Enhancing Supply Chain Efficiency and Green Logistics: The Role of Environmental Regulations

Abstract

This study investigates the influence of Environmental Regulations (ER) and Financial Incentives (FI) on Supply Chain Efficiency (SCE) and Green Logistics Implementation (GLI) among small and medium-sized enterprises (SMEs) in Jordan. Drawing on the theoretical foundations of Sustainable Supply Chain Management (SSCM), this study proposes and empirically tests a conceptual model linking ER and FI to SCE and GLI. A quantitative research design was employed using data collected from 243 professionals across Jordanian SMEs involved in logistics and supply chain operations. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) via SmartPLS 4. The results reveal that both ER and FI significantly and positively influence SCE and GLI, though with varying magnitudes. ER exerted a stronger effect on SCE (β = 0.372, p < 0.001) compared to GLI (β = 0.172, p < 0.01), suggesting that regulatory compliance enhances operational efficiency but may not fully drive proactive green logistics practices. Conversely, FI demonstrated the strongest impact on SCE (β = 0.412, p < 0.001) and a weaker yet significant effect on GLI (β = 0.148, p < 0.05), indicating that financial support serves as a critical enabler of efficiency but requires complementary institutional and cultural mechanisms to promote sustainability adoption. These findings underscore the complementary roles of regulatory and financial instruments in advancing both efficiency and sustainability within SME supply chains. The results also provide practical insights for policymakers and SME managers aiming to strengthen the competitiveness and sustainability of Jordan’s supply chain ecosystem.