Organizational and regulatory stakeholder pressures friends or foes to green logistics practices and financial performance: Investigating corporate reputation as a missing link

Abstract

Exploring ways to protect and promote environmental sustainability have recently become critical to organizations survival due to pressures from diverse stakeholder groups. The aim of this study is to explore the effects of organizational stakeholder pressure and regulatory stakeholder pressure on green logistics practices and financial performance whiles investigating if environmental reputation and social reputation are missing links in mediating the relationships between organizational stakeholder pressure, regulatory stakeholder pressure, green logistics practices and financial performance. It is proposed that organizational stakeholder pressure and regulatory stakeholder pressure influence green logistics practices and financial performance, and in turn, environmental reputation and social reputation mediate these relationships. A thorough review of literature showed that organizations choose to either adopt a proactive or reactive approach to green practices based on organizational or regulatory stakeholder pressures. This research adopted partial least square structural equation modeling technique in analyzing the data due to it having more predictive power. The results show that pressures from organizational and regulatory stakeholders influence the adoption and implementation of green logistics practices, thereby enhancing environmental reputation, which also improves financial performance. The results specifically highlights that regulatory stakeholder pressures significantly influences social reputation, which also significantly influence financial performance. Environmental and social reputations proved to play mediating roles in the hypothesized relationships. These findings evidence that organizational and regulatory stakeholder pressures depending on how they are responded to can be friends or foes to green logistics practices, environmental reputation, social reputation and financial performance. Thus, the scope of stakeholder pressures appear to be potent and wider than previously understood. This study was tailored to the logistics sector because previous researches have concentrated on the manufacturing sector. Moreover, few researches have incorporated reputation as an intermediate variable in the relationships between stakeholder pressures, green logistics practices and financial performance. • Companies that adopt reactive approaches to environmental orientation are mostly pressured by regulatory stakeholders. • Organizational stakeholder pressure motivates companies in adopting proactive approaches to environmental practices. • Stakeholder pressure, corporate reputation and green logistics practices significantly impacts financial performance. • Environmental and social reputations strongly and significantly correlates with financial performance. • Long-term investments in environmental practices improve performance due to cost reduction from cleaner productions.