Suppliers' communication capability and external green integration for green and financial performance in Korean construction industry

Abstract

Environmental policies and customer concerns about environmental pollution lead to the implementation of environmental management by companies. Beyond individual-level efforts, manufacturing firms started to integrate green activities into their supply chain management system. However, suppliers still struggled to satisfy the needs of buyers and customers related to environmental capabilities in the construction sector because of the lack of communication resulting from the hierarchical relationship between buyers and suppliers. This study empirically examined the communication capabilities for green supply chain management and the relationship among external green integration, green cost reduction, and corporate competitiveness from the suppliers' perspective. We collected data from a survey of 103 construction suppliers in Korea and employed structural equation modeling to test the hypotheses. The findings from this study indicated that suppliers with higher information sharing capabilities improved their environmental collaboration, contributed to green cost reduction, and achieved their competitive advantage. In addition, the results showed that green alignment the degree of consistency in the evaluation of suppliers' environmental capabilities made by buyers and suppliers had a positive influence on the suppliers' competitiveness. Thus, the managers who can understand the buyer-supplier relationship and the necessity for environmental management in supplier firms need to consider information sharing and external green integration as critical factors for the implementation of an effective green supply chain management system. In addition, this study provides scientific value by revealing the role of communication capabilities, identifying the importance of supplier perspective, and exploring green supply chain management in the context of the construction industry.