Antecedents and Performance Outcomes of Strategic Environmental Sourcing: An Investigation of Resource‐Based Process and Contingency Effects

• Author: G. Tomas M. Hult,Sachin B. Modi,Srinivas Talluri,Tobias Schoenherr
• DOI: http://doi.org/10.1111/jbl.12052
• Date: 01 September 2014
• Published date: 01 September 2014

Antecedents and Performance Outcomes of Strategic

Environmental Sourcing: An Investigation of Resource-Based

Process and Contingency Effects

Tobias Schoenherr

1

, Sachin B. Modi

2

, Srinivas Talluri

1

, and G. Tomas M. Hult

1

1

Michigan State University

2

The University of Toledo

This study develops an understanding of the antecedents and performance-related consequences of strategic environmental sourcing (SES).

Institutional pressure and the firm’s environmental engagement serve as antecedents to SES, with performance dimensions including envi-

ronmental, product development, and product quality performance. While direct relationships between these dimensions and SES have been

studied in prior work, the present research adds greater specificity and depth by investigating process and contingency effects on product-level

outcomes. The resource-based theory provides the theoretical motivation for these relationships, which are tested via survey data collected from

sourcing professionals in the U.S. manufacturing industry. The results emphasize environmental engagement as an important process element

between institutional pressure and SES, and highlight the ability of institutional pressure to strengthen the relationship between environmental

engagement and SES. Environmental performance was found as an influential conduit in the relationship between SES and both product quality

and product development performance, with SES also serving as a contingency.

Keywords: strategic environmental sourcing; environmental supplier collaboration; resource-based theory; environmental performance; product

performance; institutional pressure; mediation; moderation; mediated moderation

INTRODUCTION

Strategic environmental sourcing (SES) has come to the fore, as

is evidenced by the growing number of academic and industry

publications on environmental supply chain management (SCM)

(Sarkis et al. 2011). SES refers to the integration of environmen-

tal considerations in the selection, evaluation, and development

of suppliers. The importance of SES is heightened by the general

trend toward greater supply chain integration and the ensuing

reliance on suppliers. As such, strategic sourcing is known to

significantly influence a company’s competitiveness (Ketchen

et al. 2008; Craighead et al. 2009; Shook et al. 2009). Specifi-

cally, research indicates that SES plays a critical part in a firm’s

overall sourcing strategy (Schoenherr et al. 2012).

Similar to findings in the general domain of strategic sourcing

(Das et al. 2006), studies investigating the impact of environ-

mental management practices on performance have revealed

mixed results. On the one hand, research shows that the imple-

mentation of environmental SCM principles yields not only

environmental performance benefits but also improvements along

other dimensions of performance (Zhu and Sarkis 2004). How-

ever, on the other hand, evidence suggests that these positive

outcome effects are not always observed (Rao and Holt 2005;

Rusinko 2007). Realities are thus more complex than assumed

and deserve closer scrutiny (Yang et al. 2011; Schoenherr

2012). The present study aims to fill this void by investigating

antecedents and performance outcomes of SES, via survey data

collected from sourcing professionals in the U.S. manufacturing

industry.

Existing research indicates two influential antecedents to SES:

institutional pressure and a firm’s environmental engagement

(Delmas and Toffel 2004; Sarkis et al. 2010). Institutional pres-

sure is defined as a stimulus that can influence the firm, and it

generally subsumes the three subdimensions of coercive, norma-

tive, and mimetic pressures (Dimaggio and Powell 1983). Institu-

tional pressure is included as a potential antecedent since not all

business decisions are founded on a manager’s rationale eco-

nomic choice (Rivera 2004), especially those which pertain to

the adoption of environmental practices (Delmas and Toffel

2004). Environmental engagement is defined as the overall cli-

mate in the firm pertaining to its environmental mindset and

associated activities on a corporate or company-wide level. Envi-

ronmental engagement is included since prior research has called

attention to the importance of a favorable organizational climate

for the implementation of environmental practices (Sarkis et al.

2010).

In contrast to prior research, which has primarily focused on

direct relationships of antecedents and performance outcomes of

SES, the current investigation delves deeper into mediation and

moderation aspects in the overall framework of SES. This allows

for a more nuanced assessment by taking a process and contin-

gency perspective. Further, it enables us to put forth a conceptual

framework that may provide insight into prior contradictory find-

ings. Specifically, grounding our arguments in the resource-based

theory (RBT; Barney 1991), we hypothesize the mediating role

of environmental engagement in the relationship between institu-

tional pressure and SES. From this process perspective, environ-

mental engagement, which is driven by institutional pressure, is

viewed as a resource that is able to serve as a conduit for effec-

tuating SES. In addition, taking a contingency perspective, we

theorize the moderating role of institutional pressure on the

Corresponding author:

Tobias Schoenherr, Department of Supply Chain Management, The

Eli Broad Graduate School of Management, Michigan State Univer-

sity, 632 Bogue Street, East Lansing, MI 48824, USA; E-mail: scho-

enherr@broad.msu.edu

Journal of Business Logistics, 2014, 35(3): 172–190

© Council of Supply Chain Management Professionals

relationship between the firm’s environmental engagement and

SES. Arguments are developed to suggest that the ability of

environmental engagement to serve as a resource for the

enhancement of SES is contingent on the firms’institutional

environment. Specifically, under conditions of greater institu-

tional pressure, the influence of environmental engagement on

SES would strengthen.

In considering the performance consequences of SES, our

research framework focuses on a firm’s environmental, product

development and product quality performance. Environmental

performance, which refers to the firm’s improvement (or deterio-

ration) in terms of pollution and waste generation, is often indi-

cated to be the most immediate outcome of environmental

management practices (Zhu and Sarkis 2004). While research

providing support for this positive direct relationship is abundant

(Geffen and Rothenberg 2000; Atesßet al. 2012), negative rela-

tionships were also detected (Delmas 2002; Eltayeb et al. 2011),

necessitating further investigation. Further, while existing

research on environmental efforts of firms has often considered

outcomes such as market and financial performance (Yang et al.

2011), attention to product-level outcomes, such as product

development and product quality, is lacking. Indeed, anecdotal

evidence indicates a debate regarding whether environmental ini-

tiatives enhance or impede such aspects of performance (Walley

and Whitehead 1994; Porter and van der Linde 1995a). We bring

clarity to this discussion by the inclusion of these variables.

Product development performance, which is defined as the firm’s

improvement (or deterioration) in its ability to develop, design,

and modify new products, is included since environmental objec-

tives can influence product development outcomes, affecting the

product’s acceptance in the marketplace. This is illustrated by

Frito-Lay’s debacle with its environmentally friendly Sun Chips

bags; the company was forced to abandon their 100% composta-

ble bags because they were too noisy (Horovitz 2010). Product

quality performance is defined as the firm’s improvement (or

deterioration) in its ability to produce products that are durable,

reliable, and conform to specifications, and is included since syn-

ergetic effects between environmental activities and quality out-

comes are possible (Pil and Rothenberg 2003).

Similar as above, rather than investigating straightforward

direct relationships, the present research takes a process and con-

tingency perspective. From the process perspective, this research

hypothesizes the mediating role of environmental performance in

the relationship between SES and both product development and

product quality performance. The arguments rely on the RBT,

which stipulates that resources are able to yield competitive

advantage only if they possess the property of being effective in

achieving their intended outcome (Barney 1991). As such, SES

needs to have demonstrated the resources’intended beneficial

outcome (the effectiveness of SES), as evidenced in greater envi-

ronmental performance, before such resources can effectuate

other outcomes. From the contingency perspective, we theorize

about the moderating role of SES on the relationship between

environmental performance and both product development and

product quality performance. Within this perspective, SES is

viewed as a valuable resource, enabling a context in which envi-

ronmental performance more easily manifests itself in greater

product development and product quality performance. There-

fore, the relationship between environmental performance and

the aspects of product performance is expected to be stronger

under greater levels of SES.

Overall, by taking a process and contingency perspective, the

findings from this study provide nuanced insights into anteced-

ents and product-level performance outcomes of SES. Specifi-

cally, environmental engagement was found to fully mediate the

influence of institutional pressure on SES, with institutional pres-

sure further enhancing the influence of a firm’s environmental

engagement on SES. The critical influence of institutional pres-

sure was also evidenced by its significant indirect effects on all

three performance dimensions. In addition, we find SES and

environmental performance to mediate the moderating influence

represented by the interaction of institutional pressure and envi-

ronmental engagement. These results suggest that the indirect

influence of environmental engagement on all three performance

dimensions is enhanced under greater levels of institutional pres-

sure. Finally, evidence was found for the complete mediation of

environmental performance in the relationship between SES and

both product development and product quality performance.

However, evidence suggests for SES to serve as a moderator

only in the relationship between environmental performance and

product quality performance.

THEORY AND HYPOTHESIS DEVELOPMENT

The RBT, which suggests that a firm’s resource position can be

leveraged for competitive advantage, guides our hypothesis

development. Resources represent the strengths of a firm (Barney

et al. 2001, 2011) and lead to above-average returns when such

resources can be characterized as valuable, rare, inimitable, and

nonsubstitutable (Barney 1991). RBT serves as a particularly rel-

evant perspective for our research because of its ability to expli-

cate outcome differentials in terms of SES and performance

dimensions, and its application in considering the natural envi-

ronment of the firm and its supply chain (Sarkis et al. 2011).

The overall theoretical model, shown in Figure 1, illustrates a

network of relationships in which environmental engagement and

environmental performance act as mediators, and institutional

pressure and SES as moderators. It should be noted that the

ensuing hypotheses are not competing. Rather, they are part of a

joint investigation of mediation and moderation in a single

framework. While these more complex and sophisticated models

are not typically found in SCM and operations management liter-

atures, their importance is highlighted by widespread adoption in

parallel academic fields such as applied psychology (Edwards

and Lambert 2007).

Antecedents of SES

The mediating role of environmental engagement

Organizational sociologists and neo-institutional theorists contend

that not all business decisions are founded on a manager’s

rational economic choice (Dimaggio and Powell 1983; Rivera

2004). Indeed, institutional pressure can have a strong influence

on corporate behavior (Campbell 2007). Past research therefore

suggested a positive relationship between institutional pressure

and a firm’s environmental behavior (Jennings and Zandbergen

1995; Delmas and Toffel 2004). However, a void exists in the

Strategic Environmental Sourcing 173