• How Supplier Management Practices Affect Exchange Cost when Going Green: An Empirical Study

Abstract

This paper aims to empirically examine the relationship among firms’ attitudes toward green, dependence to supplier, supplier relationship management (SRM) practices, and exchange cost. It collected quantitative data by conducting a questionnaire based survey. The main objects are firms in the high-tech industry of Taiwan. 1263 copies of the questionnaire were sent out. A total of 186 organizations (of which 174 were usable) responded to this survey at a response rate of 14.73%. The results indicate that the degree of organizations’ dependence on their key component suppliers and their aggressiveness toward going green have significant influence on the adoption of SRM practices, and in turn, the exchange costs during the trading process. If organizations are aggressive toward going green, they will choose numerous supplier management practices to ensure suppliers realize their requirements. The overall exchange cost of these organizations is relatively low. In contrast, when organizations are not aggressive toward going green, they will less emphasize on managing their supplier on green issues. As a result of this is the high overall exchange cost. Moreover, among the ten supplier management practices investigated, ‘relationship quality’ is found to be the most effective practice in reducing the overall exchange cost. With this respect, it is suggested that organizations should set a common goal with their suppliers, take quality as first priority, and understand each other’s needs on a trust basis.

Keywords: Green Supply Chain Management (Gscm), Power Dependency, Green Attitude, Supplier Management, Exchange Cost