Green Supply Chain Management (GSCM) Practices for Sustainability Performance: An Empirical Evidence of Malaysian SMEs

Abstract

Environmental issues have been critical concern among the current businesses as various business activities might pose significant threats to the environment. Incorporating environmental aspects in business operations is perceived to be able to create value and to achieve sustainable business performance. The manufacturing sector is the key contributor to the country’s high pollution index. Green Supply Chain Management (GSCM) practices have become more prevalent in this sector in managing the environmental issues for the effectiveness of their production requirement. Nevertheless, the small and medium enterprises (SMEs) mainly are less likely to embark on environmental practices as compared to large organisations. The establishment of certified environmental management systems (EMS) is considered as a strategic management approach that defines how organisations will address their impact on the natural environment guided by ISO 14001 as a framework. This study provides empirical evidence examining the extent of GSCM practices among the SMEs through the possession of ISO 14001 and examines the impact on sustainability performance. Data were analysed using regression analyses. Results indicate that GSCM practices have a significant positive relation with sustainability performance. Eco-design practices and environmental cooperation have a positive relationship with sustainability performance. There is no relationship between green purchasing and reverse logistics practices with sustainability performance. These results imply that Malaysian SMEs adopt GSCM practices mostly through eco-design and robust cooperation among departments in dealing with environmental issues. Green practices and reverse logistics practices are still new for SMEs and do not contribute to achieving better performance.