Perspective of green innovation_ green supplier capacity explore

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					         Perspective of green innovation, green supplier capacity explore
          competitive advantages with green supply chain management

    James K. C. Chen a, b            Joe Z.Y. He b          Jeff C. F. Wang b       Kuo-Ching. Chen b

                        Institute of Management of Technology, National Chiao Tung University
                                Department of Business Administration, Asia University


        Recently environmental issues are pay attention, EU in 2006 implemented
WEEE and RoHS. Existing legal norms, obviously supply Chain Management has
become a trend. Enterprises must make innovation in the internal and external
environment of supply chain management and respond to environmental issues.
        This study purpose was to understand enterprises implemented green innovation,
the green supply chain ability and product innovation capabilities, process innovation,
management innovation capability for the competitive advantage correlation. This
study utilized literature review, in-depth interview, and survey with questionnaires to
collect data as the theoretical foundation. This research utilizes the path analysis
model of SEM to verify the hypothetical framework, and competing theories for green
supply chain competitive advantage. This research samples aimed at Taiwan’s
enterprise that through the environmental management system - ISO 14000. The
result display green innovation with supply chain performance was significant
correlation. Enterprise between itself and suppliers administered green innovation
activities to gain a competitive advantage was significant correlation. For the current
environmental issues, the findings will help enterprises understand how to administer
Green providers and green innovation activities to gain a competitive advantage.
Besides the enterprise's own green innovation activities, and external suppliers also
affect the overall ability of the key competitive advantages. Enterprises in
environmental protection and operation of the company achieve a win-win situation
The results of this study, the Government will be able to provide specific and
effective green enterprise supply chain management and decision-making of the
Key word: Green innovation, competitive advantage, Green Supply Chain

    Corresponding author: James K. C. Chen,
1. Introduction
    Global environmental awareness of the rise, environmental protection has
become a global trend. The Governments of the world has also been actively
promoting environmental protection laws and regulations, to encourage people to buy
the low-pollution, low energy, environmental protection and a chapter of commodities.
It hopes to reduce the environmental impact, the protection of the Earth's resources.
This trend has resulted in Taiwan businesses operating on a pressure. On the other
hand, today's enterprises highly face competitive market environment and
globalization under the pressure. All enterprises must reduce costs, provide faster
services, as well as added value to customers. Supply chain management and the
principle of theory, it is in this environment gradually been widely discussed and
applications. Therefore, Taiwan's enterprises are export-oriented. Enterprises are
facing an important problem that how to solve the supply chain management together
with the environment and other issues.
    Technological innovation and progress for human life brought about
unprecedented convenience. It is also facing a new product life-cycle replacement fast,
large accumulations of waste on the environment also have a considerable negative
impact. Therefore, countries have enacted relevant norms to address the growing
Serious environmental problems. The most positive is the European Union, WEEE
(Waste Electronics and Electrical Equipment), RoHS (Restriction of The Useof
Certain Hazardous Substance in Electrical and Electronic Equipment) directive in
2005 and gradually implemented. Taiwan’s nearly 30,005 1,000 manufacturers, will
have the immediate impact.
     For this change, the Taiwan industry to cope with the trend, comprehensive
promotion of green supply chain management, the implementation of green product
life cycle management, attention to the recovery of green supply chain process, thus
reducing the environmental burden of social costs, this measure also effectively
enhance the global competitiveness of the products. Many large enterprises such as
Ford cars, Motorola and Epson Dengjie are studying or implementing green supply
chain management, and in energy conservation and environmental design results
showed a significant.
     Through environmental laws and regulations, enterprises become innovative
technology business environment. In addition to regulatory compliance requirements,
it can further reduce production costs, and enhance economic efficiency (Porter,
1991). Enterprises in the dynamic and competitive environment must continue to
innovate and under the pressure of the competitors, consumers and legislators, and
other areas to survive (Porter and van der Linde, 1995). Enterprises innovation may
proceed from process and product, environmental protection concepts into their
product design, packaging, in order to create product differentiation (Shrivastava,
1995). Therefore, the production of environment-friendly green products into the
value of the business system form a green supply chain management, corporate
practices in the areas are great importance (Steger, 1993). (Steger, 1993).
     Organization's the implementation of green supply chain management practices
and the organization's environmental performance and economic performance have
the positive relations (Zhu and Sarkis, 2004). Supply chain management practices of
organizations can conduct sales performance, financial performance and competitive
edge have a positive impact (Li, Ragu-Nathan, Ragu-Nathan, & Rao, 2006). Green
supply chain management practices are rather wide range, from internal and external.
Green   supply    chain   management     practices include     internal   environmental
management, external green supply chain management, investment and restore the
ecological design or environment practical design (Zhu and Sarkis, 2004).
     To sum up, know whether the current practice or academic research, green
supply chain that are worthy of study Tracing. And the field to Taiwan as a positive,
green suppliers, green innovation was to remain on the competitive advantages. There
are gaps, so this study was to explore green suppliers, green innovation and
competitive advantage of relevance.
1. Explore the green industry in Taiwan conduct mining green supply chain
management practices of the external factors;
2. Explore the green industry because of green that should be adopted by green
innovation and internal factors;
3. Verify the green industry in Taiwan conducted mining green supply chain
management practice and the relationship between financial performance;
4. Construct ―green suppliers ─ Green innovation ─ competitive advantage‖
completely causal model: The bases are literature;
5. Through empirical research, understand the construct of the direct and indirect
impact on relations.

2. Literature
2.1 Green Supply Chain Management
     As global environmental awareness increasing, the international community for
product specifications begun to develop some of the environmental protection, such as
all international standards, regional organizations or government ―the European Union,
North America and Japan‖ directive issued by the Regulations, non-mandatory
environmental protection. The ―the era of high oil prices‖ and ―Health Kyoto Protocol
Validity‖, are two popular public issues on the industry this year. Therefore,
international manufacturers and multinational corporations propose the corresponding
policies to cope with the current environmental trends (Petts et al, 1998).For Taiwan's
export-oriented, OEM manufacturing industries are mainly the biggest impact, so
companies have to find the best programmers to investigate.
     Faced with this demand environment, many international manufacturers such as
Sony, IBM, Dell, HP and so on, require their suppliers to provide products that can
not contain substances in the law. The first layer Suppliers again in turn requires its
upstream suppliers, the products being manufactured also shall not contain controlled
substances, and requested provide guarantees such as testing data and guarantee.
Gradually it created a wave of green supply chain.
     Seuring (2004) pointed out that Green supply chain management also known as
Environmental Supply Chain Management or Sustainable Supply Chain Management.
Rao (2002) pointed out that the green supply chain management activities include the
organization itself the green activities and parts suppliers. Zhu and Sarkis (2004) is
the study of China's manufacturing sector mentioned in the green supply chain
management, including internal environment management, external Green Supply
Chain Management, investment and eco-design. Green Supply Chain Management
into the external environment management and internal environmental management
(Rao, 2002).
     Accordingly, this study of ―green supply chain management‖ found that the
literature shows green supply chain management as an environmentally-friendly
concept of the manufacturing system, including products using the concept of
recycling. According to the scholars will study the literature of the green supply chain
management classified as a green providers and the organization itself green
innovation activities to investigate.

2.2 Competitive advantage
     Competitive business strategies in the field are the most important core concept
of individual industries in recent years. In individual industries, there are certain
businesses that the performance of outstanding corporate profits higher than the
industry standard, but also has a high market rating and identity. It mains the reasons
that enterprises have a higher competitive advantage.
     Porter (1980) refers to enterprises in the industry relative to competitors,
long-term ownership of the unique and superior competitive position. This unique and
superior competitive position of its outstanding performance is higher than the
average standard of the city market share or profits; their general strategy has three
ways: 1. Comprehensive cost leadership; 2. Differentiation; 3. Decentralization.
(Prahalad and Hamel, 1990) that short-term source of competitive advantage is the
price of existing products and performance; long-term source of competitive
advantage is at least cost and speed to establish the spawn unanticipated product the
ability. Hill and Jones (2001) pointed out that when corporate profits are higher than
the industry average, known as the competitive advantage; if this high-margin profit
can be maintained for years, known as sustainable competitive advantages.
Construction of competitive advantage are the efficiency, quality, innovation and
customer response, which means that enterprises in operation and production or use
new    production   methods, including      products kinds,     production   processes,
management system, organizational structure and corporate formed strategy.
      Comprehensive scholars for competitive advantage on the dimensions, this study
casts the quality, research and innovation, efficiency and customer response to the
measure, and scholars mentioned many times for the most important dimensions. So
this study referred to the four variables that the main dimensions are on competitive

2.3 Green innovation
     Hurley and Hult (1998) that on the market dynamic, it almost unable to find
industries which do not engage in innovative activities; Porter and van der Linde
(1995) also view that business in a dynamic environment of competition, we must
constantly innovate, to competitors, consumers and legislators, and other areas under
the pressure for survival. Schumpeter (1934) pointed out that invention and
innovation is a different concept, innovation has become the industry and academia to
the subject. Rogers (1962) pointed out that many scholars research subject of
innovation from many views, but innovation can be regarded as a separate, integrated
concept. However, researchers with the interest and views of different organizations
of the innovation will define the difference, basically the definition of innovation can
be divided into four perspectives: product perspective (Burgess, 1989; Kelm et al.,
1995; Kochhar and David, 1996), the process perspective (Kimberly, 1986;
Johannessen and David, 1994; Scott and Bruce, 1994), product and process
perspective (Tushman and Nadler, 1986; Dougherty and Bowman, 1995; Lumpkin
and Dess, 1996) and multiple perspective (Damanpour, 1991; Russell, 1995; Robbins,
1996). The most recent study are multi-perspective. Multiple perspective of scholars
believe that regardless of the product or process perspective, only focused on
―technological innovation‖ level, while ignoring the ―management of innovation‖ the
level. Thus it will be ―technological innovation‖ (including products, processes and
equipment, etc.) and ―innovation management‖ (including systems, policies,
programmers and services, etc.) at the same time added into the definition of
      Above all these scholars perspective, this study explores the use of multiple
views of the organizations to adopt green innovation including product innovation,
process innovation, and management innovation study.

2.3.1 Green innovation on the green supply chain competitive advantage of the
     The EU’s environmental norms arouse the people to the concept of product life
cycle; a product from raw materials to waste must be in compliance with
environmental protection. In addition to the development of environmental norms
accord with the new technology, process and materials, the recycling of products must
also research and development in the use of them. In the 1970s the green
consumerism movement, gradually become a force; In the 1980s, it stirred up
consumer attention on environmental issues; In the 1990s Green Century Council
session, re-starting the business community, compared to the traditional treatment at
the (End-of-Pipe), through the process and product innovation, production of
environment-friendly products in an attempt produce a green image (Ramus, 2001;
Porter and van der Linde, 1995; Shrivastava, 1994; Peattie, 1992). More and more
enterprises are from the obedience of laws and regulations to transfer a positive
strategy for innovation strategy (Aragon-Correa, 1998; Berry and Rondinelli, 1998). It
continued to improve performance, in order to improve corporate body and enhance
competitiveness (Nehrt, 1998). Porter (1991) suggested that enterprises through
environmental regulations to the business environment innovative technologies, in
addition to regulatory compliance requirements, can further reduce production costs,
increase economic efficiency. Chen et al (2006) pointed out that green innovation is
related impact on the enterprise's competitive edge.
     Above all these scholars could be inferred from green innovation capable of
green supply chain competitive advantage was significant impact.
H1: Green innovation of green supply chain competitive advantage is positive
causal relationship.

2.4 Green suppliers
     Suppliers play an important role in the supply chain play; providers have a direct
impact on production quality, cost and reputation. Sarkar and Mohapatra (2006)
though that providers will affect the supply chain performance of the major factors,
poor suppliers will affect the overall supply chain performance. Today, many
companies giving their suppliers pressure, asking them to the suppliers Executive
Environmental Management System, as well as through the ISO14001 certification
(Zutshi & Sohal, 2004). The supplier's market-oriented, it will affect manufacturers of
the trust level (Zhao and Cavusgil, 2006). Providers in a number of quality for
manufacturers of products have significantly influence (Forza and Filippini, 1998).
Cannon and Homburg (2001) that suppliers and manufacturers in the relationship
between manufacturers developing sustainable competitive advantage are very
    Winn and Roome (1993) though environmental principles into supplier

management mechanism, administrate the greening movement. Purba Rao (2002)

that green supply chain management provider in the greening activities means: for
suppliers or sub-contractors to the environment conference; guidance providers create
their own environmental plan, lead providers to share expertise and issues; inform
providers of cleaner production technology and the interests of environmental
protection in accordance with the principle of selecting suppliers; Shi pressure or
incentive to suppliers to implement environmental actions; distribution the supply of
funds to help buy the equipment prevent and control pollution, wastewater and
recycling; send their internal staff to assess the environmental performance of
suppliers and so on. Zhu and Sarkis (2004) in the manufacturing industry to China in
the study discussed in the green supply chain management, the external green supply
chain management primarily concerned with suppliers and customers interaction.

2.4.1 Green providers the ability on green supply chain competitive advantage of
the relevance
      Sarkis (1999) Green supplier or supply chain management (Supply Chain
Environmental Management; SCEM), has just begun to be identified and the
environmental performance of suppliers or green reached only with the cooperation of
the manufacturers standards and regulations. Purba Rao (2002) green suppliers will
bring competitive advantage for enterprises, such as improving product quality,
improve environmental performance and reduce production costs. Rao (2002) the
study found that manufacturer and suppliers and cooperative relations are better, and
they are more competitive advantage. To give suppliers support to help achieve
mutual comply with environmental requirements; enhance the competitiveness of
green supply chain.
      Above all these scholars could be inferred from green suppliers capable of
green supply chain competitive advantage was significant impact.

H2: Green providers the ability to enterprises administrates green supply chain
on competitive advantage are positive causal relationship.
2.5 Financial Performance
      Daft (1995) though that performance is to meet the business goals of a degree.
Green supply chain management can produce the environment and corporate profits
(Walton, 1998). Environmental performance and financial performance have two
positive relationship (Russo and Fouts, 1997). Purba (2002) advocates of the green
supply chain enterprises to improve environmental performance (reduce waste, reduce
emissions and improve the environment pledged) and competitive ( improve product
quality, increase efficiency and enhance productivity, save costs ) and thus affect
economic performance (the new conduct sales opportunities, increased product prices,
profit margins, market and the contribution of sales). This study to investigate the
green supply chain in Taiwan reached the level of achievement, from financial
performance to explore. Venkatraman and Ramanujam (1986) that financial
performance refers to achieve the enterprise’s economic objectives, such as sales
growth, the interest rate, earnings per share, after-tax profit, and so on. Environmental
protection activities on the financial performance of enterprises will have some
benefits, green supply chain management can reduce the cost of procurement of
materials and energy consumption, reduce emissions and waste handling costs, reduce
accidents impunity fund (Zhu and Sarkis, 2004). Sustainable methods lead to internal
savings cost, to develop new markets, and for the waste that can make using (Tsoulfas
and Pappis, 2006). The manufacturing environment is positive on the financial
performance of the impact ( the profit growth, sales growth, market share rate of
growth) (Fuentes-Fuentes, Albacete-Saez, and Llorens-Montes, 2004). High levels of
supply chain integration directly affect the total assets of return rates and sales growth
(Rosenzweig, Roth, and Dean, 2003). Environmental supply chain management not
only have significant environmental benefits, companies also have significant benefits
(Lippmann,    1999). Good       environmental    performance and        good   economic
performance are positive and affiliates also have positive environmental disclosures in
affiliates, and better environmental performance in environmental disclose the extent
of higher (Tuwaijri, Christensen & Hughes, 2004).
     Above all these scholars, the study of financial performance targets for cost
reductions, increase sales, increase market share.

H3: Green supply chain management practices administration and organizations
financial performances are positive causal relationship.

2.6. Environmental Law
     Environmental issues on the trade implications, particularly for export-oriented
countries of the impact will be increasing. Advanced countries in environmental
protection, the strict regulations of the increase in manufacturing costs, which cannot
be deprived of environmental protection and national competition in product prices,
will require all imported products should also be consistent with its environmental
regulations, understand that the formation of trade barriers. Sarkis and Sroufe (2005)
study found that environmental norms in the growth of government pressure, the
international certification standards (such as: ISO 14000), changes in customer
demand and business-to-waste on the environment impact of knowledge. Enterprise
began its operations equipment to develop a strategy for the environment, to its
service and supply partners to maintain the consistency of the new norms.
Governments more further interventions promoting more big environmental norms is
significant and cannot easily see and avoid it (Rodrigue, Slack, & Comtois, 2001).
Many companies and the government have also been international environmental
agreements, such as the Kyoto Protocol, global climate change treaty and the
Montreal Protocol impact (EIC, 2005). Above literature review, the study of a

H4: Environment laws for enterprises administrating green supply chain
management practices have positive causal relationship.

3. Research Methods
3.1 Research Methods
   This study investigates the green suppliers, green innovation and competitive
advantage. It intended to be Structural Equation Model (SEM) for analysis,
verification of this study by the structure of the assumptions. Structural equation
model (SEM) is the most common mode of tools. This method combines the
traditional statistical analysis of the Factor Analysis and Path Analysis, and included
in the legislation of econometric formula, which can address a range of variables
relationship, and test the overall framework of the suitability. Provided by the
researchers to explore analysis into the possible ways of verification, apply to this
study was to explore the causal relationship.

3.2 Study
   The survey will target Taiwan's Ministry of Economy Standards Inspection Bureau,
and the end of 2008January before ISO 14001 certification by the vendors as the main
subject of investigation conducted by mail survey. The choice of these industries the
main reason for the EU WEEE, RoHS, such as command and EuP implementation of
the notice, will immediately affect Taiwan’s direct exports to Europe each year of
Electrical and Electronic Products. In this study, use of SPSS and LISREL software
analysis and verification of the future on various assumptions.

3.3 Research framework
                                   Green Supply Chain Management

                                                                   External factors

          Green supplier                                                Law


                                                 H1                Advantage
         Green Innovation
         1.Product Innovation

         2.Technology Innovation

         3.Management innovation



3.4 Hypothesis
    H1: Green innovation of green supply chain competitive advantage is positive
causal relationship.
     H2: Green providers the ability to enterprises administrates green supply chain
on competitive advantage are positive causal relationship.
     H3: Green supply chain management practices administration and organizations
financial performances are positive causal relationship.
     H4: Environment laws for enterprises administrating green supply chain
management practices have positive causal relationship.

4. Analysis
4.1 Data recovery
     In this study, ISO14000 by manufacturers for research, issued a total of 400
questionnaires were distributed, and the recovery of 30. Because of the time on the
urgent, the questionnaire could not be fully recovered. Follow-up will be completed.

4.2 Reliability and Validity
      To ensure this research the quality, so we do the test of reliability and validity.
Reliability is the same or similar samples to duplicate the results of testing the extent
consistent. This study set reliability that Cronbach coefficient 0.5 to 0.9 range. Data
analysis results meet the reliability test. Validity can be divided into content validity
and face validity. The survey of the literature from the contents meets the face

4.3 Structure Analysis
    In order to study the results of the rigorous research model enhance the value of
the study through confirmatory factor analysis test on future models. Confirmatory
factor analysis of the overall pattern of the test amount, the verification of the model
variables measuring whether or not correctly measuring the potential variables, and its
main measuring system used to test the convergence effect, discriminant validity and
the number of indicators of individual variable letter K (S. x. Zhang, 2001).
Confirmatory factor analysis used to verify or confirm the parameters factor analysis
of the nature and number of factors, to achieve the target level fit the criteria so that
the construction of theoretical models more in line with the actual results of behavior
(J. H. Chiou, 2004).

5. Conclusions and Recommendations
5.1 Conclusion
    Green supply chain management is a relatively new green issues, from the
management of the angle coming to see green supply chain management is a strategic
management. It considered the entire supply chain in the protection of the
environment and the economy development, and mining enterprises conduct green
supply chain management of enterprises is the financial performance and
environmental performance can also take into account, as the number of
manufacturers in Taiwan are doubts it.
   The purpose of this study in the Taiwan region to empirical OEM
production-oriented manufacturers, in response to WEEE and RoHS, and other global
green issues, the main pressure flooding or power, these manufacturers will conduct
those green-supply chain in response to management practices, and organizations can
improve financial performance and environmental performance.

5.1.1 in the main impact of external factors
    Expected results, in the relevant areas, environmental protection Act regulating the
green supply chain management practices adopted conduct positive correlation. That
is, environmental protection Act regulating factors will directly affect the conduct
mining enterprises green supply chain management practices; Act of environmental
norms in the domestic dimensions of environmental protection Act and the norms of
international environmental norms also green supply chain management practices
adopted conduct positive correlation. Act that domestic environmental protection
norms and international norms of environmental protection will also conduct a direct
impact on enterprise-green supply chain management practices. Competitive factors
on the green supply chain management practices adopted conduct positive correlation,
which is competitive factors, will directly affect the conduct mining enterprises green
supply chain management practices. And the study found, and Seuring (2004) and
Gottberg, Morris, Pollard, Mark-Herbert, and Cook (2006), Porter and Linde (1995),
Lau, Tse and Zhou (2002), who earlier research, ―green Act norms‖ and ―competition‖
element of pressure or flooding power will be driven by mining enterprises conduct
green supply chain management practices in line with the results.

5.1.2 On Organization’s financial performance
      Expected results in the financial performance of the sub-surface structure, green
supply chain management practices and financial performance-implementation of the
dimensions of the lower costs, increase sales, increase market share. There will be a
significant positive correlation that mining companies conduct green supply chain
management practices, can lower their operating costs and increase market share and
sales rates increase. This result confirms Purba (2002), Sarkis (2001), and other
people’s point of view and stressed enterprises green supply chain management will
improve the Organization’s financial performance.
5.1.3 On competitive advantage
     Expected results, in the competitive advantage of the dimensions, green supply
chain management practices adopted implementation of competitive advantage and
quality of research and innovation, efficiency and customer response to the positive
correlation that mining companies conduct green supply chain management practices,
not only can enhance the quality and efficiency, but also improve customer response,
research and innovation spirit. This result confirms Purba (2002), Sarkis (2001), and
other people’s point of view and stressed enterprises green supply chain management
will improve the environmental performance of organizations.

5.1.4 On green providers
      Expected results, green suppliers will bring competitive advantage for
enterprises, such as improving product quality, improve environmental performance
and reduce production costs. Purba Rao (2002) by green suppliers will bring
competitive advantage for enterprises, such as improving product quality, improve
environmental performance and reduce production costs. Rao (2002) the study found
those manufacturers and suppliers and cooperative relations between the better, it will
be more competitive advantage. To give suppliers support to help achieve mutual
comply with environmental requirements; enhance the competitiveness of green
supply chain. Therefore, the Organization of suppliers if they are green suppliers can
bring their competitive edge.

5.1.5 On Innovation activities for the competitive advantages
     Green confirmed that past research on the competitive edge innovation, a great
influence,   because   enterprises   will   be   through   technical   innovation   and
competitiveness of the operatic capital to upgrade the product and process innovation
(Barney and Zajac, 1994). Chen et al (2006), and other scholars point out that even
closer green innovation (product innovation, management innovation) are related
impact on the enterprise’s competitive edge. Therefore, green innovation will let
enterprises more competitive.

5.2 Proposal
    The empirical analysis different industries according to type of analysis and
discussion on sub-category, and different industry in the use of reference may be a
strategic difference. On the other hand, globalization and international environmental
awareness rising, coupled with the concept of green consumption of the rise, making
the community for social responsibility requirements are also gradually increasing.
Therefore, mining enterprises in the implementation green supply chain management
practices, in addition to care about environmental performance and financial
performance, another concern should focus on green supply chain management
practices are adopted will conduct a sustainable performance positive impact. This
study suggests that researchers can follow up a study in this direction to study.

5.3 Expected to research
     Past business activities of enterprises focus only care about their own interests
were, to ignore the supply chain partners, customers upstream and downstream
manufacturers, enterprises. This study for the WEEE and RoHS, and other global
environmental issues, only with the choice of suppliers in the upper reaches of
green-related production technology cooperation, take the initiative to understand the
problems encountered by suppliers, providing them information and services and
lower reaches of green customers thought the voice, as the manufacture of reference
to make the whole Green supply chain members are benefit.

      Compared with traditional, enterprises face the problem of environmental
management at the End-of-Pipe management, the international community has been
unable to meet the expectations of environmental protection. The study is expected
that business to promote green supply chain management of the organization financial
performance and competitive advantage that the results are positive, this can be found
as a wait-and-see attitude is still holding manufacturers of reference, help them join
the green supply chain management reasonable disclosed.

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