Reverse logistics in Malaysia: the Contingent role of institutional pressure

Abstract

Reverse logistics is a primary component of green supply chain management initiatives and is often analysed from a broad perspective. Rooted in the resource-based view of the firm, this empirical study decomposes reverse logistics into five commonly adopted disposition options (repair, recondition, remanufacture, recycle, and disposal) to examine the effects of using each option on measures of environmental performance, profitability, and sales growth. Considering institutional theory, this study also investigates the moderating role of both regulatory and ownership pressure on the relationship between each reverse logistics disposition option and levels of performance. Using survey data collected from managers at 89 ISO14001 certified electrical and electronic equipment manufacturing firms, regression models test a series of hypothesized relationships. Results suggest that under the presence of institutional pressure, use of disposition options results in increased levels of performance in some cases. The recovery of valuable components during product recondition and remanufacture activities contributes to enhanced environmental and economic benefits. Conversely, product recycling and disposal activities are not necessarily performance-inducing initiatives in the face of regulatory pressures The findings of this study can be used to inform business decisions regarding the adoption and use of reverse logistics strategies. Legislative frameworks regarding extended producer responsibility are recommended in order to motivate the implementation of reverse logistics product disposition activities.