2.2. Environmental Orientation and GSCM
Stakeholder theory indicates the interdependence between business firms and their stakeholders. Firms have to manage different pressures from various vital institutions [
19]. For example, government agencies propose new regulations and standards to reduce firms’ negative environmental impact, communities hold higher expectations for firms’ citizenship behavior, and customers demand environment-friendly products [
2]. To face these pressures from stakeholders, firms implement specific strategies such as pollution prevention, product stewardship, and clean technology [
20]. Dincer [
21] indicated that renewable energy technologies and efficient energy utilization are effective solutions for environmental problems. Florida and Davidson [
22] emphasized the importance of environmental management system to fulfill business goals and enhance environmental performance. Kjaerheim [
23] suggested that cleaner production is an effective strategy to obtain environmentally sustainable objectives. Environmental strategies are also extended to the supply chain management [
3,
12,
15,
24,
25]. From this perspective, firms may be more inclined to engage in GSCM because of the strong need to respond to environmental demands from stakeholders. Strategies that focus on GSCM help firms to obtain support, legitimacy, and resources from stakeholders.
Furthermore, according to stakeholder theory, environmental issues have become a key concern for government agencies, decision makers, and business firms in today’s business environment. Business firms have to respond to pressure from various stakeholders in dealing with environmental problems [
26]. One possible strategy for business firms is to commit to environmental issues by focusing on either internal or external organization [
27]. From external organization perspective, suppliers play an important role in building capability and competitive advantage for firms because they provide key materials and components for firms [
28]. In order for firms to fulfill external stakeholders’ expectations, firms may seek and collaborate with different suppliers to solve environmental issues [
29]. For example, firms can partner with suppliers to develop new green materials and components, engage in green R&D activities, or build green policy and management systems [
30]. By integrating environmental protection into supply chain management, firms can develop green capability and build favorable green reputation in the eyes of stakeholders [
31]. In other words, to respond to external stakeholders for environmental protection, firms can integrate environmental activities into their supply chain management. By seeking, monitoring, and collaborating with suppliers, firms can develop green capability and secure green resources. Consequently, firms can effectively obtain supports from external stakeholders [
32]. Thus, external environmental orientation may exert a positive influence on GSCM. The following hypotheses are developed.
H1a. External environmental orientation positively affects environmental selection of suppliers.
H1b. External environmental orientation positively affects environmental monitoring of suppliers.
H1c. External environmental orientation positively affects environmental collaboration with suppliers.
In a highly complex and competitive market, consumers have multiple buying options. As consumers’ purchase power increases, they demand higher quality and healthier products for their money. Thus, environmental businesses gradually grow into good business [
33]. Albino, Balice, and Dangelico [
34] suggested firms to implement environmental strategies to satisfy customers’ needs. Designing green products that minimize its environmental impacts during its entire lifecycle is an example [
35]. Bakker, Fissher, and Brack [
36] suggested that going “green” requires firms to address their environmental efforts early in the supply chain. Environmental sustainability is becoming increasingly common in corporate culture [
34]. Furthermore, corporate leaders often initiate environmental orientation. From these leaders’ perceptions, attitudes, and behaviors, environmental ideology may spread throughout the entire firm and become core cultural values and perceptions. Consequently, internal firm members seek to establish environmental businesses and minimize the environmental impacts of their operations [
35]. Chiefly, to provide environmental-friendly products for customers, corporate leaders may develop environmental strategies that shape the collective consciousness regarding the importance of environmental issues. Such core cultural values and beliefs may motivate firms to exert their internal efforts toward GSCM.
According to stakeholder theory, consumers are one of the most important stakeholders of a firm [
26]. Because today’s consumers demand more environmentally friendly products. Business firms have to produce more green products to satisfy consumers’ demands [
27]. Except focusing on external organization, integrating environmental issues into internal organization is another effective environmental strategy [
15]. For example, firms can invest to build green facilities and equipment, engage in green R&D activities, build green organizational culture, etc. [
30]. Building green capability requires firms combine internal and external resources because internal activities are closely related to external activities [
37]. Therefore, to build firms’ green capability and produce green products for customers, firms’ internal operations have to depend largely on external activities with suppliers. Furthermore, supply chain management and internal operation is often combined together in a firm’s value-chain. As these activities linked together, when firms engage in environmental activities and integrate environmental issues into internal organization, firms have to combine it with external suppliers [
38]. For example, when a firm invests in green R&D activities or uses green facilities and equipment to produce green products, they have to seek and build relationships with green suppliers because firms need green materials and resources from these suppliers [
28]. Therefore, it is argued that when firms integrate environmental issues into internal organization, they have to seek, monitor, and collaborate with green suppliers because firms’ internal activities are closely related to their supply chain management. Thus, the following hypotheses are developed.
H2a. Internal environmental orientation positively affects environmental selection of suppliers.
H2b. Internal environmental orientation positively affects environmental monitoring of suppliers.
H2c. Internal environmental orientation positively affects environmental collaboration with suppliers.
2.3. GSCM and Firm Performance
GSCM is an effective environmental strategy for firms to gain competitive advantage and enhance firm performance [
39]. According to RBV, firms acquire sustainable competitive advantage when they obtain resources that are valuable, scarce, inimitable, and non-substitutable [
40,
41]. These strategic resources can be constructed through GSCM [
36]. With the increasing demand for green products and higher government and societal concerns for the environment, firms should seek and manage relationships with green suppliers to produce safer and less costly products. Such management can help firms obtain and secure sustainable materials that are useful for producing green products [
34]. By collaboration and integration with green suppliers, firms likewise develop unique capabilities in operational process, R&D activity, and product development [
3]. GSCM is proven to enhance corporate performance. For example, Hanna, Newman, and Johnson [
42] found a positive relationship between environmental management systems and operational performance. Zhu et al. [
12] indicated that GSCM has a progressive impact on operational performance, while Green et al. [
3] demonstrated its positive relation to firm performance. Chan [
43] also suggested that GSCM helps firms reduce legal risks associated with environmental violation, improve corporate reputation, and enhance abilities to satisfy the demand of environmentally conscious customers. Consequently, GSCM improves firm performance.
In sum, according to RBV, GSCM helps firms to build green capability that produces green products to satisfy customers’ needs [
27]. This is because when seeking, monitoring, and collaborating with suppliers, firms can obtain green materials and components and secure green resources from suppliers [
28]. In other words, by partnering with suppliers, firms can develop green R&D activities, which help firms produce environmentally friendly products to meet customers’ demands [
30]. Consequently, firms’ performance will be enhanced as a result of this capability [
26]. Therefore, the following hypotheses are developed.
H3. Environmental selection of suppliers positively affects firm performance.
H4. Environmental monitoring of suppliers positively affects firm performance.
H5. Environmental collaboration with suppliers positively affects firm performance.
2.4. The Mediating Role of GSCM
Legitimacy and resources are critically important for the survival and development of any firm [
39] and obtaining them requires fulfilling the expectations of numerous institutions in the marketplace. By incorporating environmental strategy into firms’ strategic planning, firms can secure support from their stakeholders [
34]. One of the most effective means to be environmentally oriented is by extending sustainable strategies to the supply chain [
44,
45]. GSCM not only helps firms effectively respond to stakeholders’ expectations, but also builds good reputation and develops green capability (e.g., clean production, non-polluting, and minimal waste production process, green R&D, and green products) that creates competitive advantage and enhances firm performance [
3,
25]. Therefore, environmental orientation requires firms to invest increased efforts and resources into GSCM, which in turn creates green capability and competitive advantage. Consequently, firms achieve superior performance from such environmental strategies.
In sum, according to stakeholder theory, different actors in society expect firms to commit to environmental protection [
26]. To respond to this pressure, firms can integrate environmental issues into their business strategy by either focusing on internal or external organization [
27]. From internal organization perspective, firms can invest to build green capability in operation and management systems (e.g., building green facilities and equipment, engaging in green R&D activities, and developing green policy and management systems) [
30]. From external organization perspective, firms can also build a green image and positive reputation with external stakeholders (e.g., support community in environmental protection or engage in citizenship behaviors) [
27]. Both internal and external activities will enhance firms to seek, monitor, and collaborate with suppliers to build green capability because firms have to combine internal operation with external activities with suppliers [
38]. Specifically, firms will obtain green materials and components and secure green resources from suppliers which are important factors in building firms’ green capability [
37]. Furthermore, according to RBV, when firms build good relationships with suppliers, they can obtain and develop strategic resources from suppliers [
28]. This will help firms develop and build green capability which helps firms produce more environmentally products to meet customers’ expectations [
27,
30]. Consequently, firms will sell more green products and earn more performance [
26]. Therefore, it is expected that when firms engage in environmental orientation, they will seek to collaborate and partner with suppliers to build green capability. Firms will produce more environmentally friendly products to satisfy customers’ needs. As a result, firm performance will be increased. Thus, the following hypotheses are developed.
H6a. Environmental selection of suppliers mediates the relationship between external environmental orientation and firm performance.
H6b. Environmental monitoring of suppliers mediates the relationship between external environmental orientation and firm performance.
H6c. Environmental collaboration with suppliers mediates the relationship between external environmental orientation and firm performance.
H6d. Environmental selection of suppliers mediates the relationship between internal environmental orientation and firm performance.
H6e. Environmental monitoring of suppliers mediates the relationship between internal environmental orientation and firm performance.
H6f. Environmental collaboration with suppliers mediates the relationship between internal environmental orientation and firm performance.
Figure 1 shows the study framework and relationships between variables in this study.