A COMPARATIVE STUDY OF DRIVERS RENEWABLE ENERGY INITIATIVES ON

SUSTAINABLE BUSINESS PERFORMANCE: A MEDIATING EFFECT OF ECO-

EFFICIENT BASED GREEN SUPPLY CHAIN MANAGEMENT

BY

UU CHEIN ROU

Research report in partial fulfillment of the requirements for the degree of Master of

Business Administration (IB)

Universiti Sains Malaysia

2015

I

ACKNOWLEDGEMENT

The writing of this dissertation has been one of the most significant academic challenges I

have ever had to face. Without their support, patience and guidance, I would not be able to

complete this study. Therefore, I would like to this opportunity to express my appreciation

to the people who have assisted me in making this dissertation success. First of all, the

most important role in this dissertation is Dr. Yudi Fernando, my supervisor. I owe my

deepest gratitude to Dr. Yudi for his enduring encouragement, practical advice, support

and mentorship throughout the process. There is no doubt that his dedication to service is

unparalleled and unmatched. Additionally, a special thanks to Prof. Dr. Klaus Stocker for

her assistance and advice when I was in Germany.

I would also like to thank all my friends which we would have not meet each other’s

without this process. Thank you for reading many drafts, providing wonderful

encouragement and feedback and sharing your knowledge and ideas. Moreover, highly

appreciate to all the lectures and staffs in Graduate School of Business who has been

teaching me the entire MBA program in Universiti Sains Malaysia. Not to be forgotten,

my endless thanks to the respondents who have spent their precious time and valuable data

to participate in this dissertations.

Last but not least, I would like to express my heartfelt gratitude to my parents and

my family members who have always believed in me, supported, encouraged, compassion

and profound understanding throughout my entire MBA program.

II

Table of Content

Page

ACKNOWLEDGEMENT……………………………………………………… I

TABLE OF CONTENTS………………………………………………………… II

LIST OF TABLES……………………………………………………………….. XII

LIST OF FIGURES……………………………………………………………… XIV

ABSTRAK……………………………………………………………………….. XV

ABSTRACT………………………………………………………….................... XVI

CHAPTER 1: INTRODUCTION

1.1 Introduction…………………………………………………………………… 1

1.2 Background of Study…………………………………………………………. 1

1.3 Problem Statement……………………………………………………………. 8

1.4 Research Objectives…………………………………………………………... 15

1.5 Research Questions…………………………………………………………… 15

1.6 Definition of Key Terms……………………………………………………… 16

1.6.1 Renewable Energy Initiatives………………………………………. 16

1.6.2 Eco-efficient………………………………………………….. ……. 16

1.6.3 Green Supply Chain Management…………………………………. 17

1.6.4 Eco-efficient based Green Supply Chain Management ……………. 17

1.6.5 Sustainability……………………………………………………….. 17

1.6.6 Sustainable Business Performance…………………………………. 17

1.7 Significant of Study…………………………………………………………… 18

1.7.1 Theoretical Contribution……………………………………………. 18

1.7.2 Practitioner Contribution……………………………………………. 19

1.8 Organization of the Research Proposal……………………………………….. 21

III

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction…………………………………………………………………… 22

2.2 Overview of Renewable Energy……………………………………………… 22

2.3 Overview of Renewable Energy in Germany………………………………… 23

2.4 Overview of Renewable Energy in Malaysia………………………………… 33

2.5 Overview of Eco-efficient based Green Supply Chain Management………… 36

2.6 Overview of Sustainable Business Performance……………………………... 38

2.7 Review of relevant theory…………………………………………………….. 39

2.7.1 Institutional Theory…………………………………………………. 40

2.7.2 Natural Resource Based View (NRBV)…………………………….. 41

2.8 Literature review of variables…………………………………………………. 43

2.8.1 Drivers of Renewable Energy Initiatives……………………………. 43

2.8.2 Government Involvement…………………………………………… 45

2.8.3 Organization Support……………………………………………….. 46

2.8.4 Technology Support………………………………………………… 47

2.8.5 Green Information System………………………………………….. 49

2.8.6 Green Purchasing……………………………………………………. 50

2.8.7 Eco-Design…………………………………………………………... 52

2.8.8 Reverse Logistics……………………………………………………. 53

2.8.9 Sustainable Business Performance………………………………….. 54

2.8.10 Environmental Performance………………………………………. 55

2.8.11 Operational Performance………………………………………….. 56

2.8.12 Economic Performance……………………………………………. 57

2.8.13 Control Variables………………………………………………….. 58

2.8.13.1 Size of the Company (Number of Employees)………….. 58

2.8.13.2 Number of Suppliers ……………………………………. 59

2.9 Hypothesis Development……………………………………………………... 60

IV

2.9.1 Drivers of Renewable Energy Initiatives and Eco-efficient

based Green Supply Chain Management…………………………… 60

2.9.2 Drivers of Renewable Energy Initiatives and Sustainable Business

Performance………………………………………………………… 63

2.9.3 Eco-efficient based Green Supply Chain Management and

Sustainable Business Performance…………………………………. 65

2.9.4 Drivers of Renewable Energy Initiatives, Eco-efficient based Green

Supply Chain Management and Sustainable Business Performance.. 68

2.10 Theoretical Framework……………………………………………………… 73

2.11 Summary ……………………………………………………………………. 75

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Introduction…………………………………………………………………... 76

3.2 Research Design……………………………………………………………… 76

3.2.1 Type of Study………………………………………………………. 76

3.2.2 Unit of Analysis (UOA) ……………………………………………. 77

3.2.3 Population………………………………………………………….. 77

3.2.4 Sample Frame………………………………………………………. 78

3.2.5 Sampling Method…………………………………………………... 79

3.3 Data Collection Method……………………………………………………… 80

3.4 Survey Instrument……………………………………………………………. 80

3.5 Measurement of Variable and Constructs……………………………………. 81

3.5.1 Measurement of Independent Variables……………………………. 82

3.5.2 Measurement of Mediating Variables……………………………… 84

3.5.3 Measurement of Dependent Variables……………………………... 87

3.6 Data Analysis………………………………………………………………… 88

3.6.1 Structural Equation Modeling……………………………………… 89

V

3.6.2 Descriptive Analysis……………………………………………….. 90

3.6.3 Validity…………………………………………………………….. 90

3.6.3.1 Construct Validity………………………………………... 90

3.6.3.2 Convergent Validity……………………………………… 91

3.6.3.3 Discriminant Validity……………………………………. 91

3.6.4 Bootstrapping Model for Mediating……………………………….. 91

3.6.5 Pre-Test…………………………………………………………….. 92

3.6.6 Pilot Test…………………………………………………………… 93

3.6.7 Goodness of Fit Analysis…………………………………………... 94

3.6.8 Common Method Variance (CMV)………………………………... 95

3.6.9 Levene’s Test……………………………………………………... 96

3.6.10 Importance-Performance Matrix Analysis………………………. 97

3.7 Summary……………………………………………………………………... 98

CHAPTER 4: DATA ANALYSIS AND RESULTS

4.1 Introduction…………………………………………………………………... 99

4.2 Descriptive Analysis…………………………………………………………. 99

4.2.1 Response Rate……………………………………………………… 99

4.2.2 Respondent’s Profile of Germany and Malaysia…………………… 100

4.2.3 Company’s Profile of Germany and Malaysia……………………… 102

4.3 Validity………………………………………………………………………... 108

4.3.1 Construct Validity…………………………………………………... 108

4.3.2 Convergent Validity………………………………………………… 115

4.3.3 Discriminant Validity……………………………………………….. 117

4.4 Reliability Analysis…………………………………………………………… 123

4.5 Hypothesis Testing……………………………………………………………. 124

4.5.1 Hypotheses Testing results for measurement items………………… 125

VI

4.5.2 Mediating Results of the Measurement Items………………………. 140

4.6 Common Method Variance (CMV)…………………………………………… 153

4.7 Analysis of Goodness of Fit Measures……………………………………….. 156

4.8 Control Variables……………………………………………………………… 156

4.9 Levene’s Test…………………………………………………………………. 158

4.10 Importance Performance Matrix Analysis………………………………….. 161

4.11 Summary of Findings……………………………………………………….. 170

CHAPTER 5: DISCUSSION AND CONCLUSION

5.1 Introduction………………………………………………………………….. 177

5.2 Recapitulation of Study Findings …………………………………………… 177

5.3 Discussion of Major Findings……………………………………………….. 179

5.3.1 RO 1: To examine the link of Renewable Energy Initiatives on Eco-efficient based Green Supply Chain Management……………. 180

5.3.1.1 Government Involvement towards Green Information System (H1a) 181

5.3.1.2 Government Involvement towards Green Purchasing (H1b)…….. 182

5.3.1.3 Government Involvement towards Eco-Design (H1c)…………… 183

5.3.1.4 Government Involvement towards Reverse Logistics (H1d)…….. 184

5.3.1.5 Organizational Support towards Green Information System (H1e) 185

5.3.1.6 Organizational Support towards Green Purchasing (H1f)……….. 185

5.3.1.7 Organizational Support towards Eco-design (H1g)……………… 186

5.3.1.8 Organizational Support towards Reverse Logistics (H1h)………. 186

5.3.1.9 Technology Support towards Green Information System (H1i)… 187

5.3.1.10 Technology Support towards Green Purchasing (H1j)………… 188

5.3.1.11 Technology Support towards Eco-design (H1k)……………….. 189

5.3.1.12 Technology Support towards Reverse Logistics (H1l)………… 190

5.3.2 RO 2: To what extend the Renewable Energy Initiatives influence Sustainable Business Performance……………………………….... 190

VII

5.3.2.1 Government Involvement towards Environmental Performance (H2a)………………………………. 191

5.3.2.2 Government Involvement towards Operational Performance (H2b) 192

5.3.2.3 Government Involvement towards Economic Performance (H2c).. 193

5.3.2.4 Organizational Support towards Environmental Performance (H2d) 194

5.3.2.5 Organizational Support towards Operational Performance (H2e)... 195

5.3.2.6 Organizational Support towards Economic Performance (H2f)….. 195

5.3.2.7 Technology Support towards Environmental Performance (H2g)... 197

5.3.2.8 Technology Support towards Operational Performance (H2h)…… 198

5.3.2.9 Technology Support towards Economic Performance (H2i)…….. 199

5.3.3 RO 3: To investigate the relationship between Eco-efficient based Green

Supply Chain Management and Sustainable Business Performance.. 199

5.3.3.1 Green Information System towards Environmental Performance (H3a)……………………………….. 200

5.3.3.2 Green Information System towards Operational Performance (H3b) 200

5.3.3.3 Green Information System towards Economic Performance (H3c).. 201

5.3.3.4 Green Purchasing towards Environmental Performance (H3d)…… 202

5.3.3.5 Green Purchasing towards Operational Performance (H3e)………. 202

5.3.3.6 Green Purchasing towards Economic Performance (H3f)………… 202

5.3.3.7 Eco-design towards Environmental Performance (H3g)………….. 203

5.3.3.8 Eco-design towards Operational Performance (H3h)……………... 203

5.3.3.9 Eco-design towards Economic Performance (H3i)……………….. 203

5.3.3.10 Reverse Logistics towards Environmental Performance (H3j)….. 204

5.3.3.11 Reverse Logistics towards Operational Performance (H3k)…….. 204

5.3.3.12 Reverse Logistics towards Economic Performance (H3l)………. 204

5.3.4 RO 4: To examine whether EE based GSCM mediate the relationship between REI and SBP………………………………………………. 205

VIII

5.3.4.1 Green Information System mediate towards between Government Involvement and Environmental Performance (H4a)……….. 205

5.3.4.2 Green Information System mediate towards between Government Involvement and Operational Performance (H4b)………….. 206

5.3.4.3 Green Information System mediate towards between Government Involvement and Economic Performance (H4c)…………….. 207

5.3.4.4 Green Information System mediate towards between Organizational Support and Environmental Performance (H4d)………….. 208

5.3.4.5 Green Information System mediate towards between Organizational Support and Operational Performance (H4e)…………….. 209

5.3.4.6 Green Information System mediate towards between Organizational Support and Economic Performance (H4f)………………. 209

5.3.4.7 Green Information System mediate towards between Technology Support and Environmental Performance (H4g)……………. 210

5.3.4.8 Green Information System mediate towards between Technology Support and Operational Performance (H4h)……………….. 211

5.3.4.9 Green Information System mediate towards between Technology Support and Economic Performance (H4i)…………………. 212

5.3.4.10 Green Purchasing mediate towards between Government Involvement and Environmental Performance (H4j)……… 213

5.3.4.11 Green Purchasing mediate towards between Government Involvement and Operational Performance (H4k)………… 214

5.3.4.12 Green Purchasing mediate towards between Government Involvement and Economic Performance (H4l)…………… 214

5.3.4.13 Green Purchasing mediate towards between Organizational Support and Environmental Performance (H4m)……….. 215

5.3.4.14 Green Purchasing mediate towards between Organizational Support and Operational Performance (H4n)…………… 216

5.3.4.15 Green Purchasing mediate towards between Organizational Support and Economic Performance (H4o)…………….. 216

5.3.4.16 Green Purchasing mediate towards between Technology Support and Environmental Performance (H4p)…………... 217

IX

5.3.4.17 Green Purchasing mediate towards between Technology Support and Operational Performance (H4q)……………… 217

5.3.4.18 Green Purchasing mediate towards between Technology Support and Economic Performance (H4r)………………... 218

5.3.4.19 Eco-design mediate towards between Government Involvement and Environmental Performance (H4s)……… 219

5.3.4.20 Eco-design mediate towards between Government Involvement and Operational Performance (H4t)…………. 219

5.3.4.21 Eco-design mediate towards between Government Involvement and Economic Performance (H4u)…………… 220

5.3.4.22 Eco-design mediate towards between Organizational Support and Environmental Performance (H4v)………… 221

5.3.4.23 Eco-design mediate towards between Organizational Support and Operational Performance (H4w)…………. 222

5.3.4.24 Eco-design mediate towards between Organizational Support and Economic Performance (H4x)…………….. 222

5.3.4.25 Eco-design mediate towards between Technology Support and Environmental Performance (H4y)…………… 223

5.3.4.26 Eco-design mediate towards between Technology Support and Operational Performance (H4z)……………..... 224

5.3.4.27 Eco-design mediate towards between Technology Support and Economic Performance (H4aa)……………….. 225

5.3.4.28 Reverse Logistics mediate towards between Government Involvement and Environmental Performance (H4ab)…….. 226

5.3.4.29 Reverse Logistics mediate towards between Government Involvement and Operational Performance (H4ac)………... 226

5.3.4.30 Reverse Logistics mediate towards between Government Involvement and Economic Performance (H4ad)………… 227

5.3.4.31 Reverse Logistics mediate towards between Organizational Support and Environmental Performance (H4ae)……… 227

5.3.4.32 Reverse Logistics mediate towards between Organizational Support and Operational Performance (H4af)…………. 228

X

5.3.4.33 Reverse Logistics mediate towards between Organizational Support and Economic Performance (H4ag)……………. 229

5.3.4.34 Reverse Logistics mediate towards between Technology Support and Environmental Performance (H4ah)………..... 230

5.3.4.35 Reverse Logistics mediate towards between Technology Support and Operational Performance (H4ai)………………. 230

5.3.4.36 Reverse Logistics mediate towards between Technology Support and Economic Performance (H4aj)………………… 231

5.3.5 RO 5: To examine differences on dimensions between Malaysia and Germany in Electrical & Electronic Industry………………………… 232

5.4 Implications of the study……………………………………………………… 234

5.4.1 Theoretical Implication……………………………………………………… 234

5.4.2 Practical Implication………………………………………………………… 238

5.5 Limitation and Recommendation for Future Research………………………... 240

5.5.1 Limitation of the study………………………………………………………. 240

5.5.2 Recommendations for Future Research……………………………………... 241

5.6 Conclusion…………………………………………………………………….. 243

REFERENCES……………………………………………………………………. 247

APPENDIX A: CONFIRMATION LETTER FROM GRADUATE SCHOOL OF BUSINESS (GSB)…………………………………………… 279

APPENDIX B: CONFIRMATION LETTER FROM SUPERVISOR…………… 280

APPENDIX C: APPOINTMENT LETTER OF FIELD SUPERVISOR………… 281

APPENDIX D: QUESTIONNAIRE (GERMANY)……………………………… 282

APPENDIX E: QUESTIONNAIRE (MALAYSIA)……………………………… 293

APPENDIX F: IBM SPSS STATISTICAL REPORT……………………………. 302

APPENDIX F.1: SPSS Output for Cronbach’s Alpha in Pilot Study…….. 302

APPENDIX F.2: SPSS Output for Company Profile (Germany)………… 312

XI

APPENDIX F.3: SPSS Output for Respondents Profile (Germany)…….. 314

APPENDIX F.4: SPSS Output for Company Profile (Malaysia)………… 316

APPENDIX F.5: SPSS Output for Respondents Profile (Malaysia)……… 318

APPENDIX F.6: SPSS Output for Levene’s Test for Equality of Variances (Germany and Malaysia)……………………. 320

APPENDIX G: PLS ALGORITHM REPORT…………………………………… 324

APPENDIX G.1: Overview………………………………………………. 324

APPENDIX G.2: Latent Variable Correlations (Germany)………………. 325

APPENDIX G.3: Latent Variable Correlations (Malaysia)………………. 326

APPENDIX G.4: Cross Loadings (Germany)……………………………. 327

APPENDIX G.5: Cross Loadings (Malaysia)……………………………. 330

APPENDIX H: PLS BOOTSTRAPPING REPORT…………………………….. 333

APPENDIX H.1: Total Effects-Mean, STDEV, T-Values (Germany)….. 333

APPENDIX H.2: Total Effects-Mean, STDEV, T-Values (Malaysia)….. 335

APPENDIX H.3: Outer Model T-Statistic (Germany)…………………... 337

APPENDIX H.4: Outer Model T-Statistic (Malaysia)…………………… 340

APPENDIX H.5: Path Coefficients (Germany)………………………….. 343

APPENDIX H.6: Path Coefficients (Malaysia)…………………………. 344

XII

LIST OF TABLE

Table 1.1 Measurement metrics Germany and Malaysia………………………… 4

Table 2.1 In force of renewable energy policy in Germany……………………... 24

Table 2.2 The Malaysia’s key emphasis from 7MP to 10MP for energy development………………………………………………........ 34

Table 3.1 Summary of Questionnaire’s Sections………………………………… 82

Table 3.2 Items for Government Involvement (Independent Variable)…………. 83

Table 3.3 Items for Organization Support (Independent Variable)……………… 84

Table 3.4 Items for Technology Support (Independent Variable)………………. 84

Table 3.5 Items for Eco-design (Mediating Variable)…………………………… 85

Table 3.6 Items for Green Purchasing (Mediating Variable)……………………. 85

Table 3.7 Items for Reverse Logistics (Mediating Variable)……………………. 86

Table 3.8 Items for Green Information System (Mediating Variable)…………… 87

Table 3.9 Items for Environmental Performance (Dependent Variable)………… 88

Table 3.10 Items for Operational Performance (Dependent Variable)………….. 88

Table 3.11 Items for Economic Performance (Dependent Variable)……………. 88

Table 3.12 Result of Reliability (Pilot Test)…………………………………….. 94

Table 4.1 Summary of Respondents’ Profile of Germany and Malaysia……….. 101

Table 4.2 Summary of Company’s Profile of Germany and Malaysia…………. 106

Table 4.3 Loadings and Cross Loading (Germany)……………………………… 109

Table 4.4 Loadings and Cross Loadings (Malaysia)……………………………. 112

Table 4.5 Convergent Validity of Constructs (Germany and Malaysia)………… 116

Table 4.6 Summary Result of the Model Construct (Germany and Malaysia)...... 118

Table 4.7 Discriminant Validity of Constructs (Germany)……………………… 121

Table 4.8 Discriminant Validity of Constructs (Malaysia)……………………… 122

Table 4.9 Result of Reliability (Germany)………………………………………. 123

Table 4.10 Result of Reliability (Malaysia)……………………………………… 124

XIII

Table 4.11 Path Coefficients and Hypotheses Testing of the measurement items 136

Table 4.12 Mediating Results of the measurement items……………………….. 151

Table 4.13 Harman’s One Factor Test (Germany and Malaysia)………………. 153

Table 4.14 Path Coefficients and t-value for Control Variables………………… 157

Table 4.15 Levene’s Test for Germany and Malaysia…………………………… 160

Table 4.16 Index Values and Total Effects for the IPMA of Economic Performance (Germany)………………………………….. 164

Table 4.17 Index Values and Total Effects for the IPMA of Environmental Performance (Germany)…………………………….. 165

Table 4.18 Index Values and Total Effects for the IPMA of Operational Performance (Germany)………………………………… 166

Table 4.19 Index Values and Total Effects for the IPMA of Economic Performance (Malaysia)…………………………………... 167

Table 4.20 Index Values and Total Effects for the IPMA of Environmental Performance (Malaysia)……………………………... 168

Table 4.21 Index Values and Total Effects for the IPMA of Operational Performance (Malaysia)……………………………….... 169

Table 4.22 Summary of Hypotheses Testing……………………………………. 170

XIV

LIST OF FIGURE

Figure 2.1 Theoretical Framework………………………………………………. 75

Figure 3.1 Simple mediation model……………………………………………… 92

Figure 3.2 Importance-Performance Matrix……………………………………... 98

Figure 4.1 Result of Coefficient of the Path Analysis (Germany)………………. 138

Figure 4.2 Result of Coefficient of the Path Analysis (Malaysia)……………….. 139

Figure 4.3 Importance-Performance Matrix Economic Performance (Germany).. 164

Figure 4.4 Importance-Performance Matrix Environmental Performance (Germany)…………………………………………………………….. 165

Figure 4.5 Importance-Performance Matrix Operational Performance (Germany) 166

Figure 4.6 Importance-Performance Matrix Economic Performance (Malaysia).. 167

Figure 4.7 Importance-Performance Matrix Environmental Performance (Malaysia)…………………………………………………………….. 168

Figure 4.8 Importance-Performance Matrix Operational Performance (Malaysia) 169

XV

Abstrak

Isu pemanasan global telah menjadi perhatian utama setiap negara terutamanya di dalam

industri elektrik dan elektronik dimana pergantungan kepada bahan api fosil telah berubah

kearah sumber tenaga yang boleh diperbaharui. Perlaksanaan aktiviti dan projek tenaga

boleh diperbaharui ini memerlukan jangka masa yang panjang. Hal ini menyebabkan

cabaran dan tekanan diberikan untuk mendorong perlaksanaan pengurusan alam sekitar

bagi meningkatkan prestasi perniagaan yang mampan. Kajian ini merupakan perbandingan

antara negara Jerman dan Malaysia dengan mengemukakan model pembolehubah tenaga

boleh diperbaharui (penglibatan kerajaan, sokongan organisasi dan teknologi) sebagai

antecedent manakala pengurusan rangkaian bekalan eko-cekap (sistem maklumat hijau,

pembelian hijau, eko-rekabentuk dan pembalikan logistik) sebagai pembolehubah

pengantara (mediator). Hasil kajian adalah prestasi perniagaan yang mampan dari segi

prestasi alam sekitar, operasi dan ekonomi.

Satu kaji selidik dalam talian telah diedarkan kepada industri elektrik dan elektronik

dimana 110 data dari Jerman dan 140 data dari Malaysia telah dianalisa menggunakan

SmartPLS 2.0 dan IBM SPSS 22. Analisa menunjukkan German terlebih dahulu

mengamalkan dasar hijau berbanding Malaysia. Selain itu, Malaysia memerlukan

sokongan dan perlaksanaan polisi dari kerajaan untuk membantu industri pembuatan

berdaya mampan. Teori yang digunapakai kajian ini adalah teori institusi dan sumber asli

berasaskan pandangan. Kajian ini juga telah mengemukakan cadangan bagi perlaksanaan

inisiatif tenaga boleh diperbaharui bagi pengamal industri beserta beberapa batasan kajian

dan cadangan bagi penyelidikan masa hadapan.

XVI

Abstract

Global warming become major concern in every country especially electrical and

electronic industry in order to be less dependency on fossil fuels and more towards

renewable energy sources. However, implementation of renewable energy projects and

activities have been slow to materialize. Therefore, these challenges and pressures push

industry to implement environmental management practices in order to achieve sustainable

business performance. This study is a cross-national study among Germany and Malaysia

with a model for drivers of renewable energy initiatives (i.e. government involvement,

organizational support and technology support) on the antecedents, eco-efficient based

green supply chain management (i.e. green information system, green purchasing, eco-

design and reverse logistics) on mediator and outcomes are sustainable business

performance in term of environmental, operational and economic performance.

An online survey is administrated to electrical and electronic industry in Germany

and Malaysia respectively. 110 data from Germany and 140 data from Malaysia were

analyzed using the SmartPLS 2.0 for structural equation modeling and IBM SPSS 22.

Analytical results demonstrated that Germany has been earlier implemented policy than

Malaysia. Besides that, Malaysia manufacturing awareness still not there so government

has to implement and developed more policy to support manufacturing. The guiding

theories in this study are institutional theory and natural resources based view. This study

provides practical suggestions to practitioners on the drivers of renewable energy initiatives

to implement eco-efficient based green supply chain management. However, there are few

limitations in this study. This study ends with recommendations for future study.

1

CHAPTER 1

INTRODUCTION

1.1 Introduction

This chapter introduces the research outline of the study. It begins with the background of

the study followed by a discussion of the problem statements, research objectives, and

research questions. This chapter ends with a discussion of the study and gives a brief

overview of the remaining chapters in the thesis.

1.2 Background of study

Today, global warming and climate change have become major concerns of humanity, and

human activities that release a large amount of carbon dioxide (CO2) and other greenhouse

gases into the atmosphere that are main contributors to global warming (Zhang et al., 2012).

In Malaysia, a major contributor to the problem is the Electric and Electronic industry

(E&E), which has become a major player in the country’s manufacturing sector.

Recognizing the need to go green, the government has developed initiatives including the

launch of several different programmes to push Renewable Energy (RE) into the country’s

energy mix (Hashim & Ho, 2011).

Consequently, these challenges and pressures push firms to seriously consider not

only environmental impacts (Zailani et al., 2012) but also operational and economic

impacts. However, rapidly increasing awareness in industry that today’s renewable energy

supply chains are flawed has led to an understand that barriers to utilization of RE exist.

Thus, researchers and practitioners in the field of supply chain management (Ramli &

Munisamy, 2015) have begun looking at eco-efficiency as an approach to solving the

2

problem. One realization has been that a need exists to integrate eco-efficiency in green

supply chain management in order to provide an adequate balance among environmental

performance, operational performance and economic performance (Govindan et al., 2014).

In global business-to-business markets, shared resources between buyers and

suppliers often result in competitive advantages and enhanced relationships between firms.

Also changes in technology and globalization of products and services have resulted in

more dynamic markets and greater uncertainty in customer demand (Cheung, Myers, &

Mentzer, 2010). RE has become a focal construct in the E&E industry because RE has

become a driving force in the effort to sustain the earth’s natural resources and to improve

quality of life. RE sources such as wind or solar energy off many advantages because they

do not produce negative impacts like the emissions of hazardous substances such as

greenhouse gases.

Across the globe, RE has become increasingly important for the economics of many

countries (UNEP, SEFI, & NEF, 2009). According to the U.S. Energy Information’s (2014)

country analysis, Malaysia is the second largest user of non-renewable energy resources in

the world, petroleum and other liquids, natural gas, and coal are the main primary energy

sources consumed in Malaysia, with estimated shares of 40%, 36%, and 17% of

consumption respectively in 2012. Only 3% come from hydroelectricity and 4% from

biomass and waste. That is because the implementation of renewable energy projects and

activities have been slow to materialize (Hashim & Ho, 2011). The lack of these projects

may adversely impact the Malaysian economy in the future

From the perspective of eco-efficient green supply chain management and drivers

of renewable energy initiatives, the E&E industry affects the environment, economy and

3

consumers across the country, and, because Malaysia exports many E&E products, across

the world as well. For instance, the industry implement ISO 14001 which show that

industry have a systematic process and strategic plan to ensure the quality of the product

while, covers various aspect of environmental management thus the products are allowed

to export to other countries (To & Lee, 2014).

To put the issue of energy in perspective, a cross-national comparison study

between Germany and Malaysia was chosen as part of the exchange for the Masters of

Business Administration (International Business) at Universiti Sains Malaysia (USM) and

Technische Hochschulle Nuremberg Georg Simon OHM, Germany. By comparing these

two countries, the impact of eco-efficient-based green supply chain management on

business performance from the perspective of renewable energy initiatives in E&E industry

between Germany (developed country) and Malaysia (developing country) can be

measured.

To compare the two countries several metrics may be used. Both Germany and

Malaysia have 13 states; the capital of Germany is Berlin, and the capital of Malaysia is

Kuala Lumpur. Germany is bigger area wise than Malaysia, which have 357,002 square

kilometres and 329,847 square kilometres of land mass respectively. The population in

Germany was 80,996,685 and the population in Malaysia was 30,073,353 in 2014. The

average household income in Germany is about twice that of Malaysia. Electricity

production and electricity consumption in Germany is five times more than Malaysia in

2012 (CIA, 2015). However, Germany receives much less of its electricity from fossil fuels

and much more of its electricity from renewal sources than does Malaysia (See Table 1.1

below).

4

Table 1.1 Measurement metrics Germany and Malaysia

Metric Germany Malaysia

Area 357,003 sq. kilometres 329,847 sq. kilometres

Population 80,996,685 30,073,353

GDP per capita in PPP 44,700 USD 24,500 USD

GDP composition Services 68.4%, industry 30.8%, agriculture 0.9%

Services 56%, industry 34.7%, and agriculture

9.3%

Electricity consumption 582.5 billion kWh 112 billion kWh

Electricity from fossil fuels 51.1% 89.4%

Electricity from nuclear fuels 7.0% 0.0%

Electricity from hydroelectric plants

6.0% 10.6%

Electricity from renewal sources

35.0% 0.0%

Source: CIA, The World Factbook (2015)

Both governments have developed to reduce CO2 emissions in the future. The

German federal government has presented an energy strategy that aims to reduce CO2

emissions by 40% from 1990 levels by 2020, 55% by 2030 and 80-95% by 2050 (Gullberg

et al., 2014). Climate change goals together with energy security and competiveness

concerns are the major reasons behind Germany’s push to further expand renewable

electricity and improve energy efficiency. While boasting major players in automobile

manufacturing, machinery, precision equipment, heavy automotive, technology and

software, Germany’s E&E industry also plays an important part in Germany’s industrial

landscape (Economy, 2013; Julien & Lamla, 2011). According to ZVEI: Die

Electroindustrie (2014), the German electronic sector plays an important role in the global

5

economy, with exports valued at 14.6 billion euros in 2014, exceeding the previous year’s

total by 9.8% (BBC, 2014).

Malaysia too has looked at its energy polices and the place that the E&E industry

plays in it. The Malaysian government has been developing key policies and strategies for

more than 30 years to achieve the nation’s policy objectives, which are designed to mitigate

the issues of security, energy efficiency and environmental impact to meet the rising energy

demand (Occupational Structure The Green Technology Industry, 2011). Malaysia is also

developing policies for RE to create alternative business models, renewable initiatives and

more efficient technologies to reduce dependency on fossil fuels and mitigate the effects

of climate change (Hashim & Ho, 2011; Mustapa et al., 2010).

Government of Malaysia has developed a long term goals to spearhead the

sustainable development of renewable energy which increase generation of renewable

energy power capacity to 2080MW (11%) by 2020, 4000MV (17%) by 2030 and 21.4 GW

(73%) by 2050 (APEC, 2014).For instance, the Fifth Fuel of Small Renewable Energy

Power Programme (SREP) was launched in 2001 with the aim of promoting a wider use of

the huge amount of RE resources available in Malaysia, particularly biomass. Under this

SREP Programme, industries should contribute to the generation and use of renewable

energy by utilising of all types of RE sources including biomass, biogas, municipal wastes,

solar, mini-hydro and wind (Tenaga, 2013). The Electrical and Electronics (E&E) industry

is a critical element of Malaysia’s long-term economic growth strategy, particularly within

the three major ecosystems of semiconductor, solar and light emitting diode (LED)

technologies.

6

As a developed country, Germany has been a forerunner in deploying RE sources

and has ambitious goals for the future (Blazejczak et al., 2014). Germany began replacing

both fossil and nuclear fuels with renewables 20 years ago (Scholz et al., 2014). The federal

government implemented a programme called Energiewende (energy change/switch) for

energy transition to a nuclear free and a low-carbon energy supply to maintain a

competitive economy while shifting the energy structure from a heavy dependence on

fossil fuels and nuclear energy to a system based primarily on renewable energies.

However, achieving this goal has been a herculean task requiring thorough cooperation

with European neighbours (Gullberg et al., 2014). Infrastructural and technological

bottlenecks have also affected the programme's implementation, creating challenges in

manufacturing, installations and maintenance (Scholz et al., 2014).

The results of government energy policy in Germany are subject to some

controversy. According to (Frondel et al., 2010), government policy in German has resulted

in massive expenditures showing little long-term promise for stimulating the economy,

protecting the environment, or increasing energy security. Hillebrand et al. (2006)

concluded that RES sources promotion would have a net positive employment impact in

the short run due to RE source installations, which would turn negative over time due to

the long-term costs of the feed-in tariff, which guarantees fixed tariffs for 20 years.

Moreover, the German government has limited the feed-in-tariff for the solar industry;

hence, this policy might affect the operational performance in the electrical and electronics

sector (Abdmouleh et al., 2015). The impact of such confusion can be seen in that many

Germany electronics companies have not taken full advantage of benefits of the capabilities

as suggested in GSCM. The companies need to understand precisely GSCM

7

implementation in RE that benefits their business performance. E&E companies should

implement GCSM to overcome the issues.

In Malaysian, the government has developed key policies and strategies for more

than 30 years to achieve the nation’s policy objectives, which are designed to address the

issues of security, energy efficiency and environmental impacts to meet the rising energy

demands. However, despite government efforts and growing public awareness of

environmental issues, environmental problems continue to persist (Eltayeb et al., 2011).

This is because renewable energy project and activities implemented by industry have been

slow to materialize (Hashim & Ho, 2011). Despite the fact that government has encouraged

industry to participate actively in making a low carbon economy become reality, the

application level of these kinds of technologies remains in its infancy (Osman, Udin, &

Salleh, 2012). One main constraint is the high cost of energy generation. Such institutional

barriers present challenges that the industry must overcome. To date, concerns about the

environmental outcomes for organizations remain open for debate and without a conclusion.

With the emphasis on sustainable development, renewable energy (RE) has become

an area of concern in many countries because RE represents economically and

environmentally sound energy growth. Typically, government provides the motivations for

renewable energy developments through regulation or incentives (Tang, Chiara, & Taylor,

2012). Nonetheless, government requires the cooperation of the private sector in exploiting

renewable energy as a suitable driver for industry (Aslani, Naaranoja, & Zakeri, 2012). The

Electrical and Electronics (E&E) industry often is involved on renewable energy initiatives

by providing various experts, implementing instructional projects and providing training

activities related to Green Productivity improvement (Acharry, Boonrawd, & Chianchana,

8

2014). Although many countries have actively developed renewable energy technologies

supported by both governments and the private sector, some barriers exist in supporting

RE. These barriers, among others, include high conversion costs, limited locations,

environmental impacts, and other factors pose barriers to such development (Wee et al.,

2012).

In this study, the focus is the role of the supply chain in energy. Supply Chain

Management (SCM) includes the coordination and management of a complex network of

activities involved in delivering a finished product to the end-user or customer (Ninlawan

et al., 2010). Product life cycle, especially for electronic products, has been reduced

significantly in recent years due to rapid advances in technology (Osibanjo & Nnorom,

2007). All stages of a product’s life cycle influence a supply chain’s environmental burden,

from resource extraction, to manufacturing, use and reuse, recycling, and, finally, to

disposal (Zhu et al., 2007).

The “green” component of a supply chain refers to green supply chain management

(GSCM), which is defined as green purchasing, green manufacturing, and reverse logistics

which eliminate or minimize waste along supply chain (Hervani, Helms, & Sarkis, 2005;

Cucchiella & D'Adamo, 2013). As interest in GSCM-related technologies has garnered

interest from a variety of research disciplines, so too has GSCM literature grown

considerably over the last decade. To date, theory and empirical research has explored the

implementation and effects of such practices as eco-design, cleaner production,

environmental purchasing, and green/reverse logistics, on selected performance outcomes,

using financial, operational and environmental measures (Guang, Koh, Baldwin, &

Cucchiella, 2012).

9

According to Govindan et al. (2014), GSCM not only looks at internal practices

and but also external practices. For instance, environmental proactivity refers to voluntary

actions beyond compliance that an industry undertakes to minimize or eliminate the

negative impact of its activities and/or products on the natural environment. These include

policy planning, employee training, investments in environmental technologies

introduction of green products, and life cycle analysis in product design (Menguc &

Ozanne, 2005). Such environmental practices also include implementing environmental

management systems, enforcing environmental criteria for suppliers and distributors,

obtaining environmental certifications as well as efforts to protect natural habitats and

restoration measures which affected habitats (Govindan et al., 2014). Hence, the

importance of GSCM in the renewable energy sector has attracted the attention of both the

public and private sectors (Cucchiella & D'Adamo, 2013).

The E&E industry has indicated that the tool of “eco-efficiency” inherent in GSCM

can produce desirable outcomes in economic activity that reduce undesirable

environmental impacts or resource use while improving operational performance (Figge &

Hahn, 2013; Hahn, Figge, Liesen, & Barkemeyer, 2010). Due to its widespread acceptance,

eco-efficiency has become a popular mechanism by which to examine policy strategies and

their possible outcomes (English, Castellucci, & Mynors, 2006; Wursthorn et al., 2011).

Researchers in many fields have applied Eco-efficiency (EE) to improve sustainability, but

a need still remains to integrate Eco-efficiency in green supply chains in order to balance

the research output and to focus on both economic and environmental aspects.

In this study, the extension of green supply chain management based on the concept

of eco-efficiency is examined within the bounds of a new framework. This new framework

10

integrates environmental and economical aspects and accounts for all aspects of sustainable

development, which is one of the new trends in supply chain management (Burchart-Korol,

Czaplicka-Kolarz, & Kruczek, 2012). This study conceptualises a structural model of eco-

efficiency based green supply chain management and its relationship to relevant

performance measures and the drivers of renewable energy initiatives. Eco-efficiency

based green supply chain management is essential for business because the increased

pressures for environmental sustainability and operational aspects that have everlasting

impacts on the industry (Ravi, 2015). Sustainable manufacturing practices play a crucial

role in promoting renewable energy development and commercialization in E&E industries.

1.3 Problem Statement

Climate change has been aggravated in recent years as CO2 emissions continue to grow in

developed and developing countries alike (IPCC, 2014). One option for transitioning

towards a low-carbon society is to increase the share of renewable energy (RE) to mitigate

climate change and to increase renewable energy (RE) sources (Foxon & Pearson, 2007;

Jefferson, 2008). To complement these activities, increasing the overall efficiency of the

energy sector is necessary (Eichhammer et al., 2013; Marques & Fuinhas, 2011; Schleich,

2009). Demands from the customers, society, non-government organizations and

government agencies are vital factors in leading a company to conduct production activities

concerned with environmental impacts. However, because state governments have limited

financial resources, the involvement of private markets and investors is needed (Mathews

et al., 2010). Included in such issues is the fact that additional costs of heat and electricity

generation are incurred from most renewable energy sources (Lehr, Lutz, & Edler, 2012).

11

Despite successful efforts in diffusion of RE utilization, remarkable gaps between

achievements and plans exist, particularly in Malaysia. Beyond the technological issues,

the RE industry needs strong capital and investment, and a core role for the private sector

is needed (Alireza & Ali, 2013). Today, industry performance in terms of operational and

economic performance can be adversely affected, as the investment required is high for the

renewable energy sources. Moreover, renewable energy is also typically more expensive

than fossil-fuel based energy on a levelised-cost basis (IRENA, 2012), and the intermittent

nature of some renewable sources can result in higher integration costs (Fripp, 2011). Thus

utilization of renewable energy results in an increased financial burden on local distribution

companies, many of which are in poor financial health to begin with (Shunglu, 2011).

A number of earlier studies, proposing sustainability-based performance evaluation

(Figge et al., 2002; Sarkis, 2003), have focused extensively on the environmental impacts

on operational performance as well as the importance of integrating environmental aspects

into corporate strategic decision making (Shi et al., 2012). Cucchiella & D'Adamo (2013)

argued that the expansion of renewable energy offered significant challenges from the

supply chain perspective.

Despite the fact that sustainability aspects have been discussed widely in GSCM

literature, study of the extent of GSCM practices contributing to sustainable business

performance has neglected. This is because economic performance has traditionally been,

and continues to be, a top management priority for manufacturers (Zhu, Sarkis, & Lai,

2013). Less evidence is also available in the literature on measurement of sustainable

business performance. Other dimensions of organizational outcome, such as operational

12

performance, have not seen as much research or have not been (Corbett & Klassen, 2006)

integrated with environmental performance and economic performance.

Therefore, the concept of green supply chain management (GSCM) has grown in

importance because the practice contributes to the transition towards eco-efficiency

(Govindan et al., 2014) and sustainability (Yusuf et al., 2013; Zhu et al., 2013b) and also

to the future of operations management (Gunasekaran & Ngai, 2012; Diabat & Govindan,

2011). So, these are the reasons that eco-efficiency has been applied recently in the field

of supply chain management such as management, operations and others to improve

sustainability. The integration of eco-efficiency in GSCM encompasses not only

environmental aspects but also balances and focuses both economic and environmental

aspects (Govindan et al., 2014; Ravi, 2015). Despite the proliferation of research, no study

addresses issues such as an eco-efficiency based green supply chain in the literature

(Govindan, Sarkis, Zhu, Geng, & Jabbour, 2014). This study proposed a novel construct to

fill this research gap and posits that eco-efficient based green supply chain management

and sustainable business performance are related.

According to Azevedo et al. (2011), different types of green supply chain practices

that are implemented can impact performance differently (Azevedo, Carvalho, & Machado,

2011). GSCM practices that involve every tier in the greening of a supply chain are often

called external GSCM practices (Zhu et al., 2007a). The literature argues that, in general,

the adoption of GSCM practices tends to affect not only the company’s green performance

(Zhu & Sarkis, 2007b; Zhu et al., 2013b) but also supply chain performance (Azevedo et

al., 2011). However, with regard to external GSCM practices, such findings may not appear

conclusive because both supporting (Zhu et al., 2007a; Green et al., 2012) and

13

contradictory results (Zallani, et al., 2012) can be found. In addition, Szwilski (2000) also

has postulated that an environmental management system is an innovative environmental

strategy to improve organizational operational performance. Yet, limited research has

focused on other business performance outcomes such as operational performance (Murali,

Saiku, & Ho, 2013).

Evaluation of the sustainability of business performance in the Electricity and

Electronics industry has experienced different approaches in the assessment of its

economic, social and environmental impacts (Alvarado, Palafox, & Ruiz, 2011). The

stakeholders often are unable to distinguish between an organization’s environmental

practices and the practices of its suppliers (Rao, 2002; Sarkis, 2006). These inconclusive

results raise the question of what are the actual outcomes that can be realized from the

adoption of green supply chain management (Eltayeb et al., 2011). Nevertheless, the main

difficulty in drawing clear conclusions from previous studies lies not only in the mixed

results from different research but also the fact that scholars use different

definitions/measures of environmental performance (Zeng et al., 2010). Thus, a need exists

to define clearly environmental performance and how to measure it to achieve sustainable

business performance.

Although many researchers have noted the important of GSCM in the scope of the

RE challenges that affect the business performance, none of these studies are quantitative

cross-national comparison in nature in examining the drivers that influence RE initiatives

and the mediating effects of eco-efficient based GSCM towards sustainable business

performance in E&E companies. This gap includes a comparison between Germany and

Malaysia. Apparently, government plays the biggest role in developing RE sources through

14

establishing strategic plans and providing policies. However, different countries have

deployed different policies and have had different experiences with RE policies; hence,

presenting a benchmark for comparison between different countries is needed (Abdmouleh

et al., 2015).

Inconclusive findings have coloured the GSCM literature. Several scholars (Carter,

Kale, & Grimm, 2000; Rao & Holt, 2005; Zhu & Sarkis, 2004) have found that green

supply chain management has a significant positive relationship with environmental and

economic performance of organization. However, as Rao and Holt (2005) have remarked,

research has rarely established a potential link among green supply chain management,

increased competitiveness and enhanced economic performance. Previous scholars such as

Vachon and Klassen (2006b) and Zhu, Sarkis, and Lai, (2007) found no significant

relationship between green supply chain management and such performance outcomes.

According to Zhu et al., (2012), improving their environmental management maturity

before they improve green management performance through GSCM practices is desirable

for companies.

This current study aims to enhance the understanding of drivers of RE initiatives

that are associated with E&E-based GSCM through a comparison between E&E companies

and E&E-based GSCM on sustainable business performance in Germany and Malaysia in

terms of environmental, operational and economic factors. The differences between these

two countries may be attributable to: (1) drivers of RE initiatives contributing to E&E-

based GSCM; (2) the effect of E&E-based GSCM on Sustainable Business Practices (SPB);

and (3) the mediating effects of E&E-based GSCM between RE initiatives and SBP. This

study focuses on RE initiatives to provide insight about whether cross-national differences

15

between developed and developing countries actually exist, and whether these differences

may shed light on how to promote E&E-based GSCM in the manufacturing companies

especially E&E sector to increase the business performance. The belief is that RE

initiatives (financial support, fiscal support, legislative support, and political support tax

incentives for investment and technological support) could provide benefits and bring

about successful implementation in other industries (Abdmouleh et al., 2015).

1.4 Research Objectives

There are five objectives of this study are to:

1. Examine the link between renewable energy initiatives and eco-efficient based

green supply chain management;

2. Determine the extent to which renewable energy initiatives influence sustainable

business performance;

3. Investigate the relationship between eco-efficient based green supply chain

management and sustainable business performance;

4. Examine whether eco-efficient based green supply chain management mediates the

relationship between renewable energy initiatives and sustainable business

performance; and

5. Examine the differences on theoretical constructs between Malaysia and Germany

in the Electrical & Electronic Industry.

16

1.5 Research Questions

The research questions are as follows:

1. What are the effects of RE initiatives on eco-efficient based GSCM?

2. What is the relationship between RE initiative implementation on sustainable

business performance?

3. What is the relationship between eco-efficient based GSCM and sustainable

business performance?

4. Does eco-efficient based GSCM mediate the relationship between RE initiatives

and sustainable business performance?

5. Are there significant differences on the theoretical constructs between Malaysia and

Germany in their Electrical and Electronic industries?

1.6 Definition of Key Terms

The following key terms’ definitions are provided in order to share a common

understanding on the concepts and create a better understanding for further discussion.

1.6.1 Renewable Energy Initiatives

A Renewable Energy Initiative is an action plan the government has developed, with the

aim of reducing dependency on fossil fuel and contributing towards mitigating the effects

of climate change. For example, energy policies, renewable energy programmes,

renewable energy incentives and Feed-in-Tariff (FiT), and fund and financing scheme are

initiatives and action plans the government can develop (Hashim & Ho, 2011).

17

1.6.2 Eco-efficient

Eco-efficiency is achieved by the delivery of competitively priced goods and services that

satisfy human needs and bring about a better quality of life, while progressively reducing

ecological impacts and resource intensity throughout the life-cycle to a level at least in line

with the earth’s estimated carrying capacity (Schmidheiny, 1992).

1.6.3 Green Supply Chain Management

Green supply chain management is the set of supply chain management policies held,

actions taken and relationships formed in response to concerns related to the natural

environment with regard to the design, acquisition, production, distribution, use, reuse and

disposal of the industry’s goods and services (Zsidisin & Siferd, 2001).

1.6.4 Eco-efficient based Green Supply Chain Management

Eco-efficiency are tools that minimize ecological damage while maximizing production

efficiency and remanufacturing and that have become key assets to achieve best practices

in GSCM for reducing waste and preserving the quality of product-life and natural

resources (Mutingi, 2013)

1.6.5 Sustainability

Sustainability is the ability to meet current needs without hindering the ability to meet the

needs of future generations in terms of economic, environmental and social challenges

(Cartee & Rogers, 2008).

1.6.6 Sustainable Business Performance

Sustainable business performance is the performance of a company in all dimensions and

all drivers of corporate sustainability such as employees, communities, environmental

18

responsibilities, transparency and accountability, and meeting tomorrow’s needs with

innovation accounting for all stakeholders (Schaltegger & Wagner, 2006)

1.7 Significance of Study

Renewable energy initiatives will be one of the new regimes for future growth in the energy

sector. This study is among the pioneering empirical studies of renewable energy initiatives

from the business performance perspective that could make notable contributions to

companies, to academics and to practitioners as well as to society.

1.7.1 Theoretical Contributions

Energy has been a main contributor towards the rapid growth of Malaysia’s economy.

Therefore, the Malaysian government has been developing renewable energy initiatives for

more than 30 years to achieve the nation’s policy objectives. However, renewable energy

projects have been slow to materialize. A clear understanding of the projects that must be

done by both private and government sectors are needed to achieve the task. This will be a

new area for the researchers to further investigate renewable energy initiatives and the

opportunities associated with eco-efficient based green supply chain management

implementation for companies. This study represents one of the first attempts to fill in this

gap. Previously, researchers have focused more on renewable energy initiatives at the

countrywide level more than at the company level. Therefore, this study will help further

the research.

In addition, understanding renewable energy initiatives and eco-efficient GSCM

are equally important in achieving government targets, which are to achieve better business

performance in terms of environmental, operational and economic issues. Meanwhile, this

19

study shall also raise academic’s awareness about the global warming issues and the

importance of the initiatives implemented in Malaysia. In addition, the proposed

framework will use organizational theories such as the Institutional Theory and the Natural

Resource-based View Theory will be used to examine the variables of renewable energy

initiatives and eco-efficient green supply chain management.

1.7.2 Practitioner Contributions

Over the past 10 years, the government of Malaysia has introduced many different policies,

programmes, funding and schemes, and incentives to promote the implementation of RE

as an alternative energy source. However, RE implementation has been slow to materialize

because of the barriers to governments, researchers and stakeholders. In order to increase

performance, all the drivers need to work together to enhance the goals of RE.

The E&E industry needs to utilize these RE initiatives by applying knowledge and

experience in the technology rather than spending too much in trial- and-error endeavours.

Operations managers should understand more about renewable energy and, in doing so,

decrease communication barriers with policy makers and financiers. Malaysian banks also

need to be more efficient in assisting the industry and thereby increase financial support.

Companies should receive incentives and funds to implement GSCM for their business to

increase bottom-line performance. For their part, companies that implement GSCM

practices must ensure that both the organization and its employees accomplish the overall

organizational objectives, such as cost saving, cycle-time reduction, improved

environmental quality and increase value to customers as well as achieving individual goals

of their employees.

20

Environmental collaboration with suppliers and customers leads to improved

industry performance. Industry must conduct educational activities for their suppliers about

environmental issues and environmental management activities (i.e., holding awareness

seminars for suppliers, informing suppliers about the benefits of green practices, and

bringing together suppliers in the same industry to provide them with know-how

information). Industry should guide suppliers in the development of environmental

programs, visiting suppliers premises to provide on-site technical assistance, and providing

financial assistance to suppliers to improve their environmental performance. In fact,

industries and suppliers should help each other to increase overall operational performance.

Likewise, customers should be involved in the process to improve the

environmental performance. Customers should demand improved environmental

performance. Industry should exchange technical information with its customers and

demonstrate a willingness to learn a company’s operations in order to plan and set goals

for environment improvement. This implies cooperation for reducing environmental

impacts associated with products flows in the supply chain. Therefore, industry should

provide additional education for customers to help improve environmental performance.

Increased GSCM practices among industries, suppliers and customers should spur

added economic development. This development includes increased revenues from

“secondary” sales (sale of reprocessed or remanufactured products) and from offering fresh

stock in place of unsold or low selling stock, goodwill earned from acting in a socially or

environmentally responsible manner, cost reductions that come from the reduced cost of

goods sold and lower operating expenses. All of these could enhance profitability and

create better management of returned inventory that can improve asset turnover. Generally,

21

industries that apply initiatives from government and make their customers and suppliers

more aware of the issues will develop better business performance.

Lastly, if the E&E implements RE initiatives, manufacturing costs in the form of

labour, energy, materials, and other costs should be reduced; eco-efficient based-GCSM

will systematically and concretely enhancing their business. Moreover, both the private

and government sectors must assist the industry in achieving a long- term commitment by

the government and in sharing knowledge with employees about renewable energy.

1.8 Organization of the Dissertation

This dissertation has five chapters: the introduction, literature review, research

methodology, results and discussion. Background information pertinent to this study has

been presented in Chapter One as well as the problem statement, research questions and

objectives. The research objectives and questions are used to guide the direction of the

study. Chapter Two provides insights from previous scholarly studies, which review

renewable energy initiatives, the concept of eco-efficiency, green supply chain

management, business performance and the variables shown in theoretical framework.

Hypotheses development is at the end of the Chapter Two. Chapter Three discusses the

research methodology used in this study by explaining the research design, data collection,

the method of data analysis and measurement of variables to investigate the research

problem. Chapter four presents the finding and analysis of the study which includes

hypotheses testing. Lastly, chapter five discuses about conclusion, limitation and

recommendation for the further study.

22

CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

This chapter will present the previous literature that has been undertaken in this study. Thus,

this chapter will present the previous overview regards the renewable energy initiatives,

eco-efficient based green supply chain management and sustainable business performance.

There are two theories which comprised of institutional theory and natural resource based

view are included supported the proposal theoretical framework. Before summary of the

chapter, the theoretical framework and the hypothesis development are presented towards

the end of the chapter.

2.2 Overview of Renewable Energy

Due to the fast depletion and high cost of fossil fuel, this is now a threat to sustainable

growth. Attention is now focused on renewable energies as an alternative (Maulud & Saidi,

2012). Renewable energy is a free source of sustainable energy because it can produces no

negative impacts during conversion process like the emission of hazardous substances

(Wee, Yang, Chou, & Padian, 2012). Hence, renewable energy has been put in the limelight

and researchers have increased their efforts in upgrading the efficiency of alternative power

sources thus limiting the dependency on natural resources (Ahmad, Ab Kadir, & Shafie,

2011).

23

2.3 Overview of Renewable Energy in Germany

For decades, Germany has been a forerunner in the development and application of

renewable energy sources (RES). The country’s support policies for RES have received

positive attention worldwide the feed-in tariff model, determined by the Renewable Energy

Sources Act (Erneuerbare-Energien-Gesetz-EEG) of 2000, has been adopted by more than

two thirds of EU member states. The Act determines that every kilowatt-hour generated

from renewable energy receives a fixed feed-in tariff and that network operators must feed

in this electricity into the grid preferentially to the electricity generated by conventional

sources. Moreover, renewable energy plant operators receive a 20 year guaranteed payment

for their produced electricity ((Blazejczak et al., 2014). Amendments of the EEG are being

made almost every year, supported by several other policy decisions favoring renewable

energy. As a result of this governmental support, renewable energy technologies

continuously increased their share in the German energy mix. By 2012, renewables

contributed 12% to the total energy supply and 23% to electricity supply (Sühlsen &

Hisschemöller, 2014).

The growth of renewable energy in Germany has often been cited as a model

success story. The success reason is the German government launched a comprehensive

series of promotions for renewable energy in the early 1990s, which has since been

augmented with additional legislation and policy actions to increase renewable energy use

(Runci, 2005).

The reason is Government sponsorship of renewable energy was spurred initially

by energy security concerns during the 1970s. In the beginning, the energy crises of 1973-

24

74 and 1979-80 had severe economic impacts on Germany as on most other industrialized

countries. However, renewable energy technologies have deployed rapidly in Germany

since 1990 largely as a result of energy policies adopted by the German government and

the European Union. In addition, federal Electricity Feed Law (StrEG) was adopted in 1991

and became the most important instrument for the promotion of renewable energy in

Germany during the 1990s (Runci, 2005).

Besides, the German approach has combined ongoing R&D efforts with a variety

of policy instruments (taxes, standards, etc.), favorable electricity feed laws, export

promotion programs, and government secured loans for renewable energy projects (Runci,

2005). These policies below (Table 2.1) have been helping Germany to attain a leading

position in many aspects of renewable energy use. Besides, it shows that different plan

with different policy target from 1985 to 2012.

Table 2.1 In force of renewable energy policy in Germany Germany Plan Year Description of the Policy Policy Target

Combined Heat

and Power

(CHP)

Agreements with

Industry

2012 –

2022

(Dec 31st)

German government and

German industrial sector and

energy industry initialed an

agreement concerning the

improvement of energy

efficiency in the industrial

sector.

The objective is to raise

energy efficiency by 1.3

percent per year.

Multiple renewable energy sources-CHP