Environmental Engineering Reference
In-Depth Information
Table 6. Emerging Market Characteristics and their likely Impact on the Implementation of Green Lo-
gistics Systems (Based on Oral et al. 2003, Khanna et al. 2005, Arvis et al. 2007)
Likely Impact on the Implementation of Green
Logistics Systems
Dimension
Characteristics
Political & Legal
System
• Government's lack of maturity; planning horizon
often limited by legislative period
• Inefficient controlling systems
• Low regulation
• Lobbyism and Corruption
• Incentives to introduce green logistics practices are
low
• Lack of environmental legislation as driver for
green logistics
• Lack of long-term sustainability plans
Social System
• Poverty and inequality
• State of underdevelopment of rural areas
• Low investment into education and health
• High power distance culture
• Lack of collaboration
• Lack of environmental awareness as driver for
green logistics
• Consumer behavior in many customer segments
focused on low product prices; limited options for
companies to shift investment cost on consumer
• Top management avoid participative decision
making
• Focus on dedicated instead of shared resources
Capital Markets
• High inflation rates
• High interest rates
• No tendency towards investment
• Tendency towards materials, sub-product, and
product inventories
Labor Markets
• Low labor costs
• High costs of training
• Limited tendency to increase labor productivity by
implementing technologies
• Limited training within companies
Infrastructure &
Resources
• High cost of technology
• High maintenance costs
• Low public and private investments in public infra-
structure (e.g. technology and transport systems)
• Limited funds for implementation of technologies
• Limited preventive maintenance
• Underdeveloped transport systems (focus on trucks)
and information systems
Logistics System
• Low logistics performance indexes (e.g. qualifica-
tion gaps, tracking and tracing)
• High cost of transportation and warehousing
• Less use of third party logistics service providers
• Lack of modern and integrative logistics concepts
• Lack of standardization
• Short-term cost-minimization dominating
above, are global phenomena - in highly developed
as well as emerging markets.
The term “emerging market” was used origi-
nally by the International Finance Corporation
(IFC) to describe a narrow list of middle-to-higher
income economies among the developing coun-
tries, with stock markets in which foreigners could
buy securities. The World Bank defines developing
countries as those countries with low-income and
middle-income economies, i.e. economies with a
GNI per capita lower than $9,265 (World Bank,
2002). Previous research shows that the imple-
mentation of logistics concepts can be negatively
influenced by certain characteristics (Lawrence &
Lewis 1996, Oral et al. 2003), which a majority
emerging markets exhibit.
Based on existing findings (Oral et al. 2003,
Khanna et al. 2005, Arvis et al. 2007), Table 6
presents emerging market characteristics and
their likely impact on the implementation of green
logistics systems.
Confronted with such business conditions,
companies and value chains operating in emerg-
ing markets face additional obstacles to greening
their logistics systems compared to organizations
in highly developed economies.
One main consideration reflected in Table 6
is that, due to the characteristics of the political
system, it is difficult to find a highly developed
environmental legislation in emerging markets that
could propel green logistics practices. Additionally
the lack of control and the level of corruption en-
