Elsevier

Journal of Cleaner Production

Volume 216, 10 April 2019, Pages 42-55
Journal of Cleaner Production

Improving reverse supply chain performance: The role of supply chain leadership and governance mechanisms

https://doi.org/10.1016/j.jclepro.2019.01.045Get rights and content

Abstract

Recently, a growing interest has been devoted to the role of buying firms in promoting sustainability across supply chains. However, relatively little attention has been given to how the behaviour of a buying firm affects the performance of reverse supply chains. Within this context, this paper investigates the role of Supply Chain Leadership styles on suppliers' performance dimensions related to reverse product flows. Furthermore, the mediating role of two governance mechanisms (namely trust and legal-legitimate power) on this relationship is examined. This study employs structural equation modelling to analyse data collected from 190 manufacturing companies in Malaysia. The paper concludes that transformational and transactional leaderships are significant and positive contributors to suppliers’ reverse supply chain performance; trust and power significantly mediate these relationships.

Introduction

The Circular Economy (CE) paradigm pushes the frontiers of environmental, economic and social sustainability by emphasising the idea of transforming products in such a way that there are workable relationships between ecological systems and economic activities (Kirchherr et al., 2017). This is achieved by creating a paradigm shift in the design of material flows, based on the notion of waste and by-products as a resource in manufacturing processes (Genovese et al., 2017). CE has been increasingly integrated into supply chain research and practice through concepts such as circular business models and circular product design (Geissdoerfer et al., 2017; Murray et al., 2017).

The main notion of CE is not only to improve environmental sustainability by enhancing traditional performance measures, but also by taking care of reverse supply chain performance (RSCP) by improving the management of end-of-life products and intermediate by-products through reusing, recycling and refurbishment options (Nasir et al., 2016). As such, reverse supply chains (RSCs) are at the backbone of operationalising CE concepts at a meso-level, enacting inter-firm collaboration (Genovese et al., 2017). The management of RSCs carries a number of economic, social and environmental issues and implications, which are further exacerbated by the involvement of multiple actors in RSC operations (Genovese et al., 2017). In order to ensure a successful implementation of RSCs, all stakeholders in the supply chains, including buying firms, should take responsibility in optimising the adoption of RSC practices (Defee et al., 2009; Kannan, 2018; Mathivathanan et al., 2018).

Within this context, buying firms should be able to orchestrate production processes across supply chains by playing a leadership role towards upstream suppliers (Defee et al., 2009). Supply chain leadership (SCL) is concerned with the ability of an organisation (for example, the buying firm in a supply chain) to influence followers’ (for example, suppliers) actions or behaviours (Defee et al., 2009; Gosling et al., 2017).

Recently, studies about the influence of SCL on the implementation of sustainable practices within supply chains have been observed (Vivaldini and Pires, 2016; Agi and Nishant, 2017; Blome et al., 2017; Gabler et al., 2017; Gosling et al., 2017; Gunasekaran et al., 2017). However, within this emerging body of knowledge, most of the empirical studies are centred on the improvement of more traditional linear performance measures (such as the ones related to green procurement and manufacturing) (Silvestre, 2015; Kurucz et al., 2017; Roman, 2017). Very little emphasis has been devoted to RSCs even though the CE paradigm has been extensively promoted in the supply chain environment.

Furthermore, even though prior studies proposed that SCL and governance mechanisms have a potential in simultaneously contributing towards sustainability practices in supply chains (Gong et al., 2018; Jia et al., 2018), current literature fails to examine those concepts together, resulting in unclear explanations of the role of leadership styles and governance mechanisms in managing supply chain relationships and performance.

This study aims at addressing these gaps by providing an empirical investigation into the relationship between SCL and RSCP while also considering the mediating role of governance mechanisms. The paper is organised as follows. Section 2 provides a literature review discussing RSCP and the role of leadership, trust and power in a supply chain context, with specific emphasis on the influence of SCL on RSCP. This section also provides theoretical arguments and proposes the associated hypotheses. Employed research methods are presented in Section 3. Findings are illustrated in Section 4 and discussed in Section 5. Section 6 concludes the paper with a discussion on potential opportunities for future research.

Section snippets

Reverse supply chains: generalities and performance measurement

Due to pressures from stakeholders, firms’ focus on economic performance needs to be accompanied by care for environmental and social performance (Chan and Kumar, 2007; Seuring and Müller, 2008; Genovese et al., 2013). At the same time, alternative economic models are shaping the development of new forms of supply chains; this is the case of the CE paradigm, which is embracing the notion of restorative industrial systems (Genovese et al., 2017).

Reverse supply chains (RSCs) can be seen as one of

Research methodology

A seven-point Likert scale survey was designed to capture suppliers' perceived level of buying firms' leadership styles, suppliers' trust on buying firms, power exhibited by buying firms and current suppliers’ RSCP. Prior to data collection, two phases of content validity were executed. Pre-testing sessions with three experienced researchers were conducted to get feedback on the validity of the constructs. The questionnaire items were modified and emailed to 17 experts: statisticians (3),

Findings

As shown in Table 9, the overall fit of the hypothesised structural model was adequate. All hypotheses were tested while controlling for the firm's size and their supply chain position. The direct and mediation tests were conducted independently on the full model to ensure greater clarity and parsimony.

Discussion

Table 11 shows the summary of the hypotheses testing. The findings suggest that by exhibiting transformational leadership, a buying firm is able to cultivate suppliers' initiatives toward RSC orientation. Moreover, a transformational-based buying firm is usually characterised by the willingness to provide encouragement and training to supply chain partners. This nature of transformational leadership will help suppliers to cooperate in achieving mutual sustainability goals (Vivaldini and Pires,

Conclusions and future research directions

The findings of this study offer guidance to firms across supply chains on the role of buying firm's leadership approaches and its influence towards the operationalisation of RSC practices, which represent an implementation of CE strategies at an inter-organisational level. Results of the study indicate the existence of a direct relationship between SCL and RSCP, with transformational and transactional leadership approaches leading to higher suppliers' RSCP. Moreover, this research found that

Acknowledgements

This research was partially supported by the following projects: “Promoting Sustainable Freight Transport in Urban Contexts: Policy and Decision-Making Approaches (ProSFeT)”, funded by the H2020-MSCA-RISE-2016 programme (Grant Number: 734909); "Realising the Transition towards the Circular Economy: Models, Methods and Applications (ReTraCE)", funded by the H2020-MSCA-ITN-2018 programme (Grant Number: 814247).

The authors are extremely grateful to the three anonymous referees; their very useful

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