Firm performance and customer-driven green supply chain management

The aim of this study is to identify the direct and indirect relationships between customer-driven green supply chain management (GSCM) practices and environmental and financial performance in manufacturing. Partial least squares methodology is used to test the hypotheses on a sample of 119 Finnish manufacturing firms. Contrary to the predominant view of internal GSCM practices being a precursor of all external activities, this article suggests that customer requirements are an important driver to implement internal GSCM practices. The findings confirm that manufacturers can respond to customer pressure by transferring environmental requirements upstream in the supply chain, either by collaborating or monitoring the suppliers' environmental performance. Environmental monitoring is found to be an enabler of environmental collaboration. Furthermore, performance outcomes of GSCM appear to depend on the type of practice. The results indicate that manufacturers with strong internal GSCM practices combined with arm's length environmental monitoring of suppliers are likely to perform well in environmental issues. If a firm seeks to improve financial performance, it needs to form more collaborative relationships with customers to achieve environmental goals.