Effect of Green SCM Practices on Environmental Performance: Mexican Manufacturing Companies

What is it about?

Managers implement several Green Supply Chain Management (GSCM) practices to improve sustainability and economic performance, such as environmental management systems (EMS), eco-design (ED), source reduction (SR) and attending to external environmental management (EEM) requirements; however, the relationship among them requires a deep study. This paper reports the case of the Mexican maquiladora industry, analyzing the main relationships among GSCM practices with environmental impact (EI) and environmental cost savings (ECS). The analysis reports three structural equation models (SEM) developed as simple, second-order, and mediating models. Those relationships are tested using 160 responses to a survey applied to the Mexican maquiladora industry and with partial least squares algorithms (PLS), where conditional probabilities for different scenarios in latent variables are also reported. Findings indicate that EMS has a direct effect on EI (β = 0.442) and ECS (β = 0.227), indicating that EMS reduces EI and cost associated with the production process; however, ED has no direct effect on EI (β = 0.019) and ECS ((β = 0.006), and it can be due to the maquiladora nature as foreign companies focused on manufacturing and not to product design.

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Photo by Lucas Gallone on Unsplash

Photo by Lucas Gallone on Unsplash

Why is it important?

Managers implement several Green Supply Chain Management (GSCM) practices to improve sustainability and economic performance, such as environmental management systems (EMS), eco-design (ED), source reduction (SR) and attending to external environmental management (EEM) requirements; however, the relationship among them requires a deep study. This paper reports the case of the Mexican maquiladora industry, analyzing the main relationships among GSCM practices with environmental impact (EI) and environmental cost savings (ECS). The analysis reports three structural equation models (SEM) developed as simple, second-order, and mediating models. Those relationships are tested using 160 responses to a survey applied to the Mexican maquiladora industry and with partial least squares algorithms (PLS), where conditional probabilities for different scenarios in latent variables are also reported. Findings indicate that EMS has a direct effect on EI (β = 0.442) and ECS (β = 0.227), indicating that EMS reduces EI and cost associated with the production process; however, ED has no direct effect on EI (β = 0.019) and ECS ((β = 0.006), and it can be due to the maquiladora nature as foreign companies focused on manufacturing and not to product design.