Abstract
Environmental supply chain management (ESCM) practices have emerged as an important proactive organizational approach for improving environmental performance of processes and products in accordance with the requirements of environmental goals. The main purpose of this study was to investigate the drivers, environmental supply chain management practices and its effect on organizational performance of Nigerian Leather & Leather Products Industries. This study used descriptive and explanatory research design. Structured questionnaires were used to get primary data from top and middle level managers in the leather industry in Nigeria. Data were analyzed using descriptive statistics, regression analysis, and structural equation model. The findings revealed that government and senior managers’ pressure is important driver for Nigerian leather industry to adopt ESCM practices, whereas, employees’ and competitor’ pressure is not important drivers for leather industry of Nigeria to implement ESCM practices. In addition, the result of the study indicated that the Nigerian leather industry has implemented the ESCM practices. The companies in Nigerian leather and leather product industry have significantly initiated implementing the practices of ESCM in terms of internal environmental management practice, eco-design, green manufacturing practice, green packaging and investment recovery. On the contrary, green distribution practice, cooperation’s with customers and reverse logistics practices are evidenced by low-level practices. Moreover, the findings of the study revealed that ESCM practice has insignificant effects on both environmental and operational performance of the companies. The originality of this research is that it ascertains the primary drivers in promoting environmental supply chain practices in African manufacturing industry. The study provides policy insights for professional organizations, regulators, and legislators to further promote Green practices.
Keywords: Environmental supply chain management, Drivers, ESCM practice
CHAPTER ONE
INTRODUCTION
1.1 Background of Study
Environmental issues are among the most pressing concerns for modern humanity, governments, and environmentally conscious business organizations to promote organizational sustainability in the world, specifically for the emerging economies (Hsu & Hu, 2008).
Organizations in recent times are faced with a number of challenges ranging from financial crisis, climate change, environmental impact of their activities, and customer awareness of environmental sustainable products. Argument is therefore bound on the effect of human activities on the planet. According to 2013 report by intergovernmental panel on climate change (IPCC), human activities are largely contributing to affect energy budget of the Earth by increasing emission of gases and aerosols, and transforming land surface properties. It is in a bid to reduce this environmental burden and increase an inter-organizational shared responsibility that gave rise to this study on environmental sustainability of supply chain management, with emphasis on Total Exploration and Production Nigeria Limited.
A number of measures that have been put forward to mitigate the challenges posed by climate change brought about the need to promote sustainable development, but so far nothing has been achieved. In a study by Bonilla et al. (2015) revealed that modern industries rely on supply chains to accomplish their goals. But these supply chain organizations have been found culpable in environmental issues, a key reason the carbon footprint (CF) of manufacturers (cement, gas, chemicals, steels and so on) under the Kyoto agreement set an acceptable standard of carbon dioxide emission at 8% using 1990 as the base year for 2008- 2012 for most European countries.
The implication is that environmental sustainability of supply chain can be encouraged. The OECD report (2013) revealed the provision of incentives to countries that exhibit better compliance in reduction of carbon emission into the atmosphere.
Over the past two decades, there has been increasing concern and awareness of widespread environmental degradation present and future generations are facing. Its importance emanates from increasing environmental problems such as air pollution, changing water quality and quantity, discharge of toxic substances and chemicals, increase in solid waste and climate change (Esty & Winston, 2006). These problems have largely been related to the operations of manufacturing industries (Beamon, 1999). Particularly, they affect in terms of carbon monoxide emissions, discarded packaging materials, scrapped toxic materials, traffic congestion and other forms of industrial pollution (Chin et al., 2015). As a result, the manufacturing companies have found themselves receiving different pressures from various stakeholders and organizational groups to conduct environmentally-friendly operations.
Environmental supply chain management (ESCM) refer to the involvement of environmental thinking into the supply chain management from the extraction of raw materials to product design, manufacturing processes, delivery of the final products to the consumers and end of the useful life of the product, including the management of the product after its useful life, i.e., reverse logistics (Zhu & Sarkis, 2005).
The research work of Zhu, Sarkis, & Lai (2007) revealed that environmental impact occurs at all stages of a product life cycle from resource extraction to production, use, reuse, recycle and disposal. In essence, ESCM practices focus on minimizing the environmental effect of the forward and reverse flows of the supply chain, while creating economic value and lower costs for the manufacturing companies (Zhu & Sarkis, 2004). In addition, implementation of ESCM practices plays a crucial role in influencing the total environmental impact of any firm involved in supply chain activities and thus contributing to sustainability performance enhancement.
The research of Fortes (2009) asserted that by integrating the ‘green concept to the supply chain management’ concept, it has created a new research agenda for both developed and developing countries where the supply chain will have a direct relation with the environment.
The manufacturing sector, particularly the leather industry, plays a key role in the Nigerian economy in terms of contribution to GDP, employment and exports (Amede, 2017). Nowadays, the Nigerian economy has been gradually integrated into the world economy. These linkages and growth in globalization provide opportunities for Nigerian firms to export products. However, the Nigerian leather industry sector has been identified as a generator of air, wastewater, solid waste, toxic gases and other environmental pollutants (Beyene, 2015).
Therefore, businesses in general and manufacturing industries in particular, need to be proactive in their strategies towards managing the environmental impacts of their activities. In this regard, understanding the ESCM practices within manufacturing firms operating in Nigeria is very crucial. Thus, the current study examines the drivers of ESCM, its practices and its effect on firms’ environmental and operational performance within the context of Nigerian leather and leather products industry.
1.2 Statement of the Problem
The growing degradation of the natural environment is one of the main threats to human survival in the long term. Since the industrial revolution, human beings have degraded the environment through the uncontrolled consumption of natural resources by the manufacturing industries and through the emission of pollutants in their various forms (Srivastava, 2007). As a result, the firms have found themselves receiving diverse pressures from regulatory authorities, customers, competitors, nongovernmental organizations, employees and various organizational groups to conduct environmentally-friendly operations.
Increasing pressures to enhance environmental, operational and economic performance have caused emerging countries in general, and manufacturing firms in particular, to consider and start implementing ESCM. The study of (Zhu, Sarkis, & Lai, 2012) stated that the integration of environmental issues and SCM has become a thriving subfield over the past two to three decades.
Interest in ESCM has been growing among researchers and practitioners of operation and supply chain management since the early 1990s (Carter & Rogers, 2008; Kumar, Chattopadhyaya, & Sharma, 2012). A number of studies have been conducted to examine the link between ESCM practices and organizational performance. However, an in-depth investigation of the relationship between ESCM practices and organizational performance is still lacking (Zhu et al., 2013) Hence, a critical review of these prior studies reveals significant knowledge gaps.
The first research gap is that the existing research has not provided more conclusive evidence on ESCM practices, and environmental and operational performances. On the one hand, some studies found out that implementation of ESCM practices has a significant effect on both environmental and operational performance of organizations (Giovanni, 2014; Zhu & Geng, 2013). There are also contradictory results which indicated that implementing ESCM practices has no significant effect on environmental and operational performances of the organizations (GonzálezBenito & González-Benito, 2005; Rusli et al., 2013). Given the above points, this study has tried to present a clearer picture of the relationship between ESCM practices, and environmental and operational performance in the context of Nigerian leather and leather products industry.
The other research gap for this study to fill is that different scholars have operationalized the ESCM construct differently. The majority of them has a narrow perspective of the concept of ESCM and does not adequately cover all aspects of the construct. Prior researchers in ESCM have stressed the need to look at all aspects of ESCM (Kung et al., 2012). They argued that every activity at every step of the supply chain has an effect on the environment. That is why this study has made an attempt to consider all dimensions in the supply chain.
The other motivation for this study is that the concept of ESCM practices in the manufacturing industry in developing countries remains unclear and is relatively a new concept in this region. Most of the previous researches on this topic were skewed towards developed countries, mostly in North America, Europe, and Asia. In addition, studies concluded that there is still little research about ESCM implementation in developing countries, especially in Africa, and recommended further undertaking about the implementation of ESCM (Chen et al., 2012). In short, from the review of past studies, there was lack of researches that have addressed ESCM practice issues in Africa. Therefore, this study tries to extend these previous researches into the Nigeria manufacturing sector, particularly, leather and leather product industry.
Another research gap is the variety of stakeholders’ pressures that can act as motivating forces to push firms to pursue ESCM practices previous studies found out are inconclusive. (Cai & Zhou, 2014). While the identification of the drivers of ESCM practices is a popular topic in the literature, still many questions remain unanswered. Firstly, most of the studies in this field are concentrating on developed economies; their findings may not be applicable to the developing countries such as Nigeria due to the differences in organizational cultures, legislation, and economic conditions. Besides, it is unclear whether these stakeholder drivers solely or collectively motivated the implementation of ESCM practices.
Therefore, this study tries to identify the critical drivers of ESCM practices and draws a clearer picture of the relationship between drivers and ESCM practices adopted in the context of Nigerian leather industry
1.3 Research Questions
Based on the above-stated problems, this research endeavors to find answers to the following key questions:
1. What factors pressure/drive the Nigerian Leather & Leather Product Industry to implement ESCM?
2. What does the current status of ESCM practices of the Nigerian Leather & Leather Product Industry look like?
3. What is the effect of environmental supply chain management practice on the environmental performance of the Nigerian Leather & Leather Product Industry?
4. What is the effect of environmental supply chain practice on the operational performance of the Nigerian Leather & Leather Product Industry?
1.4 Objective of the Study
The main objective of this study was to investigate the drivers, environmental supply chain management practices, and its effect on organizational performance of Nigerian Leather & Leather Product Industry.
Specifically, this study has four objectives:
1. To examine the pressure/driver factors affecting ESCM practices in Nigerian Leather & Leather Product Industry;
2. To assess the current practices of ESCM in Nigerian Leather & Leather Product Industry;
3. To investigate the effect of ESCM practices on the environmental performance of Nigerian Leather & Leather Product Industry; and
4. To investigate the effect of ESCM practices on the operational performance of Nigerian Leather & Leather Product Industry.
1.4 Research Hypotheses
Ha1: Employees’ pressure positively affects the organization’s adoption of ESCM practices.
Ha2: Senior managers’ pressure positively affects the organization’s adoption of ESCM practices.
Ha3: Governments’ pressure positively affects the organization’s adoption of ESCM practices.
Ha4: Customers’ pressure positively affects the organization’s adoption of ESCM practices.
Ha5: Competitors’ pressure positively affects the organization’s adoption of ESCM practices.
1.5 scope and Limitation of study
This study has a few limitations which should be considered when interpreting the results, and these limitations may serve as a foundation for future research. First, environmental and operational performance measures were assessed using perceptual data. Thus, future research can focus on actual and more objective data on environmental and operational performance. The second limitation of this study is that it was based on a limited geographic location. This study focused only on Nigeria while further studies can be carried on different geographic areas. The third limitation of this study is that it was sector or industry-based. This study focused only on the leather and leather product industry; thus further studies can be done on different sectors like construction, mining, and textile sector.
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