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Archives of Business Research – Vol. 10, No. 10
Publication Date: October 25, 2022
DOI:10.14738/abr.1010.13254. Renaldo, N., & Augustine, Y. (2022). The Effect of Green Supply Chain Management, Green Intellectual Capital, and Green
Information System on Environmental Performance and Financial Performance. Archives of Business Research, 10(10). 53-77.
Services for Science and Education – United Kingdom
The Effect of Green Supply Chain Management, Green Intellectual
Capital, and Green Information System on Environmental
Performance and Financial Performance
Nicholas Renaldo
Economic and Business Faculty, Trisakti University, Indonesia
Yvonne Augustine
Economic and Business Faculty, Trisakti University, Indonesia
ABSTRACT
Environmental degradation is increasing and resource depletion has become a
problem. Based on the results of the preliminary survey, the majority of
respondents are more concerned with financial performance than environmental
performance. This study aims to examine the effect of green supply chain
management (GSCM), green intellectual capital (GIC), and green information system
(GIS) on environmental performance (EnvP) and financial performance (FinP). The
sample in this study was 219 respondents who came from manufacturing
companies in Riau Province. Data analysis used structural equation analysis with
SMART PLS application. The results show that only green supply chain management
has a positive effect on financial performance. Then green intellectual capital and
environmental performance each have a positive effect on financial performance.
This research develops a new measurement for green supply chain management
and green information system variables. Companies can develop systems and
information technology that can reduce waste so that their environmental and
financial performance can be better.
Keywords: GSCM, GIC, GIS, EnvP, FinP
INTRODUCTION
The measurement of company performance is generally carried out using financial
performance which cannot be avoided anymore that this is a valid performance measurement.
Measurement of financial performance using the return on assets indicator is the most
phenomenal ratio to use. In fact, financial performance is not only the main pawn in the
company, but other performance measurements also need to be considered. One of them is
environmental performance, because it refers to the principle of sustainability, of course, the
company wants to be a going concern to be able to maximize the wealth of the company owner.
In recent times, increasing environmental degradation and resource depletion have become a
perplexing problem worldwide. Environmental practices are considered a threat to the
profitability of companies due to the significant investments required for technology
investments and the long-term uncertainty and maturity associated with green investments
(Acquah, Agyabeng-Mensah, & Afum, 2020). The preliminary survey results show that 87.5%
of company representatives attach greater importance to financial performance than
environmental performance. From the results of this preliminary investigation, it can be seen
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Archives of Business Research (ABR) Vol. 10, Issue 10, October-2022
Services for Science and Education – United Kingdom
that the industry in the city of Pekanbaru is still interested in financial performance rather than
environmental performance.
Green Supply Chain Management (GSCM) Practices involves introducing environmental
practices into supply chain activities to ensure that sustainable supply chains continue to have
inconsistent and confusing impacts on business performance across all sectors, countries, and
continents GSCM is a subsystem of sustainable supply chains. Research (Kenneth W. Green,
Inman, Sower, & Zelbst, 2018) shows a positive effect of GSCM on environmental performance
while research results (Çankaya & Sezen, 2019) show a negative effect. Research (Kenneth
Wilburn Green, Toms, & Clark, 2015) shows a positive effect of GSCM on financial performance
while research results (Baah et al., 2020) show a negative effect of GSCM on financial
performance.
In this context, the practice of Green Intellectual Capital (GIC) has been increasingly promoted
over the past decade as a proactive response that organizations can take to improve
environmental performance. Intellectual capital is very important to companies in today's
conditions where companies face intense competition. Research (Widyastuti, Parianom, &
Permana, 2021) shows the positive influence of GIC on sustainability performance that is
included in the context of environmental performance. Research (Zalfa & Novita, 2021) shows
the negative effect of green human capital on (environmental) sustainability performance, the
insignificant effect of green structural capital on (environmental) sustainability performance,
and the positive influence of relationship capital green on sustainability (environmental)
performance. Research (Dwianika & Gunawan, 2020) shows a positive effect of the green
entrepreneur's intellectual capital on financial performance in the BSD city sample, but there is
no effect on the Bintaro city sample.
GSCM and GIC practices have become an important factor in improving the company's
environmental and financial performance. In addition to the supply chain and sustainable
human resources, the application of an accounting information system (T. Chandra, Renaldo, &
Putra, 2018) is also important for evaluating the company's performance. Applying a green
information system (GIS) that provides management information to make better decisions
requires information technology. Since it is related to environmental performance, the green
information system (GIS) application variable used in the study (Susanto & Meiryani, 2019) has
a positive influence on environmental performance. Research (Kwarteng & Aveh, 2018) shows
the positive effect of implementing an accounting information system on company
performance, while research (Hutahayan, 2020) shows an insignificant effect of implementing
a management accounting information system on financial performance.
It is undeniable that climate change conditions have disturbed the earth. The melting of polar
ice will continue so environmental factors are very important for companies to pay attention
to. A good company not only benefits financially, but also benefits environmentally, socially,
and others.
Based on the phenomena and differences in the results of these studies, it would be interesting
to further discuss the effect of green supply chain management practices, green intellectual
capital practices, and the adoption of green information systems on environmental
performance and financial performance. This study is designed to determine, first, whether this
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Renaldo, N., & Augustine, Y. (2022). The Effect of Green Supply Chain Management, Green Intellectual Capital, and Green Information System on
Environmental Performance and Financial Performance. Archives of Business Research, 10(10). 53-77.
URL: http://dx.doi.org/10.14738/abr.1010.13254
green factor will be able to influence environmental performance and sustainable financial
performance. Second, to determine the function of environmental performance as a mediating
variable. This study also uses three control variables to reinforce the research model
(robustness) to consider the factors of age, size, and company certification.
The difference between this research and the previous research is that it uses the
environmental performance variable as the mediating variable. This study also provides a
combination of the use of operational/industrial management variables (green supply chain
management practices), human resource management (green intellectual capital practices),
accounting information systems (adoption of green information systems), and environmental
accounting (environmental performance) and financial accounting (financial performance).
This study seeks to develop green supply chain management indicators and green information
system variables. Another difference is the measurement of all variables using primary data
which previously used secondary data.
LITERATURE REVIEW AND FORMULATION OF HYPOTHESES
Resource-based Theory
The resource-based theory states that the internal factors in achieving competitive advantage
are more important than the external factors of the company (industry). The resource-based
theory debate is about how a company can compete with other companies to gain a competitive
advantage in managing its resources based on the capabilities of the company (Hutahayan,
2020). Green supply chain management enables organizations to understand and analyze their
assets effectively and make their procedures easy to gain a competitive advantage (Shafique,
Asghar, & Rahman, 2017).
Contingency Theory
Contingency theory refers to situational factors or contingency factors that affect
organizational performance. No organizational project can be universally applied anywhere or
in any circumstance effectively. Designs may only be appropriate in certain contexts or
conditions. The implementation of contingency theory encourages researchers to identify
suitable conditions for specific organizational design and the development of supporting
theories. The thesis behind the Contingency Theory is that no single organizational concept or
project can be implemented effectively anywhere (universally) or under any circumstances.
Furthermore, contingency theory also states that the effect of strategy (including innovative
strategies) on performance depends on structural management, which includes management
control systems, human resources, and internal process performance (Hutahayan, 2020).
Legitimacy Theory
Legitimacy can be interpreted as recognition and acceptance of the existence of the company
by the community. The main assumption of legitimacy theory is the fulfillment of the
organization's social contract, which allows for the recognition of its goals. Legitimacy is a
general perception or assumption that an entity's actions are desirable, appropriate or
appropriate within a socially constructed system of norms, values, beliefs, and definitions
(Ifada, Indriastuti, Ibrani, & Setiawanta, 2021).