Why Do Firms Adopt/Implement Green Practices?–An Institutional Theory Perspective

Abstract

Green supply chain management (GSCM) has emerged as an important organizational strategy in modern business environment. It has been touted as an efficient approach to enhancing manufacturing sustainability. However, how to develop and stimulate green partnerships among supply chain partners remains a challenge. This study examines how institutional theory influences GSCM practices and supply chain performance by examining whether firms submit to institutional pressures in their adoption of green practices in addition to seeking economic efficiency. Two research questions are addressed: (1) Are GSCM practices motivated by institutional variables (external pressures), and (2) what are those “institutional variables” and how are they contributing to the diffusion of GSCM practices? Based on the data collected from the U.S. and Taiwan manufacturing plants in the electric and electronics industry using survey method, structural equation modelling (SEM) was performed to examine theoretical relationships among various institutional variables, green supply chain practices, and manufacturing performance. The findings prove that pressures from institutional actors have a significantly positive impact on GSCM practices adoption, which in turns improve organizational performance. This study provides managers with valuable implications and guidelines in enhancing their efficiency and performance through meeting standards from institutional pressures.