The role of customer relational governance in environmental and economic performance improvement through green supply chain management

Abstract

The formal control from customers through contracts and monitoring requires companies to implement green supply chain management (GSCM) practices. The informal control of customer relational governance (CRG) in terms of trust and cooperation also plays a role but it is not clear how CRG affects companies in gaining environmental and economic performance through GSCM practices. To explore the role of CRG, this paper develops a conceptual model with four hypotheses to propose moderation and mediation effects of CRG on the relationships between two GSCM practices (green innovation and green purchasing) and environmental/economic performance. Based on 333 questionnaires collected from a typical export-oriented city in China, two CRG factors are identified, they are, relationship & trust, and cooperation & reciprocity. Statistic results through hierarchical regression analysis demonstrate that both moderation and mediation effects exist. CRG partially mediates the effect of GSCM practices on environmental performance. However, relationship & trust can be detrimental for green innovation to bring environmental performance. If companies aim to improve economic performance through green purchasing, they should establish relationship & trust with customers. Meanwhile, cooperation & reciprocity with customers is needed for companies to gain economic performance through green innovation. This paper contributes to extend the previous studies of formal control from customers to examine the role of CRG for GSCM association of performance improvement. Statistic results identify effective governance mechanisms from the perspective of customer relations to achieve environmental and economic performance through GSCM practices.