Analysis the Value of Green Advertising and Environmental

Management in the Garment and Textile Industries

Damayanti Octaviaand Dita Permata Sari

School of Economics and Business, Management of Business in Telecommunication and Informatics, Telkom University,

Jalan Telekomunikasi, Bandung, Indonesia

damavia@yahoo.co.id, permatasari1995@gmail.com

Keywords: Green Advertising, Environmental Management, Environmental Reputation, Garment and Textile Industries.

Abstract: Garment and textile industries is one of the country’s foreign exchange contributors. This industry is

prioritized to be developed because it has role in economy of Indonesia. But garment and textile industry have

a weakness in competitiveness. Wasteful use of energy is one of the competitive advantage weakness, because

that has impact on industry cost and the environment. The purpose of this study is to analyze the values of

green advertising and environmental management in garment and textile industries. Research method used is

quantitative method and analysis technique using SEM-PLS tool. Sample in this research is 50 respondents

from 9 companies. The results of this research are green advertising has significant effect on environment

management, environmental reputation, and financial performance. Environmental management has no effect

on environmental reputation. The environmental reputation significant effect on financial performance.

1 INTRODUCTION

According to the Ministry of Environment and

Forestry Statistics Data 2015, the projection of

climate change shows an increase in average

temperature (climatology) ranging from about 0.65

in the period 2016-2040, 1.2

C in the period 2046-

2070, to about 1,5

C in the period 2076-2100

(www.menlhk.go.id).

Climate change is largely due to human activity.

The eight largest contributors of carbon emissions are

cement, steel, pulp and paper, textile, ceramics,

fertilizer, petrochemical, and certain food and

beverage industries (www.tempo.co.id). Based on

these data, textiles are one of the largest carbon

emitters. But on the other hand, the textile industry is

one of the ten potential commodities

(www.kemendag.go.id). Potential industries must be

developed and managed with the right environmental

management, these two ways encourage economic

growth and reduce impact on the environment.

According to Industry Minister, The Indonesian

Government try to encourage environmentally

friendly industries (www.tempo.co.id). Business and

environmental knowledge, as well as systems,

practices, and routines should be upgraded, to

encourage economic benefits and environmental

protection (Albertini, 2013).

Environmental pollution generated by the

manufacturing industry, causing consumers become

more aware of the environment (Chen, 2011 in Chen

and Chang, 2013).

Consumer environmental awareness is created by

environmental pollution increased and the

implementation of green marketing. Green marketing

has a positive impact on consumers. Consumers are

becoming more aware to protect their environment

and, in the future, consumers will prefer

environmental friendly products. Marketers and

policy makers must be aware of this consumer

behavior shifting (Khandelwal and Bajpai, 2011).

Consumer awareness is not accompanied by a

belief in green products. Therefore, green advertising

is very important in communicating the company's

environmental friendly practices to audiences

(Khandelwal and Bajpai, 2011). The occurrence of

changes in the message delivered in green

advertising. The 1980s and 1990s message delivered

focused on fuel efficiency. The 2000s message was

focused on the benefits of consumers and wider social

wealth (Ahern et al., 2012).

Consumer's hesitancy to green advertising,

because the message conveyed less meaning of the

environment deeply and most of the research does not

include the measurement of the depth of

environmental messages (Cummins, et al., 2014).

458

Octavia, D. and Sari, D.

Analysis the Value of Green Advertising and Environmental Management in the Garment and Textile Industries.

In Proceedings of the 1st International Conference on Islamic Economics, Business, and Philanthropy (ICIEBP 2017) - Transforming Islamic Economy and Societies, pages 458-463

ISBN: 978-989-758-315-5

Therefore, companies should focus on implementing

environmental policies and management, so that

consumers are trust and company acquire green

reputation from consumers (Abdelzaher and

Newburry, 2016).

Based on the data and previous research, this

article aims to know:

 Does Green Advertising have an effect on

Environmental Management?

 Does Green Advertising affect the Environment

Reputation?

 Does Environmental Management Affect

Environmental Reputation?

 Does Environmental Reputation Affect

Financial Performance?

 Does Environmental Management Affect

Financial Performance through Environmental

Reputation?

 Does Green Advertising Affect Financial

Performance through Environmental

Management and Environmental Reputation?

2 LITERATURE REVIEW

2.1 Green Advertising

Green advertising is an advertisement that offers

consumers how convenient using eco-friendly

products or services as social responsibility (Ahern et

al., 2012). Green advertising is how deep the

environmental focus is in advertising (Cummins et al,

2014).

Green advertising should focus on green claims

that are easily observable, easy to understand clearly,

practically, and useful for protecting the environment

(Leonidou et al, 2011). Therefore, green advertising

is a part of environmental marketing strategy that can

help company to achieve a sustainable competitive

advantage, and superior performance (Leonidou et al,

2011).

Hypothesis 1, green advertising has an effect on

environmental management.

A green brand image was built by the company

when creating green adverting with a message context

that provides environmental protection (Hu, 2012). In

his research Ko, et al (2013) green marketing that

focuses on green products and green advertising is

strongly related in building the company's reputation.

Providing clear information and authentic

environmental claims is the success of green

advertising in generating a good reputation within the

industry (Dean and Pachechho, 2014).

Hypothesis 2, Green advertising affects the

environmental reputation.

2.2 Environmental Management

Practice

Environmental management is a practice related to

the environment and ensures human continuity to live

on Earth indefinitely (Cummins et al, 2014).

According to Irwan and Suzana (2016) environmental

management practices are a tool for organizations to

manage the impact of the organization's activities on

the environment. There are four reasons why

companies go green, namely: (a) profitable business,

(b) part of CSR activities, (c) government regulations,

(d) cost and benefit issues (Trott, 2013). According

Jeong et al (2014) implementation of environmental

management is very useful, therefore the company

must be consistent in running environmentally

friendly practices. Industries that depend on nature

and constrained by limitations, must carry out

environmental management within their company

(Yu and Ramanathan, 2016).

According to Mayer et al (2012) cited by Yadav

et al (2016), the company's commitment to the

environment plays a role in improving green

reputation. For some companies, green reputation is

one of the most important factors. The company's

reputation is closely linked to the implementation of

environmental management (Ko et al, 2013).

Hypothesis 3, Environmental management affects the

environmental reputation.

2.3 Environmental Reputation

According to Banyte and Gageikiene (2008) cited by

Sarkar (2012) green marketing reinforce the brand

image. Generally, green marketing refers to

promotional and advertising activities that refer to the

environment. Companies that do green marketing not

only get a good response from consumers but also can

cut production costs, so the price offered to

consumers is more economical (Sarkar, 2012).

Hypothesis 6, Green Advertising has an effect on

Financial Performance through Environmental

Management and Environmental Reputation.

According to Yusof (2012) the environmental

reputation affects the value of spending. It can be said

that if a product has a good environmental reputation

then consumers will spend money to spend more

company products.

Analysis the Value of Green Advertising and Environmental Management in the Garment and Textile Industries

459

Hypothesis 4, Environmental Reputation Affects

Financial Performance.

2.4 Financial Performance

Effective implementation of green marketing

encourages a customer trust to the company, which

affects business performance (Ko et al, 2013).

Environmental performance is the output of

environmental management. Environmental

performance has a positive relationship with financial

performance (Albertini, 2013).

If the reputation of the company is good then it

will affect consumer purchase intention (Ko et al,

2013). This can be interpreted that the company's

reputation affects the company's financial

performance. According to Yu and Ramanathan

(2016) the implementation of environmental

management has an effect on the improvement of

company performance.

Hypothesis 5, Environmental management affects

financial performance through environmental

reputation.

3 METHODOLOGY

In this research, data analysis technique used is

structural equation modeling (SEM). SEM is a

composite of two separate statistical methods,

namely:

 Factor analysis developed in psychology and

psychometric

 Simultaneous equation modeling developed in

econometrics (Ghozali, 2011: 3).

According to Wright (Jogiyanto and Abdillah,

2015: 140) SEM is a statistical technique for testing

and estimating causal relationships by integrating

factor analysis and path analysis.

The SEM type used in this study is PLS-SEM.

Partial Least Squares (PLS) is a SEM-based statistical

model designed to solve multiple regressions when

specific data problems occur, such as small sample

size, missing values, and multicollinearity (Jogiyanto

and Abdillah, 2015: 161). PLS is a variance-based

structural equation analysis (SEM) that can

simultaneously perform testing of measurement

models as well as testing structural models (Jogiyanto

and Abdillah, 2015: 164). The measurement model is

used to test the validity and reliability, while the

structural model is used for causality test (hypothesis

testing with prediction model) (Jogiyanto and

Abdillah, 2015: 164).

In this study using Nonprobability Sampling.

Nonprobability sampling is a sampling technique that

does not provide the same opportunity for each

element or member of the population to be selected as

a sample (Sugiyono, 2016: 218). The type of research

used in this study is purposive sampling. According

Sugiyono (2016: 218) purposive sampling is a

technique of sampling data sources with certain

considerations. This particular consideration, such as

the person who is deemed to know best about what

we expect, or perhaps he as the ruler will make it

easier for researchers to explore the object or social

situation under study. According Jogiyanto and

Abdillah (2015: 66) purposive sampling is a sample

selection technique when the researcher does not have

data about the population in the form of sampling

frame and the researcher then chooses the sample

based on certain criteria and the researcher's

assessment to direct the selected sample according to

the research objectives.

The sampling criteria are based on the following:

 Respondents are part of manufacturing

companies of textile sub-sector and garment

sub-sector listed on Indonesia Stock Exchange

which carry out environmental management.

 Respondent is a staff / equivalent, supervisor /

equivalent, or also manager / equivalent part of

textile manufacturing and garment

manufacturing company listed on BEI

responsible for environmental issues and

product safety.

Based on the criteria of sampling above, the

company that became the sample of this study

amounted to 9 companies because it meets the criteria

of sampling, 8 companies are not sampled in this

study because it does not implement environmental

management. The total sample taken is 50 samples.

4 RESULTS AND DISCUSSION

This study uses several test models, namely Indicator

Reliability, Internal Consistency Reliability,

Convergent Validity, and Discriminant Validity.

Inner model test to know relation between construct,

significance value and R-square from research. The

inner model test is performed using the R-square

value of the endogenous construct (dependent

variable) and t-test on each exogenous latent variable

(independent) to the endogen dependent variable

construct from the bootstrapping result.

ICIEBP 2017 - 1st International Conference on Islamic Economics, Business and Philanthropy

460

Table 1: Results of R

in endogenous latent variables.

Latent Variable

Value R

Environmental Management

(EM)

0,292

Environmentally Conscious

Manufacturing

(ECM)

0,757

Product Stewardship (PS)

0,714

Environmental Reputation (ER)

0,310

Financial Performance (FP)

0,079

It is known from Table 1 that the value of R2 for

endogenous latent variables of Environmental

Management (EM) in this structural model has a

value of 0.292 which means that the exogenous latent

variable Green Advertising (GA) influences the

endogenous latent variable of Environmental

Management (EM) of 29.2% and 70.8 % influenced

by other factors outside of these variables. The value

of R2 shows that the model belongs to a substantial

(weak) classification.

Then the value of R2 for Environmentally

Conscious Manufacturing (ECM) in this structural

model is 0.757 which means the exogenous latent

variable of Environmental Management (EM) affect

endogen variables Environmentally Conscious

Manufacturing (ECM) of 75.7% and 24.3% other

factors beyond those variables. The value of R2

shows that the model belongs to a substantial (strong)

classification.

Then the value of R2 for Product Stewardship

(PS) in this structural model is 0.714 which means

exogenous latent variable of Environmental

Management (EM) affect endogenous latent variable

Product Stewardship (PS) equal to 71,4% and 28,6%

influenced by other factors outside of these variables.

The value of R2 shows that the model belongs to a

substantial (strong) classification.

The R2 value for Environmental Reputation (ER)

in this structural model is 0.310 which means

exogenous latent variable Environmental

Management (EM) and Green Advertising (GA)

affect endogenous Product Stewardship (PS) of

31.0% and 69.0% by other factors outside the

variable. The value of R2 shows that the model

belongs to a substantial (weak) classification.

The endogenous latent variable of Financial

Performance (KK) in this structural model has an R2

value of 0.079 which means the exogenous latent

variable Environmental Management (EM), Green

Advertising (GA), and Environmental Reputation

(ER) affect endogenous latent variable Financial

Performance (FP) equal to 7.9% and 92.1% are

influenced by other factors outside of these variables.

The value of R2 shows that the model belongs to a

substantial (weak) classification.

Table 2: Hypothesis test results.

Hypothesis

Correlation

Path Coefficient

t test

t table (5%)

Explanation

→

0,541

5,759

1,96

Accepted

Significant

→

0,392

2,355

1,96

Accepted

Significant

→

0,238

1,677

1,96

Rejected

→

0,282

2,357

1,96

Accepted

Significant

→

0,067

1,194

1,96

Rejected

→

0,147

2,072

1,96

Accepted

Significant

Based on the result of path coefficient value and

t-statistics value in Table 2, it shows all hypothesis of

positive path coefficient value and T-statistics> 1,96

meaning significant then all hypotheses supported.

The conclusions of the test results for each hypothesis

are as follows:

Green Advertising has a significant positive effect

on Environmental Management.

Green Advertising has a significant positive

impact on the Environment Reputation.

Environmental Management has no effect on

Environmental Reputation.

Analysis the Value of Green Advertising and Environmental Management in the Garment and Textile Industries

461

Environmental Reputation has a significant

positive effect on Financial Performance.

Environmental Management has no effect on

Financial Performance.

Green Advertising has a significant positive effect

on Financial Performance.

5 CONCLUSIONS

Based on the research conducted on the sub-sector of

textile and garment industry, it can be concluded that:

 Green advertising has a positive and significant

impact on environmental management activities

in the textile and garment industry sub-sector.

 Green advertising has a positive and significant

impact on the reputation of the environment in

the sub-sector of textile and garment industry.

 Environmental management does not affect the

environmental reputation of the textile and

garment industry sub-sector.

 The environmental reputation has a positive and

significant impact on the financial performance

of the textile and garment industry sub-sector.

 Environmental management does not affect the

financial performance of the textile and garment

industry sub-sector.

 Green advertising has a positive and significant

effect on financial performance in textile and

garment industry sub-sector.

Based on this research, there are some suggestions

for further research that is:

 The number of companies as samples is added

to be more accurate, not only in the textile and

garment industry sub-sector but in other sub-

sectors so that the results can be more accurate,

detailed and accurate.

 In this study the collected data is limited by the

number of sample companies so that the

analysis technique used is the PLS-SEM

method. Subsequent research could use

Covariance Based SEM or CB-SEM method in

performing data analysis and using Amos or

Lisrel software. This is useful for obtaining

maximum results due to standardization in CB-

SEM higher than PLS with more data samples.

 Based on this research, there are some

suggestions for sub-sector companies of textile

and garment industry are as follows:

 Green Advertising conducted by the company

has a positive influence on Environmental

Management, the sub-sector of textile and

garment industry as the object of this research

should keep improving the company's activity

communication in environmental management

to create the value of the conscious environment

by regularly updating the website with

information related to environmental protection.

 Green Advertising conducted by the company

has a positive impact on the Environmental

Reputation. In the implementation, Green

Advertising is enough to raise the company's

Environmental Reputation. Companies can

emphasize the environmental impact of

products in marketing campaign activities and

sponsor environmental organizations so that the

Environment Reputation is in good category.

 The company's environmental reputation affects

Financial Performance, the textile and garment

industry sub-sector must be able to improve

customer perception about the future prospect of

the company's environment by showing the

company's achievement in environmental

protection.

 Green Advertising run by the company affects

the Financial Performance of textile and

garment industry sub-sector. With the existence

of Green Advertising then can improve the

company's Financial Performance through

Environmental Reputation. The company can

improve the company's environmentally

friendly image, so that customers are satisfied

with the company's efforts in reducing adverse

environmental impacts.

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