Universiti Putra Malaysia Press Serdang • 2016 © Universiti Putra Malaysia Press 2016 First Print 2016 All right reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form, or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of the copyright owner. UPM Press is a member of the Malaysian Book Publishers Association (MABOPA) and a member of Majlis Penerbitan Ilmiah Malaysia (MAPIM). Perpustakaan Negara Malaysia Cataloguing-in-Publication Data Achieving Sustainable Supply Chain through the Creation of Economic Growth, Environmental Protection and Social Progress / Editors฀Azmawani฀Abd฀Rahman฀•฀Hossein฀Nezakati. Includes index ISBN 978-967-344-534-9 1. Business logistics. 2. Business logistics--Environmentalaspects. 3. Industrial eficiency. 4. Business--Management. I.฀Azmawani฀Abd฀Rahman.฀ii.฀Nezakati,฀Hossein. 658.7 Typesetting: Ku Ida Mastura Ku Baharom Cover Design: Md Fairus Ahmad Type Face : Times New Roman PS Font Size: 11/14.5 pt Layout and Design by Universiti Putra Malaysia Press 43400 UPM, Serdang Selangor Darul Ehsan Tel: 03-89468851/8854 Fax: 03-89416172 Email: penerbit@putra.upm.edu.my Printed by Universiti Putra Malaysia Press 43400 UPM, Serdang Selangor Darul Ehsan Contents PREFACE CHAptER 1 ix Integrating฀Operations,฀Human฀Resource,฀ Marketing, and Accounting and Finance Perspectives in Sustainable Supply Chain Research 1 Azmawani Abd Rahman, Hossein Nezakati, Jo Ann Ho, and Tze San Ong CHAptER 2 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors 8 Mee Yean Tay, Azmawani Abd Rahman, Yuhanis Abdul Aziz and Shafie Sidek CHAptER 3 Adoption of Sustainable Supply Chain Management฀(SSCM)฀by฀the฀Hotel฀Industry 29 S. Punitha, Yuhanis Abdul Aziz, and Azmawani Abd Rahman CHAptER 4 Environmental Sustainability: Perspective from a Logistics Sector 53 Kavighta Mohan Kumar, Azmawani Abd Rahman, and Murali Sambasivan CHAptER 5 Three Tiers of Sustainability Measurement in the Grocery Retail Industry Gowri Vijayan and Nitty Hirawaty Kamarulzaman 74 CHAptER 6 The Inluence of Leadership Styles on the Firm’s Intention to Engage in Corporate Social Responsibility (CSR) Activities: A Literature Review 102 Athirah Mohd Tan, Jo Ann Ho, Wong Foong Yee CHAptER 7 Green฀Human฀Resource฀Management฀as฀a฀ Catalyst for Sustainable Environmental Practices in Organisation 116 Sharmila Laksmi Muniandy and Azmawani Abd Rahman CHAptER 8 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement 131 Mahoumed Hosseinpour, Hossein Nezakati, Samsinar Md Sidin, Wong Foong Yee CHAptER 9 Sustainability: The Effective Role of NGOs on Firms 151 Masoumeh Hosseinpour, Hossein Nezakati, Jo Ann Ho, Jamil Bojei CHAptER 10 The Role of Government to Stimulate Sustainable Supply Chain Management through Network-based Approach Kourosh Sharifirad, Hossein Nezakati and Azmawani Abd Rahman 163 CHAptER 11 Assessing the Effect of Environmental Practices on the Firms Financial Performance 177 Tze San Ong, Sayed Yoused Sheikh Abou Masoudi, and Yee Woon Ang CHAptER 12 Environmental Collaboration as Environmental Capabilities and its Relationship with Environmental Innovation and Firm Performance 195 Lee Ah Suat, Tze San Ong, and Ridzwana Mohd Said LIST OF CONTRIBUTORS 213 ABOUt฀tHE฀EDItORS 215 INDEX 217 Preface In supply chain management, sustainability is the idea that business establishment must ensure that markets, commerce, technology, operations, and inance advance in ways that beneit the economies, societies, ecosystems, and stakeholders in general, or at a minimum, do no harm and contribute to a more maintainable and inclusive global economy. The processes should also emphasis on the irm’s collaboration with the suppliers, customers and key business partners. Driven by the importance of sustainable development, this book focuses on sustainability issue from supply chain management viewpoints. The cost due to pollution and other damage to the environment that caused by businesses operations should not be underestimated and irms should be made aware and be held responsible for it. As such, it is vital to investigate how business establishment contribute to the sustainability issues in calling for environmental and social contribution. Twelve chapters in this book covers sustainable supply chain issues from the perspectives of Operations,฀ Human฀ Resource,฀ Marketing฀ and฀ societal,฀ and฀ Accounting฀ and Finance. Azmawani Abd Rahman Project Leader, GUPM-IPB Chapter 1 Integrating Operations, Human Resource, Marketing, and Accounting and Finance Perspectives in Sustainable Supply Chain Research Azmawani Abd Rahman*, Hossein Nezakati, Jo Ann Ho, and Tze San Ong INTRODUCTION World Commission on Environment and Development (WCED) deined sustainability development as development that meets the needs of the present without compromising the ability of future generations to meet their needs. Sustainable development is a new pattern of development that accomplishes balance between the environmental, social and economic attributes. In 1992, the United Nation conference has developed the concept of sustainable development following the continuous diminishing of global environment, due to, unsustainable pattern of consumption and production, especially in industrial countries. Universally, sustainable development has been a signiicant issue in the strategies of companies, governments, societies, and business associations. Driven by the importance of sustainable development, this book focuses on sustainability issue from supply chain management viewpoints. The cost due to pollution and other damage to the environment that caused by businesses operations should not be underestimated and irms should be made aware and be held responsible for it. As such, it is vital to investigate how business establishment contribute to the sustainability issues in calling for environmental and social contribution. Twelve chapters in this book covers sustainable supply chain issues from the perspectives of *Corresponding Author: Assoc. Prof. Dr. Azmawani Abd Rahman (azar@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth Operations,฀ Human฀ Resource,฀ Marketing฀ and฀ societal,฀ and฀ Accounting฀ and Finance. SUSTAINABLE SUPPLY CHAIN: OPERATIONS PERSPECTIVE Sustainability has emerged as an important term in business operations hence pressurizing the entire industry to reconsider their existing practices to be more environmentally, socially and economically responsible. The impact of manufacturing process on the environment is directly related to the energy uses, resource consumption, and waste production in the process of transforming raw materials into the inal products. Manufacturing irms have great opportunity to catalyze the nations towards applying sustainable societies by designing sustainable product and implementing sustainable production activities. Issues in operations range from understanding indicators of sustainable production practices and relating operational issues like logistics operations, lean management, quality, purchasing, warehousing, and productions to sustainable development. Other issues include the challenges irms of various establishments might encounter when considering sustainable production and the impacts of sustainable productions to various performance aspects. Sustainable supply chain management (SSCM) has become a vital practice for irms in reducing the environmental effects from their daily operations. Chapter two analyzes the sustainability of supply chain in service industry. It focuses on three major sectors which are the hotel and accommodation, banking and retail and wholesale sectors. The three sectors were selected because of their increased importance to the income of a country. The chapter provides an exclusive analysis of the service industry and on how the service industry within the three major sectors practices SSCM. The chapter concludes that the three service sectors are comparable in their SSCM practices. Chapter three discusses about the adoption of sustainable supply chain management (SSCM) by the hotel industry. The chapter aims at giving comprehensive analysis of SSCM within the hotel industry by examining how hotels implement sustainable solutions in different phases 2 Integrating Operations, Human resource, Marketing, and Accounting and Finance Perspectives of the supply chain. The discussions reveal that SSCM is no longer an option for the hotels but it has become a business imperative and a very important tool for the success of hotels in a competitive business world. The evidence from the study shows that hotels have been trying to adopt a holistic approach to sustainability deploying sustainable solutions in all phases of the supply chain. Chapter four discusses about the environmental sustainability from the perspective of logistic sector; focusing particularly on freight transportation. Through content analysis, the chapter highlights previous research done in this area particularly on practices, units of analysis, methodology and indings. The task of identifying sustainable practices within logistics is a tedious one due to the limited work done in the area. The chapter concludes that companies nowadays have found it dificult to identify good practices involved in sustainability. This is because green issues are a major challenge for companies in the logistics industry. Besides, there have been no speciic practices to represent environmental sustainability logistics practices. Chapter ive gives a summarize view on corporate sustainability and its measurement, highlighting its prevailing limitations for applicability in the fragmented grocery retail industry. It also discusses the need for a simpliied and interpretive evaluation system, for measurement of sustainability across retail formats. Subsequently, the chapter introduces the Three Tiers Sustainability Ranking System as a possible alternative for sustainability measurement in irms. The chapter suggests that the Three Tiers Ranking System could be considered as a solution to the wide spread dilemma of sustainability measurement, and performance evaluation based on implementation of practices by the formats. The chapter concludes that the Three Tiers Ranking System could be the necessary impetus for governments, consultancy irms, and academicians to turn their focus towards sustainable development of fragmented industries. SUSTAINABLE SUPPLY CHAIN: HUMAN RESOURCE PERSPECTIVE Over the past decades, businesses acknowledged that people are important assets to an organization. Organizations with better records of human 3 Achieving Sustainable Supply Chain through the Creation of Economic Growth sustainability are expected to gain more beneits especially in attracting new talents, retaining existing high quality employees and creating a good reputation which could attract more customers. Sustainable human practices include but not limited to the provision of health insurance; employee separation policies; suficient remuneration and reasonable job arrangements. Although business leaders recognize the importance of sustainability human resource practices, scholarly research and theory development on this topic are clearly lagging. Some questions remain relevant within the area of human resource are; What are sustainable human resource practices? What resources do organizations need to develop such practices in their organizations? What are the drivers of sustainable human resource practices? And are the organization’s sustainable human resource practices meeting the expectations of stakeholders? This book addresses two chapters from the human resource perspectives. Chapter six is on leadership style and chapter seven is on green human resource. Chapter six discusses a literature review on the inluence of leadership styles on the irm’s intention to engage in corporate social responsibility (CSR). It explores how leadership style can be one of the important factors to increase the intention of irms to engage in CSR activities. The literature reviews summarize empirical leadership literature from 2004-2015. Based on review, it is concluded that the leadership style does signiicantly inluence฀ a฀ irm’s฀ intention฀ to฀ engage฀ in฀ CSR฀ activities.฀ Hence,฀ the฀ companies may take this as a guide on how different leadership styles may beneit the organizations especially in the CSR activities. Chapter seven highlights on green human resource management, which acts as a catalyst for sustainable environmental practices in organization. The chapter explores how human resource in the organization can act as wealth generator without damaging the environment and at the same time preserving the future generations. The Chapter also discusses about the green ive categories which consist of conserving, working sustainability, avoiding harm, inluencing others and taking initiative in positive and negative behavior incidents. These may help employees to promote sustainability practices and increase awareness and commitment in the issue of sustainability in the organization. 4 Integrating Operations, Human resource, Marketing, and Accounting and Finance Perspectives SUSTAINABLE SUPPLY CHAIN: MARKETING AND SOCIETAL PERSPECTIVES Consumers’ behavioural purchasing is changing towards more environmentally friendly products. Many research results indicate that consumers nowadays are willing to pay more for the products which are able to reduce the negative effects on the environment. Additionally, researches also indicate consumers’ attitude towards the product which is produced in the sustainable way can affect their purchasing behaviour. Government is known as the most inluential and deterministic factor to pressurise the company. Government has the power to force the companies and ultimately customers to adopt the different rules such as environmental regulations. There is no choice from the government pressure unlike other factors for a company. Moreover, both local and international communities can ask the companies to bring sustainable performance in their supply chain. Some important issues in sustainability from a marketing perspectives are on the discovery of consumers’ attitude toward sustainable supply chain, determinant of the role of consumers’ attitude on companies’ sustainable supply chain adoption, the level expectancy of communities from companies to adopt sustainable supply chain, and the extent companies are willing to adopt sustainable supply chain as a pressure of consumers and communities. This paper includes three chapters from this angle. Chapter eight looks into green behavior and sustainable consumption as a gratifying conclusion of environmental movement. The main objective of the chapter is to understand the concepts of green behavior and sustainability consumption. From consumer perspective, the chapter highlights that these behavior could be performed via activities like resource management, use of harmless materials, waste management, green purchasing behavior, recycling of materials, saving energy and water usage also the use of public transportation. The chapter paves the way for the government and other environmental groups that aim to promote environment friendly behavior in society. 5 Achieving Sustainable Supply Chain through the Creation of Economic Growth Besides the consumer perspective, chapter nine also looks from the Non-Governmental Organisations (NGOs) perspective. NGOs have played crucial role in pushing for sustainable development. One of the activities of NGOs, is to focus on the social, and environmental activities of business to turn sustainable. This chapter discusses the role and effect of NGOs on a irm’s sustainability commitment. The chapter also highlights some of the theories that might be helpful as a theoretical framework for researchers to study how a irm can apply and practice sustainability in addition to highlighting role of NGOs on irm sustainable adoption. The implications for future studies on sustainability practices by irms due to NGOs are also discussed. Meanwhile, the role of government also may give a vital impact to the sustainable supply chain. Chapter ten explores the role of government to stimulate sustainable supply chain management through network-based approach. This chapter proposes four main roles of government such as government as a collaboration integrator, as a collaboration seeker, as a collaboration champion and as a collaboration facilitator. These roles suggest how the government should act under different contexts in order to effectively enable society and market actors to generate and deliver more sustainable values while guaranteeing their survival. SUSTAINABLE SUPPLY CHAIN: ACCOUNTING AND FINANCE PERSPECTIVES Organizations are increasingly recognizing the boarder information needs of a wider range of stakeholders. Many are moving to use triple bottom line reporting to communicate the economic, environmental and social dimensions of their activities and more importantly a range of information to practice sustainable practices. An important aspect of contemporary accounting and inance is the inclusion of inancial and non-inancial information, social and environmental information. At this juncture, issues that offer illumination and insight on sustainable supply chain management from the accounting and inancial perspective would be relevant and signiicant. This includes approach that can beneit the organizational and enhance shareholder values, as well as contribute 6 Integrating Operations, Human resource, Marketing, and Accounting and Finance Perspectives to a more sustainable environment and society. For example, social audits are used to measure and report the extent to which they have operated; sustainable factors can be taken into account in capital investment decisions; environmental and social costs can be used in managing the supply chain and performance measurement systems. This book includes two chapters on sustainability and inancial performance. Chapter eleven assesses the effect of environmental practices on the irms’ inancial performance using a sample of 78 leading companies listed in Bursa Malaysia. The results showed that efforts to embrace environmental practices might assist company gain inancially. Therefore, effective efforts are needed from regulatory bodies, especially the government to facilitate the environmental practices as well as to increase the environmental awareness in Malaysia. The last chapter looks into the environmental collaboration as environmental capabilities and its relationship with environmental innovation and irm performance. The chapter focuses on the construct of environmental collaboration that is posited to be the fundamental environmental capabilities established from the social processes in engaging stakeholders. The results put forward the theoretical importance of environmental collaboration with diverse stakeholders such as suppliers, customers and consumers and the communities as source of irm’s environmental capabilities. An integrated view of the effects of environmental collaboration on irm’s innovation and performance is presented in the chapter. In conclusion, to remain competitive and sustainable in the dynamic business world today, irms must be aware and responsive to the environmental and social issues. Policies and practice that support sustainable development have become more widespread following concerns over the extent of environmental deterioration. Attention has been demanded from governments, communities and business all over the world to respond to the sustainability challenge to a certain degree. If organizations decide to pursue sustainability within its supply chain, the lows, operations, and activities within the chain should be improved and resulted in simultaneous economic, environmental, and social gains. 7 Chapter 2 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors Mee Yean Tay, Azmawani Abd Rahman*, Yuhanis Abdul Aziz and Shafie Sidek INTRODUCTION Today, climate change is the most important global environmental challenge, which results in competition for new resources, territorial changes and disruptions in trade patterns. Global warming causes sea levels to rise, which in turn affects marine life. Environmental deterioration can also be referred to as environmental degradation. Furthermore, it threatens natural resources such as clean water supply, fossil fuels for energy and food supply. If the current carbon dioxide (CO2) emission is not controlled, it will lead to more than a doubling of the atmospheric concentrations in the future. Our clean air and water supply are at risk and even more of our beautiful, open spaces will disappear. In addition to that, the effects of economic activities on the environment are clearly seen when new factories and buildings are built. For example, service sectors such as hotels produce large amounts of wastes, which resulted in the environment problem. Thus, the companies should be aware of it and enhance or restructure their business strategies to sustain their businesses. Organizations need to have a irm stance on climate change issues to stay competitiveness. As business today is becoming more challenging, companies need to have higher environmental awareness and thus be responsible for every single activity while producing products and *Corresponding Author: Assoc. Prof. Dr. Azmawani Abd Rahman (azar@upm.edu.my) Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors providing services. The manager or owner must think of a creative and innovative way to become more competitive. Vital environmental and sustainability issues need to be given more attention. Correspondingly, organizations should attempt to actively engage in Sustainable Supply Chain Management (SSCM) practices. SSCM is not about the protection of environment, but also must be social responsible and proitability in the long term success. It could lead a company to a positive outcome from an environmental perspective and also with its business sustainability performance. Organizations can assist in protecting the environment by becoming green and sustainable businesses (Porritt and Winner, 1988; Wanjohi et. al., 2013). The Malaysian Dutch Business Council (MDBC) Chairman, Zainul Rahim, stated that sustainability is becoming an integral part฀of฀a฀business.฀However,฀it฀should฀not฀just฀focus฀on฀corporate฀social฀ responsibility, but put sustainability efforts inancially in the long term (Green+, 2015). Sustainability can be achieved by companies through cutting down carbon emissions and reducing waste. Furthermore, it can enhance operational eficiency. Sustainability has received high attention and it has become critical for organizations to be more competitive and฀ improve฀ their฀ performance฀ (Fairield,฀ Harmon฀ and฀ Behson,฀ 2011).฀ Therefore, minimizing the environmental effects, improving social responsibility and establishing a new niche for consumers who have environmental concerns have become the focus of service companies. It will gradually feel the effects of climate change. Thus, there is a need to be concerned of the environmental issues in order to stay in a healthy and clean environment. Generally, to cope with the environmental changes, the practices such as SSCM should become the main focus of the companies. Thus, secondary data will be applied as a method for this paper. A review of literature was conducted from all related published papers. To pinpoint the applicable published papers, a structured keyword search was conducted. As a result, the terms of “supply chain management”, “sustainable supply chain management”, “sustainability” and “service industry” were searched separately. Databases such as Science Direct, Emerald, and SAGE Journals Online were selected for a search of articles published due to its broad coverage of management journals. To identify further relevant articles, the 9 Achieving Sustainable Supply Chain through the Creation of Economic Growth references cited were used as secondary sources. Besides that, this paper also reviewed examples of industrial applications which were obtained from local and international newspapers, magazines and websites. Generally, this paper has two contributions. Firstly, this paper seeks to scrutinize the remaining literature and the best practices of the service industry regarding to SSCM. From there, it enhances the present discussions in the academic ield. Moreover, it further enhances the understanding of SSCM practices. Secondly, this paper is applicable internationally since there are a lot of sustainability initiatives and practices taking place in the service and manufacturing industry. Thus, the service industries across the globe are applicable and can learn from this paper. GREEN PRACTICES IN THE SERVICE INDUSTRY There are ive different types of transformations throughout the supply chain in a service organization. These are identiied as physical, psychological, locational, intellectual and informational transformation. The supply chain in a service organization is also plays an important role in leading a better business. Other than leading better businesses, protecting the environment is also part of the responsibility of a service organization. The growth of the service industry is becoming important to developing countries and becoming the main contributor, especially in Malaysia. It contributes more than 50% to the Gross Domestic Product (GDP). Moreover, the employment rate in the service industry also increases. The service industry needs to be sustained by strengthening its current supply chain. Hence,฀ SSCM฀ practices฀ might฀ be฀ an฀ innovative฀ practice฀ that฀ leads฀ businesses to be more productive and sustainable in the long term. If economic, social and environmental prosperity decrease, as a result, we will miss out on the growth opportunities of a sustainable economy. By adhering sustainability practices, organization will have a good achievement in term of reputation, environmental protection and economic viable in the long term business operations. Moving forward, service industries such as logistics, retail and wholesale and other industries that have environmental awareness should implement sustainability practices in their business operations (Smith and Perks, 2010). This in turn can ensure an organization is able to put the environmental aspect at the heart 10 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors of its business process. Over the past decade, service sectors have also arisen with various practices or launched programmes to encourage their suppliers towards better environmental and social practices to improve the economy. Table 2.1 below indicates some best practices implemented in the service industry. Table 2.1 Best Practices in the Service Industry Industry Practices Sources 1. Transport and Logistics Services •฀ Transport focused initiatives Wolf and Seuring (2010) •฀ Transport and beyond transport initiatives Lieb and Lieb (2010) Martinsen and Björklund (2010) Martinsen฀and฀HugeBrodin (2010) 2. Café/ Restaurant Example: Starbucks, Gloria Jean’s Coffee, Tully’s coffee •฀ Bring your own cup (BYOC) •฀ Green cup (compostable paper) Weil (2007) 3. Hotel฀Industry •฀ Energy •฀ Waste Management •฀ Water Consumption and Conservation Webster (2000) Sloan et. al. (2015) 4. Wholesale and Retail •฀ Eco-Options Program Industry •฀ Better Life Index (Example: Wal-Mart •฀ Bring your own bag and฀Home฀Depot) (BYOB)- no plastics bag 5. Banking •฀ Renewable energy •฀ Recycled paper 11 Lenihan (2007) https://www.db.com/ cr/en/concrete-supplychain.htm https://www.westpac. com.au/ Achieving Sustainable Supply Chain through the Creation of Economic Growth cont. Table 2.1 6. Tourism •฀ Sustainable tourism activities - Renewable energy technologies - Water conservation Font et. al. (2008) Source: Compilation from various authors SUPPLY CHAIN MANAGEMENT Supply chain is the process of obtaining raw materials and information to the inishing product, in which the product or service then reaches the end users. It consists of producers, distributors or wholesalers, retailers, customers, suppliers and service providers (Ahi and Searcy, 2013). Furthermore, it deals with supply and demand. Supply chain management is฀a฀frequently฀discussed฀topic฀since฀the฀last฀two฀decades.฀However,฀there฀ are still various deinitions that exist as shown in Table 2.2. Table 2.2 Deinitions of SCM Author (Year) Definition Lambert, Cooper and Integration of main trade processes from the manufacturer Pagh (1998) to the inal customer that provides products or services and details that maximize value creation to the stakeholders. Walters and Lancaster The management of the interface relationships between (2000) the main stakeholders and organizational tasks that occur in the maximization of value creation which is driven by customer requirements and satisfaction, and facilitated by eficient logistics management. Mentzer et al. (2001) A systemic, strategic management of the traditional business operations and the strategies through these business operations within a particular company and across businesses within the supply chain, for the purposes of boosting the performance and the supply chain of the individual companies as a whole in the long term. 12 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors cont. Table 2.2 Handield฀and฀Nichols฀ Integrated management system of organizations’ supply (2002) chains and activities through supportive organizational relationships, business processes and high level of information sharing systems that offer supply chain members a sustainable competitive advantage. Eng (2005) Managing the inputs of products or services that include a variety of activities within a single department in an organization, between the different departments and from outside of the organization, for end users from the procurement of raw materials through to the end of the products life cycle. S t o c k a n d B oye r The management of a network of relationships within (2009) an organization and among mutually dependent organizations, which involve the material suppliers, procurement, production, logistics, marketing and related systems that facilitate the forward and reverse low of materials, services, inances and information from the manufacturer to end user with the beneits of adding value, maximizing proitability through eficiencies and achieving customer satisfaction. Source: Compilation from various authors The deinitions of SCM differ from author to author based on their different perspectives, such as logistics and operational management. Still, there is no consensus of deinition for SCM (Miguel and Ledur Brito, 2011). Walters and Lancaster (2000) and Stock and Boyer (2009) have a similar view on SCM. From the above deinitions, the deinitions from the Stock and Boyer (2009) will be chosen as they have considered the various aspects of SCM, which due to environment issues, have affected the operations of various industries. This deinition can also be applicable in the service sectors as some service sectors also require product to deliver their services. 13 Achieving Sustainable Supply Chain through the Creation of Economic Growth SUPPLY CHAIN MANAGEMENT AND SUSTAINABILITY In the recent year, supply chain management and sustainability issues have received greater attention from both scholars and practitioners. They are treated as challenging and interesting tasks for traditional businesses to practice in everyday business activities (Li and Ye, 2014). SSCM is about greening the supply chain that results in the long term sustainability performance of an organization. Correspondingly, the whole supply chain is included while greening the supply chain to achieve the preferred outcome. Generally, every single organization, no matter within or between industries, has its own boundary approach while engaging in environmental practices. There is still no ixed approach that can be well applicable in every context, for the reason that there are differences that occur in the nature of the businesses. Commonly, the well-established organizations will integrate many aspects to fully beneit from the SSCM because of their strong inancial status. For example, some companies published their sustainability reports online. There are various antecedents of why organizations should engage in SSCM practices to succeed in their businesses. In a supply chain, upstream and downstream from the supply chain are both vital for the business concerned. Without close partnership with suppliers and customers, the business performance will be latten and cannot last. It is far more important for an organization to integrate multiple aspects such as (i) social responsibility, (ii) environmental protection and (iii) economic growth to achieve the goal or objective of the business. To be sustainable, company should be socially responsible to the business activity that could cause unnecessary damage to the society when an organization is concerned over social walfare, it could provide a positive impact to the organization in terms of reputation and inancial performance. Service industries such as hotel always consume lots of energy which is costly. Energy is one of the largest expenditure for hotel to operate. As a result, if hotel does not take consideration of reducing the consumption of energy, this in turn causes environmental problems. In today’s challenging business world, there is a need to better understand the impact that SSCM practices could actually give to the industry or the organization itself. Eventhough the results from the 14 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors previous studies indicate that the execution of this practice will increase the฀operation฀cost฀during฀the฀transformation.฀However,฀the฀engagement฀of฀ SSCM฀could฀generate฀a฀positive฀impact฀in฀the฀long฀term฀(Hasan,฀2013).฀ For example, eficiency in the operation, good reputation, improved inancial performance and the like. SSCM has different perceived outcomes in every industry with the involvement of a range of people, processes and information technologies. Furthermore, with the same involvement, the system is still seen as complex to the organization due to the need to the extended scope of concerns imposed by the triple bottom line (environment, social and economic), managing business activities, cultural changes, information and the like across supply chain (Kurnia et. al., 2013). Thus, SSCM is seen as a tool that not only considers a green approach, but also brings about sustainability to the industry. SSCM consists of three dimensions that are social, environmental and economic. Furthermore, sustainability has a vital role in an organization. There are various deinitions of SSCM proposed by various authors. They might have similarity and differences in their proposed deinitions. Still, there is no consensus for the deinition for SSCM. Thus, the list of various deinitions will be stated as follows (Table 2.3). Table 2.3 Deinitions of SSCM Author (Year) Definition Jorgensen and Knudsen (2006) Enterprises manage social responsibilities through disrupted production processes and environmental boundaries Seuring (2008) The integration of sustainable development and supply chain management [in which] by merging environmental and social facets along the supply chain, thus avoiding related problems, but also looking at more ecological products and processes Carter and Rogers (2008) Tactical, transparent integration and integration of social, environmental and economic factors in the systematic coordination of a business process for improving durable proitability and its supply chain. 15 Achieving Sustainable Supply Chain through the Creation of Economic Growth cont. Table 2.3 Font et. al. (2008) Adding sustainability through the supply chain processes which the impact of environmental, social and economic dimensions on the business processes will be taken into account. Pagell and Wu (2009) The speciic managerial actions undertaken by a irm to create a truly sustainable supply chain. Ahi and Searcy (2013) The main inter-organizational business systems which manage the raw materials, information and investments related to the procurement, production and product or service delivery to meet stakeholder requirements and increase proit, competitiveness and resilience of the company in the short and long run through the integration of a Triple Bottom Line (economic, environmental, and social). Jaegler and Sarkis (2014) The management of inancial, information and product lows with goals of inter, intra and extra integration with social and environmental concerns as the focus Source: Compilation of various authors From the above deinitions, Seuring (2008) agreed on the deinition provided by Jorgensen and Knudsen, (2006). Both researches are concerning two dimensions (social and environmental) of SSCM. Pagell and Wu (2009) emphasized that SSCM is the speciic managerial actions undertaken by a irm to create a truly sustainable supply chain. Therefore, SSCM should add sustainability through the supply chain processes which the impact of environmental, social and economic dimensions on the business activities will be taken into account (Font et. al., 2008). From the above review on SSCM, the deinition provided from Ahi and Searcy (2013) is well presented. The authors considered well all the three dimensions of sustainability perspectives and business processes. Moreover, they also presented the expected outcome from adopting sustainability into the supply chain. This deinition is applicable for both manufacturing and service context. For example, without procurement 16 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors or product, hotel, retail and wholesale sectors are unable to deliver their services to the customers. With this deinition, service sectors could have a clear view and understanding on the function of SSCM brings to their companies. PRACTICES OF SSCM IN THE SERVICE INDUSTRY The reduction of the carbon footprint can actually reduce operation costs in the long run. Sustainability makes good environmental, social and economic sense. The organization should ensure that they treat those aspects as priorities in their business. Through sustainability, irms can improve their business performances (BSI Group, 2014). A successful SSCM is always a collaborative one. It means that to have a successful SSCM in the organization, they should have a good collaboration with suppliers฀and฀customers฀in฀order฀to฀deliver฀product฀or฀service.฀However,฀ managers face four challenges of the sustainable supply chain such as uncertainty, complexity, cooperation/coordination and the alignment of goals and incentives in order to have a successful SSCM with them. No business can survive without collaboration with the wider aspect of its supply chain. For example, collaboration with the suppliers and customers are considered important to an organization. Every service sectors has different best practices. The following section observes the application of such green and sustainable supply chain practices in each sector. Hotels and Accomodation Sectors The hotel sectors include lodging, event planning, cruise lines and the like. The hotel industry is becoming more important to the growth of the country.฀ However,฀ it฀ is฀ becoming฀ one฀ of฀ sectors฀ that฀ contribute฀ to฀ the฀ environmental issues within the service industry. Various researchers stress that the hotels should reduce their impact on the environment (Sloan et. al., 2015). It is not just about the green development, but also creating a business opportunity that is sustainable. Shangri-La, Marriott and Regal hotels are focusing on green initiatives and sustainability. Shangri-La Hotels฀&฀Resorts฀has฀its฀own฀sustainability฀initiatives฀which฀are฀namely฀ concerning฀ the฀ environment,฀ health฀ &฀ safety,฀ employees,฀ supply฀ chain,฀ 17 Achieving Sustainable Supply Chain through the Creation of Economic Growth and stakeholder relations. The Dow Jones Sustainability Indices (DJSI) has recognized it as the only hotel group included in the index component within Asia/Paciic. Other than that, Marriott is also one of the hotels constructing sustainable business practices that put less stress on the environment. It emphasizes on its corporate social responsibility program, environmental awareness and also business principles. Regal is another hotel that emphasises on green and sustainability. Its organization mission is to become an internationally recognized hotel group known for its Sustainability Programs. Their sustainability development is exactly the same as emphasised by Shangri-La hotels. Marriott has its own environmental goals to be achieved, which are: i. 20% energy reduction and water consumption by 2020 ii. 20% water per occupied room iii. Empower their hotel development partners to build green hotels iv. Green the hotel supply chain v. Educate and inspire associates and guests to conserve and preserve vi. Initiate innovative conservation such as rainforest protection and water conservation They have also involved themselves in the society and have thus committed themselves to invest in the communities where they run businesses through their “spirit to SERVE our communities”. It is all about corporate social responsibility and community engagement initiatives. Their properties are focused on ive areas of giving such as shelter and food, environment, ready for jobs, vitality of children and empowering diversity (http://www.marriott.com/marriott/aboutmarriott.mi). Shangri-La alleviates the impact on the environment by ensuring that their day-to-day operations nourish through the implementation of responsible environmental practices and thus continued improvement. Many of its hotels around the world are certiied under the ISO 14001 Environmental Management Systems. They ensure that only the highest standards of health and safety are maintained for the beneit of all their stakeholders. Thus, they have commenced certiication under the 18 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors Occupational฀ Health฀ &฀ Safety฀ Management฀ Systems฀ (OHSA:฀ 18001).฀ Shangri-La is committed to work with trade partners who are sharing the values of corporate citizenship, environmental protection, human rights and social integrity. 94% of its hotels run on low temperature laundry and green housekeeping, reducing water and energy consumption (http:// www.shangri-la.com/). Regal฀Hotel฀implemented฀the฀5-R฀principle฀which฀are฀reduce,฀reuse,฀ recycle, replace and reject to reduce energy consumption and conserve resources while continuing to sustain a green environment. They also implemented a waste management system (paperless programme) to support environmental protection. Besides that, green procurement also exists in this hotel. They also launched a social responsibility programme. In฀2014,฀Regal฀Hotel฀launched฀a฀programme฀named฀“Endeavour฀Growth.฀ Quality Delivery”. It is aimed at achieving economic sustainability by the continued enhancement of eficiency and quality of work, as well maximizing proits for their stakeholders such as shareholders, business partners, guests, associates, community and environment (https://www. regalhotel.com/regal-hotels-international/en/home/home.html). Overall, green hotels would likely emphasise on the improvement of environmental performances such as energy, water and waste. Correspondingly, their businesses can achieve sustainability in the long term. There are various examples of measures or programmes undertaken by hotels in line with their environmental management policies, such as: i. Conversion from halogen bulbs to energy-saving LED bulbs ii. Replacement of normal luorescent tubes to T5 lights iii. Installation of water-savings iv. Introduction of microbial waterless urinal cubes v. Educating guests to re-use bath towels and bed linens vi. Reducing chemical usage vii. Elimination of plastic carrier bags viii. Recycling A4 paper ix. Segregation of used items 19 Achieving Sustainable Supply Chain through the Creation of Economic Growth x. Implementation of waste segregation xi. Embarking on a year-long ‘green’ initiative by planting xii. Training and development, employee well-being, knowledge enhancement Banking Sector SSCM has increasingly become the main focus for larger companies due to the inluence of stakeholder pressure, environmental problems, regulations and other factors. The banking sector has major impact on the economy because of the intermediate inancial low, some of which have signiicant environmental and social impact (Chief Sustainability Oficers Forum, 2012). Therefore, the banking sector’s ability to inluence the transition towards a more sustainable and stable economy is unparalleled. Today, organizations have no option but to adopt sustainability practices. For example, there is a pressure derive from the regulator that force organization to adopt sustainability practices to cope with the environmental problems. Deutsche Bank makes a real difference in the initiative by spending over €8 billion each year on goods and services. To support sustainability, they launched the green supply chain (GSC) initiative in 2010 which focuses strictly on the environmental, social and ethical standards of their business partners. It requires their suppliers to meet certain eco-eficiency standards. For example, the suppliers should provide relevant information about the energy eficiency of their products or specify time limits for the elimination of toxic substances in their products (https://www.db.com/ unitedkingdom/index.html). They have introduced GSC frameworks for various sourcing categories. For example, power from renewable energy, paper, multifunctional printers and servers. Their total electricity purchases in 2013 were 79% mostly hydro and wind power which came from certiied renewable sources. Every framework establishes speciic sustainability criteria for the procurement of the goods in question. They plan to expand the GSC initiative. Therefore, they have signed agreements with business partners of renewable energy and they make greater use of recycled paper. Utilizing such high-eficiency ‘smart’ equipment will help them reduce 20 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors the consumption of energy and paper. Therefore, the GSC initiative has signiicantly improved their eco-eficiency performance (https://www. db.com/unitedkingdom/index.html). Westpac was an early adopter of SSCM and they aimed at ensuring their suppliers’ business practices demonstrate sustainability. There are a few reasons for Westpac aiming at sustainable businesses: i. Better understanding of organizational strengths and weaknesses, leading to better risk management ii. Enhanced reliability and trust in the market, protecting the organization reputation iii. Enhanced relationships with business partners, leading to more cost effective products and services iv. Improved worklow, product and material selection, resource and energy eficiency v. Improve the ability of long term sustainability vi. Improve the ability to discover new market segments and satisfy market niches for sustainable products and services (Westpac Group, 2014). Their 2017 Sustainability Strategy is dedicated on three important areas designed to achieve sustainability across their business operation environment: i. Social: Enhance working and living conditions by thinking innovatively about ever-changing demographics, traditionally tapping into under employed individuals and changing service offerings. ii. Environmental: The key solutions to cope with the environmental issues are needed such as imparting to and investing in CleanTech and environmental services, thus reducing their environmental footprint. iii. Financial: Discovering new directions for personal wealth creation which are less dependent on liability, and offering new models of inancial education to meet the changing concept of retirement (Westpac Group, 2014). 21 Achieving Sustainable Supply Chain through the Creation of Economic Growth In summary, banking sector has the sustainability strategy which focusing on the three dimensions such as social, environment and economic performance. With this sustainability strategy, they could be more competitiveness and improve their business performance in the long term. Retail and Wholesale Sector The retail and wholesale industries are part of the service sector. Furthermore, retailers and wholesalers are investing in their communities, environment and in social responsibility because most of their activities are฀focused฀on฀the฀customer.฀For฀example,฀Walmart฀and฀Home฀Depot฀are฀ concerning with the environmental and social issues. Walmart has more than 8600 stores and retail outlets which are operating under 55 different banners in 15 countries. Moreover, it employs more than 2 million associates worldwide and focusing on 3 main goals. There are energy, waste and products. The carbon footprint of Walmart has been improved. In addition, it is better than before and becoming transparent. Sustainability 360 is an approach that is applied by Walmart to take a comprehensive view of its business. Its objective of this approach is to make sustainability more than just an additional step. On the other hand it is something that lives in the everyday business operation. This has resulted in the Personal Sustainability Projects (PSP’s) for its employees. For example, cycling or walking to work, exercising or planting a tree. It operates its stores by using solar and wind energy. Upstream and downstream suppliers contribute 80% of the carbon footprint for a retailer. As a result, this has led to the Green Index scorecard development and the carbon disclosure project. The function of the development is to track and measure its huge supplier base. Walmart has taken action to replace its lighting with LED which is more energy saving (http://corporate.walmart. com/). the฀Home฀Depot฀has฀2000฀stores.฀Its฀Sustainability฀Integration฀System฀ provides an organized, transparent structure that allows the oversight of ive key issues such as energy conservation, water consumption, carbon emissions, sustainable product assortment, sustainable operations, and supply chain impact. Accordingly, it has made a commitment to corporate 22 Sustainable Supply Chain in the Service Industry: Analysis on the Three Major Sectors social responsibility and launched environmental programmes for business operation sustainability. It continually attempts operational improvements to yield reductions in energy and water consumption, and carbon emissions (Home฀Depot,฀2014).฀Home฀Depot฀has฀improved฀its฀energy฀savings฀goal฀ by another 5% in 2010. Therefore, by 2015 it will produce a reduction of 20% since 2004 (Brughelli, 2012). In addition, the establishment of the Eco Options program that identiies products which are environmentally friendly and provide customers฀with฀the฀easiest฀way฀to฀buy฀‘green’.฀According฀to฀Home฀Depot,฀ Eco Options is the most signiicant approach which has a positive impact on the environment by offering conservation-minded and environmentally friendly products readily available to customers. Now, it still continues to lead the business in the concern of environmental and sustainability to the improvement of the market. Besides that, they also collaborate with the suppliers so that their operations have less impact on the environment. In฀conclusion,฀Walmart฀and฀Home฀Depot฀have฀taken฀serious฀actions฀ to cope with the environmental deterioration. Besides that they had also taking care of the social aspect while doing the businesses by launching the programmes that could raise the public environmental awareness. Through these, they can eventually improve their reputation and inancial performance of the organizations. CONCLUSION In today’s fast and challenging business world, business leaders realize that the previous business strategies are becoming less advantageous. Firms are responsive to their business partners’ sustainability efforts in their own developments (Bai and Sarkis, 2010) and it is impossible for any organization to be environmentally sustainable without incorporating SSCM practices (Preuss, 2005). From the above discussions of the selected sectors within the service industry, few observations can be summarized. All three service sectors have similarities in SSCM practices. They emphasize on health and safety at the workplace, reducing the consumption of energy, corporate social responsibility and economic viability. These practices need to be integrated completely throughout the chain within the industry to achieve 23 Achieving Sustainable Supply Chain through the Creation of Economic Growth sustainability assurance. The entire eco-system within the chain needs to collaborate together in a concerted effort to strike the balance between the environmental, social and economic performances of the irms. It is challenging to measure and improve the sustainability performance of the supply chains. Therefore, thinking of new and innovative ways to nurture business activities become much more important for companies to be more sustainable. For sustainability to be resilient, companies must build beyond their own boundaries. SSCM is given greater challenges in the integration of supply chain members to address the impact of production and consumption within the performance objectives that integrate the environmental, economic, and social perspectives of sustainability (Carter and Rogers, 2008; Linton et. al., 2007; Seuring and Müller, 2008; Teuscher et. al., 2006). Practicing managers should be aware that sustainability is not giving away all the business proits in order to being sustainable. Both manufacturing and service companies have been engaging in SSCM. The ideas and the techniques for developing SSCM are slightly different, but the objectives are similar. Thus, irms need to have a crystal clear understanding of the multi-dimensional concepts of sustainability to have a balance between proitability and sustainable development issues (Law, 2010). 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Seuring,฀S.,฀&฀Müller,฀M.฀(2008).฀From฀A฀Literature฀Review฀to฀A฀Conceptual฀ Framework For Sustainable Supply Chain Management, Journal of Cleaner Production, 16, 1699–1710. Sloan,฀ p.,฀ Legrand,฀ W.,฀ tooman,฀ H.,฀ &฀ Fendt,฀ J.฀ (2015).฀ Best฀ practices฀ in฀ Sustainability:฀ German฀ and฀ Estonian฀ Hotels,฀ Advances in Hospitality and Leisure Article Information, 5, 89–107. Smith,฀E.฀E.,฀&฀perks,฀S.฀(2010).฀A฀perceptual฀Study฀Of฀the฀Impact฀Of฀Green฀ Practice Implementation On The Business Functions, Southern African Business Review, 14, 1–29. Stock,฀J.฀R.,฀&฀Boyer,฀S.฀L.฀(2009).฀Developing฀a฀Consensus฀Deinition฀of฀Supply฀ Chain Management: A Qualitative Study, International Journal of Physical Distribution & Logistics Management, 39, 690–711. teuscher,฀ p.,฀ Gruninger,฀ B.,฀ &฀ Ferdinand,฀ N.฀ (2006).฀ Risk฀ Management฀ in฀ Sustainable Supply Chain Management: Lessons Learnt from the Case of GMO-Free Soybeans, Corporate Social Responsibility and Environmental Management, 13, 1–10. Walters,฀D.,฀&฀Lancaster,฀G.฀(2000).฀Implementing฀Value฀Strategy฀through฀the฀ Value Chain, Management Decision, 38, 160–178. Wanjohi,฀ p.,฀ Gachoka,฀ H.,฀ Kihoro,฀ J.,฀ &฀ Ogutu,฀ M.฀ (2013).฀ Green฀ Business:฀ Potential for Application as a Business Innovation for Wealth and Employment Creation in Kenya, Global Business and Economics Research Journal, 2, 1–12. Webster, K. (2000). Environmental Management in the Hospitality Industry, Cromwell: New York. Weil,฀ N.฀ (2007).฀ Heart฀ of฀ Green.฀ Available฀ at฀ http://heartofgreen.typepad.com/ heart_of_green/2007/09/bring-your-own-.html [Accessed 02 May 2015]. Westpac Group. (2014). Sustainable Supply Chain Management Framework, 1–13. 27 Achieving Sustainable Supply Chain through the Creation of Economic Growth Wolf,฀C.,฀&฀Seuring,฀S.฀(2010).฀Environmental฀Impacts฀As฀Buying฀Criteria฀For฀ Third Party Logistical Services, International Journal of Physical Distribution & Logistics Management, 40, 84–102. 28 Chapter 3 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry S. Punitha, Yuhanis Abdul Aziz*, and Azmawani Abd Rahman INTRODUCTION All across the world, a series of atmospheric environmental challenges have been threatening human health and well-being in many ways. Environmental pollution (e.g., air, water, land, noise, thermal, etc.), extreme weather conditions, land degradation and decreasing supplies of safe water are some of those environmental challenges that are threatening human survival today. Additionally, the looming threat of overpopulation with a prediction of 9.6 billion earthlings by 2050 (Gerland et. al., 2014) is also likely to further drain natural resources which are already in limited supply (Dimick, 2014). In light of the above, people have begun to set aside ideas on how they could protect, preserve and restore the natural environment from severe destructions. They realise that if remedial actions are not taken to correct such adverse environmental challenges, the risk of the ecosystem collapsing to an intolerable level may be felt. According to Miller and Spoolman (2011), environmental movement started gaining momentum in the 1970s and that period was also called the environmental decade or the irst decade of the environment. On the other hand, Cain and Lovejoy (2004) mentioned that it was not until the mid-1980s that conservation activities were truly rooted in protecting the environment. Despite the concern about when the movement took root, what is obvious is that environmental concerns among citizens around the world *Corresponding Author: Assoc. Prof. Dr. Yuhanis Abdul Aziz (yuhanis@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth and the number of scientiic studies related to the environment have grown signiicantly. Besides that, governments around the world have started developing and adopting policies to protect land, air, fresh water, historic resources, wildlife and marine aquatic life, with speciic departments to implement and administer them. Simultaneously, regulations to control the impacts of industrial or business activities (e.g., taxation, pollution charges, and subsidies for pollution control equipment) across national boundaries have been intensiied. To meet these governmental regulations, many businesses have set their own environmental policies and control units (Chan and Wong, 2006). Some researchers have also commented that such adoption by businesses were not mandated by law but could be described as voluntary initiatives with the purpose of projecting a corporate social responsibility (CSR) image (Carroll and Shabana, 2010). While businesses are continuously looking for productive and creative ideas to reduce their environmental impacts, greening the supply chain or sustainable supply chain management (SSCM) is one such creative action point that is fast gaining consideration in the business world (Rao, 2007). Principally, such creativity assists businesses not only in lessening their environmental footprints, but also in improving their daily business processes to achieve proitability and cost savings. Initially, attention was given to the retailing and manufacturing industries due to the visible nature of their environmental impacts, but later, the service industries also found themselves under heightened scrutiny. The hotel sector, which is known as one of the largest sectors of the service industry, occupies an important place in terms of ecological conservation related to tourism and travel. This is mainly because of all commercial buildings, hotels have been found to have the most harmful impact on the environment (Sloan et. al., 2009). Although their contributions to the environment may be individually small, collectively they reveal a signiicant environmental impact฀ (Green฀ Hotels฀ and฀ Responsible฀ tourism฀ Initiatives,฀ 2010).฀ Basically, they consume a tremendous amount of resources (e.g., energy, water and non-durable goods) that can cause environmental damages more than the other categories of services of comparable size (Leonidou et. al., 2013;฀tang฀et.฀al.,฀2013;฀Hsieh,฀2012;฀Kasimu฀et.฀al.,฀2012). 30 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry As a result, many hotels to date have begun to implement numerous innovative approaches to strengthen the “greenness” of their processes (Dief and Font, 2010; Manaktola and Jauhari, 2007). Correspondingly, SSCM is seen as one of the possible approaches and it has been placed at the very core of hotels’ business models. The fundamental principle of SSCM rests on collaboration between hotels and both their upstream and downstream partners that involve all stages of procurement, production and฀ distribution฀ of฀ products฀ and฀ services.฀ However,฀ the฀ SSCM฀ adopted฀ by hotels is not readily apparent and there are variations in the degree and mode of execution. At the same time, much of the existing researches related to hotels (e.g., Trung and Kumar, 2005; Shanklin et. al.,1991) seemed to emphasise on a single function or phase as opposed to looking at the entire hotel’s supply chain. Therefore, the objective of this paper is to provide a comprehensive analysis of SSCM within the hotel industry by examining how hotels implement sustainable solutions in various phases of the supply chain. Hence,฀ a฀ comprehensive฀ review฀ of฀ literature฀ was฀ conducted฀ with฀ the aim of gathering and analysing all related papers in the ield. Studies covering various countries were considered and they were identiied by using keywords such as “sustainable supply chain management”, “sustainable development”, “hospitality”, “sustainability” and “green management”. Besides that, this study is also supported by examples of industrial applications obtained from local and international newspapers, magazines฀and฀websites฀(e.g.,฀Green฀Hotelier,฀2015;฀Marriott,฀2015;฀Hilton,฀ 2011). Fundamentally, this paper sees the importance of the connection between academic literature and industrial information as a potential channel for innovation and development in both areas simultaneously. Overall, this paper makes two contributions. First, this paper seeks to analyse existing literature and best practices of hotels in relation to SSCM, which will enrich the current discussions in the academic ield and also to enhance the understanding of this topic by academicians. Second, this study is applicable globally as there are a number of sustainable initiatives taking hold in the hotel industry around the world and the hotels may beneit from such practical examples and ideas discussed in this paper. 31 Achieving Sustainable Supply Chain through the Creation of Economic Growth LITERATURE REVIEW SSCM is known as a multifaceted and challenging task, covering a wide range of activities. When an organisation aims at greening its supply chain, it is important to adopt the entire supply chain to obtain the desired outcomes. It also requires a nuanced understanding of the social and environmental issues alongside the economic costs and beneits. In general, each organisation has its own way of entrenching and demonstrating its commitment to the environment and there is no one ixed approach which can be used by all organisations. The commitment is often expressed on the basis of the individual organisation’s unique priorities which are fundamental for an effective supply chain management. According to the Sustainable Supply Chain Foundation (2010), sustainability within the supply chain captures a few priorities, such as responsible use and protection of the natural environment, conservation of natural resources, reduction of ecological footprints, savings to achieve inancial goals and responsibility towards society. Commonly, best practice organisations do not focus on just one, but often integrate many priorities to reap the full beneits of SSCM. However,฀ the฀ implementation฀ of฀ multiple฀ priorities฀ remains฀ challenging as strategists need to extend their concentration span as far as possible upstream towards the suppliers and also downstream towards the consumers. A poor level of coordination between the priorities along the path can tear down a high level of performance that can be achieved by an organisation. This is indeed very important for the hotel industry as its priority is not limited to one. The industry often strives to conserve its key resources which are energy and water and this is further exaggerated by the ever-rising energy costs and demand for clean water (Amemba, 2013). Besides the priority to conserve resources, added pressure has also been put on the industry to respond to challenges related to social responsibility. Hence,฀ activities฀ aimed฀ exclusively฀ at฀ increasing฀ the฀ welfare฀ of฀ society฀ have become another priority for the industry as well. On the other hand, such priorities discussed above may prove to be a costly endeavour for hotels if not handled with a number of economic factors. This is because consumers often focus on low costs (Mandese, 1991), whereas suppliers 32 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry may incur greater costs (e.g., to install energy eficient technology) while making an attempt to fulil the requirements of hotels to be environmentally friendly฀(Hotel฀Industry฀Magazine,฀2011).฀ However,฀the฀industry฀realised฀that฀a฀long-term฀view฀is฀important฀to฀ understand the full potential of SSCM. Even though there persists a myth that greening the supply chain may incur additional expenses, with the help of greater operating eficiency as well as a systematic approach, the hotel industry believes that SSCM is able to create a positive long term net impact on its inancial performance. For that reason, SSCM remains a critical success factor for the industry although the system is perceived to be complex with the involvement of a variety of personnel, processes and technologies (Charter et. al., 2001). BASIC TERMINOLOGY Supply chain is a concept that is well established in the literature and various explanations have been given in the past several years. According to฀Ganeshan฀and฀Harrison฀(1995),฀a฀supply฀chain฀contains฀various฀facilities฀ and distribution opportunities that include the functions of material purchasing,฀production฀and฀distribution฀of฀goods฀to฀consumers.฀Handield฀ and Nichols (1999) further explain that a supply chain is a network of activities related to movement and transformation of raw materials into inished goods which also involves information low. In its simplest form, supply chain is described as organisational alignments that move products and services to the market (Lambert et. al., 1998). It includes not only the manufacturers and suppliers, but also transporters, wholesalers, retailers and consumers themselves (Chopra and Meindl, 2001). According to Chen and Paulraj (2004), typically there are three traditional stages in the supply chain (i.e., purchasing, production and distribution) that link both the upstream and downstream trading partners (Figure 3.1). Each one of these stages is made up of a number of facilities and managed by a different group of people. 33 Achieving Sustainable Supply Chain through the Creation of Economic Growth Internal Supply Chain Suppliers Purchasing Production Distribution Customers Figure 3.1 An illustration of a company’s supply chain Source: Chen and Paulraj (2004) If this is what a supply chain is, then supply chain management can be explained as the integration of all activities or processes through the development of synergistic supply chain relationships to gain a competitive edge฀(Handield฀and฀Nichols,฀1999).฀Supply฀chain฀management฀basically฀ requires supply chain members to work together to enhance total supply chain performance, overall business-process excellence and end-consumer satisfaction, instead of striving for a bigger proit share (Sigala, 2008). The supply chain members cooperate by coordinating activities spanning irms’ boundaries to establish agile supply chain (Bowersox, 1990). This signiies a novel approach in managing business processes and building networks of long-lasting relationships with supply chain stakeholders (Sigala,฀2004;฀Harland,฀1996).฀According฀to฀Rabelo฀et.฀al.฀(2007),฀costs฀ reduction or bottom line improvement can also be achieved through an eficient supply chain management. Well ahead, the integration of environmental practices within supply chain management has itself developed into a separate and growing ield. Researchers (Touboulic and Walker, 2015; Pagell and Wu, 2009) termed this integration as sustainable supply chain management (SSCM) and it has continued to garner a steady level of attention and interest from businesses. According to Seuring and Muller (2008), SSCM is deined as the coordination of materials, information and capital that includes collaboration among businesses throughout the supply chain to address the economic, environmental and social challenges related to sustainable development. Looking at another deinition, Carter and Rogers (2008) 34 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry deine SSCM as the systematic management of inter-organizational business processes to accomplish environmental, social and economic goals that are important for long-term achievement of an organisation and its chains. The deinitions of SSCM are more narrowly focused than those for supply chain management and with emphasis on the three pillars of sustainability (i.e., economic, social and environmental). These pillars are about succeeding through the consideration of the organisational economic performance while also giving high importance to the sustainability of social capital (people and community) and environmental capital (natural resources). Generally, SSCM has emanated from the identiication of the strategic importance of buying and supplying to achieve a business’ long-term performance and in addressing sustainability issues within business competencies฀ (Hall฀ and฀ Matos,฀ 2010;฀ Burgess฀ et.฀ al.,฀ 2006).฀ From฀ an฀ operational viewpoint, SSCM includes both internal and external business processes, with an emphasis on teamwork and cooperation between supply chain partners (Touboulic and Walker, 2015). The main goal of SSCM is to reduce or eliminate negative environmental impacts and waste of resources from the procurement of appealing raw materials up to delivery, usage and inal disposal of products either by customers or organisations (Hervani฀et.฀al.,฀2005).฀this฀involves฀reactive฀monitoring฀of฀the฀common฀ environmental management programmes to more proactive execution decisions across the supply chain. PHASES OF SSCM AS OBSERVED IN THE HOTEL INDUSTRY In general, greening of the supply chain is about how organisations are incorporating various environmental initiatives in different phases of the supply chain. To produce a successful product or service, it is important for an organisation to add value in each phase of the supply chain. This is equally important for the hotel industry where synchronization among all the phases will lead to better business results. According to Rao (2007), managing an effective and reliable SSCM essentially involves four phases which are (a) inbound logistics, (b) production or internal supply chain, (c) outbound logistics and (d) reverse logistics. Thus, the following sections will discuss each phase in detail by giving an overview of the phases 35 Achieving Sustainable Supply Chain through the Creation of Economic Growth with examples of how hotels implement sustainable solutions in different phases of the supply chain. Inbound Logistics To continue to the activities related to development and production, organisations acquire needed inputs from the suppliers. Thus, inbound logistics involve the activities of receiving, storing, distributing and making the inputs received from the suppliers ready for production or development of end products or services. In simple terms, it refers to the transportation, storage and delivery of goods coming into a business. Procurement practices are used in the inbound logistics to add value to the needs of an organisation by doing requirements planning, deciding between make or buy options and building relationships with vendors (Fantazy et. al., 2010). Procurement ensures the purchase of suitable supply with the best possible price at the right time and delivery of the desired quality and quantity to a preferred location (Gill et. al., 2012). In relation to SSCM, green procurement ensures the purchasing of goods and services that causes minimal damage to the environment. It takes into consideration human health and environmental impacts of its activities into the search for better quality goods and services with competitive prices (Mazzariol, 2012). The consideration often includes key factors such as making available a detailed design speciication for suppliers to incorporate environmental performance standards for supplied goods, collaboration with suppliers to help meet environmental sustainability goals, environmental audits for suppliers’ internal management and suppliers’฀ ISO14001฀ certiication฀ (Zsidisin฀ and฀ Hendrick,฀ 1998).฀ Such฀ requirements enable organisations to fulil their common strategies to reduce, reuse and recycle materials (Carter and Carter, 1998; Murphy et. al., 1995). For instance, Rao (2007) mentions that the material reduction strategy can be accomplished very effectively through ways such as (1) reducing the volume of such materials which are challenging to be disposed of, (2) purchasing more amounts of reusable or recycled materials to reduce the usage of hazardous materials and (3) motivating suppliers to reduce packaging and increase the usage of biodegradable and returnable packaging if it is unavoidable. 36 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry Marriott International, a green leader in the hospitality industry, can be used as an example to demonstrate how hotels approach the inbound logistics phase of the sustainable supply chain. According to Marriott News Center (2012), the company has been recognised for its supplier diversity efforts by DiversityInc magazine and named “Top 50 Companies for฀Supplier฀Diversity”฀by฀Hispanic฀trends฀magazine.฀the฀similar฀source฀ also reported that the company has spent nearly US$4 billion over the last decade for this commitment and the company is looking forward to increasing this amount by enabling opportunities within an everincreasing diverse and inclusive supply chain. Marriott is also a founding member฀ of฀ the฀ Hospitality฀ Sustainable฀ purchasing฀ Consortium฀ (HSpC),฀ which measures the sustainability of suppliers and their products through an established industry-wide index. Led by sustainability consulting irm MindClick฀SGM,฀who฀is฀also฀the฀founder฀and฀leader฀of฀HSpC,฀the฀index฀ platform beneits Marriott to green its global supply chain by sourcing products that meet the environmental and social responsibility (Green Hotelier,฀2015).฀ Besides that, Marriott has collaborated with its suppliers to acquire price-neutral products comprising more sustainable materials that consume less energy. Energy-eficient light bulbs, water-saving showerheads, recycled key cards and pens, and eco-friendly laundry bags are some of the materials purchased by Marriott to meet its sustainability goals. In the kitchen, actions such as buying organic and responsibly sourced seafood and other materials are performed (Marriott, 2015). On top of that, Marriott has also revealed that it will spend 75 percent of its budget to procure furniture, ixtures and equipment from sustainable sources (Environmental Leader, 2012). Furthermore, Marriott has also started to show more interest in purchasing housekeeping and cleaning products that are environmentally friendly. Preferences have been given to green-certiied cleaning products and procedures to improve indoor air quality, reduce health risks to building occupants (hotel staff and guests), enhance environmental performance and฀ gain฀ marketing฀ beneits฀ (Green฀ Hotelier,฀ 2012).฀ In฀ the฀ aspect฀ of฀ human health, these products demonstrate low toxicity, they do not bioaccumulate, they are not carcinogenic, no adverse reproductive effects, 37 Achieving Sustainable Supply Chain through the Creation of Economic Growth they are not corrosive to skin or eyes and best of all, they do not cause allergic contact dermatitis (Ruben, 2009). According to the Environmental Protection Agency (2010), these green-certiied cleaning products meet environmental standards and have positive environmental attributes (e.g., biodegradability, low toxicity, low volatile organic compound (VOC) content and reduced packaging as they are highly concentrated). Production This phase includes development activities, production process and control, testing, packaging, maintenance, and all other activities that transform the inputs into inished products or services. Some organisations have very little to do at this phase, whereas for others, it is their main focus. Cost reduction and signiicant eficiency gains can be accomplished if this phase is managed eficiently. The production managers are responsible for converting the requests and demands of the end users into production runs (Beattie, 2015). According to Rao (2007), there are many green initiatives which are associated to this phase. Some of these are: •฀ Improvement of processes to reduce generation of waste •฀ Improvement of processes to comply with emission standards •฀ Improvement of processes to comply with efluent standards •฀ Environment friendly raw materials •฀ Taking environmental criteria into consideration •฀ Design consideration •฀ Improvement of processes to reduce solid waste •฀ Improvement of processes to reduce water use •฀ Improvement of processes to reduce air emissions •฀ Use of cleaner technology processes to maximise savings •฀ Recycling of materials for internal use by the company In the hotel industry, there are some impressive innovations arising as฀a฀result฀of฀the฀push฀towards฀hotels.฀Hotels฀are฀usually฀geared฀towards฀ 38 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry energy savings, carbon emission reduction, water conservation and waste management. Despite the undeniable fact that many hotels have their own฀ strategies฀ towards฀ the฀ aforementioned฀ areas,฀ Hilton฀ Worldwide฀ is฀ the pioneer and only major multi-brand hospitality company to make sustainability measurement and corrective action a brand standard at each฀ of฀ its฀ more฀ than฀ 3,900฀ hotels฀ globally฀ (Hilton฀ Worldwide,฀ 2013).฀ The LightStay, a proprietary system which is established to analyse and evaluate฀sustainability฀performance,฀provides฀Hilton฀with฀a฀global฀platform฀ to address natural resource challenges. The LightStay system basically helps฀Hilton฀to฀quantify฀its฀energy฀use,฀water฀use,฀waste฀output฀and฀carbon฀ output through 200 operational practices such as housekeeping, paper product use, food waste, chemical storage, air quality and transportation (GreenBiz, 2010). Since฀ the฀ implementation฀ of฀ LightStay,฀ Hilton฀ has฀ continued฀ to฀ improve its environmental and inancial performance. According to the GreenBiz฀ (2011),฀ Hilton฀ has฀ saved฀ more฀ than฀ US$74฀ million฀ in฀ utility฀ costs as a result of (1) 6.6 percent reduction of energy use, (2) 7.8 percent reduction of carbon output, (3) 19 percent reduction of waste output and (4) 3.8 percent reduction of water use. The same source also reported that these actions were equivalent to the reduction of more than 50,000 cars from the road, water savings that could ill more than 1,000 swimming pools and energy conservation that could provide power to nearly 20,000฀homes฀a฀year.฀As฀a฀result฀of฀these฀efforts,฀Hilton฀Worldwide฀has฀ received฀many฀certiications฀for฀commercial฀buildings฀(Hilton,฀2011)฀and฀ one of such awards is the ISO 14001 certiication for its Environmental Management Systems (EMS). Outbound Logistics While the inbound logistics phase includes the purchase and delivery of materials from the supplier to the business, the outbound logistics phase deals with the storage and delivery of the completed or inal products or services from the business to the end users. In simple words, this phase involves the distribution of the inal products or services to the end users. Thus, the functions of an organisation for outbound logistics include marketing and selling, order processing, warehousing, transportation, 39 Achieving Sustainable Supply Chain through the Creation of Economic Growth packaging and waste management. According to Rao (2007), green marketing, eco-friendly physical distribution, eco-friendly packaging and eco-friendly waste management are all activities that might inluence or increase the ecological performance of a business and its supply chain. In the hotel industry, the marketing and selling activities are more apparent in this phase compared to all other initiatives. Marketing is seen as a vital tool for promoting sustainability and selling new ideas. In relation to this, green marketing has gained considerable momentum within the industry with consumers changing their individual attitudes and฀behaviours฀to฀support฀the฀concept฀(Han฀et.฀al.,฀2011).฀Essentially,฀this฀ concept aims at promoting activities related to environmental protection through฀ socially-responsible฀ products฀ and฀ services.฀ Hotels฀ adopt฀ green฀ marketing campaigns to highlight their superior environmental protection initiatives such as energy savings, reduction of carbon emission, water conservation and waste management. Many hotels use the term “green hotel” to sound appealing to their potential customers (Pizam, 2009) as such image is believed to have a signiicant impact on consumers’ behavioural intentions and purchasing behaviour (Prendergast and Man, 2002). While some prefer to be recognised as an “eco-friendly hotel,” they often use the term “eco” along with฀ the฀ hotel’s฀ brand฀ name.฀ For฀ example,฀ Finch฀ Bay฀ Eco฀ Hotel฀ uses฀ the term “eco” together with its name to express its commitment to the environment and society. Despite being the winner of numerous awards for its conservation efforts, the hotel was also chosen as “World’s Leading Green฀Hotel฀2014”฀by฀the฀World฀travel฀Awards฀(World฀travel฀Awards,฀ 2015). Taking advantage of these awards and recognitions, the hotel uses them as a strategic tool that allows it to easily penetrate into the ecofriendly market. As hotels’ services are largely intangible, customers also tend to depend on physical cues to help them in evaluating service providers. Therefore, hotel marketers have high responsibilities to develop this tangible evidence to represent the physical cues within the supply chain. As hotels have also implemented various sustainable solutions within the production phase, this is the right time to inform and deliver enough information to their customers about their efforts. At this point, eco40 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry labelling plays an important role (Olugu et. al., 2011) in communicating the environmental attributes of the products or system to customers. Labels with indications such as “green,” “environmentally friendly,” “nontoxic,” “energy eficient,” “recycled content,” and “recyclable” are common in the hotel industry. These indications are made apparent by merely placing an emblem or a logo that looks like a seal of approval on their products. This signiies that their products meet a set of environmental or social standards (Ecolabel Index, 2015). Similarly, labels of eco-certiication schemes also serve as a valuable additional tool for the hotel industry. According to Shieh (2012), many nations have initiated their own eco-certiication schemes and this is illustrated in Table 3.1. Basically, these schemes provide criteria and guidelines for hotels which aim at improving their environmental performance. The focus is often on waste minimization, energy conservation and management, management of fresh water resources, waste water management, pollution prevention, and environmentally sensitive฀purchasing฀(Malta฀tourism฀Authority,฀2010).฀Hotels฀that฀have฀ obtained such certiications use them as one of their marketing strategies to promote their eco-friendly operations and help their customers to make informed decisions. The trend has become so popular that almost all hotels use internet marketing to promote their hotels. In the majority of their online presence, postings about their certiications or awards have become the norm. Table 3.1 Eco-certiication schemes Location/Country Eco-certification scheme North America Green Leaf Canada Green Key Britain Green Tourism Business Scheme United States Green Seal EU Ecolabel and Green Key 41 Achieving Sustainable Supply Chain through the Creation of Economic Growth cont. Table 3.1 China Green฀Hotel฀Standard Taiwan Green Mark Singapore SEC฀Eco฀Hotel฀Label Source: Punitha and Rasdi (2013) Reverse Logistics Reverse logistics is deined as the process of moving goods from the point of consumption back to the producer in a distribution channel (Pohlen and Farris, 1992). It comprises of any process (e.g., assortment, separation, densiication or disassembly, transitional processing, delivery and integration) that seeks to reuse materials and products from the point of consumption rather than procuring them again from vendors or producers. These include the purchase and sale of surpluses, and reworking or repackaging items or shipments returned by customers. This has been further deined as an environmentally conscious approach as it minimises the waste produced through its reverse distribution and resource reduction resulting from recycling and reusing activities (Carter and Ellram, 1998). In the hotel industry, the most quoted example is laundry reduction where the guests are asked to consider using their towels and linens more than once. With such actions, hotels achieve substantial savings through the reduction of laundry loads, energy, related water or sewer, and costs of labour. Moreover, the lifespan of hotels’ linen and towel can be extended, thereby฀ reducing฀ costs฀ of฀ replacements฀ (American฀ Hotel฀ &฀ Lodging฀ Association, n.d.). Besides that, hotels also have very established recycling programmes which are likely to involve materials from (1) administrative - high quality paper, mixed paper, cardboard, bottles, ink and toner, (2) food preparation/service areas – aluminium cans, plastic containers, glass, cardboard, cooking oils and other metals, and (3) guest rooms/public areas - magazines, newspaper, bottles and cans. Some hotel groups, such as Hilton฀International฀and฀Fairmont฀Hotels฀and฀Resorts,฀use฀divided฀waste฀ baskets at source so that the separation process can be initiated in a room itself (Baker, 2015). 42 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry Besides handling the waste physically, hotels also use modern waste management technology to improve their overall environmental performance. These advanced technologies also have all the potential to contribute to superior reverse logistics performance within the hotel industry.฀For฀instance,฀taj฀Hotels฀Resorts฀and฀palaces฀has฀a฀long฀standing฀ commitment to sustainability programmes and the group is also well known for its reverse logistics practices. Taj Residency, one of the hotels of the Taj Group, has executed a number of signiicant strategies to decrease water consumption including treating and reusing wastewater onsite and installing water eficient ixtures (Tuppen, 2014). According to EarthCheck (n.d.), the hotel’s efluent and pool backwash water is brought to an onsite single phase treatment plant where it is treated for suitable reuse on the hotel’s gardens and in the site’s cooling tower. This determined wastewater recycling project saves the hotel 15-20kL of electricity consumption daily. Approximately three quarters of the water savings are reinvested into the system for maintenance. Further, EarthCheck (n.d.) also reported that the hotel has a system where the dishwasher collects inal rinse water for reuse for the next load’s initial wash, thus saving 15L of treated water each cycle or 9kL annually. At the same time, the hotel has also installed a heat exchanger to recover heat from the site’s air conditioning refrigerant (Verma, 2014). This heat is used to preheat water used to feed its boiler thereby helping the hotel to reduce energy consumption (EarthCheck, n.d.). Another hotel of Taj Group, the Vivanta, has successfully started producing bio-gas for cooking purposes by using all bio-degradable waste (i.e., food waste, dry leaves, grass cuttings, animal waste and paper). The digested waste which is high in quality is used as manure in its own garden (taj฀Hotels,฀2012).฀Besides฀that,฀the฀taj฀Exotica฀Resort฀and฀Spa฀Maldives,฀ which is also another hotel of Taj Group, uses Membrane Bioreactors System (MBR) to treat sewage water. The water is basically recycled for lushing฀of฀toilets฀and฀gardening฀after฀treatment฀(taj฀Hotels,฀2013).฀ 43 Achieving Sustainable Supply Chain through the Creation of Economic Growth CONCLUSION Essentially, the objective of this paper is to provide a comprehensive analysis of SSCM within the hotel industry by examining how hotels implement sustainable solutions in different phases of the supply chain. The discussions reveal that SSCM is no longer an option for the hotels but it has become a business imperative and a very important tool for the success of hotels in a competitive business world. The evidence provided above also shows that hotels have been trying to adopt a holistic approach to sustainability deploying sustainable solutions in all phases of the supply chain. The beneits that hotels can attain from SSCM have led to these solutions฀ being฀ increasingly฀ adopted฀ worldwide.฀ Hotels฀ that฀ truly฀ rely฀ on SSCM can expect better resource eficiency (e.g., energy, water and waste reduction), higher environmental performance, more opportunity for development and also improved brand reputation, all of contribute to both top line revenue generation and bottom line savings. MANAGERIAL IMPLICATION Hotels฀ have฀ been฀ utilising฀ SSCM฀ as฀ a฀ point฀ of฀ differentiation.฀ they฀ have demonstrated remarkable ideas and techniques to improve their environmental฀performance฀through฀SSCM.฀However,฀such฀involvements฀ are much more obvious among the leading players in the industry and the usage of SSCM among hotels with other low star ratings (e.g., 2-star hotels and 3-star hotels) is not apparent and needs to be strengthened. Thus, the examples of sustainable solutions shared in this paper may serve as guidelines for the latter to start their ventures into SSCM. Similarly, the evidence of cost savings and inancial performance provided in this paper is expected to be a motivating factor for them to integrate SSCM into their operations. 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Olugu,฀E.฀U.,฀Wong,฀K.฀Y.฀,฀&฀Shaharoun,฀A.฀M.฀(2011).฀Development฀Of฀Key฀ Performance Measures For The Automobile Green Supply Chain, Resources, Conservation and Recycling, 55(6), 567-579. 49 Achieving Sustainable Supply Chain through the Creation of Economic Growth pagell,฀M.฀,฀&฀Wu,฀Z.฀(2009).฀Building฀A฀More฀Complete฀theory฀Of฀Sustainable฀ Supply Chain Management Using Case Studies Of 10 Exemplars, Journal of Supply Chain Management, 45(2), 37-56. pizam,฀A.฀(2009).฀“Green฀Hotels:฀A฀Fad,฀ploy฀Or฀Fact฀Of฀Life?”,฀International Journal of Hospitality Management, 28(1), 1. pohlen,฀t.฀L.฀,฀&฀Farris,฀M.฀t.฀(1992).฀Reverse฀Logistics฀In฀plastics฀Recycling,฀ International Journal of Physical Distribution and Logistics Management, 22(7), 35–48. prendergast,฀G.฀,฀&฀Man,฀H.฀W.฀(2002).฀the฀Inluence฀Of฀Store฀Image฀On฀Store฀ Loyalty฀ In฀ Hong฀ Kong’s฀ Quick฀ Service฀ Restaurant฀ Industry,฀ Journal of Foodservice Business Research, 5(1), 45-59. punitha,฀S.฀,฀&฀Rasdi,฀R.฀M.฀(2013).฀Corporate฀Social฀Responsibility:฀Adoption฀ Of฀Green฀Marketing฀By฀Hotel฀Industry,฀Asian Social Science, 9(17), 79-93. Rabelo,฀L.,฀Eskandari,฀H.,฀Shaalan,฀t.฀,฀&฀Helal,฀M.฀(2007).฀Value฀Chain฀Analysis฀ Using฀ Hybrid฀ Simulation฀ And฀ AHp,฀ International Journal of Production Economics, 105(2), 536-547. Rao, P. (2007). Greening Of The Supply Chain: An Empirical Study For SMES In The Philippine Context, Journal of Asia Business Studies, 1(2), 55-66. Ruben, D. (2009). What Hoteliers Should Know About Green Cleaning-Part One. Green Lodging News. Available at: http://www.greenlodgingnews.com/whathoteliers-should-know-about-green-cleaning-part [Accessed 5 April 2015]. Seuring,฀S.฀,฀&฀Müller,฀M.฀(2008)..฀From฀A฀Literature฀Review฀to฀A฀Conceptual฀ Framework For Sustainable Supply Chain Management, Journal of Cleaner Production, 16(15), 1699-1710. Shanklin,฀C.฀W.,฀petrillose,฀M.฀J.฀,฀&฀pettay,฀A.฀(1991).฀Solid฀Waste฀Management฀ practices฀ In฀ Selected฀ Hotel฀ Chains฀ And฀ Individual฀ properties,฀ Journal of Hospitality & Tourism Research, 15(1), 59-74. Shieh,฀H.฀S.฀(2012).฀the฀Greener,฀the฀More฀Cost฀Eficient?฀An฀Empirical฀Study฀ Of฀International฀tourist฀Hotels฀In฀taiwan,฀International Journal of Sustainable Development & World Ecology, 19(6), 536-545. Sigala, M. (2004). Collaborative Supply Chain Management In The Airline Sector: The Role Of Global Distribution Systems (GDS), Advances in Hospitality and Leisure, 1(1), 103-121. 50 Adoption of Sustainable Supply Chain Management (SSCM) by the Hotel Industry Sigala, M. (2008). A Supply Chain Management Approach For Investigating The Role Of Tour Operators On Sustainable Tourism: The Case Of TUI, Journal of Cleaner Production, 16(15), 1589-1599. Sloan,฀ p.,฀ Legrand,฀ W.฀ ,฀ &฀ Chen,฀ J.฀ (2009).฀ Sustainability In The Hospitality Industry.฀Butterworth-Heinemann:฀Oxford.฀ Sustainable Supply Chain Foundation. (2010). What Is Sustainable Supply Chain Management? Available at: http://www.sustainable-scf.org/ [Accessed 5 April 2015]. taj฀ Hotels.฀ (2012).฀ Communication On Progress. 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Available at: http://www.worldtravelawards.com/award-worlds-leading-green-hotel-2014 [Accessed 10 April 2015]. 51 Achieving Sustainable Supply Chain through the Creation of Economic Growth Zsidisin,฀ G.฀ A.฀ ,฀ &฀ Hendrick,฀ t.฀ E.฀ (1998).฀ purchasing’s฀ Involvement฀ In฀ Environmental Issues: A Multi-Country Perspective, Industrial Management & Data Systems, 98(7), 313-320. 52 Chapter 4 Environmental Sustainability: Perspective from a Logistics Sector Kavighta Mohan Kumar, Azmawani Abd Rahman*, and Murali Sambasivan OVERVIEW OF SUSTAINABILITY The topic of sustainability and its essential concept, part of which is known as the Triple Bottom Line (TBL) (Kleindorfer et. al., 2005), has become a mainstream research topic of academics and practitioners. The sustainability concept expands its direction to measure the successfulness of business organizations with new criteria and values. Organizations are now refocusing their corporate activities to understand how they impact social, environmental and economic dimensions under sustainability (Leppelt et. al., 2013). Due to the current outsourcing trend in the manufacturing ield, shippers choose to outsource some of their business functions to become more฀cost฀effective.฀However,฀the฀shipper’s฀image฀as฀a฀sustainable฀irm฀ is obtained through their internal operations and external supply chain members; especially upstream and downstream suppliers (Awaysheh and Klassen, 2010; Leppelt et. al., 2013). ‘Shippers’ is a term commonly used in the logistics ield to represent manufacturers and can be deined as agents in administrative charge of moving shipments or consignments between origins and destinations. Shippers can be the either freight producers or receivers of freight (Mesa-Arango and Ukkusuri, 2014). Due to the easy accessibility of information through the media, social networks and telecommunication technology, customers and other stakeholders now have more information about their own supply chain *Corresponding Author: Assoc. Prof. Dr. Azmawani Abd Rahman (azar@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth (Awaysheh and Klassen, 2010; Dey, LaGuardia and Srinivasan, 2011). Therefore, issues related to supplier misconduct, such as poor working conditions for employees at the supplier’s plant, the use of sweatshop labour, the use of hazardous substance in production processes, improper environmental practices, and fraudulent activities have been pushed into the limelight for the public to see (Dey et. al., 2011). Therefore, external stakeholders like consumers, governments and non-governmental organizations (NGOs) pressure focal irms to ensure sustainable practices are well executed with proper controls at supplier bases to avoid adverse publicity, damage to reputation, costly legal obligations and bad perception (Awaysheh and Klassen, 2010; Foerstl et. al., 2010; Carter and Easton, 2011). From the manufacturing industry’s perspective, sustainability inclusion is not only required in products and the manufacturing process but is necessary for the entire supply chain (Jayal et. al., 2010; Ghadimi and฀Heavey,฀2014)฀and฀the฀survival฀of฀manufacturing฀companies฀can฀be฀ assured through triple bottom line practices throughout the supply chain (Vinodh and Joy, 2011). All components sourced from suppliers must be aligned with buyer (manufacturer) sustainability policies to ensure the buyer supply chain is fully sustainable (Gunasekaran and Spalanzani, 2012). In addition, these authors provide an overview of sustainability development literature and its application in the manufacturing and service industry. SUSTAINABILITY IN THE FIELD OF LOGISTICS The concept of sustainable development was considered “jargon” in academic literature and the business world in the 90’s and only gained popularity after the year 2000. The concept of “Sustainability” is acknowledged as a costly one for businesses to practice by governments (Paul, 2008) and (Elkington, 1998). The 21st century was mentioned as a “the Sustainability Century” for organizations. The report, “Our Common Future”, published by the World Commission on Environment and Development (WCED), is the baseline for the concept of sustainable development and this report is comprehensively produced through a 54 Environmental Sustainability: Perspective from a Logistics Sector global partnership with countries around the world (Mebratu, 1998). This report is also better known as the “Brundtland report”; under this report the “classic” deinition of sustainable development is explained as “development which meets the needs of the present without compromising the ability of future generations to meet their own needs” (WCED 1987 p. 43; Drexhage and Murphy ,2010). Sustainability has emerged as an important term in the logistics industry, hence pressurizing the entire sector to reconsider their existing practices to be more environmentally, socially and economically responsible. Sustainability is becoming an important aspect for logistic service providers, but how they and shippers work together to ensure sustainability for logistics activities in supply chain management remains unclear. According to (Abbasi and Nilsson, (2012) concepts like environmentally sustainable logistics, environmentally friendly logistics, green logistics, and green management (Venus, 2011) are found to be used interchangeability in sustainable logistic literature. According to Zhu, Sarkis and Lai (2008a) to use environmentally sustainable (green) supply chain management (GSCM) in their research is to portray environmental sustainability. The deinition of environmental sustainability for logistics is not clearly stated in literature so many contributions on this topic can be found in literature under “Green Supply Chain Management” (GSCM) (Murphy et. al., 2000; Faruk, 2001; Zhu et. al., 2008b). In logistics, transportation is one of the modes that causes a high negative impact on the environment and society. For transportation, the topic of environmental sustainable is related to emissions released by trucks or other vehicles, noise pollution, trafic congestion, high fuel consumption due to unplanned travel, empty running, speeding vehicles and poor vehicle loading. The main purpose of transportation is to move goods from their origin to the desired destination; hence, there are several important parameters to฀ be฀ taken฀ into฀ consideration฀ (Holter฀ et.฀ al.,฀ 2008).฀ Transportation has serious฀impact฀on฀economic,฀social฀and฀environmental฀issues.฀However,฀ this paper focuses only on environmental drawbacks. According to Reisi et. al. (2014) one-ifth of the carbon dioxide (CO2), half of nitrogen oxides 55 Achieving Sustainable Supply Chain through the Creation of Economic Growth (NOx), one third of chloroluorocarbons (CFCs) found in the atmosphere originated from transportation activities. The transfer of goods from one point to another point is mainly named as freight transport and can be divided as road freight, sea freight and air freight. In freight transport, road freight transport is regarded as one of the main causes of environmental pollution (Fürst and Oberhofer, 2012). ENVIRONMENTAL SUSTAINABILITY IN FREIGHT TRANSPORTATION The issues pertaining to global warming due to the cutting down of trees for development and the massive use of natural resources without proper sustainable planning have caused major setbacks regarding the environment. Due to this, the world is facing a global warming crisis and is under pressure to ensure the next generation will not suffer from resources depletion which is harmful to mankind. Awareness of global warming is increasing every day; businesses are facing great challenges to meet customers’ requirements for green products and services, governments’ policies on green issues, public pressure and new technology innovation. The impact of business operations towards the environment is the main reason why governments and society are really sensitive about sustainable development (Evangelista et. al., 2010) and therefore manufacturers and service providers are endeavouring to practice sustainability in their supply chain management to address green issues (Evangelista et. al., 2010). Many research papers on environmental issues are focusing on manufacturing sectors but less work is being done on the service sector. It is time to pay attention to environmental sustainability in the service sector such as the logistics service industry (Evangelista, 2014). In addition, environmental sustainability has become a serious concern for transport and logistics; logistics service providers have to make the necessary efforts to reduce the negative externalities on the environment caused by freight movements (Evangelista, 2014). Environmental sustainability is known as activities, actions, functions or processes which will reduce the environmental impact of supply chain management (Golicic and Smith, 2010). The term “Green” in logistics refers to environmental 56 Environmental Sustainability: Perspective from a Logistics Sector friendly and eficient transport and distribution systems. Furthermore, green logistics and environmental sustainability are interchangeable terms used in logistics literature and have the similar deinitions. Environmental sustainability has received international recognition through the World Commission on Environment and Development Report (1987). To further explain environment sustainability, Gordon Brown’s speech during the฀ United฀ Nations฀ Ambassadors฀ meeting฀ on฀ April฀ 20,฀ 2006฀ (Holt฀ and฀ Ghobadian, 2009) was useful. Environmental sustainability is not an option – it is a necessity. For economies to flourish, for global poverty to be banished, for the well-being of the world’s people to be enhanced – not just in this generation but in succeeding generations – we have a compelling and ever more urgent duty of stewardship to take care of the natural environment and resources on which our economic activity and social fabric depends. Corporate environmental management has typically focused on managing internal environmental practices. Adapted from (Holt฀and฀Ghobadian,฀2009), p. 934 With this, an increasing awareness about the environment has encouraged the incorporation of green and sustainability thinking in supply chain paradigms (Cabral et. al., 2012; Jain 2012; Koh et. al., 2013; Kumar, Teichman and Timpernagel, 2012; Genovese et. al., 2013). “Green” in the supply chain relects products and services which are produced and performed in a green way such as green product design, green sourcing, green marketing, green consumption, green manufacturing processes, green delivery of the inal product to the customers, and green end-of-life management (Cabral et. al., 2012; Srivastava, 2007). However,฀greening฀the฀supply฀chain฀has฀turn฀into฀a฀major฀challenge฀ for business especially the logistics industry (Zhu et. al., 2008a); hence, environmental sustainability has become a critical issue for logistics service providers as a whole (WEE, 2009). Transport and logistics-related activities are the main contributor of greenhouse emissions and for this reason, transport and logistics service providers are being pressured to address their green issues by incorporating environmental strategies into 57 Achieving Sustainable Supply Chain through the Creation of Economic Growth their operations (Evangelista et. al., 2010). Environmental sustainability is a coined term for green logistics in supply chain management. With these practices in place, companies may reap beneits such as energy saving, cost reductions, fuel eficiency and resource savings, eficiency improvements, increase in market shares and higher proit margins (AlaHarja฀and฀Helo,฀2014;฀pazirandeh฀and฀Jafari,฀2013;฀Kumar฀et.฀al.,฀2012;฀ Rao฀and฀Holt,฀2005).฀ The environmental aspects of transportation and logistics continues to be a serious concern for manufacturers outsourcing their logistics services because their products are moved from one point to another over great distances before they reach end users using various transportation modes (Evangelista, 2014; ITF, 2013). Any unsustainable practices by logistics service providers while goods are at transit will jeopardise their good name in the eye of customers, the public and NGOs. Therefore, efforts to reduce the negative effects on the environment through freight movement is necessary (McKinnon, 2008). According to Zailani et. al. (2011), a growing number of third party logistics service providers (3PLs) are making their operations green. The main reasons why logistics service providers intend to be green is because they desire to improve customer relationships through supporting their manufacturer’s environmental sustainability programs and also service providers are aware that environmental sustainability will soon be an important selection criteria (Evangelista et. al., 2010; Evangelista, 2014; Genovese et. al., 2013). On the other hand, being sustainably green helps to reduce environmental risks and impacts, improve the ecological eficiency of companies and their stakeholders, increase corporate proits and achieve market share objectives. Under the logistics supply chain, transportation has the largest impact on the environmental with high CO2 emissions being released compared to other logistics activities (Mc Kinnon, 2010; Wu and Dunn, 1995; Abbasi and Nilsson, 2012; Browne, 2005; Isaksson, 2012; González-Benito and González-Benito, 2006). To improve their environmental performance, one of the ways is to prioritize shipment consolidation with proper planning and program lows (Wu and Dunn, 1995; González-Benito and GonzálezBenito, 2006). With proper planning, the vehicles usage can be maximized 58 Environmental Sustainability: Perspective from a Logistics Sector and emissions of contaminating gases can be reduced (González-Benito and González-Benito, 2006). Companies are able to reduce the environmental burden they impose with proper practice of environmental sustainability practices such as pollution control, greenhouse gas emission and waste disposal (Colicchia et.฀al.,฀2013;฀Lin฀and฀Ho,฀2008;฀Maas฀et.฀al.,฀2014).฀When฀environmental฀ factors were incorporated into the logistics ield, concepts like recycling and disposals, reserve distribution, reserve logistics and green logistics emerged and created new market opportunities for those involved in logistics (Rodrigue et. al., 2001). However,฀ research฀ related฀ sustainability฀ is฀ commonly฀ found฀ in฀ the฀ area of supply chain management but there are limited papers available that fully focus on transportation activities. The next section under Table 4.1, attempts to highlight the studies done in the ield of supply chain and logistics management pertaining to environmental sustainability to highlight the literature gap on environmental sustainability practices. In management research, end outcome is mostly on performance; and the content analysis of environmental sustainability and performance were analysed to understand the research gap in this area. 59 Table 4.1 Content Analysis of Environmental Sustainability and Organizational Performance from Supply Chain Management &฀Logistics฀Management Achieving Sustainable Supply Chain through the Creation of Economic Growth 60 cont. Table 4.1 Environmental Sustainability: Perspective from a Logistics Sector 61 cont. Table 4.1 Achieving Sustainable Supply Chain through the Creation of Economic Growth 62 cont. Table 4.1 Environmental Sustainability: Perspective from a Logistics Sector 63 cont. Table 4.1 Achieving Sustainable Supply Chain through the Creation of Economic Growth 64 cont. Table 4.1 Environmental Sustainability: Perspective from a Logistics Sector 65 cont. Table 4.1 Achieving Sustainable Supply Chain through the Creation of Economic Growth 66 Environmental Sustainability: Perspective from a Logistics Sector The content analysis shows papers are mainly focused on green supply chain management practices and not speciic environmental sustainability practices. The analysis shows some of the common practices generally used to highlight green supply chain management are used as environmental sustainability practices. The practices such as, internal management, eco design, reserve logistics, cooperation with customers on environmental activities from green supply chain management are applied as practices in฀ environmental฀ sustainability.฀ However,฀ there฀ no฀ speciic฀ practices฀ to฀ represent environmental sustainability logistics practices. DISCUSSION Many papers have focused on the idea of sustainability within the supply chain context (Seuring and Müller 2008; Srivastava 2007), but little work has been done to understand the role and importance of logistics in an organization’s quest towards sustainability (Dey et. al., 2011). Logistics and transport service providers can actually change all the negative externalities caused by their operations into positive business opportunities by practicing sustainability. Lately, shippers or manufacturers prefer to select and accept only sustainable service providers and intend to switch over from those who do not meet their sustainability requirement. Thus, research on sustainability in the logistics ield is an emerging research area and needs to be further expanded theoretically and practically. It is time to gain more knowledge on sustainable environmental practices among logistics service provider and shippers. The effort to study environmental sustainable logistics practices will help to provide a true existing picture of logistics practices adopted by Logistics Services Practices (LSPs) and whether it is sustainable or unsustainable RECOMMENDATION FOR FUTURE STUDY The current paper is useful to conceptualize environmental sustainability from logistics and transportation perspectives and little empirical work has been done to generalize these practices within logistics irms Therefore, more research is needed to further expand this area. Environmental sustainability is just one concept from the Triple Bottom 67 Achieving Sustainable Supply Chain through the Creation of Economic Growth Line (TBL), whereby social logistics sustainability and economic logistics sustainability still remain as an unexplored area. Developing such studies in future research in this area will help both the LSPs and shippers in this ield. 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Sustainability came into focus in 1983, with the establishment of the World Commission for Environment and Development (WCED). Under the฀ leadership฀ of฀ former฀ prime฀ Minister฀ of฀ Norway,฀ Dr.฀ Gro฀ Harlem฀ Brundtland, the Brundtland committee was instructed to conirm the link between environmental issues and economic development of nations, as reported in the Brandt Report1. The results of the Brundtland committee titled ‘Our Common Future’ introduced the concept of ‘Sustainable 1 Lead by the former German Chancellor Willy Brandt, the Brandt report of 1980 was the irst to suggest global economic equality through sharing of resources between the developed and developing nations. *Corresponding Author: Assoc. Prof. Dr. Nitty Hirawaty Kamarulzaman (nitty@upm.edu.my) Three Tiers of Sustainability Measurement in the Grocery Retail Industry Development’2 (SD), a merger between sustainability and economic growth in 1987. Sustainable Development (SD) was deined by the report as “a development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs” (World Commission on Environment and Development, 1987, pp. 43). Several UN conferences on climate change and SD have taken place since to pace the global development in this ield. With each UN conference, the idea of SD is becoming clearer on how nations can attain it. While the Rio Earth Summit (1992) concentrated on the importance of policy development for SD, the Kyoto Protocol and the Johannesburg conferences highlighted the importance of industries to be involved in SD of a nation. The Copenhagen Conference (2009) debated on process transparency, while the Rio +20 (2012) conference recognized the role played by society in successful adaptation of SD into a nation. All this resulted in nations recognizing the importance of uniied approach to SD, thereby strengthening their stand on green industrial processes and activities in their nations. The most recent UN Conference on Climate Change took place on December 1st-12th 2014 in Lima, Peru. Though less fruitful than intended, the nations agreed upon reviewing the next stage of Kyoto Protocol implementation during the 2015 UN Conference in Paris. Nevertheless, it could be observed that the discussions in UN climate change conferences have been leaning more towards industrial greening and enhanced green performance by nations. This increased emphasis of UN member nations to green their industries led to the development of the concept of Corporate Sustainability, which is discussed in detail in the following section. CORPORATE SUSTAINABILITY The intense focus on SD across nations led to the development of sustainability regulations and market restrictions on business operations by global governments. Added to this, the rise in pressure from consumers 2 Sustainability is an ideology, while, SD is a road-map of social, economic, and environmental functions to achieve the status of sustainability in any activity that uses resources. 75 Achieving Sustainable Supply Chain through the Creation of Economic Growth and other stakeholders in the corporate world forced companies to accept the sustainable way of business. Corporate sustainability is actually a customized version of SD as deined by the Brundtland report,฀ but฀ only฀ speciic฀ to฀ businesses.฀ Dyllick฀ and฀ Hockerts฀ (2002,฀ pp.131) deined corporate sustainability as “the meeting of needs of the current stakeholders, without affecting the interests of potential future stakeholders to the business”. In order to do this, the companies have to maintain their economic, social, and environmental capital base without lagging behind on the sustainability aspect for political perspective. While Dyllick฀and฀Hockerts฀(2002)฀focused฀on฀the฀stakeholder฀angle฀of฀corporate฀ sustainability, Sutton (2004) explained the concept based on resource conservation. According to Sutton (2004) corporate sustainability is the adoption of business strategies and activities which saves, protects and increases the availability of natural resources for future use, and at the same time fulils the needs of the organization. The sustainable activities should emphasize on maximum utilization and minimal wastage. Further, Sikdar (2003) stated that sustainability in corporate terms includes a sensible balance between economic development, environmental leadership, and social equity. The Global Reporting Initiative (GRI) guidelines explain corporate sustainability to encompass relations between the economic, environmental, and social needs, while securing the future of the company (Global Reporting Initiative, 2010). Corporate sustainability involves a serious decision-making and provides a balance between environment commitment and interests of the company. It is not a short-term application, and responsible decisions made might lead to a successful green company in the future. The changing attitude of their customers, employees, and investors towards sustainability and green businesses, along with diminishing natural resources have really inluenced the way companies think about sustainability. Companies have come to realize that sustainability is linked to long term proits, and฀ companies฀ that฀ adapt฀ faster฀ wins฀ the฀ race.฀ However,฀ adapting฀ sustainability into existing business operations is one of the main hurdles to its acceptance by companies. Several indicators have been developed for studying and monitoring corporate sustainability across industries. Corporate sustainability reporting, 76 Three Tiers of Sustainability Measurement in the Grocery Retail Industry standard speciication by GRI, ISO 14000 series of certiications, EU Eco-Management and Audit Scheme (EMAS), Dow Jones Sustainability Indexes (DJSI) have been taken up to track the performance of companies in฀ terms฀ of฀ corporate฀ sustainability฀ (Guth฀ and฀ Stegar,฀ 2008).฀ However,฀ the indicators generally cover the themes of economic, environmental, and social aspects of sustainability or Triple Bottom Line (TBL). Triple Bottom Line (TBL) collaborates the economic, environmental, and social dimensions of sustainability and its interdependency3. More information of sustainability indicators will be discussed in upcoming sections of the chapter. The measurement of sustainability indicators for evaluation is the progressive step towards corporate sustainability in industries. Therein, several organizations are on the forefront of development of sustainability indicators and measurement criterions. Currently, GRI is one of the largest platforms for corporate sustainability, with the recently released G4 version with 15 performance indicators which exclusively address the supply chain (Searcy and Ahi, 2014). The World Business Council for Sustainable Development (WBCSD) is another organization focused on corporate sustainability. The WBCSD is a CEO-led organization of fellow companies that acts as a platform for corporate sustainability development. It focuses on value creation and adaptability of sustainable solutions for companies (World Business Council for Sustainable Development, 2014). Consulting฀irms฀like฀Ernst฀&฀Young,฀KpMG,฀and฀SustainAbility฀provide฀ services related to sustainability development and accounting for irms. With the acceptance of sustainability by companies being inevitable, huge progress is being made on incorporation of complete sustainability into supply chains across industries. A study by Davis and Konisky (2000) on sustainability change-agents identiied retailers as the most effective motivators to inluence the adoption of sustainability across all players along the supply chain of industries. This is a very critical observation, since it is a necessary step to ensure SD within the industry, and the nation. This is especially true in case of the grocery retail industry, wherein food 3 TBL was irst articulated by Freer Spreckley in 1981, but coined only in 1997 by John Elkington in his book Cannibals with Forks: The Triple Bottom Line of 21st Century Business 77 Achieving Sustainable Supply Chain through the Creation of Economic Growth perishability and market sensitiveness give retailers control over the product supply chain. RETAILERS AS CHANGE-AGENTS TO SUSTAINABILITY The critical part of any change is the presence of a change-agent/role player, who inluences others through self-adoption of that change. In case of sustainability supply chain management (SSCM), the role of retailers as inluencers to both upstream and downstream supply chain is well recognized. Retailers inluence environment sustainability directly as well as indirectly. The direct effects of their operations include channel selection, operations management, and resource control. The indirect inluences can be upstream or downstream (Davies and Konisky, 2000). The upstream lane sees retailers in a strong position to inluence the green supply chain management. They act as the connecting link between manufacturers or producers and demands from consumers. This alone positions them to a primal role in upstream management of green practices and products by controlling demand and supply (Connor and Schiek, 1997; Ytterhus et al., 1999). The capability of retailers like Walmart to green their supply chain through selection of green suppliers and sustainable purchasing decisions supports their role in creating a sustainable supply chain (Brammer et al., 2011; Green et al., 1996). They can also address food safety and animal welfare by implementing management guidelines, as Tesco did in its meat supply฀chains฀(Lindgreen฀and฀Hingley,฀2003). The downstream inluence of retailers is on their consumers. Study done on the effect of green image of retailers on shopping value and store loyalty found that the green image of a store signiicantly inluences its shopping value. Also, store loyalty has a mediating effect on shopping value and green image (Yusof et al., 2012). Another study done on environment conscious consumption has shown retailers to have a stronger inluence than their peers on guiding consumers towards green purchasing (Tsarenko et al., 2013). Consumer preference studies showed that environmental impact factor of a product is not the main selling point for majority of the consumers (95% of consumers). This is the result of lack of awareness about the environmental implications of each product. According to Tsarenko et al. (2013), this is where the retailers can play an 78 Three Tiers of Sustainability Measurement in the Grocery Retail Industry important role in educating consumers on green retailing and purchasing. The role of retailers to reverse this situation, especially in case of the organic and green foods is immense (Speer, 1997). The opportunity for retailers to inluence consumer purchase decisions directly through Point-of-Purchase (POP) materials have been found effective (Reicks et al., 1997). Besides, since retailers deal with the consumers directly, product crises related to food safety and animal welfare issues often affects them (Wiese and Toporowski, 2013). This is true in case of the food industry, wherein sustainability could be effectively branded and promoted by grocery retailers. Their ability to create a multiplier effect on the huge number of suppliers under them helps in greening the upstream food supply chain, while their high rate of consumer footfall supports the spread of mass marketing initiatives. It is thereby opportune for nations to utilize retailers to spread the message of SD to their society. One of the biggest hurdles towards implementation of corporate sustainability in industries is the identiication of suitable sustainability indicators for further measurement and interpretation. The following section summarizes the wide array of sustainability indicators currently available on corporate sustainability. SUSTAINABILITY INDICATORS The measurement of sustainability is critical for conversion of a business into a sustainable one. Sustainability indicators have been developed to facilitate this progression (Erol et al., 2009). Indicators are quantiied information/practices that aid to better understand and explain the changes over time. Such information gives an overall picture, helping in the assessment of available options and evaluation of programs. Indicators also simplify the information for better communication to the regulatory฀bodies฀and฀the฀public.฀However,฀indicators฀should฀be฀veriiable,฀ measurable, clear, unambiguous, easy to interpret, limited, accessible, and rapid among other features (Reed et al., 2006). Dow Jones Sustainability Indices, Commission for Sustainable Development, Food and Agriculture Organization (FAO), and World Bank are some of the organizations involved with the development of sustainability indicators. Sustainability 79 Achieving Sustainable Supply Chain through the Creation of Economic Growth indicators can be calculated at the macro and micro levels. While the macro level identiies measurement of sustainability in a nation or the world, the micro level measurement deals with smaller units like companies, stores, and industries. An understanding of the external and internal sustainability practices followed by grocery stores, not only helps in suitable indicator identiication, but also supports better commitment to implementation of corporate sustainability. Most of the sustainability indicators are based on TBL. Azevedo et al. (2012) identiied green and lean practices as important indicators towards corporate sustainability, and the associated beneits included reduced costs and lead time, improved process low, improvement of environmental quality, meeting customer expectations, employee commitment, and morale (Fliedner, 2008; Vinodh et al., 2011). Ahi and Searcy (2013) in their study, expanded corporate sustainability indicators to incorporate stakeholders, volunteers, and long term performance, with a focus on the environmental, social, and economic dimensions. According to Grosvold et al. (2014), SSCM indicators include supplier training, third party certiication, investment in clean technology, codes of conduct, green manufacturing, and product design that reduces its resource intake, less pollution, more eficient use of raw materials, among other beneits. Beske and Seuring (2014) argued that orientation, continuity, collaboration, risk management, and proactivity are the keys to achievement of SSCM. The study by Govindan et al. (2014) investigated the impact of lean, resilient and green supply chain management (SCM) indicators on SSCM in the Portuguese Automobile Industry. The study classiied the green SCM indicators based on the upstream, downstream, and organization levels, which could thereafter be used by irms as a checklist for sustainability implementation. Furthermore, the sustainability practices were classiied into three groups based on the lean, green, and resilient paradigms. The proposed set of lean paradigm consisted of waste elimination, total quality management, just-in-time (JIT) practices, while the green paradigm consisted of cleaner production, ISO 14001, and reverse logistics practices. The resilient paradigm consisted of lexible sourcing, supply chain risk management, and lexible transportation. The study showed waste elimination, supply chain risk management, and cleaner production 80 Three Tiers of Sustainability Measurement in the Grocery Retail Industry to have signiicant impact on SSCM, while ISO 14001 certiication, lexible transportation, lexible sourcing, and reverse logistics are found not signiicant to SSCM in the industry. Subramanian and Gunasekaran (2015) conducted a review analysis of published papers on cleaner practices in organizational process in two prominent journals over a decade period. Their study summarized that cleaner practices in organizational processes included consideration of environmental performance in supplier selection, reduction in carbon emissions, responsible marketing, waste management, recycling, and employee engagement indicators (Caniato et al., 2012; Kuehn and McIntire, 2014). Involvement of employees in corporate social responsibility (CSR) activities, employee education on environment sustainability, consumer awareness through programs, and green image creation are the social sustainability practices majority followed by businesses. Grocery retailers only concentrated on rectifying the environmental impact from their operations. Small initiatives like applying green energy sources for lighting, cooling, use of recyclable bags, pop-up (POP) pamphlets on food miles, and carbon footprint, can go a long way for all formats of retailing to show their support to environment conservation (Thompson, 2007). Practices like energy and water conservation, eficient raw material usage, waste management, packaging material recycling, organic foods, and promotion of local products are among a few green practices followed worldwide under this agenda (Jones et al., 2005; 2007). The limited investment requirement for such steps, further adds to its positive side for adoption. Some of the sustainability indicator studies are highlighted in Table 5.1. 81 Achieving Sustainable Supply Chain through the Creation of Economic Growth Table 5.1 Previous Literature on Sustainability Indicators Sustainability indicators Previous literature Energy consumption and renewable use GRI (2010), Ramanathan et al., (2014), Matopoulos฀and฀Bourlakis฀(2010),฀Halme฀et฀ al., (2006), McIntyre et al., (1998), Jones et al., (2005), Delai and Takahashi (2013), Erol et al., (2009), Fritz and Matopoulos (2008), UNEP (2012), Dos Santos et al., (2013) Water consumption Kolk and Mauser (2002), Matopoulos and Bourlakis (2010), Delai and Takahashi (2013), Jones et al., (2005), GRI (2010), Fritz and Matopoulos฀(2008),฀Halme฀et฀al.,฀(2006),฀Erol฀et฀ al., (2009), UNEP (2012), Dos Santos et al., (2013) Waste management Kuei et al., (2013), Delai and Takahashi (2013), Erol et al., (2009), UNEP (2012), Ramanathan et al., (2014), Fritz and Matopoulos (2008), GRI (2010), Bekele et al., (2012) Product recovery and reverse logistics Sarkis et al., (2010), Delai and Takahashi (2013), Erol et al., (2009), Tanzil and Beloff (2006), Diakaki฀et฀al.,฀(2006),฀Hussin฀et฀al.,฀(2012),฀UNEp฀ (2012), Matopoulos and Bourlakis (2010), GRI (2010), Dos Santos et al., (2013), Vijayan et al., (2014) Transportation Ramanathan et al., (2014), Matopoulos and Bourlakis (2010), Delai and Takahashi (2013), UNEP (2012), Erol et al., (2009), Fritz and Matopoulos฀(2008),฀Halme฀et฀al.,฀(2006),฀GRI฀ (2010), Bekele et al., (2012) Supply chain management Ytterhus et al., (1999), Delai and Takahashi (2013), GRI (2010), Erol et al., (2009), Jones et al., (2005), UNEP (2012) Sustainability reporting system Delai and Takahashi (2013), Erol et al., (2009), UNEP (2012) Type of store Delai and Takahashi (2013), Erol et al., (2009), BRC (2013), UNEP (2012) 82 Three Tiers of Sustainability Measurement in the Grocery Retail Industry cont. Table 5.1 Total sales Fritz and Matopoulos (2008), Delai and Takahashi (2013), Erol et al., (2009), GRI (2010), Matopoulos and Bourlakis (2010), Bekele et al., (2012), Dos Santos et al., (2013) Number of employees Delai and Takahashi (2013), Erol et al., (2009), Szekely and Knirsch (2005), UNEP (2012), Bekele et al., (2012), Dos Santos et al., (2013) Employee training and participation Matopoulos and Bourlakis (2010), Delai and Takahashi (2013), Erol et al., (2009), GRI (2010), UNEP (2012), Bekele et al., (2012), Dos Santos et al., (2013) Consumer complaints Matopoulos and Bourlakis (2010), Delai and Takahashi (2013), Erol et al., (2009), Jones et al., (2005), UNEP (2012), Dos Santos et al., (2013) Consumer awareness BRC (2013), Matopoulos and Bourlakis (2010), Delai and Takahashi (2013), Erol et al., (2009), UNEP (2012) Participation in local green activities Matopoulos and Bourlakis (2010), Delai and Takahashi (2013), Erol et al., (2009), UNEP (2012), Fritz and Matopoulos (2008), Choi and Sirakaya (2006) Support to local governments GRI (2010), Robert et al., (2002), Delai and Takahashi (2013), Erol et al., (2009), UNEP (2012) (Source: Compiled by the Authors) Small-scale retailers can also assort to environmentally friendly practices by looking into their energy usage, transportation, resource consumption, recycling and salvaging practices, and selection of green suppliers (Robinson, 2007). In countries with fragmented (multiple formats) retail industries, it is necessary for small retailers to move on par with the big format stores. The response of small retailers to increased hostility from big formats is often through differentiation and niche marketing (Cotton and Cachon, 2007). This has led them replicating many environment friendly practices followed by their big competitors, including 83 Achieving Sustainable Supply Chain through the Creation of Economic Growth energy conservation, waste management, Just-in-Time (JIT) inventory management system, food miles, reuse, and recycling operations (McGee and Rubach, 2011). Big format retailers have a better chance to improve their operations by greening their transportation operations, waste management especially packaging left-overs, energy wastage, product standardization, educating consumers regarding environmental implications of products, involving green suppliers, and using sustainable procurement practices (Lai et al., 2010). Top international food retailers focus mainly on energy reduction, waste reduction, packaging material reduction, transportation logistics control, and sale of environment friendly products. The 3R (Reduce, Reuse, Recycle) policy implementation is through practices like packaging waste management, limiting packaging from suppliers, use of recyclable packaging, returns management, recycling at store, and paper usage reduction (Evans and Denney, 2009). As summarized above, extensive studies have been done on indicators for฀corporate฀sustainability.฀However,฀there฀is฀a฀gap฀in฀studies฀integrating฀ sustainability indicators for decision-making sustainability assessment models for irms (Carter and Rogers, 2008; Seuring, 2013; Wu and Pagell, 2011). There are currently many conlicting frameworks for developing indicators, that it is unclear how to collect the necessary data (Reed et al., 2006). This is also attributed to the debate between indicators based on the top-down and bottom-up approaches. While the top-down approach is based on studies by experts on indicators and frameworks, the bottom-up approach relies on the participatory involvement of all its stakeholders in the designing of the framework. It is necessary to identify the situation under which indicators are to be used, the absence of which will make its interpretations negligible and ill-used under the circumstances. This requires the development of a proper measurement strategy for the sustainability indicators, which is the progressive step towards corporate sustainability in any industry. The following section discusses on sustainability measurement and sustainability reporting. 84 Three Tiers of Sustainability Measurement in the Grocery Retail Industry SUSTAINABILITY MEASUREMENT Sustainability measurement is concerned with the transparent and systematic documentation of the irm’s progress towards fulilling its environmental, economic, and social goals (Boyd et al., 2007). The act of measuring and auditing the irm’s activities requires an alignment between policy and practice, the failure in which can result in less indicative reporting of the irm’s activities (King et al., 2005). Measurement involves practices like supplier questionnaires, internal auditing, and risk assessment. The indicators used for measuring needs to be uniformly accepted and applied across฀the฀supply฀chain,฀for฀precise฀measurement฀of฀SSCM฀(Hervani฀et฀al.,฀ 2005). The measurement of sustainability is a crucial part of its integration into business operations. The successful implementation of SSCM requires companies to check whether the intended objectives are being achieved through its implementation. Sustainability measurement requires companies to address resource consumption and value creation, by including TBL into each stage of the product life cycle. A sustainable company should reduce its resource use, therefore the indicators on usage of energy, materials, water, land, human capital and other inputs could be considered. The company should look into customer satisfaction, economic value added, social welfare, functional performance, and reduce pollution tp maximize its value generation. Lagging and leading indicators are focused on the outcome from an action, for instance the performance or beneits from an activity, while leading variables focus on the reason behind the beneit indicators help companies to monitor the progress made. The performance metric is the most common framework used by companies to measure sustainability (Hervani฀et฀al.,฀2005).฀ Sustainability performance measurement (SPM) involves the establishment of a sustainability policy, focused on the major aspects and objectives to achieve. The indicators or metrics are elected based on the pre-determined objectives, and then the targets are selected. Once the indicator framework is ready, the process of measuring, tracking, and reporting฀of฀the฀outcomes฀begins฀(Jenkins฀et฀al.,฀2003).฀However,฀during฀ the implementation care should be taken to start with only a few metrics at a time, in order to check for compatibility and adjustments. This phased 85 Achieving Sustainable Supply Chain through the Creation of Economic Growth application will also help to track the progress in application, and ease of use.฀ However,฀ companies฀ often฀ struggle฀ to฀ understand฀ how฀ to฀ measure฀ their SSCM performance. Schaltegger and Burritt (2014) conceptual paper discussed on the development of a practical approach towards Sustainable Supply Chain (SSC) performance measurement and management, and the design of an analytical framework for its assessment. Varsei et.al. (2014) developed a conceptual multidimensional framework for SSCM in focal companies based on extensive studies on organizational theories. The authors extracted the enablers and drivers to sustainability initiatives from stakeholder theory, institutional theory, resource-based view, and social network perspectives. Marshall and Toffel (2005) isolated the sustainability frameworks of triple bottom line (TBL), the natural step, the ecological footprint, and Graedel and Klee (2002) framework for sustainability and resource usage as optimal for measurement of corporate sustainability. The study on balanced scorecard based on multidimensional approach by Kaplan and Norton (1996) paved the way for further studies on฀ sustainability฀ scorecards฀ like฀ Brignall฀ and฀ Modell฀ (2000);฀ Hubbard฀ (2009); and Figge et.al. (2002). According to Montiel and Delgado-Ceballos (2014), there is no standardized method for measurement of sustainability in irms. Though the measurement of environmental sustainability parameters is well established, there is no clarity on the measurement of economic and social sustainability dimensions. Most of the research whether present facts or use case studies to elucidate sustainable performance. Two of the most common approaches followed are to use secondary data from other institutions like Dow-Jones sustainability index and GRI, or to create own constructs and scales for sustainability measurement. According to the authors, the most commonly used secondary sources for sustainability measurement are the Kinder, Lydenberg, and Domini (KLD) indices, the GRI, and the Dow Jones Sustainability Index (DJSI). KLD is an independent rating service that analyses the environmental and social behavior of companies based on corporate governance, product quality and safety, employee relations, diversity, human rights, community relations, and environmental indicators (David et al., 2007; Kang, 2013; 86 Three Tiers of Sustainability Measurement in the Grocery Retail Industry Neubaum and Zahra, 2006; Wong et al., 2011). It is mainly used to assess the relationship between social and economic sustainability parameters of irm performance, to measure CSR, product quality dimensions for CSR, and environmental performance (Montiel and Delgado-Ceballos, 2014). The GRI was developed to act as a guide for creation of sustainability reports by irms, and is used by researchers to examine corporate sustainability reports (Fifka and Drabble, 2012; Pe’rez-Batres et al., 2010). The economic measures of economic performance, market pressure, and indirect economic impacts, the social measures of labor practices and decent work, human rights, society, and product responsibility, and the environmental measures of materials, energy, water, biodiversity, emissions, efluents and waste, products and services, compliance, and transport are used to aid companies in development of standardized sustainability reports (Bos-Brouwers, 2010; Etzion and Ferraro, 2010). the฀DJSI฀is฀a฀collaboration฀between฀Standard฀&฀poor’s,฀Dow฀Jones฀ indices, and SAM, and used to measure the performance of global corporate leaders in sustainability. The economic measures of corporate governance, risk and crisis management, codes of conduct/compliance/corruption and bribery, customer relationship management (CRM), brand management, supply chain management (SCM), and privacy protection, social measures of social reporting, labor practice indicators and human rights, human capital development, talent attraction and retention, corporate citizenship philanthropy, and stakeholder engagement, and the environmental measures of environmental reporting, environmental policy/ management system, and operational eficiency are covered under DJSI (Cheung, 2011;฀ Hartman฀ et฀ al.,฀ 2007;฀ Maas฀ and฀ Liket,฀ 2011).฀ Corporations฀ often฀ use above measures as proxy for corporate sustainability while reporting on sustainability practices and irm performance. While DJSI and GRI extensively cover sustainability indicators, there are some signiicant differences between the two frameworks. Montiel and Delgado-Ceballos (2014) identiied that while GRI is exhaustive on environmental dimension and concerned with indirect economic impacts, DJSI focuses more on stakeholder management and sustainability reporting. Also, corporate governance and product responsibility are not deined similarly under the three pillars of both frameworks. This 87 Achieving Sustainable Supply Chain through the Creation of Economic Growth further highlights the existing confusion among organizations on deining indicators for corporate sustainability. Nevertheless, the non-clarity on selection of suitable sustainability indicators and measurement criterions poses certain limitations towards viable and practical interpretation of corporate sustainability across industries. This is of signiicance especially for a fragmented grocery retail industry, wherein corporate sustainability requires careful measurement along the multiple retail formats dominating the industry. Addressing such a limitation is critical to ensure green industrialization and SD of the nation. LIMITATIONS TO MEASUREMENT OF CORPORATE SUSTAINABILITY The measurement of implementation of corporate sustainability in a fragmented retail industry requires the selection of suitable indicators based on their interpretation capability. It is essential for decision making by irms and governments on sustainability implementation in that industry. But, the limitation lies in identiication of suitable indicators, and viability of the results for decision making. Ease of interpretation, and applicability are the two most important suitability criterions for indicator selection฀and฀measurement.฀However,฀in฀case฀of฀corporate฀sustainability,฀ the vast literature on indicators and the distorted deinition of corporate sustainability has led to confusion on the identiication of suitable indicators. According to Roca and Searcy (2012), currently there are about 2,555 sustainability metrics/indicators under used globally. This huge selection has created a visible confusion on the identiication of optimal metrics, based on their usability, ease of interpretation, and applicability. Often enough, misjudgment on the applicability of indicators to a particular industry leads to wide confusion on interpretation and viability. Thereby, many times the studies are seen self-inconclusive, because of incorrect application฀ of฀ the฀ study฀ results.฀ However,฀ measurement฀ of฀ corporate฀ sustainability in a heavily fragmented grocery retail industry, requires the selection of suitable, interpretive, and applicable sustainability indicators. It also requires the consideration of all the retail formats into the study, irrespective of their dominance. But, most of the studies on corporate sustainability and its measurement in the grocery retail industry are based 88 Three Tiers of Sustainability Measurement in the Grocery Retail Industry on modern formats, and secondary sources of data. This is necessary to aid in policy development for subsequent application of corporate sustainability across the retail formats. Searcy and Ahi (2014) observed that the wide array of metric selections also allowed for selective reporting by companies, which in many cases prevents a true interpretation and relection of the ground situation. This is highly undesirable since SD of a nation requires complete sustainability in its industries among other parameters. It also requires the establishment of an interpretive decision making model, using suitable sustainability indicators for tracking the progress in corporate sustainability across the industry.฀However,฀the฀reduced฀number฀of฀studies฀focused฀on฀applicability฀ of sustainability indicators for decision making in irms (Carter and Rogers, 2008; Seuring, 2013; Wu and Pagell, 2011) and increased focus of studies on secondary data of modern grocery retail formats, limits the viability of existing research into measurement of corporate sustainability in a fragmented grocery retail industry. Thereby, there is a need for a simpliied interpretive ranking system for tracking sustainability across retail formats, for its uniied implementation in the industry. SOLUTION AND RECOMMENDATIONS Any study on sustainability of grocery retail industry requires the inclusion of all retail formats into the study, irrespective of dominance. This is because the presence of multiple formats not only makes any understanding of sustainability diffusion across the formats dificult, but also inhibits the implementation of change factor into the industry as a whole. Such markets with low level of sustainability implementation require an interpretable ranking system, so that governments could monitor the level of sustainability achieved by each format of retail, and plan policies accordingly for enhanced sustainability implementation. This will not only help to ensure SD in the nation, but also help with the positive screening for investors. An example of such an interpretation is the study conducted by Guth and Stegar (2008). They interpreted the implementation of corporate sustainability in Association of South-East Asian Nations (ASEAN) through categorization based on irm size. The study found that Small 89 Achieving Sustainable Supply Chain through the Creation of Economic Growth and Medium Enterprises (SMEs) with their focus on proit maximization, implemented the minimal level of sustainability practices into their operations, while the large and medium local companies implemented some level of environmental protection and pollution prevention measures. The larger companies mainly multinational corporations (MNCs), adapted sustainability completely into their operation. Now, this result could be used by the governments to identify measures to make SMEs and medium and large companies adopt more sustainability practices. This is the applicability of the study. For nations with developing green policies, such an interpretation will help governments to accurately monitor the progress in implementation of practices across the irms. The Three Tiers Sustainability Ranking System developed by Future Laboratory in 2008, is another example of an interpretive model on applicability of sustainability studies for decision making in irms. Commonly called as The Three Tiers of Sustainability, the Three Tiers Ranking System is based on the sustainability practices implemented by companies฀and฀their฀commitment฀to฀its฀enhancement฀(Hall,฀2001;฀Oracle,฀ 2011). The three tiers are namely: TIER 1: The Basics- The implementation of basic environment friendly measures like switching off lights and PCs when not in use, paper management, and reduction in carbon footprint from daily business activities. TIER 2: Thinking Sustainably- Companies incorporate sustainability into their supply chain operations. This level is attained through corporate assessment of their operations. Supplier management, Life Cycle Management (LCM) and resource optimization belong to this group of sustainable activities. The companies at this stage of sustainability understand the beneits from incorporation of sustainable practices into their supply network. 90 Three Tiers of Sustainability Measurement in the Grocery Retail Industry TIER 3: The Science of Sustainability- The creation of an auditing system and benchmarks for development of a framework for governance of SSCM. The environmental impact of supply chain agility, lexibility and the costs incurred are explained here. The companies at this level will be committed to sustainability and act as a pushing force to implementation of sustainability standards and regulations across the industrial and government levels. In consideration of sustainability as a process, the three tiers could be summarized in layman terms into ecofriendly (Tier 1), green (Tier 2), and sustainability (Tier 3) practices, following the natural progression of sustainability practices as implemented across irms. The Tier 3 (sustainability) is the uppermost and desired level of implementation by a irm.฀However,฀the฀fulilment฀of฀all฀the฀three฀stages/tiers฀is฀essential฀for฀an฀ industry to completely claim sustainability. Only on its completion should the industry be measured based on the TBL, since prior usage might turn interpretation non effective due to limited application of practices. A viable and interpretive result on sustainability performance based on TBL requires the industry to implement a certain level of sustainability practices. The Three Tiers Ranking System allows for the use of suitable sustainability indicators for decision based interpretation. The irms categorized based on the Three Tiers Ranking System, could be individually studied for factors towards implementation of sustainability. This will help governments and irms to track the progress in sustainability in their irms and industries, and plan policies based on above said interpretations. The biggest advantage of this system, is irm segregation based on application, which could be useful for studies on sustainability in fragmented grocery retail industries. The Three Tiers Ranking System also gives a deinition of sustainability and its progression, as should be implemented by irms. The simplicity in its application allows ease in planning, and interpretation of study results. The results obtained from tiers of application across formats would allow governments to scrutinize possible policy developments 91 Achieving Sustainable Supply Chain through the Creation of Economic Growth focused on enhanced sustainability implementation in said formats. This ranking system could be used to further the observations of Guth and Stegar (2008), especially for sustainability studies on ASEAN nations, which has just started its transformation process into a green nation. FUTURE RESEARCH There is a need for focused studies on identiication of applicable sustainability indicators for different industries, and its interpretation. This will not only make selection of suitable indicators easy, but also help researchers to get viable and conclusive results from their sustainability studies. The role of interpretive models for classiication, and decision making should be studied further for its applications in fragmented industries like the grocery retail industry. With more nations coming into SD lifestyle, such studies could guide them in monitoring and evaluating their industries for corporate sustainability. CONCLUSION Corporate sustainability has been widely researched over the years for its viability฀and฀implications.฀However,฀the฀wide฀array฀of฀available฀literature฀ has distorted the deinition of corporate sustainability. With more industries turning towards sustainability, such a limitation can no longer be entertained. Focused research and applications based on requirements of speciic industries need to be undertaken in order to ensure SD of a nation. It is up to the researchers and consultancies to concentrate their focus on fragmented markets, on how to measure sustainability across the formats for further policy development. It also requires the development of simpliied interpretive ranking systems, which could support its application across fragmented markets, like the grocery retail industry. 92 Three Tiers of Sustainability Measurement in the Grocery Retail Industry REFERENCES Ahi,฀p.฀,฀&฀Searcy,฀C.฀(2013).฀A฀Comparative฀Literature฀Analysis฀of฀Deinitions฀ for Green and Sustainable Supply Chain Management, Journal of Cleaner Production, 52(1), 329-341. DOI: 10.1016/j.jclepro.2013.02.018. 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Apart from that, the National Integrity Plan also incorporated CSR as one of its key components฀to฀achieve฀the฀plan’s฀strategic฀objectives฀(Hamid฀and฀Atan,฀ 2011). As a result of these initiatives, Malaysian companies are increasingly integrating CSR initiatives into their company values, culture, decision making,฀strategy฀and฀operations.฀However,฀an฀organization’s฀commitment฀ to good CSR practices depends on the leaders in that organization (Rashid and Ibrahim, 2002). Corporate leaders have to be fully aware of the CSR trends and realise the signiicance of CSR to their businesses and the industry.฀However,฀different฀leadership฀styles฀may฀lead฀to฀different฀CSR฀ practices among organisations. *Corresponding Author: Assoc. Prof. Dr. Ho Jo Ann (ann_hj@upm.edu.my) The Influence of Leadership Styles on the Firm’s Intention to Engage in Corporate Social Responsibility OBJECTIVES AND STRUCTURE The objectives of this paper are to: •฀ Review a 10-year literature on the inluence of leadership on corporate social responsibility in organizations; and •฀ Identify research gaps in the literature and opportunities for further research. This chapter is divided into three main parts. The irst gives an introduction into the background and objectives of the paper, structure and deinition of leadership based on previous studies. The second part gives a literature review on the topic, summarizing available literature on leadership, types of leadership styles, and the inluence of these styles on CSR practices in irms. The third part presents the discussion on research gaps and opportunities for future research. DEFINITIONS OF LEADERSHIP Leadership has been deined as “a social process of dynamic collaboration, where individuals and organisation members authorise themselves and others to interact in ways that experiment with new forms of intellectual and social meaning” (Gemmil and Oakley, 1992; pp. 124). Shaw (2007), on the other hand, looked at leadership from the perspective of four elements.฀ He฀ stated฀ that฀ leadership฀ was฀ (1)฀ a฀ process฀ that฀ (2)฀ entailed฀ inluence, (3) occurred within a group, setting or context and (4) involved achieving goals that relected a common vision. While there are a plethora of deinitions for the term “leadership” (Jackson, 2005), Yukl (2001) contends that the only consistent deinition of leadership is that it is a process of inluence. LITERATURE REVIEW Sources of Literature The study began with an extensive search in the electronic journal databases such as ACM Digital library, ProQuest, Emerald Management, JSTOR, Science Direct, SAGE Journal Online, Wiley and Springer Link 103 Achieving Sustainable Supply Chain through the Creation of Economic Growth for keywords such as “Corporate Social Responsibility”, “CSR” and “leadership styles”. The search was also limited to articles published between the years 2004 and 2015 as the researchers were only interested in the most recent publications examining this relationship. The search returned over 60,000 indings for CSR, 901 for the combination of CSR and leadership styles, 874 indings for CSR and intention to engage and 216 indings for all the three keywords. After eliminating unrelated articles, 38 articles were selected for inclusion in this paper. Leadership Styles The study of leadership is fundamental to the study of human behaviour and predates the study of organizations and business. Therein, this chapter intends to understand this fundamental behaviour and its relationship with CSR in irms. The primary goal of this review was to collect the existing research relating leadership style with CSR in an effort to better understand the intersection of both these ields. As per the review of literature, there are seven leadership styles, namely transformational leadership, transactional leadership, visionary leadership, participative leadership, autocratic leadership, authentic/ethical leadership, and servant leadership. All the leadership styles are summarized in the next few paragraphs below. The irst leadership style is transformational leadership. Strand (2011, pp.85) stated that transformational leadership “involves an exceptional form of inluence that moves followers to accomplish more than what is usually expected of them. It is a process that often incorporates charismatic and visionary leadership”. Transformational leadership is a relationship of mutual stimulation and elevation that converts followers into leaders and may convert leaders into moral agents. There are four leadership factors associated with transformational leadership: idealized inluence, inspirational motivation, intellectual stimulation and individualized consideration (Northouse, 2010). The irst two factors were considered as emotional and next two were categorized as intellectual (Bass 1985 as referenced by Waldman et. al., 2006b). Second is transactional leadership that refers to the type of leadership where the leader “approaches followers with an eye to exchanging one thing for another” (Strand, 2011, pp.87). Bass et. al. (2003) also explained 104 The Influence of Leadership Styles on the Firm’s Intention to Engage in Corporate Social Responsibility transactional leadership as associated with pragmatic managerial styles focuses on reward and follower self-interests. Besides that, Du et. al. (2013) stated that transactional leaders were more effective at operating an existing system; they set goals, articulated explicit agreements regarding expectations and rewards and provided constructive feedback to keep everybody at task. The third leadership style is the visionary leadership. This leadership style involves a relationship between an individual (leader) with one or more followers based on leader behaviours that engender intense, favourable฀ reactions฀ and฀ attributions฀ on฀ the฀ part฀ of฀ followers฀ (House,฀ 1996). Waldman et. al. (2006a) stated that the key behaviours commonly associated with this leadership style included providing a sense of mission or purpose based on opportunities and constraints in the larger environment; articulating an inspirational vision that challenges the status quo and was based on a powerful imagery and a sense of purpose; showing determination when accomplishing goals or change, including acting decisively; and questioning assumptions. Participative leadership style which refers to a leader who invites subordinates to take part in the decision making is the fourth leadership style. Generally, a participative leader consults with subordinates, obtains their ideas and opinions, and integrates their suggestions into the decisions about how the group or organization will proceed (Strand, 2011). Next, the autocratic leadership style has also been identiied as one of the leadership styles for CSR in irms and it is the ifth leadership style in this section. Autocratic leadership is explained as a leader who is not interested in building relationships with followers but tend to view them merely as instruments to meet organizational goals (Maak and Pless, 2006). This style is characterised by coercion and a distinct lack of democratic process in decision making. Although this style of leadership was less popular, Angus et.al. (2010) found that a controlling leader can effectively resolve and prevent social dilemmas in decision making. The sixth leadership style is the authentic or ethical leadership style. Walumbwa et. al. (2008) looked at authentic or ethical leadership as a pattern of leader behaviour that drew upon and promoted both positive psychological capacities and a positive ethical climate, to foster greater 105 Achieving Sustainable Supply Chain through the Creation of Economic Growth self-awareness, an internalized moral perspective, balanced processing of information, and relational transparency on the part of leaders working with followers. This type of leadership is most prominent in non-proit organisations. There are four elements to authentic or ethical leadership and these elements are honesty, trustworthy, fair and caring (Brown et. al., 2005). The authors also saw a leader’s fair and moral behaviour as a core component of authentic or ethical leadership and labelled this component of ethical leadership as concern for morality and fairness. Last but not least is the servant leadership style. According to Van Dierendonck (2011), this leadership style refers to leadership that combines the motivation to lead with a need to serve. Pless et.al. (2012) found that the idealist responsibility orientation of leaders is likely to be very servant-based, with the notion that the leader’s role is to serve the needs of targeted stakeholders. Influence of Leadership Style on Firm’s CSR Intention Several studies have explored the inluence of leadership styles on CSR in irms. Table 6.1 lists some of the empirical research conducted on the inluence of leadership styles on a irm’s intention to engage in CSR activities. 106 107 Author(s)/ Year Journal Type of Leadership Style(s) Examined Findings Waldman et.al. (2006b) Journal of Management Studies Transformational Leadership Transformational leadership was found to be positively associated with propensity of the irm to engage in “strategic” CSR, or those CSR activities that were most likely to be related to the irm’s corporate and business-level strategies. Shahin and Zairi (2007) International Journal of Quality฀&฀ Reliability Management Transactional Leadership; Transformational Leadership Leadership style was found to play an important role in socially responsible organizations. Transformational leadership was found to be more effective as compared to transactional leadership in making irms more socially responsible. Ararat (2008) The International Journal of Business in Society Directive Leadership; Supportive Leadership; Achievement Leadership; Participative Leadership Participative leadership style in CSR can work everywhere except in those societies with a combination of high power distance, strong collectivism and high uncertainty avoidance. The Influence of Leadership Styles on the Firm’s Intention to Engage in Corporate Social Responsibility Table 6.1 Empirical Research on Leadership Styles to Firm’s CSR Engagement Intention cont. Table 6.1 The International Authentic/Ethical Leadership Journal of Business In Society Ethical leaders can inluence their followers, as people learn by paying attention to and emulating credible role models and this will be the CSR strategy for the irm. Angus et. al. (2010) Journal of Business Ethics 1. Explicit CSR was linked to an autocratic leadership style, whereas implicit CSR was more closely aligned with emergent and authentic styles. According to the article, “implicit” CSR were activities mandated by government regulations or norms while “explicit” CSR refered to activities that were voluntarily implemented by the irm. Autocratic Leadership; Emergent Leadership; Authentic/Ethical Leadership; Visionary Leadership; Transformational Leadership 108 2. This study also found that visionary leaders with strong stakeholder values belonged to inancially successful companies. Groves and Larocca (2011) Journal of Business Ethics Transactional Leadership Transformational Leadership; Autocratic Leadership; Visionary Leadership Leader stakeholder CSR values predicted transformational leadership, whereas leader economic values were associated with transactional leadership. Achieving Sustainable Supply Chain through the Creation of Economic Growth Hind฀et.฀al. (2009) Strand (2011) Journal of Leadership, Accountability and Ethics Transformational Leadership; Transactional Leadership; Visionary Leadership; Participative Leadership; Charismatic Leadership 1. While charismatic leadership was not found to inluence CSR engagement in irms, intellectual stimulation was found considered for strategic CSR by irms. 2. Transformational leadership was found more important to CSR effectiveness, than transactional leadership. 109 Van Dierendonck (2011) Journal of Management Servant Leadership In response to servant leadership, individuals would feel commitment, empowerment, job satisfaction and increased engagement at work while teams would experience increased effectiveness and organizations would display a stronger focus on sustainability and CSR. Du et. al. (2013) Journal of Business Ethics Transactional Leadership; Transformational Leadership Firms with greater transformational leadership were more likely to engage in institutional CSR practices and transactional leadership was not associated with these CSR practices. Vlachos et. al. (2013) Charismatic Leadership A manager’s charismatic leadership would inluence their employees’ interpretations about the motives underlying their companies’ engagement in CSR initiatives. Journal of Business Ethics The Influence of Leadership Styles on the Firm’s Intention to Engage in Corporate Social Responsibility cont. Table 6.1 Achieving Sustainable Supply Chain through the Creation of Economic Growth The relationship between transformational leadership and CSR has been examined by Shahin and Zairi (2007), Luu (2012), Waldman et. al. (2006b) and Tongkachok and Chaikeaw (2012). Their research indings implicated that transformational leadership was signiicantly associated with CSR, although Luu (2012) and Waldman et. al. (2006b) further stated that transformational leaders engaged the irm in strategic rather than social CSR. In addition, the study by Du et. al. (2013) showed that transformational leadership was associated with altruistic ethics while transactional leadership was associated with utilitarian ethics. This inding was similar to the indings by Luu (2012) which showed that transactional leadership฀correlated฀with฀legal฀and฀economic฀CSR.฀Hence,฀transactional฀ leaders tended to support CSR practices when these practices increased the product quality and safety, and emphasized the organization’s primary stakeholders. In addition, Du et. al. (2013) suggested that transformational leadership style was best suited to initiating and designing socially responsible practices, while transactional leadership was best suited to implementing and deriving business beneits from socially responsible practices. Autocratic leadership and authentic leadership style were also found to have an inluence on the irm’s engagement in CSR activities. This has been suggested by Angus et. al. (2010) who found that autocratic leadership style was linked to explicit CSR activities while implicit CSR activities was more closely aligned with emergent and authentic leadership styles. Both Aguinis and Glavas (2012), and Waldman et. al. (2006a) also found that visionary leadership style was signiicantly related to CSR values. This leadership style positively inluenced employees’ extra effort, which฀ in฀ turn฀ positively฀ inluenced฀ irm฀ performance.฀ However,฀ Ketola฀ and Vries (2006) emphasized the need for coherency and consistency in visionary leadership to ensure the success of such a leader. Servant leadership style was also found to have inluence on the irm’s engagement in CSR activities. In response to servant leadership, individual employees may feel commitment, empowerment, job satisfaction, and increased engagement at work; teams may experience increased effectiveness while organizations as a whole may display a stronger focus on sustainability and CSR. Besides that, Christensen et. al. (2014) found 110 The Influence of Leadership Styles on the Firm’s Intention to Engage in Corporate Social Responsibility that servant leadership had a commitment to the growth of individual employees and to the survival of the organization, and a responsibility to the community. This will beneit in terms of increased job satisfaction, a positive inluence on team performance and enhanced irm performance as measured in return on assets. DISCUSSION Research Gaps The review of literature identiied ive research gaps. First, among the seven types of leadership styles, transformational and transactional leadership styles were the most widely examined leadership style in CSR studies (for example Angus et. al. (2010); Christensen et. al. (2014); Du et. al. (2013); Groves and Larocca (20110; McWilliams et.al. (2006); Papagiannakis and Lioukas (2012); Pless et. al.(2012); Raub and Blunschi (2013); Shahin and Zairi (2007); trand (2011); Voegtlin et. al.(2012); Waldman et. al. (2004); Waldman฀et.฀al.฀(2006b).฀Hence,฀there฀is฀a฀need฀to฀analyse฀other฀leadership฀ styles such as the traditional economist leader, orientation integrative leader, idealist leader or opportunity seeker as identiied by Pless et. al. (2012) and its inluence on a irm’s intention to engage in CSR activities. Second, there has been no previous studies which have examined a leader’s values, leadership style, follower value congruence and responsible leadership outcomes into an integrated model (Amato and Roome, 2009). There is also a need to specify which leadership style would inluence which type of CSR dimensions (for example, economic, social, philanthropy or ethical). Third, Basu and Palazzo (2008) suggested that future researchers should examine whether the underlying CSR dimensions of a irm would change when the mantle of leadership passes on from a certain type of leader to another. For example, would a change of leadership style from transformational leadership style to autocratic leadership style result in a change in the irm’s engagement in CSR activities? Fourth, it is also suggested that further research be undertaken to identify the factors that would encourage leaders to engage in responsible leadership. For instance, future studies might explore whether a broader scope of job responsibility, challenging tasks, participation in important 111 Achieving Sustainable Supply Chain through the Creation of Economic Growth decisions, speciic personal values (self-transcendent), collectivistic work and social justice values would inluence leadership styles (Groves and Larocca, 2011 ; Voegtlin et. al., 2012). Researchers might also include factors such as the leader’s cultural background and the type of industry the leader’s irm is in on the irm’s intention to engage in CSR activities. Lastly, Du et. al. (2013) and Aguinis and Glavas (2012) stated that although different leadership styles had been linked to organizational effectiveness, there was still a lack of research that examined the inluence of employees’ perception and expectations on their manager’s leadership style and how this expectation would inluence the irm’s engagement in CSR activities. CONCLUSION Overall, the reviewed articles showed that leadership style does signiicantly inluence a irm’s intention to engage in CSR activities. However,฀only฀transformational฀and฀transactional฀leadership฀styles฀were฀ identiied to signiicantly inluence a irm’s intention to engage in CSR. This may be because of a gap in knowledge on other leadership styles, and the associated beneits from their adoption into company strategy. Companies need to understand the beneits that accrue from different leadership styles on their CSR activities, for instance, on employee’s loyalty or job satisfaction, and the inancial outcomes of cost control and proits. Then, they can start customizing these programmes as per the business environment. Conclusively, there is a need for more research on the relationship between leadership styles and CSR in irms, and beneits from the use of different leadership styles. 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Leadership in Organisations, National College for School Leadership 2003 prentice฀Hall:฀Englewood฀Cliffs,฀NJ. 115 Chapter 7 Green Human Resource Management as a Catalyst for Sustainable Environmental Practices in Organisation Sharmila Laksmi Muniandy and Azmawani Abd Rahman* INTRODUCTION Globalisation has led to many changes in the business environment, such as free trade agreements that make it possible for customers to buy products at a฀cheaper฀price฀than฀before.฀However,฀some฀anti-globalisation฀supporters฀ critique that globalisation largely affects the job market in developed countries as companies move to developing, or in underdeveloped countries to eliminate labour costs and exploit available resources at lower prices. Therefore, to stop the exploitation of human capital and natural resources, the term sustainable business has been widely discussed by many scholars, NGOs, governments and others. According to Daft (2012), sustainability is deined as the economic development that generates wealth and meets the needs of the current population, while preserving the environment for the needs of future generations. Companies strive to ind ways to produce goods and services without damaging the environment or depleting a resource. For some companies, pressure from various stakeholders, like the government, customers and NGOs, has indirectly forced them to adapt sustainability processes฀within฀their฀organization.฀However,฀the฀cost฀related฀to฀people฀ taking time to acquire the knowledge needed to perform sustainable practices was identiied as a barrier that could stop the industry from practicing sustainability (Pelham, 2011). *Corresponding Author: Assoc. Prof. Dr. Azmawani Abd Rahman (azar@upm.edu.my) Green Human Resource Management as a Catalyst for Sustainable Environmental Practices The sustainable activity model highlighted ive core foundations for sustainability activities; people, relationships, systems, ideas and infrastructure to move organisation activities towards sustainable values (McPhee, 2014). Referring to the sustainable activity model, organisational activities prefer to avoid using raw materials restricted by government or protested by the local community, or to produce products required by those ive core foundations of sustainability activities that reduce waste. Although all ive core foundations of the sustainability activity model are important to move an organisation towards sustainability, managing people is highlighted as the number one priority to achieve long-term sustainability฀ with฀ long-term฀ inancial฀ success.฀ Hence,฀ this฀ chapter฀ will฀ highlight the role of human resources as a catalyst for sustainable practices in an organization. GREEN HUMAN RESOURCE MANAGEMENT (GHRM) Green฀Human฀Resource฀Management฀(GHRM)฀is฀deined฀as฀using฀every฀ employee as a touch point or interface to promote sustainable practices and increase employee awareness and commitment on the issues of sustainability฀(Mandip,฀2012).฀In฀other฀words,฀GHRM฀creates฀a฀workforce฀ within the organisation that can promote green practices that encourage sustainable business activities to gain environmental management advantages. According to Mishra, Sarka and Kiranmai (2014), the area of฀GHRM฀has฀high฀signiicance฀in฀organisations,฀as฀it฀contributes฀to฀other฀ functional green management, green operations, green marketing, supply chain฀management,฀green฀inance฀and฀accounting.฀thus,฀GHRM฀can฀play฀ a signiicant role in motivating employees towards sustainability. In addition, in 2012, PricewaterhouseCoopers (PwC) conducted a survey on the sustainability maturity of companies in ive ASEAN countries; Malaysia, Thailand, Vietnam, Philippines and Indonesia1. From the PwC survey, 80% of organizations knew the importance of sustainability; but on average, less than half of the companies had a sustainable framework, while 5% of the companies did not have a plan at all for any sustainable practices. In the same survey’s results, PwC also 1 Going beyond philanthropy? Pulse- check on sustainability. February (2013); PWC. 117 Achieving Sustainable Supply Chain through the Creation of Economic Growth highlighted that to implement a sustainability framework; employees are the most important stakeholders in getting it done. Therefore, researching HRM฀ to฀ improve฀ sustainable฀ practices฀ in฀ organizations฀ is฀ indeed฀ an฀ important ield of research. The Ministry of Energy, Green Technology and Water in Malaysia introduced the green technology policy in July 20092. The policy aims to use green technology as a driver to accelerate the national economy and promote sustainable development. Although the government developed initiatives, like providing inancial incentives and encouraging local companies to start businesses using green technology, according to Yeong and Putuhena (2015), on an economical and technological scale, sustainability is still far beyond the reach of most companies in Malaysia. Consequently,฀sustainable฀HRM฀practices฀may฀lead฀to฀useful฀and฀practical฀ knowledge that can be applied in organizations to achieve environmental sustainability (Jackson and Seo, 2010). GHRM INITIATIVES FOR SUSTAINABLE ENVIRONMENTAL PRACTICES HR฀ initiatives฀ in฀ organisations฀ depend฀ on฀ the฀ impact฀ of฀ environmental฀ matters to the organisation and can successfully contribute to a irm’s environmental management activities (Staffelbach et. al., 2012). According฀to฀Zibarras฀and฀Coan฀(2015),฀there฀are฀ive฀HRM฀practices฀to฀ manage employee behaviour towards sustainable environmental practices; 1) employee life cycle; 2) training; 3) employee empowerment; 4) top management support; and 5) rewards. Furthermore, previous research by Harvey,฀Williams฀and฀probert฀(2013)฀divided฀those฀HR฀activities฀into฀two฀ categories i.e., the direct and indirect contributions. Direct contributions refer to the reward system, training and employee life cycle (recruitment and selection), while indirect contributions are employee empowerment; which฀ includes฀ the฀ soft฀ HRM฀ policies฀ and฀ practices฀ that฀ inluence฀ the฀ attitude of employees to engage and commit towards the organization’s environmental policies. 2 : http://www.kettha.gov.my/portal/ 118 Green Human Resource Management as a Catalyst for Sustainable Environmental Practices Employee life cycle refers to recruitments, inductions and environmental performance indicators in appraisals and promotions that focus on hiring and retaining employees who are passionate about the environment and are familiar with recycling and conservation, and integrating a performance management that consists of policies of environmental responsibility (Ahmad, 2015). The employee life cycle process makes sure the organisation inds green-collar employees. Greencollar employees help to implement sustainable environmental practices in the organisation as they have the interest, expertise, and knowledge in environmental issues and practices within an organization, and they are employed฀primarily฀for฀these฀reasons฀(Harvey฀et.฀al.,฀2010). Next, training should be provided to employees of all levels, so that they may acquire the knowledge and skills to accomplish the objectives and฀targets฀of฀the฀environmental฀management฀system฀(Daily฀and฀Huang,฀ 2001). This is further supported by Texeira et. al., (2012), Sudin (2011) and Mee et. al., (2015), who state that training, which is the process where people acquire capabilities to perform jobs, can be a factor that increases or decreases the implementation of sustainable environmental practices in organizations. Green employee empowerment co-exists in an organization that is involved in green practices, and employee empowerment falls under the big฀umbrella฀of฀GHRM฀where฀empowered฀employees฀ultimately฀ensure฀ that the well-being of the organization is well-protected when it comes to implementing green practices in the organization (Tariq et. al., 2014). Moini et. al. (2014) support this by showing that the management and employees of Danish irms that are more receptive to change are more likely to integrate new environmental concerns into their corporate strategy. Similarly, Benn et. al. (2015) provided empirical evidence that if employees are given the opportunity by the senior management to participate and be involved in the implementation of environmental initiatives, they will be more engaged in the organisation. Therefore, empowering green employees will allow innovative solutions for both the common and newly emerging change-related business problems (Kumari, 2012). 119 Achieving Sustainable Supply Chain through the Creation of Economic Growth Then, according to Zibarras and Coan (2015), the reward system is a method least used by organizations to inluence employee environmental behaviour, but at the same time, their indings indicated that reward can be an effective tool to inluence employee behaviour. For instance, Mandip (2012) states that DuPont, Nordstrom and 3M have offered rewards to staff who provide suggestions to help the environment and increase the irm’s proitability. Overall, the reward package should be given to employees who acquire certain knowledge and skills that help prevent, reduce or eliminate any environmental related damages caused by organisational activities. Moreover, according to Sawang and Kivtis (2014), if the senior management perceives environmental issues to be important and are aware of how the environmental issues could impact their business, they are more likely to incorporate a green approach in their business process where the senior management can integrate green practices as a part of the฀HR฀practices.฀On฀the฀other฀hand,฀Jackson฀and฀Seo฀(2010)฀outlined฀that฀ HRM฀professionals฀who฀lack฀concern฀about฀environmental฀sustainability฀ can฀ pose฀ a฀ barrier฀ for฀ HR฀ scholars฀ to฀ understand฀ about฀ sustainability.฀ Nevertheless,฀ the฀ limited฀ knowledge฀ of฀ HR฀ professionals฀ about฀ organisational environmental policies can inluence the implementation of green practices. Pillania (2014) repeatedly argues that in order to behave in a sustainable manner, organisational actions need to go beyond technical ixes and demand the commitment of all members of the company, from senior management to the shop loor. Thus, understanding top management policies฀supporting฀GHRM฀contributes฀signiicantly฀to฀green฀practices฀in฀ an organisation. EMPLOYEE BEHAVIOUR According to Chou (2014), pressure from the organization applied through environmental policies, supervisors’ attitude, training, information and practical tasks may have a stronger effect on employee behaviour if the employees have weak personal environmental values. On the other hand, employee behaviour that harms the environment as little as possible, or even beneits the environment, is known as pro-environmental behaviour 120 Green Human Resource Management as a Catalyst for Sustainable Environmental Practices (Steg฀ and฀ Vlek,฀ 2009).฀ Hence,฀ it฀ is฀ important฀ to฀ study฀ the฀ nature฀ of฀ green employee behaviour that leads to or detracts from environmental sustainability in an organisation. Furthermore, Ones and Dilchert (2012) identiied the Green Five taxonomy of employee green behaviour and their sixteen functionally distinguishable behaviours by which employees contribute to or detract from environmental sustainability. The following part of this section will discuss how those behaviours contribute to sustainable environmental practices. Figure 7.1 shows the ive main categories of employee green behaviour and their sixteen functionally distinguishable behaviours. Figure 7.1 The Employee Green Five Taxonomy Source: Ones and Dilchert (2012): p. 129 Although the Green Five taxonomy outlines the behavioural factors that inluence employee green behaviour, behaviour is a choice between positive and negative behaviour. Table 7.1 summarises the information of negative and positive types of behaviour for each type of meta-category. Individual behaviours, contributing to environmental sustainability, can be positive or negative towards environmental sustainability. 121 Achieving Sustainable Supply Chain through the Creation of Economic Growth Positive employee green behaviour may be considered a speciic form of pro- environmental behaviour. Nevertheless, research conducted by Paillé et. al. (2014) highlighted that there is a positive relationship that฀ exists฀ between฀ the฀ HRM฀ inluencing฀ the฀ positive฀ behaviour฀ of฀ employees towards the environment. For example, including or linking positive environmental behaviour values in the recruitment and selection process can ensure the organisation is able to identify employees who can contribute positively towards the organisation’s sustainable practices. It also is applicable when giving appraisal feedback for the employees. If the managers know the criteria of behaviour that help or detract environmental sustainable practices, then it will be easier for the managers to provide feedback฀speciically.฀thus,฀HRM฀inluencing฀the฀positive฀behaviour฀of฀ employees฀towards฀the฀environment฀is฀an฀indirect฀‘soft’฀HRM฀policy฀and฀ practice฀that฀impact฀the฀employees’฀work฀attitude฀(Harvey฀et.฀al.,฀2013). 122 Table 7.1 The Green Five Taxonomy and Examples of Positive and Negative Behaviours in Each Category Conserving The conserving behaviour that contributes to sustaining the environment by minimizing waste and contributes to sustaining the planet. Examples of Negative Incidents Reducing use Turning off lights when not needed; printing double sided Using water excessively; leaving machinery running when not in use Reusing Reusing disposable plastic products Relying on single use, disposable products Repurposing Using modern garbage incinerator to heat buildings; diverting used cooking oil to make biodiesel Throwing out surplus materials that could be used for something else Recycling Recycling cans, bottles, paper Failing to recycle (or separate trash) despite the available containers 123 Examples of Positive Incidents Green Human Resource Management as a Catalyst for Sustainable Environmental Practices Green Five Category cont. Table 7.1 Working sustainably 124 Purchasing non- disposal equipment or supplies; using eco-friendly chemicals or natural ingredients in productions Using raw materials from unsustainable sources Changing how work is done Optimizing shipping program to reduce air shipments Knowingly relying on a work process that is environmentally sustainable Creating sustainable products and processes Designing new products to substitute environmentally unfriendly one; developing new manufacturing processes with less environmental impact Embracing innovation for sustainability. Choosing virtual meetings (video-conferencing, online collaboration) instead of travel; purchasing hybrid cars for the company Insisting on computer printouts where paperless options are available Achieving Sustainable Supply Chain through the Creation of Economic Growth Includes behaviours that enhance the environmental sustainability of work products and process Choosing responsible alternatives cont. Table 7.1 Pollution Upgrading sewer collection system to prevent overlow and contamination of drinking water; treating hazardous waste properly Improperly disposing of paints, oils, and other hazardous substances; contaminating the soil by dumping harmful chemicals Monitoring environmental impact. Monitoring emissions from operations; regularly testing groundwater and soil for contamination Failing to follow up on cleanup efforts after an accident or negative event Strengthening the ecosystem Planting a “living proof ” on a factory building; maintaining the wildlife area around work facilities Clear cutting unnecessarily. Behaviours that are included in this meta- category involve polluting or preventing pollution. 125 Educating and training for Inluencing others to be more sustainability environmentally friendly and encouraging and supporting Encouraging and environmentally sustainable supporting behaviour. Influencing others Hiring฀a฀sustainability฀education฀ coordinator; participating in courses on proper chemical handling Encouraging carpooling and providing beneits for it; asking co- workers to dress warmly instead of using space heaters Green Human Resource Management as a Catalyst for Sustainable Environmental Practices Avoiding Harm cont. Table 7.1 Taking initiative 126 Starting a new environmental program; instituting a policy on reduced energy use Lobbying and activism Pushing organizations to disclose environmental records; arguing for environmental issues on board Putting environmental interests irst Not using air conditioners on hot days; turning down an environmentally unfriendly project Adapted from Ones and Dilchert (2012) Stopping an environmental program for business reasons Not being willing to compromise own comfort or convenience to reduce the energy or resource used Achieving Sustainable Supply Chain through the Creation of Economic Growth Behaviours that deine putting environmental interests irst, referring to behaviours that reject or turn down projects that can cause damage to the environment, even the proitable ones. Initiating programs and policies Green Human Resource Management as a Catalyst for Sustainable Environmental Practices CONCLUSION In Daimler AG, a global automotive company, the human resource sustainable committee plays a signiicant role in the company’s sustainable broad groups3. The committee is responsible for Daimler’s overall people-focused฀ sustainable฀ activities.฀ Consequently,฀ the฀ HR฀ plays฀ an฀ important role in green recruiting, environmental education and leadership evaluation and development. The example of Daimler AG provides a practical฀approach฀towards฀GHRM฀activities฀as฀a฀Catalyst฀for฀Sustainable฀ Environmental Practices in Organisation. In fact, implementation of sustainable practices should be a compulsory effort in all organisations and Dittmar (2014, pp. 284), quoted “As human pressures within the Earth System increase, several critical thresholds are approaching or have been exceeded, beyond which abrupt and non-linear changes to the life-support functions of the planet could occur. This has signiicant implications for human well-being now and in the future.” Thus, irms must act in the best interest of the people and communities affected by its activities by ensuring its activities bring no harm or by minimising฀ the฀ harm฀ to฀ the฀ environment.฀ At฀ such,฀ establishing฀ GHRM฀ practices in an organisation can contribute towards the irm’s sustainable practices. Currently,฀ there฀ is฀ a฀ need฀ to฀ conduct฀ GHRM฀ practices฀ to฀ inluence฀ employee environmental behaviour in the context of Malaysian irms. Researches are focused on the organisation’s overall activities towards green฀ or฀ sustainable฀ initiatives฀ without฀ speciic฀ focus฀ towards฀ GHRM฀ activities There were researches conducted on Malaysia irms about environmental practices, but were mostly focused on the initiates for sustainable practices, such as Ramayah and Rahbar (2013), Azizi et. al. (2015) and Yeong and Putuhena (2015), and less focused speciically towards฀GHRM฀activities฀for฀sustainable฀environmental฀practices.฀ On฀the฀other฀hand,฀there฀are฀empirical฀GHRM฀related฀studies฀focused฀ in฀western฀countries,฀such฀as฀Harvey,฀Williams฀and฀probert฀(2013),฀Zibras฀ and Coan (2015) and Sawang and Kivtis (2014), and several conceptual 3 ฀ ฀ Deller,฀ Schnieders฀ and฀ titzrath฀ (2012),฀ HR฀ and฀ Sustainability฀ at฀ Daimler฀ AG,฀ in฀ Managing฀Human฀Resources฀for฀Environmental฀Sustainability. 127 Achieving Sustainable Supply Chain through the Creation of Economic Growth papers฀related฀to฀HRM฀initiatives฀to฀inluence฀pro-environmental฀behaviour,฀ such฀as฀Kramar฀(2014),฀Kumari฀(2012),฀Ahmad฀(2015),฀Daily฀and฀Huang฀ (2001), Mandip (2012), Jackson and Seo (2010) and Tariq et. al. (2014). Thus, future research can ill the gap by conducting empirical research on the฀GHRM฀activities฀to฀inluence฀employee฀behaviour฀in฀Malaysian฀irms,฀ in order to implement sustainable environmental practices. REFERENCES Ahmad,฀ S.฀ (2015)฀ Green฀ Human฀ Resource฀ Management:฀ policies฀ And฀ practices,฀ Cogent฀ Business฀ &฀ Management,฀ Available฀ from:฀ doi:฀ 10.1080/23311975.2015.1030817 [Accessed 11 May 2015]. Azizi,฀N.S.M.,฀Wilkinson,฀S.฀,฀&฀Fassman,฀E.฀(2015).฀Strategies฀For฀Improving฀ Energy Saving Behaviour In Commercial Buildings In Malaysia, Engineering, Construction and Architectural Management, 22(1), 73- 90. Benn,฀ S.,฀ teo,฀ S.t.t.,฀ ,฀ &฀ Martin,฀ A.฀ (2015).฀ Employee฀ participation฀ And฀ Engagement In Working For The Environment, Personnel Review, 44(4), 492510. Chou,฀ C.J.฀ (2014).฀ Hotels’฀ Environmental฀ policies฀ And฀ Employee฀ personal฀ Environmental Belief: Interactions And Outcomes, Tourism Management, 40, 436- 446. Daft, R. L. (2012). 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Available at: doi: 10.1080/09585192.2014.972429 [Accessed 11 March 2015]. 130 Chapter 8 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement Masoumeh Hosseinpour, Hossein Nezakati*, Samsinar Md Sidin, Wong Foong Yee WORLD ENVIRONMENTAL MOVEMENT Earth is currently facing severe degradation, from global warming, ozone layer depletion, and large scale pollution among other causalities. Majority of these depredating forces have been traced back to exploitive human behaviors฀(UNEp,฀2012).฀However,฀the฀environmental฀movement฀which฀ was developed to protect the environment against such exploitive human actions, demands a change in our behavior towards the environment. The increasing awareness brought upon consumers by this movement, on the effect of our behavior on the environment, (Jackson 2005) which supports the adoption of environment friendly behavior. The concern over environmental degradation as a movement, irst started in the United States of America (U.S.A), Europe, and then Asia. In United States of America, the movement appeared for the irst time during the 1960s and 1970s, partially after experiencing the drawbacks from use of modern technology, and the irst oil crisis (Grunert and Juhl, 1995). During the twentieth century, several environmental groups made attempts to create awareness among public on environmental conservation. For instance, Rachel Carson’s bestseller book entitled “Silent Spring” focused on the hazardous effects of application of DDT (Dichlorodiphenyltrichloroethane) and other human activities on the ecosystem and the environment (Carson, 1962). *Corresponding Author: Dr. Hossein Nezakati (hossein_na@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth The author attempted to explain how each and every human activity had a direct or indirect effect on the food chain, its ecosystem, and ultimately the environment. The observations made by Rachel Carson were supported by then President of the United States of America, President John F. Kennedy, who acknowledged the importance of her book and environmental movement for the nation and the world. Large scale environmental calamities were often found to be a result of human miscalculations or natural disasters. For instance, the 1969 ire on the Cuyahoga River was the result of an oil spill along the Californian coast of Santa Barbara. This was one of the irst environmental disasters to raise the public hackles on environmental responsibility and conservation in the U.S.A (Rootes and Leonard, 2009). The nearly recent Fukushima Daiichi nuclear plant disaster of 2011 in Japan, was the result of a tsunami caused by massive earthquakes in the region. The resulting nuclear spill got released into the local waters, and would require decades of cleansing to completely remove the radioactive traces (Steven, 2012). Over the years, a series of such environmental disasters have raised global public concerns on environmental safety and conservation. The increasing emphasis by environmentalists on environmental conservation, inluenced the public to accept more environment friendly choices and manners (Lowe, 1992; Lowe et.al., 2008). In accordance with such changes, the irst Earth Day was celebrated on April 22, 1970 by millions of people around the world (Earth Day Network, 2012). This gave birth to new concepts like green behavior, green consumerism, and sustainability. The environmental movement started in Europe around the same time. The book ‘Silent Spring’ created awareness among the people of Europe on the drawbacks of industrialization (Dalton, 1994). Speciically, environmental disasters like the Torrey Canyon oil spill in 1967 off the south-west coast of England, bought about many public protests and complaints (Dalton,1994;McCormick,1989). Consequently, the United Nations (UN) Stockholm Conference of 1972 was held to discuss on environment related issues and propose possible solutions for environmental conservation. Thereby, the initial Environmental Action Programme (EPA) was established by the European Council Committee 132 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement in 1972. The EPA focused mainly on nature, sources of water and air, in addition to environmental measures on production, planning, management, and product policy (Scheuer, 2005). The environmental movement was initiated across Asian countries as well. For instance, the Malaysian government emphasized on the important of environmental conservation in Malaysia by introducing Sustainable Development via the Third Malaysia Plan (3MP) with the main focus on economic progress, environmental protection, and social welfare (Economic Plan Unit, 1976-1980). In order to support its policies towards environmental conservation, the Malaysian government established the Department of Environment (DOE) in 1975. The functions of the DOE included the prevention, control, and abatement of pollution in the country through enforcement of the Environmental Quality Act of 1974. The National Environmental Policy (DASN) was also initiated, with focus on the economic, social and cultural issues, and improvement of the national lifestyles through application of the sustainability concept. Later, in the Sixth Malaysian Plan (6MP), the Malaysian government stressed more towards sustainment of the environment (Economic Plan Unit, 1990-1995). In 1994, Malaysia also cooperated with the UN Framework Convention on Climate Change. The Ninth Malaysian Plan (9MP) (20062010), and the Tenth Malaysian Plan (10MP) (2010-2015) focused more on the promotion of environment friendly or green behavior. The government also passed policies like the National Energy Policy, and the National Forestry Act for developments in energy eficiency and natural resource protection respectively (CETDEM, 2012; Chua and Oh, 2010). GREEN BEHAVIOR The environmental movement has brought about a change in public behavior towards the environment. People have realized the effects of their behavior on the environment, and the important role they play in its conservation (Mostafa, 2007). Therefore, the intention to adopt new environment friendly behavior was initiated among the public, mostly by environmentalists. The green or environment friendly behavior is generally (or according to the knowledge of environmental science) judged in the context of 133 Achieving Sustainable Supply Chain through the Creation of Economic Growth the considered society, as a protective way towards environmental conservation for a healthy earth (Krajhanzl, 2010). This behavior could be performed via activities like resource management, use of harmless materials, waste management (Veleva, 2011), green purchasing behavior (Majláth, 2010), recycling of materials, saving energy and water usage, as well฀as฀use฀of฀public฀transportation฀(Hosseinpour฀et.฀al.,฀2014). The green behavior concept is widely studied across institutions like colleges and universities, and have found rapid acceptance among the societies (Fuller, 2010).The agencies like the United Nation Environment Program (UNEP) and the United Nations Educational Scientiic and Cultural Organization (UNESCO) aims to enhance the exhibitionism of green behavior globally, in order to protect the environment from different levels฀ of฀ degradation฀ (Hassan฀ et.al.,฀ 2015).the฀ development฀ of฀ green฀ behavior led to the introduction of the concept of green consumerism and green consumers. GREEN CONSUMERISM Consumers have realized the fact that their lifestyle directly affects the environment (Mostafa, 2007). The raising concern on this issue led to the development of a new group of consumers, known as the green consumers. These green consumers are concerned about environmental degradation (Soonthonsmai, 2007), and put efforts to organize petitions, boycott non-environment friendly manufacturers and retailers, and promote environmental protection behavior (Fegus, 1991). This change in consumer behavior was observed since the 1990s. For instance, during that decade 79 percent of Americans labelled themselves as environmentalists, following green practices like recycling (82 percent), and 93 percent of Americans believed their lifestyles to be environment friendly (Waterviews Globe Scan, 2009). However,฀ all฀ consumers฀ who฀ consider฀ environmental฀ issues฀ cannot฀ be categorized under this segment. Simmons Experian Research Services (2007) divided consumers into four groups according to their behavior towards the environment: 134 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement •฀ Behavioral Greens: This group of people thinks and acts green, holds negative attitudes towards products that pollute, and incorporate green practices on a regular basis. •฀ Think Greens: This group of people thinks but does not necessarily act green. •฀ Potential Greens: They neither behave nor think along particular environmentally conscious lines, and remain neutral on key green issues •฀ True Browns: This group of people are not environmentally conscious, and may in fact have negative attitudes about the environmental movement. Additionally, consumers of these days are more concerned on topics such as human rights and ethical issues. Therefore, some concepts like sustainable consumption was developed in tangent with such concerns. SUSTAINABLE CONSUMPTION The concept of sustainable consumption was introduced during the UN Earth Summit at Rio in 1992 (Jackson, 2006). Brembeck et.al.(2007) believed that consumption could be perceived as a heterogeneous actors’ assemblage involved in the routine of life, rather than reduction in consumption. Sustainable consumption is equal to greening the entire supply chain, from the production side, to manufacturing, and to inal markets, while informing consumers on sustainability (Tania and Sigrid, 2006). It is imperative to understand that green consumption differs from sustainable consumption. While green consumption focuses on the selection, use, and promotion of green products, sustainable consumption focuses on the environmental, economic, and ethical aspects (Lewis, 2014). Christer (2002) and Lewis (2014) believe policies to be a vital part of sustainability, but is not considered for green consumption. Thereby, Hobson฀(2006)฀considers฀green฀consumption฀to฀be฀a฀‘weak฀sustainability’.฀ Joohyung (2012) believe that understanding and recognizing the proenvironmental behavior of consumers is crucial to secure a sustainable 135 Achieving Sustainable Supply Chain through the Creation of Economic Growth environment.฀However,฀this฀fact฀does฀not฀guarantee฀that฀consumers฀have฀ intention to perform the behavior. Guardian Sustainable Business (2010) conducted a study in the UK to understand consumer’s purchasing behavior on the ethical and environmental grounds of sustainability. The study results showed that consumers were concerned about issues such as, climate change, pollution and exploitive usage of resources. Besides this, consumers also identiied the ethical issues such as labor rights, human rights, fair trade, occupation health and safety as important while purchasing products. Furthermore, the consumer’s attitude towards solving environmental issues were restricted to minimizing wastage, encouraging eco-friendly production processes, in addition to use of sustainable modes of transportation (European Commission, 2009). According฀ to฀ Homburg฀ and฀ Matthies฀ (2010),฀ understanding฀ the฀ consumer’s association with and importance of sustainability to them is the irst step to achieving sustainable consumption. The consumer perceives a sustainable product to have a premium price tag (Guardian Sustainable Business, 2010; Marsh et.al., 2010) . While, self-image and peer acceptance play vital roles in performing sustainability in contrast the good level of awareness (Marsh et.al., 2010). Besides, the importance of sustainability as a product feature, differs from consumer to consumer. For instance, for some consumers’ sustainability as a product feature stands in fourth place after quality, price, and availability of the product. Under such situations, the promotion of environmental education is a solution to increase the level of awareness of consumers on sustainable consumption and other ecological issues (Edwards, 2005). In order to accommodate such an objective, various consumer behavior models are being utilized currently in the ield of green behavior performance. MODELS ON CONSUMER BEHAVIOR Research consists of two crucial elements namely, theory and observation (Trochim,2006). Theory is what goes on inside the scientist’s mind while observation is what goes on in the real world which can be measured and observed (DevComPage, 2009). Theory guides every aspect of research, from the formulation of research question, through operationalization and 136 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement discussion. The continuous and active changes in consumers’ attitude, perception and intentions, makes consumer behavior a dificult concept (Gorden, 1980). Being a dynamic concept, instability across locations and time periods is a part of consumer behavior (Engel et.al.,1995). In such situations, it is not easy for businesses to make decisions for their customers. Consequently, realizing consumers’ behavior in order to meet their demands and to reach the business goals is essential for every business (Demer et.al., 2014). Engagement in environment friendly behavior arises from the related inluences of this behavior on people and environment in addition to the individual as decision maker (Culiberg and Bajde, 2013). Different consumer behavior models could be used to study environment friendly behavior. The models on consumer behavior are varied, especially due to the attention from various study ields of psychology, sociology, economics, and social anthropology (Naik and Reddy,1999). The models’ concentration varies from focusing on internal factors (attitude, perception and intention) to external factors (norms, control factors, and incentives). According to Stern (2000), a practical and useful model is the one which covers (i) motivations, attitudes and values; (ii) contextual or situational factors; (iii) social inluences; (iv) personal capabilities; and (v) habits. Adoption of behaviors like green behavior or sustainable consumption exhibits changing behavior. Behavior change is fast becoming the ‘holy grail’ of sustainable development policy (Jackson, 2005). The Theory of Reason Action (TRA) (Ajzen and Fishbein, 1980) and the Theory of Planned Behavior (TPB) (Ajzen, 2002) are some of the most widely used consumer behavior models in research. According to the Theory of Reason Action (TRA), the attitude of a person towards a particular behavior and subjective norms are the two main components of intention to perform or not perform that behavior. Attitude of a person towards a particular behavior is related to that person’s evaluation of that behavior. Subjective norms are related to social pressure on a person, and norms expect an individual to perform or not perform a behavior. In this model the main indicator of a behavior is intention. Intention presents a person’s motivation to carry out a behavior, which is formed through premeditation. 137 Achieving Sustainable Supply Chain through the Creation of Economic Growth The difference between the Theory of Reason Action (TRA) and the Theory of Planned Behavior (TPB) is the additional component of perceived behavioral control. Perceived behavioral control is in conjunction with a person’s ability and control over a behavior. The two models try to provide the framework by which the intention of performing or not performing a behavior can be measured. The application of these models have been diverse. Lee (2009) used these models to study fashion behavior, while Dunn (2009) studied consumers’ eating behavior. More recently, the above models were used to discover the inluence of green activities like go฀green฀campaign฀on฀green฀behavior฀intention฀(Hosseinpour฀et.al.,2015).฀ The Norm Activation Theory (Schwatrtz, 1977) and the Theory of Interpersonal Behavior (Triandis, 1977) are two other well-known theories applied in the ield of consumer behavior studies. Schwatrtz (1977) in the Norm Activation Theory state that, the personal norm is the only direct determinant of pro-social behavior. In this model (Figure 8.1), intention is rejected as an effective component of behavioral performance. In addition, personal norm as an opinion on moral responsibility and the only direct variable is adopted by person in pro-social behavior. Two components of awareness of consequences and acceptance of the personal responsibility inluences personal norms in this model. Awareness of Consequences Personal Norm Awareness of Responsibility Figure 8.1 Norm Activation Theory Source: Schwatrtz (1977) 138 Behavior Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement Central processing (High฀motivation฀ability) Peripheral processing (Low motivation ability) Peripheral processing (Low motivation ability) Atitude Comprehensio Peripheral Peripheral Elaboration Reward association Intergration Reward association Atitude Behavioral change Figure 8.2 Elaboration Like hood Model Source: Petty (1977); Petty and Cacioppo (1986) On the other hand, there are available theories that concentrates on the role of attitude as a behavioral changing determinant. The most effective among those theories, is the Elaboration Like-hood Model (ELM) (Petty, 1977; Petty and Cacioppo,1986). According to this model, there are two different and effective processes involved in changing attitude, which are central processing route and peripheral processing. Comprehensive attention to the message and evaluation of its concept in addition to combination into an individual’s attitude set is related to the central processing route. Based on the ELM, higher motivation level and ability 139 Achieving Sustainable Supply Chain through the Creation of Economic Growth among consumers to involve with the message depends on the route. However,฀according฀to฀the฀peripheral฀processing฀route,฀consumers฀are฀less฀ motivated and less able to engage with the issue. In this case, peripheral ‘persuasion cues’ may be used to suggest ‘source attractiveness’. Therefore, the central process route is the main and the most effective component affecting attitude. Meanwhile, it should be considered that peripheral process is inluential to change in attitude and behavior over long periods. In terms of understanding pro-environmental consumer behavior, Stern’s Value Belief Norm Theory (Figure 8.3) is the most practical model (Gardner and Stern, 2002). Stern’s Value Belief Norm Theory relates to the Norm Activation Model. According to Value Belief Norm Theory, being aware of results in the Norm Activation Model could lead to฀ acceptance฀ of฀ the฀ New฀ Environmental฀ paradigm฀ (NEp).฀ How฀ much฀ a person accepts NEP, links the biospheric and altruistic values with egoistic values. Besides, Stern believe that the model prepares ‘the best explanatory account to date, of a variety of behavioral indicators of nonactivist environmentalism”. Values Beliefs Norm Behavior Environmental citizen Biospheric Altruistic Acceptance of NEP AC AR PN Egoistic Biospheric Private sphere behaviors AC = awareness of consequences AR = ascription of responsibility PN = personal norm Figure 8.3 Value Belief Norm Theory Source: Gardner and Stern (2002) 140 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement On the other hand, some researchers believe that intention plays a role in performing behavior. In this regard, the factors of attitude, past behavior and habit as internal factors, and social factors such as norms are effective for building on the essential intention. In such cases, models like the Theory of Interpersonal Behavior (Triandis, 1977) are employed by researchers. Mostly, this model is compared with the Attitude, Behavior, Context (ABC) model by Stern (2000). The ABC model considers the roles of attitude, contextual factor, personal capabilities, and habits in its฀ framework.฀ However,฀ this฀ idea฀ is฀ not฀ considered฀ in฀ the฀ theory฀ of฀ Interpersonal Behavior model framework. According to the Theory of Interpersonal Behavior, belief about the outcome and evaluation of outcome builds up the attitude towards a particular behavior, and attitude is vital for intention. Besides, norms which are in conjunction with what should be performed and what should not be performed are in this model. Norms, roles, and self-concept make up the social factor. Roles are a “set of behaviors that are considered appropriate for persons holding particular positions in a group”. Self-concept is related to the idea that a person has of his/her self. Emotions are related to a decision or the situation that is supposed to be separate from rational estimate of outcome of behavior (Figure 8.4). 141 Achieving Sustainable Supply Chain through the Creation of Economic Growth Belief about Outcome Attitude Evaluation od Outcome Facilitating Condition Norms Roles Social Factor Intention Behavior Self-Concept Affect Emotions Frequency of Past Behavior Habits Figure 8.4 Theory of Interpersonal Behavior Source: (Triandis, 1977) Additionally, the use of ethical theories to study eco-friendly consumer behavior was suggested by Chan et.al. (2008). Thereby, the Issue-Contingent Model by Jones (1991) is considered below (Figure 8.5). In this model, there are four stages of ethical decision making namely; recognizing a moral issue, making moral judgments, establishing a moral intent, and engaging in moral behavior. Furthermore, two other elements of moral intensity and organizational factor are considered in this model. 142 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement Moral Intensity Magnitude of consequences Social consensus Probability of effect Temporal immediacy Proximity Concentration of effect Recognize moral issues Make moral judgement Establish moral intent Engage in moral behavior Organizational factor Group dynamics Authority factors Socialization process Figure 8.5 Issue-contingent model Source: (Jones,1991) There are some issues with regard to sustainability and how consumers behave towards this concept. A company that aims to practice sustainability, should consider the issues of customer health, safety and customer privacy along the product chain. More importantly, according to indicator of sustainability i.e. environment, economic and social in order to reach sustainable consumption, there is a need to change consumption 143 Achieving Sustainable Supply Chain through the Creation of Economic Growth pattern. Consumers might carry different attitude towards sustainability and sustainable consumption. For instance, consumers might carry a positive attitude towards this concept which might lead to more intention to perform sustainability (Vermeir and Verbeke, 2002). DISCUSSION Earth is in challenge with the environment degradation, and human’s behavior is the main reason of this disaster. In this regard, people around the world have realized the drawbacks of their behavior on environment and they put effort to reduce and even to stop the related drawbacks. In order to protect the earth, the environmental movements started around the world with the aim to raise public awareness on environmental protection. This led to the development of concepts like green or environment friendly behavior, and green consumerism. Mainly, these concepts aimed to protect earth and environment by pressuring sectors such as manufactures to be green. In order to reach this goal, global governments and world agencies invested their efforts to change public behavior towards environment conservation. In this regard, green consumers tried to change their behavior into a more environmentally friendly one. Changing in behavior is observed from purchasing behavior, recycling of materials to boycotting some environment harming manufacturers. The concept of sustainability was introduced as part of the environment movement. Sustainability covers the three main focus areas of environment, ethical and economic. This led to the development of the concept of sustainable consumption. The sustainable consumption does not mean reduction in consumption, and involves the green footprint. In contrast, green behavior does not involve any policies, which is a core part of sustainable consumption. Consumer behavior is a complex topic, and cannot be generalized. Thereby, a study on the environment friendly behavior of consumers require the use of speciic consumer behavior models. The frameworks provides by the models helps in understanding the patterns in observed consumer behavior.฀However,฀the฀results฀obtained฀by฀researchers฀are฀often฀varied.฀ For instance, some consumers might have an attitude towards sustainable 144 Green Behavior and Sustainable Consumption – A Gratifying Conclusion of Environmental Movement consumption by which they assume environmental degradation and ethical issues฀as฀vital.฀However,฀for฀some฀other฀consumers,฀this฀concept฀might฀not฀ be that vital. CONCLUSION If the aim is to change behavior and to protect environment, some effort is required. At the irst stage, awareness about environmental protection and concerned ethical issues are crucial since some might not have the knowledge about it or might have a wrong attitude toward it. In the second stage, environmental education to the whole society is vital. The important point is to change the behavior of people in the society.฀Hence,฀it฀is฀crucial฀to฀invest฀into฀programs฀to฀educate฀the฀public฀ about environmental management. In this case, government and NonGovernmental Organizations (NGOs) might employ some tools such as go green campaigns or environmental education to change the behavior. More importantly, it should be considered that behavioral change is a time consuming and demanding act, that requires an investment of time and money to reach the inal goal. Finally, concentrating on children could be helpful. Since children are the future adults in any society, any education to mold their behavior would stay on as a practice for their lives. Some evidences point towards the effectiveness of such environmental education programs on children’s behavior changing. For instance, a study was conducted by Prestin and Pearce (2010) in U.S.A in order to promote recycling among children. Interestingly, the results showed the changes among children’s attitude towards this concept and how they were intend on recycling. Therefore, the future studies could apply some of the consumer models discussed in the chapter, in order to measure the sustainable consumption behavior or green behavior of consumers in different markets. Also, studies could be done to measure how these types of programs are actually effective on changing behavior of respondents towards more sustainable one. The reviewed theories in this chapter could be practically useful for researchers to provide the framework to discover consumer’s green behavior. 145 Achieving Sustainable Supply Chain through the Creation of Economic Growth REFERENCES Ajzen, I. (2002). 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Vermeir,฀I.฀,฀&฀Verbeke,฀W.฀(2002).฀Sustainable฀Food฀Consumption:฀Exploring฀ the Consumer ‘‘Attitude – Behavioral Intention’’ Gap, Journal of Agricultural and Environmental Ethics , 19:169–194. 150 Chapter 9 Sustainability: The Effective Role of NGOs on Firms Masoumeh Hosseinpour, Hossein Nezakati*, Ho Jo Ann, Jamil Bojei SUSTAINABILITY CONCEPT The United Nations (UN) conference in Stockholm, 1972 introduced the concept of sustainability for the irst time. This concept was developed in response to the rise in environmental problems and natural resource depletion in the world. This was followed by the initiation of the World Commission on Environment and Development, in 1983. A year after the Chernobyl disaster, the Brundtland Report of World Commission on Environment and Development (WCED) titled “Our Common Future” on sustainable development was introduced in 1987 (Anca et.al., 2014). Sustainable development is the one which meets the needs of present population without compromising the ability of future generations to meet their own needs. The concept of needs, in particular the essential needs of the world’s poor, to which overriding priority should be given; and the idea of limitations imposed by the state of technology and social organization on the environment’s ability to meet present and future needs (WCED,1978). Sustainability is deemed important by governments and societies alike. Nowadays business and societal stakeholders (government, consumers and Non-Governmental Organizations-NGOs) are asking the businesses to adopt a higher standard, which potentially creates pressure on companies (Mary and Patrice, 2014).Thereby, sustainability is becoming a vital *Corresponding Author: Dr. Hossein Nezakati (hossein_na@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth element of concern for effectiveness of organizations (Worley et.al., 2010). The term Triple Bottom Line (3TBL) is of the core part of sustainability. Triple Bottom Line is related to the creation of economic beneits, while considering the social and environment dimensions. It was introduced by John (1999) via his famous book “Cannibals with Forks: Triple Bottom Line of 21st฀Century฀Business”฀(Dyllick฀and฀Hockerts,฀2002).฀Companies฀ face many challenges while practicing sustainability, and demands for social support, environmental and inancial outcome. Supply chain management stands in the frontline of sustainability in business. In fact, it can guide irms to reach goals of TPB performance (Seuring and Müller, 2008). Stakeholders play vital roles in inluencing supply chain performance. Any individual or group that could be inluential on a irm is known as its stakeholder (Freeman, 1984). In terms of long-term survival of any business, a stakeholder approach suggests an active management of the business environment, relationships, and the promotion of shared interests (Freeman and McVea, 2001). In this manuscript, only the effectiveness of NGOs as a stakeholder on irms to be sustainable is discussed. NGOs NGOs generally refer to groups whose stated purpose is the promotion of environmental and/or social goals rather than the achievement or protection of economic power in the marketplace or political power through the electoral process (Bendell, 2000). NGOs sector activities vary from women’s care, children’s care, natural resources protection (water, energy and land), to human activities such as environmental education and humanitarianism. Furthermore, NGOs differ in terms of size, religious orientation, functions (service provider, social movements, networks or apex organizations), and relationship with donors, and other elements (World Bank, 2003). The concentration of NGOs are mostly in the third world countries, and NGOs in some cases work closely with governmental organizations. For instance, the International Fund for Agriculture Development (IFAD) which is supported by UN-Non-Governmental Liaison Service has spent a lot of efforts on the farmers of undeveloped countries. According to 152 Sustainability: The Effective Role of NGOs on Firms IFAD, farmers in these nations are on the front line of climate change. Consequently, in order to change the behavior of these farmers into sustainable way, IFAD focuses on the countries such as Africa, Asian and the Paciic Latin America and Caribbean and Near East. “Re-greening” is one of the projects which was implemented in west and central Africa to promote water and soil conservation (IFAD, 2012). Other NGOs like United Nation Environment Program (UNEP) established a programme titled “Environmental Education and Training Unit”. The main goal of this programme is to develop and promote the attitude which leads to environmentally friendly behavior in societies (UNEP, 2012). the฀ presence฀ of฀ NGOs฀ was฀ always฀ apparent.฀ However,฀ post-World฀ War II, the activities taken up under alongside the promotion and awareness generated towards more environmentally friendly behavior among nations increase. For instance, the World Wildlife Fund (WWF) with the main objective of wildlife protection was established in 1961. Later on, other commitments such as awareness of climate change, sustainability development, and environmental educations were also introduced into the agenda (WWF, 2012). On the other hand, the footprint of different NGOs can be observed in their humanitarian activities. NGOs compete for getting donations. Besides, majority of the donors are more concerned on humanitarian donations (Bookstein, 2003; Munslow and Brown, 1999). Furthermore, the role of NGOs in promoting concepts like sustainable consumption can also be observed. For instance, UNEP initiated the concept of sustainable consumption which is concerned with “doing more and better while less” through reduction in resource use, degradation and pollution, and increasing the quality of life (UNEP, 2012). The role of supply chain management in the success of NGO activities should be considered. There are varied types of supply chain related to NGOs, including food relief items, non-food relief supplies, food for development activities, and non-foods for development activities (Marie et.al., 2013). For instance, during disaster relief, NGOs should be able to respond as fast as possible, distributing food, shelter, and other necessities to the needy via their supply chain. In fact, their supply chain management contains the processes of planning, implementing and controlling the 153 Achieving Sustainable Supply Chain through the Creation of Economic Growth eficient, cost-effective low and storage of goods and materials as well as related information, similar to any general supply chain management (Thomas and Kopczak, 2005). Besides, to be sustainable and pressure on companies to apply this concept is one of NGOs approaches. NGOs AND FIRM’S SUSTAINABILITY Stakeholders pressurize irms to turn sustainable, with the intention to promote฀ sustainability฀ in฀ business฀ practices.฀ However,฀ stakeholders฀ do not always succeed in this endeavour. Their pressure might result in awareness of sustainability or might lead to adoption of a sustainability goal or objective by the irm, rather than resulting in implementation of a฀practice฀(Mary฀and฀patrice,2014).฀However,฀there฀is฀a฀logical฀progress฀ for a irm to adopt sustainability which starts from awareness about the concept to practicing it. Every stakeholder pressure may inluence a irm differently. NGOs as external stakeholders are not only able to signiicantly affect the local business activities, but also have the power to be internationally claimed (Doh and Guay, 2006). NGOs activities such as, boycotting, litigation and shareholder resolution or partnership are often considered by฀ irms฀ (Hendry,฀ 2005).฀ According฀ to฀ the฀ Stakeholder฀ theory:฀ NGOs฀ are involved with the business agenda of a company. In this regard, managements consider the role of stakeholder as a key success and they know how to prevent detrimental pressure (Savage et.al., 1991). Furthermore, NGOs are able to affect public’s mind with regard to an organization’s environmental practices (Sarkis et.al.,2010). The study conducted by Schrader et al.(2012) found that all companies believed in the crucial role of stakeholders like NGOs for sustainability adoption in the companies. Therefore, for a irm it is crucial to consider the role and inluence of stakeholders on the irm performance in terms of sustainability. EFFECTIVE ROLE OF NGOs ON FIRM’S SUSTAINABILITY Meeting the goal of TBL of sustainability is a complex challenge for companies. In fact, the responsibility of this concept should not be only one฀party฀like฀the฀government฀฀(CSRI,฀2006).฀However,฀the฀role฀of฀NGOs฀ 154 Sustainability: The Effective Role of NGOs on Firms as an external stakeholder should be considered. Concerning the effects of NGOs on irms, NGOs strategies underwent a shift from one of forcing change (through protests and boycotts), to facilitating change (through cooperative relationships) and sustaining change (by creating their own standards and accreditations that businesses sign up to) through developing their standards (Murphy and Bendell ,2001). There are ways for businesses to gain the support of NGOs like involvement in reputation enhancement, branding, developing new marketing methods, developing motivation among employees, and risk reduction. Considering the NGOs reach the speciied goals, they can demand resources which should be provided by businesses. Besides, NGOs can play a more vital role by affecting the policy of companies. However,฀ in฀ order฀ to฀ make฀ this฀ relationship฀ more฀ successful฀ and฀ more฀ inluential, cooperative relationships were observed to be signiicant from the NGOs side and of new social and political structures (Schneidewind and Petersen, 1998). NGOs can play different roles on each irm’s sustainability. In terms of social aspect of sustainability, NGOs’ role was found to be signiicant in pressuring irms to consider society in business. Besides, NGOs have played a major role with media in reporting unsustainable labour practices followed by factories in under developed countries. More importantly, Byung and Pervez (2015) in their study emphasised on the importance of NGOs by referring to them as the third government which cannot be neglected from companies. Considering the environmental aspect of irm’s activities, Kestemont and Ytterhus (1997) stated that NGOs consider the environmental characteristics of products and services, environmental impact of company activities and environmental responsibility of a company (Vazquez et.al., 2010). More importantly, NGOs have the power to affect the business activities of both big and small and medium-sized irms. As an example, in examining the association between NGOs and small and medium-sized enterprises by Gabor and Gyula (2015), they concluded that NGOs have direct and positive role on irms (small and medium-sized enterprises). On the other hand, in the study by Sushil and James (2015) on some 155 Achieving Sustainable Supply Chain through the Creation of Economic Growth big companies like Apple, Nike and Nestle, it was founded that these companies were challenged by NGOs. THEORIES ON SUSTAINABILITY AND THE ROLE OF NGOs Theory is deined in various ways by researchers. Bachrach (1989) deined theory as a statement of relationships between units observed or approximated in the empirical world. The related theories to organizational sustainability are in initial stages of development. Each theory is able to develop difference aspect and framework in relation to analysing the irm and its related research problems (Seth and Thomas, 1994). Traditionally, studies in management disciplines and business disciplines with focus on sustainability and environmental aspects have applied฀ organizational฀ theory฀ application฀ (tang,฀ 2010).However,฀ with฀ regard to sustainability and how NGOs can pressure and play a role on a irm to apply sustainability, there are available theories to be reviewed. Firstly, organizational theory that is not clearly deined is considered. This theory is wildly applied in management, business disciplines to psychology,฀ sociology฀ and฀ economic฀ studies฀ (Hatch,฀ 2006).฀ According฀ to Sarkis et.al., (2010) is a management insight that can help explain or describe organizational behaviors, designs, or structures. This theory is applied in management studies, natural environmental and sustainable studies like green supply chain management (Etzion, 2007; Ketchen and฀Hult,฀2007).฀In฀addition,฀this฀theory฀can฀provide฀the฀framework฀for฀ researchers by which they will be able to discover the effectiveness roles of NGOs on a irm to adopt sustainable concept and even to practice it. Furthermore in this concern, another well-known theory entitled the Stakeholder or Shareholder theory is applied by researches. Based on this theory, each irm has the responsibility and duty towards its stakeholders since the main goal of irm is to return the maximum amount to stockholders via irm market value. Stakeholder theory states that there are some pressures on company’s externalities by both internal and external stakeholders (Freeman,1984). Stakeholders provide capital for a company and with their major impact on irm with limited abilities which 156 Sustainability: The Effective Role of NGOs on Firms decreases the related risks. Brook (2001) stated that this theory excludes social, cultural, and economic needs which might potentially harm the society, the environment and even the company. Though the theory suffers from critiques, it is applied by researchers across different management disciplines. In fact, researchers applied this model as the theoretical framework of study to discover the effectiveness role of NGOs on a irm to adopt or practice sustainability. An example, in some studies it has been found that NGOs as an external stakeholder might be able to pressure on irm to apply sustainability concept in their organization (Argadoña, 1998). Another study by Dong et.al. (2014) in China employed this theory, and found that NGOs’ role is not remarkable in this context. Therefore, it can be concluded that NGOs in different cases play varied role. The Resource Based View theory (RBV) is another well-known theory in the management studies. According to RBV, competitive advantage and performance determinants are the related source for irm (Peteraf and Bergen, 2003). Besides, the theory considers irm performance due to its speciic resource and capabilities (Barney, 1991). This model considers the situation of irm in two stages. Firstly, it assumes that a irm by its available resources could be dissimilar from others in an industry or a strategic group. Secondly, due to implementation of the irm’s strategies (which might not be allocated faultlessly), there might be persistence on the resources heterogeneousness. More importantly, if a irm aims to compete strongly, a resource of irm needs to be available, rare, and perfectly฀capable฀to฀be฀imitated฀and฀substituted฀(Barney,฀1991).฀However,฀ this model excluded the environmental dimension of organizations and includes social aspect of organizations through resource management. Recently, researchers linked the Resource Based View theory as a theoretical framework to the sustainability of a irm by considering the Informational฀ technology฀ resources,฀ Human฀ Resources฀ Management฀ resources, and Sustainable Supply Chain resources (Dao et.al., 2011). However,฀ in฀ terms฀ of฀ the฀ effective฀ role฀ of฀ NGOs฀ on฀ irm฀ to฀ practice฀ sustainability by applying this model as a theoretical framework, there is not much research. 157 Achieving Sustainable Supply Chain through the Creation of Economic Growth DISCUSSION The concept of sustainability started 30 years ago in the world. Sustainability affects societies and governments equally. In this regard, both government and NGOs asks people and companies to apply this concept. NGOs as a separate party from the government, have the power to inluence public’s mind regarding speciic issues. NGOs act as external stakeholders to irms, inluencing the irm reputation and even affecting company policy making. The role of NGOs and their effects are non-deniable. One way for any company to gain proitable and suitable market share is through cooperation with NGOs. This group of stakeholders pressurise companies in different ways to adopt sustainability into their businesses. In fact, NGOs might ask a company to consider environmental issues during the production of a product or service. Furthermore, NGOs’ concern for human’s right like labour right, even inluences them to take media support to change the labour policies of any unyielding company. Effects of NGOs on both big and small irms can be observed. Therefore, as a suggestion for all irms, it is essential for companies to consider the needs and demands of NGOs. By doing this, a irm can meet two goals. Firstly, there is a situation by which irms actually can practise sustainability. Secondly, by doing so and meeting the demands of NGOs, irms can guarantee the supports of NGOs and retain company’s reputation. There are available theories and models to help study NGOs’ effectiveness towards irm sustainability. Besides, the application of related theories by both NGOs and businesses could lead to the development of a reliable framework on sustainable business. CONCLUSION Sustainability is on important and challenging concept for irms. At the irst stage for irms it is more practical to gain the essential knowledge of this concept. In the second stage, irms need to realize that how it is practically possible for them to implement sustainability in their irms. In this case, irms should consider the expectation and even the opinion 158 Sustainability: The Effective Role of NGOs on Firms of some stakeholders such as government and NGOs. The vital point for irms is to consider meeting the demand of these stakeholder. However,฀there฀is฀lack฀of฀sources฀for฀irms฀to฀refer฀to.฀For฀instance,฀as฀ mentioned some of the studies applied the listed theories in their studies, but there is no available reference to employ some theories like the Resource Based View theory. Therefore, it is suggested for the researchers who are interested to study the inluence of NGOs on a irm to adopt or practise sustainability to use this model as a theoretical framework to ill this gap. In fact, researchers can try to discover the effects of NGOs on irms to be sustainable by considering the available resources and strategies of irms. REFERENCES Argadoña, A. (1998). The Stakeholder Theory and The Common Good, Journal of Business Ethics, 17, 1093-1102. 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Supply chains are also inevitably facing urgent and long-term concerns with respect to sustainability and sustainable development. Sustainability in academic literatures is commonly referred to as the effective utilization of limited global resources to fulil the needs of the present generation, without compromising on the possibility of resource provision for future generations in order to meet their needs and wants. Focus of early studies on Sustainable Supply chain management (SSCM_ usually lies on environmental factors and how to enhance costeffectiveness by reorganization of the lows of materials and improving the utilization of energy and water. The scope of supply chain was restricted to a capacity and level of relationship with partners/suppliers. But to tackle long-run sustainability concerns such as climate issues, biodiversity loss, social security problems or risks to workforce, citizens and communities, companies require optimizing their operational process and delivery within the supply chain, in addition to the whole production structure, as well as services during and after production (Abdala and Barbieri, 2014). *Corresponding Author: Dr. Hossein Nezakati (hossein_na@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth Most of the deinitions found through literature review with respect to the SSCM emphasis on the circulation of information, capital and materials as well as the organizational cooperation among the companies, in order to attain their goals in terms of three main dimensions of sustainability. These dimensions include social (people), environmental (planet) and economic (proit) aspects. This deinition tends to focus on the requests and requirements of the end consumers and also other stakeholders such as government (Linton et. al., 2007; Seuring and Muller, 2008). Carter and Rogers (2008) also provide a deinition for SSCM. They describe SSCM as an integrated strategic network by which organization attains its environmental, economic and social goals in a transparent business co-ordination and inter-organizational process, in order to enhance its long term core organizational performance and as well as its supply chain system. According to Porter and Van (1995) the sustainability is referred to as a possible advantage source and survival at the market, in a way that organizations leverage their strategic competencies and organizational performance to keep their competitive advantage. Companies of different sizes are accountable for the delivery of goods and฀ services,฀ and฀ thus฀ also฀ for฀ the฀ management฀ of฀ supply฀ chains.฀ How฀ this is accomplished is dependent on market demands and expectations. Both the drivers and relevant tools must be around to pave the way for establishment of the market readiness and required capabilities of SSCM. Incumbent companies are receptive to be in the forefront of SSCM. Doing so they respond to external forces and drivers set by governments, investors, customers and stakeholder. The incentives are longed-for, but numerous obstacles hinder the implementation (Abdala and Barbieri, 2014). Pressures imposed by clients, government and competition could result in organizational change in terms of structure, type of strategic relationship between businesses, activities, operational system and productivity ,among others. It is not only coercive forces made by stakeholders requiring organizations to take action on sustainability but also strong normative, such as brand reputation, and imitative drivers such as ierce competition between market players, among that form the core competitive guidelines in this area (Zhu and Sarkis, 2007). Realizing the hidden opportunities 164 The Role of Government to Stimulate Sustainable Supply Chain Management behind compliance, organizations have taken up sustainability beyond the regulatory requirements and have adopted sustainability for competitive advantages. The business reasons also go beyond any moral necessities. The business case for sustainability, especially supply chain sustainability, is a multidimensional phenomenon. Business motives can include cost reduction through eficient use of resources; revenue generation through recycling system; improving image and reputation, building good will; creating a license to operate; and to build a reliable and resilient supply chain (Reinhardt, 1998; Sarkis, 2009). In many cases, Companies often modify their sustainability priorities based on pressure from their stakeholders like government, consumers, and non-governmental organization, among others (Angell and Klassen, 1999). Thereby, the managers started incorporating environmental, social, and economic dimensions into their organizational supply chain. The relationship of organizations with the supply chain players attenuate the risks related to production and service. According to Porter and Van (1995), sustainability could be used as a survival tactic by organizations, leveraging their strategic competencies and performance to their advantage. This study attempts to highlight the inluence of the government as an important driver on establishing market readiness to accomplish the concept of SSCM, since there is lack of literature on this area of research. Study at hand proposes some roles for government according to the Network-based Approach as a possible way to establish and expand market readiness in relation to SSCM. Network-based collaborative interaction is deined as an approach which focuses on innovation as an eficient mechanism to harness the resources and capabilities of external communities and networks to boost transformation pace and outcomes (Nambisan, 2008). STUDY BACKGROUND Research in the ield of SSCM is still at its infancy stage (Gold et. al., 2010). Seuring and Muller (2008) also came to the conclusion that SSCM literature is still limited in quantity, and no major reviews have been conducted in this ield. SSCM as an emerging concept, however, has recently gained a great deal of interest among scholars. Kleindorfer et. 165 Achieving Sustainable Supply Chain through the Creation of Economic Growth al. (2005); Linton et. al. (2007); Carter and Rogers (2008); Seuring and Muller (2008); Pagell and Wu (2009), among others, were involved in the conceptualization of SSCM and its development. During its early stage, it used to be taken as Green Supply chain management (GSCM), with main focus on the environmental issues. According to Srivastava (2007), GSCM gained more importance with growing concern over environmental degradation, natural resources, greenhouse pollution damages, and so on.฀ However,฀ Seuring฀ and฀ Muller฀ (2008)฀ argued฀ that฀ the฀ possibilities฀ for SSCM go beyond the environmental dimension. They combined the concept of SCM and sustainability, integrating principles of green chains into a wide theoretical framework. The incorporation of social and economic aspects into SCM has shifted its focus from only environmental issues, providing a more comprehensive and integrated outlook. Carter and Rogers (2008) describe SSCM as a strategic integrated network which reaches its environmental, social and economic objectives, through a system of transparent business coordination and inter-organizational processes. This is to establish and enhance long- run economic performance of a focal organization and its respective supply chain. Kleindorfer et. al. (2005); Pagell and Wu (2009), however, raised questions over the synergy between proits and sustainable practices. They argued that since the society usually appears to be indifferent and reluctant over economic and political arguments, the main role in demanding an improvement in environmental performance, equality, health, and safety issues lies with the government. There have been plenty of cases wherein, the government agents were found detrimental to environmental and social actions by businesses. Gold et. al. (2010) conirmed that external pressures, namely pressure from government, clients and other stakeholders work as enhancing SSCM in organizations. This observation is supported by Zhu et. al. (2005), Welford and Frost (2006), and Seuring and Muller (2008), wherein the pressures exerted by the government, consumers, market, and suppliers were found relevant to sustainability as practiced by organizations. 166 The Role of Government to Stimulate Sustainable Supply Chain Management THEORETICAL SUPPORTS SSCM suffers from lack of consistent comprehension about the concept of sustainability. Carter and Rogers (2008) reported such inconsistency in understanding about sustainability within the wider domain of operational, organizational and SCM literature. They found out that the main part of literature on SSCM is predominated by environmental aspect such as green product production, green logistics, waste management and human rights, providing limited and narrow aspects of SSCM. Diverse environmental concerns are emphasized “in a standalone fashion, without consideration of the potential interrelationships” swinging between social, environmental and economic topics (Carter and Rogers, 2008). Seuring and Muller (2008) also brought to the surface that research in SSCM “is still dominated by green/environmental issues” (p.1699), with “a clear deicit in SCM and purchasing literature on … the amalgamation of all three dimensions of sustainable development” (p. 1702). Sustainability as an integration concept comprising of economic, environmental and social concerns is still rarely addressed in the literature reviews. Integration of those three facets of sustainability in academic literature stared only from 2002 (Seuring and Muller, 2008). Given the signiicant inconsistency in deinition of sustainability, the level of theory building in the ield of SSCM sounds to be quite underdeveloped. “Despite numerous calls for more theory development in SCM research, there has been relatively, little theory building research within the broad of SCM to date” (Carter and Rogers, 2008). Seuring and Muller (2008) also came to the conclusion that there is insuficiency in the theoretical background, both from the supply chain or operation management, likewise from a broader viewpoint, such as new institutional economics or strategic management. Researchers have discussed that empirical research requires to form on a robust theoretical basis, however, based on conducted case studies, a great deal of opportunities are seen for theoretical development (Seuring and Muller 2008). According to the studies, substantial part of current literature reviews are focused on the conceptualization of SSCM (Carter and Rogers, 2008; Gold et. al., 2010; Seuring and Muller, 2008). While it is considered that 167 Achieving Sustainable Supply Chain through the Creation of Economic Growth conceptual theory development is a requirement of pre-theory stage, but there is a substantial necessity for further reality experiments in speciic environments to pave the way for theory building (Carter and Rogers, 2008). Furthermore, the tendency towards incorporating sustainability into SCM practices has resulted in subsequent transformation in the business interaction with respect to procurement strategies and dealing with suppliers. Traditional theories (e.g. resource-based view of the irm (RBV) and transaction cost economics (TCE), seems to fail securing a comprehensive enlightenment about corporate conduct and business strategies when it intends to manage sustainability concerns in the supply chain ield. For example, the literature review conducted by Pagell and Wu (2009) indicates “the current theory in SCM may neither adequately explain nor predict the behaviour observed with respect to sustainable sourcing”. Substantial number of current theories in the ield of SCM literature has been abounded for a long run and they sound to be as old as SCM concept itself. Those theories are as follow: Transaction Cost : The core of this theory is to answer the question Economics (TCE) on the existence of irms. TCE in the SCM context basically tends to deal with the reduction of main costs associated with procurement transaction and supplier deals (Williamson, 2010). Social Network Theory : This theory substantially has its emphasis at the behavioural and social aspects of the diverse type of networking relationship, including the relationship between irms, individuals and irms and as well as relationship between individuals. This theory is helpful to examine such relationships from different aspects namely technical, inancial and social essentials (Carter and Rogers, 2008). 168 The Role of Government to Stimulate Sustainable Supply Chain Management Resource Based View (RBV) : This theory indicates that all core resources and capabilities of the irms are considered as its most crucial competencies. RBV mainly emphasizes on taking advantage from in-house as well as other irms’ core resources to build competitive advantage in the market (Ramsay, 2001). Principle-Agent Theory : This theory deals with issues such as governance and the control mechanism structure of irms, in order to alleviate the opportunism cases in organization as a result of conlicting interests between the Principle (delegating authority) and the Agent. In SCM context, this theory tries to elaborate how companies’ decision is made while being affected by conlicting interests between parties and as well as how this concern affects organization’s decision with respect to SCM (Fayezi et. al., 2012). Game Theory : This theory is concerned with decision making strategy. It has its focus on cooperative and noncooperative interaction among intelligent and rational decision made by actors with different scenarios and results. This theory has direct implication on the relationship and trust among market actors to base the collaboration ground in order to minimize the cost while gaining more beneits฀(Hennet฀and฀Arda,฀2008). 169 Achieving Sustainable Supply Chain through the Creation of Economic Growth Systems Theory : This theory indicates that the correct and robust analysis of the market requires its components, relationships, rules, and context of interaction to be comprehended. In SCM context this theory attempts to identify and make rational connection among diverse components of a complex system which could be from raw material to complete product. It also stresses on the role of subsystems in the context of main and bigger systems of supply chain networks. Study on the importance of internal and external networks is another concern of this theory (Edward and Mark, 2013). Network Perspective : The main focus of this study is on the study of the direct and indirect (extended) partnership in the context of SCM which could be obtained through long-term contracts with partners and also trust based relationships among supply chain actors (Edward and Mark, 2013). Given that government is as one of the core players in the market and society, their role in SCM should be examined as a network development driver. The relationships between central government, local governments and markets, are mainly characterized by the degree of centralization, privatization, and collaboration between government agencies and the private sector. Power erosion of the nation state in favour of complex layering and networks between different tiers of government is the main factor฀which฀comes฀to฀main฀focus฀(Day฀and฀Hadield,฀2004;฀Hargreaves,฀ 2004). According to Stone (2001), conceptualizing “social relations as networks enable the identiication of the structure of social relations (for example, whether parties know one another and what the nature of their relationship is) as well as their content (e.g., lows of goods and services between players, as well as norms governing such exchanges).” 170 The Role of Government to Stimulate Sustainable Supply Chain Management The diversiication in above mentioned theories makes it complicated for researchers to rely on. None of the above theories provide the researcher with a robust foundation and supporting ground on SSCM. This is mainly because SSCM itself involves a diverse range of issues that makes it hard to be examined from only one perspective. THE NETWORK-BASED COLLABORATIVE APPROACH This study aims to propose a primary framework through the Networkbased approach, which might set a foundation for building a rational framework to explain how the government can play a proactive and collaborative role in line with sustainable SSCM. Government agencies are one of the most inluential institutional elements of a society, with the potential for diverse partnerships across communities and networks, and enough lexibility to bring about transformational change in the society and businesses. Network-based collaborative interaction is deined as an approach which focuses on innovation as an eficient mechanism to harness the resources and capabilities of external communities and networks to boost transformation pace and outcomes (Nambisan, 2008). It bears four groundbuilding centre points as follow: 1. A communal set of purposes and goals that work as a bond to stick the network components together. It also determines the direction for members of interest. 2. A shared mind-set and awareness that enable diverse members of the network to experience a convergent dynamic external context in a very reliable way. 3. Socially knowledge creation that stresses on building novel knowledge base through interactive communication and diffusion among community members. 4. Structure of collaboration and participation that gears the governance mechanism for proactive contribution of members in a rewarding manner that builds an adequate ground for synchronization, integration and synergy across the network. 171 Achieving Sustainable Supply Chain through the Creation of Economic Growth DISCUSSION Based on above mentioned principles, the current study developed distinctive categories for evaluation of possible governmental role in SSCM. They are: •฀ Government as a collaboration integrator •฀ Government as a collaboration seeker •฀ Government as a collaboration champion •฀ Government as a collaboration facilitator As an integrator and seeker, the government could play a proactive role in engaging external partners, and to turn external collaborative schemes into innovative programs. The government could play a more supportive role as a champion or facilitator, discovering common foundation for diverse societies and beneiciaries to generate public good, outside the current services and initiatives. The government could take up the works of IBM, 3M, Boeing, p&G฀as฀role฀models฀on฀collaboration฀practices.฀Different฀approaches฀to฀ collaborative interaction also have implications on necessity for different types of collaborative capabilities and foundation. There are four set of competencies that government agencies might require to be equipped with: •฀ A dynamic, open, and collaborative organizational culture and mindset. •฀ The transformational leadership capabilities •฀ The dynamic organizational structure •฀ Success metrics This study proposes below given framework, for possible collaborative roles of government on SSCM (Table 10.1). 172 The Role of Government to Stimulate Sustainable Supply Chain Management Table10.1 Proposed Collaborative roles of government in SSCM Context Network Government-Led Community- Led Emergent Context (new SSCM) Government as Collaboration Seeker Government as Collaboration Champion Established Context (existing SSCM) Government as Collaboration Integrator Government as Collaboration Facilitator Each of those four roles mentioned above (Table1), emphasizes on partnership development with diverse external bodies, diverse collaboration, and different collaborative outcomes that could lead to SSCM. This is a near possibility, due to the collaboration between market players, working together with shared goals and understandings, dynamic and participative structure, and conducive infrastructure. The above table suggests how the government should act under different contexts, to effectively enable society and market actors to generate and deliver more sustainable values while guaranteeing their survival. It should be noted that the concept of ‘Sharing is Caring’ and also “Share more, Gain more’, would be the core and stimuli of this notion. RECOMMENDATION FOR FUTURE STUDIES It is recommended for future studies to focus on elaboration of concepts proposed in this chapter, on the governmental role in SSCM. The limitation of current study with empirical research, suggests the operationalization and testing of proposed concepts for consistency and applicability. It is also suggested that the role of the government in SSCM to be examined in different contexts. 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Measuring Social Capital: Towards a Theoretically Informed Measurement Framework for Researching Social Capital in Family and Community Life, Research Paper No. 24, Melbourne: Australian Institute of Family Studies. Welford,฀R.฀,&฀Frost,฀S.฀(2006).฀Corporate฀Social฀Responsibility฀in฀Asian฀Supply฀ Chains, Corporate Social Responsibility and Environmental Management, 13, 166-176. Williamson, O. E. (2010). Transaction Cost Economics: The Natural Progression, Journal of Retailing, 83(3), 215-226. Zhu,฀Q.฀,&฀Sarkis,฀J.฀(2007).฀the฀Moderating฀Effects฀of฀Institutional฀pressures฀ on Emergent Green Supply Chain Practices and Performance, International Journal of Production Research, 45(18), 4333-4355. 175 Achieving Sustainable Supply Chain through the Creation of Economic Growth Zhu,฀Q.,฀Sarkis,฀J.฀,&฀Geng,฀Y.฀(2005).฀Green฀Supply฀Chain฀Management฀in฀China:฀ Pressures, Practices and Performance, International Journal of Operations and Production Management, 25(5/6), 449-468. 176 Chapter 11 Assessing the Effect of Environmental Practices on the Firms Financial Performance Tze San Ong*, Sayed Yoused Sheikh Abou Masoudi, and Yee Woon Ang INTRODUCTION An increasing awareness of the various environmental and social problems of stakeholders has led a shift in the way corporations and consumers go about their business routines. There has been a change in attitudes towards a greener lifestyle, and particularly to reducing negative impacts on the environment. Corporations need sustainable business practices in order to stay competitive. According to World Commission on Environment and Development (WCED, 1987), sustainability is deined as fulilling the current needs without destroying our future generation’s needs. The commission is said to be the irst major international effort to raise public awareness of the destructive effects of human activities on society and the environment and the risks in losing nature. The Commission has established a link between the economy, the society, and the environment, and has shown that healthy social and environmental systems are required to sustain economic growth (CGA, 2005). Thus, to be a sustainable organisation, engagement in sustainability development should be included in an organisation’s future plans or as a strategy to maintain competitiveness. It concerns not only the quality of future global environment, but can also be viewed as a business *Corresponding Author: Assoc. Prof. Dr. Ong Tze San (tzesan@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth opportunity and investment in the future so as to gain business competitive advantages (Cowan et. al., 2010). The concept of sustainability involves everything from biology to business, and it overlaps with corporate social responsibility (CSR) not only in preserving natural resources, but also focuses on future living standards. Sustainability has been a key issue for many corporations from “green” manufacturing to sustainability initiatives (Reilly and Weirup, 2012). The challenge for corporations, however, is to ind ways to close the gap between their stated sustainability principles and their actions towards long-term and short beneits (Park et. al., 2009). According to a survey report from the Economist Intelligence Unit (2010)1, which was based on over 200 senior executives in the areas of sustainability, corporate social responsibility and inance, 87% of the respondents agreed that sustainability will become more important over the next three years. 46% of those respondents agreed that sustainability represents a risk, but others see opportunity arising from sustainability. In this report, managerial executives have given their opinions on sustainability, such as Ming Long, CFO of Investa, a privately owned Australian real estate investment irm, who stated that sustainability practices could bring competitive advantages over other players; and Wim Bartels, the global head of Sustainability Services at KPMG in the Netherlands, who even predicted that some companies will disappear if they do not practice sustainability as part of their strategies. We can see from our results and the opinions of the senior executives the importance and attraction of sustainability to companies. Sustainable actions can not only generate an organisation’s revenue from new products, services and markets, but also control the cost for resource eficiency, build trust by enhancing brand value among stakeholders, and help organisations avoid safety and environmental incidents by complying with regulations (Accenture and CIMA, 2011). For example, managing carbon emissions would link to cost reductions 1 Report namely ‘Managing for Sustainability’ discusses why irms are adopting sustainable practices, how corporate social responsibility is embedded into companies’ businesses, and how the companies measure and report their success. 178 Assessing the Effect of Environmental Practices on the Firms Financial Performance through increased resource eficiency. In addition, sustainability activities could also protect the reputation or enhance the corporate image, satisfy pressure from the community, consumers, and stakeholders, and fulil societal expectations (Cowan et. al., 2010). Dummett (2006) stated that the customer base of an individual business or industrial sector is greatly inluential over the degree to which a company initiates sustainability activities. The more organisations engaged in sustainability development, the greater the competitive advantage gained in the industry. It must be noted that many leading companies such as Citigroup, GE have already foreseen the opportunities in implementing sustainability in their corporate strategy and this leading trend will later spread to other companies, even to the smaller companies and to other developing countries. According to Eccles et. al. (2013), companies that voluntarily adopt a sustainable business culture over many years have signiicantly outperformed their counterparts in terms of the stock market and accounting performance over the long term. Sustainability does not only bring cost-related advantages and market advantages, but it could also bring reputational advantages to organisations (Grieg-Gran, 2002). Since the introduction of CSR framework in September 2006 by Bursa Malaysia, more and more Malaysian companies have engaged in, or are performing, some level of sustainability activities, through meeting compliance requirements, volunteering for relief efforts, and donating money, amongst other things; however, the formal reporting of these sustainability activities is still very low (Teh et. al., 2012). In addition, many companies are not actively engaged in corporate sustainability efforts due to their lack of understanding of sustainability. This passive involvement is also caused by a lack of empirical and convincing evidence about the beneits of sustainability development. For example, Yang et. al. (2011) found that the direct consequences of environmental management practices on market and inancial performance are negative. This preliminary study therefore aims to investigate the relationship between environmental involvement and inancial performance at corporate level. 179 Achieving Sustainable Supply Chain through the Creation of Economic Growth ENVIRONMENTAL SUSTAINABILITY According to Moldan et. al. (2012), environmental sustainability was originally referred to as “environmentally responsible development” (World Bank, 1992), then “environmentally sustainable development” (Serageldin and Streeter, 1993), until most recently the environmental sustainability concept was developed (Goodland, 1995). Goodland (1995) deined environmental sustainability as something that “seeks to improve human welfare by protecting the sources of raw materials used for human needs and ensuring that the sinks for human wastes are not exceeded, in order to prevent harm to humans”. Sutton (2004) described it as “the ability to maintain the qualities that are valued in the physical environment”. The Organisation for Economic Co-operation and Development, OECD (2001) deined environmental sustainability under four speciic criteria: regeneration (renewable resources shall be used eficiently and their use shall not be permitted to exceed their long-term rates of natural regeneration), substitutability (non-renewable resources shall be used eficiently and their use is limited to levels which can be offset by substitution by renewable resources or other forms of capital), assimilation (releases of hazardous or polluting substances to the environment shall not exceed its ability to assimilate, and avoiding irreversibility (irreversible adverse effects of human activities on ecosystems, biogeochemical, and hydrological cycles should be avoided). The environmental dimension focuses on impacts on natural systems, such as land, water, air and ecosystems. It describes a company’s effects on the physical environment that could be the most visible to consumers (McGinn, 2009). Examples include energy input, air emissions, greenhouse gas emissions, land and ecosystem use, incidence reporting, and regulatory compliance (Reilly and Weirup, 2012). Environmental sustainability varies across an extensive range of organisations, “from heavily natural-resource-based organisations to banks and less natural-resource-intensive organisations” (IMA, 2008). Some organisations may appoint environmental management consultants to carry out environmental assessments; while some organisations may have their own staffs for such assessments. ISO 14001 Environmental 180 Assessing the Effect of Environmental Practices on the Firms Financial Performance Management System Standard may be a good framework to model an environmental assessment (IMA, 2008). IMA proposed environmental performance indicators such as the selection of raw materials; creation of planned waste streams and unplanned waste and by-products; the impact of processes and indirect materials being used on employee health and the workplace; cost avoidance in areas such as the internal costs of managing toxic materials; reducing waste levels and other similar environmental aspects. ENVIRONMENTAL PRACTICES AND FINANCIAL PERFORMANCE From the company perspectives, in order to convince the corporations to engage in environmental practices as well as environmental disclosure, it is necessary to foresee the beneits of the activities. For example, both industrial managers and political decision makers are increasingly more concern on the relationship between environmental disclosure and company performance (Walls et. al., 2012). Yang et. al. (2011) found that the direct consequences of environmental management practices on market and inancial performance are negative. However,฀ environment฀ management฀ practices฀ are฀ positively฀ inluence฀ environmental performance which in turn positively inluence market and inancial performance of a corporation. This indicates that environmental management practice has indirect relationship with the inancial performance. The indirect positive consequences of environmental management practices require a longer period to realize, while the negative consequences are more short term in nature. Singal (2013) in a similar note agreed that positive impact of environmental disclosure needs a longer time to realize since the study found that current period’s inancial strength is signiicantly inluenced by the previous year’s environmental disclosure which means that the investment in the environment brings a positive impact on the next period’s credit rating. Flammer (2012) had investigated whether shareholders are sensitive to corporations’ environmental disclosure. The results showed that the shareholders react positively to the disclosure of eco-friendly initiatives, but react negatively to the disclosure of eco-harmful behavior. There is 181 Achieving Sustainable Supply Chain through the Creation of Economic Growth a signiicant stock price increase for the corporation that is reported to behave responsibly towards environment, whereas companies that are irresponsible towards the environment experience a signiicant stock price decrease. A research by Chen et. al. (2014) showed that environmental disclosure has a strong and positive correlation with sales growth. This shows the importance of announcing suficient environmental information to public in order to improve the relationship with stakeholders. By disclosing suficient environment information, public may have the tendency to increase a market acceptance for products and then increase sales growth. Besides that, the research also found that environmental disclosure has positive correlations with product innovations. This indicates that corporation should put environmental consideration at the research and design stage to improve product innovation and to gain or retain a competitive advantage for the corporation. There is a mix of indings on the relationship between environmental฀ disclosure฀ and฀ inancial฀ performance.฀ However,฀ most฀ of฀ the indings found that environmental disclosure will help the organization in gaining competitive advantage in long term. DATA AND SAMPLE The study sample of 78 listed companies was drawn from the top 100 companies, based on their market capitalisation, listed on the stock exchange of Malaysia, Bursa Malaysia, as at 27th of May, 2013. The top 100 companies were selected for this study due to the expectation that they would have more advanced information on the sustainability reporting. The study covers a period of 5 years, from 2008 to 2012. Although this population is clearly biased towards the largest irms, this was not deemed to be a problem as there was ample evidence that environmental performance varies considerably among the largest irms. The main source of information was based on annual reports (Chairman’s letter, Mission Statement, Director’s report, Operations Review and Other) and sustainability reports from the respective companies listed in Bursa Malaysia. In addition, environmental policy and environmental audit are under environmental sub-themes. Environmental policy is the 182 Assessing the Effect of Environmental Practices on the Firms Financial Performance speciic environmental procedures that set by the companies to address environmental issues while environmental audit is the evaluation performed by companies to identify the environmental compliance. For the measurement of the quantity of environmental disclosure, the company’s annual report was obtained from the websites. Then, all these documents are scrutinized to check if there is any environmental information existing by referring to the GRI guidelines. In term of examining the quality of the environmental disclosure, an environmental disclosure score checklist is adapted from Sulaiman et. al. (2014) as presented in Appendix II. If an indicator was disseminated completely, it received a score of 1. In contrary, if no information relating to that particular indicator, the undisclosed indicator was numbered with a value of 0. After that, all points obtained were summed to determine the quality of environmental disclosure of a company. VARIABLES According to Reilly and Weirup (2012), one key non-inancial metric is the ability to meet sustainability needs without harming the ability of future generations฀to฀meet฀those฀same฀needs.฀Hence,฀the฀independent฀variables฀ in this study are environmental performance aspects, which are guided by Global Reporting Initiatives (GRI, 2011) guidelines. While assessing the organisational outcomes, inancial performance is only one element in determining a irm’s effectiveness (Kanter, 2009; Senge et. al., 2008), and multiple measures may be required to evaluate overall corporate performance. The dependent variable is therefore inancial performance, which is measured by ROA and ROE ratios. CATEGORIES OF ENVIRONMENTAL PRACTICES In this study, there are four groups of environmental practices based on GRI, as below: E1 – Materials, Energy, and Water; E2 – Biodiversity; E3 – Emissions, Efluents, and Waste; and E4 – Others (Products and services, Compliance, Transport, and Overall) 183 Achieving Sustainable Supply Chain through the Creation of Economic Growth RETURN ON TOTAL ASSETS (ROA) The return on total assets (ROA) measures the overall effectiveness of management in generating proits with their available assets. The higher the irm’s return on total assets, the better the irm is. ROA is calculated as Earnings available for common stakeholder Total assets RETURN ON EQUITY (ROE) Return on Equity (ROE) is a measure of overall irm performance. It compares net proit after taxes (minus preferred stock dividends, if any) to the equity that shareholders have invested in the irm, that is, Net proit after taxes Shareholders’ equity This ratio tells us the earning power of shareholder book value investments, and is frequently used in comparing two or more irms in one industry. A high return on equity often relects the irm’s acceptance of strong investment opportunities and effective expense management. However,฀if฀the฀irm฀has฀chosen฀to฀employ฀a฀level฀of฀debt฀that฀is฀high฀by฀ industry standards, a high ROE might simply be the result of assuming excessive inancial risk. To investigate the return more fully, a Du Pont approach is therefore utilised. This approach breaks down into components as below. Net proit after taxes Net proit after taxes = Shareholders equity Net sales x Net sales Total assets x Total assets Shareholders equity This Du Pont approach to ROE helps to explain “why” a irm’s ROE is less or greater than the industry’s ROE. 184 Assessing the Effect of Environmental Practices on the Firms Financial Performance HYPOTHESES H01 : There is a signiicant relationship between environmental practices and ROA H02 : There is a signiicant relationship between environmental practices and ROE RESULTS The 78 listed companies in 10 different sectors (shown in Table 11.1), were studied through their annual reports, and sustainability reports. The trading/services sector accounted for the highest percentage in this study, that is 32.05%, followed by plantations, consumer products and inance sections; which are more than 10%; while others are more than 5%, except for the hotel sector, which only accounted for 1.3%. Table 11.1 Total number of companies from each sector Sector Number of Companies Percentage (%) Construction 5 6.40 Consumer Products 11 14.10 Finance 13 16.67 Hotel 1 1.30 Industrial Products 5 6.41 Infrastructure 4 5.12 Plantation 8 10.25 Properties 6 7.70 Trading / Services 25 32.05 Total 78 100.00 SUMMARY OF DESCRIPTIVE STATISTICS The results of the descriptive statistics for the variables are presented in Table 11.2. From the descriptive analysis, the mean value for E1 (Materials, Energy and Water) is 157.37. This indicates that the average number of words written under variable E1 is 157.37 words, and so for the other variables. 185 Achieving Sustainable Supply Chain through the Creation of Economic Growth As shown in Table 2, the standard deviation for E1 is 319.23, and the variance is 101908.01. This is the dispersion for distribution of each E1 for the period of ive years, and it also shows that E1 has a variation or spread of 319.23 in the normal distribution. Table 11.2 Descriptive statistics for the variables Variables Mean Median Standard Deviation Variance ROA 0.08 0.07 0.09 0.01 ROE 0.17 0.14 0.28 0.08 E1 157.37 43.00 319.23 101908.01 E2 221.79 19.00 751.40 564593.85 E3 230.23 65.50 536.22 287531.31 E4 102.76 0.00 349.47 122126.23 RELIABILITY TEST All collected data has been subjected to a reliability test. The Cronbach’s Alpha coeficient for all the independent variables is 0.79, which is considered reliable with a relatively high degree of internal consistency (Table 11.3). Table 11.3 Reliability Test E1 E2 E3 E4 Scale Mean if item Deleted Scale Variance if item Deleted Corrected item-Total correlation Cronbach’s Alpha if item Deleted 2713.40 2648.98 2640.54 2768.01 1.39 1.29 1.29 1.44 0.71 0.41 0.64 0.43 0.77 0.78 0.76 0.79 Cronbach’s Alpha= 0.792(No. of item =4) 186 Assessing the Effect of Environmental Practices on the Firms Financial Performance RESULTS OF MULTIPLE REGRESSION ANALYSIS Relationship between Environmental Practices and ROA When ROA is regressed against environmental performance indicators (based on Table 11.4), it produces an F-Statistic value of 3.02, which indicates that the result is valid at the signiicance level of 0.05. Three per cent of the variation in ROA is explained by the variation in all the independent variables as indicated by the R-squared. Among the four environmental performance indicators, only E1 and E4 have a signiicant relationship with ROA. Their p-values are respectively 0.000 and 0.01 which are lower than the signiicance level of 0.05. The estimated coeficient of 0.01 indicates that E1 is positively associated with ROA; while -0.04 indicates that E4 is negatively associated with ROA. Therefore, we reject the null hypothesis and stated that there is a signiicant impact of E1 and E4 on ROA. Table 11.4 Regression Analysis of Environmental Performance and ROA Parameter Estimate Std. Error df t Sig. 95% Conidence Interval Lower Bound Intercept 7.509388 .496551 390 15.123 E1 .006159 .002099 390 2.935 E2 -.001201 .000969 390 E3 .000390 .001740 E4 -.004389 .001725 Upper Bound .000 6.533137 8.485639 .002033 .010285 -1.240 .216 -.003106 .000704 390 .224 .823 -.003030 .003811 390 -2.544 a. Dependent Variable: Return on Assets R2 = 0.03; Adjusted R2 = 0.02 F-STAT = 3.02 187 .004 .011 -.007780 -.000997 Achieving Sustainable Supply Chain through the Creation of Economic Growth Relationship between Environmental Performance and ROE In Table 11.5, the F-Statistic shows the value of 3.30, indicating that the estimated regression is valid and is statistically signiicant at the signiicance level of 0.05. The R-squared is only at the value of 0.03, which indicates a very weak relationship between such independent variables and ROE. The regression results show that E1 and E4 are signiicant at the level of 0.05. This implies that E1 and E4 can signiicantly affect corporate inancial performance. E1 is positively correlated with ROE at the estimated coeficient of 0.02, and E4 has a negative relationship with ROE at the coeficient of -0.01. Thus, we reject the null hypothesis and state that E1 and E4 have an impact on ROE. Table 11.5 Regression Analysis of Environmental Performance and ROE Parameter Estimate Std. Error df t Sig. 95% Conidence Interval Lower Bound Intercept Upper Bound 15.619532 1.544578 390 10.112 .000 12.582790 18.656274 E1 .019488 .006528 390 2.985 .003 .006653 .032323 E2 -.005408 .003014 390 -1.794 0.74 -.011333 .000517 E3 .003733 .005412 390 .690 .491 -.006907 .014373 E4 -.010823 .005366 390 -2.017 .044 -.021373 -.000273 a. Dependent Variable: Return on Assets R2 = 0.03; Adjusted R2 = 0.02 F-STAT = 3.30 DISCUSSION AND CONCLUSION This study explores the impact of environmental practices on the inancial performance of publically listed companies in Malaysia. It also attempts to examine company awareness of sustainability reporting. The results of this study suggest that it does indeed beneit a company to be green. When environmental performance is individually regressed with inancial 188 Assessing the Effect of Environmental Practices on the Firms Financial Performance performance, we found that materials, energy, and water (E1), other environmental aspects (E4), local communities (S3), and other social aspects (S4) have effects on both ROA and ROE. In this study, there is a positive correlation between eficiency used towards natural resources (E1) and inancial performance (both ROA and ROE). This is mainly due to cost saving and reductions that would directly increase the proitability of the company. This is consistent with the research of Vijfvinkel et al. (2011), which stated that policies on materials reuse is positively related to proit development. When companies advocate material reuse, energy eficiency and water re-usage policies, which stress the reuse/recycling of input materials, reducing the consumption of energy, promoting energy saving, providing more renewable energy products, and recycling water sources, this in turn reduces the costs and increases the proitability of companies. On the other hand, E4 was found to be negative predictor for ROA and ROE. This is a result of compliances that are required by environmental laws and regulations, which increase the cost of companies, and thus decrease their proit. When companies are mitigating the environmental impact of products and services, they may need a lot of research and development, which will subsequently increase expenses, and reduce the return฀on฀the฀assets฀and฀equities.฀However,฀our฀study฀is฀not฀consistent฀with฀ that of Russo and Fouts (1997). As well as the variables that are signiicant to both ROA and ROE, there are variables that are not signiicant. Our results suggest that emissions, efluents and waste (E3) do not have a signiicant relationship with inancial฀performance,฀which฀is฀not฀consistent฀with฀the฀study฀by฀Hart฀and฀ Ahuja (1996) where a positive relationship between emissions reduction and ROA, and ROE was found. It stated that there would be an increase in corporate ROA and ROE after efforts to prevent pollution through emissions reduction within one to two years of initiation. A negative relationship between the emission index and inancial performance was also found in studies by Jaggi et. al. (1992), and Cordeiro and Sarkis (1997).฀However,฀our฀indings฀were฀consistent฀with฀those฀of฀a฀study฀by฀ Aragon-Correa and Rubio-Lopez (2007), where no signiicant relationship between emissions and inancial performance was found. 189 Achieving Sustainable Supply Chain through the Creation of Economic Growth Additionally, E2 is found to be of no signiicant relationship between ROA and ROE in this study. One possible reason could be due to the fact that the companies studied are not engaged in biodiversity activities. Environmental disclosures are still in a stage of immaturity because Bursa Malaysia’s requirement for reporting corporate sustainability has only been effective since 2006. This study has added to the environmental reporting literature by providing empirical results from the perspective of Malaysian listed companies. The indings of the study show that Malaysia, as a developing country, reported the increasing number of environmental reporting over the past few years. Although careful attention was given to the methods of data collection and analysis, there are many other factors that affect the inancial performance of a irm, which should also be acknowledged. In this study, we have only focused on the impact of environmental practices on corporate inancial performance, other macro-factors such as the economic conditions, business environmental factors and the like are not considered during the period of the study. Since environmental activities are categorized into four variables in this study, perhaps future researchers could relate all the variables and the inancial performance to see more in-depth relationships between them. Financial performance indicators such as the current ratio and other proitability ratios could be considered, rather than the variables studied in this research. Future researchers may conduct studies starting from the year 2010 instead of considering earlier periods, because sustainability issues are still new to Malaysian companies, and the inancial crises of 2008-2009 may affect study results. Period of study should be extended to 2014 to relect the most recent development. 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Yang,฀M.฀G.฀M.,฀Hong,฀p.,฀&฀Modi,฀S.฀B.฀(2011).฀Impact฀Of฀Lean฀Manufacturing฀ And Environmental Management On Business Performance: An Empirical Study Of Manufacturing Firms, International Journal of Production Economics, 129(2), 251-261. 194 Chapter 12 Environmental Collaboration as Environmental Capabilities and its Relationship with Environmental Innovation and Firm Performance Lee Ah Suat, OngTze San*, and Ridzwana Mohd Said INTRODUCTION Financial performance of business organisations is increasingly affected by the societal needs to protect the natural environment. It is crucial for irms to stay proitable while implementing environmental protection practices. In response, irms seek to improve innovation from their environmental practices฀in฀order฀to฀remain฀competitive฀(Hart,฀1995;฀porter฀and฀Van,฀1995).฀ Innovation functions as a dominant predictor of irms’ proitability, growth and sustainable value creation. Firms equipped with superior innovation performance are more likely to achieve continuous improvements; engage in healthy competition through new products and new processes. Similarly, when faced with environmental and social challenges, these irms are more likely to ind solutions to sustainability challenges through their innovation capabilities (Googins and Escudero, 2014). Nevertheless, the potential for improving environmental innovation is often constrained by the irm’s strategic approach towards environmental efforts. Traditionally, scholars from the win–win paradigm of environmental management argue for two forms of environmental derived beneits: (1) resource productivity through reduction of waste and resource usage improvement; and (2) improved environmental reputation as a result of corporate responsibility and legitimacy. Both pathways offer sources of competitive *Corresponding Author: Assoc. Prof. Dr. Ong Tze San (tzesan@upm.edu.my) Achieving Sustainable Supply Chain through the Creation of Economic Growth advantage,฀either฀in฀terms฀of฀lower฀cost฀or฀differentiation.฀However,฀such฀ environmental approaches are lacked of strategic emphasis to derive innovation from irm’s environmental practices. From an environmental perspective, innovation takes a dominant role in solving environmental issues, likewise from business perspective, innovation serves as a robust predictor of a irm’s success. Thus, without leveraging on environmental strategies as sources of innovation, companies are missing the full potential of environmental strategies for their competitiveness. Scholars calls for redirecting organisational approach to corporate sustainability from corporate responsibility oriented, business case oriented, to shared value creation oriented (Googins and Escudero, 2014; Porter and Kramer, 2011; Sloan, 2009).Porter and Kramer (2011)argue on the importance of viewing sustainability as shared value creation between the irm and the society. Engaging members of the society in the organisation value creation activities offer great potential for businesses to ind solutions to social and environmental problems while creating value฀beneiting฀both฀society฀as฀well฀as฀businesses(Hart,฀1995;฀Googins฀ and Escudero, 2014; Porter and Kramer, 2011; Sloan, 2009). Similarly, (Googins and Escudero, 2014) propose the concept of shared innovation as corporate approach to solve environmental challenges through involving stakeholders฀ as฀ active฀ collaborators฀ and฀ partners.฀ Hart฀ (1995)฀ stresses฀ the role of stakeholders’ participation as the pre-requisite condition for implementing a product stewardship strategy or sustainable development strategy. In sum, stakeholders are the best informants about the social and environmental demand on irms’ new products and services as well as a great source to rely on for insights on social and environmental issues. Adopting a strategic lens of shared value creation through innovation allows irms to integrate closely their business values with the environmental strategies. LITERATURE REVIEW Firm Performance Findings of a meta study by (Albertini, 2013) have concluded empirical studies relating to environmental practices and irm performance have largely conceptualised inancial performance as the proxy of irm 196 Environmental Collaboration as Environmental Capabilities performance. Financial performance is deined as “the economic outcomes resulting from the interplay among an organisation’s attributes, actions and environment”(Combset.al.,2005).Financial performance is a construct with focus on irm’s proitability that can be assessed using accounting returns, growth, and stock market performance. Following extant environmental management literature, this research examines inancial performance in terms of accounting returns represented by return on assets, return on sales, and return on investment. Environmental Innovation Environmental innovation is deined as the implementation of new product, processes, or methods on the basis of reduced negative environmental impact, aim to better satisfy users’ needs, and therefore leading to improve competitiveness (Cheng and Shiu, 2012; OECD, 2005; Schiederig et.al., 2012). The focus is on two major concepts of innovation which are closely related to organizational capabilities: product innovation and process innovation. Environmental product innovation refers to the introduction of a product or services that are new or have been signiicantly improved with respect to their characteristics or intended uses (OECD, 2005) aim at reducing adverse environmental impact associated with products use. Environmental product innovation involves improvements to irm’s existing products or development of new eco-products (Cheng and Shiu, 2012). Environmental process innovation refers to the implementation of a new or signiicantly improved production or delivery method aim at reducing harmful environmental impact during manufacturing processes which are observable by three indicators: new or signiicant changes in techniques, equipment and software (OECD, 2005). Environmental process innovation implementation brings about improvements of current processes or the addition of processes to reduce environmental impact (Cheng and Shiu, 2012). Environmental Collaboration Collaboration is deined as “a process through which parties who see different aspects of a problem can constructively explore their differences 197 Achieving Sustainable Supply Chain through the Creation of Economic Growth and search for solutions that go beyond their own limited vision of what is possible” (Gray, 1989, p.5). Attributes of a collaboration entails: an interdependent relationship between stakeholders, collective decision making,฀ joint฀ responsibility฀ for฀ results฀ (Hartman฀ et.al.,฀ 2002);฀ and฀ proactive cooperation among participants to explore new transformational solutions. Environmental collaboration is deined as the direct involvement of an organization with its suppliers and customers (Vachon and Klassen, 2008); the communities (Porter and Kramer, 2011) in planning jointly for environmental solutions including greener product design, process improvements and waste reduction in logistics activities (Vachon and Klassen, 2006). Environmental Collaboration with Suppliers, Customers and Consumers, and the Communities Environmental collaborations with three groups of stakeholders are highly important as sources of innovation and such relationships are represented by three variables: environmental collaboration with suppliers, environmental collaboration with customers and consumers; environmental collaboration with the communities. Environmental collaboration with suppliers refers to “working jointly with suppliers to set and achieve environmental goals that result in the reduction of the environmental impact of coordinated activities”(Green et.al., 2012; Vachon and Klassen, 2006) and environmental collaboration with customers and consumers refers to “working jointly with customers to set and achieve environmental goals that result in the reduction of the environmental impact of coordinated activities” (Green, et.al., 2012; Vachon and Klassen, 2006). Environmental collaboration with communities refers to irm’s efforts to work jointly with community cluster to strengthen their capabilities to set and achieve environmental goals that would contribute to reduction in environmental impact of the irm’s activities. Communities cluster include related business irms, academic institutions, trade associations, community groups and other relevant institutions. 198 Environmental Collaboration as Environmental Capabilities THEORETICAL FOUNDATIONS Environmental Collaboration as a Source of Environmental Capabilities The theoretical importance of environmental collaboration as a source of environmental capabilities is indicated by several streams of research. Stakeholder Theory Freeman (1984) stakeholders theory redirect attention of business managers from solely shareholders focused to other stakeholders including customers, suppliers, employees, local community organizations, environmentalists, consumers advocates, governments and others. The instrumental view of stakeholder engagement positspositive stakeholder relationship as means for an organisation to achieve its strategic outcomes (Donaldson and Preston, 1995; Jones, 1995). The superior form of stakeholders engagement aims at fostering stakeholders’ active participation฀(Sloan,฀2009).฀Svendsen฀(2005)฀&฀Laberge,฀(2005)฀advances฀ the idea of “stakeholder network”; the author argues for the importance of building a bilateral partnership between stakeholders and business that results in collective learning and joint action for innovation. Through environmental collaboration, stakeholders are connected in a network of knowledge, skills, and experiences that facilitates discovery of innovative solutions for complex issues beyond a single organisation.Thus strengthen irm’s environmental capabilities. Empirical study indicates improved environmental performance through proactive stakeholder engagement (Alt et.al., 2014). Green Supply Chain Management Paradigm Sustainable supply chain management (Carter and Rogers, 2008; Carter and Easton, 2011) argues for inclusion of environmental considerations in managing supply chain activities. Thus, broaden irm’s scope of environmental management to include environmental performance of their suppliers and customers. The green approach requires cooperation and collaborative efforts between manufacturers, suppliers, and customers in order to develop solutions for environmental issues at supply chain 199 Achieving Sustainable Supply Chain through the Creation of Economic Growth level (Gnoni et.al., 2011).Environmental collaboration aims to achieve improvements of products (Bowen et.al., 2001; Vachon and Klassen, 2008) and also on production processes (Vachon and Klassen, 2008) targeted at reduced environmental damages, thus contributes to enhanced environmental performance. The essence of environmental collaboration with the suppliers is the mutual readiness of suppliers to pool resources and the sharing of ideas and information towards a collective goal of environmental protection across the supply chain. This requires active interaction and commitment between the suppliers and the irm in planning and exploring environmental solutions on a collective basis. Similarly, manufacturers would need to work together with their customers to identify customers’ environmental needs, and to integrate those environmental requirements into their supplies to the customers. Such collaboration leads to enhancement of environmental performance, both for the irm and the customers. In sum, environmental collaboration plays an antecedent role to the monitoring of environmental performance of suppliers and customers฀ (Green฀ et.al.,฀ 2012)฀ Zelbst,฀ ฀ Bhadauria,฀ &฀ Meacham,฀ (2012)฀ and as a result, irms acquire environmental knowledge, information and skills that strengthen its environmental capabilities. Value Co-Creation Paradigm Value co-creation represents the joint, collaborative process between a company and its customers in generating values in business(Prahalad and Ramaswamy, 2000, 2003, 2004) both in terms of physical products as well as products’ symbolic values(Galvagno and Dalli, 2014), in order to achieve a shared goal (Witell et.al., 2011). Such engagement facilitates empowerment and sharing of experience (Prahalad and Ramaswamy, 2004) oriented at communities wellbeing. Environmental Collaboration with customers serves as a mechanism to involve customer experience individually or in groups as sources of value creation that enhance environmental protection. Firm advocating value co-creation concept, involves customers in the practice of co-design for sustainability, that integrates customers and users environmental knowledge and experience in the early design phases of product development (Sanders and Stappers, 200 Environmental Collaboration as Environmental Capabilities 2008; Witell et.al., 2011). Customers or users of products are given the role as ‘expert of his/her experience’ and play an important role in knowledge development, creation of new idea and concept development, and irms support the process of ideation and development by providing necessary resources (Sanders and Stappers, 2008). Co-design for sustainability enable irms to deploy its resources and skills to creation of new or improved products, and processes that are environmentally safe. In addition, environmental collaboration with customers enable irms to gain access to customers’ experiences related to: (1) the environmental impact associated with products use; and (2) how environmental features included in irm’s products complement or enhance products’ functionality. This information is highly market oriented. In sum, the richness and diversity of experiences derive from environmental collaboration with customers constitute irm’s environmental capabilities. Shared Value Creation Paradigm Literature in shared value paradigm (Googins and Escudero, 2014; Pitzer et.al., 2013;Porter and Kramer, 2011) supports the positive role of environmental collaboration with the communities in building irm’s environmental capabilities. The shared value concept proposed by (Porter and Kramer, 2011) suggests business is able to generate economic value through societal value creation by addressing the communities’ needs and challenges. One dominant strategy to achieve shared value is through building supportive industry clusters at the locality of company. Collaboration with the communities serves as a mechanism to involve local society knowledge and experiences’ expertise as sources of value creation that beneits the society. Members of community constitute an important group of stakeholders which is vital to the survival and success of corporation (Freeman, 1984), due to their possession of local environmental knowledge and expertise. Thus, irms’ environmental capabilities are strengthen via environmental collaboration with the communities. 201 Achieving Sustainable Supply Chain through the Creation of Economic Growth Environmental Collaboration as Sources of Environmental Innovation and Firm Performance The resource-based theory (Barney, 1991), the natural resource-based theory฀ (Hart฀ 1995),฀ relational฀ view฀ (Dyer฀ and฀ Singh,฀ 1998)฀ ฀ and฀ the฀ concept of resource Orchestration (Sirmon et.al., 2010) are the theoretical paradigms that support the positive role of environmental collaboration in fostering environmental innovation and also irm performance. NATURAL RESOURCE-BASED VIEW OF FIRM PERFORMANCE Environmental collaboration represents an organisational capability framed within the resource-based view (Barney, 1991) and the natural resourcebased฀view฀(Hart,฀1995)฀of฀the฀irm.฀Resource-based฀View฀(RBV)฀of฀irm฀ performance postulates irm’s competitive advantage and performance as highly depending on the resources and capabilities possess by the irm (Barney, 1991;Dierickx and Cool, 1989). When environmental strategies are able to create resources and capabilities equipped with the attributes of valuable (V), rare (R), in-imitable (I), non-substitutable (N) (Barney, 1991); and฀ socially฀ complex฀ and฀ path฀ dependent฀ on฀ its฀ creation฀ (Hart,฀ 1995),฀ these resources and capabilities lead to sustainable competitiveness in the form of above-normal rates of return (Barney, 1991). Further, the NRBV researchers฀(Hart,฀1995;฀Russo฀and฀Fouts฀1997;฀Sharma฀and฀Vredenburg,฀ 1998) argue on the emergence of valuable organizational capabilities as a result of adopting proactive environmental strategies. Literature shows that corporate environmental strategies are more likely to bring positive inancial performance when irms obtain green competencies (McEvily and Marcus, 2005; Marcus and Anderson, 2006). RELATIONAL VIEW The relational view advanced by (Dyer and Singh,1998) suggests interirm relationship as the source of competitive advantages or relational rent. Inter-irm collaborative interaction could result in knowledge sharing (Parmigiani and Rivera-Santos, 2011). Environmental collaboration establishes regular inter-organisational interaction leading to knowledge exchange, reconiguration and creation of new environmental knowledge 202 Environmental Collaboration as Environmental Capabilities that generate innovative solutions for environmental challenges. Collaborative interaction with stakeholders create relational space that are conducive for emergence of trust among the participating stakeholders (Bradbury et.al., 2010). Trust-based interaction facilitates participation and leads to information sharing, as well as collective learning, which are the important antecedents of irm’s innovation. Further, environmental collaboration represent irm’s absorptive capability as irms are able to assimilate and leverage on environmental knowledge from external stakeholders into innovation capabilities. Absorptive capacity is a key driver of irm’s innovation performance (Cohen and Levinthal, 1990); and is can be developed through inter-irm interaction process (Dyer and Singh, 1998). In sum, irms with high inter-irm knowledge sharing mechanisms are more likely to achieve relational rents, or competitive advantage through environmental innovation generated from inter-irms collaboration ties. RESOURCE ORCHESTRATION VIEW The concept of resource orchestration(Sirmon et.al., 2010) argues on the important role of management capabilities in selecting portfolio of resources, conigures resources into capabilities and deployment of resource in gaining a resource-based competitive advantage (Sirmon et.al., 2010). Environmental collaboration relects a process of resource coniguration and deployment process. The collaboration process facilitates coordinating of knowledge, skills and experiences derived from stakeholders’ participation for the purpose of environmental wellbeing. Management capabilities in resource coordination and deployment affect irm competitive advantage. HYPOTHESIS DEVELOPMENT Environmental Collaboration and Environmental Innovation Cooperation and interaction between a irm and its suppliers enable the irm to gain access to environmental knowledge and skills embedded across the supply chain activities. Effective environmental collaboration facilitates information exchange and technologies resource sharing between a irm 203 Achieving Sustainable Supply Chain through the Creation of Economic Growth and its suppliers(Vachon and Klassen, 2008), thus contributes to irm’s environmental capabilities to implement environmental solutions that required resources across the supply chain(Vachon and Klassen, 2006). Leveraging on supply chain based environmental solutions enlarge irm’s scope for environmental innovation. These irms gain better capability to (i) implement environmental product innovation in terms of new or improved products that are environmentally safe; (ii) implement environmental process innovations in terms of end-of-pipe pollution prevention technologies and also cleaner technologies aim at reducing harmful environmental impact during manufacturing processes. Thus, this research proposes the following hypothesis: H1a : Environmental collaboration with suppliers positively inluences irm’s environmental product innovation. H1b : Environmental collaboration with suppliers positively inluences irm’s environmental process innovation. Customer engagement results in improvements in irm’s innovation (Moreira and Silva, 2014; Prahalad and Ramaswamy; 2003, Witell et.al., 2011 ). Involving customers and consumers in the product development process enable irms to gain environmental knowledge and insights embedded within customers’ personal experiences associated with product use. Thusenable irms access to customers’ speciic environmental information which is highly market oriented. Such capabilities enhance irm’s capability to innovate in order to create new or improved products that better fulilled customers’ needs, yet environmentally safe. Empirical study by (Moreira and Silva, 2014) reported positive association between cooperation with customers and marketing innovation. Empirical study on this link is limited, thus, this research proposes the following hypothesis: H2a : Environmental collaboration consumerspositively inluences innovation. 204 with customers and environmental product Environmental Collaboration as Environmental Capabilities H2b : Environmental collaboration consumerspositively inluences innovation. with customers and environmental process The shared value concept proposed by (Porter and Kramer, 2011) argues that productivity and innovation of irms are greatly affected by the locality cluster or local communities where the irm operates. Environmental collaboration with the local communities represent irm’s efforts to strengthen the local clusters’ capabilities to search for innovative solutions for environmental challenges(Pitzer et.al., 2013). For example, joint research with local universities on environmental technologies project, sponsoring trade association on environmental issues, working with community groups on environmental issues and other forms of supports (Porter and Kramer, 2011). Consequentially, irms gain access to environmental related technologies, knowledge, information, skills, resources and infrastructure embedded within the communities. Thus, strengthen irm’s ability to create new or improved eco-products; and to implement improved eco-process. Empirical study on this link is sparse, thus, this research proposes the following hypothesis: H3a : Environmental collaboration with the communities positively inluences environmental product innovation. H3b : Environmental collaboration with the communities positively inluences environmental process innovation. ENVIRONMENTAL INNOVATION AND FIRM PERFORMANCE Environmental innovation is theorised as the key factor underpinning the positive link between proactive environmental practices and irm performance฀(Hart,฀1995;฀porter฀and฀Van,฀1995;฀Sharma฀and฀Vredenburg,฀ 1998). Environmental innovation contributes to improving inancial performance in two manners: (1) irms equipped with high level of environmental innovation are more likely to realize their competitive beneits in the form of innovative products, improved manufacturing and operational processes, and reduced operational costs (Ambec and 205 Achieving Sustainable Supply Chain through the Creation of Economic Growth Lanoie, 2008;Porter and Van, 1995); and (2) these irms can differentiate themselves from their competitors, gain external reputation and legitimacy, thereby increase their total revenues (Ambec and Lanoie, 2008; Porter and Van, 1995). Environmental innovation contributes to irm’s competitive advantage and irm performance as this capability is irm speciic, rare, valuable and dificult to be imitated by competitors (Barney,฀1991);฀socially฀complex฀and฀path฀dependent฀(Hart,฀1995,฀Sharma฀ and Vredenburg, 1998). Empirical studies support the positive role of environmental innovation on irm performance. Environmental product innovation (Chen et.al., 2006; Chiou et.al., 2011); environmental process innovation (Chen et.al., 2006; Chiou et.al., 2011)is reported to inluence irm’s competitive advantage positively. Similarly, environmental innovation is reported to be positively associated with irm’s turnover, and export (Rennings et.al., 2006); return on investment, proits, market share, and sales (Cheng et.al., 2014). Environmental process innovation is also conirmed to be positively associated with turnover (Rennings et.al., 2006); return on investment, proits, market share, and sales (Cheng et.al., 2014). Thus, this research proposes the following hypothesis: H4a : Environmental product innovation is positively related to irm’s inancial performance. H4b : Environmental process innovation is positively related to irm’s inancial performance. Figure 12.1 presents the conceptual relationship between environmental collaboration, environmental innovation and irm’s inancial performance. 206 Environmental Collaboration as Environmental Capabilities Environmental Collaboration with suppliers Environmental Collaboration with customers and consumers Environmental Collaboration with the communities H1a H1b H2a H2b Environmental Innovation •฀ Product innovation •฀ Process innovation H4a H4b Firm’s Financial Performance H3a H3b Figure 12.1 Conceptual framework CONCLUSION This research establishes the theoretical importance of environmental collaboration with diverse stakeholders including suppliers, customers and consumers, and the communities, as sources of irm’s environmental capabilities. An integrated view of the effects of environmental collaboration on irm’s innovation and performance is presented. The proposed conceptual model adds theoretical insights to the literature linking proactive environmental strategies and irm performance. In addition, insights on the role of environmental collaboration with different groups of stakeholders on irm’s innovation and performance are useful to businesses when deciding their environmental practices and policies. Further empirical testing is required to validate the theoretical model. ACKNOWLEDGMENT This work was supported by the Universiti Putra Malaysia [Project No: GP-IPS/2013/9392000]. 207 Achieving Sustainable Supply Chain through the Creation of Economic Growth REFERENCES Albertini, E. (2013). Does Environmental Management Improve Financial Performance? A Meta-Analytical Review, Organization , & Environment, 26(4), 431–457. 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She is currently an Associate Professor at Department of Management and Marketing and Deputy Dean (Research and Graduate Studies) in the Faculty of Economics and Management at Universiti฀putra฀Malaysia.฀She฀is฀also฀an฀associate฀researcher฀at฀Halal฀products฀Research฀ Institute.As an academician, Azmawani actively collaborates with the industry through her involvement as an advisor, assessor, and consultant. She was involved as consultant for the Ministry of Communication and Multimedia on Exploring New Wireless Sensor technology฀in฀traceability฀and฀tracking฀System฀towards฀Achieving฀total฀Halal฀Solution.฀ She is an oficial writer for Malaysian Productivity Corporation Business Excellence Award. Azmawani is currently a vice president for the Research and Education committee at฀ the฀ Malaysia฀ Franchise฀ Association฀ (MFA).฀ Her฀ involvement฀ with฀ MFA฀ includes฀ as฀ an evaluation panel and as a technical committee of the prestigious Malaysian Franchise Award for the franchise industry players. She has vast experience in teaching and training through her involvement as trainer with the industry.Azmawani is active in research and her ongoing research activities are in the areas of advanced manufacturing technology management, including the production of halal-related products, green supply chain, halal tourism supply chain management, and organizational culture. She has presented numerous academic papers at local and international conferences, and her work has been published in books, and local and ISI journals. She has also been invited as the keynote and lead speaker in conferences. She has been awarded with RUGS, GUPM, FRGS, and ERGS research grants as a lead researcher. She has also served as a reviewer for many local and international journals. She has regularly been invited as panel judges and as assessor for research฀grants฀by฀other฀higher฀learning฀institutions.฀฀Her฀paper฀published฀in฀the฀Leadership฀ &฀Organization฀Development฀Journal฀(a฀citation-indexed฀journal)฀has฀received฀recognition฀ from the Emerald library in 2009 as one of the top ten most-downloaded articles in the journal’s history. HOSSEIN฀NEZAKAtI (Ph.D.) is a Senior Lecturer at Department of Management and Marketing, Faculty of Economics and Management, University Putra Malaysia (UPM), Afiliated member of Graduate School of Management (GSM), Assistant Professor at Department of Business Administration, Faculty of Management, Central Tehran Branch, Islamic Azad University, Vice President of Academy for Global Business Advancement (AGBA – USA) for Iran and Committee Member of Case Writers’ Association of Malaysia (CWAM),฀Journal฀Reviewer฀of฀15฀International฀Journals.฀He฀specializes฀in฀international฀ business and marketing, Adviser of Command Board of more than 40 Top Trading and Manufacturing Companies, Market Analyzer for business initiating and market developing, Business and Marketing Plan Reviser, plan member of international conferences, Supervisor and committee member and juror of more than 130 dissertations and thesis. Index Accommodation 2, 17 Accounting 1-7 Authentic leadership 105-106 Autocratic leadership 105, 110-111 DJSI see Dow Jones Sustainability Indices Dow Jones Sustainability Indices 18, 77, 79, 86-87 Banking 2, 11, 20-22 Behavioral control 138 Business process excellence 3 Eco Options 23 -certiication schemes 41 -friendly hotel 40 Elaboration Like-hood Model 139 ELM see Elaboration Like-hood Model Employee environmental behavior 127 behavior 120-126 life cycle 119 Employees 118-119 End customer satisfaction 34 Environmental aspects 58 capabilities 195-212 collaboration 7, 195-212 degradation 131, 134, 144-145 deterioration 7-8 drawbacks 55 effects 2 friendly 37, 55, 83-84, 132, 137 impact 36, 56, 58, 197 nitiatives 119 innovation 195-212 movement 132-150 performance 44, 58-59, 81, 188 Change agents 78-79 Communities 198, 207 Consumer behavior 136-135, 137, 144 perspective 5-6, 33 purchase decisions 79 Consumers 54, 79, 134, 177, 198, 207 attitude 137 Corporate leaders 102 Social Responsibility 4, 23, 30, 32, 81, 87, 102-115, 178-179 sustainability 3, 75-78, 80, 88-89, 92, 196 CRM see Customer relationship management CSR see Corporate Social Responsibility Customer relationship management 87 Customers 22, 35, 40-42, 58, 116, 198, 207 Development 36 Achieving Sustainable Supply Chain through the Creation of Economic Growth performance standards 26 policies 120 pollution 56 practices 177-194 protection 40 risks 58 standards 41 sustainability 3, 7, 53-73, 86, 121, 180-181 Ethical leadership 105-106 External stakeholders 54, 154, 157 Finance 1-7 Financial performance 7, 181-182, 196-197 Firm performance 111, 195-212 Firm’s intention 102-115 sustainability commitment 6 inancial performance 177-194 Follower value 111 Food industry 79 Freight transport 3, 56-67 Game Theory 169 Global Reporting Initiative 76-77, 183 supply chain 37 warming 56, 132 Globalization 116 Government 6, 54, 116, 145, 163-176 Green behavior 5, 131-150 consumerism 134-135 consumers 134 consumption 135 employee empowerment 119 behavior 121-122 ive taxonomy outlines 121, 123-126 hotel 40 human resource management 4, 116130 image 78 logistics 56-58 management 31 marketing 40 performance 75 procurement 36 purchasing 79 retailing 79 Supply Chain Management 55, 67, 80, 86, 156, 166 Supply Chain Management Paradigm 199-200 GRI see Global Reporting Initiative Grocery retail industry 3, 74-101 GSCM see Green Supply Chain Management Hilton฀International฀39 Hospitality฀ industry 37 Sustainable Purchasing Consortium 37 Hotel฀industry฀2,฀11,฀17,฀30,฀35-43 Hotels฀2-3,฀17-19,฀29-52 HRM฀see฀Human฀resource฀ management HSpC฀see฀Hospitality฀Sustainable฀ Purchasing Consortium Human฀ health 36 resource 1-7, 120, 127 resource management 120, 122, 128, 157 sustainability 3-4 218 Index Inbound logistics 35-39 Industrial greening 75 Industry-wide index 37 Integrating operations 1-7 Issue-Contingent Model 142 Non-Governmental Organizations 54, 58, 116, 145, 151162 perspectives 6 Norm Activation Theory 138, 140 Job satisfaction 111-112 Operation 2, 23 Organizational effectiveness 112 environmental policies 120 performance 60-66 sustainability 156 Organizations 53, 79, 111, 116-130, 165 Outbound logistics 39-40 Leadership 103, 106 styles 102-115 styles 4 values 111 LightStay 39 Logistics 55, 56, 58-59 irms 67 management 60-66 sector 3, 53-73 Services Practices 67 LSPs see Logistics Services Practices Manufacturing industry 10, 33, 54, 56 Marketing 1-7, 40 Marriott International 37 Material reduction strategy 36 Moral intensity 143 Multiple Regression Analysis 187 Natural resource based view 202 Network perspective 170 -based collaborative approach 163176 NGOs perspectives see NonOrganizational Organizations perspectives NGOs see Non-Governmental Organizations Participative leadership 105 Perceived behavioral control 138 Performance evaluation 3 Principle Agent Theory 169 Procurement practices 36 Product supply chain 78 Production 36 Public 58 RBV see Resource Based View Theory Relational view 202-203 Reliability test 186 Resource Based View Theory 157, 159, 168169 orchestration view 203 Retail 2, 11, 17, 22-23, 33 Retailers 78-79, 83-84 Return on assets 111 219 Achieving Sustainable Supply Chain through the Creation of Economic Growth Equity 184, 188-190 Total Assets 184, 187, 189-190 Reverse logistics 42-43 ROA see Return on Total Assets ROE see Return on Equity Servant leadership 106, 110 Service industry 2, 8-28 Shared Value Creation Paradigm 201 Shareholder 181 theory 156 Small and Medium Enterprises 90 SMEs see Small and Medium Enterprises Social Network Theory 168 standards 41 Societal perspectives 2, 5, 7 SPM see Sustainability performance measurement SSCM see Sustainable Supply Chain Management Stakeholder theory 156, 199 Stakeholders 58, 76, 84, 110, 118, 151, 154, 159, 165, 177, 196, 207 Suppliers 36-37, 198, 200, 207 Supply chain 1-3, 10, 16, 18, 30, 3337, 54, 57, 77, 85 management 1, 9, 12, 14-17, 34-35, 56, 59, 60-66, 87, 152-154, 163, 166-168, 170 risk management 80 Sustainability 1-2, 5-7, 9-10, 14-17, 22-24, 31-32, 35, 37, 53, 59, 67, 74, 78-79, 86, 89, 91-92, 110, 116, 143144, 151-162, 165, 167, 178 consumption 5, 135-145 development 1, 7, 18, 24, 35, 54, 56, 74-75, 77, 133, 151 goals 37 indicators 77, 79-84, 88-89 integration System 22 measurement 3, 85-88 performance 24, 39 performance measurement 85 policies 54, 85 Sustainable activity model 117 business 116 consumption 131-150 environmental practices 116-130 irm 53 materials 37 supply chain 3-28, 86, 157 Supply Chain Foundation 32 Management 2-3, 9-10, 12-17 Research 1-7 System Theory 170 TBL see Triple Bottom Line TCE see Transaction Cost Economics Team performance 111 Theory of interpersonal Behavior 138, 141 Planned Behavior 137-138 Reason Action 137-138 Three tiers sustainability measurement 74-101 Ranking System 3, 90-91 Tourism 12 TPB see Theory of Planned Behavior TRA see Theory of Reason Action Transaction Cost Economics 168 220 Index Transactional leadership 104-105, 110-112 Transformational leadership 104, 110-112 Transportation 55-56, 58-59, 67 Triple Bottom Line 53-54, 67-68, 77, 80, 152 Value Co-Creation Paradigm 200-201 Visionary leadership 105, 110 Wholesale sectors 2, 11, 17, 22-23, 33 World environmental movement 132133 World travel Awards 40 221