The Cost of Legitimacy: Quantifying the Financial Trade-offs and Capital Allocation Efficiency of Institutionalizing Green Supply Chain Management in Developing-Market Energy Firms

• Abey Litty

  Texas University

  Author

The institutionalization of green supply chain management (GSCM) in developing-market energy firms presents a paradox: while external pressures mandate environmental stewardship, the financial implications remain poorly quantified, creating legitimacy-driven capital allocation inefficiencies. This study investigates the financial trade-offs and capital allocation efficiency consequences of GSCM institutionalization among 144 oil and gas firms operating in Nigeria, employing a mixed-methods design combining retrospective financial analysis with regression modeling. Drawing on institutional theory and prospect theory, the research quantifies the relationship between coercive, normative, and mimetic pressures and GSCM adoption costs, revealing that coercive and normative pressures significantly enhance GSCM practices (β = 0.42, p < 0.001), while mimetic pressures show no significant effect (β = 0.08, p = 0.312). Capital allocation efficiency declines by 18.7% during the initial institutionalization phase, with cost recovery periods averaging 4.2 years. The study identifies that firm size does not moderate these relationships, indicating uniform pressure effects across firms. These findings contribute a replicable financial quantification framework for GSCM institutionalization, offering practitioners evidence-based benchmarks for investment decisions and policymakers insights for designing targeted incentive structures that address the 89.4% of firms reporting cost-related adoption barriers.

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