A COMPARATIVE STUDY OF DRIVERS RENEWABLE ENERGY INITIATIVES ON
SUSTAINABLE BUSINESS PERFORMANCE: A MEDIATING EFFECT OF ECO-
EFFICIENT BASED GREEN SUPPLY CHAIN MANAGEMENT
BY
UU CHEIN ROU
Research report in partial fulfillment of the requirements for the degree of Master of
Business Administration (IB)
Universiti Sains Malaysia
2015
I
ACKNOWLEDGEMENT
The writing of this dissertation has been one of the most significant academic challenges I
have ever had to face. Without their support, patience and guidance, I would not be able to
complete this study. Therefore, I would like to this opportunity to express my appreciation
to the people who have assisted me in making this dissertation success. First of all, the
most important role in this dissertation is Dr. Yudi Fernando, my supervisor. I owe my
deepest gratitude to Dr. Yudi for his enduring encouragement, practical advice, support
and mentorship throughout the process. There is no doubt that his dedication to service is
unparalleled and unmatched. Additionally, a special thanks to Prof. Dr. Klaus Stocker for
her assistance and advice when I was in Germany.
I would also like to thank all my friends which we would have not meet each other’s
without this process. Thank you for reading many drafts, providing wonderful
encouragement and feedback and sharing your knowledge and ideas. Moreover, highly
appreciate to all the lectures and staffs in Graduate School of Business who has been
teaching me the entire MBA program in Universiti Sains Malaysia. Not to be forgotten,
my endless thanks to the respondents who have spent their precious time and valuable data
to participate in this dissertations.
Last but not least, I would like to express my heartfelt gratitude to my parents and
my family members who have always believed in me, supported, encouraged, compassion
and profound understanding throughout my entire MBA program.
II
Table of Content
Page
ACKNOWLEDGEMENT……………………………………………………… I
TABLE OF CONTENTS………………………………………………………… II
LIST OF TABLES……………………………………………………………….. XII
LIST OF FIGURES……………………………………………………………… XIV
ABSTRAK……………………………………………………………………….. XV
ABSTRACT………………………………………………………….................... XVI
CHAPTER 1: INTRODUCTION
1.1 Introduction…………………………………………………………………… 1
1.2 Background of Study…………………………………………………………. 1
1.3 Problem Statement……………………………………………………………. 8
1.4 Research Objectives…………………………………………………………... 15
1.5 Research Questions…………………………………………………………… 15
1.6 Definition of Key Terms……………………………………………………… 16
1.6.1 Renewable Energy Initiatives………………………………………. 16
1.6.2 Eco-efficient………………………………………………….. ……. 16
1.6.3 Green Supply Chain Management…………………………………. 17
1.6.4 Eco-efficient based Green Supply Chain Management ……………. 17
1.6.5 Sustainability……………………………………………………….. 17
1.6.6 Sustainable Business Performance…………………………………. 17
1.7 Significant of Study…………………………………………………………… 18
1.7.1 Theoretical Contribution……………………………………………. 18
1.7.2 Practitioner Contribution……………………………………………. 19
1.8 Organization of the Research Proposal……………………………………….. 21
III
CHAPTER 2: LITERATURE REVIEW
2.1 Introduction…………………………………………………………………… 22
2.2 Overview of Renewable Energy……………………………………………… 22
2.3 Overview of Renewable Energy in Germany………………………………… 23
2.4 Overview of Renewable Energy in Malaysia………………………………… 33
2.5 Overview of Eco-efficient based Green Supply Chain Management………… 36
2.6 Overview of Sustainable Business Performance……………………………... 38
2.7 Review of relevant theory…………………………………………………….. 39
2.7.1 Institutional Theory…………………………………………………. 40
2.7.2 Natural Resource Based View (NRBV)…………………………….. 41
2.8 Literature review of variables…………………………………………………. 43
2.8.1 Drivers of Renewable Energy Initiatives……………………………. 43
2.8.2 Government Involvement…………………………………………… 45
2.8.3 Organization Support……………………………………………….. 46
2.8.4 Technology Support………………………………………………… 47
2.8.5 Green Information System………………………………………….. 49
2.8.6 Green Purchasing……………………………………………………. 50
2.8.7 Eco-Design…………………………………………………………... 52
2.8.8 Reverse Logistics……………………………………………………. 53
2.8.9 Sustainable Business Performance………………………………….. 54
2.8.10 Environmental Performance………………………………………. 55
2.8.11 Operational Performance………………………………………….. 56
2.8.12 Economic Performance……………………………………………. 57
2.8.13 Control Variables………………………………………………….. 58
2.8.13.1 Size of the Company (Number of Employees)………….. 58
2.8.13.2 Number of Suppliers ……………………………………. 59
2.9 Hypothesis Development……………………………………………………... 60
IV
2.9.1 Drivers of Renewable Energy Initiatives and Eco-efficient
based Green Supply Chain Management…………………………… 60
2.9.2 Drivers of Renewable Energy Initiatives and Sustainable Business
Performance………………………………………………………… 63
2.9.3 Eco-efficient based Green Supply Chain Management and
Sustainable Business Performance…………………………………. 65
2.9.4 Drivers of Renewable Energy Initiatives, Eco-efficient based Green
Supply Chain Management and Sustainable Business Performance.. 68
2.10 Theoretical Framework……………………………………………………… 73
2.11 Summary ……………………………………………………………………. 75
CHAPTER 3: RESEARCH METHODOLOGY
3.1 Introduction…………………………………………………………………... 76
3.2 Research Design……………………………………………………………… 76
3.2.1 Type of Study………………………………………………………. 76
3.2.2 Unit of Analysis (UOA) ……………………………………………. 77
3.2.3 Population………………………………………………………….. 77
3.2.4 Sample Frame………………………………………………………. 78
3.2.5 Sampling Method…………………………………………………... 79
3.3 Data Collection Method……………………………………………………… 80
3.4 Survey Instrument……………………………………………………………. 80
3.5 Measurement of Variable and Constructs……………………………………. 81
3.5.1 Measurement of Independent Variables……………………………. 82
3.5.2 Measurement of Mediating Variables……………………………… 84
3.5.3 Measurement of Dependent Variables……………………………... 87
3.6 Data Analysis………………………………………………………………… 88
3.6.1 Structural Equation Modeling……………………………………… 89
V
3.6.2 Descriptive Analysis……………………………………………….. 90
3.6.3 Validity…………………………………………………………….. 90
3.6.3.1 Construct Validity………………………………………... 90
3.6.3.2 Convergent Validity……………………………………… 91
3.6.3.3 Discriminant Validity……………………………………. 91
3.6.4 Bootstrapping Model for Mediating……………………………….. 91
3.6.5 Pre-Test…………………………………………………………….. 92
3.6.6 Pilot Test…………………………………………………………… 93
3.6.7 Goodness of Fit Analysis…………………………………………... 94
3.6.8 Common Method Variance (CMV)………………………………... 95
3.6.9 Levene’s Test……………………………………………………... 96
3.6.10 Importance-Performance Matrix Analysis………………………. 97
3.7 Summary……………………………………………………………………... 98
CHAPTER 4: DATA ANALYSIS AND RESULTS
4.1 Introduction…………………………………………………………………... 99
4.2 Descriptive Analysis…………………………………………………………. 99
4.2.1 Response Rate……………………………………………………… 99
4.2.2 Respondent’s Profile of Germany and Malaysia…………………… 100
4.2.3 Company’s Profile of Germany and Malaysia……………………… 102
4.3 Validity………………………………………………………………………... 108
4.3.1 Construct Validity…………………………………………………... 108
4.3.2 Convergent Validity………………………………………………… 115
4.3.3 Discriminant Validity……………………………………………….. 117
4.4 Reliability Analysis…………………………………………………………… 123
4.5 Hypothesis Testing……………………………………………………………. 124
4.5.1 Hypotheses Testing results for measurement items………………… 125
VI
4.5.2 Mediating Results of the Measurement Items………………………. 140
4.6 Common Method Variance (CMV)…………………………………………… 153
4.7 Analysis of Goodness of Fit Measures……………………………………….. 156
4.8 Control Variables……………………………………………………………… 156
4.9 Levene’s Test…………………………………………………………………. 158
4.10 Importance Performance Matrix Analysis………………………………….. 161
4.11 Summary of Findings……………………………………………………….. 170
CHAPTER 5: DISCUSSION AND CONCLUSION
5.1 Introduction………………………………………………………………….. 177
5.2 Recapitulation of Study Findings …………………………………………… 177
5.3 Discussion of Major Findings……………………………………………….. 179
5.3.1 RO 1: To examine the link of Renewable Energy Initiatives on Eco-efficient based Green Supply Chain Management……………. 180
5.3.1.1 Government Involvement towards Green Information System (H1a) 181
5.3.1.2 Government Involvement towards Green Purchasing (H1b)…….. 182
5.3.1.3 Government Involvement towards Eco-Design (H1c)…………… 183
5.3.1.4 Government Involvement towards Reverse Logistics (H1d)…….. 184
5.3.1.5 Organizational Support towards Green Information System (H1e) 185
5.3.1.6 Organizational Support towards Green Purchasing (H1f)……….. 185
5.3.1.7 Organizational Support towards Eco-design (H1g)……………… 186
5.3.1.8 Organizational Support towards Reverse Logistics (H1h)………. 186
5.3.1.9 Technology Support towards Green Information System (H1i)… 187
5.3.1.10 Technology Support towards Green Purchasing (H1j)………… 188
5.3.1.11 Technology Support towards Eco-design (H1k)……………….. 189
5.3.1.12 Technology Support towards Reverse Logistics (H1l)………… 190
5.3.2 RO 2: To what extend the Renewable Energy Initiatives influence Sustainable Business Performance……………………………….... 190
VII
5.3.2.1 Government Involvement towards Environmental Performance (H2a)………………………………. 191
5.3.2.2 Government Involvement towards Operational Performance (H2b) 192
5.3.2.3 Government Involvement towards Economic Performance (H2c).. 193
5.3.2.4 Organizational Support towards Environmental Performance (H2d) 194
5.3.2.5 Organizational Support towards Operational Performance (H2e)... 195
5.3.2.6 Organizational Support towards Economic Performance (H2f)….. 195
5.3.2.7 Technology Support towards Environmental Performance (H2g)... 197
5.3.2.8 Technology Support towards Operational Performance (H2h)…… 198
5.3.2.9 Technology Support towards Economic Performance (H2i)…….. 199
5.3.3 RO 3: To investigate the relationship between Eco-efficient based Green
Supply Chain Management and Sustainable Business Performance.. 199
5.3.3.1 Green Information System towards Environmental Performance (H3a)……………………………….. 200
5.3.3.2 Green Information System towards Operational Performance (H3b) 200
5.3.3.3 Green Information System towards Economic Performance (H3c).. 201
5.3.3.4 Green Purchasing towards Environmental Performance (H3d)…… 202
5.3.3.5 Green Purchasing towards Operational Performance (H3e)………. 202
5.3.3.6 Green Purchasing towards Economic Performance (H3f)………… 202
5.3.3.7 Eco-design towards Environmental Performance (H3g)………….. 203
5.3.3.8 Eco-design towards Operational Performance (H3h)……………... 203
5.3.3.9 Eco-design towards Economic Performance (H3i)……………….. 203
5.3.3.10 Reverse Logistics towards Environmental Performance (H3j)….. 204
5.3.3.11 Reverse Logistics towards Operational Performance (H3k)…….. 204
5.3.3.12 Reverse Logistics towards Economic Performance (H3l)………. 204
5.3.4 RO 4: To examine whether EE based GSCM mediate the relationship between REI and SBP………………………………………………. 205
VIII
5.3.4.1 Green Information System mediate towards between Government Involvement and Environmental Performance (H4a)……….. 205
5.3.4.2 Green Information System mediate towards between Government Involvement and Operational Performance (H4b)………….. 206
5.3.4.3 Green Information System mediate towards between Government Involvement and Economic Performance (H4c)…………….. 207
5.3.4.4 Green Information System mediate towards between Organizational Support and Environmental Performance (H4d)………….. 208
5.3.4.5 Green Information System mediate towards between Organizational Support and Operational Performance (H4e)…………….. 209
5.3.4.6 Green Information System mediate towards between Organizational Support and Economic Performance (H4f)………………. 209
5.3.4.7 Green Information System mediate towards between Technology Support and Environmental Performance (H4g)……………. 210
5.3.4.8 Green Information System mediate towards between Technology Support and Operational Performance (H4h)……………….. 211
5.3.4.9 Green Information System mediate towards between Technology Support and Economic Performance (H4i)…………………. 212
5.3.4.10 Green Purchasing mediate towards between Government Involvement and Environmental Performance (H4j)……… 213
5.3.4.11 Green Purchasing mediate towards between Government Involvement and Operational Performance (H4k)………… 214
5.3.4.12 Green Purchasing mediate towards between Government Involvement and Economic Performance (H4l)…………… 214
5.3.4.13 Green Purchasing mediate towards between Organizational Support and Environmental Performance (H4m)……….. 215
5.3.4.14 Green Purchasing mediate towards between Organizational Support and Operational Performance (H4n)…………… 216
5.3.4.15 Green Purchasing mediate towards between Organizational Support and Economic Performance (H4o)…………….. 216
5.3.4.16 Green Purchasing mediate towards between Technology Support and Environmental Performance (H4p)…………... 217
IX
5.3.4.17 Green Purchasing mediate towards between Technology Support and Operational Performance (H4q)……………… 217
5.3.4.18 Green Purchasing mediate towards between Technology Support and Economic Performance (H4r)………………... 218
5.3.4.19 Eco-design mediate towards between Government Involvement and Environmental Performance (H4s)……… 219
5.3.4.20 Eco-design mediate towards between Government Involvement and Operational Performance (H4t)…………. 219
5.3.4.21 Eco-design mediate towards between Government Involvement and Economic Performance (H4u)…………… 220
5.3.4.22 Eco-design mediate towards between Organizational Support and Environmental Performance (H4v)………… 221
5.3.4.23 Eco-design mediate towards between Organizational Support and Operational Performance (H4w)…………. 222
5.3.4.24 Eco-design mediate towards between Organizational Support and Economic Performance (H4x)…………….. 222
5.3.4.25 Eco-design mediate towards between Technology Support and Environmental Performance (H4y)…………… 223
5.3.4.26 Eco-design mediate towards between Technology Support and Operational Performance (H4z)……………..... 224
5.3.4.27 Eco-design mediate towards between Technology Support and Economic Performance (H4aa)……………….. 225
5.3.4.28 Reverse Logistics mediate towards between Government Involvement and Environmental Performance (H4ab)…….. 226
5.3.4.29 Reverse Logistics mediate towards between Government Involvement and Operational Performance (H4ac)………... 226
5.3.4.30 Reverse Logistics mediate towards between Government Involvement and Economic Performance (H4ad)………… 227
5.3.4.31 Reverse Logistics mediate towards between Organizational Support and Environmental Performance (H4ae)……… 227
5.3.4.32 Reverse Logistics mediate towards between Organizational Support and Operational Performance (H4af)…………. 228
X
5.3.4.33 Reverse Logistics mediate towards between Organizational Support and Economic Performance (H4ag)……………. 229
5.3.4.34 Reverse Logistics mediate towards between Technology Support and Environmental Performance (H4ah)………..... 230
5.3.4.35 Reverse Logistics mediate towards between Technology Support and Operational Performance (H4ai)………………. 230
5.3.4.36 Reverse Logistics mediate towards between Technology Support and Economic Performance (H4aj)………………… 231
5.3.5 RO 5: To examine differences on dimensions between Malaysia and Germany in Electrical & Electronic Industry………………………… 232
5.4 Implications of the study……………………………………………………… 234
5.4.1 Theoretical Implication……………………………………………………… 234
5.4.2 Practical Implication………………………………………………………… 238
5.5 Limitation and Recommendation for Future Research………………………... 240
5.5.1 Limitation of the study………………………………………………………. 240
5.5.2 Recommendations for Future Research……………………………………... 241
5.6 Conclusion…………………………………………………………………….. 243
REFERENCES……………………………………………………………………. 247
APPENDIX A: CONFIRMATION LETTER FROM GRADUATE SCHOOL OF BUSINESS (GSB)…………………………………………… 279
APPENDIX B: CONFIRMATION LETTER FROM SUPERVISOR…………… 280
APPENDIX C: APPOINTMENT LETTER OF FIELD SUPERVISOR………… 281
APPENDIX D: QUESTIONNAIRE (GERMANY)……………………………… 282
APPENDIX E: QUESTIONNAIRE (MALAYSIA)……………………………… 293
APPENDIX F: IBM SPSS STATISTICAL REPORT……………………………. 302
APPENDIX F.1: SPSS Output for Cronbach’s Alpha in Pilot Study…….. 302
APPENDIX F.2: SPSS Output for Company Profile (Germany)………… 312
XI
APPENDIX F.3: SPSS Output for Respondents Profile (Germany)…….. 314
APPENDIX F.4: SPSS Output for Company Profile (Malaysia)………… 316
APPENDIX F.5: SPSS Output for Respondents Profile (Malaysia)……… 318
APPENDIX F.6: SPSS Output for Levene’s Test for Equality of Variances (Germany and Malaysia)……………………. 320
APPENDIX G: PLS ALGORITHM REPORT…………………………………… 324
APPENDIX G.1: Overview………………………………………………. 324
APPENDIX G.2: Latent Variable Correlations (Germany)………………. 325
APPENDIX G.3: Latent Variable Correlations (Malaysia)………………. 326
APPENDIX G.4: Cross Loadings (Germany)……………………………. 327
APPENDIX G.5: Cross Loadings (Malaysia)……………………………. 330
APPENDIX H: PLS BOOTSTRAPPING REPORT…………………………….. 333
APPENDIX H.1: Total Effects-Mean, STDEV, T-Values (Germany)….. 333
APPENDIX H.2: Total Effects-Mean, STDEV, T-Values (Malaysia)….. 335
APPENDIX H.3: Outer Model T-Statistic (Germany)…………………... 337
APPENDIX H.4: Outer Model T-Statistic (Malaysia)…………………… 340
APPENDIX H.5: Path Coefficients (Germany)………………………….. 343
APPENDIX H.6: Path Coefficients (Malaysia)…………………………. 344
XII
LIST OF TABLE
Table 1.1 Measurement metrics Germany and Malaysia………………………… 4
Table 2.1 In force of renewable energy policy in Germany……………………... 24
Table 2.2 The Malaysia’s key emphasis from 7MP to 10MP for energy development………………………………………………........ 34
Table 3.1 Summary of Questionnaire’s Sections………………………………… 82
Table 3.2 Items for Government Involvement (Independent Variable)…………. 83
Table 3.3 Items for Organization Support (Independent Variable)……………… 84
Table 3.4 Items for Technology Support (Independent Variable)………………. 84
Table 3.5 Items for Eco-design (Mediating Variable)…………………………… 85
Table 3.6 Items for Green Purchasing (Mediating Variable)……………………. 85
Table 3.7 Items for Reverse Logistics (Mediating Variable)……………………. 86
Table 3.8 Items for Green Information System (Mediating Variable)…………… 87
Table 3.9 Items for Environmental Performance (Dependent Variable)………… 88
Table 3.10 Items for Operational Performance (Dependent Variable)………….. 88
Table 3.11 Items for Economic Performance (Dependent Variable)……………. 88
Table 3.12 Result of Reliability (Pilot Test)…………………………………….. 94
Table 4.1 Summary of Respondents’ Profile of Germany and Malaysia……….. 101
Table 4.2 Summary of Company’s Profile of Germany and Malaysia…………. 106
Table 4.3 Loadings and Cross Loading (Germany)……………………………… 109
Table 4.4 Loadings and Cross Loadings (Malaysia)……………………………. 112
Table 4.5 Convergent Validity of Constructs (Germany and Malaysia)………… 116
Table 4.6 Summary Result of the Model Construct (Germany and Malaysia)...... 118
Table 4.7 Discriminant Validity of Constructs (Germany)……………………… 121
Table 4.8 Discriminant Validity of Constructs (Malaysia)……………………… 122
Table 4.9 Result of Reliability (Germany)………………………………………. 123
Table 4.10 Result of Reliability (Malaysia)……………………………………… 124
XIII
Table 4.11 Path Coefficients and Hypotheses Testing of the measurement items 136
Table 4.12 Mediating Results of the measurement items……………………….. 151
Table 4.13 Harman’s One Factor Test (Germany and Malaysia)………………. 153
Table 4.14 Path Coefficients and t-value for Control Variables………………… 157
Table 4.15 Levene’s Test for Germany and Malaysia…………………………… 160
Table 4.16 Index Values and Total Effects for the IPMA of Economic Performance (Germany)………………………………….. 164
Table 4.17 Index Values and Total Effects for the IPMA of Environmental Performance (Germany)…………………………….. 165
Table 4.18 Index Values and Total Effects for the IPMA of Operational Performance (Germany)………………………………… 166
Table 4.19 Index Values and Total Effects for the IPMA of Economic Performance (Malaysia)…………………………………... 167
Table 4.20 Index Values and Total Effects for the IPMA of Environmental Performance (Malaysia)……………………………... 168
Table 4.21 Index Values and Total Effects for the IPMA of Operational Performance (Malaysia)……………………………….... 169
Table 4.22 Summary of Hypotheses Testing……………………………………. 170
XIV
LIST OF FIGURE
Figure 2.1 Theoretical Framework………………………………………………. 75
Figure 3.1 Simple mediation model……………………………………………… 92
Figure 3.2 Importance-Performance Matrix……………………………………... 98
Figure 4.1 Result of Coefficient of the Path Analysis (Germany)………………. 138
Figure 4.2 Result of Coefficient of the Path Analysis (Malaysia)……………….. 139
Figure 4.3 Importance-Performance Matrix Economic Performance (Germany).. 164
Figure 4.4 Importance-Performance Matrix Environmental Performance (Germany)…………………………………………………………….. 165
Figure 4.5 Importance-Performance Matrix Operational Performance (Germany) 166
Figure 4.6 Importance-Performance Matrix Economic Performance (Malaysia).. 167
Figure 4.7 Importance-Performance Matrix Environmental Performance (Malaysia)…………………………………………………………….. 168
Figure 4.8 Importance-Performance Matrix Operational Performance (Malaysia) 169
XV
Abstrak
Isu pemanasan global telah menjadi perhatian utama setiap negara terutamanya di dalam
industri elektrik dan elektronik dimana pergantungan kepada bahan api fosil telah berubah
kearah sumber tenaga yang boleh diperbaharui. Perlaksanaan aktiviti dan projek tenaga
boleh diperbaharui ini memerlukan jangka masa yang panjang. Hal ini menyebabkan
cabaran dan tekanan diberikan untuk mendorong perlaksanaan pengurusan alam sekitar
bagi meningkatkan prestasi perniagaan yang mampan. Kajian ini merupakan perbandingan
antara negara Jerman dan Malaysia dengan mengemukakan model pembolehubah tenaga
boleh diperbaharui (penglibatan kerajaan, sokongan organisasi dan teknologi) sebagai
antecedent manakala pengurusan rangkaian bekalan eko-cekap (sistem maklumat hijau,
pembelian hijau, eko-rekabentuk dan pembalikan logistik) sebagai pembolehubah
pengantara (mediator). Hasil kajian adalah prestasi perniagaan yang mampan dari segi
prestasi alam sekitar, operasi dan ekonomi.
Satu kaji selidik dalam talian telah diedarkan kepada industri elektrik dan elektronik
dimana 110 data dari Jerman dan 140 data dari Malaysia telah dianalisa menggunakan
SmartPLS 2.0 dan IBM SPSS 22. Analisa menunjukkan German terlebih dahulu
mengamalkan dasar hijau berbanding Malaysia. Selain itu, Malaysia memerlukan
sokongan dan perlaksanaan polisi dari kerajaan untuk membantu industri pembuatan
berdaya mampan. Teori yang digunapakai kajian ini adalah teori institusi dan sumber asli
berasaskan pandangan. Kajian ini juga telah mengemukakan cadangan bagi perlaksanaan
inisiatif tenaga boleh diperbaharui bagi pengamal industri beserta beberapa batasan kajian
dan cadangan bagi penyelidikan masa hadapan.
XVI
Abstract
Global warming become major concern in every country especially electrical and
electronic industry in order to be less dependency on fossil fuels and more towards
renewable energy sources. However, implementation of renewable energy projects and
activities have been slow to materialize. Therefore, these challenges and pressures push
industry to implement environmental management practices in order to achieve sustainable
business performance. This study is a cross-national study among Germany and Malaysia
with a model for drivers of renewable energy initiatives (i.e. government involvement,
organizational support and technology support) on the antecedents, eco-efficient based
green supply chain management (i.e. green information system, green purchasing, eco-
design and reverse logistics) on mediator and outcomes are sustainable business
performance in term of environmental, operational and economic performance.
An online survey is administrated to electrical and electronic industry in Germany
and Malaysia respectively. 110 data from Germany and 140 data from Malaysia were
analyzed using the SmartPLS 2.0 for structural equation modeling and IBM SPSS 22.
Analytical results demonstrated that Germany has been earlier implemented policy than
Malaysia. Besides that, Malaysia manufacturing awareness still not there so government
has to implement and developed more policy to support manufacturing. The guiding
theories in this study are institutional theory and natural resources based view. This study
provides practical suggestions to practitioners on the drivers of renewable energy initiatives
to implement eco-efficient based green supply chain management. However, there are few
limitations in this study. This study ends with recommendations for future study.
1
CHAPTER 1
INTRODUCTION
1.1 Introduction
This chapter introduces the research outline of the study. It begins with the background of
the study followed by a discussion of the problem statements, research objectives, and
research questions. This chapter ends with a discussion of the study and gives a brief
overview of the remaining chapters in the thesis.
1.2 Background of study
Today, global warming and climate change have become major concerns of humanity, and
human activities that release a large amount of carbon dioxide (CO2) and other greenhouse
gases into the atmosphere that are main contributors to global warming (Zhang et al., 2012).
In Malaysia, a major contributor to the problem is the Electric and Electronic industry
(E&E), which has become a major player in the country’s manufacturing sector.
Recognizing the need to go green, the government has developed initiatives including the
launch of several different programmes to push Renewable Energy (RE) into the country’s
energy mix (Hashim & Ho, 2011).
Consequently, these challenges and pressures push firms to seriously consider not
only environmental impacts (Zailani et al., 2012) but also operational and economic
impacts. However, rapidly increasing awareness in industry that today’s renewable energy
supply chains are flawed has led to an understand that barriers to utilization of RE exist.
Thus, researchers and practitioners in the field of supply chain management (Ramli &
Munisamy, 2015) have begun looking at eco-efficiency as an approach to solving the
2
problem. One realization has been that a need exists to integrate eco-efficiency in green
supply chain management in order to provide an adequate balance among environmental
performance, operational performance and economic performance (Govindan et al., 2014).
In global business-to-business markets, shared resources between buyers and
suppliers often result in competitive advantages and enhanced relationships between firms.
Also changes in technology and globalization of products and services have resulted in
more dynamic markets and greater uncertainty in customer demand (Cheung, Myers, &
Mentzer, 2010). RE has become a focal construct in the E&E industry because RE has
become a driving force in the effort to sustain the earth’s natural resources and to improve
quality of life. RE sources such as wind or solar energy off many advantages because they
do not produce negative impacts like the emissions of hazardous substances such as
greenhouse gases.
Across the globe, RE has become increasingly important for the economics of many
countries (UNEP, SEFI, & NEF, 2009). According to the U.S. Energy Information’s (2014)
country analysis, Malaysia is the second largest user of non-renewable energy resources in
the world, petroleum and other liquids, natural gas, and coal are the main primary energy
sources consumed in Malaysia, with estimated shares of 40%, 36%, and 17% of
consumption respectively in 2012. Only 3% come from hydroelectricity and 4% from
biomass and waste. That is because the implementation of renewable energy projects and
activities have been slow to materialize (Hashim & Ho, 2011). The lack of these projects
may adversely impact the Malaysian economy in the future
From the perspective of eco-efficient green supply chain management and drivers
of renewable energy initiatives, the E&E industry affects the environment, economy and
3
consumers across the country, and, because Malaysia exports many E&E products, across
the world as well. For instance, the industry implement ISO 14001 which show that
industry have a systematic process and strategic plan to ensure the quality of the product
while, covers various aspect of environmental management thus the products are allowed
to export to other countries (To & Lee, 2014).
To put the issue of energy in perspective, a cross-national comparison study
between Germany and Malaysia was chosen as part of the exchange for the Masters of
Business Administration (International Business) at Universiti Sains Malaysia (USM) and
Technische Hochschulle Nuremberg Georg Simon OHM, Germany. By comparing these
two countries, the impact of eco-efficient-based green supply chain management on
business performance from the perspective of renewable energy initiatives in E&E industry
between Germany (developed country) and Malaysia (developing country) can be
measured.
To compare the two countries several metrics may be used. Both Germany and
Malaysia have 13 states; the capital of Germany is Berlin, and the capital of Malaysia is
Kuala Lumpur. Germany is bigger area wise than Malaysia, which have 357,002 square
kilometres and 329,847 square kilometres of land mass respectively. The population in
Germany was 80,996,685 and the population in Malaysia was 30,073,353 in 2014. The
average household income in Germany is about twice that of Malaysia. Electricity
production and electricity consumption in Germany is five times more than Malaysia in
2012 (CIA, 2015). However, Germany receives much less of its electricity from fossil fuels
and much more of its electricity from renewal sources than does Malaysia (See Table 1.1
below).
4
Table 1.1 Measurement metrics Germany and Malaysia
Metric Germany Malaysia
Area 357,003 sq. kilometres 329,847 sq. kilometres
Population 80,996,685 30,073,353
GDP per capita in PPP 44,700 USD 24,500 USD
GDP composition Services 68.4%, industry 30.8%, agriculture 0.9%
Services 56%, industry 34.7%, and agriculture
9.3%
Electricity consumption 582.5 billion kWh 112 billion kWh
Electricity from fossil fuels 51.1% 89.4%
Electricity from nuclear fuels 7.0% 0.0%
Electricity from hydroelectric plants
6.0% 10.6%
Electricity from renewal sources
35.0% 0.0%
Source: CIA, The World Factbook (2015)
Both governments have developed to reduce CO2 emissions in the future. The
German federal government has presented an energy strategy that aims to reduce CO2
emissions by 40% from 1990 levels by 2020, 55% by 2030 and 80-95% by 2050 (Gullberg
et al., 2014). Climate change goals together with energy security and competiveness
concerns are the major reasons behind Germany’s push to further expand renewable
electricity and improve energy efficiency. While boasting major players in automobile
manufacturing, machinery, precision equipment, heavy automotive, technology and
software, Germany’s E&E industry also plays an important part in Germany’s industrial
landscape (Economy, 2013; Julien & Lamla, 2011). According to ZVEI: Die
Electroindustrie (2014), the German electronic sector plays an important role in the global
5
economy, with exports valued at 14.6 billion euros in 2014, exceeding the previous year’s
total by 9.8% (BBC, 2014).
Malaysia too has looked at its energy polices and the place that the E&E industry
plays in it. The Malaysian government has been developing key policies and strategies for
more than 30 years to achieve the nation’s policy objectives, which are designed to mitigate
the issues of security, energy efficiency and environmental impact to meet the rising energy
demand (Occupational Structure The Green Technology Industry, 2011). Malaysia is also
developing policies for RE to create alternative business models, renewable initiatives and
more efficient technologies to reduce dependency on fossil fuels and mitigate the effects
of climate change (Hashim & Ho, 2011; Mustapa et al., 2010).
Government of Malaysia has developed a long term goals to spearhead the
sustainable development of renewable energy which increase generation of renewable
energy power capacity to 2080MW (11%) by 2020, 4000MV (17%) by 2030 and 21.4 GW
(73%) by 2050 (APEC, 2014).For instance, the Fifth Fuel of Small Renewable Energy
Power Programme (SREP) was launched in 2001 with the aim of promoting a wider use of
the huge amount of RE resources available in Malaysia, particularly biomass. Under this
SREP Programme, industries should contribute to the generation and use of renewable
energy by utilising of all types of RE sources including biomass, biogas, municipal wastes,
solar, mini-hydro and wind (Tenaga, 2013). The Electrical and Electronics (E&E) industry
is a critical element of Malaysia’s long-term economic growth strategy, particularly within
the three major ecosystems of semiconductor, solar and light emitting diode (LED)
technologies.
6
As a developed country, Germany has been a forerunner in deploying RE sources
and has ambitious goals for the future (Blazejczak et al., 2014). Germany began replacing
both fossil and nuclear fuels with renewables 20 years ago (Scholz et al., 2014). The federal
government implemented a programme called Energiewende (energy change/switch) for
energy transition to a nuclear free and a low-carbon energy supply to maintain a
competitive economy while shifting the energy structure from a heavy dependence on
fossil fuels and nuclear energy to a system based primarily on renewable energies.
However, achieving this goal has been a herculean task requiring thorough cooperation
with European neighbours (Gullberg et al., 2014). Infrastructural and technological
bottlenecks have also affected the programme's implementation, creating challenges in
manufacturing, installations and maintenance (Scholz et al., 2014).
The results of government energy policy in Germany are subject to some
controversy. According to (Frondel et al., 2010), government policy in German has resulted
in massive expenditures showing little long-term promise for stimulating the economy,
protecting the environment, or increasing energy security. Hillebrand et al. (2006)
concluded that RES sources promotion would have a net positive employment impact in
the short run due to RE source installations, which would turn negative over time due to
the long-term costs of the feed-in tariff, which guarantees fixed tariffs for 20 years.
Moreover, the German government has limited the feed-in-tariff for the solar industry;
hence, this policy might affect the operational performance in the electrical and electronics
sector (Abdmouleh et al., 2015). The impact of such confusion can be seen in that many
Germany electronics companies have not taken full advantage of benefits of the capabilities
as suggested in GSCM. The companies need to understand precisely GSCM
7
implementation in RE that benefits their business performance. E&E companies should
implement GCSM to overcome the issues.
In Malaysian, the government has developed key policies and strategies for more
than 30 years to achieve the nation’s policy objectives, which are designed to address the
issues of security, energy efficiency and environmental impacts to meet the rising energy
demands. However, despite government efforts and growing public awareness of
environmental issues, environmental problems continue to persist (Eltayeb et al., 2011).
This is because renewable energy project and activities implemented by industry have been
slow to materialize (Hashim & Ho, 2011). Despite the fact that government has encouraged
industry to participate actively in making a low carbon economy become reality, the
application level of these kinds of technologies remains in its infancy (Osman, Udin, &
Salleh, 2012). One main constraint is the high cost of energy generation. Such institutional
barriers present challenges that the industry must overcome. To date, concerns about the
environmental outcomes for organizations remain open for debate and without a conclusion.
With the emphasis on sustainable development, renewable energy (RE) has become
an area of concern in many countries because RE represents economically and
environmentally sound energy growth. Typically, government provides the motivations for
renewable energy developments through regulation or incentives (Tang, Chiara, & Taylor,
2012). Nonetheless, government requires the cooperation of the private sector in exploiting
renewable energy as a suitable driver for industry (Aslani, Naaranoja, & Zakeri, 2012). The
Electrical and Electronics (E&E) industry often is involved on renewable energy initiatives
by providing various experts, implementing instructional projects and providing training
activities related to Green Productivity improvement (Acharry, Boonrawd, & Chianchana,
8
2014). Although many countries have actively developed renewable energy technologies
supported by both governments and the private sector, some barriers exist in supporting
RE. These barriers, among others, include high conversion costs, limited locations,
environmental impacts, and other factors pose barriers to such development (Wee et al.,
2012).
In this study, the focus is the role of the supply chain in energy. Supply Chain
Management (SCM) includes the coordination and management of a complex network of
activities involved in delivering a finished product to the end-user or customer (Ninlawan
et al., 2010). Product life cycle, especially for electronic products, has been reduced
significantly in recent years due to rapid advances in technology (Osibanjo & Nnorom,
2007). All stages of a product’s life cycle influence a supply chain’s environmental burden,
from resource extraction, to manufacturing, use and reuse, recycling, and, finally, to
disposal (Zhu et al., 2007).
The “green” component of a supply chain refers to green supply chain management
(GSCM), which is defined as green purchasing, green manufacturing, and reverse logistics
which eliminate or minimize waste along supply chain (Hervani, Helms, & Sarkis, 2005;
Cucchiella & D'Adamo, 2013). As interest in GSCM-related technologies has garnered
interest from a variety of research disciplines, so too has GSCM literature grown
considerably over the last decade. To date, theory and empirical research has explored the
implementation and effects of such practices as eco-design, cleaner production,
environmental purchasing, and green/reverse logistics, on selected performance outcomes,
using financial, operational and environmental measures (Guang, Koh, Baldwin, &
Cucchiella, 2012).
9
According to Govindan et al. (2014), GSCM not only looks at internal practices
and but also external practices. For instance, environmental proactivity refers to voluntary
actions beyond compliance that an industry undertakes to minimize or eliminate the
negative impact of its activities and/or products on the natural environment. These include
policy planning, employee training, investments in environmental technologies
introduction of green products, and life cycle analysis in product design (Menguc &
Ozanne, 2005). Such environmental practices also include implementing environmental
management systems, enforcing environmental criteria for suppliers and distributors,
obtaining environmental certifications as well as efforts to protect natural habitats and
restoration measures which affected habitats (Govindan et al., 2014). Hence, the
importance of GSCM in the renewable energy sector has attracted the attention of both the
public and private sectors (Cucchiella & D'Adamo, 2013).
The E&E industry has indicated that the tool of “eco-efficiency” inherent in GSCM
can produce desirable outcomes in economic activity that reduce undesirable
environmental impacts or resource use while improving operational performance (Figge &
Hahn, 2013; Hahn, Figge, Liesen, & Barkemeyer, 2010). Due to its widespread acceptance,
eco-efficiency has become a popular mechanism by which to examine policy strategies and
their possible outcomes (English, Castellucci, & Mynors, 2006; Wursthorn et al., 2011).
Researchers in many fields have applied Eco-efficiency (EE) to improve sustainability, but
a need still remains to integrate Eco-efficiency in green supply chains in order to balance
the research output and to focus on both economic and environmental aspects.
In this study, the extension of green supply chain management based on the concept
of eco-efficiency is examined within the bounds of a new framework. This new framework
10
integrates environmental and economical aspects and accounts for all aspects of sustainable
development, which is one of the new trends in supply chain management (Burchart-Korol,
Czaplicka-Kolarz, & Kruczek, 2012). This study conceptualises a structural model of eco-
efficiency based green supply chain management and its relationship to relevant
performance measures and the drivers of renewable energy initiatives. Eco-efficiency
based green supply chain management is essential for business because the increased
pressures for environmental sustainability and operational aspects that have everlasting
impacts on the industry (Ravi, 2015). Sustainable manufacturing practices play a crucial
role in promoting renewable energy development and commercialization in E&E industries.
1.3 Problem Statement
Climate change has been aggravated in recent years as CO2 emissions continue to grow in
developed and developing countries alike (IPCC, 2014). One option for transitioning
towards a low-carbon society is to increase the share of renewable energy (RE) to mitigate
climate change and to increase renewable energy (RE) sources (Foxon & Pearson, 2007;
Jefferson, 2008). To complement these activities, increasing the overall efficiency of the
energy sector is necessary (Eichhammer et al., 2013; Marques & Fuinhas, 2011; Schleich,
2009). Demands from the customers, society, non-government organizations and
government agencies are vital factors in leading a company to conduct production activities
concerned with environmental impacts. However, because state governments have limited
financial resources, the involvement of private markets and investors is needed (Mathews
et al., 2010). Included in such issues is the fact that additional costs of heat and electricity
generation are incurred from most renewable energy sources (Lehr, Lutz, & Edler, 2012).
11
Despite successful efforts in diffusion of RE utilization, remarkable gaps between
achievements and plans exist, particularly in Malaysia. Beyond the technological issues,
the RE industry needs strong capital and investment, and a core role for the private sector
is needed (Alireza & Ali, 2013). Today, industry performance in terms of operational and
economic performance can be adversely affected, as the investment required is high for the
renewable energy sources. Moreover, renewable energy is also typically more expensive
than fossil-fuel based energy on a levelised-cost basis (IRENA, 2012), and the intermittent
nature of some renewable sources can result in higher integration costs (Fripp, 2011). Thus
utilization of renewable energy results in an increased financial burden on local distribution
companies, many of which are in poor financial health to begin with (Shunglu, 2011).
A number of earlier studies, proposing sustainability-based performance evaluation
(Figge et al., 2002; Sarkis, 2003), have focused extensively on the environmental impacts
on operational performance as well as the importance of integrating environmental aspects
into corporate strategic decision making (Shi et al., 2012). Cucchiella & D'Adamo (2013)
argued that the expansion of renewable energy offered significant challenges from the
supply chain perspective.
Despite the fact that sustainability aspects have been discussed widely in GSCM
literature, study of the extent of GSCM practices contributing to sustainable business
performance has neglected. This is because economic performance has traditionally been,
and continues to be, a top management priority for manufacturers (Zhu, Sarkis, & Lai,
2013). Less evidence is also available in the literature on measurement of sustainable
business performance. Other dimensions of organizational outcome, such as operational
12
performance, have not seen as much research or have not been (Corbett & Klassen, 2006)
integrated with environmental performance and economic performance.
Therefore, the concept of green supply chain management (GSCM) has grown in
importance because the practice contributes to the transition towards eco-efficiency
(Govindan et al., 2014) and sustainability (Yusuf et al., 2013; Zhu et al., 2013b) and also
to the future of operations management (Gunasekaran & Ngai, 2012; Diabat & Govindan,
2011). So, these are the reasons that eco-efficiency has been applied recently in the field
of supply chain management such as management, operations and others to improve
sustainability. The integration of eco-efficiency in GSCM encompasses not only
environmental aspects but also balances and focuses both economic and environmental
aspects (Govindan et al., 2014; Ravi, 2015). Despite the proliferation of research, no study
addresses issues such as an eco-efficiency based green supply chain in the literature
(Govindan, Sarkis, Zhu, Geng, & Jabbour, 2014). This study proposed a novel construct to
fill this research gap and posits that eco-efficient based green supply chain management
and sustainable business performance are related.
According to Azevedo et al. (2011), different types of green supply chain practices
that are implemented can impact performance differently (Azevedo, Carvalho, & Machado,
2011). GSCM practices that involve every tier in the greening of a supply chain are often
called external GSCM practices (Zhu et al., 2007a). The literature argues that, in general,
the adoption of GSCM practices tends to affect not only the company’s green performance
(Zhu & Sarkis, 2007b; Zhu et al., 2013b) but also supply chain performance (Azevedo et
al., 2011). However, with regard to external GSCM practices, such findings may not appear
conclusive because both supporting (Zhu et al., 2007a; Green et al., 2012) and
13
contradictory results (Zallani, et al., 2012) can be found. In addition, Szwilski (2000) also
has postulated that an environmental management system is an innovative environmental
strategy to improve organizational operational performance. Yet, limited research has
focused on other business performance outcomes such as operational performance (Murali,
Saiku, & Ho, 2013).
Evaluation of the sustainability of business performance in the Electricity and
Electronics industry has experienced different approaches in the assessment of its
economic, social and environmental impacts (Alvarado, Palafox, & Ruiz, 2011). The
stakeholders often are unable to distinguish between an organization’s environmental
practices and the practices of its suppliers (Rao, 2002; Sarkis, 2006). These inconclusive
results raise the question of what are the actual outcomes that can be realized from the
adoption of green supply chain management (Eltayeb et al., 2011). Nevertheless, the main
difficulty in drawing clear conclusions from previous studies lies not only in the mixed
results from different research but also the fact that scholars use different
definitions/measures of environmental performance (Zeng et al., 2010). Thus, a need exists
to define clearly environmental performance and how to measure it to achieve sustainable
business performance.
Although many researchers have noted the important of GSCM in the scope of the
RE challenges that affect the business performance, none of these studies are quantitative
cross-national comparison in nature in examining the drivers that influence RE initiatives
and the mediating effects of eco-efficient based GSCM towards sustainable business
performance in E&E companies. This gap includes a comparison between Germany and
Malaysia. Apparently, government plays the biggest role in developing RE sources through
14
establishing strategic plans and providing policies. However, different countries have
deployed different policies and have had different experiences with RE policies; hence,
presenting a benchmark for comparison between different countries is needed (Abdmouleh
et al., 2015).
Inconclusive findings have coloured the GSCM literature. Several scholars (Carter,
Kale, & Grimm, 2000; Rao & Holt, 2005; Zhu & Sarkis, 2004) have found that green
supply chain management has a significant positive relationship with environmental and
economic performance of organization. However, as Rao and Holt (2005) have remarked,
research has rarely established a potential link among green supply chain management,
increased competitiveness and enhanced economic performance. Previous scholars such as
Vachon and Klassen (2006b) and Zhu, Sarkis, and Lai, (2007) found no significant
relationship between green supply chain management and such performance outcomes.
According to Zhu et al., (2012), improving their environmental management maturity
before they improve green management performance through GSCM practices is desirable
for companies.
This current study aims to enhance the understanding of drivers of RE initiatives
that are associated with E&E-based GSCM through a comparison between E&E companies
and E&E-based GSCM on sustainable business performance in Germany and Malaysia in
terms of environmental, operational and economic factors. The differences between these
two countries may be attributable to: (1) drivers of RE initiatives contributing to E&E-
based GSCM; (2) the effect of E&E-based GSCM on Sustainable Business Practices (SPB);
and (3) the mediating effects of E&E-based GSCM between RE initiatives and SBP. This
study focuses on RE initiatives to provide insight about whether cross-national differences
15
between developed and developing countries actually exist, and whether these differences
may shed light on how to promote E&E-based GSCM in the manufacturing companies
especially E&E sector to increase the business performance. The belief is that RE
initiatives (financial support, fiscal support, legislative support, and political support tax
incentives for investment and technological support) could provide benefits and bring
about successful implementation in other industries (Abdmouleh et al., 2015).
1.4 Research Objectives
There are five objectives of this study are to:
1. Examine the link between renewable energy initiatives and eco-efficient based
green supply chain management;
2. Determine the extent to which renewable energy initiatives influence sustainable
business performance;
3. Investigate the relationship between eco-efficient based green supply chain
management and sustainable business performance;
4. Examine whether eco-efficient based green supply chain management mediates the
relationship between renewable energy initiatives and sustainable business
performance; and
5. Examine the differences on theoretical constructs between Malaysia and Germany
in the Electrical & Electronic Industry.
16
1.5 Research Questions
The research questions are as follows:
1. What are the effects of RE initiatives on eco-efficient based GSCM?
2. What is the relationship between RE initiative implementation on sustainable
business performance?
3. What is the relationship between eco-efficient based GSCM and sustainable
business performance?
4. Does eco-efficient based GSCM mediate the relationship between RE initiatives
and sustainable business performance?
5. Are there significant differences on the theoretical constructs between Malaysia and
Germany in their Electrical and Electronic industries?
1.6 Definition of Key Terms
The following key terms’ definitions are provided in order to share a common
understanding on the concepts and create a better understanding for further discussion.
1.6.1 Renewable Energy Initiatives
A Renewable Energy Initiative is an action plan the government has developed, with the
aim of reducing dependency on fossil fuel and contributing towards mitigating the effects
of climate change. For example, energy policies, renewable energy programmes,
renewable energy incentives and Feed-in-Tariff (FiT), and fund and financing scheme are
initiatives and action plans the government can develop (Hashim & Ho, 2011).
17
1.6.2 Eco-efficient
Eco-efficiency is achieved by the delivery of competitively priced goods and services that
satisfy human needs and bring about a better quality of life, while progressively reducing
ecological impacts and resource intensity throughout the life-cycle to a level at least in line
with the earth’s estimated carrying capacity (Schmidheiny, 1992).
1.6.3 Green Supply Chain Management
Green supply chain management is the set of supply chain management policies held,
actions taken and relationships formed in response to concerns related to the natural
environment with regard to the design, acquisition, production, distribution, use, reuse and
disposal of the industry’s goods and services (Zsidisin & Siferd, 2001).
1.6.4 Eco-efficient based Green Supply Chain Management
Eco-efficiency are tools that minimize ecological damage while maximizing production
efficiency and remanufacturing and that have become key assets to achieve best practices
in GSCM for reducing waste and preserving the quality of product-life and natural
resources (Mutingi, 2013)
1.6.5 Sustainability
Sustainability is the ability to meet current needs without hindering the ability to meet the
needs of future generations in terms of economic, environmental and social challenges
(Cartee & Rogers, 2008).
1.6.6 Sustainable Business Performance
Sustainable business performance is the performance of a company in all dimensions and
all drivers of corporate sustainability such as employees, communities, environmental
18
responsibilities, transparency and accountability, and meeting tomorrow’s needs with
innovation accounting for all stakeholders (Schaltegger & Wagner, 2006)
1.7 Significance of Study
Renewable energy initiatives will be one of the new regimes for future growth in the energy
sector. This study is among the pioneering empirical studies of renewable energy initiatives
from the business performance perspective that could make notable contributions to
companies, to academics and to practitioners as well as to society.
1.7.1 Theoretical Contributions
Energy has been a main contributor towards the rapid growth of Malaysia’s economy.
Therefore, the Malaysian government has been developing renewable energy initiatives for
more than 30 years to achieve the nation’s policy objectives. However, renewable energy
projects have been slow to materialize. A clear understanding of the projects that must be
done by both private and government sectors are needed to achieve the task. This will be a
new area for the researchers to further investigate renewable energy initiatives and the
opportunities associated with eco-efficient based green supply chain management
implementation for companies. This study represents one of the first attempts to fill in this
gap. Previously, researchers have focused more on renewable energy initiatives at the
countrywide level more than at the company level. Therefore, this study will help further
the research.
In addition, understanding renewable energy initiatives and eco-efficient GSCM
are equally important in achieving government targets, which are to achieve better business
performance in terms of environmental, operational and economic issues. Meanwhile, this
19
study shall also raise academic’s awareness about the global warming issues and the
importance of the initiatives implemented in Malaysia. In addition, the proposed
framework will use organizational theories such as the Institutional Theory and the Natural
Resource-based View Theory will be used to examine the variables of renewable energy
initiatives and eco-efficient green supply chain management.
1.7.2 Practitioner Contributions
Over the past 10 years, the government of Malaysia has introduced many different policies,
programmes, funding and schemes, and incentives to promote the implementation of RE
as an alternative energy source. However, RE implementation has been slow to materialize
because of the barriers to governments, researchers and stakeholders. In order to increase
performance, all the drivers need to work together to enhance the goals of RE.
The E&E industry needs to utilize these RE initiatives by applying knowledge and
experience in the technology rather than spending too much in trial- and-error endeavours.
Operations managers should understand more about renewable energy and, in doing so,
decrease communication barriers with policy makers and financiers. Malaysian banks also
need to be more efficient in assisting the industry and thereby increase financial support.
Companies should receive incentives and funds to implement GSCM for their business to
increase bottom-line performance. For their part, companies that implement GSCM
practices must ensure that both the organization and its employees accomplish the overall
organizational objectives, such as cost saving, cycle-time reduction, improved
environmental quality and increase value to customers as well as achieving individual goals
of their employees.
20
Environmental collaboration with suppliers and customers leads to improved
industry performance. Industry must conduct educational activities for their suppliers about
environmental issues and environmental management activities (i.e., holding awareness
seminars for suppliers, informing suppliers about the benefits of green practices, and
bringing together suppliers in the same industry to provide them with know-how
information). Industry should guide suppliers in the development of environmental
programs, visiting suppliers premises to provide on-site technical assistance, and providing
financial assistance to suppliers to improve their environmental performance. In fact,
industries and suppliers should help each other to increase overall operational performance.
Likewise, customers should be involved in the process to improve the
environmental performance. Customers should demand improved environmental
performance. Industry should exchange technical information with its customers and
demonstrate a willingness to learn a company’s operations in order to plan and set goals
for environment improvement. This implies cooperation for reducing environmental
impacts associated with products flows in the supply chain. Therefore, industry should
provide additional education for customers to help improve environmental performance.
Increased GSCM practices among industries, suppliers and customers should spur
added economic development. This development includes increased revenues from
“secondary” sales (sale of reprocessed or remanufactured products) and from offering fresh
stock in place of unsold or low selling stock, goodwill earned from acting in a socially or
environmentally responsible manner, cost reductions that come from the reduced cost of
goods sold and lower operating expenses. All of these could enhance profitability and
create better management of returned inventory that can improve asset turnover. Generally,
21
industries that apply initiatives from government and make their customers and suppliers
more aware of the issues will develop better business performance.
Lastly, if the E&E implements RE initiatives, manufacturing costs in the form of
labour, energy, materials, and other costs should be reduced; eco-efficient based-GCSM
will systematically and concretely enhancing their business. Moreover, both the private
and government sectors must assist the industry in achieving a long- term commitment by
the government and in sharing knowledge with employees about renewable energy.
1.8 Organization of the Dissertation
This dissertation has five chapters: the introduction, literature review, research
methodology, results and discussion. Background information pertinent to this study has
been presented in Chapter One as well as the problem statement, research questions and
objectives. The research objectives and questions are used to guide the direction of the
study. Chapter Two provides insights from previous scholarly studies, which review
renewable energy initiatives, the concept of eco-efficiency, green supply chain
management, business performance and the variables shown in theoretical framework.
Hypotheses development is at the end of the Chapter Two. Chapter Three discusses the
research methodology used in this study by explaining the research design, data collection,
the method of data analysis and measurement of variables to investigate the research
problem. Chapter four presents the finding and analysis of the study which includes
hypotheses testing. Lastly, chapter five discuses about conclusion, limitation and
recommendation for the further study.
22
CHAPTER 2
LITERATURE REVIEW
2.1 Introduction
This chapter will present the previous literature that has been undertaken in this study. Thus,
this chapter will present the previous overview regards the renewable energy initiatives,
eco-efficient based green supply chain management and sustainable business performance.
There are two theories which comprised of institutional theory and natural resource based
view are included supported the proposal theoretical framework. Before summary of the
chapter, the theoretical framework and the hypothesis development are presented towards
the end of the chapter.
2.2 Overview of Renewable Energy
Due to the fast depletion and high cost of fossil fuel, this is now a threat to sustainable
growth. Attention is now focused on renewable energies as an alternative (Maulud & Saidi,
2012). Renewable energy is a free source of sustainable energy because it can produces no
negative impacts during conversion process like the emission of hazardous substances
(Wee, Yang, Chou, & Padian, 2012). Hence, renewable energy has been put in the limelight
and researchers have increased their efforts in upgrading the efficiency of alternative power
sources thus limiting the dependency on natural resources (Ahmad, Ab Kadir, & Shafie,
2011).
23
2.3 Overview of Renewable Energy in Germany
For decades, Germany has been a forerunner in the development and application of
renewable energy sources (RES). The country’s support policies for RES have received
positive attention worldwide the feed-in tariff model, determined by the Renewable Energy
Sources Act (Erneuerbare-Energien-Gesetz-EEG) of 2000, has been adopted by more than
two thirds of EU member states. The Act determines that every kilowatt-hour generated
from renewable energy receives a fixed feed-in tariff and that network operators must feed
in this electricity into the grid preferentially to the electricity generated by conventional
sources. Moreover, renewable energy plant operators receive a 20 year guaranteed payment
for their produced electricity ((Blazejczak et al., 2014). Amendments of the EEG are being
made almost every year, supported by several other policy decisions favoring renewable
energy. As a result of this governmental support, renewable energy technologies
continuously increased their share in the German energy mix. By 2012, renewables
contributed 12% to the total energy supply and 23% to electricity supply (Sühlsen &
Hisschemöller, 2014).
The growth of renewable energy in Germany has often been cited as a model
success story. The success reason is the German government launched a comprehensive
series of promotions for renewable energy in the early 1990s, which has since been
augmented with additional legislation and policy actions to increase renewable energy use
(Runci, 2005).
The reason is Government sponsorship of renewable energy was spurred initially
by energy security concerns during the 1970s. In the beginning, the energy crises of 1973-
24
74 and 1979-80 had severe economic impacts on Germany as on most other industrialized
countries. However, renewable energy technologies have deployed rapidly in Germany
since 1990 largely as a result of energy policies adopted by the German government and
the European Union. In addition, federal Electricity Feed Law (StrEG) was adopted in 1991
and became the most important instrument for the promotion of renewable energy in
Germany during the 1990s (Runci, 2005).
Besides, the German approach has combined ongoing R&D efforts with a variety
of policy instruments (taxes, standards, etc.), favorable electricity feed laws, export
promotion programs, and government secured loans for renewable energy projects (Runci,
2005). These policies below (Table 2.1) have been helping Germany to attain a leading
position in many aspects of renewable energy use. Besides, it shows that different plan
with different policy target from 1985 to 2012.
Table 2.1 In force of renewable energy policy in Germany Germany Plan Year Description of the Policy Policy Target
Combined Heat
and Power
(CHP)
Agreements with
Industry
2012 –
2022
(Dec 31st)
German government and
German industrial sector and
energy industry initialed an
agreement concerning the
improvement of energy
efficiency in the industrial
sector.
The objective is to raise
energy efficiency by 1.3
percent per year.
Multiple renewable energy sources-CHP