The impact of green supply chain management in small to medium enterprises: Cross-sectional evidence

Abstract

Background: South Africa has a high rate of small to medium enterprises (SMEs) failure, especially in the manufacturing sector. The operational challenges confronting manufacturing SMEs are acknowledged by the Global Competitiveness Index that ranked South African SMEs as one of the lowest in emerging economies.

Objectives: The aim of this study is to examine the association between green supply chain management (GSCM) practices, environmental collaboration and financial performance in SMEs.

Method: The study is quantitative in nature and involves a convenient sample of 312 SMEs based in Gauteng Province, South Africa. Data analyses follow a two-step process involving a confirmatory factor analysis to test the psychometric properties of the measurement scale and Structural Equation Modelling to test the proposed hypotheses.

Results: The study shows that three GSCM practices, namely, green procurement, green logistics and green manufacturing in SMEs exert a positive effect on environmental collaboration, with green manufacturing exerting a higher effect than the other two constructs. In turn, higher levels of environmental collaboration inspired higher levels of SME financial performance.

Conclusion: The study advances that SMEs can succeed financially through the influence of enhanced environmental collaboration, which emanates, in part, from the adoption and implementation of GSCM practices.