Decision Support Systems 52 (2012) 624–634

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Decision Support Systems

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Do green supply chain management initiatives impact stock prices of firms?

Indranil Bose a,⁎, Raktim Pal b,1

a School of Business, The University of Hong Kong, Pokfulam Road, Hong Kongb College of Business, James Madison University, Showker Hall, MSC 0202, 800 South Main Street, Harrisonburg, VA 22807, USA

⁎ Corresponding author. Tel.: +1 852 2241 5845; faxE-mail addresses: indranil_bose@yahoo.com (I. Bose

1 Tel.: +1 540 568 7094.

0167-9236/$ – see front matter © 2011 Elsevier B.V. Alldoi:10.1016/j.dss.2011.10.020

a b s t r a c t

a r t i c l e i n f o

Article history:Received 4 February 2011Received in revised form 29 September 2011Accepted 23 October 2011Available online 28 October 2011

Keywords:Event studyGreen operationsGreen supply chainStock pricesSustainabilityRecyclingRemanufacturing

Although firms have been taking green supply chain management (GSCM) initiatives, it is not known whetherthey create value for firms. We analyze 104 announcements related to GSCM using an event study, and deter-mine what causes statistically significant gain in stock prices for these firms. Manufacturing firms, firms withhigh R&D expenses, and early adopters show a strong increase in stock prices on the day of the announcement.At the same time, small firms, firms not well-known for taking green initiatives, as well as firms that are low ingrowth potential considerably surprise the market when they make such announcements.

© 2011 Elsevier B.V. All rights reserved.

1. Introduction

In recent years, green supply chain management (GSCM) initiativeshave gained considerable prominence. However, how much value itbrings to organizations is still being investigated. While an Aberdeenresearch study indicates companies implementing successful GSCM ini-tiatives may benefit from reduction in energy and logistics costs, andenhanced competitive advantage, the study also mentions a majorityof the corporate respondents (55%) who identified green initiatives asa top focus reported that the key pressure for these initiatives wereoverwhelmingly related to corporate social responsibility [85]. Kleinet al. report sustainability is not a core part of most companies' strate-gies in spite of its increasing eminence [51]. Another research study sur-veyed more than 125 supply chain, operations, finance professionalsand executives around the world across multiple industry segments tounderstand how the organizations are coping with growing environ-mental concerns inmanaging complex supply chains [1]. The study con-cludes that most of the organizations have been slow to address theseissues. The findings from these studies show that while green supplychain has received significant attention, organizations are still debatingthe benefits it may generate. There are various reasons behind thedilemma. First, different parties involved in a GSCM initiative may nothave the same opinion on ‘greenness’ of the initiative. Also, comprehen-sive methodology for monitoring progress and performance evaluationof such initiatives is mostly lacking and still in the developmental stage.

: +1 852 2858 5614.), palrx@jmu.edu (R. Pal).

rights reserved.

In addition, while some initiatives may yield significant benefits in thelong run their short-term outcomes may not be very attractive. Also,there is the risk of adopting a relatively unproven technology. Some ofthe GSCM projects may have involved multiple organizations and allkey supply chain partners should be on board through proper incentivealignment and there should be a consensus on measures to be used forassessing project success. While a number of previous research studieshave looked into various dimensions of benefits of GSCM, we take a dif-ferent approach. We use the event study method to analyze the changein stock price of firms due to implementation of GCSM practices. Wehope our study will be able to clear up some of the dilemmas aboutthe value of green supply chain.

The rest of the paper is organized as follows. In the next sectionwe discuss the motivation and scope of the study. The next sectiondetails the development of the research hypotheses. Then we presentthe research method, and explain the process of data collection andfiltering. Next, the results obtained from this research are described.Finally, we discuss the managerial implications and conclusionsderived from the study.

2. Motivation and scope

2.1. Green supply chain fundamentals

First, let us discuss what green supply chain means. Broadly speak-ing, any sustainability issues encountered in managing supply chain ispart of GSCM. According to the Environmental Protection Agency(EPA), “the traditional definition of sustainability calls for policies andstrategies that meet society's present needs without compromising

625I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

the ability of future generations to meet their own needs.” We use thesame connotation of long-term maintenance of the well-being of thenatural world with responsible use of resources in the context of supplychain management. While regular forward supply chain usually dealswith flow of products starting from initial processing of raw materialsat suppliers to delivery of finished items to customers, the scope ofgreen supply chain goes beyond this usual definition. It also includes en-vironmentally friendly product and process design, extension of prod-uct life cycle, and recovery of end-of-use and end-of-life returns. Thus,green supply chain encompasses components of environmental man-agement as well as closed-loop supply chain, which integrates design,operations, and control of a system for maximizing value over lifecycle of a product including value recovery from return/disposal at theend of its use. For example, by employing efficient closed-loop supplychain Xerox Corporation not only makes and sells new printer car-tridges but also the organization generates substantial revenue byremanufacturing used cartridges collected from the users. Interestedreaders may refer to Linton et al. [57] and Guide and Van Wassenhove[36] for detailed information on the topic of closed-loop supply chain.

In green product design, analysis is made to assess the environ-mental impact during the useable life cycle and afterwards, andattempts are made to minimize adverse effects [47]. Modular designand easy disassembly options help in repair and remanufacturing ofthe end-of-use returns, and recycling of end-of-life returns [36,52].Green process design includes elimination and/or reduction ofwaste and by-product during manufacturing [48], reuse of wastedenergy [32], adherence to quality standards such as ISO 14000 andrelated eco-management and audit schemes to reduce defects [17],and adoption of lean principles to avoid excess usage [50,107]. Exten-sion of product life cycle helps in reducing resource consumption[56]. Reverse supply chain deals with acquisition of used products,reverse logistics for bringing collected products to reprocessing facil-ities, inspection (for deciding subsequent actions such as repair,remanufacturing, recycling, or disposal), recovery (remanufacturing,recycling, etc.), and remarketing [34]. This reverse chain is coordinat-ed well with the regular forward chain to form the closed-loop supplychain. Thus the scope of green supply chain includes environmentalmanagement, closed-loop supply chain, and a broad perspective ofgenerating value for the organization and society.

2.2. Supply chain and sustainability issues

A number of studies have discussed various sustainability issues,made arguments in favor of GSCM, and estimated its benefits. Here,we briefly mention some of those studies.

Laws and regulations have been passed in the last few years topromote environmental sustainability. One such notable regulationis the European Directives on Waste and Electronic Equipment[25,26]. Many states in the US also have passed environmental laws[58,89]. Obviously, organizations need to adopt green practices tocomply with the laws and regulations. However, these initiativesmay take the organizations above and beyond compliance, and helpthem develop competitive advantages and bring tremendous profitpotential. For example, considering toxicity of lead used in shoulder-ing, Hewlett-Packard anticipated that this would be banned some dayand invested money in finding alternatives. When the EuropeanUnion's Restriction of Hazardous Substances Directive took effect in2006 they were ready with an amalgamation of tin, silver, and copper,and this provided a competitive edge [67]. Volvo planned proactivelyin anticipation of a Swedish law that made automakers responsiblefor disposal of used vehicles, and eventually set up sophisticatedoperations for salvaging and dismantling vehicles that generated sig-nificant revenue stream [90].

Sustainable product and process design can contribute to thebottomline of a firm. The number of environmentally conscious customers isgrowing and has passed a threshold size to justify introducing green

offerings in certain industry sectors. For example, in 2005 P&G launchedTide Coldwater in the US and Ariel Cool Clean in Europe. As these coldwater detergents can reduce electricity consumption appreciably, theycaptured significantmarket shares. In order to reduce fuel consumptionin shipping and delivery processes, FedEx uses innovative flight sched-ules, routing, and load planning, fuel-efficient delivery trucks, and intel-ligent vehicle routing. In 2008, Clorox introduced the GreenWorks lineto address significant environmental concerns associated with thehousehold cleaning products and by the end of the year the line hadgrown the US natural cleanersmarket by 100% [67]. In addition to inde-pendent green projects implemented by individual firms, joint productsector approaches and cross sector approaches involvingmultiple orga-nizations to undertake sustainability initiatives have emerged as morerecent trends [100].

Life cycle of products can be extended by adopting appropriateproduct recovery strategies. Many organizations such as Xerox [94],Caterpillar [4], and Hewlett-Packard [106] have successfully implemen-ted remanufacturing and recycling operations to increase profitability.Also, the span of the life cycle may become a key consideration. Forexample, when the product life cycle is short, such aswe see in personalcomputers that may lose 1% of their value per week [35], fast recoverythrough the reverse supply chain is important.

Green thinking may also influence sourcing decision, which is acritical activity in supply chain management. Pagell and Wu discussin details how most of the sustainable companies they examined intheir case studies incorporate social dimensions in their suppliermanagement practices [70]. Many large organizations encouragesuppliers to become environmentally conscious and even provideincentives sometimes. Cargill and Unilever have invested in greenertechnology and worked with farmers to adopt sustainable practicesin producing agricultural commodities. In 2008, Wal-Mart issued adirective to its China based suppliers to cut packaging cost by 5%and increase energy efficiency of products by 25% [67]. Staples hasmore than 2800 SKUs that contain recycled materials and is activelyworking with its suppliers to develop additional environmentallyfriendly products [105]. Wipro has agreed to only work with suppliersthat have adopted green practices [8].

Return collection and recovery are an integral part of green supplychain. Appropriate recovery of returns can be value-added. For exam-ple, earlier Cisco used to consider used equipment as scrap but laterimproved the recycling operations to reduce cost significantly and in-crease reuse of equipment from 5% in 2004 to 40% in 2008 [67]. Whileefficient return collection system saves logistics costs, easy and envi-ronmentally conscious return policy improves customer relationshipsthat in turn may generate more sales [87,90].

2.3. Scope of the study

Since one of the important goals of supply chain management isimproving supply chain performance [12], a number of arguments canbe made in favor of adopting sustainability practices in supply chainmanagement. In general, by focusing on business fundamentals re-searchers have argued that environmental sustainability can contributeto profitability and competitive advantages [55,75]. The resource basedview has been used to justify competitive advantage of sustainable prac-tices because of better access and utilization of resources [44]. Markleyand Davis also use the resource based view to argue that firms canincrease competitive advantage as a result of a stronger triple bottomline consisting of financial, social, and environmental outcomes [62].The impacts of sustainable operations on the triple bottom line involvingprofit, people, and planet have also been discussed [52]. Defee et al. de-velop a conceptual framework to establish competitive advantages ofclosed-loop supply chain [20]. Using structural equation modelingsupported by conceptual framework, Rao and Holt show greening of dif-ferent phases of supply chain in an integrated fashion leads to competi-tiveness and economic gains [78].

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Among the practitioners, green supply chain management hasgained significant importance. According to a number of Gartnerreports, green supply chain is an emerging area and is being consideredactively inmanyfirms' business strategy [71,104]. Some of theMcKinseyreports also have reiterated the significance of environmental sustain-ability issues [7,79]. Using content analysis of corporate communica-tions to stakeholders through corporate social responsibility (CSR)report, Tate et al. show how many top organizations incorporate theirtriple bottom line goals through operations and supply chain strategies[92]. Researchers have studied the design of supply chain with environ-mental considerations [102], and the decision making behavior of mul-tiple stakeholders in a supply chain with optimization of CSR [18].

We have not come across any studies that have assessed the im-pact of GSCM on market value of firms. While other studies havelooked into the merits of green initiatives from various perspectives,the direct measure of change in valuation of shares due to such initia-tives definitely provides another set of insights in justifying its adop-tion. We specifically address two research questions:

• Do the announcements of GSCM initiatives lead to a significantlypositive increase in stock prices of firms taking the initiatives?

• Which type of firms benefit considerably from the announcementsrelated to GSCM?

We use the event study method that has been used widely in ac-counting and finance literature to analyze the effect of the announce-ments on the short-term change in stock prices of the announcingfirms.

3. Research hypotheses

To address the above research questions we systematically developa series of hypotheses that are grounded on extant literature and cur-rent practice. These hypotheses relate the impact of GSCM announce-ments on the short-term change in stock prices of the announcingfirms, and argue which type of firms are likely to benefit from theseannouncements.

3.1. Impact on firms taking green supply chain initiatives

Firms are increasingly taking up the mandate of adopting sustain-able business practices. GSCM is an example of such a business practice.There are several advantages to adoption of GSCM. It has the potentialto advance firms in an environmentally friendly direction much beforeregulations force them to adopt such practices. GSCM initiatives can en-hance the brand value of the firm and can create a positive impressionabout the firm in the minds of the various stakeholders that are associ-ated with the firm. GSCM can also be looked upon as an opportunity todevelop new lines of business that can become profitable in the future.This leads us to hypothesize:

H1. Firms that announce GSCM initiatives are likely to show signifi-cant positive impact in their stock prices.

3.2. Impact on manufacturing oriented firms

Production is an integral part of the value-chain concept advocat-ed in the strategic management literature [74], and internal supplychain's performance can be managed well within this function [82].Recoverable manufacturing operations contribute significantly tothe economy. According to Guide et al., it accounts for sales inexcess of US$53 billion [33].

The importance of manufacturing in the context of environmen-tal sustainability may be established using management and orga-nization theories [83]. It is argued that natural resource view [37]and eco-centric management idea [86] help to guide organization's

practices in relation to the natural environment. These theoriesdelineate the differences between traditional and environmentallyfriendly strategic management processes including product designand production systems. Both of these are core manufacturingissues.

We also like to argue that typical manufacturing firms usuallydeal with a number of major functional processes including purchas-ing and inbound logistics, production, distribution, and reverse logis-tics that have a huge potential to implement environmentallyfriendly projects successfully. Because of the capital intensive natureof operations, even a small percentage of savings attained by thesuccessful implementation of such projects may also result in a sub-stantial amount in monetary terms. Hence, manufacturing firmsmay have higher likelihood to be successful with green supplychain initiatives.

Also, typically many manufacturing operations cause pollutions.Hence, green practices adopted by the manufacturing firms may beviewed more positively by investors. Previous research studies haveobserved other positive impacts of green initiatives for manufacturingorganizations. Vachon and Klassen [98] have found collaborativeenvironmental activities among the North American manufacturingfirms to enhance several production related performance measures in-cluding reduction of scrap rate, cycle time, and setup time, and im-provement in on-time delivery, flexibility, and quality. Zhu and Sarkishave foundChinesemanufacturers to gain significant economic benefitsby adopting green supply chain practices [107]. In addition to direct fi-nancial benefits such as cost savings and profit increases,manufacturersmay obtain other benefits from green initiatives. Some of these includepreparedness to launch new products and to adhere to new compli-ances [67], better relationshipwith customers [87], and image of corpo-rate social responsibility [85]. It appears that manufacturing firms havea lot to gain from green initiatives. Hence, we hypothesize:

H2. Compared to other firms, manufacturing firms will show stron-ger positive impact in their stock prices when they make GSCM relat-ed announcements.

3.3. Impact of research and development (R&D) expenditure

In a number of event studies on firm performance R&D has beenused as a control variable [6,43]. The existing literature suggeststhat well-orchestrated R&D activities are important to implementa-tion of successful GSCM practices. Bowen et al. argue that implemen-tation of green supply chain is better explained by the developmentand deployment of an organization's internal resources rather thanusual external pressures [10]. A recent study reports that green com-panies usually have higher R&D expenditures [9].

The importance of a well-coordinated R&D policy for developingsustainable technology is emphasized by O'Brien [68]. The R&D strat-egies of firms are important in extending the product life cycle andenhancing recycling activities [11]. Christensen et al. mention thecritical role of the R&D team as one of the internal stakeholders inimplementing green sourcing [16]. Ettlie and Sethuraman also reportthat higher R&D intensity in firms lead to enhanced level of globalsourcing [24]. Hence, it may be conjectured that among the firmsimplementing GSCM initiatives, the ones with greater focus on R&Dare more likely to succeed. We formalize the hypothesis as follows:

H3. Firms with high R&D expenses will show stronger positive im-pact in their stock prices when they make GSCM related announce-ments compared to firms with low R&D expenses.

3.4. Effect of early adoption of green initiatives

It may be argued that firms that adopt green practices earlier mayhave some advantages and hence they may have better performance

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of their stocks. Zhu et al. argue that early adopter of GSCM or closed-loop supply chain may enjoy greater benefit because they are awareof more opportunities for economic gains that can be achieved byadopting these green practices [108]. They further mention thatthese firms are more likely to adopt green practices based on theirunique environmental concerns, and hence may attain a more sophis-ticated level of adoption. On the other hand late adopters are likely toseek benefits of legitimacy by conformance [103], and hence theiradoption practices may be compromised [22]. Zhu and Sarkis foundthat early adopters of GSCM among Chinese manufacturers achievedboth environmental and economic goals [107]. Early adoption ofgreen practices may improve some of the business processes in an or-ganization. Kingston, a renowned manufacturer of memory products,passed substantial savings to their customers by helping them short-en the qualification process of suppliers because of lead-free opera-tions mandated by green initiatives [76]. Also, green initiatives mayboost economic development by creating new jobs. A recent reportmentioned about green job growth in Colorado based on early adop-tion of renewable energy and energy efficiency standards [45].

Usually time delays have negative impacts on business. An earlyarticle in Harvard Business Review track the impact of decision mak-ing delays in a business system consisting of a factory, a warehouse,and multiple retailers, and develop a model for showing the adverseeffects of such delays on organization's performance [31]. Thirtyyears later Stalk emphasizes similar views on importance of rapidresponse to changing business environment [88]. There are manyother studies that have shown that firms with late entry into the mar-ket tend to have higher development and manufacturing cost [19,66],and lesser market share [80,97]. Delays in introducing new productshave significant negative impact on stock prices of firms [41], andalso on profitability [42].

We are aware that a counter argument may be made that lateadopters may learn from the mistakes of early adopters and may seegreater positive impact. However, a previous study did not find anysuch positive impact in the case of IT-based supply chain implementa-tion [21]. Also, considering the likelihood of green supply chain initia-tives being unique and more subject to firm-specific customization,we think that the early adopters will be in a more advantageous posi-tion by traversing the learning curve before the others. Based on theexisting literature, we argue that the firms that introduce the greensupply chain initiatives early may gain early-mover's advantage andthe market is likely to react positively to their potential to developexpertise from sustained experience that may eventually enhancetheir profitability. Hence, we hypothesize:

H4. Firms that are early adopters of GSCM initiatives will show morepositive impact in their stock prices than firms that are late adopters.

3.5. Impact of initiatives related to remanufacturing and/or recycling

A significant amount of green supply chain initiatives are related toremanufacturing or recycling. While a number of issues can be claimedto be associated with green supply chain, remanufacturing and recy-cling are arguably themost prominent ones. Many of the research stud-ies in operations and supply chain management, which deal withenvironment concerns, address issues related to recycling and remanu-facturing [29,33,34,49,60,61,94–96,99]. Also, recycling and remanufac-turing are important considerations in the marketing literature. Forexample, Sharma et al. use recycling and remanufacturing as two ofthe three major components in their framework for understandingthe role of business-to-business marketing in the supply chain forattaining environmental sustainability objectives [84]. A recent greensupply chain study finds that concerns about waste and recycling aremore critical than greenhouse gas emissions and resource consump-tions [93]. Hence, it may be argued that firms that implement green

initiatives related to remanufacturing and/or recycling may be seen fa-vorably by the market. Formally, we test the hypothesis:

H5. Firms that make announcements related to remanufacturingand/or recycling show more positive impact on their stock pricesthan firms making announcements on other aspects of green supplychain.

3.6. Effect of firm size

The operating performance of organizations may vary by its size[28]. The critical role of the size of an organization on its performancehas been studied extensively in the strategic management literature.A number of empirical research papers focusing on impact of diverseissues of firm value/performance have also considered firm size as animportant factor. Some of them are on ERP implementation [39], ITinvestment [46], outsourcing [38], product introduction delays [43],and supply chain glitches [42]. Thus, it is logical to check if firm sizehas any impact in our analysis.

The size of the firmmay play a role in adoption of green supply chainpractices. An earlier survey reported that smaller organizations give lessimportance to environmental issues compared to their larger counter-parts [64]. This may be due to the fact that the smaller organizationsare usually resource strapped. Another study also finds that larger com-panies tend to bemore environmentally conscious [3]. In a study ofman-ufacturers, Walton et al. find that encouraging small companies toparticipate in greenpurchasing ismore challenging [101]. Now, the ques-tion is how the market will react if a small firm announces its plans forgetting involved in green supply chain initiatives. Capital valuation theo-ry suggests that announcements of new capital expenditures made bythe smaller firms usually draw larger market reactions than thosemade by the largerfirms [5]. In the context of IT investment, Im et al. pro-vide empirical evidence of significant returns by the smaller firms [46].We argue that one will not expect smaller firms to undertake major en-vironmentally focused projects, and it will be a pleasant surprise if asmall firmmakes announcements to such effect. Hence, we hypothesize:

H6. Smaller firms making GSCM announcements will show morepositive impact on their stock prices than larger firms.

3.7. Impact of corporate sustainability stewardship

Many organizations take up sustainability issues strategically forcreating shareholder values by harnessing revenue potentials andmanaging risks from sustainable products and services. Organizationscan gain substantial competitive advantages from sustainable strate-gies [2,62]. Since 1999, the Dow Jones Sustainability Index is trackingthe financial performance of the leading sustainability-driven compa-nies across the world [53]. The index captures the top 10% of the big-gest 2500 companies worldwide based on long-term economic,environmental and social criteria. According to a systematic corporatesustainability assessment the leaders in each of the 57 industrygroups are identified. The companies that are in the index may beconsidered adept in managing sustainability issues, and hence maybe more likely to implement green initiative successfully any way.On the other hand, the companies that are not in the index may notbe that prominent, and hence the investors may not expect them totake up green supply chain projects. Thus, if the firms that are notlisted in the Dow Jones Sustainability Index make any green supplychain related announcements there is a possibility of them gettingmore favorable response from the investors compared to the firmsthat are listed in the index. We test the hypothesis:

H7. Firms not listed in the Dow Jones Sustainability Index will showmore positive impact in their stock prices than firms that are notlisted in the Dow Jones Sustainability Index.

628 I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

3.8. Effect of firm's growth potential

The growth potential of firms has significant impact on its perfor-mance [27]. The growth potential of a firm is widely accepted inaccounting and finance as one of the key characteristics that influencethe market reaction. Typically, accounting measures such as market-to-book ratio and Tobin's Q are used as proxies for firm's growth poten-tial [6,14]. Higher value of themarket-to-book ratio suggests that inves-torsmay expect high growth from the firm. Chatterjee et al. usemarket-to-book ratio as a control variable in assessment of value creation by ITinfrastructure investments [14]. Oh et al. (2006) also use the ratio tofind the impact of growth prospect on cumulative abnormal returns(CAR) of firms making IT investments [69]. The growth potential offirms has been used in event studies within other contexts such as equi-ty financing [73], capital investment [13], and asset sales [54].

It may be argued that the firms with higher growth potential aremore likely to implement newer projects and investors have high ex-pectations from these companies. On the other hand, investors maynot have much expectation from the firms with low growth potential,and hence their green supply chain initiatives may be viewed morepositively than their counterparts with higher growth potential. Weformalize the hypothesis as follows:

H8. Firmswith low growth potentialwill show stronger positive impacton their stock prices compared to firms with higher growth potential.

4. Research method

The event study technique analyzes the immediate impact of an-nouncements of events on firm value. This is widely used in thefield of accounting and finance. The event study is an appropriatemethod for examining the financial impact of GSCM initiatives be-cause such announcements are of great interest to investors of thefirms. Using an event study allows the investors to estimate the im-mediate impact of the action undertaken by the firm rather thanwaiting to check the impact on accounting measures that are not im-mediately available. At the same time it is known that “event studyhas become a classic because it works”. It can be used under lessthan perfect conditions and still produce reliable results [40]. Thisleads us to use the event study method for this research.

In this method, the relevant announcements are retrieved fromone or more news databases using a suitable list of keywords. The da-tabases commonly used include Factiva, PR Newswire, and BusinessNewswire. After downloading all announcements that match the key-words, those related to private companies, and non-listed companiesare removed. Then duplicate announcements are filtered, andonly the earliest occurrences of such announcements are retained.Next, announcements that are released around the date of someother confounding events are eliminated. The confounding eventscan include announcements of earnings, mergers, acquisitions, decla-ration of dividends, change of senior management, and declaration ofanalyst ratings, among others. In this research, we adopted a three-day confounding window, starting from 1 day prior to the date ofthe announcement, and lasting up to 1 day after the date of the an-nouncement. Then firms that had average stock price less than US$1or average daily trading volume less than 50,000 shares in the estima-tion period, are removed from further consideration, as thinly tradedmarkets have limited predictability [91].

4.1. Computation of abnormal stock return

For the computation of abnormal stock market returns we usedthe capital asset pricing model (Fama and French, 1992) that isshown in Eq. (1):

Rit ¼ αi þ βiRmt þ εit ð1Þ

where Rit is the rate of return for announcement i on day t, Rmt is therate of return of market index m on day t, α is the y-intercept, β is theslope that measures the sensitivity of Rmt, and ε is the disturbanceterm. We primarily used the NYSE index for US listed companies,and other country specific indexes for firms listed in other countries.The rate of return of stock price of the adopting firm on the an-nouncement day and 1 day after the announcement is computedwith respect to the benchmark market index. Although the windowsused for estimation of the event varied from one study to another, weused 200 trading days' data prior to the announcement of the eventfor obtaining the regression model [14,46,77]. We also left a gap of30 days between the estimation window and event window to re-duce the impact of the event on the estimation model [81]. To com-pute the abnormal return (AR) of announcement i on day t, theformula used is shown in Eq. (2):

ARit ¼ Rit− ai þ biRmtð Þ ð2Þ

where R is the rate of return,m is the market index, ai is the intercept,and bi is slope of the regression model for announcement i. The cumu-lative abnormal return (CAR) is then computed using Eq. (3):

CAR ¼

PNi¼1

PS2t¼S1

ARit

Nð3Þ

where N is the number of announcements, and the event window isfrom S1 to S2 days around the event day. To facilitate the computationof the subsequent statistical significance test, AR is usually transformedto the standardized abnormal return (SAR), as shown in Eq. (4):

SARit ¼ARitffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffi

Var ARitð Þp ð4Þ

where Var ARitð Þ ¼ si2 1þ 1

Diþ Rmt−Rmð Þ2

P−T2

j¼−T1

Rmj−Rmð Þ2

2664

3775, si2 is the residual return

variance obtained from the regression model for announcement i, Di isthe number of trading days used in the regression model for announce-ment i and ranges from T1 days to T2 days before the date of the an-nouncement, and Rm is the mean return on market index over theestimation period of Di. The cumulative standardized abnormal return(CSAR), is computed using Eq. (5):

CSAR ¼ 1N

XN

i¼1

XS2t¼S1

SARitffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiffiS2−S1 þ 1

p : ð5Þ

Assuming that CSAR follows a normal distribution, a one tail Z testis used to test its statistical significance. The test statistic is given byEq. (6):

Z ¼ffiffiffiffiN

pCSAR ð6Þ

For a more detailed description of the above parametric statisticalprocedure, the interested reader may refer to past research in the area[23,46].

In addition to the parametric test, some researchers have used non-parametric tests, such as the sign test [15], to improve the robustness ofthe obtained results [77]. In order to test the generated hypotheses,appropriate subsamples based on the criteria determined in thehypotheses are created, and the abnormal returns are computed foreach subsample. Again, both parametric and nonparametric tests areused and conclusions are drawn about whether the results obtainedfor the entire sample hold for the selected subsamples or not.

Table 1Filtering of announcements using different criteria.

Criterea Number

Number of announcements matching keywords 14,871Number of relevant announcements 228Number of announcements confounded by other news 41Number of announcements related to private firms 49Number of announcements related to thinly traded firms 34Number of announcements selected for analysis 104

Table 3Distribution of sample firms making the green supply chain related announcements by2-digit SIC.

2-Digit SIC Industry Frequency Percentage

26 Paper and allied products 1 2.428 Chemical and applied products 2 4.834 Fabricated metal products 1 2.435 Industrial machinery and equipment 11 26.236 Electronic and other electric equipment 3 7.137 Transportation equipment 4 9.538 Instruments and related products 2 4.840 Railroad transportation 1 2.442 Motor freight transportation/warehouse 3 7.149 Electric gas and sanitary services 1 2.450 Wholesale trade-durable goods 6 14.353 General merchandise stores 1 2.467 Holding and other investment offices 1 2.473 Business services 3 7.175 Auto repair and parking 1 2.487 Engineering and accounting and

management services1 2.4

Total 42 100.0

629I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

4.2. Data collection and filtering

For obtaining the announcements data we searched the Factivadatabase. The keywords used for this purpose included green supplychain, closed-loop supply chain, sustainable operation, green opera-tion, remanufacturing, green refurbishment, green disassembly,green returns management, and product recovery. Although someof the past studies have found synergy between green supply chainand quality and lean principles [30,63,72,78], we did not include qual-ity and lean as keywords in our search as these concepts have beenstudied for a long time in a variety of contexts other than green.Although they may be involved in successful green supply chain oper-ations in certain situations, it becomes difficult to establish conclusiveevidence from the announcements on whether they indeed sup-ported green supply chain initiatives in an organization. The earliestannouncement date in our sample data is found to be May 27, 1997,and the latest announcement date is December 14, 2009. After allthe filtering activities, our final data set consisted of 104 announce-ments involving 48 companies. Out of these 48 firms, 34 were listedin the US, and the remaining 14 firms were listed in Canada, China,Germany, Japan, Taiwan, and the UK. Table 1 provides a step-by-step breakdown of how the announcements are collected and cleanedfor analysis. A sample announcement is shown in the Appendix A.

Table 2 shows the distribution of green supply chain related an-nouncements used in our study by year. It is evident that increasingnumbers of firms are taking green supply chain initiatives in recentyears. This is quite expected because of the growing attention thetopic is gaining lately. Table 3 presents distribution of the firmsselected in our study by two-digit SIC codes. A significant number offirms, for which the announcements are gathered, belong to the indus-trial machinery and equipment, and wholesale trade of durable goodscategories. Many of these types of businesses are manufacturing-oriented, and remanufacturing and recycling may play a critical rolefor the success of these businesses. We may note that we have

Table 2Distribution of green supply chain related announcements byyear.

Year Number of announcements

1997 31998 11999 12000 22001 22002 02003 02004 12005 132006 222007 222008 222009 15Total 104

hypothesized that these types of businesses may gain greater positiveresults by adopting green initiatives and higher percentage ofannouncements in these categories provides an early indication of thevalidity of the assumptions. Table 4 provides descriptive statistics ofthe financial data of the firms included in the study. Specifically, itlists the mean, median, standard deviation, maximum, and minimumvalues of different accounting measures of the firms (such as totalassets, EBIT, total liabilities, working capital, and sales) as well as theirR&D expenses, and market value. It shows that there is a wide varietybetween the firms that are included in this research.

4.3. Determination of subsamples

In order to conduct the subsampling analysis, we characterizedthe firms according to a number of factors based on hypotheses H2–H8. To determine whether the firms belonged to the manufacturingsector we examined their SIC codes. If the firms had SIC codes be-tween and including 20 and 39, they are considered to bemanufacturing firms [14]. Otherwise, they belonged to the ‘Others’subsample. The next subsample is related to R&D expenses of thefirm. For this we computed the ratio of R&D expenses to the total as-sets of the firm. The division by the amount of total assets is done tooffset any bias due to the size of the firm. Then the median of thatratio is used to distinguish between firms that had high R&D expensesfrom the firms that had low R&D expenses. To determine the cutoffdate for time period of adoption a cutoff date of February 16, 2005is used. This is the date for the beginning of the implementation ofthe landmark Kyoto protocol that was adopted in Kyoto, Japan on De-cember 11, 1997 [8]. Firms making GSCM announcements before thisdate are considered to be early adopters. The announcements that arerelated to recycling or remanufacturing are identified by reading thetext of the announcement. Among the 104 announcements, 79belonged to this subsample. Total assets have often been used as aproxy for firm size. We used the natural logarithm of total assets ofthe firm (1 year prior to the date of the announcement) as a proxyfor firm size. The median value is used as the cutoff point to distin-guish between big and small firms. The world components of theDJSI are studied (http://www.sustainability-index.com/07_htmle/data/djsiworld.html) to determine if the firm is included in thisindex on not. To distinguish between high and low growth potentialfirms, we listed the market-to-book ratio for all firms, and deter-mined the median for all firms, which is used as the cutoff. Firmswith market-to-book ratio greater than or equal to the median are

Table 4Descriptive statistics of financial information of the firms making green supply chain related announcements.

Total assets(Mil. US$)

EBIT(Mil. US$)

Total liabilities(Mil. US$)

Sales(Mil. US$)

Working capital(Mil. US$)

R&D expenses(Mil. US$)

Market value(Mil. US$)

Mean 34,024.5 11,337.3 50,165.3 96,868.0 20,641.8 4857.0 84,321.2Median 25,635.0 3322.9 18,968.0 36,339.0 1698.5 665.0 33,744.8Std. Dev. 36,254.0 55,039.3 149,075.9 369,791.2 129,208.5 27,652.9 25,0873.5Maximum 222,142.0 543,793.0 1,190,331.0 3,467,853.0 1,248,987.0 275,300.0 1,748,484.0Minimum 224.5 −416.8 73.2 117.5 −10,869.0 0.0 79.3

Table 5Overall impact of the announcements on stock price in different event windows.

Event window [−1] [0] [1] [−1, 0] [0, 1] [−1, 1]

Mean CAR 0.16% 0.20% 0.00% 0.36% 0.21% 0.37%Z test p-value 0.35 0.13 0.35 0.15 0.30 0.26No. of +ve:−ve returns 49:55 58:46 47:57 56:48 52:52 54:50Sign test p-value 0.40 0.06 0.26 0.13 0.37 0.23

630 I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

put in the ‘high growth potential’ subsample, and the firms with aratio less than the median are put in the ‘low growth potential’ sub-sample. Finally, the correlations between all factors used in the sub-sampling are computed. For doing this, for each announcement thecorresponding subsampling factor is assigned a value of either 0 or1. For example, for the size of the firm, ‘big’ is assigned a value of 1,and ‘small’ is assigned a value of 0. Next, all pairwise correlationsbetween the seven subsampling factors are computed. All correla-tions are found to be small, and are found to range between −0.258and 0.427. This indicates that the subsampling factors are weakly cor-related with each other, and may be analyzed separately through in-dividual hypothesis development.

Table 6Cumulative abnormal return (CAR) of firms that are subsampled using various factors on d

Panel A: impact of nature of firm

Characteristic Manufacturing Othe

Sample size 79 25Mean CAR 0.32% −0.Z test p-value 0.06 0.45No. of +ve:−ve returns 45:34 12:1Sign test p-value 0.08 0.48

Panel C: impact of period of adoption

Characteristic Early Late

Sample size 13 91Mean CAR 0.81% 0.15Z test p-value 0.33 0.09No. of +ve:−ve returns 8:5 49:4Sign test p-value 0.23 0.17

Panel E: impact of firm size

Characteristic Small Big

Sample size 54 50Mean CAR 0.50% 0.04Z test p-value 0.03 0.42No. of +ve:−ve returns 33:21 24:2Sign test p-value 0.04 0.47

Panel G: impact of growth potential

Characteristic

Sample sizeMean CARZ test p-valueNo. of +ve:−ve returnsSign test p-value

5. Discussion of results

Table 5 presents cumulative abnormal returns (CAR) observed bythe firms making announcements of green supply chain related ef-forts. According to standard event study research we compute theCARs for different event windows. In particular, we list the CARsobtained on the day before the announcement (i.e., [−1]) to find ifthere is any leakage of the news, on the day of the announcement(i.e., [0]) to see if there is immediate impact, and also on the day fol-lowing the announcement (i.e., [1]) to show if there is any delayedimpact. We also show the CARs aggregated over different combina-tions of event windows. The results indicate that the most significantimpact happens in the event window [0]. This is expected as the in-vestors perceive green initiatives positively, and react soon after theannouncements are made. For this time window, while the non-parametric test is statistically significant (with p-value of the test sta-tistic being less than 0.1) the parametric test is not significant at the10% significance level. The mean CAR is found to be positive and0.2%. There are more announcements generating positive returnsthan negative returns. Hence, we can conclude that Hypothesis 1 is

ay of announcement.

Panel B: impact of R&D expenses per total assets

rs High Low

51 5302% 0.48% 0.00%

0.08 0.293 33:18 24:29

0.01 0.26

Panel D: impact of nature of operation

Recycling/remanufacturing Others

79 25% 0.23% 0.25%

0.18 0.112 43:36 14:11

0.19 0.20

Panel F: impact of listing in DJSI

Not listed Listed

61 43% 0.53% −0.19%

0.02 0.365 35:26 22:21

0.08 0.43

Low High

52 520.52% −0.05%0.02 0.4531:21 26:260.04 0.48

631I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

partially supported. As the hypothesis is not fully supported, we pro-ceed to investigate if GSCM initiatives have greater impact in specificsituations as stipulated in hypotheses H2 through H8. For the sub-sampling analysis, the event window [0] is chosen as it showed par-tial significance for H1.

Table 6 shows the results from analyses performed on varioussubsamples to test hypotheses H2 through H8. Panel A of Table 6shows the effect of GSCM initiatives for manufacturing firms. Bothparametric test (p-value of Z test being 0.06) and non-parametrictest (p-value of sign test being 0.08) confirms that manufacturingfirms indeed observe greater positive change in stock price by under-taking such initiatives, as hypothesized earlier in H2.

Hypothesis 3 (H3) suggests that firms with high R&D expensesshow strong positive impact. However, R&D expenditure may varywidely according to the size of the firm. Hence, we normalize the mea-sure by using the ratio of R&D expenses and total assets. Panel B ofTable 6 shows that firms with higher ratio have statistically significantpositive change in return compared to the firms with lower value ofthe ratio. Both the parametric and non-parametric tests have p-valuesless than 0.1, which strongly supports confirmation of H3.

Hypothesis 4 (H4) suggests that firms that are early adopters ofGSCM initiatives show greater positive impact. However, resultsshown in Panel C of Table 6 imply the hypothesis cannot be confirmedby either of the two tests in the event window [0]. We investigate fur-ther if the other event window has any effect on the analysis. Panel Aof Table 7 demonstrates that both parametric test (with p-value of0.08) and non-parametric test (with p-value of 0.10) confirm the hy-pothesis in the event window [1]. This is an interesting finding. Al-though it implies the early adopters of green supply chain receivepositive reaction from the investors, it is delayed by a day. This maybe due to the fact that the concept of green supply chain is shapingup in the early years and people are not as aware about GSCM asthey are at the current time. Thus the market takes a longer time toreact to the announcements.

Hypothesis 5 (H5) suggests that the firms that made announce-ments related to remanufacturing and/or recycling will show strongpositive result. The results, as shown in Panel D of Table 6, indicatethe hypothesis cannot be confirmed by either of the two tests inevent window [0]. Subsequently, we test the hypothesis in theevent window [1]. The results in Panel B of Table 7 show that the hy-pothesis cannot be supported even in the event window [1]. This im-plies that while the investors may view overall green supply chaininitiatives positively, they may not be keen to know the details. Prob-ably there is not enough knowledge among the investors about theimpact of these two specific green operations.

Hypothesis 6 (H6) implies that small firms show strong positive im-pact. Panel E of Table 6 illustrates that both parametric test (with p-value of 0.03) and non-parametric test (with p-value of 0.04) confirmthe hypothesis in event window [0]. This finding is expected becauseof the reasons provided in the hypothesis development section, whichis presented earlier in the manuscript. Hypothesis 7 (H7) states thatfirms not listed in the Dow Jones Sustainability Index (DJSI) show strongpositive result. Both parametric test (with p-value of 0.02) and non-parametric test (with p-value of 0.08), as shown in Panel F of Table 6,provide statistically significant support for the hypothesis. Hypothesis

Table 7Cumulative abnormal return (CAR) of firms that are subsampled using period of adop-tion and nature of operation one day after announcement.

Panel A: impact of period of adoption Panel B: impact of nature of operation

Characteristic Early Late Recycling/remanufacturing Others

Sample size 13 91 79 25Mean CAR 1.26% −0.06% 0.24% −0.31%Z test p-value 0.08 0.30 0.34 0.25No. of +ve:−ve returns 8:5 40:51 40:39 9:16Sign test p-value 0.10 0.18 0.42 0.12

8 (H8) suggests that firms with low growth potential show strong pos-itive impact. The results, as shown in Panel G of Table 6, indicate that thehypothesis can be statistically confirmed by both parametric (with p-value of 0.02) and non-parametric test (with p-value of 0.04).

6. Managerial implications and conclusion

Severalmanagerial insightsmay be obtained from the study. Overall,the study shows that plans for adopting GSCM initiatives have positiveimpact on shareholders' value of the firm. While this inference is par-tially supported in our initial analysis of the data, subsequent analysesof the subsamples support the claim further. More specifically, we findthat green supply chain initiatives may yield greater positive influenceunder certain situations. We describe them as follows.

We find that investors tend to view green supply chain projects inmanufacturing firms more favorably compared to those in non-manufacturing firms. This suggests that executives of manufacturingfirms are in an advantageous position to deal with sustainability is-sues, and contribute significantly to overall success of their firms.This advantage should be tapped to its full potential.

Research and development (R&D) plays a crucial role in successfulimplementation of new ideas, technologies, and/or systems. Greensupply chain is no exception. Firms with higher R&D intensity tendto generate more positive reaction among investors in implementinggreen supply chain projects. Higher R&D investment by the firms canbe viewed as a proxy for innovativeness. When innovative firmsadopt green supply chain practices, the market adjudges it more pos-itively by associating innovativeness with higher chance of successfulimplementation. This is encouraging news for innovative companies.It also bolsters the importance of proper R&D infrastructure forundertaking meaningful green initiatives.

In early years, although the market reacts positively to green sup-ply chain announcements, the reaction is a little slower compared tothe more recent announcements. It may be attributed to the fact thatacceptance of new ideas takes time. While this may not be an issuecurrently for implementing green supply chain practice in generalas considerable time has passed since inception of the practice, specif-ic novel ideas within the paradigm of green supply chain may facesimilar delayed reaction from the market. Although we do not haveconclusive evidence in support of the argument as the scope of ourstudy is limited to the study of short-term effects, this research pro-vides some indirect indications in favor of the conjecture. It may beworthwhile to investigate it in future.

Since a significant number of green supply chain initiatives, partic-ularly the ones related to closed-loop supply chain, deal with rema-nufacturing and/or recycling issues [36] we thought investors willreact positively to the announcements that are related to these twoissues. Our analysis does not find it to be significant, and this mayappear to be counter-intuitive. However, it may be argued that inves-tors may not be interested in specific types of initiatives within thedomain of GSCM. Also, they may not be aware of the technical detailsof green supply chain operations, and unlike financial data the infor-mation is not readily available from commercial databases. While theissue is outside the scope of our current manuscript, future studiesmay be conducted to understand and compare the success potentialof diverse initiatives within the green supply chain practice includingenvironmentally friendly product and process design, elimination/reduction of excess waste and energy use in production and distri-bution, adherence to environmental quality standards, and dynamicvalue recovery through recycling and remanufacturing operations. Inaddition, we do see probable scope for executives of the firms adopt-ing green supply chain to educate investors about the issues, andpossibly even harness untapped potential for generating additionalvalue for the firms.

We find smaller firms, firms not listed in the Dow Jones Sustain-ability Index (DJSI), and firms with low growth potential receive

Cummins now offering remanufactured ISX enginesAdam Ledlow290 words2 November 2006eSource Canada Business News NetworkCOLUMBUS, Ind.—Cummins is now remanufacturing ISX en-gines on a new state-of-the-art production line at the San LuisPotosi, Mexico, plant. "The Cummins ReCon ISX is an extremelyimportant product for Cummins and our loyal customer base,"said Allen Pierce, general manager of parts and servicemanufacturing. "We must provide the very best in quality andvalue, which is whywe've handpicked people at all levels includ-ing several from the original equipment plant in Jamestown, N.Y.and brought them here for the duration of the implementationprocess. All the latest quality tools and Six Sigma processesare being used to ensure our best ReCon engine launch to date.”Plant manager Aaron Borunda added, “The new ReCon ISX linerepresents a major investment in the talented and dedicated em-ployees at our facility. We have sufficient capability to meet allforecasted orders, plus we have the expansion capacity availableto meet future growth needs.” Unlike rebuilt or reconditioned en-gines, every ReCon ISX is completely disassembled, thoroughlyinspected, remanufactured and tested on the production line toverify that it meets factory specifications, the company says.Materials and components are upgraded to the latest technologyusing only genuine Cummins new or ReCon parts, which includea one-piece forged-steel piston, a new one-piece head gasket forbetter coolant control, a flat-top induction-hardened cylinder lin-er for better cylinder sealing, and an improved piston pin and lu-brication for longer life-to-overhaul. Cummins is offering a two-year/200,000-mile (321,869 km) warranty, twice as long asprevious standards. Extended coverage plans are also available.Current production is limited to engines produced between1998 and October 2002.

Notations/acronyms

Explanation/extended terms

GSCM Green Supply Chain ManagementISO International Organization for StandardizationModular design It is an approach that divides the entire system into smaller parts

or modules that can be developed, replaced, and/or upgradedindependently. It provides benefits from enhanced speed andflexibility in design, development and reuse of product.

Recycling Recycling is processing of a product after the end of its life cycleto prevent potential waste of useful materials. After recycling,

632 I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

strong positive reaction from the market when they make announce-ments of adoption of green supply chain practices. This substantiatesour initial conjecture that investors probably do not have high expec-tations about these types of firms, and when their actions surpass theexpectation level investors view them quite positively. This is an in-teresting finding as it indicates that the potential to be successful inadopting green supply chain practices is not limited to the large andrenowned firms. Smaller and lesser known firms can also be equallyaccomplished, if not more, in such initiatives with proper infrastruc-ture and appropriate managerial stewardship.

We believe that the results of our research will be quite usefulfor operations managers. Although operational decision making isdependent on accounting metrics such as profitability, these figuresare usually not available as soon as the firm makes a public announce-ment of a GSCM initiative. Sometimes, “direct productivity relatedmea-sures may require many months or even years of observation” [59]. Atthe same time, such metrics may not always be a true reflection of thetrue financial impact of an initiative because “managers canmanipulateaccounting profits because they can select accounting procedures” [65].In the absence of such measures, financial impact analysis using anevent study and the corresponding findings as listed in this paper willbe deemed quite important for the managers of the firm.

We must point out some of the limitations of our current study.The study is limited to analysis of short-term impact of announce-ments related to green supply chain initiatives. It will be importantto investigate how the impact unfolds in the long-term. In suchlong-term studies, it will be useful to investigate if the market reac-tion to successful initiatives is different from that to the unsuccessfulones. At the same time, the long-term studies can also focus on theimpact of GSCM initiatives on performance metrics such as profitabil-ity. Also, the research suffers from the limitations of an event study asit only deals with publicly listed firms. It will be worthwhile to studyhow impact of green supply chain may vary across different industrysectors as more announcements become available in future. Anothervaluable stream of research may be in exploring the use of othermethodologies such as case studies and survey analysis to find theimpact of GSCM and conduct comparative studies.

While the concept of green supply chain has received prominencein industrial practice as well as in media, still organizations are debat-ing its merits. Many even view the green supply chain projects asmere tools for achieving compliance with environmental laws andregulations. Of course, there are organizations that have understoodthe benefits and are avidly continuing green operations at present.A number of research studies have discussed various measures ofbenefits, details of which are discussed in the early part of the manu-script. However, to the best of our knowledge no previous studieshave analyzed the impact of green supply chain initiatives on thestock prices of the firm. The event study method adopted in thisstudy has been used widely in accounting and finance literature,and is capable of shedding light on how the market values certain ac-tions taken by the firms. Hence, the findings may provide useful infor-mation for the investors as well as for the firms. Our analysis doessubstantiate that adoption of green supply chain practice indeed cre-ates value for the firms and the promise of success is not limited tothe elite few. The evidence of smaller and lesser known firms beingsuccessful suggests potential low barriers to entry into this arena.Truly, green supply chain management is poised to improve the triplebottom line—profit, people, and planet.

the materials used in a product may be converted into someother materials or may be brought back to their original formsto be used again.

Remanufacturing Remanufacturing is the process of replacing or repairing wornout or obsolete components or modules in a product andbringing back the product to like-new condition.

Reverse logistics Reverse logistics is the process of moving products from theirtypical final points of use for the purpose of proper disposaland/or value recovery through recycling or remanufacturing.

Acknowledgment

The first author gratefully acknowledges financial support re-ceived from the University of Hong Kong in the form of Small ProjectFunding. He also acknowledges research assistance received from Mr.Shipeng Yan.

Appendix A

Sample announcement

List of notations and acronyms

633I. Bose, R. Pal / Decision Support Systems 52 (2012) 624–634

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Indranil Bose is an associate professor at the School ofBusiness, the University of Hong Kong. He holds a B. Tech.(Hons.) from the Indian Institute of Technology, M.S.from the University of Iowa, M.S. and Ph.D. from PurdueUniversity. His research interests are in telecommunica-tions, data mining, information security, and supply chainmanagement. His publications have appeared in Commu-nications of the ACM, Communications of AIS, Computersand Operations Research, Decision Support Systems, Ergo-nomics, European Journal of Operational Research, IEEE ITProfessional, Information & Management, Journal of Orga-nizational Computing and Electronic Commerce, Journal ofthe American Society for Information Science and Tech-

nology, Operations Research Letters etc. He is listed in the International Who's Whoof Professionals 2005–2006, Marquis Who's Who in the World 2006, Marquis Who'sWho in Asia 2007, Marquis Who's Who in Science and Engineering 2007, and MarquisWho's Who of Emerging Leaders 2007. His research is supported by several grantsfrom academia and industry. He serves on the editorial board of Information &Management, Communications of AIS, and several other IS journals, and is frequentlyinvited as keynote speaker at major international conferences.

Pan

Raktim Pal is an associate professor at the College ofBusiness, James Madison University. He has a Ph.D. andtwo M.S. degrees—all from Purdue University. He holds a B.Tech. (Hons.) degree from the Indian Institute of Technolo-gy, Kharagpur. Prior to joining James Madison Universityhe worked in industry for several years and was involvedin a number of supply chain management projects at well-known organizations. His research interests are in theareas supply chain management and logistics, projectmanagement and IS/OM interfaces, transportation systemsmodeling and analysis, and applied operations research.His research papers have appeared in Communications ofthe ACM, Communications of the AIS, Computers &

Operations Research, European Journal of Operational Research, Information &Management, International Journal of Production Economics, Journal of TransportationEngineering, and Transportation Research Record. He serves on the editorial board ofInternational Journal of Applied Decision Sciences. He is listed in Marquis Who's Who inAmerica 2009, Marquis Who's Who of Emerging Leaders 2007, and America's Registryof Outstanding Professionals 2003. He is a member of Decision Sciences Institute,roduction and Operations Management Society, and Institute for Operations Researchd the Management Sciences.