Exploring firm performance by institutional pressures driven green supply chain management practices

Abstract

Purpose Environmental concerns are rapidly increasing in the industries across the world. They are a more serious issue, especially, in the developing countries due to the prevalence of old practices and outdated technology. The purpose of this paper is to understand the role of institutional pressure and environmental orientation of the firm in adopting green supply chain management (GSCM) practices, and thereon the effect of GSCM on the firm’s performance. Design/methodology/approach By employing survey methodology using purposive sampling technique, the data were collected from 229 respondents who were working as supply chain management professionals in various manufacturing firms. The hypotheses were tested through partial least square structural equation modeling (PLS-SEM). Findings The findings reveal that both institutional pressures and environmental orientation significantly impact GSCM practices. The result further shows that GSCM practices have a positive effect on the environmental and economic performance as well as customer effectiveness. Originality/value Industries in the developing economies like Pakistan are reluctant to implement GSCM practices due to the perception of ambiguous financial implications. This study signifies that institutional pressures act as an effective driving force for change management and compliance.