The Moderating Role of Social Capital in the Relationship Between Green Supply Chain Management and Sustainable Business Performance: Evidence from Jordanian SMEs

2.1 Theoretical background

This research draws on the Resource-Based View (RBV) and Relational View (RV) theories to generate the conceptual framework examining the moderating role of SC between the GSCM and sustainability performance among Jordanian SMEs. Extending the theory of RBV [19], the RV perspective is a branch of the RBV on an inter-organization or networks levels, which may be regarded as the theoretical underpinning of choice for examining partnerships within supply chain actors [20]. The RV theory focuses on the creation and growth of inter-organizations resources and skills through collaboration, which is uniquely challenging for competitors to imitate. It should be highlighted that this imperfection in rivals' imitation also translates into imperfection in the endowed company's replication [21]. The RV theory suggests four elements of inter-firm competitive advantage: complementary capabilities and resources, knowledge-sharing routines, relation-specific assets, and practical governance [22]. Likewise, RBV theory also highlights various firm-level factors that could help in achieving sustainable competitive advantage. These factors include time compression diseconomies [23] and causal ambiguity [24].

In this regard, Sustainable Supply Chain (SCM) can be viewed as the management of a heart supply chain within a company, a dynamic connection between two companies, an exterior supply chain from the sources to the clients, or the network of connected companies [25]. From the perspective of Paulraj et al. [26] support the network conception of SCM by asserting that organizations are regarded as links in a network supply chain. A company's performance is equally influenced by how well it collaborates with its immediate partners and by how well those partners collaborate. Lockett et al. [27] argued that the value of resources is largely strengthened when the organizations cooperate with other organizations by combining their valued capital. Meanwhile, Halldorsson et al. [28] also pointed out that collaboration between businesses results in greater benefits as compared to individual performances.

According to the RBV, resources are assets unique to a specific company that is hard to replicate, arguing that a company’s ability to access essential resources helps in achieving a higher competitive advantage [29]. Therefore, the organizational capability is one of the key factors that is represented as complex packages of individual skills, assets, and extensive knowledge that allow organizations to manage activities and effectively use of their resources [30]. In general, essential capabilities are critical for any company to achieve its sustainable development goals [30]. Hence, with evolving external environment, organizations must continuously strengthen their resource base to maintain competitiveness and outperform in the market. Mainly, organizations’ dynamic capabilities to combine, develop, and reorganize external and internal competencies to timely address external changings, are vital for sustainability [31].

In this regard, SMEs may view supply chains as opportunities to use external resources and capabilities that they can access and utilize to build sustainable competitive advantage. The individual company may ask other supply chain companies for complementary resources while concentrating on its core expertise [32]. According to Rungtusanatham et al. [33], a company’s supply chain relations are vital resources that can help secure long-term operational performance advantages or enable temporarily superior operational performance if the companies can consistently preserve their values, rarity, imperfect transferability, and imitability.

Hence, it can be deduced that stronger SC will increase the likelihood that network participants will act in ways that are beneficial to other participants in order to preserve their social network relationships. SC was also acknowledged in the literature on organizational research as a useful tool for gaining access to resources [34], and demonstrated the usefulness of RV in explaining the interactions and activities between firms [35]. Additionally, achieved superior sustainability levels [11]. Extending from this line of study, we suggest that RBV and RV offer a strong foundation for comprehending how GSCM information exchange behaves. In particular, RV provides a theoretical framework for exploring how information sharing about sustainability and network-based social interaction are related. To the best of our knowledge, no prior research has looked at the causes of the moderation role of SC on the connections between GSCM and SBP in the setting of Jordanian SMEs. This study seeks to investigate the SC relationships between Jordanian SMEs and their suppliers and their various impacts on sustainable business performance outcomes. Figure 1 is a theoretical framework that explains the role of SC as a moderation between GSCM and sustainability performance.

2.2 Green supply chain management

Recently, GSCM is gaining great attention from business operation experts and researchers because of the growing concerns regarding the adverse impact of industrial companies on the plant, society, and, the environment. Likewise, increased awareness of organizations' obligations to their customers, suppliers, and internal operational processes has expanded the scope of environmental management practices, surpassing the general bounds of business duties toward the protection of the earth and society [36]. Hence, GSCM is regarded as an approach for efficient strategic management that elevate the environmental performance of manufacturing organizations as well as else sustainability performance objectives [36]. In this regard, De Giovanni [37] argues that GSCM is a special road map for producing economic earnings as well as enhancing social well-being. It is not solely a tool for minimizing the environmental footprints of processes and products. Also, it is obvious from the empirical datum already obtainable that eco-friendly techniques typically offer respectable social performance, such as enhancing corporate image [38]. and increasing consumer loyalty [37].

In this study, GSCM includes both internally and externally directed practices as proposed by Wolf [39]. As reported by Srivastava [40], these practices foster green values across the various processes of the supply chain. The external and internal GSCM practices presented in the extant GSCM literature can be viewed in Table 1. The previous literature has comprehensively examined INT-GSCM and EXT-GSCM practices [10]. Fahimnia et al. [41], asserted that adopting both forms of GSCM practices creates a sustainable competitive advantage for the organization. These practices are also helpful for all parties involved within the supply chains to save economic costs and improve the environment. Accordingly, the associations between various dimensions of GSCM, namely the INT-GSCM and the EXT-GSCM, need to be examined further, particularly in their relationship with sustainability outcomes to enrich the literature on GSCM [40].

Table 1. Green supply chain management practices

2.3 Sustainable business performance

In describing the concept of sustainability, Mentzer et al. [43] referred to the Brundtland Commission by defining the concept as the development that fulfills the desires of the present consumers without bargaining the capacity of future consumers to meet their desires. Pertinently, the concept of organizational sustainability comprises three elements: environmental, economic, and social performance [44]. As Koo et al. [45] highlighted in both developed and developing nations, SBP also takes into account the adverse impacts of business activities on the environment. Precisely, during the United Nations Climate Change (UNCC) conference in 2015, the need to rescue planet earth was proposed through the use of preventative measures that cover all sustainability aspects (social, economic, and environmental aspects) [46].

Sustainability aspects refer to the actual outcomes of organizations’ practices on the organization’s social, environmental, and economic performance outcomes. In this regard, environmental performance concerns the willingness of a firm to reduce its effluent waste, air pollution, using lethal material, and the occurrence of environmental catastrophes [47]. Meanwhile, as described by Newman et al. [48], social performance concerns the actual effects of organizations' practices on the company's social elements and product reputation perceived by the company's stakeholders (e.g., employees, consumers, suppliers, and the public at large). Moreover, economic performance relates to the enhancement of a firm’s performance in finance and marketing relative to industry averages following its green practices [47].

The multi-dimensional concept of sustainability is in line with the TBL framework given by Elkington [49], which from a microeconomic perspective, at the same time considers and balances environmental, economic, and social goals. Whereas the researchers now view wise management as a core foundation of sustainability Hence, businesses should recognize that sustainability is not just about being a good corporate citizen and getting points for decreasing toxic emissions from your production or giving your employees and community access to healthcare [50]. The TBL thus proposes that organizations can involve in activities that positively affect society and the environment and bring about long-term financial gains and a sustainable competitive advantage. These activities can be found at the economic, environmental, and social performance nexus. The TBL of sustainability performance components, therefore, have equal weight and produce shared value [51].

2.4 Social capital

The concept of SC comprises “the total of the potential and actual resources rooted within, offered through, and derived from the network of relations possessed by an individual or social unit” [52]. According to the RBV theory, SC is an intangible asset that could help firms acquire a competitive advantage in the market. Meanwhile, as described by Nahapiet [52], has three main components, such as structural, cognitive, and relational capital. Lawson et al. [34] provide explanations for these aspects, for instance, structural capital comprises structural arrangement and accountabilities that promote technical and management dialogue among the involved parties. Similarly, relational capital signifies the relational embeddedness demonstrating the relationships formed through past interactions underpinned by trust and reciprocity. Further, cognitive capital shows the engagement of parties who possess a similar understanding to form shared beliefs and objectives.

In addition, RV also perceives interpersonal connections as important capital for the organizations to access required resource [45]. Hence, SC is perceived as a stimulator of alliance and coordination that will benefit all involved parties in the supply chain [11]. Tsai and Ghoshal [53] described SC as all current and potential resources formed through the relationships in the network of an organization, and these resources can be accessed through these relationships. They also highlighted the mechanism of how SC facilitates the organization’s resource exchange and product innovation. Subsequently, the hypotheses development is formulated in the following section to support the research model.

2.5 Hypothesis development

2.5.1 Green supply chain management and sustainable business performance

The concept of SCM was presented in 1990, and it includes all elements and tasks related to the movement of merchandise from raw materials to the end consumers like supplier-customer relationship, inventory control, and product delivery [43]. Due to the growing environmental concerns, GSCM was introduced as a vital tool for achieving sustainability [8]. In this regard, the obligation to establish documented EMS by ISO 14001 increases the firm’s environmental performance [54], because EMS facilitates the deployment of GSCM through its guidelines on handling the environmental effects of the supply chain [55].

Rao and Holt [56] stated that adopting GSCM procedures significantly improves organizations' competitive performance. Alshura et al. [57] argued that employing green design (eco-design) in GSCM can decrease the negative effects of production. In the same vein, Mumtaz et al. [58] described various ECO practices that could reduce or avert the utilization of harmful materials in product creation and minimize waste production. Amemba et al. [59] reported that during production, utilizing ecologically acceptable energy sources, such as biodegradable energy and solar, is a vital component of the supplier’s green processes, lessening adverse effects of production on the environment, while increasing productivity. Further, Zhu and Sarkis [6] reported that the adoption of ECO may ensure eco-efficiency and facilitate remanufacturing operations, achieving sustainable performance certification, ECO processes, and sustainability success.

Literature indicates that both INT-GSCM and EXT-GSCM practices play a key role in enhancing sustainability outcomes. For example, GP as an internal practice help firms follow the environmental protection standards in determining suppliers, the process of evaluation, the attainment of raw materials, and in the reuse, and recycling processes [58]. Nderitu and Ngugi [60] reported the critical impact of GP methods on long-term organizational sustainability performance since these buying methods assure product safety through the product's compliance with environmental standards. Likewise, the patterns of green spending contribute to forming a positive “green” reputation in the market, which can help maintain corporate sustainability performance [61].

An organization is required to maintain teamwork among all departments so that environmental challenges can be addressed effectively [36]. In this regard, Chin et al [62] suggested top management encourage and implement the GSCM procedures within the production process. Organizations should collaborate with external parties, including suppliers to achieve sustainability goals and increase awareness of environmental issues [11]. Kim and Chai [63] reported that EC could be supported through supplier integration at the strategic, operational, and tactical levels. Rahim et al. [64] further added that these collaborative practices could facilitate the successful use of GSCM practices to achieve adequate sustainability outcomes. Investigating the importance of suppliers’ involvement, previous literature has found the significant and positive role of EC in achieving sustainability [9]. Hence, SMEs managers should motivate collaboration among all involved parties in the chain so that GSCM processes can be effectively implemented to achieve sustainable development goals [55].

Additionally, RL is another vital EXT-GSCM practice that is critical for remanufacturing and recycling operations. According to Muma [61], RL comprises several sub-practices like material reuse, product return, reproduction, recycling, and waste disposal. It requires the retrieval of used goods (e.g., used packaging) from consumers by businesses, and these retrieved used goods are returned to suppliers for remanufacturing [65]. This indicates the significance of RL practice in maintaining superior sustainability performance. Hence, based on the arguments from previous literature, the researchers proposed the following hypotheses:

Hypothesis 1: There is a positive relationship between internal GSCM practices and the sustainable business performance of Jordanian SMEs.

Hypothesis 2: There is a positive relationship between external GSCM practices and the sustainable business performance of Jordanian SMEs.

2.5.2 Social capital and sustainable business performance

Companies with high-level SC appear to show superior performance as opposed to their rivals [52], and the relational embeddedness of SC is an important performance antecedent [66]. Mainly, companies could achieve favorable credit policies by establishing business connections with suppliers [11]. The performance of these connections has been examined using financial and non-financial measures. Stam et al. [67] showed that the SC has a positive and significant linkage to the firm's sustainability performance. Likewise, Lin and Dumin [68] reported that SC obtained from networking and social connections with business executives, public servants, and local leaders improved sustainability outcomes. In addition, among Thailand SMEs, Veskaisri et al. [69] also reported the positive effect of personal connections with other companies' managers on the enterprise's market share.

Meanwhile, Krause et al. [70] reported a strong link between the insights of purchasing firms with comparable values and aims with major suppliers and the enhancement of sustainability performance, particularly in terms of cost reduction. This emphasized that SC improves the SMEs sustainability outcomes, especially concerning profit, market share, turnover, and employment. Moreover, Omisakin et al. [71] found that SC is advantageous to the sustainability performance outcomes of SMEs, especially in job creation, environmental protection, and expanding the enterprise's survival. The above-mentioned debate has led us to propose the following hypothesis:

Hypothesis 3: Social capital positively affects the sustainable business performance of Jordanian SMEs.

2.5.3 Moderating role of social capital

As provided by the first two hypotheses, the practices of GSCM are expected to positively influence Jordanian SMEs sustainability outcomes. The GSCM practices improve the capability of organizations' processes to efficiently use resources and enhance productivity [10]. Somehow, as indicated by Zhu and Sarkis [6], imprudent implementation of GSCM practices may not improve SBP because some of the external and internal factors could adversely affect an organization’s ability to gain competitive advantages. Previous findings by Chan et al. [72] have shown that within SC networks, knowledge is incorporated into business operations via social connections which consider vital tools for ensuring sustainability. Thus, SMEs must have strong relationships with their supply chain allies to effectively exchange important information. Furthermore, the relational strength between supply chain members also plays a vital role in the association level between GSCM practices and sustainability performance [8, 55].

Through SC, knowledge sharing can be expanded, and organizations have better access to the knowledge of their partners [11]. Through additional knowledge, firms enhance their flexibility to deal with sustainability issues. As reported by Pathak et al. [73], firms and their partners can collaborate in enhancing their capability of implementing GSCM practices to minimize environmental risk, particularly via relational bonding within the supply chain. Notably, firms with weak relational bonding with their partners may have weaker attachment and incompatibility issues that could adversely affect their performance [74]. Incompatible partnerships between firms and their partners can also lead to a lack of understanding and ineffective communication [73]. Hence, SMEs must strive to maintain a higher interaction with their suppliers, even though some may be contradictory to their strategies [75]. Hence, without adequate relational bonding between SMEs and their partners, cooperative activities to develop GSCM practices may be impossible to carry out effectively, resulting in unsatisfactory sustainability outcomes.

Preserving adequate connections with supply chain partners will encourage more knowledge transfer beyond corporate bounds [40]. Through these special networks, partners will be motivated to maintain their partnership with one another, especially with those who have greater expertise in sustainability measures like cost-saving and green product design [10]. Extant studies, such as Alghababsheh et al. [76] have reported that supply chain partners who share the same values and objectives would interact more in incorporating logistical green management processes. In general, GSCM contributes to the operational and environmental performance enhancement of organizations through SC accumulation [77].

Furthermore, firms seek to preserve their connections with their suppliers, proposing flexible solutions and specialized green practices to these suppliers. According to Afum et al. [55], these specialized green practices help firm partners to acquire value-added benefits they may not get elsewhere. Indeed, firms could effectively collaborate with their partners in the process of introducing eco-friendly outcomes and in the implementation of innovative energy-saving technology. Concerning the issue of sustainability, SMEs can raise the competencies of their SCM and the ability to design greener (eco-friendly) products. In this regard, SC enhances the relationship strength between SMEs and their partners, leading to increased productivity, efficiency, resource utilization, information exchange, and sustainability outcomes in general. Previous literature also implies that SC could play a significant moderating role in the link between GSCM practices and sustainability outcomes [18, 55]. Hence, it is argued that the positive effect of GSCM practices on SMEs sustainability could be intensified with the presence of high-level SC between supply chain partners. Likewise, the literature also indicates the potential of high-level SC aspects, structural, relational, and cognitive, to simplify the adoption of the SMEs GSCM practices, both external and internal GSCM, in their effort to improve SMEs sustainability [55]. Thus, the following hypotheses were proposed:

Hypothesis 4: Social Capital positively moderates the relationship between Internal green supply chain practices and the sustainable business performance of Jordanian SMEs.

Hypothesis 5: Social Capital positively moderates the relationship between external green supply chain practices and the sustainable business performance of Jordanian SMEs.

4.1 Demographic profile of the respondents

The demographic profile reveals that the survey participants have the appropriate training, credentials, and job status to participate in this study. Among the respondents, SMEs investigated in this research, Results from Table 3, show that most participants were males, 78.1%, while females constituted 21.9%. In terms of age, most respondents were between the ages of more than 45 years 31.9%; 25.3% were between the ages of 41-45 years; 23.1% were between 36-40 years; 13.4% were between 31-35 years while 8% were between the ages 25-30 years. Regarding educational level, most respondents were first-degree holders (58.9%); 31.1% had master's/postgraduate degrees, while 10% had diplomas. The results also asserted that the majority of the participants 58.4% had spent more than ten years working for Jordanian SMEs; 18.7% had worked in SMEs for 7-10 years; 13.6% had worked in SMEs firms for 4-6 years, and 9.2% had worked in SMEs for 1-3 years. Concerning firm size, 77.9% of the targeted population were from SMEs categorized as medium (30-99 employees), and 22.1% of the respondents were from small (6-29 employees).

Table 3. Demographic data of respondents

4.2 Common method bias

First of all, this study applied the full collinearity assessment proposed by Kock [89] for the valuation of common method bias. In general, common method bias issues are typically caused by the measuring methodology used in SEM-related studies. Precisely, Instruments may have an impact on responses, which leads to a certain extent of common variation among the items. Hence, a random variable was created and then full collinearity was assessed by regressing this random variable on the latent variables of this study. Results tabulated in Table 4, demonstrate that all whole collinearity Variance Inflation Factors (VIFs) values are below the significance threshold of 3.3 [87]. As a result, this shows that collinearity is not a problem in this study.

Table 4. Full collinearity testing

4.3 Measurement model

The proposed model was put to the test in this study using the recommendations of Anderson and Gerbing [90], that is, to use a two-step approach. As the first step, the measurement model was tested for its validity and reliability. The guidelines provided by Hair et al. [87] were followed in testing the instrument’s validity and reliability. The testing of the measurement model involved computation of loadings, Average Variance Extracted (AVE), and Composite Reliability (CR), with the following requirements: loading values should be at least 0.5, the AVE should be ≤ 0.5, and CR should be ≤0.7. The measurement model test results are displayed in Table 5 as follows: loading values were generally tolerable, with one or two loadings lower than 0.708 [87]; AVEs were all ≥ 0.5, while CR values were all ≥ 0.7. As mentioned earlier, the model had three first-order constructs: GSCM, SC, and SBP. The results of validity and reliability tests of the first-order constructs are represented in Table 5, and the results affirmed the validity and reliability of the first-order measurements.

Discriminant validity was evaluated as the next step, using the Heterotrait-monotrait Ratio of correlations (HTMT) criterion based on Henseler et al. [91]. In interpreting HTMT values, there are two types of HTMT criterion, the stricter one, and the more lenient one, whereby the former proposed a value of at least 0.85, while the latter proposed a value of 0.9 at least. All obtained values of HTMT are displayed in Table 6, and as can be observed, all values are lower than the lenient criterion of ≤ 0.9. Hence, it is reasonable to conclude that the respondents generally were able to differentiate the study constructs. As can be deduced from the results shown in Table 5, the measurement items demonstrated validity and reliability. Finally, while structural models are examined to evaluate the hypothesized links among particular model variables, measurement models are calculated to evaluate the validity and reliability of the constructs.

The next step involved running the structural model to test the proposed hypotheses:

Table 5. Measurement model for the first order constructs

Table 6. Discriminant validity (HTMT)

4.4 Structural model

The proposed hypotheses findings (direct effects) are provided in Table 7, together with the beta and corresponding T-values that are crucially based on the one-tailed T-test. Ramayah et al. [92] suggested this research hypothesis was examined by running a bootstrapping method. Thus, to obtain the t-values, bootstrapping with 5000 resamples was employed. As shown in Table 7, it is found that INT-GSCM is positively related to sustainable business performance (β = 0.414, p<0.01) at a 1% level of significance. Similarly, EXT-GSCM practices have a positive relationship with SBP (β = 0.233, p<0.01) at 1% significance, hence supporting H1 and H2.

Subsequently, the direct relationship between SC and sustainable business performance was also positive (β = 0.133, p<0.01) at a 1% level of significance, therefore, H3 is supported. On the other hand, this research also investigates hypothesized moderating relationships. Notable, SC is combined as moderating variable in the direct relationships of INT-GSCM and EXT-GSCM with SMEs sustainability performance. Moreover, using SmartPLS a moderating effect are created as a product of independent and moderating variables [92]. Findings offered in Table 7, demonstrate that SC does not moderate the influence of INT-GSCM (β = -0.087, p<0.181), and EXT-GSCM (β= 0.0.233, p<0.332), on sustainability performance. Therefore, H4 and H5 were not supported. Hence, overall findings reveal that both INT-GSCM and EXT-GSCM practices play significant and positive roles in determining Jordanian SMEs sustainability performance outcomes. In addition, several researchers have disapproved of the P-value standards and recommended considering other approaches such as effect size. Hence, this study additionally provided F-square (F-sq) values so that the analysis could take effect size into account. Cohen [93] proposed cutoff values of 0.35, 0.15, and 0.02, indicating large, medium, and small effects, respectively. The F-sq values presented in Table 7, assert that all three direct relationships have sufficient effect size, supporting H1 (F-sq=0.13), H2 (F-sq=0.04), and H5 (F-sq =0.025). However, H4 and H5 are not supported.

This research has limitations regarding methodology and theory, which should be rectified in future studies. The first issue with this research is its cross-sectional approach, whereby the data were obtained at a single point in time. However, the involvement of the practices of GSCM may take time before sustainability behaviors are at the maximum. Hence, the use of longitudinal analysis may be employed by future research, which may allow the researchers to identify the changes that occur in the SMEs sustainability behaviors over time after the application of the practices of GSCM.

The second limitation of this study is that it covered only SMEs from the JIE. Hence, future studies should consider other Jordanian SMEs because they also switch to sustainable behavior adoption; the Jordanian government requires all establishments to adopt the sustainability approach. This will insure the generalizability of the findings. Further, this study should be replicated in different regions and cultures to allow the development of more universal measures of GSCM in SMEs.

The third limitation is that this research only employed a quantitative approach. So, the use of a mixed-method approach to investigate the moderation impact of SC between GSCM and SBP outcomes will increase the depth and breadth of the findings obtained. Next, the moderation impact of SC was examined in this study regarding the association between GSCM practices and SBP. In order to increase the understanding of the relationship between the constructs, future studies should consider including other variables as potential moderators, for instance, institutional pressure [101], firm size [102], and environmental management systems [103]. In addition, future studies should consider other practices of GSCM, including product lifecycle analysis, industrial ecology, industrial ecosystems, extended producer responsibility, and product stewardship [104], regarding their impact on SBP among Jordanian SMEs. The use of different indicators may also be considered in future studies.

At last, Jordan entails a big population with complex activities that potentially impact the SBP of the SMEs. However, this study was only focusing on JIE. In Jordan, SMEs are important because they run the future economy, aside from possessing the vigor and enthusiasm to acquire and implement sustainability activities within societal functions. Notably, the overall SBP of SMEs is a result of the trans-disciplinary contribution of various parties like top management, suppliers, government, and non-governmental organizations (NGOs). Hence, managers of other sustainability institutions, like NGOs, may be considered owing to the varied perspectives of varied firms.