Green project partnership in the supply chain: the case of the package printing industry

Journal of Cleaner Production 14 (2006) 661e671 www.elsevier.com/locate/jclepro

Green project partnership in the supply chain: the case of the package printing industry Stephan Vachon a,*, Robert D. Klassen b a

School of Business and Center for the Environment, Clarkson University, Potsdam, NY 13699, United States b Richard Ivey School of Business, University of Western Ontario, London, Ontario, N6A 3K7 Canada Available online 13 September 2005

Abstract By interacting with their suppliers and their customers, manufacturing organizations can potentially develop and implement more effective solutions to environmental challenges they are facing. This paper explores the outcome, in terms of operational performance, of green project partnership in the supply chain. Green project partnership, defined here as the degree of interaction between organizations in the supply chain regarding pollution prevention, can take place upstream with the suppliers and downstream with the customers. Using the data from a survey of the Canadian and United States package printing industry, the linkage between green project partnership and five performance indicators was tested. The results indicate that green project partnership with customers was positively linked to quality, flexibility and environmental performance while partnership with suppliers was associated with better delivery performance. Ó 2005 Elsevier Ltd. All rights reserved. Keywords: Supply chain management; Environmental management; Environmental technologies

1. Introduction As competition has intensified and globalized over the last decade, supply chain management has received greater attention by manufacturing organizations. Firms increasingly rely on their supply network to handle more complex technologies and higher customer expectations. Among these expectations, increasing attention is devoted to suppliers’ social responsibility with a particular focus on fair and legal use of natural resources. The importance of environmental issues has also increased with the active involvement of other important stakeholders, such as local communities and lobbying groups [1,2]. Furthermore, governments impose standards that set the lower boundary of customers’ expectations regarding environmental compliance. As such, greater * Corresponding author. Tel.: C1 315 268 3980; fax: C1 315 268 3810. E-mail addresses: [email protected] (S. Vachon), rklassen@ ivey.uwo.ca (R.D. Klassen). 0959-6526/$ - see front matter Ó 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.jclepro.2005.07.014

collaboration among the members of a supply chain might foster the development of improved environmental practices aimed at reducing pollution at the source through technological innovation or better resource management. However, several organizations favour off-the-shelf, less disruptive solutions suggesting more investment in end-of-pipe technologies, which keep their production process and products unchanged. For instance, Statistics Canada [3] revealed that the environment-related capital expenditures of Canadian plants were divided fairly equally between end-of-pipe technologies and integrated process technologies e defined as process modification and material substitution leading to reuse of waste and water in order to reduce emissions of pollutants and the amount of waste [3]. Furthermore, the same survey reported that of environment-related operating expenditures (in contrast to capital expenditures), end-of-pipe technologies are favoured three to one over integrated process technologies.

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One explanation for such behaviour may lie in the characteristics of supply chain management. Ashford [4] proposed that customers’ unwillingness to relax product specifications and lack of supplier resources and expertise can partly explain the bias toward end-of-pipe technologies. Other possible explanations can include resistance to change, incomplete understanding of the production process, and a lack of supply chain cooperation [5]. This paper examines the impact of environment-related interactions in the supply chain on operational performance. In particular, the paper assesses the impact of environment-related or green project partnerships on a plant’s cost, quality, delivery, flexibility and environmental performance. Green project partnership can be defined by the extent of interaction between a plant and its primary suppliers and major customers in developing and implementing pollution prevention technologies. The general premise of this paper is that a higher degree of green project partnerships in the supply chain is associated with improved operational performance. Such a theoretical premise is tested using data and observations from the package printing industry in Canada and the United States. There are five additional sections to this paper. An overview of the relevant and recent literature on environmental management in the supply chain is presented in Section 2. In Section 3, the link between green project partnerships and operational performance is established. In Section 4, the data collection and measurement methodology are discussed. In Section 5, empirical results are presented. Section 6 synthesizes the results and contrasts them with the existing literature. 2. Environmental management in the package printing industry Linking supply chain activities and environmental issues has been a topic of interest over the last decade. For example, in recent years, many manufacturing organizations have increased their interest in green purchasing [6], reverse logistics [7], product stewardship [8], and design-for-the-environment [9]. All these activities related to supply chain management occur across multiple organizations, whether upstream in the supply network or in the distribution channel, and influence the way manufacturing organizations address environmentally related issues. Thus, rather than considering an organization’s approach toward environmental management from an isolated perspective of a single manufacturer, explicit recognition of upstream and downstream interactions in the supply chain is needed [5,10].

of environmental technologies [11], often referred to by the dichotomy of pollution control vs. pollution prevention technologies [12]. The former mostly takes the form of ‘‘end-of-pipe’’ technologies and remediation projects, while the latter seeks to reduce or eliminate pollution at its source by modifying production processes or products. A third category of environmental technologies, often mixed with pollution prevention [13], comprises management techniques and procedures (e.g., ISO 14001 certified system). The last category named here, management systems, refers mainly to infrastructural aspects of production management as suggested by Wheelwright’s typology [14]. In the printing industry, the different environmental technologies available to plant managers can be classified using the same typology of pollution prevention, pollution control and management system. An example of pollution prevention would be enclosed doctor blades. These blades lower emissions from the production processes by systematically wiping off excess ink for immediate reuse during the printing job in the flexography process [15]. Other examples of pollution prevention technology include the covered ink pan in gravure printing that prevents premature evaporation of the ink during the printing process [16] and closed-loop solvent/alcohol recuperation systems, which distil and condense room emissions into reusable material in lithography [17]. Pollution prevention can also take the form of material substitution, exemplified by the transition toward water-based ink from solvent-based ink, or the use of alcohol-free ink solutions.1 Pollution control technologies take the form of filters and structural mechanisms to recoup and/or dispose of undesirable outputs from the production process. An example of pollution control would be a total enclosure area or clean room that maximizes the recovery and filtration of emissions [18]. Another example is the incorporation of oxidizers, which burn emissions in presses [19]. Finally, a wide range of management systems is proposed to reduce and control environmental issues within printing plants. Good inventory management of chemicals helps to reduce hazardous waste by decreasing the likelihood of material becoming obsolete [20]. Cleaning solvent can be reused in order to maximize its utilization (e.g., four-stage solvent life cycle) [21]. Scheduling darker printing jobs at the end of a sequence reduces the cleaning solvent needed between jobs and during setups [16]. From all these examples, it is noteworthy that an individual printing plant does not necessarily have all the needed

2.1. Environmental technologies 1

One way to characterize a manufacturing organization’s environmental management is through its selection

In Canada, isopropyl alcohol (a 100% VOC) has traditionally been used in fountain solution on offset presses, its replacement with alcohol substitute additive would be an example of pollution prevention.

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know-how to select and implement pollution preventive technologies. Also, printing plants planning structural change to products need to work closely with their customers to assure proper use and efficiency on the customers’ filling lines. Such interaction aimed at selecting and implementing a pollution preventive technology is termed, a ‘green project partnership.’

2.2. Green project partnership Practices that foster green project partnership include direct involvement of the suppliers or customers in the implementation of a new production process or in product modifications [22,23]. Therefore, green project partnerships imply different degrees of interaction between organizations in developing and implementing a new pollution preventive technology. They also comprise cooperation in reducing waste and energy use related to logistical activities [24]. As such, the development of partnership for environmental projects requires a mutual willingness to learn about each other’s operations in order to improve environmental performance through pollution preventive technologies [25]. One example of such a partnership is Flint Ink, an ink supplier (Concord, Ontario) and Tye-Sil (Montreal, Quebec), a large package printing company. They both worked together to develop a water-based ink alternative to reduce the VOC from the printing process.2 An example of partnership with a downstream customer is IKEA, the large Swedish retailer. Over the last decade, IKEA worked closely with printing organizations to move away from toluene-based ink and to be able to adopt water-based ink for the printing of their catalogues, which constituted, at that time, one of the largest printing jobs in the world [26].

3. Green project partnership and operational performance Several studies, particularly in strategic management, have linked supply chain management to operational performance using the resource-based view (RBV) of the firm as a theoretical lens [27]. The application of the RBV in the operations management literature is quite recent but can provide important insights [28]. An extension to environmental management, termed the natural-resource-based view (NBRV) of the firm [13], is used here to further support the theoretical link between green project partnerships and operational performance. 2 Source: www.cleanprint.org/cs/pressroom/flint-ink.html (as of October 3, 2004).

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3.1. Operational performance Supply chain management literature develops some performance metrics mainly based on cost, customer responsiveness and financial indicators [29,30]. However, most of the studies did not consider multi-echelon costs and responsiveness, concentrating instead on two consecutive echelons. It is noteworthy that most of the performance metrics are closely related to those widely accepted in the operations strategy literature. For example, Van Hoek [31] proposed measuring the suppliers’ contribution to the buying organization’s operational performance as an indicator of supply chain performance. Therefore, the set performance indicators examined in this paper are directly associated with manufacturing operations and the environment. There are four widely accepted manufacturing performance indicators: cost, quality, delivery and flexibility [14]. While cost is not an uncontested orderwinner, it remains important for manufacturing firms. Costs are reflected through direct material costs, labor and overall productivity, capacity utilization and inventory level. Quality, including the supplier’s involvement in continuous improvement and quality management systems [32], has also been an important metric in supply chain management. For example, Kekre et al. [33] argue that the number of suppliers is inversely correlated with product quality. Product reliability, conformance and durability are the dimensions of quality [34] examined in this paper. Delivery performance is generally divided into two sub-dimensions: speed and reliability [35]. Speed refers to the degree of customer responsiveness including the order cycle time (i.e., the time from the placement of an order by a customer to its shipment or receipt) and manufacturing throughput time (i.e., from the start of the first manufacturing operation to the completion of the last operation). Reliability relates to the ability of a plant to follow through on its commitment to a particular delivery date. Beamon [29] proposes that flexibility should be considered in supply chain performance. Supply chain flexibility is defined as the system’s ability to accommodate volume and schedule fluctuation from suppliers, manufacturers and customers. This definition is consistent with the manufacturing literature that advocates mix flexibility, new product flexibility and volume flexibility as a means of reacting to operating context fluctuations [36]. Manufacturing organizations have a direct impact on the natural environment through their production process configuration and management (e.g., pollutant, energy consumption) and product design (e.g., hazardous material). Hence, it is important to incorporate environmental performance into operational performance.

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Historically, the reporting of environmental performance has not been given a great deal of attention [37] as the operations management literature traditionally emphasized the performance metrics related to cost, quality, delivery and flexibility. Recent international environmental meetings and trends for more environmentally sound operations require consideration that environmental performance be added to that list. Besides the Toxic Release Inventory in the US (TRI) or its Canadian equivalent, the National Pollutant Release Inventory (NPRI) filed by individual facilities as required by law, only a few generally recognized measurements can be found in the literature. 3.2. Linking green projects partnership and performance Several studies have positively linked green activities in the supply chain with organizational performance [10,38]. Studies based on cases and anecdotal facts in the automotive industry [25,39], the electronic industry [40] and the steel industry [41] provide further evidence of a linkage between the green interaction in the supply chain and manufacturing performance. In particular, a paint and coating supplier worked, on-site, in the paint shop of an automaker to develop a better product-based solution in response to the ever-increasing pressure faced by the automakers to reduce VOC (volatile organic compound) emissions [25]. Another example of green project partnership environmental cooperation is Castrol, a lubricant producer supplying the automotive industry. Castrol worked with one of its customer’s plants to ensure the proper use of its chemical. This interaction resulted in process modifications leading to significant savings through less chemical use at the customer’s plant, hence helping the environment [39]. Two expected and direct outcomes from a high degree of green project partnership in the supply chain are the development of knowledge sharing routines and the development of the capability to integrate external resources [27]. Such a combination of resources can lead to a competitive advantage [42]. Hence, green project partnership is indicative of a capability for effective integration of internal and external know-how and technologies. As such, this capability generates resources difficult to replicate, leading in turn to a competitive advantage. Knowledge integration and collaboration among organizations resulting from the partnership are recognized as resources with the properties required for generating competitive advantage. As such, manufacturing organizations engaged in green project partnership with their suppliers and customers can develop organizational capabilities that will be reflected not only in environmental performance but also in other performance dimensions such as cost and quality [43].

From the above theoretical development two questions emerge. First, because organizational performance for manufacturing plants can take several forms an interesting objective is to assess the linkage of green project partnership with different performance dimensions (i.e., cost, quality, delivery, flexibility and environmental). In other words, does green project partnership affect performance universally? Second, because green project partnership can be mainly driven by downstream organizations’ performance, it is possible that partnership with suppliers has a different impact on a plant’s performance than partnership taking place with customers. Therefore, the following two hypotheses are proposed. H1 As the extent of green project partnership with suppliers increases, manufacturing performance (i.e., cost, quality, delivery and flexibility) and environmental performance improve. H2 As the extent of green project partnership with customers increases, manufacturing performance (i.e., cost, quality, delivery and flexibility) and environmental performance improve.

4. Methodology The relationship between green project partnership and manufacturing performance was tested using a plant-level survey. This research was part of a larger project investigating the impact of green manufacturing practices on competitiveness in the package printing industry. A single industry approach was adopted to control the type of manufacturing processes and workflow, which, as mentioned earlier, are quite standardized in the package printing industry. A survey instrument to measure the constructs of interest was developed based on the previously reviewed literature and a series of extensive interviews with different stakeholders of the package printing industry. A total of six semi-structured interviews with industry experts (three of which reviewed the questionnaires) were conducted. These experts were former executives of large Canadian package printing organizations, two government representatives (one from Canada and one from the United States) and the environmental manager of a large North American printing industry association. These interviews were supplemented by six Canadian plant visits and a total of eight semi-structured interviews with different plant managers (e.g., purchasing, product designs, and general managers). After these interviews and visits, the questionnaire was revised and modified to refine and clarify the constructs and items. A North American sample of 366 plants with at least 90 employees was compiled from two exhaustive

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sources: the Packaging Sourcebook for the United States and Scott’s Industrial Directory for Canada. After an initial telephone call to the plant manager to confirm contact information and to introduce the research project, a three-wave survey process similar to that prescribed by Dillman [44] was followed. Conducted in summer 2002, the survey was offered in both English and French to each potential respondent to encourage participation. A total of 84 completed surveys were received for a response rate of 23%. Out of the 84 respondents, 28 or one-third were Canadian plants. A chi-square test of independence revealed no evidence that the respondent pool differed significantly from the target pool along: (i) the geographical location of the respondents (U.S. vs. Canada); (ii) the three segments of the industries (folding box, flexible packaging and labels); and (iii) parent company size (companies with more than three plants vs. companies with three or fewer plants).

4.1. Green project partnership A total of four items for each of the two scales e green project partnership with suppliers and green project partnership with customers e were developed (see Appendix A). These scales measure the extent of partnership in process modification, product design and development, material substitution and logistics management. The scales were tested for internal reliability (a); both exceeded 0.90. An exploratory factor analysis (with varimax rotation of the factors) using all the items suggests that the items were indeed loading in two dimensions (partnership with suppliers and with customers). The results of the factor analysis are presented in Table 1. Subsequently, the average of the items was used as a metric for both partnership scales.

4.2. Manufacturing performance Manufacturing performance was defined and measured by a set of multi-item scales, consistent with earlier research [45]. A series of 15 items was used to measure five different manufacturing performance dimensions, namely cost, quality, delivery, flexibility and environment. These items required the respondents to evaluate their plant’s performance against major competitors (Appendix A). Table 2 presents the results of the factor analysis. One item related to quality was cross-loading with another performance dimension and rejected for further analysis (g1_g). Again, the reliability measure (i.e., Cronbach a) for each scale was above the threshold of 0.70. As before, the average of the items for each scale was computed and used in subsequent analysis.

4.3. Contextual variables Seven contextual variables were used to control for the following characteristics: plant size (number of employees), parent company size (number of employees), average press age (years), extent of investment in new manufacturing equipment during the previous two years (percentage of sales), supply base (number of suppliers normalized by the number of employees at the plant), customer concentration (percentage of sales coming from the three largest customers) and country (Canada vs. USA). This last variable is a dichotomous variable to control for potential difference between the countries (0 Z Canada, USA Z 1). Table 2 Rotated factor matrix: operational performancea Items

Items

Partnership with suppliers

Partnership with customers

d1_a d1_b d1_c d1_d d2_a d2_b d2_c d2_d

0.846 0.871 0.852 0.844 0.221 0.257 0.239 0.275

0.238 0.256 0.278 0.222 0.883 0.920 0.908 0.698

g1_a g1_b g1_c g1_d g1_e g1_f g1_g g1_h g1_i g1_j g1_k g1_l g1_m g1_n g1_o g1_p

Eigenvalue Cronbach a

1.484 0.912

4.862 0.910

Eigenvalue Cronbach a

Table 1 Rotated factor matrix on green project partnershipa

a

Extraction method: principal component analysis. Rotation method: varimax with Kaiser normalization. Rotation converged in three iterations.

a

Dimensions Cost

Quality

Delivery

Flexibility

Environment

0.888 0.794 0.738 0.088 0.028 0.003 ÿ0.116 0.064 0.295 0.274 0.293 0.110 0.046 ÿ0.042 0.059 0.133

ÿ0.028 ÿ0.143 0.351 0.856 0.699 0.882 0.493 ÿ0.066 0.021 0.171 ÿ0.012 0.118 0.143 0.090 0.124 0.154

0.148 0.189 0.119 0.106 ÿ0.041 0.011 0.498 0.824 0.719 0.716 0.383 0.192 0.176 0.112 0.001 0.107

0.092 0.132 0.088 0.043 0.340 ÿ0.035 0.074 0.183 0.231 0.177 0.610 0.867 0.867 0.045 0.088 0.045

0.055 0.055 0.031 0.135 0.121 0.089 0.177 0.116 0.005 0.068 0.006 0.104 0.070 0.805 0.898 0.892

1.489 0.799

4.732 0.792

1.736 0.765

1.102 0.799

2.522 0.857

Extraction method: principal component analysis. Rotation method: varimax with Kaiser normalization. Rotation converged in six iterations.

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Size is an important contextual variable that is widely used in operations strategy and environmental management literature [46]. Organizational size is positively correlated to the ability to develop new products and processes [47] while providing leverage in inter-organizational activities [48]. Because innovative capacity is linked to proactive management orientation [49], there is a potential impact of organizational size on environmental technology selection and the degree of green project partnership. Small organizations, more preoccupied with short-term issues not necessarily linked to environmental management [50,51], usually invest less in pollution prevention technologies while being more reactive to environmental issues and regulations [46]. However, they are under less scrutiny and will have less power over their suppliers. They also have fewer resources and less knowledge to share with their major customers, which will likely translate into a decrease in cooperative activities with them. The range of possibilities in terms of structural changes within existing products or processes is contingent on the capacity of the equipment to handle these changes. As the equipment ages, such possibilities diminish reducing the likelihood of managers to select pollution prevention technologies that require structural changes. In this type of situation, managers will aim for less disruptive technologies and favour end-of-pipe technologies along with infrastructural investments when faced with environmental challenges. Investment in new equipment can provide an opportunity to improve the environmental performance of the process technologies employed in a plant. However, it can also be argued that new technologies that increase the degree of automation will build complexity into the production process [52], rendering the new process less adaptable for environmentally friendly structural changes [51]. So far, the contextual variables have been associated with plant characteristics. Two characteristics of the supply chain structure are added for the analysis. First, green project partnerships are likely to be affected by the size of the supply network. The larger a supply base is, the more difficult it is to develop long-term relationships and integration, which should impede the establishment of partnership. By analogy, customers may be subject to the same circumstances. A plant that has multiple customers might not be willing to invest resources in environmental cooperative activities with its customers. As such, we expect that the larger the customer base, the less environmental cooperation will occur.

5. Empirical analysis Results of bivariate correlations are presented in Table 3. The relationships between green project partnership and operational performance were tested

using hierarchical linear regression. For each regression model, the contextual variables were introduced first and then the two metrics of green project partnership indicators (one upstream with the primary suppliers and one downstream with the major customers). By structuring the analysis this way, the incremental variance explained by the green project partnership in the supply chain could be assessed explicitly. The standardized betas (b) from ordinary least square regressions and the incremental squared multiple correlation coefficient (R2) are reported for each model. Measures of multicollinearity were within recommended limits (VIF all below 2 [54]). The results of the different regression models are presented in Table 4. Taken together, green project partnership whether with primary suppliers or major customers was associated with better performance in quality, delivery, flexibility and the environment as all of the DR2 were significant (Models 2e5, p ! 0.05). Support for Hypothesis H1, which expected a positive link between the extent of green project partnerships with suppliers and operational performance, was found. Specifically, the results suggest a positive and significant association between delivery performance and the extent of green project partnership with suppliers (Model 3, p ! 0.05). While not significant, the linkage between the extent of green project partnership with primary suppliers and all other performance indicators were directionally consistent with Hypothesis H1. Stronger support for Hypothesis H2 was found. Particularly, the relations between the extent of green project partnerships with major customers and quality (Model 2, p ! 0.05), flexibility (Model 4, p ! 0.10), and environment (Model 5, p ! 0.10) were all significant. The coefficient linking cost performance and green project partnership was directionally consistent but not significant. Some results from the contextual variables are noteworthy. First, plant size was associated with poorer delivery (Model 3, p ! 0.10) and environment performance (Model 5, p ! 0.10). The first result reflects that negative link of larger, more complex, organizations with delivery speed and reliability and is consistent with other results in the literature [55]. The second result is consistent with the findings of Grant et al. [46] who found that there was a positive relation between the plant size and the pollution rate in the United States chemical industry. A second interesting result relates to the degree of customer concentration and its positive link with cost (Model 1, p ! 0.05) and delivery performance (Model 3, p ! 0.05). The complexity generated by a larger customer base (e.g., more stock-keeping-units, different product specifications, and multiple orders) leads to more difficulties in job scheduling, production planning and inventory management; hence, poorer performance

Table 3 Correlations s.d.

4.8 5.5 5.6 5.5 5.2

0.8 0.7 0.8 0.8 1.0

0.08 0.33 0.22 0.12

0.17 0.28 0.28

0.46 0.17

0.12

Green projects partnership 6. Partnership with suppliers 7. Partnership with customers

3.9 3.1

1.4 1.3

0.18 0.02

0.27 0.34

0.28 0.12

0.22 0.34

0.28 0.28

0.49

4.9 7.0 7.5 11.3 0.7 0.5

0.6 2.2 8.0 6.7 1.4 0.2

0.05 ÿ0.02 ÿ0.01 ÿ0.03 ÿ0.20 0.14

0.06 0.15 ÿ0.16 ÿ0.31 0.00 0.24

ÿ0.25 ÿ0.09 ÿ0.07 ÿ0.00 0.02 0.23

ÿ0.03 ÿ0.04 ÿ0.06 0.02 ÿ0.07 0.12

ÿ0.19 0.07 ÿ0.14 0.11 ÿ0.05 0.12

0.7

0.5

ÿ0.01

0.19

ÿ0.01

ÿ0.05

0.32

Contextual variables 8. Plant sizea 9. Parent company sizeb 10. Reinvestment ratec 11. Age of presses 12. Supplier based 13. Customer concentratione 14. Countryf

1

2

3

4

5

6

7

8

9

10

11

12

0.13 ÿ0.08 0.01 ÿ0.15 ÿ0.25 0.16

0.15 0.07 0.14 ÿ0.01 ÿ0.18 0.19

0.36 0.04 0.09 ÿ0.36 0.05

ÿ0.19 0.21 ÿ0.16 0.33

ÿ0.29 ÿ0.11 ÿ0.21

0.04 0.02

ÿ0.13

0.15

0.11

0.05

0.15

ÿ0.12

ÿ0.12

0.03

13

0.01

N for bivariate correlations varies from 80 to 83 because of missing data.Correlations greater than 0.29 (absolute value) are significant at p ! 0.01; correlations greater than 0.22 (absolute value) are significant at p ! 0.05. a Natural logarithm of the number of employees in the plant. b Natural logarithm of the number of employees in the parent company. c Percentage of annual sales invested in new equipment over the last two years. d Total number of suppliers scaled by plant size (number of employees). e The percentage of sales coming from the three largest customers. f Dichotomous variable: 0 Z Canada and 1 Z United States.

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Mean Manufacturing performance 1. Cost 2. Quality 3. Delivery 4. Flexibility 5. Environmental

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Table 4 Green project partnership and manufacturing performancea Cost (Model 1) b Contextual variables Plant sizeb Parent company sizec Reinvestment rated Age of presses Supplier basee Customer concentrationf Countryg Green project partnership Partnership with suppliers Partnership with customers R2 F statistics Number of observations

DR

2

Quality (Model 2) 2

b

DR

0.096

Delivery (Model 3) b

DR

0.170*

0.090 ÿ0.229

ÿ0.020 0.131

0.063 0.105 ÿ0.036 0.296** 0.051

ÿ0.119 ÿ0.291** 0.031 0.154 0.098 0.019

2

Flexibility (Model 4) b

DR

0.175** ÿ0.198* ÿ0.199

Environment (Model 5) DR2

b

0.066 ÿ0.012 ÿ0.144

0.082 0.134 0.034 0.259** 0.051 0.087**

2

0.000 0.117 0.037 0.090 0.063 0.072**

0.177** ÿ0.207* 0.195 0.031 0.093 ÿ0.003 0.004 0.248**

0.130***

0.105***

0.172 0.127

0.037 0.304**

0.312** ÿ0.027

0.203 0.256*

0.183 0.228*

0.116 1.004 79

0.257** 2.653 79

0.248** 2.526 79

0.196* 1.837 78

0.282*** 2.922 77

*p-Value ! 0.10, **p-value ! 0.05, ***p-value ! 0.01. a The standardized betas (b) are reported. b Natural logarithm of the number of employees in the plant. c Natural logarithm of the number of employees in the parent company. d Percentage of annual sales invested in new equipment over the last two years. e Total number of suppliers scaled by plant size (number of employees). f The percentage of sales coming from the three largest customers. g Dichotomous variable: 0 Z Canada and 1 Z United States.

in cost and delivery. Not surprisingly quality performance was adversely affected by the age of the presses (Model 2, p ! 0.05). Finally, the American plants were on average performing better in regards to the environment. This is reflected in the estimated coefficient that is affecting the country variable in Model 5 ( p ! 0.05).

6. Discussion The empirical evidence relating the extent of green project partnership with operational performance supports the contention that interaction between organizations in the supply chain can lead to cross fertilization of knowledge and know-how resulting in improved organizational performance. However, the results indicate that green project partnership with major customers can likely generate benefits in more dimensions of operational performance than similar partnership upstream with primary suppliers. 6.1. Green project partnership with suppliers While less predominant in terms of impact on the operational performance, the extent of green project partnership with primary suppliers was positively linked to faster and more reliable deliveries. Partnering with suppliers during structural changes in the plant increases

the effectiveness when implementing these changes. This supports the NBRV that suggests that environmental management can be leveraged to develop other related capabilities [56e58]. By integrating the knowledge from primary suppliers, green project partnership can lead to the development of effective troubleshooting procedures and a better control over variations generated by new processes or inputs. Such capability allows faster average throughput time and increases the likelihood of completing scheduled jobs on time. Other studies have linked environmental considerations in the supply chain to the development of operational capability. For instance, Bowen et al. [22] suggested that such a proactive approach to the environment could lead to the development of supply management capability that includes the competence to integrate knowledge and know-how from the supply network (also known as absorptive capacity [59]). 6.2. Green project partnership with customers Partnership with major customers in process modification, input substitution, and waste reduction in the logistics process was found to affect product quality positively in terms of conformance to specifications and durability. This result is consistent with other studies that have found a positive link between pollution prevention technologies and quality [43]. It also suggests that a greater degree of partnership with customers will

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help to establish product specifications that are compatible with new pollution preventive technologies taking the form of process modifications or new and less harmful inputs. Green project partnership was also found to be positively associated with the ability of a printing plant to react to unforeseen events in terms of order changes (due date and volume) as well as the ability to change the product mix. Finally, green project partnership downstream with major customers was also found to be positively linked to better performance in regards to solid waste disposal and air and water emissions.

6.3. Limitations and conclusion While studying a single industry allows for greater control over secondary factors, it is not without its drawbacks. First, using a single industry forming a single echelon in the supply chain allows greater specificity in describing the types of integration activities underway, but potentially limits generalizations. Future research is likely to benefit from a methodology that captures multiple echelons in linked supply chains, possibly using a case-based approach. A second limitation of the design of this study is the fact that it used only one respondent, which might potentially create grounds for bias. Second, any potential bias introduced by the single respondent cannot be explicitly ruled out; however, earlier research suggests no major concerns [60], and careful targeting of a knowledgeable respondent can assist in overcoming potential problems with common method variance [61]. This study focused on the impact of green project partnership on operational performance. Green project partnership with primary suppliers was positively linked to delivery performance while such partnership with major customers was linked with greater quality, flexibility and environmental performance. One research avenue would be to expand this line of research to the service sector. The greater part of environmental management research has been concentrated in the manufacturing sector, with special emphasis on industries with a high environmental impact such as the chemical [56], furniture [58], electronics [40], and automotive [25] industries. While the service sector represents more than 75% of the industrialized economy, it has not attracted much attention in the environmental management literature [62]. Some studies based on anecdotal evidence in the hospitality industry [63] and in the health care industry [64] have started to build the recognition that service operations can be harmful to the environment. However, theoretical and conceptual development is practically nonexistent in the literature.

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Acknowledgements Both authors would like to thank the Social Sciences and Humanities Research Council of Canada (SSHRC) for their financial support for this research. The first author would also like to thank Carrina Ylagan for able research assistance for the collection of the data used in this paper.

Appendix A. Green project partnership with suppliers The following statements relate to your plant’s environmental activities with your primary suppliers (inks, substrates, equipment). Over the last two years, our primary suppliers. (1 Z not at all, 4 Z moderately, 7 Z great extent) d1_a d1_b d1_c

d1_d

share their know-how and expertise in environmental management and technologies; are involved in the implementation of new environmentally sound processes in our plant; help us during the transition phase toward more environmental friendly material (e.g., ink change, water-based adhesive); co-operate with us to reduce waste in logistics and material management (e.g., reusable containers).

Green project partnership with customers The following statements relate to joint environmental activities and initiatives between your plant and its major customers. Over the last two years, our major customers. (1 Z not at all, 4 Z moderately, 7 Z great extent) e1_a e1_b e1_c e1_d

share their know-how and expertise in environmental management and technologies; provide their expertise during environmentally sound process modifications; provide their expertise during environmentally sound material adoption (e.g., input substitution); co-operate with us to reduce waste in logistics and material management (e.g., reusable logistics material).

Manufacturing performance For each of the items listed below, how does the plant compare relative to your primary competitors? (1 Z Far worse than competitors, 4 Z about the same as competitors, 7 Z far better than competitors.) g1_a g1_b

Production costs. Total product costs.

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g1_c g1_d g1_e g1_f g1_g g1_h g1_i g1_j g1_k g1_l g1_m g1_n g1_o g1_p

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Labor productivity. Conformance to design (e.g., color intensity/ structural property). Product durability (e.g., color fading, substrate resistance). Perceived overall product quality. Promptness in solving customer complaints (dropped). Order fulfillment speed. Manufacturing throughput time. Meeting delivery due date. Ability to change delivery date. Ability to change output volume. Ability to change product mix. Solid waste disposal. Air emissions. Water emissions.

Control variables 1 As of the beginning of January 2002, how many employees (full-time equivalent) work at your plant? (Plant size.) 2 As of the beginning of January 2002, how many employees work in the entire organization (parent company) including your plant? (Firm size.) 3 On average, over the last two years, about what percent of annual sales has been invested in new manufacturing equipment? (Reinvestment rate.) 4 What is the average age of the presses (in years)? (Age of presses.) 5 Please indicate the number of suppliers that your plant has for each of the following: substrates (all of them), inks, and all other suppliers (maintenance, equipment, transportation). (Number of suppliers.) 6 Please indicate the percentage of your plant’s total sales represented by your three largest customers. (Customer concentration.)

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