depth interviews with the pharmaceutical and electronic corporations approvedby the ISO14001 certification in India before December 2004. The findings obtained from the 151valid samples are described as follows: Table 4: Reliability of observed variables, as well as construct reliability and average variance extracted of latent variablesDimension R2 Construct Average variance reliability extractedEnvironmental regulations 0.91 0.78Domestic environmental regulations 0.73Government environmental policy 0.81International environmental 0.82agreementsExternal stakeholders 0.94 0.85Supplier 0.79Customers 0.90Community stakeholders 0.86GSCM practices 0.89 0.81Green procurement practices 0.85Green manufacturing practices 0.78Environmental performance 0.75 0.60Management performance 0.57Operational performance 0.63Financial performance 0.91 0.79Cost reduction 0.73Market share growth 0.90Profit increase 0.74 Table 5: Convergent validity and discriminate validityLatent variables Environmental External GSCM Environmental regulations stakeholders practices performanceEnvironmental regulations 1.000External stakeholders 0.295* 1.000GSCM practices 0.798* 0.225* 1.000Environmental performance 0.271* 0.431* 0.251* 1.000Financial performance 0.396* 0.399* 0.267* 0.265* 662
  10. 10. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEMEHypothesis 1The environmental regulations factors consist of three observed variables: domesticenvironmental regulations, government environmental policy and international environmentalagreements. Their factor loadings, λ1, λ2 and λ3, of the environmental regulations factors oflatent variables are 0.89, 0.95 and 0.93, respectively. Their t values are all larger than thesignificance level of 1.96, indicating that the preliminary fit index is favorable. On the otherhand, the path coefficient, γ1, of the normative factors to the latent variables of GSCMpractices is 0.28 and t is 3.39, suggesting that the normative factor has a positive relationshipwith the investigation of GSCM practices.Also, λ2 (government environmental policy) is 0.95, higher than λ1 (0.89) and λ3 (0.93) ofdomestic environmental regulations and international environmental agreements,respectively, indicating that the pressure on enterprises to adopt green supply chainmanagement practices comes from the government environmental policy of environmentalregulations factors.Hypothesis 2The factor loadings, λ4, λ5 and λ6, of the external stakeholders of latent variables are 0.86,0.90 and 0.90, respectively, and their t values are all larger than the significance level of 1.96.On the other hand, the path coefficient, γ2, of the external stakeholders factors to the latentvariables of GSCM practices is 0.27 and t is 3.22, suggesting that the external stakeholdersfactors have a positive relationship with the investigation of GSCM practices. The values ofλ5 (customers) and λ6 (community stakeholders) are both equal to 0.90, indicating thatcustomers and community stakeholders of external stakeholders have a larger effect onenterprises’ adoption of green supply chain management practices than suppliers. A possiblecause, as revealed in the in-depth interviews conducted in this study, can be identified fromthe fact that some interviewees regard suppliers as enterprises’ internal stakeholders.Hypothesis 3GSCM practices consist of two observed variables: green manufacturing practices, includinggreen design, manufacturing green products, recovery and reuse of used products, and settingstandards for green products, and green procurement practices, including establishing acontrol list of environmentally hazardous substances, the profile for raw materials containingno prohibited substances, the assessment table of environmental management for suppliers,the green product approval data, and the auditing mechanism for green management. Thefactor loadings, λ7 and λ8, of the environmental performance of latent variables are 0.92 and0.88, respectively, and their t values are both larger than the significance level of 1.96. On theother hand, the path coefficient, β1, of GSCM practices to the latent variable environmentalperformance is 0.51 and t is 4.68, indicating that the investigation of GSCM practices has apositive relationship with the environmental performance of corporations.Hypothesis 4The path coefficient, β2, of GSCM practices to the latent variable financial performance is0.45 and t is 5.12, indicating that the investigation of GSCM practices has a positiverelationship with financial performance. On the other hand, the investigation of GSCMpractices can provide benefits to organizations, including cost reduction, market share growthand profit increase, whose effects on financial performance are reflected by the values λ11(0.85), λ12 (0.95) and λ13 (0.86), respectively; the most significant effect of enterprises’investigation of GSCM practices is, therefore, in enhancing market share growth. The above 663
  11. 11. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEMEfindings suggest that the pressure or drive from environmental regulations, suppliers,consumers and community stakeholders have prompted the pharmaceutical and electronicmanufacturers in India to implement GSCM practices. From the present study, it is found thatregulations and external stakeholders exert pressure on corporations to implement GSCMpractices. [14, 37] Furthermore, it was found that the investigation of GSCM practices canenhance the environmental and financial performance of corporations, consistent with thefindings of who emphasized the beneficial effects of the investigation of GSCM practices inimproving environmental and financial performance. [30, 36] A corporation should notoverlook long-term sustainability while pursuing short-term profit. It is important to pursueeconomic development and at the same time consider environmental burden, therebypreserving the natural resources and environment on which the entire human race isdependent, instead of relentlessly exploiting available resources. In pursuing economicdevelopment, social justice has to be taken into account in order to strike the right balancebetween economy, environment and benefit to society. It is therefore suggested that futureresearch may focus on the relationship between GSCM practices and sustainableperformance. Enterprises used to be concerned only with their own profit, ignoring the mostimportant links in their production chain: upstream suppliers and downstream customers. Thepresent study found that, in the face of the current global green issue, corporations can benefitfrom an entirely green supply chain by cooperating with upstream suppliers on greenproduction technology and exchanging green information with them, as well as taking thevoices of downstream customers and green consumers into account in their productionprocesses. The conventional end-of-pipe treatment approach taken by corporations in face ofenvironmental problems can no longer meet the demands of international environmentalprotection. To meet the expectations of society, pollution preventive measures should beadopted as an environmental management strategy. However, corporations in general areconcerned that stressing environmental performance would add to their operational cost,accompanied by a decreasing market share and competitiveness. Nevertheless, the presentstudy found that the investigation of GSCM practices has a positive effect on environmentaland financial performance; that is, an increase in environmental performance will beaccompanied by increased corporation profit and market share. These conclusions effectivelydispel the doubts of those corporations in India that have not yet implemented GSCMpractices.Environmental protection activities can have a positive effect on a corporation’s financialperformance. GSCM can cut the cost of materials purchasing and energy consumption,reduce the cost of waste treatment and discharge, and avoid a fine in the case ofenvironmental accidents. [51] A sustainable approach can lead to internal cost saving, opennew markets and find beneficial uses for waste. [44] Environmental munificence has apositive effect on financial performance for example, growth in profits, sales and marketshare. [12] Financial performance is defined here as cost reduction, market share growth andprofit increase. To analyze the research issues a hypothesis:Tools and parameters “The relationship between green supply chain management practices and organizationalperformances,” was created as the tool of the present study. The items in the questionnairewere then taken as research variables according to the conceptual model of the study. Theoperational definitions of the research variables are shown in Table 1. According to themethodology of structural equation modeling, the variables of the present research aredescribed as follows: 664
  12. 12. International Journal of Mechanical Engineering and Technology (IJMET), ISSN 0976 –6340(Print), ISSN 0976 – 6359(Online) Volume 3, Issue 3, Sep- Dec (2012) © IAEMEExogenous variablesThere are two exogenous latent variables in the present study: environmental regulations andexternal stakeholders. The exogenous latent variables of environmental regulations arereflected in domestic environmental regulations, government policies on environmentalprotection and international environmental agreements. On the other hand, the exogenouslatent variables of external stakeholders are reflected in suppliers, customers and communitystakeholders.Endogenous variablesThe endogenous latent variables in the present study are divided into interpretative variablesand outcome variables for the final outcome according to the cause–effect relation.Interpretative variables adopted in green supply chain management practices are reflected intwo observed variables, green procurement practices and green manufacturing practices.Outcome variables include environmental and financial performance. Environmentalperformance is reflected in two observable variables, environmental managementperformance and environmental operation performance, whereas financial performance isreflected in three observable variables, namely cost reduction, market share growth and profitincrease.6. REFERENCES 1. Bagozzi R.P.; Yi Y. (1988) On the evaluation of structural equation models, Jr. Acad. Mark. Sci., 16, 74-94. 2. Bentler P.M.; Wu E J.C. (1993) EQS/Windows user’s guide. Los Angeles: BMDP Statistical software. 3. Breen L. and Xie Y. (2009), Examining the role of the customer in facilitating reverse logistics system in NHS community pharmacy in the UK, proceeding of the Logistics Research Network annual conference, 9-11 September, 2009, Cardiff, UK, 588-591. 4. Brent, A.C.; Visser, J.K., (2005). An environmental performance resource impact indicator for life cycle management in the manufacturing industry, J. Clean. Prod. 13, 557-565. 5. Brown, G.(2006), Speech by the RtHon Gordon Brown MP, Chancellorof the Exchequer, to United Nations Ambassadors, New York,NY,April2006. 6. Cetindamar, D. (2001), “The role of regulations in the diffusion of Environment technologies: Micro and macro issues”, European Journal of Innovation Management, Vol.4No.4, pp.186-93. 7. Cheng, J., Yeh, C. and Tu, C.(2008),“Trust and knowledge sharing in green supply chains”, Supply Chain Management: An International Journal, Vol.13 No.4, pp.283- 95. 8. Chien, M. K., Shith, L. H., (2007), An empirical study of the implementation of green supply chain management practices in the electrical and electronics industry and their relation to organizational performances. 4(3), 383-394 9. Conover, William Jay (1999). Practical Nonparametric Statistics (Third Edition ed.). Wiley, New York, NY USA. pp. 388–395. ISBN0471160687 9780471160687 10. Daft, R.L., (1995). Organization Theory and Design. (5th. Ed.). New York: West Publishing Company. 11. Food_ and_ Drug_ Control_ Administration_(FDCA) 665
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