GREEN SUPPLY CHAIN MANAGEMENT (GSCM) AFFECTING AN ORGANIZATION’S SUSTAINABILITY PERFORMANCE IN INDONESIA WOODEN FURNITURE INDUSTRY

Abstract

The purpose of this paper is twofold: first, to investigate the effect of green supply chain management (GSCM) practices on the sustainability performance of the organizations, and second to investigate mediating effect of government support toward GSCM practices and sustainability performance. The study is based on the data collected from 30 to 35 small and medium enterprises (SMEs) chosen from each surveyed region. In this study, the selected SMEs should have conducted some GSCM practices. Hence, the total number of samples used in this study is 100 SMEs. The relationship between GSCM practices and sustainability performance and the moderating effect of government support are analyzed using structural equation modeling. The results of this study revealed that GSCM practice which consists of environmental leadership, green innovation initiatives, and customer collaboration has an indirect impact on sustainability performance. Among these drivers, environmental leadership gives the most significant effect. The results have also shown that government support moderating the relationship between GSCM practices and sustainability performance. Among the limitations of this study is related to the sample that is restricted to SMEs of furniture in three regions. The other limitations could be related to variables involved as GSCM practices drivers. The study has only used environmental leadership, green innovation initiative, and customer collaboration as the antecedents’ variables of sustainability performance. Moreover, this study has only used the Linkert scale as an approach to measuring sustainability performance, which could be the source of bias. From the internal side of organizations, the owner of SMEs can develop an effective and comprehensive strategy. The strategy requires the owner of SMEs to show an environment-oriented, allocate specific people for exercising and implementing GSCM practices and learn about current practices that can support environmentally friendly products, and also make use of the government support provided by the government. Since the study also found that environmental leadership was the factor that has a direct effect on sustainability performance, therefore the government should help the SMEs of furniture in developing the right GSCM practices. This study contributes to the literature on GSCM by combining the critical factors of sustainability performance towards GSCM practices drivers and empirically testing the government support impacts on GSCM practices and sustainability performance.