FACTORS INFLUENCING GREEN PURCHASING ADOPTION FOR SMALL AND MEDIUM ENTERPRISES (SMEs) IN MALAYSIA

By Ramakrishnan, Pavitra; Haron, Hasnah et al. | International Journal of Business and Society, January 2015 | Go to article overview

FACTORS INFLUENCING GREEN PURCHASING ADOPTION FOR SMALL AND MEDIUM ENTERPRISES (SMEs) IN MALAYSIA


Ramakrishnan, Pavitra, Haron, Hasnah, Goh, Yen-Nee, International Journal of Business and Society


ABSTRACT

Acute awareness of environmental problems following continuous environmental deterioration drives growing SMEs to adopt green purchasing practices. SMEs are recognized as the main source of environmental risk and bottleneck in adopting green purchasing practices. This is mainly due to SMEs are lack of information and resources or expertise to deal with the environmental issues. Therefore, this study aimed to investigate the factors influencing green purchasing adoption for EMS IS0 14001 SMEs in Malaysia. A cross-sectional approach using survey was conducted among all the EMS 14001 certified SMEs listed under the Federation of Malaysian Manufacturers (FMM) 2012 directory. A research model been proposed as supported with stakeholders theory. The research model comprises of green purchasing adoption as a dependent variable while government regulations, customer pressures, top management support, supplier relationship and perceived benefits as independent variables and corporate social responsibility as moderating variable. Results show that only government regulations, customer pressures and perceived benefits were found to be positively and significantly influencing green purchasing adoption for SMEs in Malaysia. Limitations and suggestion for future research are discussed.

Keywords: Green Purchasing Adoption; SMEs; Malaysia..

1. INTRODUCTION

Industrial development has always created inestimable wealth and prosperity. However, this benefit for the humanity has also been accompanied by unintentional environmental degradation to our planet, the Earth. Business organizations are identified as the main source of environmental degradation and expected to adopt green practices in the supply chain process (Baguette, 2009). This has introduced the practice of Green Supply Chain Management (GSCM), integrating environment thinking into supply chain management, including product design, material purchasing and selection, manufacturing processes, delivery of the final product to the customers and end of life management of the product after its useful life (Srivastara, 2007). In the process of GSCM, material purchasing is the most important process prior to manufacturing activities by business organization, where purchasing role highlighted an effective environmental management which demands for the emergence of Green Purchasing (GP) (Handfield et al. 2002). Chien & Shih (2007) defines green purchasing as a responsible purchasing process that accounts environmental and social consequences, where it involves activities that reduce, reuse or recycle materials that express environmental preferences through the supply chain. Currently, there is an increase number of SMEs showing interest in the implementation of EMS ISO 14001. This shows that they are cognizant on its firm environmental impacts and simultaneously is determined to gain variety of benefits through the implementation of EMS ISO 14001 (Goh, 2011).

This paper focused on the green purchasing adoption by EMS 14001 certified SMEs as they are expected to embark on green purchasing initiatives. It is noticed that the larger companies where the headquarters are from United States of America (USA), United Kingdom (UK), Japan and other European countries have taken steps to promote the green initiatives or practice whereas the local manufacturing industries, like SMEs are still not adopting the green purchasing practice and having the attitude of "wait and see" (Green Purchasing Network Malaysia, 2003). This attitude would be the main reason for Malaysian companies to still stay far behind in adopting the green purchasing practices compared to foreign countries (Green Purchasing Network Malaysia, 2003). SMEs represent 99.2% of all businesses in Malaysia and contribute 56.4% of total employment in the country, SMEs constitute an important component of the Malaysian economy and have the potential to be a powerful engine of growth and innovation (Tenth Malaysia Plan, 2010). …

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