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Ying-Mei Chen

B30467513/S2653745

THE RELATIONSHIP BETWEEN GREEN DESIGN PRACTICES AND

ORGANIZATION PERFORMANCE

–an empirical study of Taiwanese industry

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Abstract

Purpose – Green Supply Chain Management (GSCM) has emerged as an important

organizational strategy to become environmentally sustainable. Green design, as part of GSCM practices, has gained an increasing awareness. This research aims to evaluate and describe GSCM drivers, practices (focusing on green design) and performance among various Taiwanese Electrical and Electronic manufacturing companies.

Design/methodology/approach –The survey data were collected from a sample of

102 ISO 14001 certificated manufacturing companies in Taiwanese Electrical and Electronic for testing the research hypotheses. Factor analysis was conducted to examine the grouping of GSCM pressures, practice and performance while multivariate and single linear regression were used to test relationships among the variables.

Finding – A strong relationship was found among regulations, companies’ internal

strategies, green designs, and sustainable performance in Taiwanese manufacturing companies. However, the impact of stakeholder on green design was not obvious.

Research limitations/implications – This result supported the contribution of green

design to sustainable performance, and this finding would encourage companies adopt GSCM practices. Government would also legislate more stringent but practical environmental regulations to foster industry’s interest in applying Green Design practices. Future research can investigate the identified relationships in present work in different countries or industries, as well as further find out mediating and moderating relationships. A larger sample size research would also be helpful for a better pictures of GSCM empirical situation.

Key words – green supply chain management, green design, environmental practices,

sustainable performance

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Content

1. Introduction ... 4

2. Literature review and hypotheses development... 7

2.1 The definition of GSCM and its practices ... 8

2.2 GSCM practices in Taiwan ... 10

2.3 Factors that influence GSCM practices adoption ... 13

2.3.1 Environmental regulation ... 15

2.3.2 External stakeholders ... 16

2.3.3 Internal strategic motivations ... 18

2.4 GSCM performance ... 20

2.4.1 GSCM practices and enterprises’ environmental performance ... 21

2.4.2 GSCM practices and enterprises’ financial performance... 21

2.4.3 GSCM practices and enterprises’ social performance ... 22

2.5 The concept of green design ... 23

2.6 The Formulation of Research Hypotheses and Conceptual Model ... 25

3. Methodology ... 27

3.1 Research instrument design ... 27

3.2 Data collection ... 28

4. Result ... 30

4.1 Basic data analysis ... 30

4.2 Factor analysis ... 32

4.3 Reliability analysis ... 35

4.4 Validity analysis... 36

4.5 Regression analysis ... 37

4.5.1 The prerequisites of regression analysis ... 38

4.5.2 Multiple linear regression ... 39

4.5.3 Simple linear regression ... 45

4.6 The summary of hypothesis ... 54

5 Discussion and Conclusion... 56

Appendix A ... 58

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Appendix B - Raw data from the survey... 64 6 Reference ... 66

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1. Introduction

From 2003, a series of environmental protection directives, such as the Waste Electrical and Electronic Equipment (WEEE), Restriction of Hazardous Substances (RoHS) and Eco-design for Energy Products (EuP), were legislated by the European Union (EU). And thereby many industrialized countries, such as the United States, China, Japan, and Korea, etc., were stimulated to develop their own environmental regulations as well. With the increasing worldwide environmental awareness during the past decades, more and more companies have been driven to improve their environmental performance (Zhu & Sarkis, 2006). Green Supply Chain Management (GSCM) has emerged as an important organizational strategy to integrate environmental consciousness into supply-chain management in order to reduce the potential environmental impacts and risks in the whole product life cycle, while improving ecological efficiency of the organizations with their supply chain partners (van Hock and Erasmus, 2000). To succeed in this ‘green wave’, many companies have been striving to eliminate the conflicts between the economic performance and the environmental protection by using GSCM (Srivastava, 2007), companies in Taiwan were no exception.

Taiwan, well-known for its fruitful electrical and electronics industry, has an estimated total amount of electrical and electronics products export of US$111.6 billion yearly (Taiwan Electrical and Electronic Manufacturers’ Association, 2014). By the nature of Original-Equipment-Manufacturing (OEM) or Original-Designing-and-Manufacturing (ODM), the Taiwanese electrical and electronics manufacturers have encountered great pressure from customers around the globe to produce green products and to regulate the manufacturing process. A previous work, related to GSCM triggers, practices and performance in Taiwanese electronic industry, was surveyed by Chien and Shih in 2007. On the one hand, they found that in response to the external stakeholders and the world’s progressively stringent environmental compliance standards, the implementation of green procurement and green manufacturing practices are the main two standpoints for Taiwanese companies to conquer ‘green barrier’ in order to be entitled to continue exporting products and to maintain their global competitiveness. However, in some preliminary research, it was argued that the triggers of adopting green initiatives into companies’ activities and procedures are broader than the external or institutional drivers. The internal motivation is also an important factor for firms to adopt GSCM practices (Hajikhani et al., 2012). For example, in 2012, Hajikhani et al. pointed out a firm’s internal strategic motivations

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have stronger influence on GSCM practices adoption in Malaysian manufacturers. Chien and Shih (2007) found that the adoption of GSCM has a positive effect on Taiwanese companies’ environmental and financial performance. Commonly, a company’s performance is measured by assessing its level of objective attainment (Daft, 2012) and likewise, companies who adopted GSCM practices tend to examine their organizational performance on environmental and business performance only (Purba, 2002; Zhu & Cote, 2004; Chien & Shih, 2007). However, some argue that such performance measurement should not be limited to environmental impact and profit/loss. Instead, it should also include the impact on the society as a whole (Kleindorfer et al., 2005). That is, except for financial and environmental performance, companies should also take social aspects, or these three aspects as a whole so-called ‘Triple Bottom Line-3BL’, into consideration at the same time.

Apart from green procurement and green manufacturing, green design also plays a crucial part in the GSCM practices, and it has gained more and more attention recently. Many enterprises started to take product design more seriously, and as some study (Lenvis & Gretsakis, 2001) inferred that most of the environmental impact would be decided during new product/ process development stage, and thus the whole product life cycle is suggested to be considered from as early as in the product designing phase. A great deal of innovations have brought out the best in the product design and the manufacturing process to lower the environmental influence (Hong, Kwon, and Roh, 2009), and it turned out that these innovations have also helped many companies to gain their competitive advantage in the global market (Huang & Wu &Rahman, 2010). Taiwanese government has also promoted green design by offering free consultation services for various industry to ‘go green’ (SME Green News, 2014), and it is expected that Taiwanese companies are undergoing a complete transformation into green design. Therefore a thorough investigation on the holistic framework of green design in GSCM in Taiwanese electrical and electronic companies is worthy to carry out.

To sum up, inspired by Chien and Shih’s (2007) research, this thesis will try to further cover the needed of investigation on which possible internal pressures and the internal strategic motivations may exist that affect GSCM practices adoption for Taiwan's electric and electronic industry. The evaluation of performance and social aspect will be taken as an extended variable. As for GSCM practices, green design is the main focus in this empirical study.

This thesis is structured as follows. In Section 2, the relevant literature on GSCM will

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be briefly reviewed. The theoretical framework for this research, as well as a set of hypotheses, will be presented in Section 3. Afterwards, the research methodology is presented in Section 4 with full details of the participants. Section 5 provides the results of statistical analysis for the hypotheses tests. Finally, a conclusion is given with a summary of study findings, contributions, limitations and future research directions in Section 6.

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2. Literature review and hypotheses development

In this section, an extensive literature review on Green Supply Chain Management (GSCM) from previous study was surveyed. First, the definition of GSCM was provided in section 2.1, followed by selected examples of GSCM practices adopted by leading electrical and electronics companies in Taiwan in section 2.2. Afterwards, factors that affect GSCM practices adoption and the corresponding performances brought by GSCM practices adoption were presented in section 2.3 and 2.4. As for the keynote for this study, the concept of Green Design practices was emphasized in section 2.5. Finally, the conceptual model and hypotheses which lay the foundation of this empirical study were formulated in section 2.6.

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2.1 The definition of GSCM and its practices

Evolved from Supply-Chain Management (SCM), Green Supply-Chain Management (GSCM) introduces “green consciousness” to address the importance of environmental management to the traditional SCM domain, whereby normally a series of management activities are involved to evolve ideas to products, and to move products from suppliers to customers efficiently.

The growth in GSCM literature can be traced back to the early 1990s with the advent of corporate environmental management, environmentally conscious manufacturing strategy, and supply chain management literature (Zhu & Sarkis, 2006). Researchers indicated that the prerequisite of GSCM is to integrate the environmental management strategy, as principle, into all of the processes spanning product design, procurement, manufacturing and assembly, packaging, logistics and distribution. (Handfield et al., 1997) In 2004, Zhu and Sarkis further elaborated on the GSCM definition to include reversed logistics into the original integrated green supply chains, and thus an efficient and sustainable flow was formed from suppliers to manufacturers, from manufacturers to customers, and from customers back to recyclers, as a “closed loop” system. As a result, the environmental concerns were integrated not only into the traditional SC management paradigm, but also into the end-of-life management of the product after its useful life (Srivastava, 2007; Sarkis et al., 2011). All in all, GSCM can be seen as an effective management philosophy as well as a set of practices for organizations to redesign their operating procedures or reallocate their resources to minimize (and preferably to eliminate) the negative impacts of their supply chain on the environment. A complete overview of the definitions is given in Table 1.

Similar to the concept of supply chain management, the boundary of GSCM and its practices depends on the goal of the investigator. Therefore, it comes as no surprise that the definition of GSCM and GSCM practices may vary from literature to literature, and it can often be redefined for particular industries, goals and properties (Hu & Hsu, 2010). As an example, Rao (2002) did some research on the major manufacturing companies in South East Asia, and she found that GSCM practices would include internal environmental management and supplier greening, i.e. merging the environmental protection principle into suppliers’ management system, and making the products more environment-friendly by monitoring the suppliers’ environmental performance (Rao, 2002; Yeh and Chuang, 2011). As another example, Zhu & Sarkis

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(2004) used convenience sampling of 186 respondents from the Mainland China manufacturing industry, and tried to categorize GSCM practices. Except for common areas of internal environmental management and external environmental practices (green purchasing), they found that more complete GSCM practices should include investment recovery and eco design. The former, also known as asset recovery, was to create additional value via sales or reuses of excess inventories, scrap of used materials, and end-of-life capital equipment, etc. The latter, as a structural process, was aimed to apply ecological thinking into product and process design, and links to manufacturing and logistics as well.

To add interest to this field of research, the definition of GSCM variables in this thesis are developed from on the one hand in theory: the previous GSCM research, and on the other hand in practice: the common GSCM practices (Green Design in particular) for Taiwanese electrical and electronics industry. For the remainder of this section, it will be divided into subsections of discussion on the pressures and drivers for GSCM adoptions, the examples of GSCM practices in Taiwan, and the corresponding performances from GSCM adoptions.

Table 1 the definition of green supply chain

Definition of GSCM Reference

A combination from green purchasing to integrated green supply chains flowing from supplier to manufacturer to customer, and reverse logistic.

Zhu & Sarkis, 2004 An integration of environmental thinking into supply chain management, including product

design, material sourcing and selection, manufacturing processes, delivery of the final product to the consumers as well as end-of-life management of the product after its useful life.

Srivastava, 2007, p54

An integration of environmental concerns into the inter-organizational practices of supply chain management, including reverse logistics.

Sarkis & Zhu & Lai, 2011, p.3

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2.2 GSCM practices in Taiwan

To achieve international expectations and demand for environmental protection, some Taiwanese electrical and electronic companies started to implement GSCM practices. From 2004, Taiwanese government has also initiated a “green program”, nicknamed “G-Program”, to reinforce the electrical and electronic industries' awareness to apply green supply chain management. This G-program has stimulated the growth of green technology development in Taiwan, and it has also helped streamline the product manufacturing process in response to the more and more stringent global environmental requirements. In the following paragraphs, some best practices of green supply chain taken by the Taiwanese electrical and electronic enterprises are explored in more depth.

Best Practice Example 1:

Taiwan Semiconductor Manufacturing Company Limited (TSMC)

Based on ISO14025, TSMC is one of the leading companies that initiates the environmental management into its semiconductor manufacturing process, covering life cycle assessment, reduction of greenhouse gases emission and raw material usages, and water resource management. TSMC has also implemented ISO14001 environmental management system to make sure that no prohibited substances, listed in the global regulations, are used or produced in their products. In addition, TSMC keeps promoting state-of-the-art environmental measures to their new plants in order to increase their competitiveness. Finally, TSMC not only requests its partner suppliers to pass environmental-related certifications, such as ISO14001, RC14001, etc., but also supports them to build up recycling and waste reduction plans, as well as carbon-dioxide calculation system (TSMC, 2014).

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Best Practice Example 2: Delta Electronics, Inc.

Recognized in the stock of Dow Jones Sustainability World Index (DJSI), Delta has always put great efforts on implementing green supply chain by two fundamental principles: being environment-friendly and energy-saving for the world. Delta is one of the leading companies in the power supply industry, and through its continuous green product refinement, Delta avoids unnecessary waste in its manufacturing process and saves up to 50% energy consumption for its customers and end users. On Delta’s green product management platform, it has also requested its upstream suppliers to submit guarantees, evaluation reports and inspection of hazardous substances, etc., in order to conform to the green procurement standards and the EU ROHS directives. Besides, Delta tries to adopt more local suppliers in its supply chain, and promotes greenhouse gas emission assessment management system to their suppliers (Delta CSR report, 2014).

Best Practice Example 3: ASUSTeK Computer Inc.

Ever since its foundation in 1898, ASUS has taken sustainability seriously. It has started 'Green ASUS project' as early as in 2000, which introduced green design, green purchasing, green manufacturing, and green marketing and services into all its product development. ASUS launched e-Green platform, connected to e-Purchasing system, to control and evaluate its suppliers how green they were. Apart from setting strict green standards to their suppliers, it is worth mentioning that ASUS also initiated green supplier development programs to invite their partners to ‘turn green’. The collaborative green design between ASUS, its suppliers, and its clients, has led to great achievements. For example, in 2010, ASUS introduced the world's first Lead-free and Halogen-free motherboard, and became the first company among the top ten IT Computer Manufacturers to receive the Japan Eco Mark certification (ASUS CSR report, 2014).

Best Practice Example 4: Quanta Computer Inc.

Quanta is one of the major OEM/ODM companies in Taiwan. It has implemented advanced green supply chain practices, including green design, green purchasing and green manufacturing. Its key strength is in the product design stage, aiming to design products that use low toxic materials, consume less energy, and withstand long

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duration of usage. All its used materials and components fulfill international regulations, such as EU RoHs, POFS and EU REACH, and about 90% of its product line has passed American energy saving certification, E-star 5.0/5.2 computer specification. Moreover, the modularized design has made its products easy to dismantle and recycle, and thus more than 65% of parts can be reused, satisfying the WEEE 3R (Reuse, Recycle, and Recovery) principle. Apart from its strength in green design, Quanta also includes green supplier assessment systems in its green purchasing application. It has also held green suppliers conference yearly since 2006 to “turn green” its suppliers by addressing its green policy and requirements with them, and providing guidance for its suppliers to develop their own environmental management systems.(Quanta, 2010)

Although the above four examples are not exhaustive, still it can be seen that most of the Taiwanese electrical and electronics companies are OEM-centric (Original Equipment Manufacturer) and/or ODM-centric (Original Design Manufacturer), and in one way or another, Green Product Management System (GPMS) and Green Component Verification System (GCVS) are the two major systems that have been commonly implemented to keep track on their whole supply chain network, including suppliers. For the OEM-centric companies, their GSCM practices will focus on minimizing the environmental impact as much as possible during their product manufacturing process. Actions such as waste, pollution, and energy consumption reduction, and increase of recyclable materials or sustainable energy utilization are commonly being taken during production. For the ODM-centric companies, on the other hand, they are keener to design green products, and to select suppliers in terms of not only their price and availability, but also their environmental and social performance when making purchasing/ procurement/ sourcing decisions. Aside from the OEM/ODM perspectives, a few Taiwanese electrical and electronics companies are own-branded, and they take a step further to consider product lifecycle management and build up green product recycling program. All in all, it can be observed that Taiwanese electrical and electronics companies are becoming more and more aware of and responsible to the environment and society. Their GSCM adoptions include three aspects: green design, green purchasing and green manufacturing (Chien & Shih, 2007).

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2.3 Factors that influence GSCM practices adoption

Due to the fact that GSCM seeks cooperation of various involved parties from upstream suppliers to the final downstream consumers, and covers a wide variety of processes from design, manufacturing, distribution, and reversed logistics, etc., there are also a bunch of factors that have fundamental influence on companies’ GSCM decision makings. When companies decide to apply GSCM, they may tend to consider not only their management philosophy and business strategy, but their supply chain partners and the environmental policy. Much research has been devoted to find out what driving factors are motivating companies to adopt or improve their GSCM practices, and it was found that the diverse driving factors of GSCM could be in general categorized as external and internal factors. With respect to the external factors, regulation, marketing, suppliers, and competitors can all be the external drivers or pressures for companies to adopt and improve their GSCM practices (Zhu & Sarkis, 2006). There was also some research indicating that stakeholder theory, as an explanatory theory, could be regarded as antecedents or contingencies for adoption of various GSCM practices (Sarkis& Zhu& Lai, 2011). Hajikhani et al. (2012) also stated that most of the external factors could be linked to either stakeholder pressure or environmental regulation. By combining stakeholder theory with the push from environmental regulations, it can explain why some enterprises, under external pressure, adopted certain GSCM policies even when the benefits (i.e. decrease in cost) of applying GSCM practices were sometimes not prevalent at that moment. On the other hand, the importance of understanding internal factors behind GSCM adoption should not be underestimated either. Delmas and Toffel (2004) argued that the internal process, such as organizational structure, strategic position and financial and environmental performance, would transform the external “objective pressures” into “perceived pressures”, and in turn affect the adoption of environmental management practices by firms. To support this argument, Testa and Iraldo (2010) mentioned that companies’ internal strategies, such as cost-reduction strategy, efficiency-growth strategy (Corbett & DeCroix, 2001) and environmental-risk-reduction strategy (Sarkis, 2003), would drive managers to apply GSCM practices in order to achieve better environmental and commercial results. To sum up, GSCM practices adoption was driven by firms’ external stakeholder requests in response to the needs of full compliance with environmental regulations, as well as by firms’ internal strategic motivations in the hope of gaining competitive advantage in the market (Meythi & Martusa, 2013).

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In the following subsections, the detailed factors affecting GSCM practices adoption are to be examined:

1. External Factors

(1) Environmental Regulation: domestic regulation and government policy, and international agreements

(2) External Stakeholders: customers, suppliers, and community stakeholders 2. Internal Strategic Motivations

(1) Corporate positive image strategy (Reputation-led) (2) Cost saving strategy (Efficiency-led)

(3) Innovative product and process development strategy (Innovation-led)

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2.3.1 Environmental regulation

To respond to the increasingly stringent environmental regulations, more and more companies started to adopt environmental practices, such as developing green products, appointing new standards and regulations bounding the use of hazardous materials (Chien & Shih, 2007). Such “regulatory pressures” felt by companies arise from threats of penalties for non-compliance, or from fears of losing companies’ reputation and end-users' trust when public disclosure of information concerning the organizations' environmental impact is required (Konar & Cohen, 1997). The conformity achieved under external coercive pressures occurs through influence exerted by those in power, and government agencies are examples of such power groups (Rivera, 2004). Therefore, the source of environmental regulations is said to include domestic environmental regulations, government environmental policies, and international agreements according to Hervani, et al.(2005), Zhu, et al.(2006), Chien, et al. (2007), and Hajikhani, et al. (2012), etc.

Domestic environmental regulations and government policy

Domestic governments have been given the power to build sound foundations for their nation's future. They, as people’s protectors, also have the obligations to oversee whether the country’s developments lead their people to a bright and sustainable future. Around the world, governments as well as their people have been more and more aware of the issues of the scarcity of the natural resources, the needs to care for labors’ occupational health and safety, and the potential green barriers in this globalization economy, etc. To combat these issues, many governments have put their concerns into policy makings, and through a series of legislations, they give enterprises certain measures of what the minimum requirements are. For the environmental concerns, much research has noticed involvement of governmental agencies in the GSCM practices adoption. For example, it was observed in several countries that many voluntary environmental management practices have been developed as a result of government’s intervention (Rivera, 2004; Chien, et al., 2007). Zhu and Sariks (2006) also found that the domestic regulation played a key role in increasing companies’ environmental awareness, and that this was the main driver to companies’ decisions to apply GSCM practices. In addition to decision making, Lu et al. (2007) noticed that there were many organizations starting to initiate greening activities in their supply chains in response to stringent domestic regulations.

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International environmental agreements

Even though it seems that the domestic environmental regulations have more power and immediate effects on companies GSCM adoptions, many governments and companies may notice that they are also greatly influenced by global ecologic agreements, such as the Climate Change Treaty, the Kyoto Contract and the Montreal Protocol (Chien & shih,2007). As globalization is progressing, international integration among economies and societies through cross-country flows of product, information, people etc., is becoming inevitable, and thus many environmental issues became globally relevant and no single government can step aside or work alone. As a result, many legislation and regulations have emerged by various level of co-operations and negotiations from governments or international organizations. Examples of such regulations include the applicability of Waste of Electronics and Electrical Equipment (WEEE), Restriction of Hazardous Substance (RoHS) and Directive of Eco-design Requirements of Energy-using Products (EuP), etc. Although some of these regulations are not coercive, still they may reshape the global trading flows as non-tariff barriers to international trading activities. Therefore, pressures from these agencies and national/international regulators cannot be neglected when discussing their influence on the adoption of environmentally responsible measures.

2.3.2 External stakeholders

Freeman (1984) defined “stakeholders” to include any individuals or groups who have the ability to affect an organization’s performance, or conversely, who are likely to be affected by an organization’s achievement. When applying stakeholder theory to GSCM paradigm, it suggests that environmental externalities may be internalized through these stakeholder pressures within and between supply chain members (Sarkis, et al., 2011). To identify and to investigate the roles and responsibilities of various stakeholders within GSCM practices has also become one of the major topics for many GSCM researchers (Gunther & Scheibe, 2005). Therefore, to name just a few, based on Hervani, et al.(2005), Chien, et al.(2007), Zhu, et al.(2008) and Hajikhani, et al. (2012), the main external stakeholders of GSCM practices are believed to include: suppliers, customers and community stakeholders.

Suppliers

Being the major players in the supply chain, suppliers also contribute to the performance of the whole supply chain, and in some study, the “poor performance” of suppliers is indicated to have greater influence on the overall supply chain

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performance (Sarkar & Mohapatra, 2006). Especially for manufacturers, the manufacturer-supplier relationship is considered as a crucial element in pursuit of sustainable competitive advantage (Sheth & Sharma, 1997; Cannon & Homburg, 2001). Fostered from this perspective, some leading companies from developed countries have started to evaluate their second-tier suppliers in addition to their direct suppliers (Zhu, et al., 2004).

Customers

Driven by customer requirements to be perceived more legitimate or responsible, organizations are motivated to take corresponding measures to fulfill customers’ satisfaction (Zhu & Sarkis, 2007). Measures in environment management are especially being embraced by organizations to incorporate environmental practices and in response to in-kind performance improvements under customer pressure, as normative pressure (Kagan et al. 2003). For manufacturing firms, because of their sandwiched position in the supply chain, they are more likely to adopt some practices, such as GSCM, to meet their primary customers’ requests for environmental requirements (Arimura et al., 2008). As an example, to be able to export and sales to foreign customers, manufacturing companies in China were often being urged to improve their environmental performance (Christmann & Taylor, 2001).

Community stakeholders

Community stakeholders are a group of individuals who have well knowledge of and are familiar with a company, but are not necessarily involved in a firm’s partnership, and examples of such groups are employees (i.e. labour union), local communities, civil society, non-government organizations (NGO) and etc. (Nelson, Rashid et al. 1999). Researchers have begun evaluating whether the roles of socio-economic communities are associated with companies’ decisions to adopt GSCM practices. Henriques & Sadorsky (1996) and Hajikhani, et al. (2012) have found that community stakeholders did have the potentials to affect and change a society’s feelings toward a firm. As for another example, in a survey of ISO14001 certified companies among 15 countries, Raines(2002) found that one of the strongest triggers for a company to decide to achieve environmental certification was the willingness to have better relationship with the local communities in the neighborhoods. In Taiwan, many enterprises also conduct their social corporate sustainability from the community stakeholders’ perspective, such as the examples mentioned in the previous Section 2.2.

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2.3.3 Internal strategic motivations

Although much research has depicted regulation pressures and stakeholder theory as the two determinants of GSCM practices, it did not fully answer to questions like why certain companies apply different strategies or GSCM practices under more or less the same external pressures in today’s business environment (Delmas & Toffel, 2004). Therefore, besides the external factors, the internal factors for companies to adopt GSCM practices has been aware of in recent research. These internal factors were found mostly related to specific business strategies, aiming for the top management, who decide whether or not to develop GSCM practices in a company, to strive for better environmental and financial results in being the leaders in the market, instead of being merely followers or respondents to the external stimuli (Testa & Iraldo, 2010).

Internal business strategies that induce a firm to adopt GSCM practices to be more competitive in market can be, for example, cost-saving strategy, resulted in green procurement or recycling and reuse process; green-suppliers strategy, by carrying out conscientious selections of suppliers (i.e. with ISO 14001) in order to reduce environmental risk; etc. There were many other strategies in different ways for various industries, but all in all they could be categorized into the following three most diffused strategic views:

Reputation-led strategy

“Legitimacy”, as companies’ acts in accordance with society's values and norms, is the ultimate target for companies to adopt certain practices and policies (DiMaggio & Powell, 1983). Nowadays, as environmental consciousness is getting widely recognized by people and society, more and more organizations try to adopt environmental practices in the hope that their legitimacy can be improved and their end-users’ expectation can be met. Accordingly, GSCM practices, as one of the key measures in such environmental practices, are becoming widely adopted. Examples of GSCM actions such as setting up cooperative green logistics system with suppliers to reduce carbon emissions during distribution can make a good impression on customers and consumers, which can in turn contribute to positive corporate image and therefore increase the market share (Testa, et al. 2010)(Hajikhani, et al. 2012).

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Efficiency-led strategy

Efficiency in supply chain domain is often defined as cost reduction, which includes: total cost, distribution cost, manufacturing cost, and inventory cost, etc. (Lee et,al. 2013). For instance, strategies to reduce the cost during the production and transportation process can be reduction of product dimension, reduction of material usage, or minimum packaging, etc. Neumayer and Perkins (2005) further emphasized that the internal motivation linked to efficiency is to advance in performance, productivity, and profitability. And therefore, the potential increase of efficiency is one of the most significant incentives for GSCM practices adoption (Min & Galle, 1997; Rao, 2002) as whoever can provide more cost-competitive products win the market (Simpson & Samson 2008).

Innovation-led strategy

Companies encouraging product and process innovations are perceived having pioneerism and uniqueness to their positions in the market, and opportunity also exists in innovation for GSCM practices adoption in that it will further strengthen their leadership comparing to their competitors (Vachon & Klassen, 2007). Testa and Iraldo (2010) stated that “GSCM can also be seen as the result of an innovation leader’s strategy.” Moreover, Hajikhani, et al. (2012) emphasized that “environmental specific” innovation-led strategy is situated on a higher level comparing to efficiency-led strategy. As a result, creative GSCM practices adoption makes enterprises more sustainable, and increases the possibility of being the game changers in the competitive business environment.

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2.4 GSCM performance

The concept of companies’ GSCM performances was previously confined by tangible measures, such as in environmental, financial and operational aspects (Zhu et al., 2005; Rao & Hao, 2005; Chien & Shih, 2007; Green et al., 2012). Research on intangible outcomes, such as company image, product image, employee satisfaction and customer loyalty or satisfaction, has limited interpretation for GSCM performances (Eltayeb et al., 2011). However, as more and more companies nowadays started to put sustainability into one of their key organizational strategies for them to stay competitive in today’s socio-ecological interwoven business environment, measurements of companies’ performance have also been reshaped accordingly. The triple bottom line (3BL) theory was applied, asking the following questions: how successful, or healthy, a company can be measured financially (the first bottom line on the profit); how friendly a company treats the environment (the second bottom line on the planet); and what potential impact a company brings to the society and its organization (the third bottom line on the people).

The concept of 3BL was originally proposed in mid-1990 as a new framework to measure companies’ performance in general. It went beyond the traditional measures of profit versus loss, return versus investment, and shareholder value versus environmental and social dimension. Nowadays, 3BL is widely used as a new performance measurement framework for many international companies whose goal is to achieve sustainable development of economic, environment and society (Guan et al., 2010), and they have started to answer those 3BL questions from their sustainability principles and annual reports (Krajnc & Glavi, 2005).

In the following paragraphs, the performances in adopting GSCM practices are examined through the 3BL principle.

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2.4.1 GSCM practices and enterprises’ environmental performance

Environmental performance is concerned with regulatory and contractual compliance, public perception and competitive advantage (Theyel, 2001). It is often defined in terms of “reduction rate” in environmental related issues, such as in wastes (e.g. in carbon-dioxide emission and energy consumption), in hazardous substances usage, and in the frequency of environmental accidents, etc. Many empirical studies showed that environmental performance can be improved by implementing environmental management or GSCM practices. For example, based on survey results of 186 respondents in the Chinese manufacturing industry, Zhu and Sarkis (2004) found that there was a positive relationship between GSCM practices (e.g. environmental audit on suppliers, cooperation with suppliers and customers for environmental objectives, etc.) adoption and environmental performance. Chien and Shih (2007) also drew similar conclusion from the survey of Taiwanese electronic and electrical companies. A more recent study, Laosirihongthong et al. (2013), analyzed survey data from 190 ISO14001 certified manufacturing companies in Thailand and confirmed that GSCM practices (green purchasing and eco-design) lead to positive environmental performance.

2.4.2 GSCM practices and enterprises’ financial performance

Financial performance is the most important driving factor behind enterprises applying environmental practices, especially in developing countries, such as in China, Taiwan, and Malaysia etc. Many parts of GSCM by its nature focus on “saving”, for example, saving the consumption of materials and energy, cutting cost of waste treatment and discharge, and preventing the fine from environmental accidents (Zhu & Sarkis, 2004). Researchers also discovered other benefits brought by GSCM approaches, such as internal cost saving, and revenue of waste reusing (Fuentes-Fuentes, et al., 2004; Tsoulfas & Pappis, 2006). These practices of greening the supply chain lead to greater profit margins, and further contribute to the competitiveness, the growth of profit and market shares, and the economic performance of a company (Rao & Holt, 2005). However, the merits of GSCM practices adoption in financial performance is still varied (Wagner, Schaltegger et al. 2001). In some research, it was found to have a positive influence, especially in the manufacturing industry (Alvarez Gil et al.,2001; Chien & Shih, 2007; Green et al.,2012). Other papers, such as Bowen et al.(2001) suggested through closer examination that GSCM would not benefit profitability and sales performance in the short term. Another example was in the

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study of Thai’ manufacturers, Laosirihongthong et al. (2013) found that not all GSCM practices share the same level of positive financial impact, in that only GSCM practices like packaging-related eco-design indicating positive, whereas other practices, such as green purchasing, product-related eco-design, and reverse logistics, showing weak influence.

2.4.3 GSCM practices and enterprises’ social performance

To echo the worldwide sustainability wave, social performance, or so-called corporate social responsibility, has been taken seriously by many companies. Many enterprises believe their efforts paid in implementing GSCM practices are worthwhile due to the fact their corporate responsibility is expected to be enhanced in social fields, such as company image, product image, employee and customer satisfaction, etc. An increasing number of studies also pay more attention on the possible social performance as one of the outcomes of GSCM practices adoption. For example, Huang and Wu and Rahman (2012) indicated that companies’ social performance was improved by developing Corporate Social Responsibility (CSR) and by pursuing sustainable developments through green product innovation (i.e. Green Design). In a survey of seven Organization for Economic Cooperation and Development (OECD) countries, Testa and Iraldo (2010) also demonstrated that GSCM adoptions (i.e. supplier assessment and supplier requirements) could result in better corporate image and gain better relationship with institutional stakeholders, such as customers, suppliers, and employees. And in another recent study, Saxena and Khandelwal (2012) found that a positive attitude towards “greening the supply chain” brought organization better social image and therefore contributed to competitive advantage in the marketplace with sustainable growth.

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2.5 The concept of green design

One of the GSCM-related practices, Green Design, has received increasing attention in Taiwanese electronic and electrical companies. Also known as eco-design, environmental ecological design, environmentally consider design, environmentally responsible design, life-cycle design or sustainable design, Green Design generally refers to not only the design product or service with optimization of its functionality, quality, and cost in mind, but to take certain environmental measures into consideration in the hope that the impact on the resource consumption and on the environment over the whole product life cycle can be minimized. Therefore, on top of the traditional functionality design paradigm, in which building reliable and cost effective products is the key, Green Design has shifted the design concept to pursue effective disassembly, material and product reuse, and waste reduction (Zhu, et al., 2003).

By examining the entire life cycle of a product on sustainable basis, Green Design extends a product’s life cycle from “raw material extraction through materials processing, manufacturing, distribution, and use” to “repair and maintenance, final disposal and recycling”. Srivastava (2007) aims to understand how a product’s environmental compatibility is affected by the design decision, and thus separated Green Design into life cycle assessment/analysis (LCA) and environmentally conscious design (ECD) for better understanding. The environmental, occupational health and resource-related impacts associated with all phases of a product’s life can be assessed or evaluated by means of LCA. And by doing so, the evaluation results can feedback to design process to see if there are better ways (i.e. re-design the product or manufacturing process) to further reduce the imposed impacts. Besides, the LCA results can also be used in advertising or marketing as a benchmark for end users to compare how environment friendly a product is. As for ECD, another R (Reduction) is added to the original 3R (Reuse, Recycling, and Regeneration) as the key mindset of Green Design, in which source reduction has been introduced into the product development phase to prevent the negative impact on the environment from the start (Paul Burall, 1994). Zhu and Zarkis (2004) further added waste, pollution and energy reduction into Green Design practices to avoid designing or producing products with hazardous substances, and to encourage usage of reusable, recyclable, and recoverable materials in the product design. In addition to product-related eco-design, Laosirihongthong et al.(2013) suggested that packaging-related design should also be included in the Green Design practices. The eco-friendly package is designed

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to be as compact as possible, so that less space is needed when in storage or in transportation of the products. Also, the compact package is often made from reusable and recyclable materials to reduce waste.

The eco-design actions or activities are often company- and/or product-specific. In this study, three common Green Design practices for electrical and electronics industry in Taiwan were defined in Table 2.

Table 2 the definition of Green Design practices in Taiwan

Item s Definition Approach Reference Exam ples in

Taiw an Green design a procedure w hich incorporate environmental concerns into product design and

development stage.

Life cycle assessment/analysis Paul Burall (1994), Zhu and Sarkis

(2004), Srivastava(2007), Green, et al.(2012)

TSMC Environmentally conscious

design of product for reuse, recycle, and recovery of material, component parts.

Delta, ASUS

Design of product to avoid or reduce use of hazardous

products and/or their manufacturing process

TSMC, Delta

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2.6 The Formulation of Research Hypotheses and Conceptual Model

From the above literature review, it becomes apparent that the triggers for GSCM adoption and the relationship between GSCM practices and performance have been extensively investigated previously. Although some researchers, such as Zhu (2005), pointed out the importance of Green Design in the GSCM practices, and emphasized that companies should put Green Design as the first priority in the GSCM practices adoption, at least on inbound or in the early product design stage. The cause and effect of Green Design applications still remained ambiguous and relatively unexplored. Therefore, it is worthy to carry out an investigation on Green Design, as an emerging approaches in GSCM practices, for its possible drivers and corresponding performances. A set of hypotheses were thus formulated in the following to address this investigation for the Taiwanese electrical and electronics industry.

Based on Chien and Shih (2007) findings that the environmental regulation and external stakeholders, such as suppliers, customers and community stakeholders, have significant effect on GSCM actions in Taiwanese electrical and electronics industry, Hypothesis 1 to Hypothesis 3 were proposed to examine if similar factors also affect Green Design practices adoption:

Hypothesis 1: Environmental regulations have a positive relationship with green design practices.

Hypothesis 2: External stakeholders have a positive relationship with green design practices.

Hypothesis 3: Internal stakeholders have a positive relationship with green design practices.

In section 2.4, 3BL theory was introduced to measure organizational performances as a result of GSCM practices adoption. Likewise, here Hypothesis 4 to Hypothesis 6 were presented to seek if similar relationships exist between Green Design practices and the organizational performances:

Hypothesis 4: Green design practices have a positive relationship with environmental performance.

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pressure

pressure

effect

Hypothesis 5: Green design practices have a positive relationship with financial performance.

Hypothesis 6: Green design practices have a positive relationship with social performance.

The overall conceptual model for this research is presented in Figure 1 as follows:

External factors

(H1) Environmental regulatory -Domestic regulation and government policy -International agreements (H2) External stakeholders -Customers -Suppliers -Community stakeholders (H3) Internal factors - Reputation-led strategy - Efficiency-led strategy - Innovation-led strategy (H4) Environmental performance -Reduction of waste.

-Decrease of consumption for hazardous/harmful/toxic materials.

-Decrease of frequency for environmental accident. (H5) Financial performance -Cost reduction

-Market share growth -Profit increase

(H6) Social performance -Reputation increase -stakeholder satisfaction -occupational health and safety.

Green design practices

- Life cycle assessment - Design of product for reuse, recycle, and recovery of material, component parts

- Design of product to avoid or reduce use of hazardous products and/or their manufacturing process

Sustainable performance

Figure 1 Overall conceptual model

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3. Methodology

3.1 Research instrument design

This research focuses on modeling the perceptions and experience of green design practices in Taiwanese electrical and electronics industries, including semiconductors, optoelectronics, household appliances, communication and networks, and electronic and computers. To test the hypotheses mentioned in Section 2, a questionnaire (see appendix 1) was developed to include the triggers for Green Design implementation, current Green Design practices and the corresponding performances. The operational definitions of the elements in this questionnaire, regarded as research variables, were developed as in Table 3 based on extensive literature review.

The questionnaire was composed of four parts with total 20 questions. The first part asked for the background information of interviewees. In the second part, three main drivers were covered, including Environmental Regulations, Stakeholders’ Pressures, and Internal Strategic Motivations in the organization. Variables belonging to the first driver, Environmental Regulations, were international environmental agreements, government environmental policies, and domestic environmental regulations; Variables belonging to second driver, Stakeholders’ Pressures, were composed of pressures from suppliers, customers and community; And last but not least, companies’ reputation-led, efficiency-led, and innovation-led strategy reflected the final driver about Internal Strategic Motivations. Nine questions were asked in part 2 under five-point Liker-type scale (1=not at all, 2= a little bit, 3= to some degree important, 4=relatively significant and 5=significant). The third part regarding green design practices was based on inputs from the experts in the electrical and electronics industry in Taiwan as well as the literature review. Three questions were laid out in this part using a five-point scale (1 = not considering it, 2 = planning to consider it, 3 = considering it currently, 4 = initiating implementation, 5 = implementing successfully). And the fourth part, consisting of seven questions, focused on the influence of Green Design implementation on Environmental Performance, Financial Performance, and Social Performance, and was answered using a five-point scale (1=not at all, 2= a little bit, 3= to some degree important, 4=relatively significant and 5=significant) for each question. Considering most of the respondents were native Chinese speakers, the questionnaire was formulated in English with subtitles in Chinese. In addition, a brief foreword was provided to explain the topic of each section

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so as to avoid misunderstanding. 3.2 Data collection

To the best knowledge of the author of this thesis, the Open Government Data is still in its infancy in Taiwan, and thus to get hold of a list of all the electrical and electronics companies in Taiwan would not be an easy job. Nevertheless, in this research, the target companies were chosen from "2013 Top 1350 Manufacturers in Taiwan" from a prestigious magazine, called Common Wealth magazine, which has done such yearly survey and ranking for the top 1350 enterprises in Taiwan for almost 30 years. To further narrow down the research targets, this study selected 300 companies from the list and focused on those who passed the ISO (International Organization for Standardization) 14001 certification before the end of December 2013. The reason why these companies were chosen was due to the fact since ISO 14001 set out the environmental management criteria for an organization, whoever passed it could be recognized as having a good foundation of environmental management system, implying that they might have implemented better GSCM practices (and Green Design might be included, too), and thus their performance and impact on the environment and on the society were the interest that this research would like to find out. Furthermore, this questionnaire was distributed to the management teams of the sample companies, but not confined to the supply chain department only; instead, the quality assurance or purchasing department were included as well, since from previous study's experience, some Taiwanese companies might lack of dedicated GSCM representatives or departments (Chien and Shih, 2007; Hu and Hsu,2010). The link to the online research questionnaire was sent by e-mail to the selected companies. Up to November 15th 2014, there were a total of 113 completed questionnaires received, with 102 valid and 11 invalid, representing a response rate at 34%. Comparing to previous GSCM related researches (Chien and Shih (2007): 151 valid samples; Hu and Hsu (2010): 87 samples; Chiou et al.(2011): 124 samples), such response rate was considered sufficient for running statistical analyses to find out the relationship between Green Design practice and its triggers and performances.

The collected data was further analyzed by using SPSS(16.0). First, factor analysis, reliability test, and validity test were applied to see if the questionnaire captured the essence of Green Design triggers, practices and the corresponding companies’ performances. Afterwards, several multivariate analyses and regression analyses were carried out to verify the hypotheses in this research.

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Table 3 the operational definitions of the research variables

Variable Operational definition Reference

Green design practices Companies design product or process based on the principle of minimizing consumption of components and energy and avoiding or reduce the use of hazardous material during manufacturing process.

Zuu & Sarkis (2003), Hajikhani & Wahiza & Idris (2012)

Environmental regulations Environmental regulations, government policies and international agreements, which making organizations to become environmental consciousness.

Sarkis (1998), Sarkis (2003), Brent & Visser (2005), Papadopoulos & Giama (2007)

External stakeholders Any group or individual, including suppliers, customers and community stakeholders, which making enterprises to become environmental consciousness.

Greenwood (2001), Hervani et al. (2005)

Internal strategic factors The strategy for companies, including reputation-led, efficiency-led and innovation-efficiency-led strategy, to become conscious of environment.

Sarkis (2003),

M.Hajikhami, et al.(2012)

Environmental performance The attainment of organizations’ objectives on environmental management performance, including reduction of waste emission, decrease of frequency for environmental accidents, and decrease of consumption for hazardous/harmful/toxic materials.

Sharma & Vredenburg (1998), Sarkis (2003), Tsoulfas & Pappis (2006)

Economic performance The attainment of organizations’ objectives on financial or economic performance in enterprises’ activities, including cost reduction, profit increase, and market share growth.

Rao (2002), Zhu & Sarkis (2003), Fuentes-Fuentes et al. (2004)

Social performance The attainment of organizations’ objectives on social performance, including increase reputation, stakeholder satisfaction, occupational health and safety.

GRI(2002)

Noted: partially adapted from International Journal of Environmental Science and Technology, p.388, by M. K. Chien and L.H. Shih, 2007.

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4. Result

4.1 Basic data analysis

Descriptive analysis is used for showing the basic feature of the data in this study. The distribution of respondents by gender, age, education and job title is summarized in Table 4. The majority of the respondents are male, which accounts for 83%. More than half respondents are between the ages of 41 and 50. Educational backgrounds are largely university and above (63.0%). Most (58.0%) respondents work as (assistant) section manager and environmental officer in the supply chain related departments.

Table 4 Basic data analysis

Basic information Item Number Percentage

Sex Male 85 83% Female 17 17% Age Under 30 5 5% 31- 40 22 22% 41- 50 58 57% over 50 17 17%

Education Master degree 9 9%

University 55 54%

College 38 37%

Title General manager 1 1%

(Assistant) manager 22 22%

(Assistant) section manager 27 26% Environmental safety officer 33 32%

Other 19 19%

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The mean and standard deviations were also calculated to further describe the current status for the pressures of implementing GSCM practice, green design practices and sustainable performance in Taiwanese companies. As can be seen in Table 5, the means for all items across all the dimensions are between 3.38 and 4.42. This implies that many Taiwanese companies have already applied green design practices to fulfill their external pressure and internal motivation and has had corresponding results in terms of good sustainable performance.

Table 5 Average and standard deviations of variables

Dimension Average SD

H1) Environmental regulation

Central governmental regulations and government policy 4.42 0.9

International environmental agreements 4.4 0.8

H2) Stakeholder Customers 4.17 0.73 Suppliers 4.21 0.64 Community stakeholders 4.2 0.68 H3) Internal factors Reputation-led strategy 4.1 0.63 Efficiency-led strategy 4.22 0.72 Innovation-led strategy 4.08 0.68

- Green design practice

Design of product to avoid or reduce use of hazardous products and/or their manufacturing process

3.5 0.96

Life cycle assessment(LCA) 3.42 0.6

Design of product for reuse, recycle, and recovery of material, component parts 3.38 0.71

H4) Environmental performance

Reduction of waste emission. 4.17 0.73

Decrease of consumption for hazardous/harmful/toxic materials. 4.2 0.68

Decrease of frequency for environmental accident 4.21 0.63

H5) Financial performance

Cost reduction 4.06 0.61

Market share growth 3.81 0.69

Profit increase 3.79 0.68

H6) Social performance

Reputation increase 4.21 0.64

Occupational health and safety increase 4.16 0.71

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4.2 Factor analysis

Factor analysis is a statistical technique, often used to extract or to confirm key factors from the variability among several observed correlated variables. In this study, key factors to green design practices and companies’ performance have been conceptualized in Figure 1, and in this section factor analysis was used to test these groupings.

Prior to using factor analysis on the groupings of the survey data, Kaiser-Meyer-Olkin (KMO) measure and Bartlett’s test of sphericity were applied first to examine if the collected data was suitable for factor analysis. The KMO measure examines the strength of the relationship among variables. The higher commonality exists among variables, the more appropriate for factor analysis is to be applied. Kaiser (1974) suggests that for a satisfactory factor analysis to be proceeded, the sampling adequacy should be greater than 0.8. Another way to test if the collected data is acceptable for factor analysis is via Bartlett’s test of sphericity. If the p value of the Bartlett’s test result is less than .001, the data is considered as having multivariate normal distribution.

In Table 6, the value of KMO measure for the two groupings Pressure for Companies’ Green Design Practices and Companies’ Performances were both greater than 0.8, and the p values in Bartlett's test of sphericity were also smaller than .001, all implying the collected data was suitable for applying factor analysis.

Table 6 the result of KMO measure and Bartlett's test of sphericity

KMO Measure of Sampling Adequacy

Bartlett's Test of Sphericity

P value Pressure for companies'

green design practices

0.861 779.5 0.000

companies' performance 0.882 1012.1792 0.000

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After confirming that factor analysis was proper to be applied to the questionnaire results, principal component analysis with varimax rotation was chosen as the factor analysis method to verify the survey data. It empirically extracted three orthogonal components from the answers to the nine questions of green design practices pressures/drivers, which coincided with the original predicted groupings: external regulation pressure, external stakeholder pressure and internal motivations in the previous section. Similarly, the factor analysis on the Performance part of the questionnaire also converted the replies into three dimensions, also corresponding to the environmental, financial and social performance as predicted in Table. As Table 7 and Table 8 showed, the components of GSCM drivers and Performance could explain 86.12% and 91.8% of their inherent variation. In the next section, the reliability of these factors was tested with levels of Cronbach.

Table 7 Rotated Component Matrix of pressure of green design practices adoption

Rotated Component Matrixa

Component 1 2 3 Government policy(λ1) .946 Domestic regulation(λ2) .954 International agreement(λ3) .936 Customers(λ4) .913 Suppliers(λ5) .924 Community stakeholders(λ6) .865

Corporate positive image strategy(λ7) .851

Cost saving strategy(λ8) .465

Innovative product and process development strategy(λ9)

.648

Eigenvalues 3.493 2.689 1.569

% of Variance 38.811 29.880 17.431

Cumulative % 38.811 68.691 86.123

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. 3 components extracted.

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Table 8 Rotated Component Matrix of pressure of companies' performance Rotated Component Matrixa

Component

1 2 3

Reduction of waste emission(β1) .823

Decrease of consumption for hazardous/harmful/toxic materials(β2)

.798

Decrease of frequency for environmental accident(β3) .576

Cost reduction(β4) .816

Market share growth(β5) .844

Profit increase(β6) .867

Reputation increase(β7) .502

Occupational health and safety increase(β8) .792

Eigenvalues 2.851 2.303 2.190

% of Variance 35.632 28.793 27.376

Cumulative % 35.632 64.425 91.801

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. 3 components extracted.

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4.3 Reliability analysis

To measure consistency, precision and repeatability of the indicators, a reliability analysis is necessary. The internal consistency of constructs was evaluated by using Cronbach’s Alpha with a value between 0.00 (indicating no reliability) and 1.00 (indicating perfect reliability). The reliability is regarded as high if Cronbach’s Alpha is larger than 0.7(Cronbach, 1951). In Table 9, all the dimensions' Cronbach's Alpha values are greater than 0.7, which means that the designed questionnaire has high reliability because of its internal consistency.

Table 9 the result of Cronbach's Alpha

Dimension Cronbach's α

Environmental regulation 0.939

Stakeholder 0.934

Internal factors 0.853

Green design practice 0.722

Environmental performance 0.943

Financial performance 0.91

Social performance 0.863

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4.4 Validity analysis

Validity consists of two aspects. On the one hand, content validity refers to how well an instrument measurement covers the content domain of the variables that is supposed to be measured (Nunnally, 1967). As for this questionnaire, it was not only designed based on an extensive literature review, but was reviewed by two experienced supply chain managers in Taiwanese electronic and electricity manufacturers. Therefore, this survey is considered having captured the essence of the main drivers behind GSCM practices, and of the relationship between Green Design in particular and companies' various performances as a result.

On the other hand, convergent validity refers to how measurements, that are theoretically related, are in effect related, and is considered high when its factor loadings are significant (Anderson and Gerbing, 1988). In this study, the factor loading (λ1,λ2,... λ9 and β1,β2,….β8) of observable variables shown in Table 7 and Table 8 were all higher than .45, indicating all observable variables could reflect the latent variables constructed.

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4.5 Regression analysis

In this section, the research hypotheses described earlier were verified by thorough analyses of the obtained results using Person correlation analysis and Regression analysis. The relationship between the three predicted triggers (Environmental Regulations, External Stakeholders’ Pressure, and Internal Strategic Motivations) and the Green Design Practices was firstly investigated. Person correlation analysis was employed to determine the direction and strength of this relationship, afterwards, a multiple linear regression was used to examine each contribution of the three drivers towards the Green Design Practices. Secondly, Person correlation analysis was used to determine whether the green design practices have impact on companies' various performances, and three single linear regression analyses were performed to validate to what extent the impact would be.

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4.5.1 The prerequisites of regression analysis

Linear regression analysis is often used to estimate the variation of dependent variables by the variation of predictor variables, but it would be accurate only if the following prerequisites hold true: normality of residuals, linearity of residual and no or low level of multicollinearity in the predictors.

Many methods can be used to verify these prerequisites. For example, the first prerequisite can be examined by a normal P-P Plot of regression standardized residuals. If the residuals are normally distributed, the values should fall closely on the diagonal line on the P-P Plot. The second prerequisite can be inspected by a Scatter plot of the standardized residuals versus the dependent variable. The residuals on a scatter plot will scatter randomly with non-linear or quadratic pattern when the residuals are independent. Finally, multicollinearity occurs when there are high correlations among predictor variables. Multicollinearity will result in unreliable and unstable estimates of regression coefficients. Correlation matrix, and Tolerance are two common methods to be used to examine whether multicollinearity problem exists. If the correlations in the Correlation matrix are as high as .90 or greater, or the Tolerance is equal to or less than .19, a potential multicollinearity problem may exist.

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4.5.2 Multiple linear regression

- Correlation analysis

In this research, Person correlation analysis was used to determine the direction and strength of a relationship between independent variables (environmental regulations, external stakeholders’ pressure and internal strategic motivations) and dependent variables (green design practices). And the results were interpreted based on Guilford's rule of thumb. As can be seen from the results of Person correlation analysis in Table 10, all independent variables (Environmental regulation, Stakeholders, Internal factors) were observed having positive and significant correlations with dependent variable (Green design practices). And based on Guilford's rule of thumb (1973), both the Environmental regulation (with r =.823, p=.000) and Internal factors (with r =.814, p=.000) could be regarded as having strong positive level of impact on Green design practices adoption (r > 0.7), whereas the impact from external Stakeholders’ pressure (with r =.682, p=.000) was considered in moderate level ( 0.7 > r >0.3).

Table 10 Correlation analysis of factors affects green design practices

Correlations

Green design practices Sig. (2-tailed)

Environmental regulation Pearson Correlation .823** .000

Stakeholders Pearson Correlation .682** .000

Internal factors Pearson Correlation .814** .000

**. Correlation is significant at the 0.01 level (2-tailed).

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- Residual analysis Normality of residuals

Figure 2 shows most of the values followed along the diagonal, and thus, the assumption of residual normality was true for this study.

Figure 2 Normal P-P plot of regression standardized residual

Linearity of residual

All the dots in Figure 3were scattered randomly with no clear pattern, therefore, the assumption of residual normality was also met in for this study.

Figure 3 Scatter plot of Regression Standardized Predicted Value -3 -2 -1 0 1 2 3 2 2.5 3 3.5 4 4.5 Re gr es si on S ta nda rdi ze d R es idua l

Regression Standardized Predicted Value

Scatter Plot

Dependent variable: Green design practices

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