How Environmental Management Competitive Pressure Affects a Focal Firm's Environmental Innovation Activities: A Green Supply Chain Perspective

AuthorJing Dai,Frank L. Montabon,David E. Cantor
DOIhttp://doi.org/10.1111/jbl.12094
Date01 September 2015
Published date01 September 2015
How Environmental Management Competitive Pressure Affects a
Focal Firms Environmental Innovation Activities: A Green Supply
Chain Perspective
Jing Dai
1
, David E. Cantor
2
, and Frank L. Montabon
2
1
The University of Nottingham
2
Iowa State University
Recently, environmental management offers rms a source of competitive advantage in the marketplace. The development of environmental
innovations is critical to the success of todaysrms. Drawing on the Schumpeterian perspective of competition, this research examines
how the perception of rival rmsgreen success inuences a rm to pursue and produce environmental innovation through its green supply
chain integration activities. Using survey data from 230 rms, a conceptual model is developed and tested using structural equation modeling.
We nd that the rms in our sample do perceive pressure from their competitorssuccess in environmental management activities, and thus take
supply chain action to pursue integration activities. By differentiating incremental and radical environmental innovation, this study also reveals
the role of three dimensions of green supply chain integration (internal, supplier, and customer integration of green product development) on
incremental and radical environmental innovation separately. Specically, ndings suggest that green supply chain integration has a positive
impact on developing incremental environmental innovation, while only customer integration has a signicant positive impact on developing
radical environmental innovation.
Keywords: green supply chain management; competitive pressure; environmental innovation
INTRODUCTION
Environmental management is an important supply chain topic
(Montabon et al. 2007; Gattiker and Carter 2010; Hofer et al.
2012). Firms are reliant upon their supply chains in order to
introduce environmental innovations to the marketplace (Gattiker
and Carter 2010; Sarkis et al. 2010; Cantor et al. 2012). Envi-
ronmental innovation is a specic kind of technical innovation
that consists of new products and processes that can be used to
either avoid or reduce environmental burdens (Porter and Van
der Linde 1995a; Ziegler and Nogareda 2009).
Environmental management and innovation are important
aspects of competition. The Coca-Cola Company and its rival
PepsiCo provide an illustrative example of how companies are
involved in environmental management competition. Coke devel-
oped technology to produce fully recyclable plastic bottles that
are 30% plastic made from sugar cane. Coke won the praise of a
green starrating through this project (DuBois 2011). Afterward
Pepsi declared that it had developed plans to produce competing
technologies, which partly involved producing 200,000 bottles
made from plant-only plastic derived from sugar cane (Neuman
2011).
While there is a steady stream of research in separate environ-
mental management, supply chain integration, and supply chain
competition, a surprising gap in the literature exists regarding
research that theoretically and empirically integrates these bodies
of literature. For example, Brockhaus et al. (2013) nd that
sustainability implementation efforts lack comprehensive supply
chain integration activities. Sarkis et al. (2010) show how stake-
holders place pressure on rms to implement environmental man-
agement training practices. Montabon et al. (2007) nd that
environmental practices can affect rm performance. Hofer et al.
(2012) provide empirical evidence that leader and challenger
rms are involved in environmental competition across several
U.S. manufacturing industries.
Our study lls a gap in the literature by being the rst to
develop theory and present empirical evidence as to what extent
arm leverages its supply chain integration in green product
development activities to pursue environmental innovation from
a competitive perspective (e.g., Swink 2006; Song and Benedetto
2008; Teece 2009). To the best of our knowledge, we are una-
ware of previous research that has examined how the integration
of green product development activities in the supply chain facil-
itates a rms ability to produce environmentally focused innova-
tions. We are also unaware of strategic management research
that has examined the important role of how the supply chain
enables the rm to engage in environmental competition (Grimm
and Smith 1997). Our study suggests a rm takes environmental
actions in order to respond to competitive behavior.
The purpose of this article is to examine the extent to which a
rm leverages supply chain integration in green product develop-
ment activities as a way to respond to a rival rms green suc-
cess with environmental innovation activities. Because scant
research has examined the green supply chain process from a
competitive perspective, the following are our research questions:
(1) Does the perception of rival rms green success motivate a
rm to integrate green product development supply chain activi-
ties? and (2) Does a rms integration of green product develop-
ment supply chain activities affect the rms environmental
innovation efforts? We theorize that a rms ability to respond to
the perception of a rivals green success is heavily dependent
Corresponding author:
Jing Dai, Department of Entrepreneurship, Marketing and Manage-
ment Systems, Nottingham University Business School China, The
University of Nottingham, Ningbo 315100, China; E-mail:
jing.dai@nottingham.edu.cn
Journal of Business Logistics, 2015, 36(3): 242259 doi: 10.1111/jbl.12094
© Council of Supply Chain Management Professionals
upon its ability to integrate environmental activities into the sup-
ply chain.
LITERATURE REVIEW
Supply chain integration research
We now turn to describing a sample of environmental manage-
ment research that has been published in prominent supply chain
journals. Our primary focus is on previous supply chain integra-
tion, supply chain competition, and green innovation research.
The literature review is summarized in Table 1.
Several supply chain scholars have developed theoretical argu-
ments linking supply chain integration to rm performance. We
focus on literature that has presented surprising ndings (Schoen-
herr and Swink 2012). For example, Koufteros et al. (2007) nd
that black-box and gray-box integration does not affect a rms
production innovation capabilities for small rms, but that gray-
box integration affects product innovation capabilities for large
Table 1: Literature review
Reference Major ndings
Supply chain integration research
Koufteros et al. (2007) Black-box and gray-box integration do not affect a rms production innovation capabilities for small
rms.
Swink et al. (2007) Several forms of integration have nonsignicant effects on several performances.
Flynn et al. (2010) Supplier integration is not related to operational performance.
Schoenherr and
Swink (2012)
Close integration with customers and suppliers enhances rm performance.
Supply chain competition and innovation research
Hart (1997) Presents compelling arguments that environmental management activities should be considered a
competitive strategy.
Sharma and
Vredenburg (1998)
Environmental innovation helps a rm to remain competitive.
Bansal and Roth (2000) Competitive pressure inuences a rms environmental innovation activities.
Elmuti (2002) Explores supply chain management strategy to improve rm effectiveness.
Hall and Clark (2003) Distinguishes between incremental and radical innovation.
Hall and Kerr (2003) Examines the challenges of radical innovation adoption in the value chain.
Roy et al. (2004) Develops a theoretical buyersupplier radical and incremental innovation model.
Arundel et al. (2007) Presents a typology of environmental innovation and then suggests future environmental innovation
research.
Flint et al. (2008) Supply chain learning and innovation processes include the incorporation of customer input into
business processes.
Li et al. (2008) Discusses a rms motivation to acquire an outsourcing partners knowledge base and shows how this
knowledge inuences incremental and radical innovation outcomes.
Slocum and Rubin (2008) Presents a review that scant research exists on how public research and development programs can
foster radical or breakthrough innovations.
Arlbjørn et al. (2011) Provides a new supply chain innovation denition and descriptive model.
Sarkis et al. (2011) Reviews green supply chain literature with a particular focus on green supply chain practices. Presents
future green supply chain research questions.
Hofer et al. (2012) Discusses how rms compete in the area of environmental innovation.
Gligor and Holcomb (2012) Examines supply chain agility strategy to establish rm competitive advantage.
Wagner (2012) Explores the inuence of supplier integration on the rms new product development efforts.
Sampson and Spring (2012) Demonstrates how eight distinctive customer roles determine service supply chain innovation.
Arlbjørn and Paulraj (2013) Firms leverage the innovation capabilities of their supply chain partners.
Azadegan et al. (2013) A rms partnerships with private rms and governments are related to the rms innovation
performance.
Bellingkrodt and
Wallenburg (2013)
Logistics service providers serve a critical role in a rms ability to acquire knowledge for
innovation.
Blome et al. (2013) Examines how ambidextrous governance in supply chains improve innovation and cost performance.
Dangelico et al. (2013) Discusses a rms motivation to produce green product innovation.
Jensen et al. (2013) Conducts a case study which demonstrates that green supply chain innovation requires the involvement
of multiple supply chain partners.
Oke et al. (2013) Examines how supply chain partner innovativeness has a positive effect on product innovation strategy.
How EM Competitive Pressure Affects Innovation 243

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