Omega 40 (2012) 267282

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Omega
journal homepage: www.elsevier.com/locate/omega

Green logistics management and performance: Some empirical evidence

from Chinese manufacturing exporters
Kee-hung Lai a,n, Christina W.Y. Wong b,1
a
b

Department of Logistics and Maritime Studies, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Business Division, Institute of Textiles and Clothing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong

a r t i c l e i n f o

abstract

Article history:
Received 3 August 2010
Accepted 6 July 2011
Available online 21 July 2011

The value chain of many business enterprises is increasingly required to demonstrate the protability
of their primary activities, starting from inbound logistics to operations, outbound logistics, marketing
sales, and nally to services. The adoption of green logistics management (GLM) presents an
opportunity for Chinese manufacturing exporters to competently respond to the escalating expectation
of the international community for resources conservation and to achieve environmental performance
protably. This study makes several important contributions to the literature on managing logistics
with environmental considerations. First, the authors identify the components of GLM: (i) procedurebased practices, (ii) evaluation-based practices, (iii) partner-based practices, and (iv) general environmental management practices. Second, they relate GLM to environmental and operational performance
in a developing country context. Third, they identify the institutional and operational antecedents that
prompt the adoption of GLM by export-oriented manufacturing enterprises in China. Fourth, they
examine the moderating effect of environmental regulatory pressure on the GLM-performance linkage.
The results are based on a survey of manufacturing exporters in China. The commonly held view that
economic motivation is related to the adoption of GLM is not supported. However, GLM positively
affects both environmental and operational performance, and regulatory pressure enhances the GLMperformance relationship.
& 2011 Elsevier Ltd. All rights reserved.

Keywords:
Environmental protection
Logistics management
China
Regulatory pressure
Firm performance

1. Introduction
Business enterprises in newly industrialized countries such as
the BRICs (Brazil, Russia, India, and China) are increasingly
expected to comply with environmental standards such as the
Waste Electrical and Electronic Equipment (WEEE), the End of Life
Vehicle (ELV) Directive, and the Restriction of Hazardous Substances (RoHS) if their merchandises are to reach international
markets successfully. Such environmental-based trade barriers
have also aroused the awareness of customers, rms, and government bodies for protecting the environment. Meanwhile, there
are growing international concerns on the environmental
damages associated with the accelerated industrial activities in
the BRICs and China in particular [1,2]. As global suppliers of
manufactured products, manufacturing enterprises in China need
to seek sustainable solutions such as green logistics management
(GLM) in pursuit of protable growth without inicting environmental damages to other countries through managing the
n

Corresponding author. Tel.: 852 2766 7920; fax: 852 2330 2704.
E-mail addresses: lgtmlai@polyu.edu.hk (K.-h. Lai),
tcchris@polyu.edu.hk (C.W.Y. Wong).
1
Tel.: 852 2766 6415.
0305-0483/$ - see front matter & 2011 Elsevier Ltd. All rights reserved.
doi:10.1016/j.omega.2011.07.002

logistics cycle of their merchandises, i.e., spanning sourcing,

manufacturing, distribution, and disposal [3]. Such a solution
should be able to improve business performance, while preserving the local, as well as the global environment.
Nowadays, the majority of products consumed in developed
countries have their resource materials or part of their manufacturing processes served by developing countries. The globalization of production highlights the importance of GLM on
prevention of environmental harm arising from product manufacturing and distribution activities. Serving as the worlds
factory, Chinese manufacturing exporters are encountering international pressure to conserve resources and reduce their environmental consequences [4]. The circular economy law in China,
which promotes conservation of resources, reects organizational
responsibility towards achieving this goal [5]. According to the
Chinas National Development and Reform Commission, a circular
economy is a scientic development model, where resources
become products and the products are designed in such a way
that they can be fully recycled for sustainable development of a
country with a focus on balancing economic development and
environmental protection. Resource depletion and an increasingly
detrimental environmental burden caused by organizational production operations have led the Chinese government to impose

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

stricter regulatory policy. This law took effect on 1 January 2009

and China is one of the pioneer emerging countries implementing
circular economy-oriented legislation to redress the environmental harms arising from the rapid growth of its industrial activities
in recent decades. The circular economy initiative of China has
major strategic importance for Chinese enterprises, particularly
those in the manufacturing sector which are considered a major
polluting source to the environment. Thus, protable growth,
increasing environmental awareness, and stringent regulatory
policies all suggest that Chinese manufacturing exporters need a
management approach to tackle these challenges. Managing the
logistics cycle of products in an environment-friendly manner and
the different facets of these environmental management practices
are increasingly embraced as a source of lasting competitive
advantage by many Chinese manufacturers [6].
As China aspires to develop a circular economy to promote
continuous economic development without generating signicant
environmental and resource challenges, GLM is congruent with
this goal featuring a focus on the three Rs (i.e., recycling, reuse,
and reduce) to improve internal procedures and external conformances in managing product movements. To reach this circular
economy objective, the important role of logistics management
should not be neglected. Considerable opportunities exist along
the logistics chain to reduce a rms environmental impact; for
example, substituting chemicals that might reduce the generation
and handling of hazardous waste or by reducing the packaging
waste that must be managed and disposed. GLM is novel and
unique relative to concepts such as reverse logistics and closedlooped supply chain, which are conned to an emphasis on
mitigating the environmental damages through managing the
forward and reverse physical movements of goods among trading
partners. Reverse logistics focuses on planning, implementing,
and controlling efcient ows of materials, in-process inventory,
nished goods from the point of consumption to production for
the purpose of recapturing value or conducting proper disposal [7]. Similarly, closed-loop supply chain consists of a forward as
well as reverse supply chain, such that the loops of product ow is
closed by reusing the product as itself, its components, or its
materials [8]. Although these concepts are helpful for environmental protection by reducing the disposal to landll with focus
on processes in handling end-of-life or returned products, e.g., by
recycling and remanufacturing, they neglect the management
practices that are useful for mitigating the environmental
damages caused by products throughout their life-cycle. In comparison, GLM is a management approach that considers product
return and recycling, environmental management systems, and
eco-efciency as viable ways to comply with environment-based
regulations in international trade [9,10]. While environmental
impacts occur at all stages of a products life cycle [11], GLM can
contribute to integrate these factors in organizational logistics
operations particularly on meeting market expectations, managing environmental risks, complying with regulations, and
improving business efciency. In particular, product distribution
requires partner participation and performance monitoring if the
recovery of products and materials in an environmentally sound
manner can succeed.
GLM reects organizational ability to conserve resources, reduce
waste, improve operational efciency, and satisfy the social expectation for environmental protection. Other than internal activities such
as product development and manufacturing processes, managing
physical product ows is considered essential for environmental
protection from the logistics and international business perspectives
[12,13]. While there are studies linking logistics elements including
procurement, distribution, packaging, reserve logistics, to environmental preservation [14,15], the literature is void of a theoretical
construct that captures the key elements of GLM. Thus, this study

lls this research gap by developing GLM as a composite construct

reecting an organizations strive to balance economic growth and
environmental protection in logistics management as well as the
structure (i.e., the procedures), relevant processes (i.e., the evaluation), and strategy (i.e., partner and management focus) that supplement this goal. Thus, at the core of GLM is the belief that rms can
improve both environmental and operational performance by managing the logistics cycle of their products.
We examine two performance measures for evaluating the
outcomes of GLM: (1) environmental performance, which is
related to reduction in emission, waste, and pollution incurred
from logistics activities, and (2) operational performance, which
is concerned with improvement in product development and
delivery. Based on the theory of structuration, we investigate
the antecedent economic and institutional factors pressurizing
the adoption of GLM by Chinese manufacturing exporters. Finally,
we evaluate the effect of regulatory pressure moderating the links
between the antecedent factors and performance outcomes.
We develop new measurement items and adapt existing scales
for evaluating GLM in manufacturing as well as the antecedent
and outcome factors experienced by Chinese manufacturing
exporters. The survey-based data were analyzed using conrmatory factor analysis (CFA), structural equation modeling, and
multi-group analysis for moderating effect. Our empirical results
establish that GLM can be embraced as a manufacturing resource
to make the logistics cycle less wasteful and regulation plays a
role to strengthen the implementation of GLM due to customer
pressures as well as the performance outcomes in both economic
and operational aspects.

2. Conceptualization and developing the GLM construct

We conducted exploratory interviews to understand environmental concerns of manufacturing enterprises in China. Specically,
we explored attributes constituting GLM and the pressures that are
experienced by the manufacturers. The details of the exploratory
interviews are summarized in Appendix B. We now proceed to
elaborate on these four attributes of implementing GLM.
Procedure-based practices: Policy guidelines are needed to
implement any organizational practices such as GLM. We
dene procedure-based practices as the management practice
to perform GLM activities based on company structure and
reporting systems in manufacturing enterprises. The procedure-based practices in GLM help manufacturers to detail and
rationalize the actions to be taken in GLM, and serve as a
communication tool between organizational functions on their
responsibility in GLM.
Evaluation-based practices: Periodic performance evaluation is
desired for manufacturing enterprises to identify areas for
improvement. These practices reect organizational ability to
evaluate, monitor, and improve performance on a continuous
basis. The purpose of evaluation-based practices is to provide
formal documents and reports to managers, reducing equivocality on the success of GLM.
Partner-based practices: A logistics chain requires the support
and knowledge of internal staff members to work beyond
organizational boundaries for any initiative such as environmental management to take effect. Staff communication and
training on GLM is therefore needed to achieve the targeted
implementation outcomes. A rm should not act unilaterally
and partnership, backward with suppliers and forward with
customers, is instrumental to competently mitigate the environmental impact arising from inter-organizational activities
and product ows. The partner-based practices reect

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

organizational ability in coordinating with internal staffs and

external partners on the implementation of GLM. Such practices emphasize information sharing and communication on
the development of GLM with related parties in the logistics
chain.
General environmental management practices: This component
of GLM requires visibility in the product development process
and that the activities are compliant with international environmental standards in a logistics chain. The general environmental management practices evaluate the extent to which
rms are visible in environmental protection actions that are
the responsibility of different stakeholders. Firms maintain
records in satisfying environmental standards with a formal
reporting system for stakeholder access, such as publishing
corporate social responsibility reports [16].
This conceptualization of GLM based on our interviews is in
line with the thoughts on environmental management and the
logistics literature. The term environmental management has
been conceptualized as encompassing managerial efforts to minimize the environmental harms generated throughout the life
cycle of manufactured merchandises. Environmental management, composed of product and operations technologies and
international business management systems, is one important
determinant of environmental performance with the purpose to
develop, implement, manage, coordinate, and monitor organizational activities to reach compliance and waste reduction goals.
Acknowledging the environmental impact that stretches beyond
organizational boundary, some enterprises have begun to shift
from multiple sourcing and competitive bidding to more longterm and traceable partnership as a preferred approach for
managing logistics [17]. Such approach involves the collective
efforts from different logistics parties including suppliers, transporters, warehouses, and retailers to undertake environmental
management practices such as eco-design, product return, and
recycling to green the logistics chain [18]. In organizing interorganizational product ow activities, a well-structured management practice is essential to improve logistical coordination
amongst partners, hence reducing potential wastes such as idle
facilities and excessive inventories [19]. Extending beyond these
concepts, GLM is dened in terms of these four specic attributes
and characterized as being specic and actionable by individual
rms to improve environmental and operational performance.

3. The antecedents of GLM

The notion of GLM resonates with the managers contacted in
our exploratory interviews, while they also believed that several
factors could affect the level of GLM a Chinese manufacturer
exhibits. These factors are broadly classied into customer pressures, economic incentives, and regulatory requirements. Consistent with the theory of structuration [20], these factors reect
organizational actions that are inuenced and structured by a set
of resources, relations, and conditions in the implementation of
GLM. In addition to institutional legitimacy, the resources available and regulatory constraints can determine the actions of
manufacturing enterprises.
Specically, the resources aspect of structuration theory highlights the available resources and inputs supportive of environmental management practices. Examples of these resources
include governmental subsidies and material costs savings, which
provide economic incentives for green logistics operations. In
servicing the international markets, manufacturing enterprises
need to mitigate the environmental impact arising from the
development and distribution of their products while raising their

269

ecological efciency. Such efciency enhancements, which are

increasingly expected by international customers, can be structured by the environmental roles and expectations of their
partners along the logistics chain [21]. There are also regulatory
requirements, spanning from limiting materials used to waste
disposal, structuring the environmental management practices of
manufacturers.
Other than economic considerations, rms pursue GLM due to
customer pressures and institutional legitimacy [22,23]. A green
image is favorable for manufacturers, particularly those with
export orientation, to gain acceptance in the global market. By
adopting GLM, there can be spill-over effects nurturing customer
preference for related products with avoidance for environmental incidents and the consequential legal costs and nes.
While GLM facilitates and promotes such actions as product
return and recycling services for their products, GLM implementation improves environmental reputation of manufacturers
through news and feature stories, cultivating a positive publicity
and corporate image to attract environmentally conscious customers [4]. While plentiful products exist in the market labeling
their environmental consciousness, customers may switch if a
product violates environmental laws or pollutes the environment
[24,25]. Many anecdotes suggest that sourcing from environmentally irresponsible manufacturers has negative impact on the
reputation of downstream customer rms, e.g., retailers, which
often interact directly with individual end consumers. This
phenomenon gives rise to an increasing trend for manufacturing
enterprises seeking ISO 14000 certication, environmental auditing, and retrieving reusable products for reuse to satisfy the
environmental requests of their customers. GLM may serve to
signal the congruence of environmental management practices
with the going green expectation by the international community. Doing so may lead to greater market acceptance and insulate
from criticisms by competitors [26]. GLM is helpful for Chinese
manufacturing exporters to showcase their environmental credentials and satisfy those increasingly better-informed and more
demanding international customers, enabling them to compete
effectively in export markets, especially in the longer term.
Hypothesis 1. The customer pressure for environmental protection encountered by a Chinese manufacturing exporter is positively related to its implementation of GLM.
GLM can be embraced as a valuable resource to satisfy the
growing organizational quest for productivity, while reducing
pollution and resources consumption. In addition to customer
expectation for cleaner production, there are two aspects of
economic pressures that are encountered by manufacturing
enterprises, namely dematerialization and decoupling [5], to gain
cost advantage in the global market. The former is concerned with
consuming less environmental resources for each unit of output,
while the latter refers to lower dependency on the input of
natural resources for continuous productivity growth. Since
environmental impacts occur at all stages of a products life cycle,
GLM plays a role to address these concerns. For instance, product
distribution in an environmentally sound way would require
procedures and evaluations to govern the processes so that
efcient recovery of products can be achieved with partner and
compliance requirements fullled. A challenge for manufacturing
enterprises is to operate protably while reducing their adverse
impacts on the environment. In particular, the Chinese economy
is showing signs of overheating with rise of ination, manufacturers in China experiencing intense growth of raw material costs
are fraught with threats of eroded earnings [27]. On the other
hand, as a manufacturing driven economy fuelled by rapid
industrialization, China has become the worlds largest waste

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

generator. To deter such enormous waste production, Chinese

government imposes higher fee of waste disposal and encourages
organizational adoption of environmental management practices
to retrieve reusable products in the hope of saving costs and
alleviating pollution problems. These situations lead to rising
costs for Chinese manufacturers to operate. In view of the economic pressures, GLM can be a viable management approach to
resolve the cost challenge and respond the environmental request
by involving cross-functional efforts, and systematically monitoring and reporting the progress of GLM to allow productivity and
environmental improvement in managing the logistics activities
throughout the product life cycle.
Hypothesis 2. The economic pressure for environmental protection encountered by a Chinese manufacturing exporter is positively related to its implementation of GLM.
4. The consequences of GLM
There is growing interest on eco-efciency and environmental
performance. The outcomes of such environmental management
systems as ISO 14001relating to gross prot margin and sales per
employee [28] as well as social and environmental performance
[29] have been examined. GLM is different with an emphasis on
customer and supplier participation to implement by establishing
various complementary management practices to facilitate such
implementation. Yet it remains unclear whether rms adopting
GLM more intensively perform better. This study examines two
performance aspects of GLM relating to environmental performance and operational performance. The former assesses performance on pollution reduction, resources conservation, and
corporate environmental reputation, while the latter evaluates
performance on productivity gains.
When pollution arises, it reveals inefcient use of inputs and
eco-unfriendliness in one or more logistics activities, spanning
from product design, production, distribution, to disposal. Such
problems can be prevented through redesigning product and
production processes [30]. Implementing GLM practices can also
make business less polluting. Examples of these practices include
substituting with less polluting inputs, recycling by-products of
processes, and innovating polluting processes. These practices are
helpful for reducing consumption of hazardous materials as well
as lowering disposal of waste water and solid wastes in the
production processes. The attributes of GLM are useful mechanisms to prevent environmental degradation caused by organizational activities through various managing, reporting, and
monitoring procedures to control the logistics processes involved
throughout a product lifecycle [31]. Such management efforts can
lessen disposal of products and parts with residual values,
redeploy reusable parts into new products, reduce carbon emission in production and distribution, and extend the product
lifecycle. The improved logistics efciency and reduced resources
consumption due to GLM are important environmental pursuits
by Chinese manufacturing enterprises [32]. By implementing
GLM that aims to reduce adverse environmental impact caused
by production and distribution activities, Chinese manufacturing
exporters stand a better chance to market their products in
overseas markets with demanding environmental expectations
by customers and environmental regulations.
Hypothesis 3. The implementation of GLM by a Chinese manufacturing exporter is positively related to its environmental performance.
There is a general belief on the trade-off between environmental
management and productivity [33]. To pursue environmental goals,
rms will inevitably suffer from increased costs and reduced
productivity due to necessary investment in capital resources for

product and process changes which in turn will add costs and erode
protability. Nevertheless, the eco-efciency perspective argues
that pollution is a form of economic inefciency, whereby pollution
reduction is benecial to productivity [34]. GLM is oriented towards
eco-efciency that proactively manages the same level or more of
product ows, but reduces environmental degradation, resource
consumption, and costs. It involves preventive approaches on
environmental protection spanning from materials sourcing to
end-of life product acquisition and processing. The collection and
use of reusable parts and components can lessen environmental
damages due to disposal in addition to reducing costs in materials
sourcing. Investigating end-of-life products also enables manufacturers to discern customer usage patterns and identify areas for
product quality improvements. In pursuit of pollution prevention,
complementary networks of suppliers and customers can be leveraged for productivity enhancement. For example, customers support for products acquisition facilitates product return for recycling
processes of manufacturers, improving the success of environmental initiative by manufacturers to reduce disposal. Chinese manufacturers advanced in supply chain cooperation perform better in
economic performance with regard to the cost for materials
purchasing, energy consumption, and waste treatment than their
laggard counterparts [5]. The procedure-, evaluation- and partnerbased focus of GLM necessitates the engagement of different functions and participation of related parties to continuously improve
the logistics chain through reduction of task redundancy and waste.
GLM therefore offers a management structure to support environmental-based logistics management coordinating the logistics chain
activities to reap operational performance gains.
Hypothesis 4. The implementation of GLM by a Chinese manufacturing exporter is positively related to its operational performance.
5. The moderating role of environmental regulations
Manufacturers need adaptation to the changing business environments [35,36], particularly environmental regulatory requirements, if their products are to compete in regulated markets.
Environmental regulatory pressure is concerned with regulations
that are enacted by local or oversea regulatory bodies to control
environmental damages caused by organizational activities ranging from production, transportation, to product disposal. In many
cases, these environmental regulatory pressures are mandatory for
enterprises to produce, distribute, and sell their products under
the legal requirements. There are many such environmental regulatory pressures encountered by Chinese manufacturing exporters
in their operations. The regulations directed at the manufacturing
sector can bring operations and performance implications. For
instance, a comprehensive set of environmental regulations for
developing a circular economy such as Clean Production Law and
Environmental Impact Assessment Law relevant to the manufacturing industry have been enacted in China. External regulatory
pressures from the European Union (EU) have led many Chinese
manufacturing exporters to reconsider the environmental impact
engendered throughout their logistics chain. Exporting products
destined for the EU market must be free from hazardous substances (e.g., RoHS and REACH) and the original manufacturers are
mandated to undertake the responsibility for the collection,
treatment, and recycling of end-of-life products, for all electrical
and electronics equipment in the case of WEEE. Since the EU
constitutes a major market for manufacturing export, it is important for manufacturers, especially those highly dependent on
export in China, to comply with these regulations or otherwise
suffer from massive export declines.
These regulatory pressures are reective of the environmental concerns by the local community and regulatory bodies

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

as negative externalities caused by imports [37]. In the wake

of increased public pressure and the growth of more stringent
environmental regulations, GLM as a proactive international
logistics management approach towards protecting the environment is a viable way for developing an environment-friendly
corporate image to compete for international trade. Such environmental reputation can be a valuable resource for manufacturers, particularly those who are export-oriented, in emerging
countries to access overseas markets, to comply with, and to
anticipate necessary changes with future legal environmental
standards in different countries. Manufacturers are often mandated to demonstrate their commitment for environmental protection and GLM can be leveraged for such purpose. Further to the
customer and economic pressures as antecedent drivers for GLM,
environmental regulatory pressure strengthens the implementation by providing guidelines on the environmental standards and
the export requirements of markets stipulating different environmental conformances. The need for regulatory compliances also
intensies the environmental dedication of manufacturers for
GLM implementation to signal their environmental and productivity achievements. We argue that Chinese manufacturing exporters encountering higher environmental regulatory pressures are
more receptive to customer and economic concerns on environmental protection with a more intensive implementation of GLM.
Hypothesis 5a. When the environmental regulatory pressure
experienced by a Chinese manufacturing exporter is high, the
positive effect of customer pressures for environmental protection on its implementation of GLM will be stronger.
Hypothesis 5b. When the environmental regulatory pressure
experienced by a Chinese manufacturing exporter is high, the
positive effect of economic pressures for environmental protection on its implementation of GLM will be stronger.
The noncompliance penalties and nes [38] as well as the
public disclosure are regulatory punishments for polluting rms.
In many instances, manufacturers are pressurized to be proactive
in environmental protection in the hope of attaining both environmental and productivity benets, while gaining recognition by
their overseas markets on regulatory compliance. Such pressures
highlight the needs of manufacturing enterprises to improve their
environmental management practices in the logistics chain.
Regulatory requirements for pollution reduction guide the performance of GLM as such pressure promote environmental awareness and standards for manufacturers to integrate the need for
environmental protection in their production processes. A more
proactive step is to develop management practices such as GLM
for improving environmental performance while minimizing
costs throughout the product life cycle. Environmental regulatory
pressure reinforce the need for implementing GLM to achieve
environmental performance where the regulatory requirements
provides guidance for manufacturers on practices useful for
preserving the environment. To gain competence in countries
stringent in environmental regulations, it requires greater efciency in the use of resources where GLM can contribute environmental and operational benets to offset the compliance costs.
In view of the higher environmental standards due to the need
for regulatory compliances, manufacturers implementing GLM
are urged for strengthening their environmental and operational
performance outcomes to establish their environmentallyfriendly position and showcase their performance achievements.
Fig. 1 depicts the research framework of this study.
Hypothesis 6a. When the environmental regulatory pressure
experienced by a Chinese manufacturing exporter is high, the

271

positive effect of its implementation of GLM on environmental

performance will be stronger.
Hypothesis 6b. When the environmental regulatory pressure
experienced by a Chinese manufacturing exporter is high, the
positive effect of its implementation of GLM on operational
performance will be stronger.
Environmental
regulatory
pressure
H5

H6
H3

Customer pressure H1

Environmental
performance

GLM
H2

H4

Economic pressure

Operational
performance

Fig. 1. Research framework.

6. Methodology
6.1. Sample characteristics and data collection
This study uses Chinese manufacturing exporters as an empirical setting to test the hypotheses due to the following reasons.
First, China is a global production base, exporting a wide variety of
merchandises ranging from 4% to 40% of the worlds manufacturing outputs of different products [39]. Second, the scale and speed
of Chinas recent rise of industrialization has engendered many
environmental problems that have aroused international concerns
relating to its pollution impact not only on the environment, but
also on health issues such as birth defects and premature death
both locally and internationally [40]. What do we know about the
institutional and operational forces triggering the environmental
initiatives of Chinese manufacturing exporters is seriously lacking.
Third, environmental management has been observed as a critical
factor affecting the prosperity of Chinese manufacturing enterprises [6]. Fourth, the environmental management issues arising
from product distribution by Chinese manufacturing exporters
provide a rich research setting appropriate for examining GLM
pertaining to its antecedents, measurement properties, and performance outcomes. In particular, given the global importance of
made in china merchandises, the environmental protection
pressures exerted by the international community, and the institutional reform for ecological modernization desired by the
Chinese government can be scrutinized to gain insights on the
effect of regulatory pressure as a contextual condition affecting
the extent of implementing GLM and its performance outcomes.
The respondents in this study were senior executives of
Chinese manufacturing enterprises. We did not constrain the
sample organizations to specic manufacturing industries with
the aim to improve the generalizability of our study ndings, but
we controlled the product type in our analysis to take account of
different environmental issues that may arise from the manufacturing processes and logistics activities [41]. We randomly drew a
sample of Chinese manufacturing exporters from the database
Dun & Bradstreet. These Chinese manufacturing exporters locate
in the Pearl River Delta (PRD) in China, which is a major industrial
zone that accounts for one third of Chinas export trade value.
Located in the worlds manufacturing center with support of
well-developed logistics infrastructure for international trade
activities, majority of these manufacturers are export-oriented,
servicing foreign customers with a wide variety of manufactured
products ranging from electronics and toys to garments and
textiles. These manufacturers in the PRD region encounter similar

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

issues pertinent to their environmental management practices

due to the pressures induced by their international customers,
local and oversea regulatory bodies, and rising operating costs
in China. In addition to the executives contact information,
company name, address, phone number, and companys business
prole, we collected archival data on annual sales volume,
product type, and company size in terms of number of employees
from the database as control variables. We identied a qualied
key informant in each sample rm knowledgeable in environmental and logistics-related management according to the information provided by the database. Respondents were assured that
their answers are reported in aggregate with others, and their
identity and company details are kept condential. A total of 800
sample manufacturers were contacted. Furthermore, a survey
package containing the questionnaire, a self-addressed pre-paid
reply envelop, and a cover letter explaining the purpose of this
study, was mailed to each of them in 2008. Given the job nature of
the key informant managers in handling foreign customers, we
were able to administer the questionnaire in English language.
Follow-up telephone calls were made or emails were sent two
days after the initial mailing to seek acknowledgement of receipt
and to emphasize the importance of their responses to this study.
We then sent another survey package to the non-respondents two
weeks after the follow-up calls and emails of the initial mailing
with a cover letter to solicit their participation. Two weeks after
the second mailing, in addition to dispatching a third survey
package to the non-respondents, we made follow-up telephone
Table 1
Prole of the respondents (n 128).
Sampled
population
(percentage)

Respondents
(percentage)

Number of employees
110
1150
51100
101500
4500
Unknown

17.8
35.5
31.7
4.1
7.4
3.5

14.8
33.6
35.9
6.3
2.3
7.0

Total annual sales (million USD)

o$10
4$10$20
4$20$50
4$50$100
4$100
Unknown

16.4
53.7
12.0
9.6
5.9
2.4

13.3
31.3
35.2
10.9
2.3
7.0

Company characteristics

Product type
Tobacco products
8.3
Petroleum rening and related industries 7.8
Rubber and miscellaneous plastic
6.5
products
Leather and leather products
4.6
Stone, clay, glass, and concrete products
9.3
Apparel and other nished products
11.8
made from fabrics and similar products
Lumber and wood products
4.5
Fabricated and metal products
5.6
Paper and allied products
4.9
Industrial, commercial, machinery, and
3.7
computer equipment
Printing, publishing, and allied industries 9.2
Electronic and other electrical equipment 3.2
and components
Chemicals and allied products
4.6
Measuring, analyzing, and controlling
10.2
instruments; photographic
Miscellaneous manufacturing industries
4.3
Others
2.9
Unknown
3.6

4.7
1.6
7.0
1.6
25
7.8
2.3
6.3
3.1
1.6
1.6
3.1
3.1
9.4
7.0
12.5
2.3

calls or sent emails to urge their response. Our data collection was
concluded three weeks after the nal mailing, with 134 completed questionnaires received for data analysis, representing a
response rate of 16.75%. We eliminated six returns due to
signicant missing data and the resulting effective response rate
of 16%is comparable to other survey-based environmental management studies, e.g. [42]. Table 1 summarizes the prole of the
respondent manufacturers.
6.2. Common method variance
We took two steps to determine whether common method
variance (CMV) posed a serious threat to the study. First, Harmons
one-factor test was applied to assess whether a single latent factor
would account for all the constructs. The single-factor model yielded
a w2 value of 2090.71 (df376). A w2 difference test was conducted
against the hypothesized six-factor model to assess CMV. A signicant difference between the w2 values of the two models
(Dw2 1502.74; Ddf21, po0.001) indicated that the t in the
one-dimensional model was signicantly worse than it was in the
measurement model. Such result provided preliminary evidence
that CMV was not a problem in this study. In addition, we followed
the procedures recommended by Lindell and Whitney [43] to examine CMV. We used the type of ownership of rm (i.e., publiclyowned vs. privately-owned) as the marker variable to perform the
CMV analysis because the marker variable is theoretically unrelated
to the dependent variables (i.e., operational and environmental
performance). The type of organizational ownership is not signicantly correlated to operational performance with p0.21 and
environmental performance with p0.97. The correlations between
all constructs in the measurement model and the type of organizational ownership are summarized in Table 4. In addition, the partial
correlations between the constructs are signicant after partialing
out the effect of CMV, and the partial correlations are reported in
Table 3. We concluded that the measurement model possessed
reasonable t with the data, the constructs exhibited both convergent and divergent validity, and CMV did not pose serious threat
to the interpretation of our study results.
6.3. Measurement development
We developed a structured survey instrument to measure the
practicing managers perception. Based on the conceptualization
of GLM according to the interviews results, we developed new
scales to operationalize the four attributes of GLM for evaluating
the extent of these environmental management practices implementation on managers perception. In addition, we included
measurement items on environmental protection for economic
pressure [44], customer pressure [45], operational and environmental improvement [46], and regulatory pressure [45] after
suitably adopting existing scales.
We generated a pool of measurement items from the literature
on environmental and logistics management. These measurement
items were systematically amended to better reect the manufacturing context. In the next step, we pretested these items with
six executives and ve academics in the eld for assessing the
comprehensiveness, logic, and relevancy of the measurement
items. On the basis of their feedback, we rened the items and
administrated the revised measurement items to 30 executives for
a pilot test. We conducted an exploratory factor analysis to purify
our scales. Based on the analysis results, we deleted two items
because of their lower corrected item-to-total correlation than the
threshold of 0.30, which left us 49 items for further analysis. The
number of indicators employed in this study are similar to those
other studies in the management literature examining latent
constructs with organizational key informants, e.g. [36].

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

273

Table 2
Results of CFA for GLM.
Indicator

Direction

Panel A: Second order conceptualization

PMP1

PMP2

PMP3

PMP4

PMP5

PMP6

EMP1

EMP2

EMP3

EMP4

PAMP1

PAMP2

PAMP3

PAMP4

CMP1

CMP2

CMP3

CMP4

PMPa

EMPa

PAMPa

CMPa

Construct

of GLM
PMP
PMP
PMP
PMP
PMP
PMP
EMP
EMP
EMP
EMP
PAMP
PAMP
PAMP
PAMP
CMP
CMP
CMP
CMP
GLMb
GLMb
GLMb
GLMb

Standardized
loading

Unstandardized
loading

0.83
0.91
0.89
0.65
0.81
0.73
0.78
0.92
0.97
0.90
0.57
0.63
0.93
0.81
0.75
0.79
0.77
0.83
0.88
0.85
1.02
0.97

1.00
1.05
1.07
0.84
0.94
0.93
1.00
1.22
1.20
1.17
1.00
1.06
1.47
1.31
1.00
1.08
1.06
1.24
1.00
1.08
0.98
0.89

Panel B: Using average scores for measuring the four dimensions of GLM

GLMb
0.81
PMPa
EMPa

GLMb
0.89
PAMPa

GLMb
0.96
CMPa

GLMb
0.84
a
b

1.00
1.13
1.05
1.00

S.E.

t-Value

0.08
0.09
0.10
0.09
0.10

13.18
12.54
8.20
10.78
9.32

0.00
0.00
0.00
0.00
0.00
0.00

0.10
0.09
0.10

12.15
12.89
11.79

0.00
0.00
0.00

0.12
0.20
0.19

8.61
7.36
6.80

0.00
0.00
0.00

0.12
0.12
0.13

9.22
8.98
9.74

0.00
0.00
0.00

0.13
0.12
0.14

8.12
8.34
6.21

0.00
0.00
0.00

0.09
0.08
0.09

12.32
12.90
10.95

0.00
0.00
0.00

Second-order indicators of GLM.

Second-order factor.

As discussed previously, GLM is conceptualized as a secondorder construct comprising four attributes: (1) procedure-based
practices, (2) evaluation-based practices, (3) partner-based practices, and (4) general environmental management practices. The
six procedure-based items reect the extent to which manufacturers formally document, manage, and report on how their
GLM practices are conducted by the responsible organizational
functions. The four evaluation-based items record the extent
to which manufacturers monitor, report, and assess their GLM
practices. The partner-based scale consists of ve items assessing how well manufacturers communicate with their internal
staff and external partners on their implementation of GLM. The
general environmental management scale evaluates the extent to
which manufacturers comply with environmental standards and
record their activities for formal reporting via publication of
annual report, etc. With reference to Russo and Fouts [44], we
developed a four-item scale to measure the increasing economic
costs of landll and potential economic gains of product return
compliance programs.
We adopted an existing scale [45] to provide a four-item
measure for evaluating the extent of customer pressure for
environmental protection engendered from customer requirements and expectations. We operationalized regulatory pressure
using a ve-item scale based on Zhu et al. [45] to evaluate the
environmental regulatory pressures experienced by manufacturers. A ve-item scale and another six-item scale were developed with reference to Sroufe [46] for evaluating environmental
and operational performance, respectively. The nal scales are
summarized in Appendix A.

were considered within acceptable levels. We evaluated the

measurement properties of the theoretical constructs by conducting conrmatory factor analysis (CFA) on the four attributes of
GLM. Then, CFA was conducted on the two antecedents (i.e.,
customer and economic pressures) and the moderator (i.e., environmental regulatory pressure) variables. Following the guidelines
by Gerbing and Anderson [47], we used maximum likelihood
estimation with sample covariance matrix as input in the CFA.

6.4. Measurement models analysis

The GLM construct

As GLM is conceptualized as a second-order construct, its four
attributes, namely procedure-based, evaluation-based, partner-based,
and general environmental management practices are rst-order
factors and measured through their respective indicators. First, we
estimated the second-order factor of GLM by examining the target
coefcient T2 [48]. The T indicates the extent to which the secondorder construct accounts for the variance amongst the rst-order
constructs. The rst-order constructs show the value of w2 336.37,
while the second-order construct has w2 352.41, giving a high T ratio
of 0.95. This result indicates that the relationships amongst the rstorder constructs are sufciently captured by the second-order construct [49]. The second-order construct t was considered acceptable
on the basis of the t indices (w2 352.41, df145, CFI0.91;
RMR0.05; IFI0.91; TLI0.90), which is consistent with Hu and
Bentlers [50] recommendations. The path coefcients between the
indicators and the rst-order factors are signicant at po0.05, while
the path coefcients between the second-order construct (i.e., GLM)
and its four attributes are signicant at po0.05. Table 2 summarizes
the results of the CFA for GLM and its respective rst-order

We used a combination of SPSS 17.0 and AMOS 17.0 to examine

the univariate skewness and kurtosis of the variables and they

w2(second-order model).

The T is computed using the following formula: T w2(rst-order model)/

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

constructs. On the basis of theoretical and empirical grounds, the

conceptualization of GLM as a second-order construct is tenable.
We further examined the second-order factor structure by conducting one-factor CFA on the average scores of the four respective
rst-order constructs following prior studies, e.g. [51]. The model t
is good (w2 16.28, df2, CFI0.97; RMR0.02; IFI0.97;
TLI0.90). All the path coefcients are signicant at po0.05. We
used the aggregated scale consisting of the average scores of the four
attributes as the indicators of GLM for further analyses.

This evidence demonstrates that convergent validity exists for

the constructs. Table 3 summarizes the standardized loadings.
We examined discriminant validity following the proposed
guidelines by Fornell and Larcker [52], which is widely adopted
by other researchers, e.g. [53]. We compared the average variance
Table 4
Common method bias analysis.
GLM

The combined measurement model

We proceeded to t a CFA on all the six latent constructs
before testing the path coefcients of the hypothesized structural
model. Composite reliability, Cronbachs a, and average variance
extracted are summarized in Table 3. We assessed the unidimensionality of the constructs by Cronbachs a. The a values were well
above the threshold value of 0.70 in the range 0.890.92,
indicating that the construct measures are sufciently reliable.
As shown in Table 2, composite reliability coefcients for the six
latent constructs fell in the range from 0.90 to 0.92, suggesting
internal consistency for each set of observed variables in its
respective latent construct [52].
The six-factor measurement model exhibits a good t with
the data (w2 587.97, df355; CFI 0.92; RMR 0.07; IFI 0.92;
TLI 0.90). The standardized factor loadings range from 0.59
to 0.96, and are statistically signicant at the p o0.01 level.

ERP

CP

EP

EPerf

ERP

0.18
0.15

CP

0.39
0.35

0.43
0.39

EP

0.33
0.29

0.48
0.45

0.59
0.56

EPerf

0.27
0.25

0.24
0.22

0.19
0.17

0.27
0.23

OPerf

0.33
0.28

0.18
0.16

0.25
0.24

0.37
0.35

0.35
0.33

Type of ownership (MV)

Mean(SD)

 0.06
2.85
(0.71)

0.09
3.20
(1.06)

0.20
2.05
(0.99)

0.05
2.35
(0.89)

 0.01
3.51
(0.85)

OPerf

 0.12
3.24
(0.76)

MV marker variable. The rst value in each cell is the correlation between the
constructs, and the second value is the correlation corrected for method bias.All
correlations are signicant at p o 0.05, except for values in italics.

Table 3
Measurement model.
Panel A: Scale properties of the latent factors
Construct
Cronbachs a

Composite reliability

Average variance extracted

GLM
ERP
CP
EP
EPerf
OPerf

0.92
0.90
0.89
0.91
0.92
0.93

0.87
0.64
0.62
0.56
0.70
0.64

0.91
0.90
0.89
0.90
0.92
0.91

Panel B: CFA results of the latent factors

Indicator
Direction
Construct
PMP
EMP
PAMP
CMP
ERP1
ERP2
ERP3
ERP4
ERP5
CP1
CP2
CP3
CP4
EP1
EP2
EP3
EP4
EP5
EPerf1
EPerf2
EPerf3
EPerf4
EPerf5
OPerf1
OPerf2
OPerf3
OPerf4
OPerf5
OPerf6

GLM
GLM
GLM
GLM
ERP
ERP
ERP
ERP
ERP
CP
CP
CP
CP
EP
EP
EP
EP
EP
EPerf
EPerf
EPerf
EPerf
EPerf
OPerf
OPerf
OPerf
OPerf
OPerf
OPerf

Estimate

Standardized estimate

1.00
1.13
1.06
1.01
1.00
0.99
0.98
0.76
0.94
1.00
0.87
0.74
1.09
1.00
1.49
1.56
1.33
1.25
1.00
1.05
0.62
0.90
0.84
1.00
1.03
1.23
1.12
1.07
1.09

0.81
0.88
0.96
0.84
0.84
0.83
0.82
0.63
0.81
0.81
0.69
0.59
0.87
0.60
0.85
0.86
0.72
0.73
0.88
0.93
0.67
0.87
0.78
0.70
0.73
0.89
0.81
0.77
0.81

S.E.

t-Value

0.09
0.08
0.09

12.14
13.53
11.23

0.00
0.00
0.00

0.09
0.09
0.10
0.09

10.85
10.67
7.66
10.60

0.00
0.00
0.00
0.00

0.10
0.11
0.11

8.13
10.66
10.05

0.00
0.00
0.00

0.23
0.24
0.23
0.21

6.37
6.40
5.85
5.89

0.00
0.00
0.00
0.00

0.07
0.07
0.06
0.08

15.44
8.71
13.58
11.08

0.00
0.00
0.00
0.00

0.09
0.14
0.11
0.14
0.13

11.01
9.01
9.81
7.98
8.40

0.00
0.00
0.00
0.00
0.00

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

extracted (AVE) of each construct with the highest variance that

each construct shares with the other constructs in the model. The
AVE for each construct is higher than the highest shared variance,
suggesting that all constructs exhibit discriminant validity. In
addition, we examined discriminant validity using an alternative
procedure [54]. Since the w2 values for the unconstrained models,
where each pair of constructs co-varies freely, are signicantly
lower than the constrained models (with the estimated correlation
for each pair of constructs constrained to one), the presence of
discriminant validity for all the constructs is evidenced.

7. Hypothesis testing
7.1. The structural model testing
The structural model used to test the hypotheses consisted
of the six factors validated in the measurement model, excluding
the moderating variable (i.e., environmental regulatory pressure).
The model t measures indicated acceptable agreement with
the covariance in the data (w2 484.83, df287; CFI 0.91;
RMR 0.07; IFI 0.91; TLI 0.90; RMSEA0.07). The hypothesis
test results for H1H4 are summarized in Table 5.
We found that GLM was positively associated with operational
(b 0.35, p o0.01) and environmental (b 0.36, p o0.01) performance, providing support for H3 and H4. In support of H1,
customer pressure was positively associated with GLM (b 0.21,
p o0.05). The prediction in H2 that economic pressure encountered by manufacturing enterprises is positively associated with

275

GLM implementation received no support (b 0.28, p 40.05). The

control variables, including annual sales volume, product type,
and company size in terms of number of employees, were
incorporated in the structural model as determinants to the
dependent variables (i.e., GLM, and environmental and operational performance). The control variables have no signicant
impact (p40.05) on the dependent variables. In sum, three of the
four hypotheses are accepted after testing the structural model.
For evaluating the impact of operational initiatives such as
GLM, it is worthwhile to examine against objective measures
of performance, although prior research has found strong links
between perceptual measures of performance with objective
measures. While we believe that our ndings hold for objective
measures of performance, we extracted sales volume as an
objective measure from our database. This measure corresponds
to the perceptual measure OPer6 we obtained through the survey.
A correlation of 0.70 between sales volume and OPer6 indicates
a close association between these measures in our data. We
repeated the test for the structural model by substituting sales
volume for OPer6, and the results we obtained were similar to the
results from the structural model that contained the OPer6
perceptual measure. To further validate the ndings, we carried
out the analysis comparing the model t of 10 randomly selected
subsamples, consisting of 100 respondents each, from our total
sample of 134. We found insignicant differences in the w2 value
when we specied equality for the parameters across two subsamples at a time. The results indicated no signicant change in
the model t, suggesting that the model was valid across different
subsamples.

Table 5
Results of hypothesis testing.
Panel A: Structural model: H1-H4
Construct
Direction
Construct
GLM
GLM
EPerf
OPerf

CP
EP
GLM
GLM

Estimate

Standardized estimate

SE

t-Value

Hypothesis

Conclusion

0.21
0.29
0.35
0.35

0.33
0.17
0.25
0.36

0.09
0.24
0.13
0.10

2.30
1.16
2.70
3.53

0.02
0.25
0.00
0.01

1
2
3
4

Supported
Not supported
Supported
Supported

Panel B: Multigroup analysis: H5H6 (high vs. low environmental regulatory pressure)
Models
w2
df
w2/df
IFI
TLI
1. Baseline model
2. Constrained model
3. Constrained paths
3a. CP-GLM
3b. EP-GLM
3c. GLM-EPerf
3d. GLM-OPerf
Path coefcients
Paths
CP-GLM
EP-GLM
GLM-EPerf
GLM-OPerf

CFI

RMSEA

w2 Difference test

697.22
901.80

474
537

1.47
1.67

0.91
0.84

0.90
0.83

0.90
0.83

0.07
0.08

Dw2 204.58, Ddf 63 p o 0.05

701.89
698.77
701.70
701.33

475
475
475
475

1.48
1.47
1.48
1.48

0.92
0.91
0.91
0.90

0.91
0.92
0.90
0.90

0.92
0.92
0.90
0.91

0.07
0.07
0.07
0.07

Dw2 4.67, Ddf 1 p o0.05

Dw2 1.55, Ddf 1 p 40.05 (insignicant)
Dw2 4.48, Ddf 1 p o0.05
Dw2 3.91, Ddf 1 p o0.05

High environmental regulatory pressurea (n 73)

Low environmental regulatory pressureb (n 55)

Hypothesis

Conclusion

0.39 c
(2.26)n
0.23
(1.28)
0.44
(3.67)nnn
0.40
(3.01) nn

0.18
(0.82)
0.06
(0.28)
0.07
(0.04)
0.22
(1.38)

5a

Supported

5b

Not supported

6a

Supported

6b

Supported

t-Values are in brackets.

p o0.001.
p o0.01.
p o 0.05.
a
Firms were classied as encountering high environmental regulatory pressure if their score on the environmental regulatory pressure was greater than the median
score.
b
Firms were classied as encountering low environmental regulatory pressure if their score on the environmental regulatory pressure was lower than the median
score.
c
Paths coefcients.
nnn
nn
n

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

7.2. The rival model testing

In our hypothesized model, GLM performs a mediating role
between the antecedent (i.e., customer and economic pressures)
and the consequence (i.e., operational and environmental performance) constructs. The hypothesized model does not include direct
paths from the antecedent factors to the consequent outcomes. In
the rival model, we allowed the two antecedent variables and GLM
to have direct effects on operational and environmental performance.
As such, GLM is not modeled as a mediating construct. We compared
the hypothesized structural model with the rival model to test the
nomological status of GLM as a mediating variable [55]. The rival
model (number of distinct parameters to be estimated59) was less
parsimonious than the hypothesized model (number of distinct
parameters to be estimated 57) with t indices w2 489.72;
df285; CFI0.91; RMR0.07; IFI0.91; TLI0.90; RMSEA0.08.
Since the two models used exactly the same covariance structure as
input, we compared the two models using w2 difference test. The w2
difference test results (Dw2 4.89; df2, p40.05) suggested that the
rival model did not explain the covariance structure better than that
of the hypothesized model. We also compared the two models based
on the percentage of the paths between the latent constructs. The
ratio of supported paths to the hypothesized paths was 3 of 4 (75%),
and the ratio of signicant paths to examined paths was only 2 of 6
(33%) in the rival model. While we prefer a more parsimonious
hypothesized model to that of the rival model, these results imply
that GLM holds a mediating role and is inuential in bringing about
operational and environmental performance for Chinese manufacturing exporters.
7.3. Moderating effect of environmental regulatory pressure
H5 and H6 are concerned with the moderating effect of
environmental regulatory pressure on the relationships among
economic pressure, customer pressure, GLM implementation,
environmental performance, and operational performance.
Following the procedures proposed by Byrne [56], we used
multi-group analysis within AMOS17.0 to assess the moderating
variable effects (i.e., environmental regulatory pressure) on the
structural model. A single environmental regulatory pressure
index was formed by averaging the measurement items. We
divided the sample into two groups (i.e., high vs. low environmental regulatory pressure groups) with median split. Manufacturers with a total score of 3.20 or less were classied as rms
operating under lower environmental regulatory pressure
(n55), and those with a total score of higher than 3.20 were
classied as rms operating under high level of environmental
regulatory pressure (n 73). Although the sample size of each
group is relatively small compared to similar studies, e.g. [57], the
multi-group analysis enables us to examine the structural relationships of the variables under high and low levels of environmental regulatory pressure. The multi-group analysis was
conducted in four steps. First, we developed a model where the
structural parameters vary freely across the two groups to form a
baseline model (Model 1). The baseline model has a value of
w2 697.22 with df 474. Second, the structural parameters were
constrained to be equal across the two groups (Model 2), generating an estimated covariance matrix for each group and an
overall w2 value for the sets of sub-models as part of a single
structural system. The constrained model has the value of
w2 901.80 with df537. Third, the moderator effects were tested
by assessing whether statistical differences exist between the two
w2 values. We conducted a w2 difference test to compare the
constrained model (Model 2) with the unconstrained one (Model
1). The w2 difference test results in w2M2  w2M1 204.58 with df 63
at po0.05, which is statistically signicant. A signicant change

in the w2 value indicates the moderator effect of environmental

regulatory pressure, such that invariance is found attributable to
environmental regulatory pressure. Fig. 2 depicts the results of
the high versus low environmental regulatory pressure groups.
High environmental regulatory pressure group
Customer pressure

.44***

.39*

Environmental
performance

GLM
.23

.40**

Operational
performance

Economic pressure
Low environmental regulatory pressure group
Customer pressure

.07

.18

Environmental
performance

GLM
.06

Economic pressure

.22

Operational
performance

***p < 0.001, **p < 0.01, * p < 0.05

Fig. 2. High versus low environmental regulatory pressure groups and the results.

Then, we examined the moderator effect of environmental

regulatory pressure on the paths in our research model by assessing the equality across two groups using a w2 difference test
between a model with a specic path set to be equal across two
groups (a constrained model) and a model where path coefcient
varies freely (a baseline model). For example, to test Hypothesis
5a, we constrained the customer pressures-GLM path equally
across the high and low environmental regulatory pressure
groups, and obtained the w2(df 475) 701.89. The Dw2(Ddf 1) 4.37
(po0.05) suggests that across the two groups, the customer
pressures-GLM path is not equal. The signicant path coefcient
is higher than that under low environmental regulatory pressure
(see Table 5 Panel B). The results support Hypothesis 5a, indicating
that the positive relationship between customer pressure and GLM
is stronger when environmental regulatory pressure is high than
when it is low. Next, we tested Hypothesis 5b, the moderator
effect of environmental regulatory pressure on the economic
pressure-GLM path. The Dw2(Ddf 1) 1.55 (p40.05) suggests that
across the two groups, the economic pressure-GLM path is equal,
providing no support for Hypothesis 5b. We repeated the multigroup analysis for testing Hypotheses 6a and 6b. The results
shown in Table 5 revealed that the GLM-environmental performance path is signicantly different across the high- and lowenvironmental regulatory pressure groups, lending support for
Hypothesis 6a that the GLM-environmental performance path is
stronger when manufacturers encounter higher level of environmental regulatory pressure. For Hypothesis 6b, the results show
that the GLM-operational performance path is stronger when
environmental regulatory pressure is higher than when it is low.
The results of the multi-group analysis are summarized in Table 5.
The plots of the relationships under high and low level of
environmental pressures in Figs. 36 suggest that the effects of
customer and economic pressures on GLM implementation, and
the effect of GLM on environmental and operational performance
are enhanced in the presence of higher environmental regulatory
pressure.

8. Discussion
There has been growing evidence of organizational willingness
to achieve improvements in the efciency with which resources

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

277

Fig. 3. A plot on the predicted value of implementing GLM under low and high
environmental regulatory pressure levels when customer pressure (CP) is encountered by manufacturers at low and high levels.

Fig. 5. A plot on the predicted value of environmental performance under low and
high environmental regulatory pressure levels when GLM is implemented by
manufacturers at low and high levels.

Fig. 4. A plot on the predicted value of implementing GLM under low and high
environmental regulatory pressure levels when economic pressure (EP) is encountered by manufacturers at low and high levels.

Fig. 6. A plot on the predicted value of operational performance under low and
high environmental regulatory pressure levels when GLM is implemented by
manufacturers at low and high levels.

are used, reduce specic environmental impacts of production

activities, and bring about environmental improvements. Chinas
integration into the worlds economy began three decades ago
after its entry into the World Trade Organization (WTO). This
economic integration made China, particularly for those of the
manufacturing exporters, depends more upon the international
trade. Yet, China has evolved as an international manufacturing
powerhouse serving the global production demands. The commensurate emissions that are produced during the manufacturing
processes have triggered substantial environmental burdens and
resource scarcity within China. These developments highlight

important implications for Chinese manufacturers who are considered as the major polluters and resources consumers. Increasingly, there are international and domestic pressures urging
Chinese manufacturers to tackle the environmental issues caused
by their growing industrial activities. As a part of the world
factory, Chinese manufacturing exporters can contribute by
producing, distributing, and packaging merchandises with more
environment-friendly alternatives, increasing the efciency of
materials use through waste minimization and recycling, and
changing the composition of output by using materials that are
less harmful to the environment. Investigation of the antecedents

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

and consequences of adopting GLM will be helpful for Chinese

manufacturing exporters to understand the importance of green
logistics and overcome the trade barriers given the rising international concerns relating to the development and distribution of
products in world trade.
The literature has increasingly focused on the ability of rms
to ease environmental problems by making resources less wasteful and thus more sustainable, while retaining the basic system
of capitalist production and consumption. GLM can be seen by
manufacturing enterprises not as a problem, but more as an
opportunity. Due to rising costs of materials and resources
scarcity such as rare metals, it can be a protable source for
manufacturers to recycle expensive materials from used products
such as mobile phones and consumer electronics. The importance
of investment recovery for Chinese manufacturers through better
utilization of scrap and used materials has also been emphasized
in the literature [32]. Yet, understanding of how effectively manufacturers can reduce environmental impact in product distribution throughout the product life cycle to meet this goal lags
far behind. The limited empirical evidence on the links between
GLM and performance provides little clue on the motivations for
adopting GLM, and specically how manufacturers can leverage
GLM as a part of their environmental strategy to improve
performance.
Environmental management and sustainable logistics is an
emerging research area tackling such issues as pollution and
waste reduction in manufacturing processes. Our study is one of
the rst attempts to ll this void by identifying and specifying the
management practices that are attributable to GLM. Based on our
interviews and survey data, we have developed and empirically
validated the GLM construct characterized with four attributes,
namely procedure-based, evaluation-based, partner-based, and
general environmental management practices. These attributes of
GLM suggest the importance of developing formal procedure and
assessment on the effort of GLM practices that enables continuous
improvement, while communicating with stakeholders on its
performance impact. The four attributes of GLM that we offer
are unidimensional and actionable measures that can indicate
where a manufacturer is headed in its efforts to manage logistics
in an environment-friendly manner. Understanding the four
attributes of GLM are essential for managers to develop procedures, perform evaluation, involve partners, and adopt general
environmental practices integrating the environmental concerns
of the physical ows (from production, distribution, to disposal)
throughout the life-cycle of products in support of both environmental and productivity improvements as envisaged in a circular
economy.
Prior work has shown that environmental management in the
supply chain does matter for performance [58]. Our empirical
results substantiate this argument and nd that regulatory
pressure moderates the performance link. Specically, GLM is
positively associated with environmental performance in reducing carbon emission, waste water, solid waste, and consumption
of hazardous materials. It also contributes to various operational
performance aspects covering product quality, shortened lead
time, and reduced waste in production, allowing manufacturing
enterprises a better cost position to compete in the international
market. The environmental and operational benets of GLM are
highlighted with manufacturers implementing GLM more intensively to experience productivity and reduced pollution in a
greater extent.
Our study ndings indicate customer pressures for environmental protection are positively related to the implementation of
GLM by Chinese manufacturing exporters. This result is consistent
with our theorization and echo the view that rms in emerging
countries pursue GLM in response to customer requirements such

as obtaining ISO 14000 certication [59] and retrieving reusable

products from the market with a view to keep customers for
continued businesses [60]. Government and other public pressures, growth in environmentally savvy customers, and enhanced
export and sale to foreign customers after the entry of China into
the WTO have collectively led to an increasing number of Chinese
manufacturing exporters to begin implementing environmental
management practices such as GLM. In line with the structuration
theory, these social conditions can inuence and shape the
international logistics operations of Chinese manufacturing
exporters. With relative scarcity of resources and the potential
pressure of green barriers in international trade, both the
Chinese government and manufacturing enterprises have
had increasing reasons to initiate and take corporate and industrial environmental management measures. Recently, China has
surpassed Japan as the second worlds largest economic entity
due largely to continuous internationalization of Chinese-made
products but this achievement also creates environmental concerns. In response, the Chinese government has implemented the
circular economy law since 2009 so as to alleviate the contradiction between rapid industrialization and shortages of
resources, where GLM can be an answer for achieving this goal.
Other than domestic regulations, there are pressures attributable
to international forces stemming from foreign governments, nongovernment bodies, consumers, and multi-national corporation
[32]. For example, extended producer responsibility has been
adopted in the European Union legislation for the reduction of the
amount of packaging waste, end-of-life vehicles, and electrical
and electronic wastes [61]. This trend for increased environmental responsibility to upstream manufacturers will accelerate
because a growing number of governments including China have
incorporated extended producer responsibility into their environmental policy. However, economic pressures for environmental
protection as reected by increasing cost of disposal, potential
savings from materials, and subsidies from government, are found
to have no association with implementing GLM by Chinese
manufacturing exporters. In the case of recycling mobile phone
in China, it recovers only materials, where no component,
assembly or packaging energy is recovered at the end of product
life [62]. Even though rare metals such as palladium and tantalum
can be extracted from waste electronic appliances, efcient
collection is a signicant hurdle to undertake recycling rendering
weak economic grounds for manufacturers to embark on GLM.
Another plausible reason is the lack of growth capacity through
cost reduction as they already command the status of low-cost
producers. The legitimacy to conform to the appeal of the international markets on environmental protection seems to be a more
salient incentive for Chinese manufacturing exporters to pursue
GLM. This is in line with the ex ante managerial belief of it pays
to be green, explaining the unattended economic opportunities
of green practices [34].
When Chinese manufacturing exporters are confronted with
environmental regulatory pressures at a high level, the positive
effects of GLM on environmental and operational performance are
enhanced. These differential strengths of performance outcomes
suggest that environmental regulations appear to be useful as a
guideline to direct the GLM efforts of manufacturers to improve
performance. Similar moderating effect of environmental regulatory pressure is also found on the relationship between customer
pressure and GLM. As regulatory pressure is a contextual condition governing organizational actions, environmental regulations
reinforce customer pressure to accelerate the implementation of
GLM by Chinese manufacturing exporters. New insights are
obtained in that environmental regulations are valuable for
enhancing the institutional legitimacy on the implementation of
GLM by Chinese manufacturing exporters and strengthening their

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

performance outcomes. Nevertheless, the moderating effect of

environmental regulatory pressures is found insignicant on the
relationship between economic pressure and GLM, suggesting
that environmental regulations are less effective to bolster the
economic incentives for Chinese manufacturing exporters to
pursue GLM.
As a major manufacturing country, GLM has become more
critical for Chinese manufacturing exporters, which enjoy many
international business opportunities but also encounter substantial environmental burdens with this opportunity. The appropriate development of the GLM concept and practices may indeed
aid Chinese manufacturing exporters by lessening the environmental burden of development, distribution, and disposal of
products, while even potentially improving their efciency and
economic positioning. The GLM construct encompasses a series of
managerial actions on environmental-based logistics management with its four attributes to supplement these actions, which
can be developed into an inimitable bundle of resources for
superior performance. Thus, GLM as we conceptualize it can be
viewed as a composite of the underlying belief, environmentalbased logistics management, and the concurrent capabilities that
a manufacturer develops. One example to illustrate is Yidian, Inc.
that believes in preserving energy and resource consumption
through GLM. It is an aluminum plate Chinese manufacturing exporters in Luoyang, Henan Province. For managing its
growing international sales network (spanning from USA, Russia,
Germany, to South Africa) and stringent environmental regulations in overseas countries, Yidian considers it strategically
important to develop and adopt environmentally responsible
management practices. In reengineering its workows, Yidian
has relocated the aluminum molding production line close to its
electrolysis factory, eliminated steps of transporting the aluminum solution from the factory to the production line. Subsequent
to this elimination of inbound logistics process, the production
cost per kilogram of each aluminum plate is lowered from RMB
410 to RMB 148, saving RMB 80 million per year and reducing the
annual emission of sulfur dioxide (a greenhouse gas that causes
acid rain) by 60%.
The study results have implications for manufacturing enterprises to improve their GLM and hence performance. Like all
strategic international logistics operations, manufacturers need to
balance the costs of investment in the implementation of green
practices that may be offset by commensurate benets in terms of
improved productivity and environmental performance. In view
of the growing customer expectations for environmental protection, our results suggest that manufacturers can meet such
pressure by implementing GLM which is conducive to environmental and operational performance improvement. Although the
economic benets of GLM implementation (e.g., disposal cost
increase and reduction of material cost) may not be realized as an
opportunity, manufacturers can benet from such implementation by catering to the customer expectation through retrieving
reusable products and participating in customers product return
program.
Our study also highlights that the importance for manufacturers to comply with environmental-based regulations to excel.
While implementing GLM can improve manufacturers environmental and operational performance, such improvements are
more apparent when they comply with both the local and
international environmental regulations. Thus, manufacturers
adopting the four attributes of GLM should take account of the
regulations related to their products as well as international
logistics operations to strengthen their performance outcomes.
By using our measurement scale, manufacturers may assess and
identify the areas of their GLM for improvement actions. Those
who are new to adopting GLM can also make use of the scale in

279

structuring their assessment, reporting, and monitoring mechanisms of green logistics activities.

9. Limitations and future research

Although our study has validated the attributes of GLM and
established the links of implementing GLM with its antecedent
factors and consequent performance outcomes, longitudinal studies would help understand whether the nature of the benets
accrued is indeed long-term. Linkages within the attributes of
GLM, similar to the strengthening environmental-based logistics
management due to regulatory pressures, could also be examined
with longitudinal data. Richer insights might be available if future
studies are conducted across different and specic industrial
sectors such as telecommunication equipment component manufacturing [63]. Factors such as knowledge management, information integration, organizational innovation, and market
orientation can be inuential determinants of a manufacturers
positional advantages [64]. Future studies are also encouraged to
analyze how the ratio of local and export sales volume by
manufacturing exporters is related to their level of environmental
regulation pressures encountered and hence the implementation
of GLM by them. Recently, Chinese manufacturing exporters are
presented with pressure of accelerated ination and export price
due to rise of RMB exchange rate. GLM can be a valuable approach
for them to improve operational performance. Future studies may
investigate how GLM is nanced under changing international
economic development. It is possible for the nancial investments
in GLM contributed by partners in the global logistics chain,
including third party logistics providers, wholesalers, and retailers, which operate in various geographic locations spanning
different countries. Future empirical studies could examine the
relative contribution of GLM to performance and the collective
contribution of all these factors together to a manufacturers
performance outcomes.
While this study focuses on the management practices of
physical product ow throughout a product life cycle, rather than
specic environmental activities, such as recycling, recovery,
remanufacturing, and reuse, this study provides insights into
the dimensions of GLM that are instrumental to manage and
reduce damages caused to the environment. Future research may
identify and examine specic organizational environmental practices that are useful in mitigating adverse environmental impact
arising from industrial operations.
As an initial exploration of GLM in emerging countries, the
sample frame of this study is conned to export-oriented Chinese
manufacturers and we also encountered difculty in empirical
data collection from them. Although our sample size and response
rate is similar to prior research that surveyed management
executives, such size may limit the generalizability of study
ndings and the multi-group analysis result. The use of multigroup analysis also requires the split of our sample into high and
low environmental regulatory pressure groups. Although multigroup analysis allows us to examine the structural pressure
practiceperformance relationships for the manufacturing rms
characterized with different levels of environmental regulatory
pressures encountered, rather than merely testing the performance impact of environmental regulatory pressure as an interaction term with the pressures and GLM practices. The sample
size for each group is relatively small in comparison to prior
studies using this analytical method. Our study establishes an
important step for GLM research in emerging countries, where
the level of environmental regulatory pressure faced by the
manufacturing exporters may vary due to the extent of their
export orientation. It is worthwhile for further research to collect

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K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

data from other countries with larger sample size to validate the
role of environmental regulations.
Successful implementation of GLM requires active involvement
of various parties, e.g., suppliers and customers, in the logistics
chain. The leadership of manufacturing exporters in pioneering
and diffusing GLM at the upstream can determine the implementation success of the downstream partners. Leadership issues in
the logistics chain on the diffusion of environmental management
practices such as GLM are worthy of investigation to extend this
line of research. It is also useful to examine how GLM can be
integrated with total quality management principles to continuously improve quality in all aspects of the product life cycle to
exceed market expectations.
Our study examines only the moderating impact of environmental regulatory pressures on the antecedents and consequences of GLM, and other factors such as market uncertainty
and turbulence could be examined in future studies. On the
regulatory pressure, we did not differentiate such pressure
related to local and international regulations, which can be
considered by future studies to gain deeper insights on the
GLM-performance relationship. While the Chinese government
is supportive of environmental protection through initiating
discussions on global warming in such international arena as
the 2009 United Nations Climate Change Conference in Copenhagen, future studies may examine how Chinese government may
inuence the institutionalization of GLM in the manufacturing
sector and in other industrial contexts such as shipping [65],
transport logistics [66], and the service sector [67]. After the
nancial tsunami in 2008, economic arguments of China with the
European Union and the United States on protectionism, trade
balance, and exchange rates become more frequent. There is also
rapidly growing industrial development at different Chinese
regions with varying investment efciency [68]. How the international economic and political situations affect the investment
of Chinese manufacturing exporters on GLM and the coordination
among international logistics chain partners for the implementation are promising topics for investigation.

Acknowledgements
We would like to thank the two anonymous reviewers for their
constructive and insightful suggestions on the earlier versions of this
paper. We also thank the Editor-in-Chief, Prof. Ben Lev, for providing
us with helpful comments for improvements. This research is
supported in part by the Research Grants Council of the Hong Kong
Special Administration Region (GRF PolyU5500/10H).

Appendix A. Finalized survey questionnaire

See Table A1 for more details.

Appendix B. Exploratory interviews

Before administration of the mass survey to investigate the
research question of this study, we conducted interviews to
explore the environmental issues in China, the attributes of
GLM, and the contextually embedded pressures that inuence
GLM implementation and its success. We followed the grounded
theory [69] and conducted qualitative research to explore and
understand the pressures faced by Chinese manufacturing exporters and their implementation of GLM. While the Chinese manufacturers in Pearl River Delta (PRD) of China are mostly export
oriented and contribute to one-third of China export trade, we use

replication logic for multiple case studies to guide the selection of

manufacturers. Specically, the manufacturing exporters are
deliberately selected from one case to the next based on the
matching of the underlying theory the pressures faced by a
manufacturer or the GLM practices of a manufacturer would serve
as the basis to identify the next sample manufacturer. This
approach enables identication of determinants that inuence
GLM implementation and the attributes of GLM that are common
and important to the Chinese manufacturing exporters. We
conducted exploratory interviews with 35 managers from
exported-oriented manufacturing enterprises in Pearl River Delta.
To ensure the quality of the exploratory interviews, we followed Yins [70] recommendations and used a case study protocol
and interview guide with interview questions to guide our collection of interview data. The key interview questions relate to: (1) Is
environmental concern more important in manufacturing than
before? (2) What capabilities are required for manufacturers to
implement GLM? and (3) What factors affect manufacturers most
in their implementation of GLM? We drafted the eld report for
each interview and returned it to the corresponding interviewee
for their review and comments. We identied the key pressures
and attributes of GLM by counting the pieces of evidence with
common theme, e.g., customer demand for environmentally
responsible products, economic pressures due to increasing price
of raw materials, management practices involved in logistics
management, and so forth. We then compared the case evidence
with insights from the literature on various organizational theories to conrm the determinants and attributes of GLM.
From the interview results, we identied four dimensions of
GLM practice with reference to the environmental management
and logistics literature. Most managers expressed the need for
environmental focus on their manufacturing outputs, especially
those targeted for export to developed nations with strict environmental regulations. In the face of dwindling prots and the
incessant rise of environmental awareness by customers, some
managers identify the economic and environmental potentials of
GLM. These potentials can be leveraged during the production and
distribution of their products with waste reduction and resources
conservation. Some managers mentioned that GLM needs formal
structures in organizational design with appropriate documentations and guidelines to successfully operate. Others noted that
management procedures, such as reporting systems, are required
to govern the implementation processes. We term this practice for
GLM as procedure-based practices that must be supplemented
with appropriate management practices to document and report
such green logistics activities as the percentage of used products
collected from the market and the percentage of those collected
items that are recycled. Managers also held the view that performance outcomes must be monitored for rms to fully realize the
value of GLM. Thus, a rm should perform a periodic evaluation of
implementing GLM. As such, we term this practice as evaluationbased practices. Managers also commented that manufacturing
logistics involves partner relationships encompassing internal
staff as well as customers and suppliers where GLM requires their
participation to succeed. We term this practice as partner-based
practices. Managers provided a further view that the GLM of a
rm should be transparent to its stakeholders and environmentally responsible for its input and output processes in compliance
with the requirements of the international trade community by
implementing environmental management practices based on
international standards, e.g., ISO 14000. We term this practice as
general environmental management practices. Based on the
interview feedback, GLM is considered as a multi-dimensional
construct with these four attributes should we capture the basic
underlying managerial action and the management practices that
supplement this action.

K.-h. Lai, C.W.Y. Wong / Omega 40 (2012) 267282

281

Table A1
.
Construct name (scale)

Measurement items

Environmental regulatory
pressure(ERP)
(1not at all 5to a great extent)

ERP1: Our products are sold to countries with specic environmental laws
ERP2: Environmental regulations governing our products are very strict
ERP3: The materials used in our products are controlled by regulations that limit the consumption of hazardous
materials
ERP4:We comply with regulations that limit the disposal of waste
ERP5: Our products comply with environmental regulations of many countries

Customer pressure (CP)

(1not at all 5to a great extent)

CP1:
CP2:
CP3:
CP4:

Economic pressure (EP)

(1not at all 5to a great extent)

EP1: The cost for disposal is increasing

EP2: Subsidies can be obtained from the government by having processes in place to retrieve reusable products from the
markets
EP3: Retrieving reusable products from the markets contribute to our cost savings program
EP4: The use of reusable parts can reduce our material cost
EP5: Our competitors have gained nancial benets from their product return program

GLM (1not at all 5to a great

extent)

Referring green logistics management (GLM) as the management practice of your rms that takes account of the
environmental impact of the physical ows (from production, distribution, to disposal) throughout the life-cycle of
products.
Procedure-based practices
PMP1: GLM procedures are formally documented
PMP2: Our rm has a formal GLM
PMP3: We have a department responsible for environmental affairs
PMP4: GLM procedures are widely available
PMP5: Formal reporting position between business units and executives
PMP6: GLM performance is formally reported
Evaluation-based management practices
EMP1: GLM information is monitored regularly
EMP2: GLM performance is periodically captured
EMP3: GLM performance is periodically reported
EMP4: We look for improvement in our GLM from time to time
Partner-based management practices
PAMP1: Our customers consider our GLM highly effective
PAMP2: Our suppliers consider our GLM highly effective
PAMP3: Our staff consider GLM highly effective
PAMP4: The results of GLM performance are widely distributed
PAMP5: Green logistics procedures are included in training
General environmental management practices
CMP1: GLM of our rm is given prominent visibility in our annual report
CMP2: Our rm has a well-developed GLM database for tracking GLM performance
CMP3: We purchase from suppliers that are ISO 14000 certied
CMP4: We are ISO 14000 certied

Environmental performance (EPerf)

(1not at all 5to a great extent)

EPerf1:
EPerf2:
EPerf3:
EPerf4:
EPerf5:

Reduction of carbon emission

Reduction of waste water
Reduction of solid wastes
Decrease in consumption of hazardous materials
Decrease in frequency of environmental accidents

Operational performance (OPerf)

(1not at all 5to a great extent)

OPer1:
OPer2:
OPer3:
OPer4:
OPer5:
OPer6:

Signicantly improved product quality

Signicantly improved lead time
Improved position in marketplace
Developed better products
Reduced waste in production
Improved selling products in international markets

Our
Our
Our
Our

customers
customers
customers
customers

consider that it is our responsibility to retrieve reusable products from the markets
require us to be ISO 14000 certied
carry out environmental audits of our rm
take part in our product return program

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