Drivers of Green Supply Management Performance: Evidence from Germany

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1 Drivers of Green Supply Management Performance: Evidence from Germany Summary Five potential drivers of green supply management were identified in the literature review: green supply management capabilities, the strategic level of the purchasing department, the level of environmental commitment of the firm, the degree of supplier assessment and the degree of collaboration with suppliers. These constructs were used to form a structural model explaining the degree of green supply management. The model was analysed with SmartPLS 2.0 and using data collected among German purchasers. The results suggest that the degree of supplier assessment and the level of collaboration exert direct influence on environmental. These two practices are driven by the strategic level of the purchasing department and the level of environmental commitment of the firm. Whereas commitment influences assessment directly, the impact of commitment on collaboration is mediated by the capabilities of the purchasing department. Key words Supplier management, Green SCM, sustainability Introduction Environmental is a concern for managers due to reasons ranging from regulatory and contractual compliance, to public perception and competitive advantage (Theyel, 2001). Environmental pressures may be expected to increase in the future and an effective means of dealing with them is through Supply Chain Management (SCM). Moreover, protecting the environment is an ethical value in itself. Thus, besides external pressures managers should be aware of their individual responsibility as human beings to contribute to the greening of the supply chain. Greening the supply chain is one of the three major issues of sustainable SCM besides the economic and social dimensions (Seuring and Müller, 2008). Green Supply Chain Management (GSCM) is defined as a buying firm s plans and activities that integrate environmental issues into SCM in order to improve the environmental of suppliers and customers (Bowen et al., 2001). Many firms have realised that customers and other stakeholders do not always distinguish between a company and its suppliers. Also, the lead company in a particular supply chain is often held responsible for the adverse environmental impacts of all organisations within its supply chain (Rao and Holt, 2005; Kovács, 2008). For this reason, GSCM is a concept that is gaining popularity. For many years, labour groups have put pressure on Western companies for using offshore suppliers that pay very low wages and/or abuse other labour conditions. These attacks have had some success, such as the campaign targeting worker pay and conditions in Asian suppliers to Nike. For example, in August 2007, the Wall Street Journal reported on the huge pollution problems associated with China s textile and apparel production. "After labour

2 issues, the environment is the new frontier," Daryl Brown, vice president for ethics and compliance at Liz Claiborne Inc., told The Wall Street Journal. "We certainly don't want to be associated with a company that's polluting the waters" (Spencer, 2007). Although during the last decade the literature on GSCM has been growing, there are still some areas that need further research. Intra- and inter-firm diffusion of best practices and the transfer of environmental technologies were identified as critical areas needing research (Angell and Klassen, 1999). Theyel (2001) pointed out that the literature offers insight on potential patterns in supply-chain relations for improving environmental. However, more understanding is needed on the ways firms work with their customers and suppliers for environmental purposes and whether supply-chain interaction helps firms improve their environmental. More recently, Vachon and Klassen (2006) stated that little research has focused on the management of the interactions with immediate customers and suppliers and their potential impact on an organisation s environmental management. This paper tries to cover these gaps and focuses on how to extend green practices to immediate suppliers. GSCM is being adopted by industry, but the extent and mode of implementation vary significantly (Rao, 2002). In some instances, it takes the form of questionnaires or suppliers visits to assess suppliers environmental (Noci, 1997). In other cases, companies go for a partnering and mentoring approach, such as site visits, exchange of personnel, technical assistance, etc. (Lamming and Hampson, 1996; Handfield et al., 1997; Geffen and Rothenberg, 2000; Zsidisin and Sifert, 2001). Although companies can follow both approaches simultaneously, few papers have considered the joint effect of these two different approaches to supplier environmental development (see Theyel, 2001; Klassen and Vachon, 2003; Lee and Klassen, 2008). The purpose of this paper is to analyse the effectiveness of different approaches used to extend sustainable practices to suppliers. More specifically, the research objectives of this paper are (1) to study the impact of different approaches (assessment and collaboration) on environmental improvement; and (2) to analyse the factors that drive or contribute to the implementation of such efforts. Regarding this latter aspect, Bowen et al. (2001) identified the following potential drivers of green supply: a more strategic purchasing approach and the supply capabilities developed by a proactive firm s environmental management. We incorporate similar constructs in our model. The main contribution of our paper is twofold. First, to consider both approaches: assessment and collaboration. As mentioned earlier, few papers have considered them simultaneously (see Theyel, 2001; Klassen and Vachon, 2003; Lee and Klassen, 2008). Secondly, to analyse the factors contributing to their implementation. Few papers have considered the process of developing the capabilities needed to adopt both approaches (see Bowen et al., 2001). The structure of the paper is as follows: first, we provide a literature review and the conceptual model and related hypotheses. Next, we explain the methodology employed. Then, we present the results and discuss them. And finally, we highlight the main conclusions and managerial implications and provide some directions for future research. Literature review The literature on GSCM has been growing as organisations and researchers have begun to realise that the management of environmental programs and operations do not end at the boundaries of the organisation (Zhu et al., 2005). Different authors offer insights on the potential of developing supply chain related programs for improving environmental

3 (see for example, Florida,1996; Handfield et al.,1997; Geffen and Rothenberg, 2000; Klassen and Vachon, 2003; Zhu and Sarkis, 2004; Rao and Holt, 2005; Lee and Klassen, 2008). Similar to the concept of SCM, the boundary of GSCM depends on the goal of the researcher (Zhu et al., 2005). Zhu et al. (2008) provided an empirical examination of the construct of GSCM practices. Their results suggested that GSCM practices implementation should be multifaceted and should include the following factors: internal environmental management, green purchasing, cooperation with customers, eco-design practices, and investment recovery. In this paper, we will focus on green supply or green purchasing. Green supply management Environmental or green purchasing is the integration of environmental considerations into purchasing policies, programmes and actions. The objective of green purchasing is to facilitate recycling, reuse, and resource reduction (Min and Galle, 1997; Carter and Carter, 1998). Purchasing can contribute to environmental in a number of ways: buying packaging materials that can be more easily recycled or reused (Min and Galle, 1997; Carter and Carter, 1998), participating in the design stage and suggesting alternative sources of supply, asking upstream members of the supply chain to commit to waste reduction goals (Carter and Carter, 1998), using early supplier design involvement (Carter and Carter, 1998), evaluating supplier, selecting suppliers based on environmental criteria (Noci, 1997), etc. As a boundary spanning unit, purchasing generally plays an important role in communicating green concepts and efforts to other companies (Green et al., 1996). Different authors have considered different aspects of environmental purchasing. For example, Drumwright (1994) established a typology of companies that approached environmental purchasing. Zsidisin and Hendrick (1998) explored the extent of involvement that purchasing managers had in some environmental issues. Carter et al. (1998) provided a reliable and valid scale for environmental purchasing and examined the impact of different organisational factors on these activities. Bowen et al. (2001) explored the role of supply management capabilities in green supply. Min and Galle (1997), Noci (1997) and Zhu and Geng (2001) considered supplier selection based on environmental criteria. And, Walton et al. (1998) examined how managers were able to drive environmentally-friendly practices within their own supply base. Our paper focuses on this latter aspect: the effectiveness of different practices used to extend sustainable practices to suppliers. Extending sustainable practices to suppliers: supplier development Buying firms that encounter shortcomings in supplier or supplier capabilities have several options: (1) invest resources to increase supplier, (2) manufacture the purchase item in-house, (3) search for an alternative supplier, or (4) a combination of the previous three (Krause et al., 2000). This paper is based on the premise that the buying firm has chosen option one (supplier development). Handfield et al. (2000) define supplier development as any activity that a buyer undertakes to improve a supplier s and/or capabilities to meet the buyer s short term or long term supply needs. To improve supplier buying firms have different options, including (1) supplier assessment, (2) providing suppliers with incentives to improve, (3) instigating competition among suppliers, and (4) working directly with them with training or other activities (Krause et al., 1998). To improve suppliers environmental, the practices adopted by industry vary significantly in the extent and mode of implementation (Rao, 2002). In some instances it takes

4 the form of questionnaires or suppliers visits, and some authors have shown that this type of evaluative practices helps to reduce environmental risk on the supply side (see for example, Walton et al., 1998). In other cases companies go for a partnering and mentoring approach to achieve sustained improvements in environmental (Lamming and Hampson, 1996; Handfield et al., 1997; Geffen and Rothenberg, 2000). This paper focuses on these two fundamental approaches: supplier assessment and collaboration with suppliers (working directly with suppliers providing training, support or other activities). In the literature, we have found few papers that considered both approaches simultaneously. Theyel (2001) analysed the adoption of different types of environmental supply chain relations and found that (1) companies use several types of relations and (2) environmental requirements is the only one that is significantly related with environmental. Klassen and Vachon (2003) explored two dimensions of supply chain activities (collaboration and evaluation) and its relationship to environmental investment at the plant level. They found that customers who implement evaluative activities are likely to see positive changes in how suppliers regard environmental issues; however, they found that customer initiated collaboration doesn t have an impact on the level of investment. Recently, Lee and Klassen (2008) after conducting some case studies, found that the presence of both monitoring and support-based GSCM provide a synergistic effect, resulting in a greater rate of development of suppliers environmental management capabilities. Based on these later results, we hypothesise that both approaches have a positive impact on environmental : H1: There is a positive relationship between the implementation of the supplier assessment approach and the environmental improvement. H2: There is a positive relationship between the implementation of the collaborative approach with suppliers and the environmental improvement. Despite the increased use of supplier development strategies across industries, little is known about the process of implementing such efforts (Hartley and Choi, 1996; Krause et al., 2000). In an attempt to explain the enablers in the implementation of these two approaches (supplier assessment and collaboration with suppliers), in the following sections we analyse the strategic level of purchasing, the environmental commitment of the firm and the purchasing capabilities. The strategic level of purchasing During the last decades purchasing has evolved from a mere buying function to a strategic function (Ellram and Carr, 1994). Strategic purchasing has been defined as the process of planning, evaluating, implementing, and controlling strategic and operating decisions (Carr and Pearson, 1999). Following Reck and Long (1988), we consider that when a purchasing function is part of the strategic planning process, it is considered a strategic purchasing function. Carr and Pearson (1999) found that strategic purchasing had a positive impact on firms financial, supplier evaluation systems and buyer-supplier relationships. As strategic purchasing increases, it is expected that firms improve their financial and increase their efforts of managing suppliers with respect to evaluation and collaboration. In the study of green supply management, little attention has been given to the strategic level of purchasing (Bowen et al., 2001). Lamming and Hampson (1996) analysed five companies that had implemented green supply management, and found that in three of them purchasing was considered to be a very important function. However, Bowen et al. (2001) found no direct

5 impact of strategic purchasing on supply management practices but an indirect effect through supply management capabilities. Based on the results of Carr and Pearson (1999) and Lamming and Hampson (1996) we hypothesise that the higher the strategic level of purchasing the higher the implementation of both approaches: H3: There is a positive relationship between the strategic level of the purchasing department and the implementation of the supplier assessment approach. H4: There is a positive relationship between the strategic level of the purchasing department and the implementation of the collaboration with suppliers approach. The environmental commitment of the firm Antecedent theory proposes that a firm s response to the environmental requirements of its stakeholders is influenced by its existing level of environmental commitment (Henriques and Sadorsky, 1999; Aragon-Correa and Sharma, 2003). Following Simpson et al. (2007) we measured environmental commitment through the firm s policies, values and employee awareness of environmental programs. One of the most cited predictors of the implementation of green supply is the proactivity of the firms towards environmental management (Bowen et al., 2001). Bowen et al. (2001) found a positive and direct impact of environmental proactivity on greening the supply process, construct that shares similarities with our supplier assessment approach. Accordingly, we hypothesise that: H5: There is a positive relationship between the environmental commitment of the firm and the implementation of the supplier assessment approach. Regarding the impact of commitment on the collaborative approach, we expect an indirect relationship. We expect that environmental commitment leads to the development of purchasing capabilities which enable the implementation of the collaborative approach. Sharma and Vredenburg (1998) and Bowen et al. (2001) argue that following a proactive environmental approach can foster the development of capabilities. Accordingly, we hypothesise that: H6: There is a direct and positive relationship between the environmental commitment of the firm and purchasing capabilities. H6.1: There is an indirect and positive impact of the environmental commitment of the firm on the collaboration with suppliers approach mediated by purchasing capabilities. Purchasing capabilities Some studies have analysed the role of purchasing capabilities in the implementation of green supply (Carter et al., 1998; Bowen et al., 2001). Capabilities are the internal and external organisational skills, resources, and functional competences developed within firms to match the requirements of a changing environment (Teece et al., 1997). In the environmental management context, firms competing in the same industry appear in practice to follow different environmental strategies (Bowen et al., 2001). One explanation for this is that they differ in their set of available resources and capabilities (Hart, 1995; Russo and Fouts, 1997; Klassen and Whybark, 1999, Bowen et al., 2001).

6 Bowen et al. (2001) found that supply management capabilities facilitate the implementation of product-based green supply (construct similar to our collaboration with suppliers approach) but not the greening of the supply process (construct similar to our supplier assessment approach). Developing purchasing capabilities the firm enables a collaborative approach in the extension of green practices to suppliers. We expect managers to facilitate the implementation of the collaborative approach by training their purchasing personnel regarding the purchase of environmentally friendly products, setting clear goals for environmental activities and evaluating purchasing personnel based on their levels of environmental activities. Purchasing capabilities enable working with suppliers to improve the environmental. However, developing purchasing capabilities is not necessarily an enabler of the assessment approach. Bowen et al. (2001) in some interviews with managers found that the supplier assessment approach was attempted regardless of whether the firm had the appropriate capabilities. Based on these results we hypothesise that: H7: There is a positive relationship between the extent to which the firm possesses appropriate purchasing capabilities and its implementation of the collaboration with suppliers approach. Purchasing Although, companies should adopt green practices due to ethical values, the proof of a positive impact of environmental on purchasing would help to enhance the acceptance of sustainable supply. Zhu and Sarkis (2004) show that enterprises having higher levels of adoption of green supply chain practices and internal environmental management observe positive economic improvements. Furthermore, Carter et al. (2000) found evidence for a positive influence of environmental purchasing activities on firm. Following Rao and Holt (2005) greening the inbound function of the firm may lead to enhanced economic. Although we found no sources postulating a direct influence of environmental on purchasing these studies provides support for the assumption of the positive relationship between these constructs. Accordingly, we propose that: H8: There is a positive relationship between the degree of environmental improvement and the level of purchasing. Hence supplier assessment and collaboration with suppliers are general practices of strategic purchasing direct impact on purchasing is conceivable. There is evidence that the extent of basic supplier development practices exerts positive effects on the buyer s purchasing (Sanchez-Rodriguez et al., 2005). In particular, Vachon and Klassen (2008) show that collaboration with suppliers on environmental issues is related with manufacturing improvements. Wen-li et al. (2003) indicate a positive correlation between the degree of supplier evaluation and purchasing. Therefore, two additional research hypotheses were formed covering the direct relationship between these practices and purchasing : H9: There is a positive relationship between the level of supplier assessment and the level of purchasing. H10: There is a positive relationship between the degree of collaboration with suppliers and the level of purchasing. The path model based on the ten hypotheses is shown in Figure 1.

7 Strategic level of purchasing H3 + Supplier assessment Environmental commitment Environmental improvement H6 + H8 + Purchasing s environmental capabilities H7 + Collaboration with suppliers H10 + Purchasing Figure 1: Hypothetical path model (Calculation with SmartPLS) Methodology The questionnaire has been elaborated based on the literature review. The list of items is provided in the appendix. The sample was drawn from a contact list of the University selecting addresses of German managers in the field of purchasing and supply. For the collection of data an online survey has been used. In August 2009, 725 individuals received an invitation to contribute by . Within a period of four weeks 181 respondents participated. As usual in web-based data collection there was a high abandonment rate after the first web-page (Grant et al., 2005). After excluding discontinued cases and cases with extensive missing data, a sample of 109 responses was available for data analysis. Therefore, the data collection results in an effective response rate of 15.0 percent. Firm s size was measured in terms of annual turnover. 7.4 percent of firms had an annual turnover lower than 10 million euros; 51.0 percent had an annual turnover between 10 million and 1000 million euros; and the remaining 41.6 percent had an annual turnover higher than 1000 million euros. The respondents worked for companies from a variety of industries. SmartPLS 2.0 (Ringle et al., 2005) was used for the analysis of the path model. This Structural Equation Modeling (SEM) software package is an application of the Partial Least Square Method (PLS) (Chin, 1998; Tenenhaus et al., 2005). In comparison to covariancebased procedures of SEM such as LISREL or AMOS the PLS algorithm is advantageous if the sample size is small (Chin, 1998). Covariance-based procedures perform a simultaneous estimation of the totality of the model parameters. Hence, these procedures require very large samples especially if models are complex as in this paper (Bentler and Chou, 1987). In contrast, the PLS estimation is based on a set of multiple regressions. Following the recommendations of Chin and Newsted (1999) the sample size should be at least ten times either the largest number of formative indicators or the largest number of independent variables influencing a dependent variable of the structural model. In this research the measurement model consists of reflective indicators exclusively. Therefore, only the second criterion is relevant. The dependent variable with the largest number of predictor variables is purchasing. This number is three. Thus, sample size should be at least 30. Based

8 on this recommendation the sample meets the sample size requirements of PLS. In contrast, AMOS would need about 200 cases following the recommendations of Bentler and Chou (1987). Measurement assessment Reliability analysis and exploratory factor analysis with SPSS were performed. The evaluation was based on the criteria provided by Hair et al. (2009). The calculations show sufficient degrees of reliability (Cronbach Alpha) and convergent validity (loadings, onefactor solution) after excluding item AS3 (audit) (Table 1). Only in the case of collaboration with suppliers Cronbach Alpha is slightly smaller than the threshold of 0.7. Nevertheless, we decided not to exclude COL3 because this item covers an important topic of environmental collaboration. Construct Indicator Cronbach Alpha >0.7 Loadings >0.7 Strategic level of purchasing POS Environmental commitment Purchasing s environmental capabilities Variance explained >50% Source POS1 POS ,6% Carr and Pearson, 1999; Chen and Paulraj, 2004 EC % Simpson et al., 2007 EC EC CAP % Carter et al., 1998; CAP Bowen et al., 2001 CAP Supplier assessment AS % Krause et al., 2000 AS AS3 Collaboration with suppliers Environmental improvement Purchasing COL % Krause et al., 2000; COL Bowen et al., 2001 COL EF % Rao and Holt, 2005; EF Daily et al., 2007 EF EF EF EF PERF % Sanchez-Rodriguez PERF et al., 2005 PERF PERF PERF Table 1. Measurement assessment (Calculation with SPSS) Finally, SmartPLS was used to evaluate the scales of the model. Common criteria to evaluate reflective measures of PLS path models are the average variance extracted, the composite reliability and the communality (Stone-Geissers Q 2 ) (Chin, 1998). The results of these calculations are shown in Table 2. The common quality requirements were met by almost each of the constructs. Only the average variance extracted of collaboration with suppliers (0.56) fails to meet the threshold of 0.6.

9 Scale Average variance extracted Composite reliability Stone-Geissers Q 2 (communality) > 0.6 > 0.7 > 0 Strategic level of purchasing POS reflective Environmental commitment EC reflective Purchasing s environmental capabilities CAP reflective Supplier assessment AS reflective Collaboration with suppliers COL reflective Environmental improvement EP reflective Purchasing PERF reflective Table 2. Measurement assessment (Calculation with SmartPLS) Results The path relationships (standardized regression coefficients) of the model were estimated performing SmartPLS. The bootstrap procedure (Efron, 1979; Diaconis and Efron, 1983) was used to obtain t-statistics in order to evaluate the significance of the parameters. The bootstrap sample means match with the original sample estimates. Therefore, bootstrapping is an appropriate method to evaluate the significance of the estimators of the proposed model. The results of the parameter estimation are shown in Figure 2 and Table 3. R 2 = Strategic level of purchasing H *** Supplier assessment * p < 0.1 ** p < 0.05 *** p < 0.01 R 2 = Environmental commitment Environmental improvement H *** H *** Purchasing s environmental capabilities H *** Collaboration with suppliers H * Purchasing R 2 = R 2 = R 2 = Figure 2. Approved path model (Calculation with SmartPLS) These results provide empirical support for nine of the ten hypotheses. All regression coefficients are in the predicted direction and significant with the exception of the relationship between collaboration with suppliers and purchasing which is negative in contrast to H10 and only significant at the 10% level. In detail, we found support for H1, which predicted that supplier assessment is positively linked to the level of environmental improvement. As well, the higher the magnitude of collaboration with suppliers

10 the more positive is the environmental improvement (H2). In support of H3 and H4, the results indicate that the strategic level of purchasing exerts significant effects on the degree of supplier assessment and the perceived level of collaboration with suppliers. Furthermore, there is evidence that the degree of a firm s environmental commitment influences the intensity of supplier assessment (H5) and the extent of environmental capabilities created and maintained by the purchasing department (H6). The extent of environmental capabilities exerts impact on the level of collaboration with suppliers (H7). Consequently, these two relationships result in an indirect influence of environmental commitment on the level of collaboration (H6.1). It seems that such an obligation is a crucial precondition for environmental cooperation with other parties in the supply chain. Hypotheses Original Sample (O) Sample Mean (M) Standard Deviation (STDEV) Standard Error (STERR) Statistics ( O/STERR ) Significance H1 pos. AS EP H2 pos. COL EP H3 pos. POS AS H4 pos. POS COL H5 pos. EC AS H6 pos. EC CAP H7 pos. CAP COL H8 pos. EP PERF H9 pos. AS PERF H10 pos. COL PERF Table 3. Parameter estimation (Calculation with SmartPLS) The significant effect of environmental improvement on the degree of purchasing (H8) corresponds to the predictions of the literature that assumes positive influences of green purchasing on firm s (Carter et al., 2000). Accordingly, supplier assessment exerts also influence on purchasing (H9). Contrary to H10 the influence of collaboration with suppliers on purchasing is negative and only significant at the 10%-level. The coefficients of determination (R 2 ) for each dependent construct indicate whether the independent variables of the model exert substantial influence on this construct (Chin, 1998). The coefficients of determination are comparatively small but of considerable value (Figure 2). This result provides evidence that the model is suitable. Discussion Following Theyel (2001), Klassen and Vachon (2003) and Lee and Klassen (2008) we developed a conceptual framework which posited a positive relationship between each approach (collaboration and assessment) and the environmental. Our analysis provides empirical support for a direct impact of the collaborative and assessment approaches on environmental. Theyel (2001) and Klassen and Vachon (2003) only found a positive effect of assessment on environmental. The reason why we may have found a positive impact of collaboration on environmental can be that when these two studies were conducted the level of collaboration with suppliers was considerably

11 lower than the level of adoption of evaluative practices. In our study, the level of assessment is higher than the level of collaboration but the difference is not very big. Our results are, however, consistent with the results of a recent case study: Lee and Klassen (2008) found that the presence of both monitoring and support-based GSCM provides a synergistic effect, resulting in a greater rate of development of suppliers environmental management capabilities. From Bowen et al. (2001) we incorporated in our framework some enablers or drivers of these two approaches. Our results show that the two approaches are driven by the strategic level of the purchasing department and the level of environmental commitment of the firm. The positive effect of the strategic level of purchasing on suppliers assessment and collaboration with suppliers is consistent with the results of Carr and Pearson (1999) and Lamming and Hampson (1996). This means that the higher the participation in the strategic planning process the higher the implementation of both approaches to improve the firm s environmental. Our results show that whereas commitment influences assessment directly, the impact of commitment on collaboration is mediated by the capabilities of the purchasing department. These results are in accordance with the findings of previous studies: First, the direct impact of commitment on supplier assessment is consistent with the results of Bowen et al. (2001). Secondly, the indirect impact of commitment on collaboration with suppliers means that in order to implement the collaborative approach the firm should possess the appropriate purchasing capabilities, which are in turn influenced by the firm s environmental commitment. These results are consistent with the findings of Bowen et al. (2001). These authors found that: (1) supply management capabilities are developed by a proactive corporate environmental approach, and (2) supply capabilities have an impact on collaborative approaches whereas supplier assessment is attempted regardless of whether the firm has the appropriate capabilities. Our results show that environmental has an impact on purchasing. We did not find any study relating the environmental and purchasing s. Our finding may be in line with all those studies that have found a positive relationship between environmental management and economic (see for example, Alvarez-Gil et al., 2001; Zhu and Sarkis, 2004). Finally, regarding the impact of both supplier development approaches (collaboration and assessment) on purchasing the results are contradictory. Whereas supplier assessment has a positive impact on purchasing, collaboration with suppliers has a negative effect. The positive effect of assessment on purchasing is consistent with the results of Krause et al. (2000) and Sanchez-Rodriguez et al. (2005). However, our negative relationship between collaboration and purchasing is contradictory to the findings of these two previous studies. Our results show that visits to suppliers, training suppliers and having joint efforts to reduce waste have a negative impact on purchasing : these practices lead to increases in costs and non-conformance, dissatisfaction of customers departments, non-accomplishment of quantities, etc. One possible explanation for this is that while collaboration with suppliers aimed at improving environmental pays off in terms of environmental results, these collaborative practices may interfere other logistics activities. This interference may result in a negative impact on purchasing measures such as on-time delivery, target costs, quantities, etc.

12 Conclusions, limitations and further research As a result of this study we have a better understanding of how collaboration with suppliers and supplier assessment can impact firms environmental. The study is important to management because it provides managers with some understanding of the impact of different purchasing practices. Our model has shown that supplier assessment and collaboration with suppliers have a positive impact on environmental. Our results also show that these two practices are driven by the strategic level of the purchasing department and the level of environmental commitment of the firm. Whereas commitment influences assessment directly, the impact of commitment on collaboration is mediated by the capabilities of the purchasing department. The managerial implications of this paper can be summarised as follows: In order to improve environmental, companies should pursue both types of approaches: supplier assessment and collaboration with suppliers. To implement these approaches companies should have an environmental commitment. This means that they should have the protection of the environment as a central corporate value and a clear policy statement urging environmental awareness in every area of the business. This commitment should result in (1) the implementation of supplier assessment practices, such as the implementation of formal evaluation systems; and (2) the development of supply capabilities needed to implement a collaborative approach. The purchasing department should also have a strategic level. This means that the purchasing department should (1) have a formal long-term plan to develop and support business strategy, and (2) participate directly in the business strategic planning process. This would contribute to the successful implementation of the collaborative and assessment approaches. Although this study has an important contribution to research and some key managerial implications, it has some limitations that should be pointed out: the fact that collaboration with suppliers, supplier assessment and environmental has been measured in general terms and not for specific buyer-supplier relationships is also an important limitation. Another limitation is that has been measured only from the perspective of the buying firm; suppliers environmental has not been considered. Finally, the data of this research was collected in Germany whereas previous studies used data from other countries. A bias caused by different cultures and national institutions should be excluded. Further research should try to overcome the aforementioned limitations. Also, further research should consider if different approaches or environmental practices are more appropriate for different types of environmental (pollution reduction, pollution control, etc).

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16 Appendix Construct No. Item Phrase Sources Strategic level of purchasing Environmental commitment Purchasing s environmental capabilities Supplier assessment Collaboration with suppliers Environmental improvement POS1 Strategy The purchasing department has a formally written long-term plan to develop and support business strategy. POS2 POS3 EC1 Planning process Planning revisions Policy statement The purchasing department participates directly in the business strategic planning process. Purchasing plans are continuously revised to adapt them to changes in Business strategic planning. Our firm has a clear policy statement urging environmental awareness in every area of the business. EC2 Value Protecting the environment is a central corporate value in our firm. EC3 Understanding At our firm, we make a concerted effort to make every employee understand the importance of environmental management. CAP1 Training Purchasing personnel receive training regarding the purchase of environmentally friendly products CAP2 Goals Our department establishes clear goals for environmental activities CAP3 Evaluation Purchasing personnel are evaluated based on their levels of environmental activities AS1 Evaluation We assess our suppliers through formal evaluation, using established guidelines and procedures. AS2 Feedback We provide suppliers with feedback about results of their evaluation. AS3 Audits We perform environmental audits for suppliers internal management systems. COL1 Visit We visit our suppliers premises to help them improve their. COL2 Training We provide training/education to these suppliers personnel. COL3 Joint efforts We make joint efforts with these suppliers to reduce waste. EF1 Waste reduction We have achieved a reduction of pollution and waste. EF2 Compliance We have improved compliance with environmental laws. EF3 Recycling We have increased the level of recycling. EF4 Environmental We have preserved the environment. protection EF5 Reputation We have improved the environmental reputation of our company. EF6 Overall environmental We have improved the overall environmental of our company. Carr and Pearson, 1999; Chen and Paulraj, 2004 Simpson et al., 2007 Carter et al., 1998; Bowen et al., 2001 Krause et al., 2000 Krause et al., 2000; Bowen et al., 2001 Rao and Holt, 2005; Daily et al., 2007

17 Purchasing PERF1 Specifications Most raw materials and parts received are in conformance with specifications. PERF2 On time All raw materials and parts arrive delivery within the delivery date. PERF3 Target cost Purchasing meets its material s target cost. PERF5 Quantities The quantity of materials purchased fit to the planned quantities. PERF6 Internal satisfaction Customer departments are satisfied with the service performed by the purchasing department. Sanchez-Rodriguez et al., 2005