Governance Mechanisms for Green Supply Chain Partnership

Chen-Lung Yang,Suyuan Lien

doi:10.3390/su10082681

Abstract

The literature has recognized the value of green supply chain management in achieving the goals of environmental management. Yet developing and fostering sustainability partnerships among supply chain organizations remains challenging. Bounded rationality and opportunistic behaviors are likely to hinder joint sustainability collaboration and performance. The literature has called for a better understanding of the governance of green supply chain collaboration. This study applies transactional cost economics as a conceptual framework to investigate the relationships among transaction features, governance mechanisms, and environmental performance. Using the data collected from 969 plants in 17 countries, the statistical analysis compares and validates the effectiveness of three alternative governance mechanisms: contractual governance, problem-solving cooperation governance, and information-sharing governance. The statistical results reveal significant performance differences in how firms apply alternative governance mechanisms to mitigate opportunism, manage adaptation problems, and improve green supply chain collaboration and performance. Overall, this study makes research contributions by confirming the mediation effects of governance mechanisms on green supply chain practices. For green supply chains to be a viable practice, firms should apply governance mechanisms in proper alignment with the nature of the collaborative and environmental conditions.

Highlights

Over the last two decades, more companies began to realize that most environmental management initiatives could not be implemented without partnering with their trade partners
This study proposes a structural equation model, under the framework of transaction economics theory, that hypothesizes a set of ‘green transaction attributes—governance mechanism—environmental performance’ relationships, with three governance mechanisms being the partial mediators
Using the data collected from 969 plants in 17 countries, we validate the proposed model and confirm that three control mechanisms are simultaneously adopted to mediate the effects of asset specificity and environmental uncertainty

Summary

Introduction

Over the last two decades, more companies began to realize that most environmental management initiatives could not be implemented without partnering with their trade partners. Leading manufacturers (e.g., HP and Ford) began to integrate their sustainability program with their supply chain management [1,2]. Managers understand that manufacturing sustainability requires close collaboration among supply chain members. This perspective promotes the concept of green supply chain management (GSCM) as a necessary strategy to implement sustainability or corporate responsibility. GSCM requires cooperation among supply chain parties in various areas, such as green purchasing [7], process improvement and product design [8], green innovations [8,9,10], and reverse logistics [11]. Manufacturing firms began to outsource their environmental programs (e.g., chemical waste) to third-party firms with specialties [10]. GSCM is regarded as an effective means of achieving environmental management

Methods

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Discussion

Conclusion