Environmental differentiation from a supply chain practice view perspective

Differentiation can play an important part in helping managers develop and implement supply chain-wide sustainable practices. While differentiation is widely accepted as a key performance outcome of supply chain management (SCM) and logistics, its strategic role may help explain performance outcomes, something that has not been well explored in the SCM literature. In this research, we investigate one instance of supply chain differentiation, that of environmental differentiation (differentiation through innovative environmentally friendly products and processes), and its role as a strategy rather than as an outcome. We apply the Supply Chain Practice View (SCPV) to propose a theoretical model that highlights the strategic role of environmental differentiation in the relationship between a series of sustainable supply chain management (SSCM) practices and performance outcomes. Structural equation modeling and survey data from over 300 U.S.-based companies are used to test the research hypotheses. Empirical results confirm the critical, mediating role of environmental differentiation in the link between SSCM practices and performance outcomes. Our findings suggest that implementing an environmental differentiation strategy led by integrative SSCM exchange relationships across members of the supply chain can be beneficial to firm performance. •Design for environment directly supports environmental differentiation.•Environmental management directly supports environmental differentiation.•Supply chain partnering directly supports environmental differentiation.•Environmental differentiation positively contributes to various performance outcomes.•The role of environmental differentiation as a strategic mediator is confirmed.