Do Suppliers Who Share Information Win on Both Green and Cost?

Chungwon Woo, Moon Gyu Kim, Yanghon Chung, Jae Jeung Rho (First author: Chung-Won Woo)
Journal of Cleaner Production, 112, 483-493, 2016 · DOI: 10.1016/j.jclepro.2015.05.119

TL;DR — Survey of 103 Korean construction suppliers analysed with structural equation modelling. Suppliers with stronger information sharing capability achieved better environmental collaboration, green cost reduction, and competitive advantage. Green alignment — buyer and supplier agreeing on how the supplier's environmental capability is rated — also raised competitiveness.

Key findings

1. Information sharing is the lever. Suppliers with higher information sharing capability improved environmental collaboration, contributed to green cost reduction, and achieved competitive advantage.
2. Agreeing on the score matters as much as the score. Green alignment — the consistency between buyers' and suppliers' evaluations of the supplier's environmental capability — positively influences supplier competitiveness.
3. The supplier's side of the story. Most green supply chain research takes the buyer's perspective; this study examines the relationship from the suppliers' perspective in a hierarchical construction sector where communication is the binding constraint.

Method in one line

Structural equation modelling on survey data from 103 construction suppliers in Korea.

국문 요약

환경규제와 고객의 환경 우려가 기업의 환경경영을 촉진하고, 제조기업은 녹색활동을 공급망관리에 통합하기 시작했다. 그러나 건설 부문의 공급업체는 구매자–공급자 간 위계적 관계에서 비롯된 소통 부족 때문에 환경역량 요구를 충족하는 데 어려움을 겪어 왔다. 본 연구는 공급업체 관점에서 녹색공급망관리를 위한 소통역량과 외부 그린통합·녹색원가절감·기업경쟁력의 관계를 실증했다. 국내 건설 공급업체 103개사 설문을 구조방정식모형으로 분석한 결과, 정보공유 역량이 높은 공급업체일수록 환경협력이 개선되고 녹색원가절감에 기여했으며 경쟁우위를 확보했다. 또한 구매자와 공급자의 환경역량 평가가 일치하는 정도인 그린 얼라인먼트가 공급업체 경쟁력에 긍정적 영향을 미쳤다.

FAQ

Q. What is 'green alignment'?
The degree of consistency between how buyers evaluate a supplier's environmental capability and how the supplier evaluates itself. Where the two agree, the supplier's competitiveness is higher.

Q. Why the construction industry?
Construction is project-based and strongly hierarchical between contractors and suppliers, which suppresses the communication that green supply chain management depends on — making it a demanding test case.

Q. Related work by the authors?
See Kim, Woo, Rho & Chung (2016, Sustainability), which measures how far contractor and supplier evaluations of the same capability actually diverge.

Full abstract

Environmental policies and customer concerns about environmental pollution lead to the implementation of environmental management by companies. Beyond individual-level efforts, manufacturing firms started to integrate green activities into their supply chain management system. However, suppliers still struggled to satisfy the needs of buyers and customers related to environmental capabilities in the construction sector because of the lack of communication resulting from the hierarchical relationship between buyers and suppliers. This study empirically examined the communication capabilities for green supply chain management and the relationship among external green integration, green cost reduction, and corporate competitiveness from the suppliers' perspective. We collected data from a survey of 103 construction suppliers in Korea and employed structural equation modeling to test the hypotheses. The findings indicated that suppliers with higher information sharing capabilities improved their environmental collaboration, contributed to green cost reduction, and achieved their competitive advantage. In addition, the results showed that green alignment - the degree of consistency in the evaluation of suppliers' environmental capabilities made by buyers and suppliers - had a positive influence on the suppliers' competitiveness.

How to cite

APA: Chungwon Woo, Moon Gyu Kim, Yanghon Chung, Jae Jeung Rho (2016). Suppliers' communication capability and external green integration for green and financial performance in Korean construction industry. Journal of Cleaner Production, 112, 483-493. https://doi.org/10.1016/j.jclepro.2015.05.119

BibTeX:
@article{woosuppliercommunicationgreen,
  title={Suppliers' communication capability and external green integration for green and financial performance in Korean construction industry},
  author={Chungwon Woo and Moon Gyu Kim and Yanghon Chung and Jae Jeung Rho},
  journal={Journal of Cleaner Production},
  volume={112}, pages={483--493},
  year={2016},
  doi={10.1016/j.jclepro.2015.05.119}}

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