Sustainable Production Practices and Determinant Factors of Green Supply Chain Management of Chinese Companies

Business Strategy and the Environment Bus. Strat. Env. 21, 1–16 (2012) Published online 16 February 2011 in Wiley Online Library (wileyonlinelibrary. com) DOI: 10. 1002/bse. 705 Sustainable Production: Practices and Determinant Factors of Green Supply Chain Management of Chinese Companies Xianbing Liu,1* Jie Yang,2 Sixiao Qu,2 Leina Wang,2 Tomohiro Shishime1 and Cunkuan Bao2 1 Kansai Research Centre, Institute for Global Environmental Strategies (IGES), Japan 2 College of Environmental Science and Engineering, Tongji University, ChinaABSTRACT This paper explores the green supply chain management (GSCM) of companies based in the Yangtze River Delta, China. The companies’ overall GSCM practice level (LGSCM) is measured by using the data from 165 valid respondents in a questionnaire survey conducted during April and May 2009. The relationships between LGSCM and the classi? ed determinant factors are analyzed. It is indicated that Chinese companies are still at a preliminar y stage of GSCM practices. Their environmental management in cooperation with external members of the supply chain is very marginal.A company’s LGSCM is signi? cantly and positively associated with the external pressures from regulatory, domestic clients and business competitors. As an internal factor, a company’s learning capacity greatly determines LGSCM. We also con? rm that the internal factors function as intermediate variables of external pressures in in? uencing a company’s GSCM. A company’s environmental management capacities will be strongly enhanced by frequent internal training of employees to increase its involvement in GSCM practices.Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment. Received 5 July 2010; revised 14 December 2010; accepted 16 December 2010 Keywords: sustainable production; green supply chain management; practices; determinant factors; China Introduction environment, in the forms of pollutant generation, ecosystem disruption and depletion of resources (Fiksel, 1996). The pressures and drivers from abroad accompanying globalization have pushed manufacturers in developing economies like China to improve their environmental performance (Zhu and Sarkis, 2006).Environmental concerns gradually become part of the overall business culture and, in turn, help re? engineer the development strategies of corporations (Madu et al. , 2002). Corporate environmental management (CEM) has been moving from traditional pollution control and risk management towards product life? cycle * Correspondence to: Xianbing Liu, Kansai Research Centre, Institute for Global Environmental Strategies (IGES), Hitomirai Building 4F, 1? 5? 2, Wakinohama Kaigan Dori, Chuo? ku, Hyogo, 651? 0073, Japan. E? mail: [email  protected] or. jp Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment OUT OF ALL BUSINESS OPERATIONS, MANUFACTURING PROCESSES ARE VIEWED TO HAVE THE HIGHEST IMPACTS ON THE 2 Xianbing Liu et al. manageme nt and industrial ecology. Recently, CEM has extended to certain boundary? spanning activities like green procurement, product stewardship, reverse logistics and so on (Zsidisin and Siferd, 2001; Snir, 2001; Prahinski and Kocabasoglu, 2006). These practices are related to supply chain management, which requires various interactions between the core manufacturer and the other entities along the supply chain, either the upstream suppliers or downstream distributors and customers.The concept of supply chain management for environmental protection was ? rst put forward by Drumwright (1994), which identi? ed the characteristics of those companies introducing new manufacturing ideas. Later, green supply chain management (GSCM) was de? ned as a new term by the Manufacturing Research Association at Michigan State University, USA (Hand? eld, 1996). The fast economic growth of China has greatly relied on the extensive expansion of manufacturing industries which produce resource? intensive but cheap goods for foreign markets.The regulatory requirements in developed economies, such as the familiar European Union (EU) Waste Electrical and Electronic Equipment (WEEE) Directive and the Restriction of Hazardous Substances (RoHS) Directive, have forced electronics manufacturers in China to actively practice certain GSCM activities. The relatively high position of Chinese manufacturers in the global supply chain offers the possibility, and an ideal setting, to explore their actual GSCM involvements. Zhu et al. (2008) studied the emerging GSCM practices at company level in a Chinese context, and con? med that GSCM is still a new concept for most Chinese companies as they change their environmental management from internal efforts to the whole supply chain. In terms of determinant factors for GSCM practices, this previous study mainly focused on a company’s internal issues, such as the importance of the company’s learning? oriented programs and support of top manage rs. The pressures from externally related stakeholders bear further study due to their importance to a company’s environmental behavior (Zhu et al. , 2008).Subsequent studies employing both external pressures and internal factors would provide a more comprehensive understanding of the relationships between GSCM practices and the determinant factors. In addition, Zhu et al. (2008) conducted their survey in the northern cities of China. Surveys of companies based in the other geographical areas of China would be necessary and meaningful. In order to close the research gap described above, this paper identi? es the external pressures which determine the level of a company’s GSCM practices while using internal factors as the intermediate variables.The Yangtze River Delta, including Shanghai and surrounding regions, is selected as the study area mainly due to its relatively developed economy compared with other regions of China. The improved background of CEM provides us wi th the possibility of monitoring a company’s GSCM practices there. Considering the complexity of GSCM practices, which may be attributed to the wide scope of environmental activities at different phases of the supply chain, this paper classi? es four categories of typical GSCM activities by referring to the existing literatures (e. g.Sarkis, 2005). Two topics are mainly discussed in this paper: (1) the current status of GSCM practices of the companies in the study area; and (b) determinant factors, external and internal, predicting the level of a company’s involvement in GSCM practices. Literature Review Although there is no uniform de? nition for GSCM so far, basic and common understandings have been formed theoretically and in practice. GSCM emphasizes the concerns for the environment along the whole supply chain and requires long? term and strategic collaborations between the supply chain members.GSCM covers the management of the life cycle of a product, from its ma nufacture and consumption until the end? of? life (Nagel, 2000). GSCM practices may be separated according to the stages of production, distribution and utilization, and thus can be categorized into internally green manufacturing activities, green procurement, eco? design, green retailing and green consumption by individuals (Walton et al. , 1998; Zsidisin and Hendrick, 1998; Carter et al. , 2000). Research on GSCM has been building gradually, but still remains sparse (Vachon and Klassen, 2008).GSCM studies were previously conducted by addressing the following aspects: general and basic issues like designing the framework for GSCM (Geoffrey et al. , 2002); implementation of GSCM strategies (Sarkis, 2003); environmental assessment of GSCM practices (Vijay et al. , 2003); relationship between a company’s performance and GSCM practices (Klassen and Mclaughin, 1996); and speci? c GSCM activities like green purchasing (Min and Galle, 1997), Copyright  © 2011 John Wiley & Sons, L td and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bseGreen Supply Chain Management in China 3 total quality and environmental management (Sarkis, 1999), green marketing (Karna and Heiskanen, 1998), and environmental performance evaluation of suppliers (Hines and Johns, 2001). Cooperation among the companies on the supply chain is the key to drive them to improve the environmental compatibility of their businesses (Ken et al. , 2000). Generally, the bene? ts of collaborative practices with upstream suppliers are much broader. In contrast, collaboration with downstream customers yields mixed outcomes Vachon and Klassen, 2008). By exploring the operational performances due to green partnership along the supply chain, Vachon and Klassen (2006) indicated that partnership with customers was positively related to product quality and ? exibility, whereas partnership with suppliers was associated with better delivery operations. Thun and Muller (2010) interviewed m anagers from the automotive supply industry in Germany and con? rmed the need for GSCM on the one hand but corresponding problems in terms of required resource on the other.Case studies of the British and Japanese food retail sector and the British aerospace industry showed that it would be easier to adopt GSCM if certain suppliers could play a leading role in a group of similar suppliers (Jeremy, 2000). While large companies can mandate their supplies to comply with certain environmental initiatives, cooperative approaches are likely to be more fruitful. Sharfman et al. (2009) suggested that inter rm trust, uncertainty and proactive environmental management most directly affect the extent of a company’s engagement in GSCM.Jeppesen and Hansen (2004) examined the conditions for environmental upgrading of Third World companies led by foreign companies. They argued that environmental upgrading on the value chain must be understood partly as a result of external industry and mark et forces, and partly as a result of the internal resources and competitive strategies of the companies involved. Two typical models are found for better application of GSCM strategies. One is to develop more environmentally friendly goods through cooperation like joint research.The other is to request that the suppliers satisfy higher environmental standards, for example achieving ISO14001 certi? cation, and the limitation of speci? ed materials in products. The construction of cooperative strategies and the evaluation of suppliers help improve the compatibilities of supply chain to the environment (Lamming, 1996). The extent of GSCM practices adopted by Chinese companies was examined by a survey of companies in several industrial sectors such as power generation, petrochemicals, electric and electronics and automobiles (Zhu and Geng, 2006).It was hard for the surveyed companies to integrate environmental issues into their business operations with suppliers and customers. Some lead ing companies have made efforts in internally proactive CEM practices like pursuing ISO14001 certi? cation, but most have just started to consider external GSCM activities. In China, environmental pressures are stronger for large companies than for small and medium? sized ones (Zhu and Geng, 2001). Automotive original equipment manufacturers (OEMs) have been required by the automobile assemblers to operate in an environmental manner since Chinese entry into the World Trade Organization (WTO) in 2001.Chinese electronic enterprises are found to be performing better in GSCM practices (Zhu and Sarkis, 2006). Development of an Analytical Framework and Research Hypotheses As mentioned earlier, this study tries to expand the determinant factors of GSCM practices in China from a company’s internal explanatory variables, which have been explored in previous studies (e. g. Zhu et al. , 2008), to the external pressures. Different alternative theoretical viewpoints, such as stakeholder t heory, institutional theory and the resource? based view, have been used to look at GSCM practices.As typical inter? organizational collaborations, the stakeholder theory with broad acceptance would be appropriate for discussing GSCM issues rather than intra? organizational management activities. In practice, stakeholder theory and institutional theory are rather similar in grouping a company’s external ‘others’, including the input and output environment of the company (suppliers and product consumers), its competitive environment (companies producing similar services or products) and its regulatory environment (DiMaggio and Powell, 1983; Delmas and Toffel, 2004).In this study, we identi? ed the determinant factors of GSCM practices by referring to existing literature and developed an overall analytical framework as shown in Figure 1. The relationships between the determinant factors and a company’s GSCM activities and research hypotheses are explained as follows. Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse 4 Xianbing Liu et al. Figure 1. Overall analytical framework of this studyHypothesis a (Ha): External Pressures The importance of external factors lies in the complementary nature of the factors behind Chinese companies’ adoption of GSCM practices at the early stage of environmental policy transformation. Besides the requirements of governmental regulations, domestic and foreign clients, competitors and neighboring communities may exert pressures on the companies (Hall, 2000). These external pressures have jointly prompted companies to become more aware of environmental problems and to practice certain GSCM activities (Sarkis, 1998; Hervani et al. 2005). Customer expectations have become the most important external pressure (Doonan et al. , 2005). To achieve sustainable solutions and business goals, the environmental properties of products and ser vices have to satisfy customer demands (Zhu and Sarkis, 2006). ‘Communities’ refer to those who are not necessarily involved in the business partnership directly but have knowledge of local companies (Nelson et al. , 1999). The community perspectives shoul be adequately represented as they may in? uence a company’s decision? aking process (Kearney, 2004). It has been indicated that communities have the ability to in? uence the social reputation of a company (Henriques and Sadorsky, 1996). According to Zhu and Sarkis (2006), Hall (2000) and Sarkis (1998), external pressures are believed to be important factors affecting a company’s GSCM practices. This generates the ? rst integrative hypothesis of this study as: Ha: companies that face higher pressures from external stakeholders are more likely to adopt GSCM practices.Hypothesis b (Hb): Internal Factors Business strategy is not only in? uenced by external stakeholders since companies subject to the same lev el of external pressure may perform differently (Prakash, 2000; Gunningham et al. , 2003). It is argued that companies also adopt different environmental practices due to their individual interpretations of the objective pressures from the outside. The difference between ‘objective’ and ‘perceived’ pressures would lead to diverse responses from companies.Therefore, our analytical model adds two internal organizational factors, namely support by top managers and a company’s learning capacity, to jointly explain a company’s GSCM practices. Management support by top managers is critical for the introduction and implementation of innovations in a company, especially environmental management systems (EMSs) (Daily and Huang, 2001). Top management support can affect the success of new initiatives by facilitating employee involvement or by promoting a cultural shift in the company, for example. Previous research suggests that cross? unctional programs need support from senior management, and indicates that top management support is associated with the success of environmentally preferable purchasing (Carter et al. , 1998). As GSCM is a broad? based organizational endeavor, Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse Green Supply Chain Management in China 5 it has the potential to bene? t from top management support. Meanwhile, a company’s learning capacity is viewed as especially important in a resource? ased view. GSCM practices are amenable to the bene? ts derived from learning since they are human resource? intensive and greatly rely on tacit skill development by employee involvement, team work and shared expertise (Hart, 1995). The capacity for implementing innovative environmental approaches is usually enhanced by employee self? learning, professional education and on? the? job training. The education level of employees and the frequency of internal environmental training are often used as proxies of a company’s learning capacity.The above discussions suggest two sub? hypotheses on internal factors which may be expressed as Hb1 and Hb2: Hb1: a company’s level of GSCM practices is positively associated with the support of top managers. Hb2: a company’s level of GSCM practices is positively associated with the company’s learning capacity. Hypothesis c (Hc): the Linkage of External and Internal Factors As discussed above, the addition of internal factors reasonably complements the pressures from external stakeholders in explaining the practice of GSCM.A company’s internal factors may be viewed as intermediate variables to adjust the in? uences of external pressures. A company will be unlikely to implement GSCM activities if it does not have the necessary capacity, no matter what pressures it faces. This generates one more hypothesis on the relationship of external pressures and internal factors in determining a company’s GSCM practices in this study, which may be documented as: Hc: the relationships between a company’s external pressures and adoption of GSCM are mediated by internal factors. MethodsSamples and Data Collection The data for this study were collected by a questionnaire survey conducted in the region of the Yangtze River Delta during April and May 2009. Two small areas in the delta were selected for the survey implementation. One was Taichang, a county? level city in Jiangsu Province. Another was Kangqiao Industrial Park based in Shanghai. Developed from traditional environmental policies, local environmental agencies have tried some innovative measures for improving CEM by encouraging the public’s involvement against industrial pollution.With aims to reduce the compliance cost and maintain ? nancial value, the companies there have adopted some proactive environmental practices. The better background of CEM in the study area compar ed with other regions of China provides the possibility for us to monitor companies’ GSCM activities in this study. According to the literature overview and preliminary understandings about the contextual background of the study area, a questionnaire was developed to measure companies’ GSCM practices, determinant factors and organizational performance.The questionnaire format consisted of four major components: general information on the companies; GSCM activities such as environmentally preferable procurement; the degree of external pressures felt by the companies; and the evaluation of environmental and economic performances. The environmental managers were chosen as focal points in the survey to answer the questions concerning GSCM issues in their companies. Due to the large scope for GSCM activities, the environmental manager discussed matters with the purchasing manager and production manager as necessary.Over a period of approximately 2 months, the survey was con ducted in two phases. In the ? rst stage, local government of? cials and seven companies were contacted in order to test the validation and feasibility of answering the survey document. The questions are listed in a concise but accurate manner to avoid misunderstanding by the respondents. The ? nalized format was sent to 210 enterprises on a name list provided by the local environmental protection bureaus Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse 6 Xianbing Liu et al. EPBs). A total of 165 respondents were con? rmed to be useful for the analysis, meaning a relatively high (78. 6%) valid response rate due to the coordination of local EPBs. The distribution of usable responses by industrial sectors is listed in Table 1. As expected, the samples from the sectors of machinery manufacturing, chemicals and textile and dyeing account for nearly half of the total, which are the representative industries in the st udy area. Operationalization of the Variables Dependent Variable The dependent variable in this study is LGSCM, a company’s overall GSCM practice level.LGSCM may be represented by a series of practical activities since it is dif? cult to directly measure the degree of GSCM involvement. Twelve items of GSCM activities were identi? ed to estimate a company’s overall level of GSCM practices in the current Chinese context, as listed in panel A of Table 2 and abbreviated as GA1 to GA12. This study addresses the GSCM practices as a company’s proactive environmental efforts in the manufacturing phase by excluding the end? of? pipe pollution control measurements and reverse logistic management of used products.Four categories of GSCM practices, represented by C1 to C4, respectively, are included: internally proactive environmental activities (C1); environmentally preferable procurement (C2); environmentally conscious design (C3); and supplier managed inventories and ser vices (C4) (Walton et al. , 1998; Carter et al. , 2000; Zsidisin and Hendrick, 1998). Achieving ISO14001 certi? cation, implementation of cleaner production auditing and reutilization of byproducts and other waste are chosen as internal proactive environmental activities of the companies.A company’s procurement strategies have strong impacts on the upstream producers in the supply chain, e. g. by buying non? toxic materials (Sarkis, 2003). In this study, four types of activities are de? ned as environmentally preferable procurement by the companies: requiring suppliers to offer cleaner products, evaluating suppliers’ environmental performances, providing education and technical assistance to suppliers, and providing education for internal procurement staff.Environmentally conscious design primarily focuses on technological improvements of products and processes to mitigate environmental impacts. Three items of activities, namely working closely with suppliers in produc t design, reducing waste in cooperation with suppliers and providing product? related environmental information for customers, are selected to assess the environmentally conscious design practices of companies. The last type of GSCM practice is supplier managed inventories and services which are found in chemical industries.Certain chemical companies commissioned their inventory management to the providers of raw materials due to the higher potential risks and the management experiences of the suppliers (PPRC, 2002). Since many chemical companies are located in the study area, two items are included to represent a company’s GSCM activities in this aspect. One is to entrust suppliers to manage company inventories. Another is to offer inventory management services for clients. Sector Paper Textile and dyeing Chemicals Plastics and rubber Metals Machinery and equipment manufacturing Electronics Automobile Printing Construction Others In totalNumber of samples 5 19 24 7 5 35 6 13 3 5 43 165 Percentage 3. 0 11. 5 14. 6 4. 3 3. 0 21. 2 3. 6 7. 9 1. 8 3. 0 26. 1 100. 0 Table 1. Distribution of the usable respondents by industrial sectors Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse Green Supply Chain Management in China Variable Description of the proxy 0 A: GSCM activities Internal proactive Achieving ISO14001 certification (GA1) environmental Cleaner production uditing (GA2) management (C1) Reutilization of byproducts and other wastes (GA3) Require suppliers to offer cleaner products (GA4) Environmentally Evaluate environmental performances of suppliers (GA5) preferable procurement (C2) Provide education and technical assistance for suppliers (GA6) Environmental education for internal purchasing staff (GA7) Work closely with suppliers in product design (GA8) Environmentally Work with suppliers on waste minimization (GA9) conscious Provide environmental information for products (GA10) design (C3) Supplier managed Entrust suppliers to manage some of the inventories (GA11) inventories (C4) Offer inventory management services for clients (GA12) 1 Valuation 2 3 4 5 7 LGSCMB: Determinant factors REGULATORY DCLIENT COMPETITOR COMMUNITY FCLIENT TSUPPORT EDUCATION TRAINING Pressure of environmental regulations Importance of domestic client’s environmental expectation Importance of competitors’ green strategies Pressure of complaints from neighboring communities Pressure of foreign customer’s environmental expectation Degree of support from company’s top managers Education level of the employees Frequency of internal environmental training External pressures Internal factors C: Control variables Characteristics of the companies Company’s size (LSIZ) Industrial sector belongings (SECTOR) Natural log of turnover Table 2. Definition and valuation of GSCM activities, the determinant factors and the controls The companies were requested to p resent a ? ve? oint Likert scale for each item of the 12 activities. The scales are de? ned as: 1 = not considering the activity at all; 2 = planning to consider; 3 = considering currently; 4 = partially implementing; and 5 = implementing successfully. The average score for all 12 items was used to represent the company’s LGSCM. In a similar way, the average score for the items of each GSCM category was used as the level of practice of that category. Independent Variables Recalling the section on ‘Development of Analytical Framework and Research Hypotheses’, the determinant factors behind companies’ adoption of GSCM activities include external pressures and internal factors. As listed in panel B of Table 2, ? e external pressures and three internal factors are classi? ed. In a similar way, a ? ve? point Likert scale was used to measure the importance, strength or degree of each factor: 1 = not at all; 2 = to some degree; 3 = moderate; 4 = relatively high; 5 = very high. The score for each factor was used to estimate its relationship with LGSCM. The only exception is for FCLIENT (pressure from foreign customers). The company’s export ratios were used as the proxy for this variable. It is assumed that the higher a company’s export ratio was, the higher the Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse 8 Xianbing Liu et al. ressure from foreign markets that would be felt by the company. The export ratios were classi? ed into four levels in the questionnaire format with consideration of easier responses from the surveyed companies. Control Variables Two more variables are introduced into the analytical framework as the controls. One is company size and another is the industrial sector to which it belongs. The existing literature suggests that larger companies are more likely to be under public scrutiny and are expected to have a higher propensity to be involved in innovative environmental practices (Hettige et al. , 1996). Larger companies are also likely to have superior resources for environmental activities.Companies with higher environmental sensitivity are more willing to improve their environmental performances. Panel C of Table 2 lists the methods for evaluating control variables. A natural log of the turnover in 2008 was used to represent a company’s size. A company’s industrial sector af? liation is classi? ed into two types, with ‘1’ referring to environmentally sensitive industries (ESI) and ‘0’ being non? ESIs. ESIs in China include mining, thermal power, construction materials, pulp and paper products, metallurgy, petroleum, brewing, fermentation, textiles, pharmacy, tanning and chemical industries (SEPA, 2003). The others are classi? ed as non? ESI.Results and Discussions Result for GSCM Practices of the Companies SPSS was used for the statistical analysis in this study. Cro nbach’s ? was calculated in order to test the consistency reliability of the values given to the items of GSCM activities. The estimated ? for all 12 items is 0. 912, which is higher than the 0. 9 that would imply a high validity of the dataset constructed. An exploratory factor analysis was performed on the 12 GSCM items to ? nd if there are different dimensions of these activities. Two factors were extracted. However, the ? rst factor accounts for 49. 9% of the variance in total and the second only accounts for 11. 6%.The rotated component matrix of the factor analysis is listed in Table 3. All the items relating to external GSCM practices (GA4 to GA12) are highly associated with factor 1. The results for internally proactive environmental activities (GA1, GA2 and GA3) are not clear since they have nearly equal loadings on both factors. The factor analysis result proves the rationality of using the average score of all the classi? ed GSCM items (LGSCM) as the dependent vari able for the regression analysis in this study. Table 4 gives a statistical summary of the scores of the de? ned GSCM activities. LGSCM of the respondents achieved an average score of 3. 9, indicating that Chinese companies are still at a very preliminary stage in their GSCM items 1 GA11 GA12 GA10 GA5 GA9 GA6 GA7 GA8 GA4 GA1 GA2 GA3 0. 814 0. 803 0. 779 0. 767 0. 749 0. 747 0. 730 0. 725 0. 691 0. 578 0. 490 0. 500 Component 2 ? 0. 119 ? 0. 107 – 0. 273 ? 0. 271 – 0. 321 ? 0. 303 0. 207 0. 492 0. 622 0. 583 Table 3. Rotated component matrix of factor analysis of GSCM items Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse Green Supply Chain Management in China 9 GSCM practices. The surveyed companies have started to implement internally proactive CEM activities to some degree (averaged at 3. 41–3. 93).Most of them plan to think about or are considering the environmental activities which would be jointly practiced with external actors in the supply chain. As examples, GA6 (provide education and technical assistance for suppliers) and GA8 (work closely with suppliers in product design) only obtained average scores of less than 3. 00. Nevertheless, slight improvement was observed in this study compared with the previous survey conducted in north China by Zhu and Sarkis (2006). This change may be attributed to the different location of the study areas. As described earlier, the region for this study has a relatively developed economy, and the companies there may be performing better on the environment than those in other areas. The surveyed companies react differently to the classi? d GSCM activities. Figure 2 provides details of the score distribution of GCSM activities practiced by the respondents. Many companies are implementing certain proactive Categories and items of GSCM activities Internal proactive environmental activities (C1) GA1 GA2 GA3 Environmentally preferabl e procurement (C2) GA4 GA5 GA6 GA7 Environmentally conscious design (C3) GA8 GA9 GA10 Supplier? managed inventories and services (C4) GA11 GA12 Overall level of GSCM practices (LGSCM) Obs. 158 159 160 160 159 160 159 160 162 153 159 159 156 157 158 158 148 Mean 3. 60 3. 41 3. 51 3. 93 3. 38 3. 84 3. 47 2. 76 3. 48 3. 32 2. 93 3. 45 3. 54 3. 11 3. 10 3. 2 3. 39 SD 1. 07 1. 49 1. 35 1. 14 1. 01 1. 16 1. 19 1. 27 1. 27 1. 04 1. 30 1. 22 1. 27 1. 23 1. 24 1. 33 0. 91 Min. 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Max. 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Table 4. Statistical summary of GSCM activities of the surveyed companies One 100% 90% 80% Two Three Four Five Ratio of the score 70% 60% 50% 40% 30% 20% 10% 0% GA1 GA2 GA3 GA4 GA5 GA6 GA7 GA8 GA9 GA10 GA11 GA12 Items of GSCM activities Figure 2. Distribution of the scores of company’s GSCM activities Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse 10 Xianbing Liu et a l. internal CEM practices.Nearly 70% of the surveyed companies are reusing byproducts and other generated waste to some degree. Around half of them are making efforts to achieve ISO14001 certi? cation and are pursuing a cleaner production audit. The companies are selective about those GSCM activities requiring cooperation with external actors on the supply chain. About 70% of the respondents are asking their upstream suppliers to provide cleaner materials or products to avoid possible environmental risks. The number of companies which arrange internally environmental education for their procurement staff and work closely with their suppliers for waste minimization is also around 50%.Another item of GSCM activity practiced relatively better by the companies is to provide product? related environmental information for their clients. However, most of the companies do not supply technical assistance to their suppliers. About 65% of the companies have not taken any action concerning envi ronmentally conscious design with their suppliers. In summary, the surveyed companies’ GSCM activities are obviously due to individual business needs and bene? ts from their own perspectives. GSCM is still a new concept for most Chinese companies. More time is needed for them to recognize the importance of strategic cooperation with other members of the supply chain. In? epth GSCM practices within a wider scope would be adopted if companies could unite as a group with a shared strategy on business and environmental issues. Descriptive Statistics of the Other Variables Table 5 summarizes the variables describing the determinant factors of GSCM activities. Companies gave higher scores to the pressures from external stakeholders. Among the external pressures, the regulative requirements and domestic client’s environmental expectations are viewed as highly important, achieving an average score of 4. 41 and 4. 29, respectively. Keeping up with competitors in the same sector is also regarded as an important factor (averaging 4. 08). The sampled companies usually carry out internal environmental training two or three times a year.The education level of employees is relatively low, probably because most of the companies are from traditionally labor? intensive industries. An average score of 2. 87 is presented for top managers’ support, which implies that company managers do not care much about GSCM efforts. This ? nding shows for a fact that the managers of Chinese companies do not seriously considering environmental activities other than basic compliance. Regarding the control variables indicating company characteristics, most of the samples are small and medium? sized. Large companies, with an annual turnover of more than 300 million Chinese yuan (CNY), only account for 7. 4% of the total.Small enterprises, which have fewer than 300 employees or yearly sales of less than CNY 30 million, account for 64. 2%. The remaining 28. 4% are medium? sized companies. According to the classi? cation criteria of the Chinese national environmental authority, half of the samples are categorized as ESI (49. 1%). The other half is non? ESI. Most of the respondents (71. 4%) process raw materials or produce components for downstream manufacturers. Result of the Relationship Between LGSCM and the Determinant Factors Pearson rank correlation was used to give a preliminary observation of the relationships between the overall level of GSCM practices and the determinant factors identi? ed earlier. The correlation matrix is shown in Table 6. ThisVariables and abbreviations REGULATORY DCLIENT COMPETITOR COMMUNITY FCLIENT TSUPPORT EDUCATION TRAINING Obs. 156 156 152 162 150 159 160 159 Mean 4. 41 4. 29 4. 08 3. 88 2. 46 2. 87 3. 30 4. 15 SD 0. 75 0. 86 0. 85 1. 73 1. 27 1. 35 1. 03 0. 75 Min. 1 1 1 1 1 1 1 1 Max. 5 5 5 5 4 5 5 5 External pressures Internal factors Table 5. Statistical summary of the determinant factors Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse Green Supply Chain Management in China LGSCM LGSCM REGULATORY DCLIENT COMPETITOR COMMUNITY FCLIENT TSUPPORT EDUCATION TRAINING 1 b 0. 195 a 0. 361 a 0. 391 ? 0. 083 0. 022 0. 113 a 0. 441 a 0. 559 REG.DCLIENT COMP. COMM. FCLIENT TSUP. EDU. 11 TRAINING 1 a 0. 395 a 0. 506 0. 035 0. 041 b ? 0. 176 b 0. 197 a 0. 477 1 a 0. 538 0. 008 0. 064 ? 0. 105 b 0. 354 a 0. 447 1 a 0. 038 0. 055 ? 0. 085 a 0. 238 a 0. 395 1 ? 0. 015 a ? 0. 471 0. 037 0. 150 1 ? 0. 086 0. 073 0. 139 1 ? 0. 041 ? 0. 073 1 a 0. 421 1 Table 6. Correlation coefficients of LGSCM and the determinant factors a Correlation is signi? cant at the 0. 01 level, two? tailed. b Correlation is signi? cant at the 0. 05 level, one? tailed. indicates that LGSCM is signi? cantly correlated with the external pressure variables DCLIENT and COMPETITOR, and internal factors like EDUCATION and TRAINING.Standard multiple regressions were performed wi th LGSCM as the dependent variable and each of the determinant factors and controls as independent variables. The results are listed in Table 7. The level of multi? collinearity between the variables was tested by an inspection of the condition index and variance proportions in the SPSS collinearity diagnostics table. According to the criteria given by Tabachnick and Fidell (2001), multi? collinearity is not a problem in this analysis since each condition index is less than 30 and the variance proportions are much less than 50. The regression result in Table 7 indicates that Ha is supported in general.Among the external pressures, DCLIENT and COMPETITOR are signi? cantly and positively associated with LGSCM at P = 0. 000. This implies that domestic clients’ environmental preferences and competitors’ green strategies for differentiation are major external drivers for companies to adopt GSCM activities. One more external factor which has a slightly positive correlation w ith LGSCM, signi? cant at P < 0. 01, is REGULATORY. Government regulations were believed to be dominant forces for CEM in the past since a company’s environmental strategies are imposed coercively via environmental sanctions (Delmas, 2002). However, this study classi? ed GSCM practices as those beyond basic environmental compliances.The governmental requirements may become a relatively minor factor for the adoption of GSCM practices. No signi? cant associations are found between the other two external pressures, COMMUNITY and FCLIENT, and LGSCM. The surveyed companies greatly valued the pressure from their neighboring communities. However, community pressure cannot account for a company’s GSCM efforts, probably because the communities mainly complain about the environmentally illegal activities of companies rather than lobby for proactive efforts such as GSCM practices. The pressure from foreign clients is not strongly felt by manufacturers in the current phase. Regard ing the internal factors, Hb1 is not supported. The support of top managers is not found to be signi? antly associated with a company’s LGSCM in this survey, which is in contrast to the result of Carter et al. (1998). Nevertheless, Hb2 is fully con? rmed. The two variables representing a company’s learning capacity, education level of employees (EDUCATION) and frequency of internal environmental training (TRAINING), are signi? cantly and positively associated with LGSCM at P = 0. 000. This result is identical to that of Zhu et al. (2008), which con? rms the hypothesis that the extent of GSCM practice engaged in by Chinese companies is positively related to the level of organizational learning capacity. Result of the Mediating Function of Internal Factors The egression result of LGSCM and the determinant factors in the previous section con? rm the causal chains existing between each of the three external pressures (REGULATORY, DCLIENT and COMPETITOR) and two internal fa ctors (EDUCATION and TRAINING) with LGSCM. Signi? cant relationships are found between each of the three external pressures and each of the two internal factors, as shown in Table 8. The t? statistic of all the regressions is greater than 2. 00. Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse 12 Variables entered (a) REGULATORY ? 0 REGULATORY LSIZ SECTOR F? value R2 (adjusted) (c) COMPETITOR ? COMPETITOR LSIZ SECTOR F? value R2 (adjusted) (e) FCLIENT ? 0 FCLIENT LSIZ SECTOR F? value R2 (adjusted) (g) EDUCATION ? 0 EDUCATION LSIZ SECTOR F? value R2 (adjusted) 0. 708 0. 374 0. 151 0. 178 1. 846 5. 721 4. 592 1. 299 18. 884 0. 294 0. 067 0. 000 0. 000 0. 196 1. 804 0. 033 0. 156 0. 253 4. 026 0. 544 3. 959 1. 573 5. 281 0. 097 0. 000 0. 588 0. 000 0. 118 0. 409 0. 356 0. 155 0. 258 0. 859 4. 224 4. 457 1. 772 13. 382 0. 226 0. 392 0. 000 0. 000 0. 079 0. 497 0. 266 0. 176 0. 293 0. 851 2. 760 4. 856 1. 960 9. 673 0. 169 0. 397 0. 007 0. 000 0. 052 Coef? cient t? statistic P? value Variables entered (b) DCLIENT ? 0 DCLIENT LSIZ SECTOR F? alue R2 (adjusted) (d) COMMUNITY ? 0 COMMUNITY LSIZ SECTOR F? value R2 (adjusted) (f) TSUPPORT ? 0 TSUPPORT LSIZ SECTOR F? value R2 (adjusted) (h) TRAINING ? 0 TRAINING LSIZ SECTOR F? value R2 (adjusted) ? 0. 310 0. 597 0. 128 0. 126 1. 803 ? 0. 021 0. 167 0. 278 1. 507 0. 041 0. 177 0. 260 0. 439 0. 342 0. 147 0. 322 Coef? cient Xianbing Liu et al. t? statistic P? value 0. 896 3. 890 4. 172 2. 210 12. 583 0. 214 0. 372 0. 000 0. 000 0. 029 3. 117 0. 840 4. 452 1. 680 7. 112 0. 123 0. 002 0. 402 0. 000 0. 095 4. 695 ? 0. 341 4. 018 1. 765 6. 188 0. 109 0. 000 0. 734 0. 000 0. 080 ?0. 726 7. 001 4. 031 0. 955 26. 249 0. 370 0. 469 0. 000 0. 000 0. 342 Table 7.Regression results for LGSCM and each of the determinant factors According to Baron and Kenny (1986), a third condition has to be met in order to con? rm the mediating function of internal factors as hypo thesized in this study. The signi? cant relations between the external pressures and LGSCM shall be strongly reduced if the internal factors are controlled. We tested Hc by repeating the OLS regressions in three steps. In step 1, LGSCM is individually regressed against each of the three external pressures which have signi? cant relations with LGSCM. In step 2, each of the three pressures and EDUCATION, as an internal factor, jointly enter into the regressions as independent variables.In a similar way, step 3 is carried out by substituting the variable of EDUCATION by TRAINING. The regression results are listed in Table 9. The robustness of the result was checked by doing the regressions with the control variables added for each case. The corresponding regression results are described in Table 10. There are no obvious changes in the signi? cances of the regression results listed in Tables 9 and 10. The mediation function of internal factors does occur and Hc is supported. In the case of introducing the internal factors into regressions, the signi? cances of external pressures to LGSCM are all reduced signi? cantly or even removed completely.This implies that the low level of GSCM involvement of Chinese companies could be fundamentally attributed to a lack of the necessary internal capacities for GSCM practices. The strong pressures Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse Green Supply Chain Management in China Variables entered Coef? cient t? statistic P? value Coef? cient t? statistic 13 P? value (a) EDUCATION as dependent variable ? 0 REGULATORY F? value R2 (adjusted) ? 0 DCLIENT F? value R2 (adjusted) ? 0 COMPETITOR F? value R2 (adjusted) 2. 131 0. 268 4. 409 2. 479 6. 145 0. 033 3. 806 4. 671 21. 819 . 0120 5. 280 2. 982 8. 894 0. 050 0. 000 0. 014 (b) TRAINING as dependent variable 2. 014 0. 83 6. 196 6. 667 44. 445 0. 222 8. 689 6. 144 37. 748 0. 195 9. 751 5. 216 27. 211 0. 1 50 0. 000 0. 000 1. 503 0. 421 0. 000 0. 000 2. 451 0. 396 0. 000 0. 000 2. 125 0. 288 0. 000 0. 003 2. 727 0. 350 0. 000 0. 000 Table 8. Regression results of internal factors and external pressures with significances to LGSCM Variable entered Coef? cient Step 1 t? statistic P? value Coef? cient Step 2 t? statistic P? value Coef? cient Step 3 t? statistic P? value (a) REGULATORY as the independent variable ? 0 REGULATORY EDUCATION TRAINING F? value R2 (adjusted) 2. 331 0. 241 5. 126 2. 367 0. 000 0. 019 1. 502 0. 146 0. 375 3. 358 1. 540 5. 338 17. 416 0. 89 0. 001 0. 126 0. 000 0. 747 –8. 783E? 02 0. 728 5. 601 0. 031 1. 699 ? 0. 895 7. 580 32. 931 0. 312 0. 092 0. 372 0. 000 (b) DCLIENT as the independent variable ? 0 DCLIENT EDUCATION TRAINING F? value R2 (adjusted) 1. 637 0. 407 4. 237 4. 619 0. 000 0. 000 1. 077 0. 286 0325 2. 813 3. 319 4. 634 22. 731 0. 236 0. 006 0. 001 0. 000 9. 139E? 02 0. 174 0. 612 21. 331 0. 124 0. 220 2. 206 6. 622 35. 351 0. 328 0. 826 0. 045 0. 000 (c) COMPETITOR as the independent variable ? 0 COMPETITOR EDUCATION TRAINING F? value R2 (adjusted) 1. 675 0. 423 4. 776 5. 031 0. 000 0. 000 0. 978 0. 319 0. 338 2. 787 4. 010 5. 101 27. 949 0. 279 0. 006 0. 000 0. 00 0. 100 0. 226 0. 570 25. 314 0. 147 0. 251 2. 811 6. 342 36. 265 0. 337 0. 802 0. 006 0. 000 Table 9. Regression results of LGSCM for mediating function test Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse 14 Variable entered Coef? cient Step 1 t? statistic P? value Coef? cient Step 2 t? statistic P? value Coef? cient Xianbing Liu et al. Step 3 t? statistic P? value (a) REGULATORY as the independent variable ? 0 REGULATORY EDUCATION TRAINING LSIZ SECTOR F? value R2 (adjusted) 0. 497 0. 266 0. 851 2. 760 0. 397 0. 007 ? 0. 197 0. 194 0. 357 0. 162 0. 190 ? 0. 355 2. 177 5. 270 4. 99 1. 375 15. 139 0. 310 0. 723 0. 031 0. 000 0. 000 0. 172 ? 0. 220 ? 0. 029 0. 611 0. 125 0. 128 ? 0. 419 ? 0. 294 6. 159 3. 811 0. 944 19. 319 0. 368 0. 676 0. 769 0. 000 0. 000 0. 347 0. 176 0. 293 4. 856 1. 960 9. 673 0. 169 0. 000 0. 052 (b) DCLIENT as the independent variable ? 0 DCLIENT EDUCATION TRAINING LSIZ SECTOR F? value R2 (adjusted) 0. 439 0. 342 0. 896 3. 890 0. 372 0. 000 0. 008 0. 212 0. 322 0. 144 0. 214 0. 018 2. 453 4. 573 4. 373 1. 552 15. 598 0. 317 0. 986 0. 016 0. 000 0. 000 0. 123 ? 0. 638 0. 137 0. 540 0. 124 0. 153 ? 1. 343 1. 592 5. 842 3. 883 1. 139 20. 317 0. 380 0. 182 0. 114 0. 000 0. 000 0. 257 0. 147 0. 322 4. 72 2. 210 12. 583 0. 214 0. 000 0. 029 (c) COMPETITOR as the independent variable ? 0 COMPETITOR EDUCATION TRAINING LSIZ SECTOR F? value R2 (adjusted) 0. 409 0. 356 0. 859 4. 224 0. 392 0. 000 ? 0. 237 0. 275 0. 329 0. 148 0. 168 ? 0. 511 3. 472 4. 911 4. 592 1. 236 17. 453 0. 345 0. 610 0. 001 0. 000 0. 000 0. 219 ? 0. 742 0. 183 0. 524 0. 127 0. 124 ? 1. 589 2. 268 5. 753 3. 994 0. 928 21. 233 0. 393 0. 115 0. 025 0. 000 0. 000 0. 355 0. 155 0. 258 4 . 457 1. 772 13. 382 0. 226 0. 000 0. 079 Table 10. Regression results for robustness test of the mediating function from external stakeholders do not necessarily lead to GSCM in reality. More speci? ally, REGULATORY is completely mediated by the two internal factors, while DCLIENT and COMPETITOR are only partially mediated. This indicates that the adoption of GSCM practices of Chinese companies is probably more responsive to non? coercive and competitive factors such as pressures from the domestic clients and leading companies in the same sector. This interesting ? nding also con? rms that governmental regulations in China do not play an active role in encouraging industrial practices in GSCM. In addition, the greater reduction of signi? cances in step 3 than in step 2 demonstrates that the variable of TRAINING is indeed potent as an intermediate variable.The internal environmental training of related employees may strongly enhance a company’s capacity to deal with external pressures by being proactive in environmental management such as GSCM practices. Conclusions This paper explores the current status and determinant factors of GSCM practices adopted by companies located in the Yangtze River Delta of China. The surveyed companies perform slightly better than the companies sampled in a Copyright  © 2011 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 21, 1–16 (2012) DOI: 10. 1002/bse Green Supply Chain Management in China 15 previous survey in North China (Zhu et al. , 2008). However, the overall level of GSCM practices does not differ dramatically. This con? ms that Chinese companies are still at a preliminary stage of GSCM practices. In particular, the companies’ environmental management in cooperation with external members of the supply chain is very marginal. Among a larger range of determinant factors classi? ed in this study, external pressures from domestic clients and competitors are signi? cantly and positively ass ociated with LGSCM while the regulatory pressure shows slightly positive in? uence. Learning capacity of the company signi? cantly determines LGSCM as an internal factor. Differing from the result of Zhu et al. (2008), the support of top managers has less in? uence on GSCM activities.These results are consistent with those of Jeppesen and Hansen (2004), which attributed the environmental improvement of Third World companies on the value chain to external market forces and the internal resources of the companies. Another meaningful ? nding of our analysis is that the internal factors are greatly mediating the in? uences of external pressures. Our analysis may provide essential policy implications for promoting the GSCM practices of companies in China. Many more concerns about a company’s environmental performance from its external stakeholders will be facilitated, which may generate pressures for the company’s efforts in GSCM practices. It is very necessary to educate c ompanies to better understand the advantages and approaches of GSCM as an innovative strategy for sustainable production.The diffusion of successful cases would be an effective method, as it helps increase a company’s capacity to actually adopt GSCM practices. As an empirical study of GSCM in China, this paper develops a comprehensive analytical framework and conducts an integrative analysis. Nevertheless, a few questions remain for subsequent studies. As examples, the working mechanism of determinant factors identi? ed for GSCM practices needs to be observed in more detail. 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