Academic journal article Business Management and Strategy

Green Lean Six Sigma and Financial Performance in Malaysian Automotive Industry

Academic journal article Business Management and Strategy

Green Lean Six Sigma and Financial Performance in Malaysian Automotive Industry

Article excerpt


Nowadays, the pressure of competition from multi-national companies had increased and among them is the automotive industry. It is the impact when the level of competition is intensifying as the manufactured vehicles shifts from being national to global. As a part of the competition, the important of understanding the implementation of green concepts is really useful for Malaysia to be a good competitor in Asian. Green concepts could provide assistance in making decisions at the early stage of the vehicle design and development process in order to avoid the costs and time consumed through later redesign. Thus, this study aims to build an effective model which indicates the relationship between Green Lean Six Sigma (GLSS) and Financial Performance (FP) in Malaysian automotive industry. The conceptual model using Structural Equation Modeling (SEM) has been proposed. Based on the proposed conceptual model and reviewed, research hypotheses are being developed. This research concludes with suggest future research work.

Keywords: Green lean six sigma, Financial performance, Environmental, Automotive, Structural equation model

1. Introduction

Recently, most develop countries planned to force automotive industry to recover and recycle their product. This condition occurs due to the level of production has become unprofitable in the face of increasingly segmented niche market. Therefore, automotive industry should take some method to prevent those huge issues and challenges parallel with their goal to improve volume of financial performance. One of the methods is exploring the concept of Green Lean Six Sigma and identify whether this method will affect the performance of the automotive industry in Malaysia.

Many companies think corporate environmental management will hinder their growth and development and has been deemed an unnecessary investment (Chen et al., 2006). However, some previous studies have contradicted this statement by giving evidence that companies engaging in environmental management and green innovation actively can improve the productivity as a whole such as increase corporate reputation, and thereby enhance corporate competitiveness under the trends of popular environmentalism consciousness of consumers and severe international regulations of environmental protection instead of not only minimize production waste and increase productivity (Chen et al., 2006).

Roughly, Lean Six Sigma (LSS) is described fusion concept where a company has adopted the simultaneous removal of waste by reducing a defect in the products to ensure that they are quality. Generally, Lean six sigma (LSS) known particularly as a cost reduction mechanism. It can be defined as a new organizational change and improvement method, (Hoerl et al., 2004; Edward and John, 2005). When companies have to operate in a highly competitive globalize market, LSS techniques may help companies to improve operational efficiency and effectiveness. (George et al., 2003; Hoerl et al., 2004). Therefore, several manufacturer companies have implemented LSS program to improve performance.

Purpose of this paper is to determine and develop research model of the successful implementation of LSS has adopted the concept of 'green' to further enhance competition with other manufacturers and to evaluate its impact on the financial performance for Malaysian automotive industry using empirical study. There have five domain categories in this study that are namely; Leadership Focus (LF), Training and Education (TE), Project Management (PM) and Focus in Metrics (FM).

2. Literature Review

As a growing number of companies work to become more environmentally sustainability, it is become more apparent that such transformation is challenging. Deloitte (2008) was suggesting that LSS can be an effective method in developing a road map for going green. Those combination methods can also help companies increase and environmental performance while they more down the path to sustainability and boost economic. …

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