Green Procurement, Stakeholder Satisfaction and Operational Performance

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IJLM
28,4 Green procurement, stakeholder
satisfaction and operational
performance
1054 Hua Song
School of Business, Remin University of China, Beijing, China
Received 18 December 2015
Revised 7 June 2016 Kangkang Yu
6 October 2016
24 October 2016
School of Agricultural Economics and Rural Development,
Accepted 24 October 2016 Renmin University of China, Beijing, China, and
Songbo Zhang
College of Business Administration, School of Business,
Capital University of Economics and Business, Beijing, China
Abstract
Purpose – Based on natural-resource-based view (NRBV ), the purpose of this paper is to clarify the
dimensions of green procurement and the mechanisms involved in the relationship between green
procurement and firm performance.
Design/methodology/approach – Secondary data were to measure all the variables in 206 Chinese
A-share companies’ annual reports, social responsibility reports, environmental reports, and sustainability
reports, which were published by Guotai Junan Securities Co., Ltd and Wind Information Co., Ltd.
Findings – The results indicate that although both product-based and process-based green procurement have
a positive effect on firm performance, these Chinese companies focus on the impact of product-based green
procurement on their operational efficiency as well as the moderating role played by stakeholder satisfaction.
Originality/value – Although studies on green procurement have increased in recent years, issues such as
how to measure green purchasing behaviors and how green procurement affects firms’ operational and
financial performance are still unexplored. Based on previous literature, two dimensions have been defined
for green procurement in this study to develop corresponding measurements, namely, product-based green
procurement and process-based green procurement. Besides, this study considers operational efficiency as the
mediator and stakeholder satisfaction as the moderator when constructing a new conceptual model to
illustrate the relationship between green procurement and firm performance.
Keywords Stakeholders, Operational performance, Green procurement, Natural-resource-based view
Paper type Research paper
Introduction
As the starting point of reducing environmental pollution, green procurement is a critical process
for management over green supply chain (Chin et al., 2015). Green procurement is defined as a
series of activities with environmental concerns to ensure that the products or raw materials
purchased would not have a negative effect on the environment; such as resource waste
reduction, cyclical utilization of resources, recycling of resources, replacement of raw materials
and so on (Carter and Carter, 1998; Min and Galle, 2001; Zsidisin and Siferd, 2001). By reducing
the cost of energy input, controlling the pollution and avoiding remedy, green procurement could
enhance the efficiency of resource utilization and operation, which in turn, would improve firms’
financial performance. Many companies have integrated environmental standards into their
purchasing policies and processes to implement green procurement; however, most of them have
The International Journal of
Logistics Management The authors acknowledge that the research underlying this paper was supported by the National
Vol. 28 No. 4, 2017
pp. 1054-1077 Natural Science Foundation of China (Nos 71272155; 71232011; 71302159; 71672189) and the
© Emerald Publishing Limited Fundamental Research Funds for the Central Universities, and the Research Funds of Renmin
0957-4093
DOI 10.1108/IJLM-12-2015-0234 University of China (Nos 11XNI002; 14XNK009).
neither adopted a systematic method to deal with the performance outcomes of green Green
procurement nor connected green procurement with their general strategy. procurement
More literatures on green procurement focus on the definition of green procurement
(e.g. Carter and Carter, 1998), the motivation and pressures to engage in green procurement
(e.g. Bloemhof-Ruwaard et al., 1995), the effect of firms’ resources and capabilities on green
procurement (e.g. Bowen et al., 2006; Green et al., 1996; Green et al., 2012), and the relationship
between green procurement and firm performance, where there are many inconsistencies. 1055
Most studies indicate that green procurement could improve the firm’s performance
(e.g. Zsidisin and Hendrick, 1998; Carter et al., 2000), but only a few suggest that the effect is
negative or insignificant. For example, Zhu and Sarkis (2004) classify that management
practices on green supply chain produce both positive economic performance
(e.g. decreasing of cost for materials purchasing) and negative economic performance
(e.g. increasing of costs for purchasing environment-friendly materials). Similarly, Liu and
Zhao (2008) investigate the effect of green procurement in Chinese manufacturing industry
and find that the practices of green procurement have positive effects on almost all of the
performance outcomes and only two factors are excluded.
The reasons for the inconsistent results could be summarized as follows. First, there are
several dimensions of green procurement, so their effects on firm performance may be different
(e.g. Liu and Zhao, 2008). Second, previous studies have only investigated the effect of green
procurement on firms’ economic performance, but these effects may not be direct, and may be
mediated by some specific performance outcomes like operational performance (e.g. Jeffers, 2010;
Green et al., 2012). Third, as members of a social network, companies would be influenced by all
kinds of stakeholders, and each stakeholder may play a distinctive role on green procurement
and performance. Many researchers have investigated stakeholders’ effect on green
procurement (e.g. Henriques and Sadorsky, 1996; Sharma and Henriques, 2005; Elijido-Ten
and Louise, 2010). They suggest that stakeholders can exert an important impact on green
procurement, which can improve the firm’s performance, but only a few of recent studies have
explored the contingent role played by stakeholders (e.g. Wong et al., 2012; Khor et al., 2016). By
revisiting Hart’s natural-resource-based view (NRBV), Hart and Dowell (2011) emphasize that
the greatest potential for future research lies in continuing to identify the contingencies that
affect the environmental-financial performance relationship.
Based on NRBV, this study provides recent studies on green procurement with
supplementary contents in three ways. First, using content analysis, this study distinguishes
two dimensions of green procurement: product-based green procurement, obtaining and
processing green materials based on a specific capability based on the present strategic
resources of the firm; process-based green procurement, related to the management of green
supply processes by using a dynamic capability to integrate, build and reconfigure internal
and external competences. Second, this study takes into account not only the general
performance but also the specific performance outcomes of green procurement and argues
that operational efficiency as the rate of using resources mediates the effect of green
procurement on firm performance. Third, in order to explain the inconsistent results of the
relationship between green procurement and its performance outcomes, this study further
brings in the contingent factors based on stakeholder theory. It includes the relationship with
both reciprocators who tend to use justice method and self-regarding stakeholders who focus
on their own payoffs. Both offer external resources to facilitate or obstruct the effect of green
procurement. The whole theoretical framework was tested by secondary data in China.
Literature review and theoretical hypothesis

Resource-based view and NRBV
RBV has become a critical theoretical foundation used to link supply chain management and
organizational performance (Vachon and Klassen, 2008). The key proposition of RBV is that
IJLM firms will develop a competitive advantage by accumulating resources that are rare,
28,4 valuable, non-substitutable, and difficult to imitate (Barney, 1991; Rumelt, 1997;
Wernerfelt, 1984). The value of RBV lies in addressing which capabilities help firms
apply the bundles of resources to achieve and sustain competitive advantage (Sirmon et al.,
2007; Vanpoucke et al., 2014). Thus, it is critical to distinguish different kinds of resources
that embody advantage-bearing capabilities (Teece et al., 1997; Luzzini et al., 2015).
1056 However, RBV is internally focused on the organization’s resources and capabilities and
systematically ignores constrains imposed by the natural environment (Hart, 1995).
Hart (1995) first inserts the natural environment into RBV to develop a NRBV of the firm.
NRBV could be considered as an adaptation of RBV. It is a theory focusing on capabilities
that facilitate environmentally sustainable activity for competitive advantage based on the
firm’s relationship to the natural environment (Hart, 1995; Jackson et al., 2016). In other
words, a firm can achieve superior performance if it has the capability to exploit and
preserve natural resources in its operating environment (Wong et al., 2012).
With recent development of NRBV, Hart and Dowell (2011) begin to consider how NRBV
can benefit from recent work in dynamic capabilities. As RBV does not address how firms
can renew their sources of competitiveness, Teece et al. (1997) emphasize the need for firms
to “integrate, build, and reconfigure internal and external competences to address rapidly
changing environments” (p. 516). Hart and Dowell (2011) suggest that NRBV shall be
extended and supplemented to create a more thorough understanding of the process by
which firms undertake sustainable development strategies. If firms are open to access to
critical resources from their engaging stakeholders, they would be more likely to create
dynamic capabilities (Hart and Dowell, 2011).
NRBV and the direct performance of green procurement

According to NRBV, green procurement is a kind of capability of addressing the
relationship between organization and natural environment. As explained earlier, the
capability to exploit and preserve natural resources could bring in superior performance to
the firm. Hart (1995) argues that such capability is either casually ambiguous or socially
complex. One perspective of defining green procurement is casually ambiguity, which
suggests that firms can gain experience and learn skills through repeated practices or
developing complementary assets with green procurement (Wong et al., 2012). For example,
Cater defines green procurement as the purchase of renewable and recyclable materials,
which relates to environment-friendly products. The other perspective focuses socially
complexity, which means that green procurement will develop where partner firm capability
allows firms to access the resources of their partners (Wong et al., 2012).
For example, Carter and Carter (1998) propose that the purpose of green procurement is
to recycle, reuse, and reduce the use of resources, during which the procurement department
participates in all kinds of activities of supply chain management. Zsidisin and Siferd (2001)
maintain that green procurement will establish a system of purchasing principles, methods
and processes with full consideration of the effect on environment, including selecting and
evaluating suppliers, building a long-term relationship with them, adopting green packages,
recycling resources, reducing energy wastes and so on.
Based on the two perspectives, this study suggests that green procurement is a kind of
systematic capability of processing resources initiated from green design for procurement
planning with suppliers, green production, and finally the green distribution. Many
empirical results show that green procurement can improve not only environmental
performance (Green et al., 1998; Zsidisin and Hendrick, 1998), but also business performance
(Carter et al., 2000; Liu and Zhao, 2008). Thus, we propose the first group of hypotheses:
H1. Green procurement has a positive effect on firm performance.
Based on NRBV, Wong et al. (2012) divide sustainable green operations into two dimensions: Green
product stewardship concerned with less use of hazardous and nonrenewable materials in procurement
product development; and process stewardship which emphasizes implementing such processes
as recycling and reengineering. Other researchers also classified green procurement behaviors in
a similar way into product-based green procurement and process-based green procurement
(Bowen et al., 2006; Li et al., 2015; Liu and Zhao, 2008).
Following previous studies, this study divides green procurement into two dimensions. 1057
The first is product-based green procurement, which concerns obtaining and processing
green materials and imposing least impact on the environment. It is a specific capability
based on the present strategic resources owned by the firm. As a key process of green
supply chain, product-based green procurement puts environment-friendly materials or
products into supply chain operations according to certain environmental standards or
behaviors (Webb, 1994). The purpose is to guarantee that the materials purchased meet the
environment-friendly, low-energy and recyclable standards. In other words, product-based
green procurement emphasizes external and explicit management and aims at physical
activities. According to NRBV, relying on the passive responses to the external environment
is necessary for the company to obtain sustainable competitive advantages. Thus:
H1a. Product-based green procurement has a positive effect on firm performance.
Green procurement not only entails investigating and monitoring but also forming a long-term
relationship with them with corresponding training and support in favor of making pro-
environmental plans and decisions (Bowen et al., 2006; Igarashi et al., 2015; Vachon and
Klassen, 2006; Zhu et al., 2007, 2008). Thus, green procurement is also related to the
management of green supply processes, such as evaluating suppliers’ capability to manage
the environment, implementing pro-environmental projects and so on. The second dimension
of green procurement, process-oriented strategy, is a dynamic capability to integrate, build,
and reconfigure internal and external competences to address rapidly changing environments
(Teece et al., 1997). The aim is to ensure the sustainability of procurement through green
processes and managerial behaviors. Compared with product-based green procurement, the
process-based green procurement is based on implicit or soft managerial activities, such as the
management system, institutions, concepts and development. The whole process of supplier
management not only includes the green concept, but also the investigation, selection,
training, and evaluation for suppliers. Such a close relationship can increase trust, reduce
transaction costs, protect firms from suppliers’ opportunism and promote the development of
both sides. In their case study on green supply chain management of Gui Tang Group
Company, Zhu and Cote (2004) find that the company promotes the development of their
suppliers by offering techniques, governmental support, and organic assistance etc., which in
turn, enhances their own product quality, environmental performance, and cost advantages.
Therefore, the key point of green supply chain management is to establish a long-term
relationship with suppliers (Zhu et al., 2007, 2008), which can improve firms’ economic and
environmental performance. Thus:
H1b. Process-based green procurement has a positive effect on firm performance.
NRBV and the indirect performance of green procurement

As green procurement defined as a capability of processing resources based on NRBV,
green procurement could enhance the rate of resource utilization, which in turn, reduces all
kinds of operational costs and improves operational efficiency (Wang and Song, 2012).
Operational efficiency represents the productivity of a firm’s operation management, which
means that obtaining the largest profits based on the limited resources (Coelli et al., 2005).
Liu and Zhao (2008) investigate the effects of green procurement in the Chinese
IJLM manufacturing industry and they find that green procurement could enhance firms’
28,4 operational performance. Furthermore, the cost saving implications of operational
performance could lead to improvement in the overall performance of the organization
(Green et al., 2012). Many studies using DEA have found that companies with a high level of
operational efficiency have a greater value (Barnum and Gleason, 2010; Ablanedo-Rosas
and Gemoets, 2010; Emrouznejad and Anouze, 2010). Based on the analysis above, green
1058 procurement affects operational efficiency, and operational efficiency affects firm
performance, which indicates a mediating effect of operational efficiency on the
relationship between green procurement and firm performance. Thus, we hypothesize that:
H2. Operational efficiency mediates the effect of green procurement on firm
performance.
Although Green et al. (2012) test the indirect path above; they have not distinguished
different dimensions of green procurement. Product-based green procurement focuses on
reducing the costs of green production throughout the process (Green et al., 1996). For
example, Liu and Zhao (2008) suggest that raw materials could be recycled and reused by
participating in the product design and production processes of suppliers, thereby, reducing
the cost of raw materials. Gray and Guthrie (1990) point out that the procurement
department can reduce both packaging costs and transportation costs by reducing the
package weight. In addition, companies could save their efforts for pollution control by
controlling the sources of pollution (Lamming and Hampson, 1996; Hamner, 2006), which
both reduce direct and indirect costs and improve operational efficiency. Thus:
H2a. Operational efficiency mediates the effect of product-based green procurement on
firm performance.
Process-based green procurement can stimulate a long-term relationship with suppliers
(Zhu et al., 2007, 2008), which saves a lot of expenditure on supplier management, such as
monitoring costs, communication costs, ordering costs, and the bidding expenses involved
in selecting suppliers. Besides, by creating a complete database of suppliers’ information,
commodities information and transaction information (Bowen et al., 2006; Hamner, 2006;
Lamming and Hampson, 1996; Vachon and Klassen, 2006), companies could strengthen
their capacity to share information with suppliers and make full use of their resources,
which in turn, would enhance the efficiency of buyer-seller cooperation. Thus:
H2b. Operational efficiency mediates the effect of process-based green procurement on
firm performance.
NRBV and the moderation of stakeholder satisfaction

One character of NRBV is that resource is socially complex, which requires to integrate the
“voice of environment”, that is, to integrate different stakeholders in the supply chain
(Hart, 1995; Vachon and Klassen, 2006, 2008). Clarkson (1995) points out that important
stakeholders are those who affect the company’s survival and development, such as
stockholders, creditors, suppliers, customers, employees, the government, etc. According to
RBV, organizations can take advantage of the resources and capabilities embedded in the
relationship network constructed by stakeholders. For example, Frooman (1999) suggests
that companies rely on stakeholders’ resources, stakeholders adopt strategic behavior that
has a direct impact on the company, but without any direct resources, stakeholders adopt
indirect ways to affect the firm such as forming working alliances. Obviously, the more
resources companies can obtain, the better they can implement all their strategies.
Thus, stakeholder theory proposed by Freeman (1984) has been applied widely as an
explanatory theory in literature on environmental sustainability (Sarkis et al., 2011).
From the stakeholder perspective, the effect of stakeholder pressures on the adoption of Green
environmental practices has been well studied (Yu and Ramanathan, 2015). procurement
In recent years, whether and how stakeholder satisfaction affects firm performance
became a critical questions in the field of academic management. Stakeholder satisfaction is
defined as the economic returns of stakeholders during the process of realizing their own
objectives (Ruf et al., 2001). From the perspective of strategic management, Dyer and Singh
(1998) propose that stakeholder satisfaction is actually a way of gaining competitive 1059
advantages because understanding and meeting with their demands would make them
participate in the firm’s business management actively. Agle et al. (2008) suggest that
provided that stakeholders’ inner values have been clarified, the performance of those who
can manage the relationship with their stakeholders effectively would be much higher than
those who cannot. Although stakeholder involvement was also found to be a key ingredient
in product stewardship efforts, future research in this area lies in continuing to identify the
contingencies for explaining the performance by implementation of various environmental
management practices (Hart, 1995; Sarkis et al., 2011).
Different kinds of stakeholders impose different effects upon company. For example,
Bridoux and Stoelhorst (2014) propose that there are heterogeneous motivations for managing
stakeholders. Adopting behavioral economists’ terminology labeling individualists as “self-
regarding” and prosocials as “reciprocators,” they identify two kinds of stakeholders with
different value appropriation and realization, which makes the ways of managing
stakeholders distinguished (Bridoux and Stoelhorst, 2014). The first type is called self-
regarding stakeholders who focus on their own benefits rather than justice and tend to
cooperate if doing so increases their own payoffs (Fehr and Falk, 2002; Bridoux and
Stoelhorst, 2014), so an arm-length approach based on market transactions and bargaining
power is often used to regulate their behavior (Dyer and Singh, 1998; Bridoux and Stoelhorst,
2014). The buying and selling behavior of these stakeholders is based on their direct
objectives, so they are transaction-oriented such as suppliers and customers (Clarkson, 1995).
Their interests must be “dealt with” and a suitable ally with them is related to applying a
direct strategy of resource usage or withholding (Frooman, 1999; Hendry, 2005). From this
perspective, the quality of the relationship with self-regarding stakeholders may influence the
way that focal companies execute their environmental strategies, thereby affecting their
operational performance (Chen et al., 2015; Pagell et al., 2007). Thus, we propose the first group
of moderating hypotheses:
H3. Self-regarding stakeholder satisfaction moderates the effect of green procurement on
operational efficiency.
In fact, suppliers who depend on the company often adopt usage strategies which seek to
attach conditions to the continued supply of a resource (Frooman, 1999). On one hand, the
faster turnover ratio of accounts payable to meet supplier satisfaction, the more their
operation will be affected by product-based green procurement because if they can receive
support and economic returns, which further motivate them to participate in green business
and invest more resources in green production (Vachon and Klassen, 2006; Hamner, 2006;
Zsidisin and Hendrick, 1998). Simpson and Power (2005) suggest using the supply relationship
to develop lean and green suppliers, which is highly relevant to the success of green product
strategy in terms of cost reduction and future market domination (Chen et al., 2015).
On the other hand, prompt payment to meet supplier satisfaction may have a negative effect
on the relationship between process-based green procurement and operational performance
because the company is reluctant to invest more effort in motivating them to intensify their
daily management and quality evaluation by means of investigation, training, auditing,
evaluating and so on (Eltayeb and Zailani, 2009; Eltayeb et al., 2010; Zhu et al., 2007, 2008).
Therefore, focusing too much on supplier’s satisfaction will reduce the effect between the level
IJLM of process-based procurement and operational efficiency. This leads to the formation of the
28,4 following hypotheses:
H3a. Supplier satisfaction positively moderates the effect of product-based procurement
on operational efficiency.
H3b. Supplier satisfaction negatively moderates the effect of process-based procurement
1060 on operational efficiency.
Customers who do not rely on the company could withhold their dollars with the intention of
making the firm change a certain behavior (Frooman, 1999). Firms should consider the
downstream demands when supplying products, mainly because customers can put pressure on
them with their buying behaviors, which affects companies’ pro-environmental behavior.
In some cases, the pressure is connected with green marketing, so customers’ preferences for
green products will prompt the companies to engage in pro-environmental behavior (Albino
et al., 2009). Zhu et al. (2007) with customer cooperation as a critical factor in implementing green
supply chain management practices toward the improvement of operational performance.
Customers can provide important information on material properties or disposal options, which
facilitate knowledge transfer and significantly improve performance (Zhu and Sarkis, 2004;
Simpson et al., 2007; Simpson, 2012). Thus, by analyzing and satisfying customers’ demands,
companies would adopt both product-based and process-based green procurement:
H3c. Customer satisfaction positively moderates the effect of product-based green
procurement on operational efficiency.
H3d. Customer satisfaction positively moderates the effect of process-based green
However, under certain circumstance, due to lower industry entry barrier and vicious
competition, customers may more concern about price and early delivery, which may be in
fact detrimental to the implementation of processes-based green procurement because of
long-time input and high-level investment which potentially increase costs of products.
Piggott and Marsh’s (2004) research indicate that the average demand of customers’ response
to food safety concerns is small, especially in comparison to price effects. Similarly, Rex and
Baumann’s (2007) research also show that only eco-label have few effects on market share
partly because they have been addressed mainly to “green” consumers. Thus, companies who
intend to satisfy customers and increase competitiveness in market may either adopt or drop
process-based green procurement, thereby enhancing or decreasing their operational
efficiency. This leads to a competing hypothesis with H3d as follows:
H3d. Customer satisfaction negatively moderates the effect of process-based green
The second type of stakeholders is called reciprocators based on the dimension of norms
that concern what is good or bad, so they are decision oriented. This kind of stakeholders
includes government, stockholders and creditors, who pay more attentions to whether green
procurement has a social value. They tend to use justice method such as obtaining
corresponding values by publicly and honestly transferring information (Bridoux and
Stoelhorst, 2014). Regulative pressures enforce changes or directly tying requirements to
resources and penalties for non-compliance (Simpson, 2012). During the process of
implementing green procurement, companies should recognize the different effects of the
heterogeneous demands of those stakeholders on green procurement. Thus, we propose the
second group of moderating hypotheses:
H4. Reciprocator satisfaction positively moderates the effect of green procurement on
firm performance.
As investors, stockholders also focus on companies’ green business. Some studies show that Green
the capital market responds to information about companies’ environmental performance procurement
(Hamilton, 1995; Lanoie et al., 1998). If green procurement acts as a signal that the firm has
the capacity to positively affect other stakeholders (i.e. customers), it will lead to an increase
in the firm’s profits (Ryu et al., 2016; Mishra and Modi, 2016). So the stockholders’ awareness
of environmental protection which can further improve the entire social perception of green
issue has become one of the most influential pressures for businesses to initiate green 1061
procurement. In response to this demand and get support from stockholders, focal firm
should provide more environment-friendly products to market. Nevertheless, the long-term
perspectives of firms explored by Coase (1937) in line with the contract theory of a firm
suggest that environment-based corporate social responsibility (CSR) involves high costs for
stockholders because of heightened information asymmetries between managers and their
shareholders (Barnett, 2007; Ryu et al., 2016; Mishra and Modi, 2016). One example that
firm’s management team shall take a long-term perspective is that process-based green
procurement often involves long-term, complicated input and cannot realize economic
performance in a short term. Because the outcomes can be potentially difficult for
stockholders to verify and evaluate, firm managers are seen as those spending shareholder
wealth to carry out these activities in the hope of gaining recognition among other
stakeholders (Ryu et al., 2016). Therefore, the more pressure from stockholders, the lesser
the tendency to input into process-based green procurement. Thus:
H4a. Stockholder satisfaction positively moderates the effect of product-based green
procurement on firm performance.
H4b. Stockholder satisfaction negatively moderates the effect of process-based green
As another type of investors, creditors also impose influence upon green procurement, and it
is suggested that financial institutes have been considering the environmental impact of
corporate borrowers as part of their investment decisions (Coulson and Monks, 1999),
because they can increase the risk and costs of lending and affect the public image
(Heyes, 1996; Qu, 2010). Therefore, companies relying on external borrowing have an
incentive to make environmental disclosures (Liesen et al., 2015). As Robert notes that the
larger the extent of external borrowing, “the greater the degree to which corporate
management would be expected to respond to creditor expectations concerning a
corporation’s role in social responsibility activities.” Furthermore, the implementation of
green procurement requires a great deal of investment in new equipment and the
development of innovative products (Liu and Zhao, 2008). They also need to train their
suppliers and make joint decisions with them (Bowen et al., 2006; Vachon and Klassen, 2006;
Zhu et al., 2007, 2008), all these demand a large quantity of capital and get support from
creditors. Thus, creditor satisfaction also determines their level of motivation in investing
the firm’s green procurement, which leads to the formation of the following hypotheses:
H4c. Creditor satisfaction positively moderates the effect of product-based green
H4d. Creditor satisfaction positively moderates the effect of process-based green
Governments’ effect on green procurement is represented by their procurement governance.
It is suggested that government policies prompt companies to implement green procurement
as part of their social responsibility (Salam, 2007; Lee, 2008). Governments can use
macro-economic methods such as regulations as well as quantitative tools (e.g. regulating
the volume of pollutions and applying product certifications) and price tools (e.g. providing
IJLM allowances and preferential policies) to normalize companies’ greening practices (Adar and
28,4 Griffin, 1976). In other words, government regulations or the threat of penalties can provide
clear standards of behavior for firms as well as force the adoption of practices by firms
(Simpson, 2012). The companies which contribute more to society to meet the satisfaction of
the government, in particular, have more motivations to implement greening practice.
For example, Perrini et al. (2007) indicate that large firms are more likely to identify relevant
1062 stakeholders and meet their requirements through specific and formal strategies on CSR.
Similarly, some researches also propose that unlike SMEs who are more informal and
owner-centric, larger firms are more responsive to the requirement from the institutional
environment (Lepoutre and Heene, 2006; Vo, 2011). Therefore, companies which meet
requirements of the government could improve the performance of implementing green
procurement by cooperating with the government in sharing information and getting
support and recognition from the government. Therefore:
H4e. Government satisfaction positively moderates the effect of product-based green
H4f. Government satisfaction positively moderates the effect of process-based green
In conclusions, we could establish the following theoretical framework as shown in Figure 1.
Method
For this study, we first collected secondary data of 206 A-share companies in China and then
adopted content analysis to code two types of green procurement. Moreover, we utilize some
financial indexes to depict other variables. Finally, regressions were used to test the
mediating effects and the moderating effects under the theoretical framework and results
were reported in the next section.
Sample and data collection

There are three kinds of data source in previous studies on green supply chain: a qualitative
study by means of a literature review (e.g. Hart, 1995) or a case study (e.g. Green et al., 1998;
Boiral, 2007); a questionnaire survey to measure green procurement and test its relationship
with firm performance (Carter et al., 2000; Min and Galle, 2001; Zhu et al., 2007; Liu and Zhao,
2008; Green et al., 2012); and an event analysis (e.g. Mathur and Mathur, 2000).
Since green procurement is a sensitive topic for companies, subjective bias would affect
the sample obtained by means of a questionnaire survey. This study adopted secondary
data to measure all the variables including companies’ annual reports, social responsibility
reports, environmental reports, and sustainability reports, which are published by Guotai
Junan Securities Co. Ltd (a leading domestic securities company that provide specialized
H4e
Customer <Exte
satisfaction rnal re
sourc
es>
Government
a
Product-based green
H3
satisfaction
H4a
H4c
procurement
H3b
Rate of using resources

H1a
Capabilities of Operational efficiency H2 Firm performance

processing resources
c
H3
H1b
H4f
Process-based green
H3d
procurement Stockholder Creditor

es> satisfaction satisfaction
sourc
Figure 1. rnal re
Supplier <Exte
H4d
H4b
Theoretical framework satisfaction

investment and financial services) and Wind Information Co. Ltd (a leading integrated Green
service provider of financial data, information and software). procurement
All the A-share companies in China that publish a social responsibility report have been
sampled. After deleting the companies that were listed after 2012; were given special
treatment (ST); or changed their industry category, 206 companies remained, 31 of which are
in service industry and 175 in the manufacturing industry. The details are shown in Table I.
1063
Measures
Green procurement. This study adopted content analysis to measure green procurement.
This technology has become a legitimate research method in the field of operations and
supply chain management (Tangpong, 2011). It uses pre-established procedures and
coding schemes to systematically classify or categorize the communication content, which
enables researchers to systematically evaluate qualitative content in all communication
forms (e.g. Krippendorff, 2004; Weber, 1990). In this study, all the items coded were taken
from existing literature. According to the literature review, green procurement has two
dimensions, namely, product-based and process-based. The main items of measuring
N %
Industry
Wholesale and retail 15 7.28
IT 16 7.77
Real state 36 17.48
Food and drinks 20 9.71
Medicine and biological products 32 15.53
Electrics 21 10.19
Fabric and clothes 13 6.31
Metal and nonmetal 53 25.73
Total 206 100.00
Firm age (year)
o10 14 6.80
10-14 84 40.78
15-19 81 39.32
⩾20 27 13.11
Total 206 100.00
Assets (billion yuan)
o5 79 38.35
5-9 32 15.53
10-49 61 29.61
⩾50 34 16.50
Total 206 100.00
Ownership
State-owned 127 61.65
Non–state–owned 79 38.35
Total 206 100.00
International business (percentage)
o0.01 100 48.54
0.01-0.09 48 23.30
0.1-0.49 41 19.90
⩾0.50 17 8.25 Table I.
Total 206 100.00 Sample distribution
IJLM product-based green procurement come from the study by Green et al. (1996) as shown
28,4 in Table II. Another two items, namely, “suppliers’ packaging materials are green”
(Carter and Carter, 1998; Carter et al., 2000) and “the whole process control of products”
(Lamming and Hampson, 1996; Hamner, 2006) were integrated with the first six items to
code product-based green procurement. As for process-based green procurement, we
mainly adopted the measures developed by Bowen et al. (2006). Another four items are
1064 integrated with the first six items, namely, “promotion of green and pro-environmental
concepts” (Green et al., 1996), “pro-environmental evaluation of suppliers’ suppliers”
(Zhu et al., 2007, 2008), “implementing green and pro-environmental trainings for the
suppliers” (Vachon and Klassen, 2006; Hamner, 2006), and “helping suppliers to
Variable Type Measure Reference
Product-based Ordinal (a) Cooperating with each other to enhance the Green et al. (1996)
green utilization efficiency of raw materials
procurement (b) Participating in partners’ production processes Green et al. (1996)
(c) Suppliers’ products are green Green et al. (1996)
(d) Green management of companies’ products Green et al. (1996)
(e) Green processing of the extra and used materials Green et al. (1996)
(paper, plastic etc.)
( f ) Green handling of wastes (waste liquid, gas etc.) Green et al. (1996)
(g) Suppliers’ packaging materials are green Carter and Carter
(1998), Carter et al.
(2000)
(h) The whole process control of products Lamming and
Hampson (1996),
Hamner (2006)
Process-based Ordinal (a) Investigation of suppliers’ green and pro- Bowen et al. (2006)
green environmental information
procurement (b) Construction and certification of environmental Bowen et al. (2006)
management system
(c) Auditing the suppliers’ environmental management Bowen et al. (2006)
system
(d) Co-making pro-environmental plans and decisions Bowen et al. (2006)
(e) Evaluation of suppliers’ green and pro- Bowen et al. (2006)
environmental system
( f ) Establishment of the reward and punishment Bowen et al. (2006)
mechanisms for suppliers’ pro-environmental
behaviors
(g) Promotion of green and pro-environmental concepts Green et al. (1996)
(h) The pro-environmental evaluation of suppliers’ Zhu et al. (2007, 2008)
suppliers”
(i) Implementing green and pro-environmental trainings Vachon and Klassen
for suppliers (2006), Hamner (2006)
(j) Helping suppliers to implement green and Zsidisin and
pro-environmental activities Hendrick (1998)
Operational Continuous The ratio between main business costs and main Financial Report
efficiency income
Firm Continuous Return on assets (ROA) Financial Report
performance
Supplier Continuous Turnover of payment Financial Report
Customer Continuous Turnover of inventory Financial Report
Government Continuous Tax on assets Financial Report
Table II. Stockholder Continuous Earnings per share (EPS) Financial Report
Measures of variables Creditor Continuous Asset-liability ratio Financial Report
implement green and pro-environmental activities” (Zsidisin and Hendrick, 1998). Dummy Green
variables were adopted to value each item in line with Anton et al. (2004). This means that procurement
if the company achieves one item, the score of the dimension to which this item belongs is
“1.” Total scores of the two dimensions of green procurement would be the sum of all their
items. Thus, the highest score of product-based green procurement is “8,” while the
highest score of process-based green procurement is “10.”
To keep the results objective, this study employed six coders to code independently, 1065
including one professor, two assistant professors and three doctoral students who major in
supply chain management and hold in-depth understanding on the design method of this
research. The two groups first tested the initial coding rules on a sample of 15 percent text
units and then coded the whole sample after calculating the consistency (Neuendorf, 2002).
We adopted Holsti function which is widely used to test consistency (Weber, 1990).
The Holsti function showed a coding reliability of 0.92, surpassing the threshold level:
H ¼ 2A=ðB1 þ B2 Þ
Where A represents the number of items that all the coders agreed; B1 and B2 represent the
number of all the units coded.
Firm performance. In line with measures for green supply chain performance proposed
by Kainuma and Tawara (2006)’s, return on assets was adopted to identify firm
performance in this study.
Operational efficiency. Operational efficiency is the ratio between inputs and outputs.
The ratio between the main business costs and income has been identified as operational
efficiency in this study.
Stakeholder satisfaction. The measures for different stakeholders are as follows.
First, supplier satisfaction is measured by turnover of payment. The higher the turnover is,
the shorter time the company will withhold suppliers’ accounts payable, which will be more
convenient for suppliers and increase their satisfaction with the company. Second, customer
satisfaction is measured by the turnover of the inventory, which represents the efficiency and
effectiveness of meeting customers’ needs. The higher the turnover is, the quicker they will
move through an organization’s processes to customers (Modi and Mabert, 2010), and the more
frequently the company will communicate with customers, which indicates a good relationship
and high customer satisfaction. Third, government satisfaction is measured by the tax on
assets. Thus, the higher the rate of tax on assets, the more economic contribution the company
would make to the government (the social contribution such as environmental protection with
the tax rebate is not considered in this study). Fourth, stockholder satisfaction is measured by
earnings per share (EPS); therefore, stockholders will be more satisfied with high EPS.
Fifth, creditor satisfaction is measured by the asset-liability ratio. Since a high ratio indicates a
higher risk which harms creditors’ benefits, creditors always seek to get a lower ratio.
Control variables. According to previous studies on green supply chain management,
firm characteristics such as size (Chen et al., 2015; Khor et al., 2016; Lucas and Noordewier,
2016; Zhu et al., 2007) and age (Vachon and Klassen, 2008) are often controlled in test for the
effects on firm competitiveness. Thus, this study first controlled firm size measured by the
logarithm of average assets and firm age was measured by the time from the company
established to 2011. Second, industries sampled in this study are quite diversified, so we also
controlled the type of industry which was measured by seven dummy variables with real
state as the baseline. In addition, from the institutional perspective, there are significant
differences between state-owned and non-state-owned firms in China. For example, testing
the sample of publicly listed Chinese firms in different manufacturing industries during
2010-2013, He et al. (2015) find that the efficiency performance of non-state-owned firms is
greater than state-owned firms. Thus, ownership was controlled by a dummy variable with
IJLM a value of “1” for state-owned, while “0” for non-state-owned. Finally, exporting products or
28,4 becoming suppliers of foreign consumers in China require Chinese enterprises to address
and overcome “green barriers” and increase their international competitiveness
(Zhu et al., 2007), so we also controlled international business which was measured by
the ratio of income from international business and the total business income.
1066 Empirical models

The general hypothesis stated earlier can be restated as the following functions. The first
group of functions was used to test the mediating effects in three steps: regressing
independent variables on dependent variables as shown in Function (1) and (2); regressing
independent variables together with mediators on dependent variables as shown in
Function (3); regressing independent variables on mediators as shown in Function (4):
yperf ¼ a1 þb11 xprod þb1i x1i þe1 (1)
yperf ¼ a2 þb21 xprod þb22 xproc þb2i x2i þe2 (2)
yperf ¼ a3 þb31 xprod þb32 xproc þb33 moper þb3i x3i þ e3 (3)
moper ¼ a4 þb41 xprod þb42 xproc þb4i x4i þe4 (4)

Where yperf stands for firm performance; moper stands for operational efficiency; xprod stands
for product-based green procurement; xproc stands for process-based green procurement; xi
stands for control variables including firm size, firm age, industry, ownership and
international business.
The second group of functions was used to test the moderating effects for reciprocators
as well as self-regarding stakeholders by first regressing independent variables and
moderators on dependent variables and then taking the interactions between independent
variables and moderators into the regressions. If the coefficients of the interactions and the
changed R square are both significant, it will represent that the moderating effects exist.
For reciprocators, Function (5) to (8) tests the moderating effects:
yoper ¼ a5 þb51 xprod þb52 xproc þb53 zsup þb5i x5i þe5 (5)
yoper ¼ a6 þb61 xprod þb62 xproc þb63 zsup þ þb64 xprod zsup þb65 xproc zsup þb6i x6i þe6 (6)
yoper ¼ a7 þb71 xprod þb72 xproc þb73 zcust þb7i x7i þe7 (7)
yoper ¼ a8 þb81 xprod þb82 xproc þb83 zcust þ þ b84 xprod zcust þ b85 xproc zcust þb8i x8i þe8 (8)
For self-regarding stakeholders, Function (9) to (14) tests the moderating effects:
yoper ¼ a9 þb91 xprod þb92 xproc þb93 zstoc þb9i x9i þe9 (9)
yoper ¼ a10 þb101 xprod þb102 xproc þb103 zstoc þ þb104 xprod zstoc þb105 xproc zstoc þb10i x10i þe10
(10)
yoper ¼ a11 þb111 xprod þb112 xproc þb113 zcred þb11i x11i þe11 (11)
yoper ¼ a12 þb121 xprod þb122 xproc þ b123 zcred þ þb124 xprod zcred þb125 xproc zcred þb12i x12i þe12 Green
(12) procurement
yoper ¼ a13 þb131 xprod þb132 xproc þb133 zgov þb13i x13i þe13 (13)
yoper ¼ a14 þb141 xprod þb142 xproc þb143 zgov þ þb144 xprod zgov þb145 xproc zgov þb14i x14i þe14 1067
(14)
Where zsup stands for supplier satisfaction; zcust stands for customer satisfaction; zstoc stands
for stockholder satisfaction; zcred stands for creditor satisfaction; zgov stands for government
satisfaction.
Results
SPSS 18.0 has been used for the data analysis in this study. Correlations among all the key
variables are shown in Table III below.
Testing the mediating effects

Table IV shows the results of test on mediating effects. Both product-based green
procurement and process-based green procurement have significant and positive effects on
firm performance, which supports H1a and H1b. Furthermore, they both have a significant
and positive effect on operational efficiency. Model 4 shows that when operational efficiency
is added to the effect on firm performance, either the effect of product-based green
procurement or process-based green procurement will decrease, while the effect of
operational efficiency is still significant. This suggests that operational efficiency can
partially mediates the effects of product-based green procurement and process-based green
procurement on firm performance, which supports H2a and H2b.
Testing the moderating effects

Table V shows the results of test on the moderating effects of reciprocators. Model 7 shows
that the interaction between supplier satisfaction and product-based green procurement has
a significant and positive effect on operational efficiency, which suggests that the effect of
product-based green procurement on firm performance will get stronger as supplier
satisfaction getting higher. Thus, H3a can be supported. In contrast, the interaction between
supplier satisfaction and process-based green procurement has a significant but negative
1 2 3 4 5 6 7 8 9
1. Product-based green
procurement 1
2. Process-based green
procurement 0.083 1
3. Operational efficiency 0.283** −0.009 1
4. Supplier satisfaction 0.033 −0.002 −0.218** 1
5. Customer satisfaction 0.008 0.191** −0.261** 0.329** 1
6. Stockholder satisfaction 0.442** 0.286** 0.350** 0.010 0.036 1
7. Creditor satisfaction 0.010 −0.100 0.285** 0.213** 0.121 0.143* 1
8. Government satisfaction 0.355** 0.224** 0.466** 0.057 0.092 0.505** 0.210** 1
9. Firm performance 0.502** 0.246** 0.483** 0.095 0.139* 0.769** 0.413** 0.602** 1 Table III.
Notes: *p o0.05; **p o 0.01 Correlations
IJLM DV Firm performance Operational efficiency
28,4 IV M1 M2 M3 M4 M5
Firm size 0.008 −0.074 −0.132* −0.073 −0.142**

Firm age −0.017 −0.025 0.001 0.028 −0.063
International business 0.023 0.000 −0.019 0.016 −0.085
Ownership −0.054 0.006 0.026 0.035 −0.021
1068 Industry 1 0.170** 0.119* 0.056 0.194** −0.328***
Industry 2 0.124 0.125* 0.065 0.150* −0.204***
Industry 3 0.318*** 0.257*** 0.192*** 0.230*** −0.090
Industry 4 0.389*** 0.264*** 0.232*** 0.237*** −0.011
Industry 5 0.105 0.067 0.037 0.152** −0.275***
Industry 6 0.099 0.071 0.027 0.133** −0.253***
Industry 7 0.102 0.057 −0.001 0.255*** −0.610***
Product-based P. 0.471*** 0.460*** 0.348*** 0.266***
Process-based P. 0.223*** 0.174*** 0.117**
Operational efficiency 0.419***
R2 0.153 0.359 0.400 0.497 0.450
ΔR2 0.153 0.207 0.041 0.097 0.450
Table IV. F 3.174*** 9.015*** 9.858*** 13.459*** 12.10***
The results of testing Notes: Product-based P. stands for product-based green procurement; process-based P. stands for process-
the mediating effects based green procurement. *po 0.1; **p o0.05; ***p o0.01
DV Operational efficiency
IV M5 M6 M7 M8 M9
Firm size −0.142** −0.168** −0.152** −0.154** −0.153**

Firm age −0.063 −0.073 −0.041 −0.042 −0.039
International business −0.085 −0.094 −0.095 −0.090 −0.127**
Ownership −0.021 −0.045 −0.063 −0.051 −0.044
Industry 1 −0.328*** −0.311*** −0.313*** −0.254*** −0.216***
Industry 2 −0.204*** −0.204*** −0.209*** −0.171*** −0.148**
Industry 3 −0.090 −0.066 −0.033 −0.060 −0.029
Industry 4 −0.011 0.005 −0.005 0.013 0.039
Industry 5 −0.275*** −0.273*** −0.263*** −0.234*** −0.226***
Industry 6 −0.253*** −0.244*** −0.245*** −0.244*** −0.226***
Industry 7 −0.610*** −0.548*** −0.541*** −0.548*** −0.510***
Product-based green procurement 0.266*** 0.269*** 0.295*** 0.262*** 0.297***
Process-based green procurement 0.117** 0.111* 0.075 0.135** 0.162***
Supplier satisfaction −0.184*** −0.208***
Supplier satisfaction × product-based P. 0.117**
Supplier satisfaction × process-based P. −0.128**
Customer satisfaction −0.158** −0.245***
Customer satisfaction × product-based P. 0.185***
Customer satisfaction × process-based P. 0.052
R2 0.450 0.480 0.510 0.469 0.492
Table V. ΔR2 0.450 0.030 0.030 0.019 0.023
The results of testing F 12.10*** 12.59*** 12.30*** 12.026*** 11.456***
the moderating effects Notes: Product-based P. stands for product-based green procurement; process-based P. stands for process-
of reciprocator based green procurement. *po 0.1; **p o0.05; ***p o0.01
effect on operational efficiency, which suggests that the effect of product-based green
procurement on firm performance will get weaker as supplier satisfaction getting higher.
Therefore, H3b can be supported. Furthermore, the interaction between customer satisfaction
and product-based green procurement has a significant and positive effect on operational
efficiency, which supports H3c. However, the interaction between customer satisfaction and Green
process-based green procurement is insignificant, which rejects H3d and H3d. procurement
Table VI shows the results of test on the moderating effects of self-regarding
stakeholders. The moderating effects of stockholder satisfaction on the relationship between
product-based green procurement and firm performance, and between process-based green
procurement and firm performance are both significant. The former is positive, while the
latter is negative, indicating that the effect of product-based green procurement on firm 1069
performance will get stronger as stockholder satisfaction getting higher, but the effect of
process-based green procurement on firm performance will get weaker. Thus, H4a and H4b
can be both supported. Furthermore, the interaction either between creditor satisfaction and
product-based green procurement or between creditor satisfaction and process-based green
procurement is significant and positive. Thus, the moderating effects of creditor satisfaction
are both significant, which supports H4c and H4d. Finally, the interaction between
DV Firm performance
IV M10 M11 M12 M13 M14 M15 M16
Firm size −0.132* −0.227*** −0.243*** 0.057 0.034 −0.067 −0.085

Firm age 0.001 0.027 0.027 0.050 0.027 −0.008 0.000
International business −0.019 0.031 0.018 −0.012 −0.033 0.119** 0.121**
Ownership 0.026 −0.003 −0.009 0.039 0.018 −0.022 −0.027
Industry 1 0.056 0.045 0.039 0.007 −0.013 0.030 0.044
Industry 2 0.065 0.057 0.045 −0.022 0.017 0.072 0.057
Industry 3 0.192*** 0.046 0.043 0.050 0.032 −0.051 −0.044
Industry 4 0.232*** 0.129** 0.101* 0.002 −0.004 0.143** 0.179***
Industry 5 0.037 0.033 0.020 −0.085 −0.048 0.070 0.045
Industry 6 0.027 0.012 0.011 −0.064 −0.082 0.000 0.007
Industry 7 −0.001 0.014 −0.017 −0.098 −0.101 0.024 0.024
Product-based P. 0.460*** 0.193*** 0.206*** 0.469*** 0.527*** 0.294*** 0.351***
Process-based P. 0.223*** 0.066 0.079* 0.262*** 0.328*** 0.112** 0.150***
Stockholders satisfaction 0.681*** 0.657***
Stockholders 0.147***
satisfaction × Product-
based P.
Stockholders −0.116**
satisfaction × Process-
based P.
Creditors satisfaction 0.481*** 0.492***
Creditors 0.193***
based P.
Creditors 0.252***
based P.
Government satisfaction 0.523*** 0.363***
Government 0.282***
based P.
Government 0.066
based P.
R2 0.400 0.710 0.729 0.512 0.606 0.525 0.598 Table VI.
ΔR2 0.400 0.310 0.019 0.112 0.094 0.125 0.073 The results of testing
F 9.858 33.323 31.765 14.311 18.145 15.059 17.599 the moderating effects
Notes: Product-based P. stands for product-based green procurement; process-based P. stands for process- of self-regarding
based green procurement. *p o0.1; **po 0.05; ***po 0.01 stakeholders
IJLM government satisfaction and product-based green procurement is significant, but the
28,4 interaction between government satisfaction and process-based green procurement is
insignificant. Therefore, H4e is supported but H4f is rejected.
Discussion and conclusions

Based on NRBV, this study constructs a theoretical framework to clarify the mechanisms
1070 underlying the relationship between green procurement and firm performance. Secondary
data from 206 A-share companies in China has been used in this study to examine two kinds
of strategies: product-based green procurement and process-based green procurement, and
to test their effects on operational efficiency and firm performance, respectively.
More important, this study takes stakeholder satisfaction as an important contingent
factor in this relationship and conducts test for the moderating effects of both reciprocators
and self-regarding stakeholders. Following theoretical and managerial implications have
been revealed by findings from Chinese companies.
Theoretical implications
Based on RBV and NRBV, this paper enriches the NRBV theory by arguing that scare, imitable,
nonreplicable, valuable dynamic capabilities are realized from both product-based and process-
based green procurement. Previous studies have only proposed the importance of NRBV and
general dimensions of natural resources which include pollution prevention, product
stewardship and sustainable development (Hart, 1995; Hart and Dowell, 2011). There has
been a lack of researches investigating dynamic capabilities which reflect firm’s detailed abilities
or measureable activities responding to green procurement, and their roles affecting supply
chain operations and competitiveness. This study has investigated the distinctive roles played
by product-based and process-based green procurement, respectively. Product-based green
procurement emphasizes on sourcing reusable and environment-friendly materials, which is
developed to manage explicit capability and ready to be related to internal coordination and
management. In contrast, process-based green procurement focuses on long-term improvement
and system optimization, which asks for great endeavor of external coordination and
management. These two kinds of procurement capabilities present two facets of firm’s practice
on green procurement, which complements rather than substitutes each other. However, the
effect of product-based green procurement is much higher than process-based green
procurement, indicating that product-based green procurement is more favorable for operational
performance than process-based green procurement. The potential reason is that product-based
procurement activities, such as purchasing pro-environmental products, updating pro-
environmental equipment, etc., are directly related to production and performance because of its
explicit feature. Nevertheless, process-based green procurement usually takes a great effect and
long-time for improvement, it is more tacit and indirect to performance.
Second, this study takes into account of both financial and operational performance
outcomes of green procurement and also supports the mediating effect of operational
efficiency on the relationship between two dimensions of green procurement and firm
performance. It is suggested that a company which implements green procurement should
realize a balance between short-term financial benefits and long-term operational efficiency.
The study shows that the two types of green procurement have not only direct effect on firm
performance but also indirect effect through enhancing operational efficiency. Therefore,
the company which implements green procurement should not only consider direct
economic benefits but also pay more attention to form its own capabilities which enhance
daily operational efficiency. The main reason is that green procurement not only signals
environmental protection and sustainable development but also improves companies’
ability to manage product life cycle and all suppliers’ processes, which may improve their
procurement efficiency (Large and Thomsen, 2011).
Third, this study particularly explains the contingent role played by stakeholder Green
satisfaction in the relationship between green procurement and firm performance, which procurement
extends NRBV by integrating stakeholder theory. This research indicates that a company
which implements green procurement should also set a high value on interactions with
different kinds of stakeholders, because each party in the environment plays a different role
in green procurement. The company should learn to manage distinctive behaviors or
appeals for different stakeholders. For self-regarding stakeholders, supplier satisfaction and 1071
customer satisfaction have different moderating effects on the two dimensions of green
procurement. Supplier satisfaction positively moderates the effect of product-based green
procurement on operational efficiency, but negatively moderates the effect of process-based
green procurement. The main reason is that implementing green procurement will entail
high costs such as human capital costs caused by complex process, technical costs or
training costs caused by business complexity, and auditing costs caused by the need to
investigate suppliers (Min and Galle, 1997). In contrast, customer satisfaction positively
moderates the effect of product-based green procurement but does not moderate the effect of
process-based green procurement. Thus, customer involvement is infrequent in process-
based green procurement, which indicates that customers pay more attention to green
products and less to green processes (Zhu et al., 2007).
For reciprocators, they are related to firms’ financial performance. First, stockholder
satisfaction positively moderates the effect of product-based green procurement on firm
performance as the capital market makes a positive response to information about enhancing
environmental performance (Hamilton, 1995; Lanoie et al., 1998). However, stockholder
satisfaction negatively moderates the effect of process-based green procurement on firm
performance. The results mean that product-based green procurement will enhance stockholders’
economic interests while process-based green procurement usually ask for long-term input which
cannot result in economic return in the short run. Thus, from the perspective of stockholder
satisfaction, they tend to adopt product-based green procurement instead of process-based green
procurement because companies are supposed to spend corporate funds on green procurement
only in ways that have been authorized by shareholders. Furthermore, creditor satisfaction
positively moderates the effect of either product-based green procurement or process-based green
procurement on firm performance. This suggests that potential and long-term profits can be
made by implementing green procurement, which is identical with the objective of most creditors.
Third, government satisfaction positively moderates the effect of product-based green
procurement on firm performance, but it does not moderate the effect of process-based green
procurement. The main reason is that process-based green procurement is implemented by
monitoring suppliers’ green behavior, evaluating and cooperating with suppliers, so government
involvement is much lower compared with product-based green procurement.
Managerial implications
The findings of this paper have several important managerial implications. First, firms have
to be aware that green procurement is built through both product-based and process-based
green procurement capabilities. Product-based procurement focuses on greening physical
materials and products in the operation which reflect explicit resources or outside-in
managerial capabilities. In contrast, process-based green procurement emphasizes on
greening behaviors or activities which reflect tacit resources or inside-out managerial
capabilities. These two natural resources or dynamic capabilities are complementary,
inseparable capabilities which are developed by companies engaged in green procurement.
Both capabilities will have great influence on operational efficiency and financial performance.
Second, as implementing green procurement, a company should balance the long-term
and short-term interests. Not all green procurement activities directly lead to economic
benefit, but some will enhance operational efficiency through upgrading and increasing
IJLM managerial capabilities. Therefore, both operational orientation and beneficial orientation
28,4 shall be considered in the process of green procurement.
Third, interacting with stakeholders in the external environment is also a great challenge
to companies which are engaged in greening. Due to different positions or value appeals, each
stakeholder often differs on the requirement of green procurement. Therefore, a company, that
initiates green procurement, should balance benefits of different stakeholders on the one hand;
1072 and develop specific or customized strategies to deal with the relationship with each
stakeholder on the other hand,. For example, suppliers’ opportunism cannot be avoided
through product-based green procurement. More irregular producing or supplying behaviors
would especially happen in the early stage of procurement when the information between
suppliers and buyers is asymmetric. The achievement of green procurement requires
suppliers’ internal processes to be managed. Similarly, Stockholders can increase companies’
capitals by buying their stock in the market, which pays for the extra cost of implementing
product-based green procurement, so they can accept this strategy. In contrast, characteristics
of process-based green procurement- namely, complexity and long duration, will cause a long
lag of benefits. Thus, this is unacceptable for stockholders who focus on their own benefits.
Forth, on the aspect of government influence, the more contribution to the society, the
more pressure from the government to adopt product greening will be resisted. This finding
is in line with the result that large firms undertake more social responsibilities than SMEs
(Lepoutre and Heene, 2006; Vo, 2011). However, rejection of the relationship between
process-based green procurement and performance indicates that strengthening process
regulations and management is a great challenge in the emerging market.
Limitations
Theoretically, there may be other kinds of linkages between green procurement and firm
performance, which are affected by other factors, but only mediating effects of operational
efficiency and moderating effects of stakeholder satisfaction were discussed in this study.
Future studies could explore more theoretical implications. Also, the data in this study was
cross-sectional, but future studies could use panel data as the sample. Finally, although the
sample collected in China as a typical country that has been exploring the balance between
green revolution and economic development could well illustrate the underlying mechanisms of
green procurement, future studies could compare the specific situations in China with the ones
in other emerging countries.
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About the authors

Hua Song is a Professor at the School of Business, Renmin University of China, Beijing, People’s
Republic of China. He received his PhD in Economics from Zhongnan University of Economics and
Laws. His research interests include supply chain management, interorganizational relationships, and
strategic management. His research has appeared in Industrial Marketing Management, Industrial
Management & Data System, Transportation Journal, and others.
Kangkang Yu is an Associate Professor at the School of Agricultural Economics and Rural
Development, Renmin University of China, Beijing, People’s Republic of China. She received her PhD
degree from the Australian School of Business, University of New South Wales, Sydney, Australia.
She has research interests in the areas of alliances and networks, supply chain flexibility, and
distribution channel management. Her research has appeared in decision sciences, international journal
of production economics, international journal of operations and production management, and others.
Kangkang Yu is the corresponding author and can be contacted at: yukangkang@ruc.edu.cn
Songbo Zhang is an Assistant professor at the School of Business, Capital University of Economics
and Business, Beijing, People’s Republic of China. He received his PhD degree from the School of
Business, Renmin University of China, Beijing, People’s Republic of China. He has research interests in
the areas of green supply chain.
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Literature review and theoretical hypothesis

NRBV and the direct performance of green procurement

NRBV and the indirect performance of green procurement

NRBV and the moderation of stakeholder satisfaction

Sample and data collection

Rate of using resources

Capabilities of Operational efficiency H2 Firm performance

procurement Stockholder Creditor

Theoretical framework satisfaction

Variable Type Measure Reference

1066 Empirical models

yperf ¼ a2 þb21 xprod þb22 xproc þb2i x2i þe2 (2)

moper ¼ a4 þb41 xprod þb42 xproc þb4i x4i þe4 (4)

Testing the mediating effects

Testing the moderating effects

Firm size 0.008 −0.074 −0.132* −0.073 −0.142**

Firm size −0.142** −0.168** −0.152** −0.154** −0.153**

Firm size −0.132* −0.227*** −0.243*** 0.057 0.034 −0.067 −0.085

Discussion and conclusions

About the authors

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Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Firm size −0.142 −0.168 −0.152 −0.154 −0.153**

Firm size −0.132* −0.227* −0.243* 0.057 0.034 −0.067 −0.085