Business strategy, green supply chain management practices, and financial performance: A nuanced empirical examination

Abstract

Green supply chain management (GSCM) practices have specific nuances and, therefore, they may support different competitive directions. However, a predominant assumption in the mainstream literature is that business strategy will have the same influence on the adoption of all GSCM practices. This is problematic as it may lead to a situation of strategic misalignment (i.e., GSCM practices are asynchronized with the strategic goals), which can result in corporate failure. To address this, our study takes a nuanced investigation to delineate the influence of business strategy (i.e., cost-leadership and differentiation strategy) on each type of the wide scope GSCM practices (i.e., internal environmental management (IEM), green purchasing (GP), eco-design (ED), customer collaboration (CC), and investment recovery (IR)), and in turn, on firm's financial performance in a developing country. An online survey received 142 responses from manufacturing companies in different industrial sectors in the country of Jordan. Our analysis revealed that cost-leadership followers pay limited attention to GSCM and focus only on implementing IR that is aligned with their aims. By contrast, differentiators are widely engaged with GSCM and place more emphasis on adopting those practices that support their competitive priorities, including IEM, GP, CC, and ED. Only IEM and IR are positively related to firm's financial performance. Accordingly, our study draws implications for theory and practice.