| Summary: | This research explores the mediating effects of product returns on the relationship between a firm's green capabilities and its adoption of closed-loop supply chain. Green capability is characterized in terms of product recovery, supply chain integration, and environmentally friendly manufacturing. A structural equation model using survey data drawn from ISO 14001 certified manufacturers in Malaysia is used to test the research hypotheses. The results reveal that recovery and integration capabilities positively influence product returns, while manufacturing and integration capabilities and product returns influence closed loop supply chain adoption. The results also indicate that the volume, type, timing, and quality of product returns partially mediate relationships between recovery and integration capabilities and closed-loop supply chain adoption. The findings highlight the importance of taking into account the complexities of product returns as part of efforts to increase the effects of green capabilities on closed-loop supply chain adoption. © 2018 Elsevier Ltd
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