IDEAS home Printed from https://ideas.repec.org/a/eee/jomega/v130y2025ics030504832400135x.html
   My bibliography  Save this article

The impact of green innovations on firm’s sustainable operations: Process innovation and recycling innovation

Author

Listed:
  • Liu, Shan
  • Yu, Jiayi Joey
  • Feng, Tianjun

Abstract

As the urgency and importance of global carbon emission reduction have escalated in recent years, numerous firms are considering ideas to develop innovative green technologies in order to contribute to the low-carbon economy. This paper examines two types of green innovations adopted by firms, namely process innovation (improving production processes to enhance energy efficiency) and recycling innovation (establishing a circular economy to recycle and re-manufacture waste products). By developing a game-theoretical model, our analytical results reveal the following findings. First, we find that both process and recycling innovations can attract more consumers and improve the firm’s profitability under specific conditions. Second, when the cost advantage of remanufacturing is sufficiently low, the adoption of process innovation is always more profitable than recycling innovation. Otherwise, the profitability largely depends on the trade-off between consumers’ perception of the two green innovations. Third, compared to a single innovation, the adoption of both process and recycling innovations (dual green innovation) leads to a further increase in consumer demand and firm’s profit when the cost advantage of remanufacturing exceeds a certain threshold. Furthermore, the optimal pricing set by the firm and consumer demand become more sensitive to consumers’ perception of greenness when dual green innovation is adopted. Finally, the equilibrium result suggests the existence of a “synergistic promoting effect” when the firm implements dual green innovation, which indicates that the advantages of each innovation are amplified when the firm adopts dual green innovation. These results can serve as guidelines for firms aiming to utilize green innovations in order to reduce carbon emissions.

Suggested Citation

  • Liu, Shan & Yu, Jiayi Joey & Feng, Tianjun, 2025. "The impact of green innovations on firm’s sustainable operations: Process innovation and recycling innovation," Omega, Elsevier, vol. 130(C).
  • Handle: RePEc:eee:jomega:v:130:y:2025:i:c:s030504832400135x
    DOI: 10.1016/j.omega.2024.103170
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S030504832400135X
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.omega.2024.103170?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Wu, Cheng-Han, 2021. "A dynamic perspective of government intervention in a competitive closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 294(1), pages 122-137.
    2. Zhu, Wenge & He, Yuanjie, 2017. "Green product design in supply chains under competition," European Journal of Operational Research, Elsevier, vol. 258(1), pages 165-180.
    3. Reimann, Marc & Xiong, Yu & Zhou, Yu, 2019. "Managing a closed-loop supply chain with process innovation for remanufacturing," European Journal of Operational Research, Elsevier, vol. 276(2), pages 510-518.
    4. Fuqiang Zhang & Renyu Zhang, 2018. "Trade-in Remanufacturing, Customer Purchasing Behavior, and Government Policy," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 601-616, October.
    5. He, Qidong & Wang, Nengmin & Yang, Zhen & He, Zhengwen & Jiang, Bin, 2019. "Competitive collection under channel inconvenience in closed-loop supply chain," European Journal of Operational Research, Elsevier, vol. 275(1), pages 155-166.
    6. Mingfeng Tang & Grace Walsh & Daniel Lerner & Markus A. Fitza & Qiaohua Li, 2018. "Green Innovation, Managerial Concern and Firm Performance: An Empirical Study," Business Strategy and the Environment, Wiley Blackwell, vol. 27(1), pages 39-51, January.
    7. Zheng, Shiyuan & Jiang, Changmin & Fu, Xiaowen & Ge, Ying-En & Shu, Jia, 2022. "Subsidies for green technology adoption under uncertain demand and incomplete information," Omega, Elsevier, vol. 112(C).
    8. Jung, Seung Hwan & Feng, Tianjun, 2020. "Government subsidies for green technology development under uncertainty," European Journal of Operational Research, Elsevier, vol. 286(2), pages 726-739.
    9. Yenipazarli, Arda, 2016. "Managing new and remanufactured products to mitigate environmental damage under emissions regulation," European Journal of Operational Research, Elsevier, vol. 249(1), pages 117-130.
    10. Vishal V. Agrawal & Ioannis Bellos, 2017. "The Potential of Servicizing as a Green Business Model," Management Science, INFORMS, vol. 63(5), pages 1545-1562, May.
    11. Wu, Xiaole & Zhou, Yu, 2017. "The optimal reverse channel choice under supply chain competition," European Journal of Operational Research, Elsevier, vol. 259(1), pages 63-66.
    12. Hong, Zhaofu & Guo, Xiaolong, 2019. "Green product supply chain contracts considering environmental responsibilities," Omega, Elsevier, vol. 83(C), pages 155-166.
    13. Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2021. "Remanufacturing configuration in complex supply chains," Omega, Elsevier, vol. 101(C).
    14. Ferrer, Geraldo & Swaminathan, Jayashankar M., 2010. "Managing new and differentiated remanufactured products," European Journal of Operational Research, Elsevier, vol. 203(2), pages 370-379, June.
    15. Lan Wang & Gangshu (George) Cai & Andy A. Tsay & Asoo J. Vakharia, 2017. "Design of the Reverse Channel for Remanufacturing: Must Profit-Maximization Harm the Environment?," Production and Operations Management, Production and Operations Management Society, vol. 26(8), pages 1585-1603, August.
    16. Liu, Huihui & Lei, Ming & Deng, Honghui & Keong Leong, G. & Huang, Tao, 2016. "A dual channel, quality-based price competition model for the WEEE recycling market with government subsidy," Omega, Elsevier, vol. 59(PB), pages 290-302.
    17. Hau L. Lee & Christopher S. Tang, 2018. "Socially and Environmentally Responsible Value Chain Innovations: New Operations Management Research Opportunities," Management Science, INFORMS, vol. 64(3), pages 983-996, March.
    18. Liu, Xiaoxi, 2024. "The introduction and market expansion effects of green products considering network externalities," Omega, Elsevier, vol. 124(C).
    19. Karthik Murali & Michael K. Lim & Nicholas C. Petruzzi, 2019. "The Effects of Ecolabels and Environmental Regulation on Green Product Development," Manufacturing & Service Operations Management, INFORMS, vol. 21(3), pages 519-535, July.
    20. Xu, Jie & Ng, C.T. & Cheng, T.C.E., 2021. "Remanufacturing strategies under product take-back regulation," International Journal of Production Economics, Elsevier, vol. 235(C).
    21. Chen, Jen-Yi & Dimitrov, Stanko & Pun, Hubert, 2019. "The impact of government subsidy on supply Chains’ sustainability innovation," Omega, Elsevier, vol. 86(C), pages 42-58.
    22. Xia, Yu & Tan, Dan & Wang, Bolin, 2021. "Use of a product service system in a competing remanufacturing market," Omega, Elsevier, vol. 102(C).
    23. Jeremy J. Kovach & Atalay Atasu & Sumitro Banerjee, 2018. "Salesforce Incentives and Remanufacturing," Production and Operations Management, Production and Operations Management Society, vol. 27(3), pages 516-530, March.
    24. Bian, Junsong & Zhang, Guoqing & Zhou, Guanghui, 2020. "Manufacturer vs. Consumer Subsidy with Green Technology Investment and Environmental Concern," European Journal of Operational Research, Elsevier, vol. 287(3), pages 832-843.
    25. Chai, Qiangfei & Xiao, Zhongdong & Lai, Kee-hung & Zhou, Guanghui, 2018. "Can carbon cap and trade mechanism be beneficial for remanufacturing?," International Journal of Production Economics, Elsevier, vol. 203(C), pages 311-321.
    26. Krishnan S. Anand & François C. Giraud-Carrier, 2020. "Pollution Regulation of Competitive Markets," Management Science, INFORMS, vol. 66(9), pages 4193-4206, September.
    27. Xin Wang & Soo-Haeng Cho & Alan Scheller-Wolf, 2021. "Green Technology Development and Adoption: Competition, Regulation, and Uncertainty—A Global Game Approach," Management Science, INFORMS, vol. 67(1), pages 201-219, January.
    28. Xiaoming Yan & Xiuli Chao & Ye Lu & Sean X. Zhou, 2017. "Optimal Policies for Selling New and Remanufactured Products," Production and Operations Management, Production and Operations Management Society, vol. 26(9), pages 1746-1759, September.
    29. Xue, Dongmei & Teunter, Ruud H. & Zhu, Stuart X. & Zhou, Weihua, 2021. "Entering the high-end market by collecting and remanufacturing a competitor’s high-end cores," Omega, Elsevier, vol. 99(C).
    30. Li, Sijie & Zheng, Bin & Jia, Dongfeng, 2024. "Optimal decisions for hybrid manufacturing and remanufacturing with trade-in program and carbon tax," Omega, Elsevier, vol. 124(C).
    31. Yang, Feng & Wang, Manman & Ang, Sheng, 2021. "Optimal remanufacturing decisions in supply chains considering consumers’ anticipated regret and power structures," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 148(C).
    32. Aradhna Krishna & Uday Rajan, 2009. "Cause Marketing: Spillover Effects of Cause-Related Products in a Product Portfolio," Management Science, INFORMS, vol. 55(9), pages 1469-1485, September.
    33. Liu, Zhi & Li, Kevin W. & Li, Bang-Yi & Huang, Jun & Tang, Juan, 2019. "Impact of product-design strategies on the operations of a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 124(C), pages 75-91.
    34. Luo, Ruiling & Zhou, Li & Song, Yang & Fan, Tijun, 2022. "Evaluating the impact of carbon tax policy on manufacturing and remanufacturing decisions in a closed-loop supply chain," International Journal of Production Economics, Elsevier, vol. 245(C).
    35. R. Canan Savaskan & Shantanu Bhattacharya & Luk N. Van Wassenhove, 2004. "Closed-Loop Supply Chain Models with Product Remanufacturing," Management Science, INFORMS, vol. 50(2), pages 239-252, February.
    36. Vishal V. Agrawal & Atalay Atasu & Koert van Ittersum, 2015. "Remanufacturing, Third-Party Competition, and Consumers' Perceived Value of New Products," Management Science, INFORMS, vol. 61(1), pages 60-72, January.
    37. Maxime C. Cohen & Ruben Lobel & Georgia Perakis, 2016. "The Impact of Demand Uncertainty on Consumer Subsidies for Green Technology Adoption," Management Science, INFORMS, vol. 62(5), pages 1235-1258, May.
    38. Gökçe Esenduran & Yen-Ting Lin & Wenli Xiao & Minyue Jin, 2020. "Choice of Electronic Waste Recycling Standard Under Recovery Channel Competition," Manufacturing & Service Operations Management, INFORMS, vol. 22(3), pages 495-512, May.
    39. Matsui, Kenji, 2022. "Optimal timing of acquisition price announcement for used products in a dual-recycling channel reverse supply chain," European Journal of Operational Research, Elsevier, vol. 300(2), pages 615-632.
    40. Chen, Rui & Meng, Qiang & Yu, Jiayi Joey, 2023. "Optimal government incentives to improve the new technology adoption: Subsidizing infrastructure investment or usage?," Omega, Elsevier, vol. 114(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yutong Sun & Meili Zhang & Chenggang Wang & Mingmin Li, 2025. "How the Digital Transformation of Chinese Traditional Manufacturing Enterprises Drives Green Innovation: A Moderated Mediation Model," Sustainability, MDPI, vol. 17(4), pages 1-28, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. He, Qidong & Wang, Nengmin & Browning, Tyson R. & Jiang, Bin, 2022. "Competitive collection with convenience-perceived customers," European Journal of Operational Research, Elsevier, vol. 303(1), pages 239-254.
    2. Jin, Wei & Yang, Jun & Wang, Chengfu, 2024. "Cost subsidy or environmental regulation? The effects of government interventions on environmental quality and 3BL performance," International Journal of Production Economics, Elsevier, vol. 270(C).
    3. Xia, Jing & Zheng, Yan & Yang, Lehe & Xiao, Yujie, 2024. "Government intervention in green technology innovation: The carrot, the stick or both?," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    4. Qian, Zhifeng & Day, Steven James & Ignatius, Joshua & Dhamotharan, Lalitha & Chai, Junwu, 2024. "Digital advertising spillover, online-exclusive product launches, and manufacturer-remanufacturer competition," European Journal of Operational Research, Elsevier, vol. 313(2), pages 565-586.
    5. Luo, Li & Shan, Renbang & Xiang, Jie, 2024. "The government intervention effectiveness in promoting remanufacturing: Subsidy or remanufacturing target?," Socio-Economic Planning Sciences, Elsevier, vol. 92(C).
    6. Zhang, Zhichao & Xu, Haiyan & Chen, Kebing & Zhao, Yingxue & Liu, Zhi, 2023. "Channel mode selection for an e-platform supply chain in the presence of a secondary marketplace," European Journal of Operational Research, Elsevier, vol. 305(3), pages 1215-1235.
    7. Liu, Chang-Yi & Wang, Hui & Tang, Juan & Chang, Ching-Ter & Liu, Zhi, 2021. "Optimal recovery model in a used batteries closed-loop supply chain considering uncertain residual capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 156(C).
    8. Golmohammadi, Amirmohsen & Kraft, Tim & Monemian, Seyedamin, 2024. "Setting the deadline and the penalty policy for a new environmental standard," European Journal of Operational Research, Elsevier, vol. 315(1), pages 88-101.
    9. Yanfen Mu & Feng Niu, 2022. "To Be or Not to Be? Strategic Analysis of Carbon Tax Guiding Manufacturers to Choose Low-Carbon Technology," Sustainability, MDPI, vol. 14(22), pages 1-16, November.
    10. Weisheng Deng, 2019. "Does Remanufacturing Always Benefit the Manufacturer and Hurt the Supplier?," Sustainability, MDPI, vol. 11(6), pages 1-13, March.
    11. Wei, Liqun & Zhang, Libin & Wei, Wanying & Chen, Xiaohong & Wang, Kai, 2024. "Working along both lines? The relationship between government green publicity and emissions tax," European Journal of Operational Research, Elsevier, vol. 317(1), pages 128-140.
    12. Qiao, Haike & Su, Qin, 2021. "Distribution channel and licensing strategy choice considering consumer online reviews in a closed-loop supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 151(C).
    13. Zhang, Yunrong & Hong, Zhaofu & Chen, Zhixiang & Glock, Christoph H., 2020. "Tax or subsidy? Design and selection of regulatory policies for remanufacturing," European Journal of Operational Research, Elsevier, vol. 287(3), pages 885-900.
    14. Zheng, Shiyuan & Jiang, Changmin & Fu, Xiaowen & Ge, Ying-En & Shu, Jia, 2022. "Subsidies for green technology adoption under uncertain demand and incomplete information," Omega, Elsevier, vol. 112(C).
    15. Chen, Yuyu & Li, Bangyi & Zhang, Guoqing & Bai, Qingguo, 2020. "Quantity and collection decisions of the remanufacturing enterprise under both the take-back and carbon emission capacity regulations," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 141(C).
    16. Matsui, Kenji, 2023. "Dual-recycling channel reverse supply chain design of recycling platforms under acquisition price competition," International Journal of Production Economics, Elsevier, vol. 259(C).
    17. Zhang, Abraham & Wang, Jason X. & Farooque, Muhammad & Wang, Yulan & Choi, Tsan-Ming, 2021. "Multi-dimensional circular supply chain management: A comparative review of the state-of-the-art practices and research," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 155(C).
    18. Xia, Jing & Niu, Wenju & Chen, Xiaolin & Zhang, Lianmin, 2023. "Investing in a shared supplier to encourage environmental responsibility under spillovers and demand uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 174(C).
    19. Xu, Xiaoping & Chen, Xinyang & Choi, Tsan-Ming & Cheng, T.C.E., 2024. "Platform financing versus bank financing: “When to choose which” for green production systems," European Journal of Operational Research, Elsevier, vol. 317(2), pages 515-532.
    20. Wang, Junbin & Zhang, Ting & Fan, Xiaojun, 2020. "Reverse channel design with a dominant retailer and upstream competition in emerging markets: Retailer- or manufacturer- collection?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jomega:v:130:y:2025:i:c:s030504832400135x. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/375/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.