Sustainable supply chain management in emerging economies: Trade-offs between environmental and cost performance

Abstract

Manufacturing firms in developing countries have recently started to adopt sustainable supply chain management (SSCM) to manage their environmental responsibility. However, achieving sustainable production within a SSCM context has been one of the most pressing challenges in emerging markets, as it may not involve securing financial benefits. Given the scarcity of empirical evidence, this study raises the proposition that SSCM practices can be both environmentally necessary and good business in the context of emerging economies. In light of this, this paper develops and empirically assesses an integrated SSCM performance framework underpinned by the resource dependence theory (RDT) lens, linking SSCM practices and their relationship with organisational performance. Using the tenants of RDT, this research develops an understanding of how firms use their partners’ resources to implement SSCM practices and manage their performance implications.Conducting an empirical study of 128 manufacturing firms (72 in China and 56 in Iran), this study examines and compares the impact of SSCM adoption on environmental and cost performance within these two emerging markets. Using a multiple regression analysis, the results show that there are more similarities than differences amongst these two emerging economies. The results also reveal that the adoption of SSCM practices results in higher levels of the environmental performance of Chinese and Iranian manufacturers, but does not necessarily lead to improved cost performance. Our findings suggest that firms operating within emerging markets need to undertake SSCM initiatives with a broader consideration of their financial bottom line in order to minimise trade-offs between the environmental and cost performance.