The International Journal of Logistics Management

Stakeholder pressure and the adoption of environmental logistics practices: Is eco-

oriented culture a missing link?
Seong-Tae Kim Sang-Yoon Lee
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IJLM
23,2
Stakeholder pressure and the
adoption of environmental
logistics practices
238 Is eco-oriented culture a missing link?
Seong-Tae Kim
Graduate School of Logistics, Inha University, Incheon, Korea, and
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Sang-Yoon Lee
Graduate School of Logistics/Asia Pacific School of Logistics,
Inha University, Incheon, Korea

Abstract
Purpose – The purpose of this study is to investigate the role of eco-oriented culture (EOC) in the
relationship between stakeholder pressure (SP) and the adoption of environmental logistics practices
(ELPs). It is proposed that the adoption of ELPs is influenced by SP perceived by a firm, and in turn
this relationship is mediated by EOC.
Design/methodology/approach – Multiple theoretical perspectives are considered to explain why
a firm adopts environmental strategies and how the firm overcomes environmental barriers.
A structural equation modelling was utilized to empirically test the effect of SP on the adoption of
ELPs, and the mediating role of EOC in its relationship, based on the survey data from Korean
logistics and manufacturing companies.
Findings – Empirical analysis shows significant relationships between SP and ELPs, and
the mediating role of EOC in the SP-ELPs path. The results indicate that corporate EOC fully mediates
the relationship between perceived SP and the adoption of ELPs.
Research limitations/implications – SP is able to influence the adoption of ELPs only through its
efforts to build a unique environmental culture. This implies that a firm with well-developed EOC may
more effectively correspond to an environmental paradigm shift and gain an edge over its competitors.
Originality/value – This study focused on the logistics area, where the environmental concerns have
increased but little research interest has been exhibited. This research attempts to empirically test
the mediating role of EOC that may explain the equivocal relationship between SP and ELPs while the
previous studies have focused on the direct connections between ELPs and their antecedents.
Keywords Eco-oriented culture, Environmental logistics practices, Resource-based view,
Stakeholder pressure, Stakeholder theory, Structural equation modelling, Republic of Korea,
Organizational culture
Paper type Research paper

1. Introduction
There are numerous studies dealing with environmental issues in a variety of business
disciplines, but almost all these studies have targeted the manufacturing sector
(Lin and Ho, 2011). However, the International Transport Forum, an intergovernmental
organization at the Organization for Economic Co-Operation and Development
The International Journal of Logistics (OECD), reported that transport was one of the most significant sectors that
Management contributed to overall greenhouse gas emissions in 2005, accounting for 23.3 percent
Vol. 23 No. 2, 2012
pp. 238-258 of the CO2 worldwide (OECD, 2010). Focussing on the movement of freight, roughly
r Emerald Group Publishing Limited
0957-4093
8 percent of the CO2 was emitted from freight transportation and an additional
DOI 10.1108/09574091211265378 2-3 percent was generated by warehousing and goods handling activities
 (McKinnon, 2010), which indicates that the environmental problems caused by logistics Environmental
activities should not be underestimated. logistics
Stakeholder pressure (SP) is considered one of the most important determinants
influencing a firm’s environmental strategy (Fineman and Clarke, 1996). However, practices
there is some controversy about whether SP is positively related to the adoption
of environmental practices (EPs). Many of the existing studies have produced
contradictory findings in their research on the relationship between SP and EPs. That 239
is, some studies have presented a positive SP-EPs link (e.g. Henriques and Sadorsky,
1996), whereas others have not revealed any connection (e.g. Frondel et al., 2008). These
disparate findings can even be found in the environmental logistics literature (e.g.
González-Benito and González-Benito, 2006). Consequently, there is some difficulty in
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defining the direct relationship between SP and EPs, which leads us to consider that
there might be a missing link connecting SP to the firm’s EPs. Accordingly, we suggest
that eco-oriented culture (EOC) may act as a channel linking SP with the adoption of
environmental logistics practices (ELPs).
The main objective of this study is to investigate the potential mediating role of
corporate EOC in the relationship between SP and the adoption of ELPs. To achieve
this, we have employed strategic management theories such as stakeholder theory and
resource-based view (RBV). Specifically, we have attempted to integrate those theories
to obtain a comprehensive understanding of how SP would affect the adoption of ELPs
and how logistics firms could overcome environmental barriers and obtain a superior
competitive advantage over their competitors in Korean logistics industry.
This paper differs from the existing research in the following respects. First, this
study focussed on the field of logistics where environmental concerns have rapidly
increased but in which little research interest has been exhibited. Second, although
some previous studies (e.g. Lin and Ho, 2011) have tried to identify the determinants
of ELPs, the attempts to examine mediating variables that may explain the equivocal
relationship between SP and ELPs are less extensive. Third, there has been scant
empirical research on the role of environmental culture for the adoption of green
initiatives, especially in the context of environmental logistics. In fact, while the
importance of organizational culture in environmental management has been discussed
in some previous studies (e.g. Harris and Crane, 2002), quantitative approaches have been
less used, especially in the logistics discipline.
The paper is organized as follows. Section 2 reviews the literature on environmental
issues focussing on SP, EOC, and ELPs, and based upon that, research hypotheses are
developed. Section 3 explains the methodology and data used in the empirical analysis
including instrument development, the sampling process, and validation issues.
Section 4 presents the results of the study and related discussions. The final section
proposes research conclusions with theoretical and industrial implications, and
suggests further research directions.

2. Literature review and research hypotheses

2.1 SP
Freeman (1984, p. 46) defined a stakeholder as “any group or individual who can affect
or is affected by the achievement of the organization’s objectives.” Various
categorizations have been used to group stakeholders (e.g. Clarkson, 1995; Henriques
and Sadorsky, 1999; Buysse and Verbeke, 2003). However, we rather focus on Mitchell
et al.’s (1997) classification which recognizes three stakeholder attributes: power (the
stakeholder’s power to influence the firm), legitimacy (the stakeholder’s relationship
 IJLM with the firm), and urgency (the stakeholder’s claim on the firm). By combining these
23,2 attributes, they generated a stakeholder typology consisting of latent stakeholders,
expectant stakeholders, and definitive stakeholders. “Latent stakeholders” are
those stakeholders who possess only one of the three stakeholder attributes;
corporate managers may not even go so far as to recognize the existence of these
stakeholders. On the other hand, “expectant stakeholders” and “definitive stakeholders”
240 are those stakeholders who possess two or three stakeholder attributes, respectively;
corporate managers must pay attention to the interests of these stakeholders.
Given this classification and the fact that a firm never satisfies every stakeholder’s
interest (Esty and Winston, 2006, p. 258), corporate managers are strategically required
to pay attention to the more influential stakeholders (i.e. expectant stakeholders or
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definitive stakeholders) than to others. Based on previous studies (Fineman and Clarke,
1996; Sarkis et al., 2010), we identified five types of stakeholders who can exert
influence on corporate environmental activities: customers, employees, shareholders,
governments, and society/NGOs. Fineman and Clarke (1996) referred to these
stakeholders as “green stakeholders.” Such groups may provide “social licenses” to
private companies, which might have a considerable influence on their business
performance (Gunningham et al., 2004). More detailed explanations about how each
green stakeholder might influence a firm’s business are as follows.
First of all, some business customers often require their supply chain partner to
follow the environmental standards that they have set for them. For instance, the Sony
Corporation constructed a new supplier environmental management system after the
so-called “Cadmium Crisis” (Esty and Winston, 2006). Under this system, suppliers
are strongly required to meet Sony’s environmental standards to maintain a
business relationship. Second, employees have been regarded as one of the stakeholder
groups which may affect a firm’s environmental activities (Fineman and Clarke, 1996).
Successful environmental programs are more likely to depend upon the participation
and involvement of employees who may have a strong preference for environmental
management (Buysse and Verbeke, 2003). Third, companies generally need to satisfy
the demand of shareholders to prevent the loss of their capital investment. Since
shareholders are likely to suffer financially when a corporation acquires a negative
reputation arising from environmental problems caused by the firm’s unethical actions
(Eiadat et al., 2008), corporate managers need to carefully establish and operate their
business strategies relating to environmental issues.
Meanwhile, from a regulatory perspective, many authors have largely concentrated
on the role of government in promoting corporate EPs (e.g. Porter and van der Linde,
1995). This stakeholder can have a huge impact on companies’ strategic decisions
by providing regulatory schemes. In this situation, businesses must comply with
environmental regulations and policies to avoid regulators’ legal actions (Sarkis et al.,
2010). Finally, society and NGOs have also played a critical role in encouraging
unethical firms to be more socially responsible organizations. These stakeholders
can mobilize public opinion all over the world in favor of or against an organization’s
activities (Henriques and Sadorsky, 1999). Moreover, they often work directly and
indirectly with governments to influence corporate behavior related to the environmental
impact of business activities.

2.2 EOC
The notion of EOC is derived from a marketing concept, market orientation (MO),
suggested by Kohli and Jaworski (1990). According to the authors, MO refers to
 organizational activities geared toward understanding customer needs, sharing this Environmental
understanding across different departments, and engaging in activities designed to logistics
meet the selected customer needs. They proposed MO activities according to three
sequential processes, namely intelligence generation, intelligence dissemination, and practices
responsiveness. This model is empirically formalized by the MARKOR scale (Kohli
et al., 1993) and has been widely accepted and developed in the marketing field (Naver
and Slater, 1990; Deshpandé et al., 1993). 241
However, some authors assert that because of environmental issues, most firms
have already moved from a customer centric orientation to an environmentally
responsible orientation (Miles and Munilla, 1993; Stone and Wakefield, 2000). In other
words, eco-oriented activities are internalized as environmental issues have been
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a central part of corporate competitive strategy (Hart, 1995; Stone et al., 2004; Markley
and Davis, 2007). From this perspective, Stone and Wakefield (2000, p. 22) shifted the
notion of MO from a market oriented one to what they termed eco-orientation (EO) that
specifically accommodates an environmental focus. They defined EO thus:
The organization-wide effort to generate ecological intelligence pertaining to current and
future societal environmental needs, disseminate this intelligence throughout organizational
departments, and generate acceptance and responsiveness to these needs through the
adaptation of internally developed programs which create and foster organizational and
public perception of ecological concern.
Similar to MO activities, the authors further empirically identified three sequential EO
processes, namely ecological intelligence generation (EIG), ecological intelligence
dissemination (EID), and ecological intelligence responsiveness (EIR).
Meanwhile, from the RBV of the firm, organizational culture is regarded as one of
the resources for sustained competitive advantage if that culture is valuable, rare,
inimitable, and non-substitutable (Barney, 1986, 1991; Harris and Crane, 2002). Such
cultural resource can be a crucial factor in differentiating a certain firm from others,
and in generating superior financial performance (Barney, 1986). Regarding
the importance of environmental sense for organizational management, based on the
natural RBV of the firm, Hart (1995) suggested that management strategy and
competitive advantage should be rooted in capabilities that facilitate environmentally
sustainable economic activities. Moreover, Russo and Fouts (1997) argued environmentally
oriented organizational capabilities could be delivered by incorporating of managerial
environmental concerns into the firm’s cultural resources. Therefore, under the concept of
RBV, EO might be realized and reinforced in the EOC context. In this regard, Stone et al.
(2004) further proposed that EO could be regarded as EOC, which is related to the set of
processes, activities, and behaviors derived from focussing on environmental stewardship.
Given the discussion, EOC can be considered such an organizational capability that
generates, disseminates, and responds to environmental intelligence.

2.3 ELPs
In this study, ELPs are environmental activities relating to logistics and supply chain
management undertaken by manufacturers as well as logistics service providers,
retailers, and wholesalers. These activities mainly focus on minimizing negative
environmental impacts while maximizing logistics efficiency in handling and
distributing cargoes. Rogers and Tibben-Lembke (2001) defined ELPs as “efforts to
measure and minimize the environmental impact of logistics activities.” Although
these activities are diverse in each phase of the supply chain (Wu and Dunn, 1995),
 IJLM many previous studies have considered ELPs a sole indicator (González-Benito and
23,2 González-Benito, 2006) or have simply regarded them as an element of the dimensions
that constitute green supply chain management (Holt and Ghobadian, 2009).
The literature reveals some important domains of ELPs in the supply chain, which are
environmental management system (Murphy and Poist, 2000; Zhu and Sarkis, 2004),
environmental sourcing (Wu and Dunn, 1995), and packaging (González-Benito and
242 González-Benito, 2006), and logistics process design for environmental efficiency
(Aronsson and Huge-Brodin, 2006). Given the discussion as well as the relevant
literature, the present study defines ELPs as three interconnecting components,
namely internal environmental management (IEM), environmental sourcing and
packaging (ESP), and environmental process design (EPD). These three dimensions are
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expected to covary with each other. More detailed explanations about these elements
are as follows.
IEM refers to those internal activities that are related to the adoption of
environmental management practices in organizations. It has been argued that a
higher reduction in pollution emissions is achieved through a combination of internal
management efforts such as environmental audit programs (Murphy and Poist, 2000),
environmental management systems (Zhu and Sarkis, 2004), environmental
accomplishments (Murphy and Poist, 2000), and all of them are approached by a
specialized team or department (Fernández et al., 2003). For example, environmental
audit programs enable a firm to gauge and visibly present the performance of its
environmental policy and activities; this visibility can also help to protect against
potential environmental accidents. In addition, a specialized team or department
may provide critical information about environmental issues to managers and
engineers in its organization and eventually offers an efficient way to properly deal
with environmental challenges.
ESP pertains to those operational activities associated with the adoption of
environmental purchasing and packaging. Wu and Dunn (1995) have asserted that as
green consumers require more and more environmentally friendly products and
services, the pressure for the utilization of eco-friendly raw materials increases
dramatically over time. In this sense, corporate environmental performance might be
determined by whether to buy those materials from environmentally friendly
suppliers. Environmental purchasing therefore could be one of the important elements
in ELPs as a way to facilitate recycling, reuse, and resource reduction (Carter et al.,
2000). In addition, for corporate managers, such activities are likely to promote
environmental packaging by selecting alternative materials that might have less
impact on the natural environment. Once consumed, the packaging materials are
generally undesired items which cause environmental problems, but by changing
packaging elements (e.g. shape and materials), packaging is able to play a key
role in reducing environmental impact as well as increasing storage efficiency
(González-Benito and González-Benito, 2006).
EPD reflects operational activities related to the adoption of logistics process
redesign toward environmentally friendly entities. Many authors have pointed out that
one of the most influential ways of reducing environmental impact in the business area
is to restructure the logistics process (Aronsson and Huge-Brodin, 2006; Kohn and
Huge-Brodin, 2008; Woodburn and Whiteing, 2010). By changing the current logistics
structure into a more environmentally friendly one, a firm may eliminate waste in the
logistics operation which may lead the firm to consume less energy. A unit load system
and optimizing the logistics process can decrease the distances between origins and
 destinations, which may reduce the number of load carriers. In addition, modal shift Environmental
referring to the changes of transport modes from less environmentally friendly ones to logistics
more environmentally friendly ones could generate positive impacts on the global
environment. Tesco, for example, utilizes rail instead of trucks between the Midlands practices
and central Scotland, which allows them to save more than seven million road
kilometers and reduce 6,000 tons of CO2 per annum (Woodburn and Whiteing, 2010).
Other way of mitigating environmental impact in EPD practices could be to design a 243
reverse logistics process that focusses on the reduction and substitution of the sources
through the methods of reuse and recycling (Wu and Dunn, 1995).

2.4 Hypotheses development

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2.4.1 SP and ELPs. Stakeholder theory may explain the antecedents and consequences
of the adoption of environmental management practices (Sarkis et al., 2010). According
to this, a firm produces externalities that affect its internal and external stakeholders
(Sarkis et al., 2011), and its environmental problems can be an externality that
cause stakeholders to increase pressures on the firm to be an environmentally
responsible organization. Since firms carry out their business activities as a
way to create values for their relevant stakeholders, corporate managers should accede
to the environmental concerns of their stakeholders (Hart, 1995; Markley and Davis,
2007).
In accordance with the argument above, some authors have asserted the importance
of SP for the adoption of proactive environmental strategies (e.g. Fineman and Clarke,
1996; Berry and Rondinelli, 1998; Sharma and Vredenburg, 1998), and have empirically
investigated this relation in a variety of disciplines (e.g. Henriques and Sadorsky,
1996, 1999; Buysse and Verbeke, 2003; Sarkis et al., 2010), including logistics
(González-Benito and González-Benito, 2006; González-Torre et al., 2010; Lin and Ho,
2011). For example, Lin and Ho (2011) found that environmental pressure from
stakeholder groups such as customers and government have a highly significant
positive impact on the adoption of environmental management practices. Based on the
foregoing discussions and the empirical findings of existing studies, we posit that
following hypothesis:

H1. SP is positively related to the adoption of ELPs.

2.4.2 The mediating role of EOC. Although many researchers have examined the role
of SP in the adoption of a firm’s environmental strategy, they have produced conflicting
results showing an equivocal relationship between them. For instance, despite the
general recognition that environmental regulation may play a critical role in the
adoption of EPs, previous research has revealed that the reality of government
regulation is different from the concept. Except for a few studies (e.g. Lin and Ho, 2011),
a considerable number of empirical findings have demonstrated that government
pressure does not have a significant effect on EPs (e.g. Rivera-Camino, 2007; González-
Benito and González-Benito, 2008). More interestingly, some studies have revealed a
negative impact of government regulation on the adoption of EPs (e.g. Eiadat et al.,
2008), which is contrary to Porter’s hypothesis (Porter and van der Linde, 1995).
As many firms are now subject to environmental pressure (i.e. SP) to protect against
environmental threats, they need to develop appropriate environmental management
strategies which will allow them to become more environmentally responsible
organizations. Many constraints, however, still exist for the adoption of various
 IJLM environmental management practices. These constraints may include organizational
23,2 culture as well as technical issues (Perron et al., 2006; Sarkis et al., 2010).
According to Fernández et al. (2003), the weakness of organizational culture and
the shortcomings in human resources might be the chief obstacles for the adoption
of environmental management practices. A lack of such resources may lead to
heterogeneous responses to SP (Sarkis et al., 2010), which could be associated with the
244 contradictory results mentioned above. Conversely, this heterogeneity could be
explained by the absence of organizational capabilities such as EOC. From the RBV of
the firm, the lack of capabilities and resources also make the adoption of ELPs difficult
(González-Torre et al., 2010; Sarkis et al., 2011). Given the context, we believe that EOC
as an organizational capability can provide a mechanism for a firm to link its
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recognition of environmental issues with the rest of its corporate resources to facilitate
environmentally sustainable activities.
Some existing literature provides empirical evidence supporting this connection.
For instance, Stone et al. (2004) hypothesized that SP such as “community ecological
concerns” and a “regulatory climate” might affect the formation of an eco-oriented
organizational culture, and presented empirical support for their argument. In addition,
González-Benito and González-Benito (2008) empirically established the positive link
between market-oriented culture and the adoption of EPs. These findings provide
initial evidence that EOC mediates the relationship between SP and the adoption of
ELPs. More recently, Sarkis et al. (2010) investigated a mediating role of training in the
adoption of EPs corresponding to stakeholders’ environmental pressure with joint
consideration of stakeholder theory and RBV. Based on the arguments above, our
second hypothesis is as follows:

H2. ECO mediates the relationship between SP and the adoption of ELPs.

3. Research design
3.1 Instrument development
The present research attempts to investigate the role of EOC in the SP-ELPs
relationship. A total of 28 measurement items were selected to measure the relevant
constructs (see the Appendix). First, in order to measure SP, five types of stakeholders
were considered based on previous studies (Fineman and Clarke, 1996; Sarkis et al.,
2010). The levels of pressure imposed by those different stakeholders were measured
using a five-point Likert scale (1: not at all, 2: a little bit, 3: to some degree, 4: relatively
strong, 5: very strong) in response to the following request: “Please assess to what
extent you really feel pressure from the following stakeholders to adopt environmental
logistics practices.” Next, a list of ten measurement items was used to measure EOC.
These items were originally developed by Stone and Wakefield (2000) and further
employed by Stone et al. (2004) in the literature. The EOC was then measured using
another five-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree)
in response to the following: “Please assess to what extent you agree or disagree with
the following activities in your company.”
The development of measurement for ELPs was carried out in two stages. The first
stage utilized a thorough review of the literature to identify scales for measuring
environmental activities in the logistics industry. From the extensive literature, a list of
21 measurement items was generated for three components of ELP (i.e. IEM, ESP and
EPD). These items were identified not only in the literature focussed on environmental
logistics (e.g. Wu and Dunn, 1995), but from the perspectives of environmental
 purchasing (e.g. Carter et al., 2000) and green supply chain management (e.g. Zhu and Environmental
Sarkis, 2004). The second stage included interviews with experts. The initial survey logistics
instrument was reviewed by experts (two academics and four practitioners in
the logistics field) regarding the relevance and clarification of the wording in the practices
measurement items. Through this process, several changes in wording were made
and some items were combined or discarded, leaving 13 measurement items. The items
were then measured using a five-point Likert scale (1: not considering it at all, 2: 245
planning to consider it, 3: considering it currently, 4: initiating implementation, 5:
implementing successfully) in response to the following: “Please assess the degree to
which you have adopted or implemented the following environmental logistics
activities in your company.”
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After identifying all the measurement items, a pilot test for the survey instrument
was conducted targeting 26 practitioners in the Korean logistics industry who are also
part-time students in logistics MBA programs. As reported in Table I, our newly
created measures of ELPs performed adequately; the coefficients of a values and
item-to-total correlations are all higher than 0.8 and 0.3, respectively, indicating that
preliminary validity of the instrument is established (Lai et al., 2002). These
development stages helped to ensure content validity, which means that the scale items
include theoretical and practical considerations (Churchill, 1979).

3.2 Data and sample description

Our target samples were Korean logistics companies, including logistics service
providers, retailers, and wholesalers, and logistics subsidiaries or departments
of manufacturing firms. A sample frame in this study consisted of the members of
logistics-related organizations and education programs in Korea, such as the Korea
Integrated Logistics Association (KILA), and the logistics MBA program and Logistics
CEO Forum at a Korean University. From those organizations, we drew 1,128
logistics practitioners while avoiding duplication of the same person. The target
respondents were at least middle and upper level managers who potentially possessed
expert knowledge of logistics operations in their companies. Of the 1,128 e-mailed
surveys followed by telephone calls, 146 applicable responses were returned giving a
12.9 percent response rate. The use of covariance structure analysis, however, requires
that the data are free from missing values (Anderson and Gerbing, 1982). Therefore,
cases with missing data were discarded, leaving a total of 142 cases. Together with the
previously collected 26 samples from a pilot test, the preliminary number of cases in
this study was 168.
To ensure the data quality, a w2-test was conducted to compare characteristics of the
two groups of respondents: 69 respondents from the student sample (i.e. logistics MBA
and CEO Forum) and 99 from the industry sample (i.e. KILA). The test results
indicated that there was no difference, at a 5-percent level of significance, between

Factors Number of items Mean SD a Range of item-to-total correlations

IEM 4 2.37 1.22 0.92 0.76-0.90

ESP 4 2.82 0.82 0.86 0.66-0.79
EPD 5 2.62 0.83 0.82 0.46-0.71
Table I.
Note: n ¼ 26 Pilot test results
 IJLM the two groups with regard to work experience, job title (see Table II), and
23,2 questionnaire responses on the 28 measurement items. Thus, it was reasonable to
combine the samples from the different groups into one usable sample group for the
empirical data analysis. Such MBA samples were often used in previous studies due to
difficulties in obtaining data (e.g. Zhu and Sarkis, 2004). Furthermore, a t-test was
conducted to check non-respondent bias. The result showed that there was no
246 statistically significant difference in the mean values of the 28 items between the early
response group (first quartile of respondents) and the late response group (last quartile
of respondents), indicating that non-response bias was not a major problem in this
study (Armstrong and Overton, 1977). Given the test results, we aggregated multiple
responses from the same firms into one organizational response, and consequently the
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total number of cases was reduced to 129.

Although multiple responses from the same firm were aggregated into one
organizational response, the majority of our data were collected from a single
respondent within each single firm, which means that common method bias may
present a problem. To assess common method bias, confirmatory factor analysis (CFA)
was applied to Harman’s single factor model (Sanchez and Brock, 1996). The model’s fit
indices of w2/df ¼ 3.25, Tucker and Lewis index (TLI) ¼ 0.63, comparative fit index
(CFI) ¼ 0.66, root mean square error of approximation (RMSEA) ¼ 0.13 were
unacceptable and significantly worse than those of the measurement model. This
suggests that a single factor is not acceptable, thus the common method bias may be
small. Therefore, it is reasonable to conclude that the common method bias does not
appear to be a problem (McFarlin and Sweeney, 1992).
The sample for logistics service providers accounted for about 69 percent while the
manufacturing firms (21 percent) and retailers and wholesalers (10 percent) accounted
for around 31 percent. Meanwhile, the mean of respondents’ work experience was
about 12 years (SD ¼ 7.34) and the mean of job grade was around point 5 (SD ¼ 2.24),
given a nine-point Likert scale where point 1 is clerk and point 9 is CEO, which
corresponded to a general manager’s position. Thus, the respondents of this research
can be assumed to possess the necessary information to assess EPs as well as to
perceive SP and the environmental orientation of their organizations. Regarding the
general characteristics of firm size in the sample, 53 percent were small- or medium-
sized firms employing o300 workers, while 6.6 percent were large companies with

Variables Total responses Student samples Industry samples w2-test

Work experience (years)

1-5 40 16 24 w2 ¼ 4.332
6-10 51 17 34 df ¼ 4
11-15 23 8 15 p ¼ 0.363
16-20 28 14 14
Over 20 26 14 12
Job grade
Others 30 12 18 w2 ¼ 4.580
Manager 59 20 39 df ¼ 4
Director 55 23 32 p ¼ 0.333
Vice president 8 4 4
Table II. CEO/president 16 10 6
Results of a w2-test Total 168 69 99
 more than 3,000 workers. The range from 301 to 2,999 employees accounts for about Environmental
40 percent in the sample. To identify the overall data property, descriptive statistics logistics
were analyzed as shown in Table III.
practices
3.3 Measurement model: validity and reliability
CFA was used to assess unidimensionality and convergent validity, discriminant
validity, reliability, and second-order construct validity. For the model fit to be at 247
acceptable levels, iterative modifications were undertaken by eliminating items with
loadings o0.5 or the items with high correlated errors (Hair et al., 2010). As a result,
two items (EPD1 and EPD2) were deleted from their corresponding construct, and their
deletions did not greatly affect the initial domain of ELPs. No items were deleted from
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the constructs of SP and ECO. In all cases, the deletions were conducted if such action
was theoretically sound (Hair et al., 2010). For example, according to Carter and Ellram
(1998), reverse logistics can be defined as “the process whereby companies can become
more environmentally efficient through recycling, reusing, and reducing the amount of
materials used.” In this context, EPD2 may cross-load onto ESP so as to hinder the
overall model fit accordingly. There are thus 26 items left measuring the seven
dimensions of the constructs. Overall, the remaining items for ELPs were centered on
the inbound and outbound flows of materials that adopt a logistics focus. These

Construct Item Mean SD Standard weight Critical R2 ratio a CR AVE

SP SP1 2.54 0.81 0.74 – 0.55 0.79 0.86 0.51

SP2 3.01 0.80 0.60 6.24 0.36
SP3 3.14 1.05 0.61 6.35 0.37
SP4 3.54 0.85 0.80 8.10 0.30
SP5 2.47 0.83 0.54 5.65 0.65
EIG EIG1 3.01 1.08 0.77 10.71 0.60 0.90 0.89 0.66
EIG2 3.13 1.11 0.88 – 0.77
EIG3 3.18 1.12 0.82 11.72 0.66
EIG4 2.76 0.98 0.86 12.82 0.74
EID EID1 3.15 0.89 0.68 8.28 0.46 0.83 0.84 0.64
EID2 3.00 0.99 0.90 – 0.81
EID3 3.14 0.94 0.74 9.26 0.55
EIR EIR1 3.39 0.93 0.65 6.07 0.42 0.71 0.73 0.48
EIR2 2.87 0.94 0.57 5.46 0.33
EIR3 3.18 0.92 0.75 – 0.57
IEM IEM1 2.34 1.07 0.78 11.18 0.61 0.87 0.83 0.55
IEM2 2.64 1.23 0.89 – 0.80
IEM3 2.95 1.40 0.65 8.44 0.42
IEM4 2.21 1.18 0.88 13.92 0.79
ESP ESP1 3.09 1.01 0.88 – 0.77 0.91 0.91 0.72
ESP2 2.91 0.99 0.86 12.90 0.74
ESP3 3.14 1.04 0.81 11.60 0.66
ESP4 3.00 0.97 0.83 12.25 0.70
EPD EPD3 2.59 1.01 0.80 9.57 0.65 0.79 0.81 0.59
EPD4 2.34 0.99 0.88 – 0.77
Table III.
EPD5 2.99 1.04 0.61 7.10 0.38
Confirmatory factor
Notes: w2 ¼ 473.32, df ¼ 278, p ¼ 0.00, w2/df ¼ 1.70, CFI ¼ 0.90, TLI ¼ 0.89, RMSEA ¼ 0.07 analysis and construct
(90% confidence interval 0.06-0.08), SRMR ¼ 0.06 reliability
 IJLM practices reflect operational elements of green supply chain management especially in
23,2 internal management as well as in procurement, packaging, and distribution (Rao and
Holt, 2005; González-Benito and González-Benito, 2006; Srivastava, 2007).
Table III reports the results of CFA showing that the w2-test for the overall fit
is significant
P P at the 0.01 level. This indicates the rejection of the null hypothesis
(H0: ¼ (y)) and poor model fit. However, this is not the sole measure for the fitness
248 of model, because models with good fit are known to be falsely rejected by w2-tests due
to bias derived from non-normality or sample size (Choi and Eboch, 1998). In this
respect, the CFI and the TLI are found to be resistant to this bias (Marsh et al., 1988).
In addition to these, the RMSEA, the root mean square residual, and the normed
w2-statistic were also used to test the overall model fit. Considering the recommended
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criteria for these indices summarized in Table IV, the proposed measurement model
was evaluated to be well fitted.
Unidimensionality and convergent validity were assessed by the fit indices and the
significance of t-value of each item, respectively. As Table III reveals, various fit
statistics show that the measurement model fits the data reasonably well. Moreover,
the test result shows that the item loadings for each factor are 42 and significant
(po0.01). Thus, the unidimensionality and convergent validity of the measurement
model were said to be certified (Anderson and Gerbing, 1988).
Discriminant validity was assessed by performing a w2 difference test on the values
that were obtained from the constrained, i.e. the correlation between two constructs is
fixed as equal to 1, and unconstrained models (Bagozzi and Phillips, 1982). The result
revealed that the unconstrained models were significantly better than the constrained
model (e.g. Dw2 for EIG-IEM was 12.65, ESP-EPD was 17.94, EIG-EID was 24.86, etc.),
which confirmed the discriminant validity of the theoretical constructs (Bagozzi and
Phillips, 1982; Anderson and Gerbing, 1988) (Table V).

Indices Recommended Source

w2/df o2.00 Segars and Grover (1998)

Table IV. Comparative fit index (CFI) 40.90 Garver and Mentzer (1999)
Goodness-of-fit indices Tucker and Lewis index (TLI) 40.90 Garver and Mentzer (1999)
and the recommended Root mean square error of approximation (RMSEA) o0.10 Steiger (1990)
values Standardized root mean square residual (SRMR) o0.08 Hu and Bentler (1999)

Correlations between constructs

Construct Mean SD SP EIG EID EIR IEM ESP EPD

SP 2.94 0.65 1
EIG 3.02 0.93 0.53 1
EID 3.08 0.81 0.38 0.60 1
EIR 3.14 0.73 0.25 0.46 0.46 1
IEM 2.54 1.04 0.42 0.68 0.51 0.49 1
ESP 3.03 0.88 0.41 0.60 0.52 0.43 0.54 1
Table V.
EPD 2.64 0.85 0.35 0.53 0.45 0.36 0.54 0.55 1
Mean, SD, and correlations
for all constructs Notes: n ¼ 129. All correlations are significant at the po0.05
 We also assessed the reliability of a construct by evaluating the construct reliability Environmental
(CR) and the average variance extracted (AVE). As Table III shows, all the CR and AVE logistics
values of the latent variables were greater than the minimum required value, 0.7 and
0.5, respectively, except for the EIR. Although the coefficient (0.48) of the AVE for practices
EIR does not exceed 0.5, the AVE value is situated on the boundary of the acceptable
threshold (Braunscheidel and Suresh, 2009; Sarkis et al., 2010). Taken together,
the reliability for the measurement model were said to be certified (Fornell and Larcker, 249
1981; Anderson and Gerbing, 1988).
Finally, the target coefficient was used to test for the existence of a second-order
construct (Marsh and Hocevar, 1985). The target coefficient is the ratio of w2 of the first-
order model to the w2 of the second-order model (i.e. first-order w2/second-order w2).
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If the coefficient of this value is 40.8, this indicates evidence of the existence of
a second-order construct (Doll et al., 1995). Table VI shows that the target coefficients
for EOC and ELPs are 1.0 and 1.0, respectively. This shows that the second-order
model explains the co-variation among the first-order factors in a more parsimonious
way and thus should be accepted (Doll et al., 1995; Li et al., 2006). The results of model
estimation (mediation model in Figure 2) showing loadings and t-values are presented
in Table VII.
Based on the empirical evidence of CR and validity, we further created summated
scales for the following estimation of structural relationships (Little et al., 2002; Sass
and Smith, 2006). This was based on a consideration of sample size since structural
equation modeling (SEM) demands a high ratio of number of observations to number
of parameters estimated (Marsh et al., 1988). In a case in which the sample size to
variable ratio is small, the use of item parceling is deemed appropriate (Bandalos, 2002;
Agarwal and Selen, 2009). If we use this technique, our proposed model (see Figure 2)

Construct Model w2/df CFI TLI RMSEA SRMR Target coefficient %

EOC First order 1.67 0.97 0.95 0.07 (0.04-0.10)a 0.04 100.00
Second order 1.67 0.97 0.95 0.07 (0.04-0.10)a 0.04
Table VI.
ELPs First order 1.99 0.96 0.94 0.08 (0.06-0.11)a 0.06 100.00
Results of fit indices
Second order 1.99 0.96 0.94 0.08 (0.06-0.11)a 0.06
for first and second-order
Note: a90% confidence interval model

Construct Item Standard weight Critical ratio R2

SP SP1 0.74 – 0.55

SP2 0.60 6.19 0.36
SP3 0.62 6.38 0.38
SP4 0.55 5.67 0.30
SP5 0.80 8.02 0.64
EOC EIG 0.85 – 0.73
EID 0.70 8.56 0.49
EIR 0.58 6.78 0.34 Table VII.
ELPs IEM 0.79 – 0.62 Results of model
ESP 0.74 8.42 0.54 estimation (mediation
EPD 0.68 7.68 0.46 model)
 IJLM would contain three constructs, each with more than three items and with high item
23,2 communalities (40.6), indicating that the model can be adequately estimated with the
samples (129) used in this study (Hair et al., 2010, p. 664). Item parceling is a technique
whereby parcels are constructed from either summing or averaging item responses
from a construct that is assumed to be unidimensional (Kishton and Widaman, 1994).
A recent study has shown that the use of this technique had negligible effects on
250 parameter bias (Alhija and Wisenbaker, 2006). By using this technique, we can still
assess our proposed structural model, while increasing the sample size ratio
considerably.

4. Results and discussion

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SEM with maximum likelihood estimation was used to test the direct effect of SP on the
adoption of ELPs (see Figure 1) and the mediating effect of EOC in the relationship
(see Figure 2). SEM can estimate the parameters of multiple equations while at the
same time reducing the measurement error in mediator variable scores (Hopwood,
2007). The direct model was examined to test H1, as shown in Figure 1. The result
shows that the model fit indices are all reasonably acceptable (see Table VIII). The path
from SP to ELPs is positive and significant (g ¼ 0.63, po0.001), which provides
empirical support for H1 (see Table VIII). It implies that the adoption of ELPs is
positively influenced by SP in the Korean logistics industry.

SP1
IEM
SP2
Environmental
Stakeholder
SP3 logistics ESP
pressure (SP)
practices (ELPs)
Figure 1. SP4
The direct structural EPD
equation model
SP5

EIG EID EIR

Eco-oriented
culture (EOC)

SP1
IEM
SP2
Environmental
Stakeholder
SP3 logistics ESP
pressure (SP)
Figure 2. practices (ELPs)
The mediating SP4
structural equation EPD
model
SP5
 Model element Direct model Mediation model
Environmental
logistics
Model fit practices
w2/df 1.86 1.73
CFI 0.95 0.95
TLI 0.93 0.93
RMSEA 0.08 (0.04-0.12)a 0.07 (0.04-0.10)a 251
SRMR 0.05 0.05
Standardized parameter estimates
SP-ELPs 0.63*** 0.03
SP-ECO Not estimated 0.66***
Table VIII.
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EOC-ELPs Not estimated 0.99***

Results of model
Notes: a90% confidence interval. ***Significant at po0.001 estimation

In order to test H2, a hierarchical approach was applied following three conditions
suggested by Baron and Kenny (1986): (1) the independent variable must be
significantly related to the mediator, (2) the independent variable must be significantly
related to the dependent variable, and (3) the significant relationship between the
independent variable and the dependent variable is either no longer significant or is
reduced in strength once the mediator is included. In the last condition (3), if the
relationship between the independent variable (i.e. SP) and the dependent variable
(i.e. ELPs) remains significant and unchanged once mediator (i.e. EOC) is included as
an additional variable, then the mediation is not supported. If the relationship,
however, is reduced but remains significant, then partial mediation is supported. On
the other hand, if the relationship is reduced to a point where it is not statistically
significant, then full mediation is supported (Baron and Kenny, 1986; Hair et al., 2010).
Accordingly, the mediation structural model is tested by adding EOC to the direct
model, as shown in Figure 2. Various fit indices consistently indicated that the model
fits the data well (see Table VIII). The causal path from SP to EOC is positive and
significant (g ¼ 0.66, po0.001) (see Table VIII), providing support for condition (1).
Condition (2) was supported by the test of H1. To confirm condition (3), we compared
the empirical results of Models 1 and 2. With the inclusion of EOC into the direct
structural model, the significant direct effects of SP on ELPs (g dropped from 0.63 to
0.03) eventually disappear (see Table VIII). Therefore, we concluded that the initial
positive relationship between SP and the adoption of ELPs is fully mediated by
corporate EOC (Baron and Kenny, 1986; Hair et al., 2010), which lends support to H2.
These findings imply that SP contributes to the adoption of ELPs only through the
establishment of EOC. In other words, Korean logistics firms may adopt ELPs under
the condition that their environmental efforts to create their EOCs are made in very
effective ways. In the situation where the natural environment may create a serious
constraint on the creation of sustainable advantage (Hart, 1995) the development of
environmentally oriented cultural capability is necessary to both logistics and
manufacturing firms.

5. Conclusions
Our findings provide empirical evidence that SP can influence the adoption of ELPs
only through its efforts to build a unique environmental culture. In this regard,
corporate EOC can be a central element in the explanation of how a firm is able to
 IJLM effectively respond to SP for environmental requests and overcome environmental
23,2 issues related to logistics management. Based on the current research, we believe that
firms with well-developed EOC are more likely to notice environmentally critical
signals which could have a huge impact on their survival (Hart, 1995), and that such
firms can gain an edge over their competitors. Conversely, firms with less developed
EOC are less able to respond to stakeholders’ concerns about environmental issues, and
252 in turn they may miss opportunities to obtain sustainable advantage.
Theoretical implications are manifested in our findings. Much of the existing
literature on environmental logistics has primarily focussed on the direct relationship
between SP and the adoption of green initiatives (e.g. Lin and Ho, 2011). These
approaches, however, cannot reasonably explain some contradictory findings, for
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instance, that no significant relationship exists between government regulation and

the adoption of EPs (e.g. González-Benito and González-Benito, 2006). Our research is
one of the initial efforts to integrate a RBV of the firm with stakeholder theory to better
explain the patterns of adopting ELPs. The inclusion of a wide range of theoretical
perspectives in this study may provide better understanding of how SP affects the
adoption of ELPs and through what channels SP may exert a significant influence on
the adoption of such activities.
The present study also offers support to industry. When they design and implement
EPs for logistics management, the logistics firms, or manufacturing companies should
recognize the mediating role of their cultural specification and make enterprise-wide
efforts to develop their own EOC to a capability dimension. The outcome of this paper
may provide more concrete advice to practitioners. For example, one of the important
factors for the implementation of EPs is human resource capability which a training
process helps to build (Daily and Huang, 2001). Training, specifically environmental
training may provide employees with guidelines on how a firm adopts or implements
EPs. On the other hand, a culture that focusses on environmental issues is able to create
an organizational climate in which such training programs are consistently offered.
Moreover, such environmentally oriented corporate culture may play a critical role in
the formation of environmental training and also environmental motivation, as well as
the involvement of workers in environmental issues, ecological innovations, and so
forth (Fernández et al., 2003). Thus, firms with less developed EOC may not
appropriately adopt environmental activities even if an environmental training
program is provided. Once firm-specific cultural capability is properly developed, it
can provide sensible and practical steps to overcome environmental barriers, which
may lead to corporate sustainability.
There are several limitations to the present research. First, we proposed EOC as a
sole mediator between SP and the adoption of ELPs. However, there might be other
variables which could explain the causal relationship between SP and ELPs, such as
environmental awareness. This variable could explain other causes of variance of ELPs
that SP and EOC do not explain. Second, due to the small sample size, it was difficult to
establish a definitive relationship between SP, EOC, and the adoption of ELPs. In order
to generalize the research findings, a larger sample size should be considered in further
research. These limitations provide additional insight into further research on
environmental logistics literature.

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 Appendix Environmental
logistics
practices
Constructs/items

Stakeholder pressure (adapted from Fineman and Clarke, 1996; Sarkis et al., 2010)
SP1 Employees
257
SP2 Customers
SP3 NGO and societies
SP4 Government
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SP5 Shareholders
Eco-oriented culture (adapted from Stone and Wakefield, 2000; Stone et al., 2004)
Ecological intelligence generation
EIG1 We conduct lots of in-house research on local environmental issues
EIG2 We receive feedback about our environmental practices from expertise
EIG3 We meet with our stakeholders at least once a year to find out about any concerns they
may have about our environmental activities
EIG4 We conduct interdepartmental meetings to discuss environment related trends
Ecological intelligence dissemination
EID1 We are quick to alert other departments when one department finds important
environmental actions of competitors
EID2 We disseminate information related to stakeholders’ environmental issues to all
departments on a regular basis
EID3 We make all departments aware of important events for the environmental regulatory
climate that might affect our industry
Ecological intelligence responsiveness
EIR1a We tend to ignore changes in the environmental climate for one reason or the other
EIR2a We seem to take forever to respond to changes in environmental pressures
EIR3a We would not be able to implement environmental programs in a timely fashion
Environmental logistics practices (adapted from 1. Wu and Dunn, 1995; 2. Carter et al., 2000; 3. Murphy
and Poist, 2000; 4. Fernández et al., 2003; 5. Zhu and Sarkis, 2004; 6. Aronsson and Huge-Brodin,
2006; 7. González-Benito and González-Benito, 2006; 8. Kohn and Huge-Brodin, 2008)
Internal environmental management (adapted from 3 to 5)
IEM1 Standardized greenhouse gas audit system
IEM2 Build of specific team or department for environmental issues
IEM3 Environment related management system, e.g. ISO 14001
IEM4 Publication of periodic environmental report
Environmental sourcing and packaging (adapted from 1, 2, 3, and 7)
ESP1 Preference green products and materials in purchasing
ESP2 Environmental criteria in supplier selection
ESP3 Recyclable and reusable outer packaging in logistics process
ESP4 Use of ecological materials for inner packaging
Environmental process design (adapted from 1, 3, 6, and 8)
EPD1b Logistics process rationalization by using LIS and IT
EPD2b Design of reverse logistics process for the reuse, recycle, and returnable
EPD3 Modal shift – transferring freight to greener modes
EPD4 Facility location for environmentally oriented logistics network
EPD5 Unit load system (ULS) through logistics standardization
Table AI.
Notes: aReverse scoring; bremoved items Measurement items
 IJLM About the authors
Seong-Tae Kim is a Graduate Student at the Graduate School of Logistics (GSL) at Inha University,
23,2 South Korea. He received his MS in Logistics degree from the same institution, and his research
focuses on logistics and supply chain management. His current research interests include
green logistics and supply chain collaboration. His first work was selected as the STX Prize (Best
Paper Award) published in the Asian Journal of Shipping and Logistics in 2011. His recent work
258 has appeared in International Journal of Logistics: Research and Applications.
Sang-Yoon Lee is Associate Professor at the Asia Pacific School of Logistics (APSL) and also
at the Graduate School of Logistics (GSL) at Inha University, Korea. He is currently the Head of
APSL at Inha University. He received his PhD degree at Cardiff University in the UK and
majored in logistics and operations management. His research focuses on international logistics
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and supply chain management. He worked for the Korea Maritime Institute, one of the
government research institutes in Korea, for approximately 12 years prior to moving to Inha
University and has consulted widely for governments, industries, and international
organizations. His current research interest includes green logistics and knowledge
management, and his recent works have been published in Marine Policy, International
Journal of Production Economics and Journal of International Logistics and Trade among others.
Sang-Yoon Lee is the corresponding author and can be contacted at: [email protected]

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