Perspective of green innovation, green supplier capacity explore competitive advantages with green supply chain management 1 James K. C. Chen a, b Joe Z.Y. He b Jeff C. F. Wang b Kuo-Ching. Chen b firstname.lastname@example.org email@example.com firstname.lastname@example.org email@example.com a Institute of Management of Technology, National Chiao Tung University b Department of Business Administration, Asia University Abstract 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 recommendations. Key word: Green innovation, competitive advantage, Green Supply Chain Management 1 Corresponding author: James K. C. Chen, firstname.lastname@example.org 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 advantage. 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 innovation. 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 relevance 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 important. 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 hypothetical: 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 H4 Environmental Green supplier Law capacity H2 Competitive H1 Advantage Green Innovation 1.Product Innovation 2.Technology Innovation 3.Management innovation H3 Financial performance 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 validity. 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. 6. 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