Green Logistics Practices and Firm Performance: The Mediating Effect of Economic Performance Among Logistics Firms in Kenya

Abstract

Emissions from the logistics industry are rising at a greater concern than any other industry and the trend is expected to continue such that by 2030 these levels will be 80% higher than they were in 2007 unlessthere is a change. Many firms aim at reducing cost and they need to strike a balance between economic, social and ecological factors for sustainability. This study establishes mediating role of economic performance on the relationship between green logistics practices and the performance of logistics firms operating in Kenya. The study is guided by the philosophy of positivism research and it applied the cross-sectional survey research design. The population of interest consist of 892 logistics firms in Kenya from which a sample of 300 firms is drawn. Primary data were collected using a structured questionnaire. Validity and reliability measurement were done using three frequently used methods – construct reliability (CR), average variance extracted (AVE), Cronbach's alpha. Data were analyzed using covariancebased structural equation modelling (CB-SEM). The study established that there is a significant positive relationship between the implementation of green logistics practices and firm performance of logistics firms in Kenya (β=0.63, p<0.001). The mediating effect of economic performance on the relationship between green logistics practices and firm performance was found to be positive and significant (β = .020, p = .039) at 0.05 significance level. It is recommended that logistics firms in Kenya should implement environmentfriendly practices both within firms and in the wider supply chain.