Structural Equation Modeling for Supply Chain Strategy and Environmental Performance

Supervisor: Dr. Melek Akın Ateş

Overview

Two enduring questions in supply chain management concern how organizational capabilities and strategic choices translate into measurable performance outcomes. The first is structural: does top-management recognition of the purchasing function shape the depth of supplier integration, and how does that integration convert into purchasing performance? The second is environmental: how do customer pressure and organizational commitment drive firms toward proactive environmental strategies, and through what mechanisms do those strategies produce environmental outcomes?

This project addresses both questions empirically, using survey data from manufacturing firms across the food & beverage, chemicals, and machinery sectors in Turkey, and applying state-of-the-art structural equation modeling methods.

Part 1 — Purchasing Recognition, Supplier Integration, and Performance

Research Question

Does top-management recognition of the purchasing function drive supplier integration, and does integration in turn improve purchasing performance? What is the relative role of long-term commitment — as moderator of the recognition–integration relationship, or as a parallel driver of performance?

Design and Constructs

The study evaluates two competing structural configurations — a moderation model and a mediation model — across four constructs, each measured with five Likert-scale items:

• Purchasing Recognition (R): extent to which top management values and strategically supports the purchasing department
• Long-term Commitment (L): firm’s commitment to sustained, strategic supplier relationships
• Supplier Integration (I): information sharing, joint product development, and joint process improvement activities
• Purchasing Performance (P): outcomes across cost, quality, delivery reliability, and innovation

Methods

• Exploratory Factor Analysis (EFA): maximum likelihood extraction with varimax rotation; Bartlett’s sphericity test; Kaiser-Meyer-Olkin measure; parallel analysis for factor retention
• Construct reliability: Cronbach’s Alpha — R = 0.93, L = 0.89, I = 0.91
• Moderation and mediation testing via bootstrapped indirect effects

Finding

EFA revealed that Supplier Integration items cross-loaded on both Long-term Commitment and Purchasing Performance factors — a theoretically meaningful pattern reflecting genuine conceptual overlap: integration is simultaneously an expression of relational commitment and a mechanism for performance improvement. Purchasing Recognition loaded cleanly and independently, confirming its distinct antecedent role in the structural model.

Part 2 — Proactive Environmental Strategies and Environmental Performance

Research Question

How do customer pressure and organizational commitment drive firms toward proactive environmental strategies, and how do those strategies translate into environmental performance through investment decisions?

Theoretical Model

A revised structural model (Ateş et al., 2012) tests 11 hypotheses across five constructs:

• Customer Pressure: environmental compliance demands and waste reduction requirements from customers
• Organizational Commitment: management support and cross-functional coordination for environmental initiatives
• Proactive Environmental Strategies: beyond-compliance practices including supplier environmental audits
• Internal Environmental Investments: eco-design, design for disassembly, and reuse and recycling integration
• External Environmental Investments: supplier collaboration for eco-design and material substitution
• Environmental Performance: measurable reductions in emissions, material intensity, and energy consumption

Method: PLS-SEM (SmartPLS 4)

Analysis followed the standard two-step approach: measurement model assessment followed by structural model evaluation with bootstrapped standard errors (500 subsamples, two-tailed, α = 0.05).

Measurement model results:

• All item loadings exceeded 0.70 (minimum: 0.74)
• Composite Reliability: 0.92–0.96 across all constructs
• Cronbach’s Alpha: 0.89–0.95
• Organizational Commitment items showed uniformly high loadings (all > 0.90), suggesting strong construct validity

Finding

Proactive environmental strategies fully mediated the effect of both customer pressure and organizational commitment on environmental investment behavior. Firms that adopted beyond-compliance environmental practices systematically invested more in eco-design and supplier collaboration; these investments in turn significantly improved environmental performance. Direct effects of customer pressure and commitment on investment outcomes were substantially weaker, confirming that strategic posture — not pressure or intent alone — is the operative mechanism linking drivers to outcomes.

This mediation structure has direct implications for sustainable supply chain management: interventions that cultivate proactive strategic orientation are more effective than those that simply increase external pressure or signal internal commitment.