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Green Supply Chain Management (GSCM) is an operational initiation to overcome environmental problems that many organizations experience, including Small and Medium Enterprises (SMEs). This study aims to determine the effect of the industrial environment on GSCM implementation and its impact on organizational performance in food and beverage SMEs in the East Java province, Indonesia. The survey and interviews were conducted with 76 Food and Beverage Association members. The variables studied included the industrial environment, GSCM, and organizational performance, and decentralization in moderating GSCM towards Organizational Performance. Data was analyzed using Partial Least Square (PLS). The results show that the Industrial environment has a significant effect on Organizational Performance, but does not have a significant effect on GSCM. GSCM does not have significant effect on Organizational Performance. However, decentralization was not able to moderate the influence of the Industrial Environment on Organizational Performance. The nature of the centralized authority on SMEs needs further testing given that such rapid environmental changes certainly require a rapid response in anticipating the speed of market changes. Also, how should the influence of a decentralized organizational structure on SMEs in various countries or in the country with foreign ownership, need to be investigated further.