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Article

Adoption of Green Supply Chain Management among SMEs in Malaysia

by
Chieh-Yu Lin
1,*,
Syed Shah Alam
2,
Yi-Hui Ho
1,
Mohammed Emad Al-Shaikh
3 and
Parves Sultan
4
1
Chang Jung Christian University, Tainan 71101, Taiwan
2
MAHSA University, Jenjarom Selangor 42610, Malaysia
3
College of Business Administration, Imam Abdulrahman bin Faisal University, Dammam 34212, Saudi Arabia
4
School of Business and Law, Central Queensland University, Level 4/08, 120 Spencer Street, Melbourne VIC 3000, Australia
*
Author to whom correspondence should be addressed.
Sustainability 2020, 12(16), 6454; https://doi.org/10.3390/su12166454
Submission received: 21 June 2020 / Revised: 3 August 2020 / Accepted: 4 August 2020 / Published: 11 August 2020
(This article belongs to the Section Sustainable Management)
Browse Figure
Versions Notes

Abstract

:
The purpose of this study is to integrate the Diffusion of Innovation (DOI) theory and Technology, Organization and Environment (TOE) theory to examine the factors that affect the adoption of green supply chain management (GSCM) practices among SMEs in Malaysia. Twelve hypotheses were developed based on the integrating theories in technology adoption context. In this study, data were collected through questionnaire survey on the SMEs in Klang Valley Malaysia. A total of 298 responses were analyzed. The regression analysis method was used to test the hypothetical relationships among technological, organizational and environmental factors and SMEs’ intention to adopt GSCM practices. Research findings show that perceived relative advantage, perceived cost, top management support, complexity, compatibility, firms size, customer pressure, regulatory pressure and the quality of human resources are statistically significant factors influencing GSCM adoption among SMEs in Malaysia. However, observability and governmental support do not have significant effects on GSCM adoption intention. According to research findings, some implications which are valuable to academics and practitioners are also addressed. This study can serve as a guideline for successful implementation of GSCM among the SMEs in an emerging country.

1. Introduction

The global industrialization has increased energy and material consumption, and ultimately led to various environmental concerns such as higher carbon emissions, toxic pollution and chemical spills. Due to the regulatory, competitive and community pressure, firms have to stabilize their environmental and economic performance. Nowadays, firms all over the world in various industries are becoming increasingly concerned about environmental degradation. They have realized that the adoption of green technology in business operations has greater benefits and also affects suppliers and customers’ relationships within firms. To manage environmental pressures from a variety of stakeholders, several firms begin to implement green supply chain management (GSCM).
GSCM practices are considered as environmentally friendly practices, which include water efficiency, energy efficiency, waste management, environment conservation, recycling and reuse, toxic substance management and hazardous and optimization of transportation [1]. Emmett and Sood [2] highlighted that GSCM practices can be implemented at the product design stage, sourcing and supplier selection, procurement stage, logistics control, manufacturing and production processes, during delivery of the product to the end user and finally during end-of-life product management. Zhu et al. [3] stated that GSCM has appeared as a way to associate elements of supply chain management and environmental management. Srivastava [4] also argued that the whole product life cycle has taken the design stage of the product to end-of-life management into consideration.
GSCM is a relatively new topic in the manufacturing areas in the Asian Emerging Economies that has provided much attention towards regulatory institutions, academia, customers and industry [5]. So far research in implementing GSCM is still insufficient and small in number in this area. The research gap in the existing literature related to GSCM is massive and there is no broad range of studies to support the advancement of GSCM [6]. The implementation of GSCM within SMEs is not very clear [7]. Very few empirical studies identified the factors affecting GSCM adoption for the SMEs in the South East Asian Region. SMEs constitute a relevant part of the entire industrial sector in this region. They may generate a significant impact on the environment. Environmental management in the SMEs may lead to sustainable success by studying and identifying necessary adjustments to the environmental impacts for those SMEs.
Although several studies analyzed GSCM adoption in developed countries [6], these studies may not be relevant for emerging countries like Malaysia due to cultural differences and levels of economic development. Welsh et al. [8] asserts that compared to the developed nations the implementation of GSCM in the emerging market are characterized by lower levels of economic development. It can be assumed that the constructs that affect GSCM adoption may differ among countries. This justifies the rationality and significance of conducting empirical research on the factors affecting GSCM adoption in a Malaysian SMEs context. Therefore, to fill the gap in GSCM research, the purpose of this research is to identify the factors that affect the adoption of GSCM among SMEs in Malaysia.

2. Theoretical Framework

As many realize that customers and other stakeholders do not always distinguish between a company and its suppliers, more and more companies have started to undertake significant efforts towards establishing green supply chain management (GSCM) [3,4]. GSCM as a form of environmental improvement is an operational initiative that many organizations are adopting to address environmental issues [4]. It is a concept that is gaining popularity throughout the world. For many organizations, it is a way to demonstrate their sincere commitment to sustainability. GSCM practices can be implemented at the different supply chain stages, including green materials management/manufacturing, green purchasing, reverse logistics and green distribution [9]. GSCM is generally perceived to be able to promote efficiency and synergy among business partners and their lead corporations, and to help to enhance green performance, minimize waste and achieve cost savings. This synergy is expected to enhance corporate image, competitive advantage and marketing exposure [10].
Several studies on the adoption of GSCM can be found in the literature [11]. However, very few empirical studies have identified the factors affecting GSCM adoption for the SMEs in the South East Asian Region. For example, Mohanty and Prakash [12] led a study in India. The main focus of that research was to identify what are the internal and external pressures that contributed to the adoption of GSCM practices among micro, small and medium size enterprises. However, this scarce research may not be relevant for emerging countries like Malaysia due to cultural differences and varying levels of economic development. Furthermore, none of them focused on the adoption of GSCM among SMEs in Malaysia using the theories of diffusion of innovation and technology-organization-environment.
There are no models that could help to explain the theoretical contribution to the GSCM practices. Thus, it is important for researchers to find other models that have been commonly used for innovation diffusion research. The two models, Diffusion of Innovation (DOI) [13] and Technology-Organization-Environment (TOE) [14], have been widely used explain innovation adoption at the organizational level. This study will integrate the DOI theory and TOE theory to examine the factors that affect the adoption of GSCM practices among SMEs in Malaysia.
Numerous researchers who examined the adoption of innovation at the organizational level employed the DOI theory [15,16]. The DOI theory elucidates how the groups or individuals adopt new innovation and the processes involved in their decision towards it. Rogers has explained five characteristics which affect an organization’s adoption of innovation rate. These characteristics include trialability, compatibility, relative advantage, observability and complexity. Rogers recommended that these five constructs play a pivotal role in an individual’s attitudes towards the adoption of innovation. The main drawback of the application of the DOI theory for innovation adoption at the firm level is that this model mainly focuses on the individual’s attitude and behavioral perspective in any adoption of innovation processes [17]. Another drawback of the DOI theory is that environmental factors such as competition have not been taken into consideration where the firms conduct business, which could negatively or positively affect the adoption and acceptance of technology [18]. Parker and Castleman [19] suggested integrating the DOI theory with other theories. Moreover, other external factors may have an effect on the adoption decision of GSCM in organizations that provide incentives or barriers towards GSCM usage intention. GSCM adoption does not occur widely across firms; it is acceptable that external factors for firms will play a pivotal role in the firms’ acceptance decision together with technological factors. Therefore, it is important to develop one integrated model that will combine the external factors, organization and technological factors that are likely to affect the degree and scope of GSCM adoption at the firm level. Thus, researchers have tried to identify other organizational and environmental factors affecting a firm’s innovativeness and combine Roger’s DOI theory to explain the model better [13].
The TOE model is found to be one step ahead as it is further integrated with the environmental construct, whereas the DOI framework was constructed within technology and organizational perspectives to explain innovation adoption [20]. The TOE model is found to be more complete and both industry and size friendly [21]. Based on the comparisons of the theoretical model, in this research we integrate the DOI and TOE models, which were both empirically validated in the previous studies. To examine the organizational acceptance of new technologies, several studies have utilized the TOE model as a theoretical basis in their research [22]. Although the TOE theory is considered as a holistic model, it still has some limitations. Due to the richness of resources in developed countries, some factors of the TOE framework are supposed to be more pertinent to a large organizational context compared to SMEs in developing countries [23]. In fact, the TOE framework itself is insufficient in explaining the adoption of innovation in SMEs [24]. Integrating the TOE framework with other theories would provide improved theoretical lenses to understand the adoption behavior and offer more important factors than the original one [24,25]. So far there is no particular research which utilized this integration model in a GSCM technology adoption decision context. This study will provide another alternative model combining the TOE model and DOI theory. Hence, using a TOE framework combined with the DOI theory could provide a holistic model to explain firms’ green initiative in general and GSCM adoption among SMEs in particular.
Numerous research on innovation adoption from the organizational perspective has highlighted the integration of TOE with DOI theories [26]. Recently, Chiu et al. [25] conducted a study using an integrated TOE framework with the DOI theory on broadband mobile applications adoption among enterprises and confirmed that environmental, organizational and technological factors have a significant influence on broadband mobile application adoption decisions. Piaralal et al. [27] reported that integration of the TOE framework with the DOI theory was a useful theoretical framework for examining the adoption decision of green technology among logistics based SMEs. Oliveira et al. [28] conducted studies using an integrated model of TOE and DOI on cloud computing adoption decision. But none of these research was conducted with a GSCM perspective. Deploying different theoretical viewpoints such as integrating TOE with DOI in forthcoming research would provide a useful result [29]. Therefore, to propose a framework for GSCM implementation among SMEs in Malaysia, the current study is grounded on the integration of the TOE framework with the DOI theory. The main reason for integrating the TOE model and the DOI theory is that at the end it can explain the firms’ implementation of innovation among business organization by considering other external constructs, while DOI is used since it accepts organizational and technological constructs.

3. Research Hypotheses

This study synthesized a research framework, as shown in Figure 1, on the adoption of GSCM in SMEs by integrating the DOI and TOE framework by using the innovation’s characteristics as the representative construct for the technological perspective. Therefore, based on the TOE and DOI framework, this study attempts to examine the influence of environmental, organizational and technological factors on the adoption of GSCM practices among Malaysian SMEs.

3.1. Technological Factors

Researchers highlighted that the technological characteristics such as complexity, compatibility and relative advantage have a significant influence on innovation diffusion [13,14,30]. Therefore, in this research, Rogers’ five innovation characteristics were considered as the factors. Previous studies identified several technological innovation characteristics (i.e., cost of adoption, complexity, compatibility, relative advantage, trial-ability, ease of use, observability, perceived usefulness) to have an impact on innovation diffusion [30,31,32]. In this study, we considered cost, observability relative advantage, complexity and compatibility, as these characteristics were confirmed to be important for conducting an innovation diffusion study [13,14,16,33].
Adoption cost is a pivotal construct in the adoption decision of innovation. Researchers identified that cost has a negative effect on innovation adoption [13,34,35]. The cost of GSCM adoption related to green processes such as green manufacturing, green design, green labeling, packing, etc. Adopting GSCM requires a high initial investment because the prerequisite of the adoption of GSCM is providing training and motivating their employees, providing a need to hire good quality employees and enabling advanced technology. High cost may be a barrier for the adoption of GSCM. Thus, the following hypothesis was proposed:
Hypothesis 1 (H1).
Perceived Cost in GSCM Has a Negative Effect on GSCM Adoption Among SMEs in Malaysia.
Agarwal and Prasad [36] argue that relative advantage is a perception that could be more advantageous than its substitute idea. Researchers identified that perceived relative advantage as one of the important factors which significantly influences the adoption decision of innovation technology [15]. Companies are willing to adopt or implement a technology which is assumed to provide higher economic benefits and better performance than the other technologies. By increasing the efficiency of green practices, it could reduce the cost of waste disposal and treatment, reduce natural resources and energy consumption and improve financial and environmental performance and productivity [37]. Researchers suggest that organizations consider financial and economic advantages as vital technological characteristics, which directly influences green technologies adoption decisions. Thus, the following hypothesis was proposed:
Hypothesis 2 (H2).
Perceived Relative Advantage in GSCM Has a Positive Effect on GSCM Adoption Among SMEs in Malaysia.
Another important factor that affects the firms’ environmental practices is complexity. Lin and Ho [33] describe the complexity in innovation when an innovation becomes difficult to understand and complex to use. To reduce complexity, researchers suggested to gather more knowledge and clear ideas on green innovation [38]. This researcher highlighted that SMEs in China gathered information about the environment and green innovation. Another researcher confirmed a negative relationship exists between complexity and innovation adoption [14]. To overcome the complexity, much effort is required to diffuse and learn about technology. Thus, the following hypothesis was proposed:
Hypothesis 3 (H3).
Perceived Complexity in GSCM Has a Negative Effect on GSCM Adoption among SMEs in Malaysia.
Another technological characteristic that shows a consistent significant relationship with innovation adoption is the compatibility of an adapted technology. Organizations adopt new technology if it is competent with the existing individual job responsibilities and values of an organization [13,14]. Researchers identified the significant and positive effect of compatibility on innovation adoption [15]. Thus, the following hypothesis was proposed:
Hypothesis 4 (H4).
Compatibility in GSCM has a positive effect on GSCM adoption among SMEs in Malaysia.
Observability is considered as the visibility of the innovation to others. Rogers [13] opine that visibility/observability plays a vital role at an early stage of adoption of innovation. Venkatesh and Brown’s [39] study results confirmed the positive and significant relationship between observability and innovation adoption intention. Kolodinsky, Hogarth and Hilgert [40] stated that the intention to use an innovation will be better when an optimistic outcome can be observed of an innovation that can be discussed with others. Thus, the following hypothesis was proposed:
Hypothesis 5 (H5).
Observability in GSCM Has a Positive Effect on GSCM Adoption Among SMEs in Malaysia.

3.2. Organizational Factors

A number of researchers have identified that certain factors such as organizational size, organizational support, quality of human resources, top management’s leadership and cultures of firms have a substantial effect on adoption intention of technology [14,41]. Lee [42] highlighted that organizational learning capabilities, availability of resources, top management support and quality of human resources have significant effects on green practices adoption. Lin and Ho [22,33] further emphasized that organizational factors are represented by the quality of human resources, company size, and organizational support. In this study, we included company size, quality of human resources and top management support to denote organizational aspects, as they show a wider impact in previous research.
A company has a higher chance of adoption of technology when the company has qualified human resources with a modern training facility and higher education. Tornatzky and Fleischer [14] have supported this notion that employees with a higher quality of human resources significantly influence the technological innovation adoption. A company can implement an advanced environmental strategy when the company has a higher innovative capacity [43]. Moreover, it is difficult to transfer knowledge within a firm if they have an absence of absorptive capacity. The knowledge barrier to a green initiative can be overcome by providing specialized and extensive training of the employees in the organization [22]. Thus, the following hypothesis is proposed:
Hypothesis 6 (H6).
Quality of Human Resources Has a Positive Effect on GSCM Adoption Among SMEs in Malaysia.
Organizational support influences the adoption intention of the technical systems. Lin and Ho [33] explain that organizational support is important as a motivation for employees to implement green practices. In the diffusion process of green practices, collaboration among different divisions and departments is needed. Subsequently, top management has to encourage and endorse a successful diffusion. Researchers stated that adoption of new innovation depends on top management support, as it will provide sufficient resources necessary for the diffusion of the innovation [44]. This means that top management support is another vital construct of the adoption of GSCM practices among SMEs in Malaysia. Thus, the following hypothesis was proposed:
Hypothesis 7 (H7).
Top Management Support Has a Positive Effect on GSCM Adoption among SMEs in Malaysia.
Researchers highlighted that company size significantly influences the adoption decision of technological innovation [45]. The size of the company seems to have an influence on the adoption of innovation. Larger companies may have greater possibilities to accept innovation technology than a smaller business entity [46]. Thus, the following hypothesis was proposed:
Hypothesis 8 (H8).
There is a Positive Relationship between Company Size and GSCM Adoption among SMEs in Malaysia.

3.3. Environmental Factors

Researchers exert that the external environment where firms conduct their business influences the organizational innovation capability and innovation adoption intention. Innovation diffusion researchers have identified several environmental variables such as the type of industry, network relations and competition, environmental uncertainty and environmental munificence [14,30]. Researchers consistently identified the main influential factors in the diffusion of innovation and environmental decision strategy, which are external resources and environmental uncertainty [14,47].
A study by Kimberly and Evanisko [48] on the organizational innovation for hospitals, found that environmental uncertainty and complexity would influence innovation decisions. Damanpour [49] emphasized that environmental uncertainty significantly influences organizational innovation adoption decisions. The growing uncertainty of the environment lends support to a higher rate of new technology adoption at an organization. Thus, the following hypothesis was proposed:
Hypothesis 9 (H9).
Environmental Uncertainty Has a Positive Effect on GSCM Adoption among SMEs in Malaysia.
Governmental support was determined as an environmental element which has an influence on technological innovation adoption in an organization. Using regulations, the government can discourage and encourage innovation adoption [14]. By providing pilot projects and financial incentives, governments can stimulate technological innovation among SMEs. Lee [42] argued that government support plays an important role in innovation adoption. It is proposed that government support might affect the decision to adopt GSCM for SMEs. Thus, the following hypothesis was proposed:
Hypothesis 10 (H10).
Governmental Support Has a Positive Effect on GSCM Adoption among SMEs in Malaysia.
The stakeholders who are represented by groups or individuals affect a company’s activities. Sharma and Henriques [50] confirmed that stakeholder pressure is one of the environmental factors which will influence organizational behavior. It is important to consider stakeholder pressure as a construct. Customer and regulators are a company’s most important stakeholders compared to other groups of stakeholders [37,51]. Customer and regulatory pressure have a significant influence on firms’ environmental activities [42]. Thus, the following hypotheses were proposed:
Hypothesis 11 (H11).
Regulatory Pressure has a Positive Effect on GSCM Adoption among SMEs in Malaysia.
Hypothesis 12 (H12).
Customer Pressure has a Positive Effect on GSCM Adoption among SMEs in Malaysia.

4. Research Methodology

To examine the factors affecting the adoption of GSCM among SMEs in Malaysia, this study used the questionnaire method to collect data from sampled SMEs. The questionnaire was developed based on a review of studies analyzing similar theoretical constructs. The survey data was analyzed by using the regression analysis method to test the proposed research hypotheses.

4.1. Sample and Data Collection

Manufacturing based SMEs were chosen as the sample in the study. This study focuses on the manufacturing companies because many manufacturing operations often lead to several negative environmental impacts, including air pollutants, waste disposal and fuel consumption in Malaysia [52]. The prevalence of green concepts derives the need for implementing green practices in the manufacturing industry. It is necessary to determine the manufacturing companies’ peculiarities in their determination to face the environmental management problems, as well as to suggest useful mechanisms for them.
All the sampled SMEs are collected in Klang Valley in Malaysia because Klang Valley is considered as the main business hub in Malaysia where almost all SMEs have well equipped modern facilities [16]. A total of 1000 SMEs were chosen and were mailed the survey instruments consisting of a questionnaire, a cover letter and a stamped reply envelope. The contact persons were either a top-level manager or owner of the firms. There were twenty-four envelope returns due to a wrong mailing address or the firms no longer existing.
Initially, 98 response questionnaires were received. Due to the small number of responses, the researchers personally contacted the selected respondents through e-mail as well over the phone to request SMEs to participate in the research. Some respondents agreed to provide feedback through personal interview. Another 200 completed questionnaires were received during this second process of data collection. Finally, 289 questionnaires were eligible for the analysis and other 9 questionnaires were discarded.

4.2. Measuring Instrument

All variables measured in this research were drawn from some earlier innovation adoption studies. To identify the level of disagreement and agreement with the statements in the survey, the 5-point Likert scale was used for all measurement items. GSCM adoption decision was measured by how likely it was that a company will use green practices [3].
The independent variables were grouped into technological, organizational and environmental dimensions. Drawing on innovation diffusion literature, cost was measured based on the perceived cost to adopt the green practices [15,16]. Relative advantage was measured by whether a green practice could increase environmental and economic performance [13,33]. Complexity was measured by whether green practices would be learned and used easily [13,33]. Compatibility was measured based on the degrees of perceived fitness between the green practice and the company’s existing technologies and processes [13,33]. Observability was measured based on the degree of perceived visibility of green practices [13,39].
The quality of human resources can be measured according to employees’ learning capabilities [14,33]. Top management support can be measured according to the degrees of the company’s resource support and leaders’ attitudes toward environment issues [33,53]. The company size can be measured by the number of employees it has.
The environmental uncertainty can be measured according to the degrees of changes in competitors’ innovative abilities, customers’ requirements and the development of new technologies [33]. Governmental support can be measured by whether a government provides financial and technical support for adopting green practices [33,42]. Customer pressure and regulatory pressure can be measured by asking the respondents to score the environmental pressure exerted by customers and regulators, respectively [33,54].

4.3. Common Method Bias and Non-Response Bias

In this research, common method bias was performed because the same respondents responded to the dependent and independent variables. Common method variance was tested using Harmon’s one-factor test, as suggested by Podsakoff et al. [55]. Firstly, all independent variables were moved into factor analysis and tested in a single factor. The first factor accounted for 37.4% of variance in the variables, which was below 50%. From the factor analysis, more than a single factor appeared and the majority of the variance did not account for one general factor; this confirmed no evidence of the presence of common method bias.
The Kolmogorov-Smirnov (K-S) test was executed to examine the non-response bias. To test the non-response bias, we compared 50 early responses that were received immediately with another 50 responses that were received after the follow-up. Significant differences were not found in this K-S test. Thus, we can conclude that non-response bias is not the issue here.

4.4. Test of Reliability and Validity

The validity of the questionnaire survey was tested with exploratory factor analysis (EFA). The EFA was conducted in this research because the adapted items in the development of the questionnaire have not been applied in the Malaysian context. Table 1 shows the factor analysis results. To test the suitability of the data for EFA, the sampling adequacy was measured with the Kaiser-Meyer-Olkin (KMO) technique. Principles axis factoring was carried out with varimax rotation. KMO values were >0.50 for all individual variables, the overall KMO value was 0.92 and Bartlett’s test of sphericity was significant (p < 0.001). A factor loading value of 0.50 was considered as the cut-off point in this research. In this research, we identified eigenvalues of more than 1.0 where 11 factors were loaded with eigenvalues of 1.0 and higher. The total variance explained for 12 factors was 74.28%. The factor analysis results verified the validity of the questionnaire survey.
In addition, Cronbach Alpha value was calculated to test the reliability of the data (see Table 1). For each construct, reliability coefficients representing the adoption of cleaner production were more than 0.7 (in between 0.805 to 0.971).

5. Research Results and Discussions

We employed regression analysis to test the hypotheses. The equality of variance, independence of errors and assumption of multivariate normal distribution were tested. No auto correlation exists as the Durbin-Watson value is 1.912, which has shown an acceptance range of between 1.5 to 2.5. The tolerance value for the multicollinearity statistics results showed that the tolerance value for cost, environmental uncertainty, quality of human resources, relative advantage, complexity, regulatory pressure, compatibility, customer pressure and governmental support and top management support found in multicollinearity statistics were all higher than 0.1 and all VIF value smaller than 10. Thus, it can be concluded that a multicollinearity problem does not exist for the independent constructs.
The regression results are shown in Table 2. The higher F-value (F = 88.793, p < 0.001) indicates a good model fit. The coefficient of determination, R2 was 0.746 shows that for the model, 74.6% of the variance explained in SMEs adoption of GSCM. In the prediction model, the research results show that all hypotheses were found to be significant except for observability and government support. The support for the ten hypotheses can be seen in the results on the relationship between the cost and GSCM adoption intention (t = −5.657; p < 0.001), relative advantage on GSCM adoption intention (t = 2.798; p < 0.010), complexity on GSCM adoption intention (t = −2.776; p < 0.01), compatibility on GSCM adoption intention (t = 3.666; p < 0.001), quality of human resources on GSCM adoption intention (t = 3.736; p < 0.001), top management support on GSCM adoption intention (t = 8.410; p < 0.001), company size on GSCM adoption intention (t = 2.934; p < 0.010), environmental uncertainty on GSCM adoption intention (t = 3.972; p < 0.001), regulatory pressure on GSCM adoption intention (t = 4.465; p < 0.001) and customer pressure on GSCM adoption intention (t = 4.694; p < 0.001). The regression results show that all hypotheses are supported except hypotheses 5 and 10.
The research findings show that the hypothesis 1 is supported. Perceived cost is an important factor of GSCM adoption intention. The result is consistent with the previous study conducted by Seyal and Rahim [35]. Although cost has been anticipated as one of the major inhibitors for technology adoption, some researchers argued that, in order to make cost-effective production in an organization, the cost may motivate adopters to accept innovative technologies in their organization [13,32].
Hypothesis 2 is also supported, which proposed that relative advantage has a significant effect on GSCM adoption intention. Our research results show that the relative advantage has a positive and significant influence on GSCM adoption intention among SMEs in Malaysia. Some previous innovation adoption research also supported our results [16,54]. Therefore, through this finding, we suggest that technology adoption is more likely to happen when GSCM is perceived as being better and beneficial to SMEs in Malaysia. The perception of relative advantage is that a new innovation is much better than its substitute idea.
Hypothesis 3 is supported, which proposed that complexity has a significant negative effect on GSCM adoption intention among SMEs in Malaysia. The result is consistent with the study of Alam et al. [15]. If the new technology is complex in nature, then companies are reluctant to use it. Complexity of green practices may be due to them containing implicit knowledge which needs laborious efforts to learn and diffuse [33]. This might affect the adoption of GSCM practices among SMEs in Malaysia.
Hypothesis 4 is supported, which implies that higher levels of perceived compatibility are related to a greater rate of GSCM adoption intention among SMEs in Malaysia. The result is consistent with previous studies in China [33]. GSCM practices should be seen as a method of integration and knowledge gathering rather than being implemented in a silo. The ability for green technology GSCM to diffuse among SMEs in Malaysia requires it to have compatibility with the firm’s current technologies and processes.
The regression coefficient of observability is not statistically significant in the regression model. Hypothesis 5 is not supported in the study. In Malaysia, many industries have sought to make supply chain function greener. The emergence of new green supply chain functions changes the nature of supply chain function, but the function cannot be seen until the actual change happens. Alternatively, we can say that it has not been operationalized effectively.
Hypothesis 6 is supported in the study. The result confirms a significant relationship between the quality of human resources and GSCM adoption intention among SMEs in Malaysia. Similar result can be found in the study conducted by Lin and Ho [33]. Due to the complex procedures of green practices in the organization, this requires cross-disciplinary coordination and needs to change the current operation procedure significantly. A company has to provide extensive training to their employees to overcome the knowledge gap and also requires specialized training to understand the underlying innovation. Hence, trained employees are important to implement GSCM among SMEs in Malaysia.
Hypothesis 7 is supported in the study, which implies that the top management support would be the most important construct influencing GSCM adoption decision. Top management support has a major influence on innovation technology adoption. In SMEs, owners or managers are the top management who plays a significant role in any decision making process. Other studies [30] lend support to this finding that top management are the key role players to adopt GSCM among SMEs in Malaysia.
Hypothesis 8 is supported in the study. In the Malaysian context, the research results show that the size of the company positively and significantly affects GSCM adoption intention among SMEs. The positive influence of company size shows the importance of company size in predicting innovation diffusion. The results of this study are similar to previous studies [14,41]. Company size is an important variable in the environmental debate. It is one of the structural variables that seems to most influence the implementation of green practices [37]. Implementing corporate environmental strategies requires knowledge and application of environmental management tools, the literature claims that company size would affect the knowledge and application of environmental practices [42]. Larger companies have more resources to devote to environmental management.
Hypothesis 9 is supported in the study, which indicates that the environmental uncertainty is a significant predictor of GSCM adoption intention among SMEs in Malaysia. The result is consistent with the findings of Ho et al. [54], which highlighted that environmental uncertainty significantly influenced technology adoption decisions.
The regression coefficient of government support is not statistically significant in the regression model. Hypothesis 10 is not supported in the study. The government support does not have a significant and positive influence on GSCM adoption intention among SMEs in Malaysia. The reason may be that Malaysian government has taken much initiatives to support firms to adopt green technology in their production and supply chain process. So, the respondents of the study might feel that this factor is not so significant.
Finally, the regulatory pressure and customer pressure are found to be the two important determinants on GSCM adoption intention by SMEs in Malaysia. Other research also found that regulatory and customer pressure drives technology diffusion [54]. In fact, researchers like Sharma and Henriques [50] have also identified regulatory pressure and customer pressure as two key determinants in technology adoption. Hypotheses 11 and 12 are supported in the study.

6. Conclusions

In this study, we proposed an integration model based on TOE and DOI theory to explore the factors that affect the adoption intention of GSCM practices among SMEs in Malaysia. The research findings show that technological, organizational and environmental factors may influence SMEs’ GSCM adoption decision. The perceived cost, perceived relative advantage, compatibility, perceived complexity, top management support, quality of human resources, firms size, regulatory pressure, customer pressure and environmental uncertainty are statistically significant factors influencing GSCM adoption intention among SMEs. However, observability and government support do not have significant influences on Malaysian SMEs’ GSCM adoption. Through the conceptual lens of DOI and TOE, this paper identified the theoretical gap and bridged the different perspectives and scopes of research by exploring the influences of technological, organizational and environmental characteristics on the GSCM adoption intention among Malaysian SMEs.

6.1. Implications

This study adds value to the lack of theoretical foundation in supply chain management area and serves as a guideline for understanding successful implementation of GSCM among SMEs in Malaysia. Previous studies employed individual approach with limited viewpoint on the complex GSCM adoption. This study applies a different approach by using an integration of two models, TOE and DOI, as supply chain management itself is complex and organizations need to consider various constructs which contribute to GSCM adoption. The study which deploys the integration of TOE and DOI has successfully proven a new theoretical framework in the context of GSCM.
The synthesis in this paper extends the GSCM knowledge and contributes to the existing GSCM body of literature. It further emphasizes the relevancy of applying multiple approaches in GSCM area of research. This study also serves as a basis for future studies and attracts more academic arguments to further fine-tune the suggested propositions. As this paper applies a new proposed theoretical perspective, future research is encouraged to carry out comprehensive literature reviews. It will be interesting to verify the concept through case studies or empirical research and reinforce the proposed theoretical framework. Therefore, qualitative research design is recommended for future research to validate the identified constructs which have significant impact on GSCM adoption intention among Malaysian SMEs.
The results of this present research also show important implications for the management of Malaysian SMEs and other developing countries, government policy makers and system suppliers that are particularly involved in green initiative. SMEs that are prioritizing moving to green manufacturing and green solution suppliers should consider the value of relative advantage, complexity of systems and compatibility of the system use to potential markets. Management of the SMEs needs to give due emphasis to personnel development though various training programs. Management also must consider other environmental constructs that could have impacts on their green initiative, which was the important predictor in this current research. For the legislation and regulatory aspects, authorities must consider the key driver of economic and environmental issues in this present competitive business environment and need to identify what regulation can be the right regulation that could be utilized to further help implement GSCM among SMEs. Finally, this research will also help firms in the acceptance of green initiative or adoption of GSCM which will produce new products for their future market. Based on this study results, firms can make sure that the implemented policies could be made smoother by taking into consideration the innovation characteristics that their employees will are most likely unaware of.
This study also provides managerial implications which may encourage academics to explore more potential constructs in their future research. The study may also benefit practitioners, especially Malaysian SMEs. The study has proven that in ensuring successful adoption of GSCM, enhancing significant constructs of TOE and DOI should be the prime focus. Supply chain management is an expansive, complex undertaking which describes inter-connectedness and inter-dependencies across a network where a change in one factor can have an effect on other factors. As proven from the findings, all organizational factors have significant effect on GSCM adoption intention. Only one factor (observability) of technological characteristics and government support from environmental context does not significantly affect GSCM adoption intention. Practitioners, however, should also give attention to these two factors, as the rapid changes in technology may require businesses to be agile and become independent capable entities to survive in volatile environments.

6.2. Limitation and Further Research Direction

There are some limitations in the study, which needs further exploration in future research. Firstly, this study focused on examining only the SMEs located in the main area of Malaysia and their intention to adopt GSCM practices. Further research can explore other states in Malaysia. Secondly, in this study, data were collected from only manufacturing companies. It will be beneficial to further understand the intention to implement the GSCM in different type of business and industrial sectors across the nation. Finally, only 12 factors were proposed in this study. There may be other potential factors influencing GSCM adoption. Further research can consider more variables in a GSCM adoption model, for example, the role of supply chain partners in the adoption of GSCM. In addition to understanding implementation of GSCM among SMEs in Malaysia, this study proposes an integration of two models, TOE and DOI, in GSCM research. Green supply chain management is a complex system which requires organizations to consider various constructs influencing GSCM adoption. The integration of TOE and DOI has been proved to be a suitable theoretical framework in explaining the implementation of GSCM in the study. The proposed integration framework may be applicable for analyzing GSCM implementation outside Malaysia. Further research can apply the integration of TOE and DOI to explore the implementation of GSCM among SMEs in other countries.

Author Contributions

S.S.A., Y.-H.H. and C.-Y.L. conceptualized the central research idea and provided the theoretical framework carried out the research. Y.-H.H. wrote and revised the article. M.E.A.-S. and P.S. designed the research, supervised research progress. C.-Y.L. anchored the review, revisions and approved the article submission. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 12 06454 g001 550
Figure 1. Conceptual Framework.
Figure 1. Conceptual Framework.
Sustainability 12 06454 g001
Table
Table 1. Factor Analysis.
Table 1. Factor Analysis.
FactorsFactor LoadingCronbach’s α
Technological Factors
Adoption cost 0.785
Initial set up cost is high0.726
We need addition staff for adopting GSCM0.845
Benefits and costs are not easy to justify0.537
Relative Advantage 0.762
GSCM can provide better environmental performance0.474
GSCM can provide higher economic benefits0.597
GSCM will boost our organizational reputation0.656
Complexity 0.737
Using GSCM needs much previous experience0.872
Learning GSCM is difficult0.889
Sharing knowledge of GSCM is difficult0.545
Compatibility 0.769
GSCM are compatible with our operating procedures0.671
GSCM are compatible with our company’s value0.793
Integrating the GSCM with the company’s existing system is easy0.734
Observability 0.781
GSCM will be adopted if we see other companies also using it0.784
My company is confident that adopting GSCM will enhance the desired returns in terms of profit0.659
Organizational Factors
Quality of human resources 0.743
Staff are able to solve problems easily by using new technologies0.536
Staff are able to provide new ideas for our organization0.670
It is easier for our staff to learn new technologies0.782
Our staff shares knowledge with each other0.873
Top management support 0.801
Higher management always encourage our employees to learn GSCM knowledge0.705
Necessary support for GSCM adoption within the firm is always given by our higher management0.588
Higher management would be enthusiastic about adopting GSCM0.756
Necessary resources are provided by the higher management for the adoption of GSCM0.852
Environmental Factors
Environmental uncertainty 0.813
It is difficult to predict a competitor’s behavior0.677
It is always good to vary customers’ choice0.619
Governmental support 0863
There is financial support offered by the Government for implementing GSCM0.691
There are training opportunities provided by the government to adopt GSCM0.734
The government has given technical support for adopting GSCM0.805
Regulatory pressure Regulatory pressure 0.855
Environmental regulations for production are set by the government0.596
It is important for us to provide information to industrial associations about environmental regulations0.623
Customer pressure 0.716
Environmental performance needs to improve due to customer pressure0.748
Our customers require us to care about the environment0.831
Intention to adopt GSCM 0.860
Our company intends to adopt GSCM0.929
Our company intends to use GSCM regularly in the future0.892
Our company would highly recommend GSCM for other companies to adopt0.842
Table
Table 2. Regression Results.
Table 2. Regression Results.
HypothesesStandardized Coefficients (β)t-Valuep-ValueResult
H1: Cost−0.245−5.6570.000Supported
H2: Relative advantage0.1102.7980.010Supported
H3: Complexity−0.081−2.7760.010Supported
H4: Compatibility0.1523.6660.000Supported
H5: Observability0.0561.3080.192Not Supported
H6: Quality of human resource0.1393.7360.000Supported
H7: Top management support0.2978.4100.001Supported
H8: Company size0.1342.9340.010Supported
H9: Environmental uncertainty0.1793.9720.000Supported
H10: Governmental support0.0431.3460.179Not Supported
H11: Regulator pressure0.1944.4650.000Supported
H12: Customer pressure0.2014.6940.000Supported

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MDPI and ACS Style

Lin, C.-Y.; Alam, S.S.; Ho, Y.-H.; Al-Shaikh, M.E.; Sultan, P. Adoption of Green Supply Chain Management among SMEs in Malaysia. Sustainability 2020, 12, 6454. https://doi.org/10.3390/su12166454

AMA Style

Lin C-Y, Alam SS, Ho Y-H, Al-Shaikh ME, Sultan P. Adoption of Green Supply Chain Management among SMEs in Malaysia. Sustainability. 2020; 12(16):6454. https://doi.org/10.3390/su12166454

Chicago/Turabian Style

Lin, Chieh-Yu, Syed Shah Alam, Yi-Hui Ho, Mohammed Emad Al-Shaikh, and Parves Sultan. 2020. "Adoption of Green Supply Chain Management among SMEs in Malaysia" Sustainability 12, no. 16: 6454. https://doi.org/10.3390/su12166454

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