The Influence of Green External Integration on Firm Performance: Does Firm Size Matter?

Abstract

Abstract:Although the importance of green external integration has been widely recognized, our understanding of how firm size influences its link with firm performance is still limited. This study develops a conceptual framework in which firm size is proposed to moderate the relationships between green external integration, the time-to-market of environmentally friendly products and firm performance. We examine this model using data collected from 176 Chinese manufacturing companies. The results reveal that firm size moderates the relationship between green customer integration and business performance, the relationship between green supplier integration and operational performance, and the relationship between the time-to-market of environmentally friendly products and business performance. In addition, green customer and supplier integration improve both operational and business performance entirely by decreasing the time-to-market of environmentally friendly products for large firms, while green customer integration enhances operational performance entirely by shortening the time-to-market of environmentally friendly products for small and medium firms. These findings have important implications for research and practice in the fields of green supply chain integration and green innovation.

Firm Size and the Business Model for Sustainable Innovation

“…However, unlike large companies, they lack the personnel with specific skills to innovate. Cooperation helps to overcome these limitations [3,36], and to integrate external knowledge [5,45,46] in order to increase their capacity for innovation. Similarly, partnering helps SMEs to reduce costs in co-production [42] and to obtain more profits, particularly when they are part of networks, R&D consortia, or innovation clusters together with brokers or technology institutes and universities [39,45].…”

“…They also have greater resources to monitor patterns of change in the market. Customers prefer to participate in innovation projects with larger companies because their brand is more known and reliable [46]. For a large company, it is easier to attract specialized personnel to manage the dynamics of innovation, the transmission of information, and the capacity to absorb knowledge [46].…”

“…Customers prefer to participate in innovation projects with larger companies because their brand is more known and reliable [46]. For a large company, it is easier to attract specialized personnel to manage the dynamics of innovation, the transmission of information, and the capacity to absorb knowledge [46]. On the other hand, small firms have more difficulty in convincing customers to buy into the idea of sustainable innovation due to lack of technical skills, poor management capacity in innovation projects, and lack of necessary infrastructure.…”

Strategies for Sustainable Business Development: Utilizing Consulting and Innovation Activities

“…Most knowledge-based firms and private sectors are engaged in their commercial or industrial innovation. Moreover, their innovation activities are highly collaborated with other entities, especially public sectors like universities and public research centers [22,53]. According to Siren et al [42], although there is not much empirical evidence that the direct effects of exploration and exploitation on the firms' profit performance because those are generally recognized as mediating constructs, those are still the core elements of firm's business strategies and innovation performance [54].…”

“…Improvement on customer satisfaction after consulting projects [5][6][7][8][9][10][11]15,16,45,53,58,61] CBP2 Improvement on financial performance after consulting projects (sale, cost, profit, etc.) CBP3 Improvement on business and task process after consulting projects CBP4 Improvement on problem solving competency and task competency of members after consulting projects…”