 Investment in Environmental Process ImprovementWenli Xiao, Cheryl Gaimon, Ravi Subramanian and Markus Biehl Production and Operations Management, 2019, vol. 28, issue 2, 407-420 Abstract: We analyze a firm's investment in environmental process improvement (EPI) to reduce the environmental impact (EI) of its manufacturing processes in relation to various internal firm characteristics and in response to different external regulatory drivers. We provide a deep understanding of how these internal and external forces cause the firm to pursue EPI earlier or later in the planning horizon and at an increasing or a decreasing rate over time. In particular, we show how a regulator can drive different patterns of EPI over time through subsidies for EPI or penalties for EI. We also explore the impacts of two key operational capabilities of the firm—the production‐cost efficiency of EPI and the effectiveness of EPI in reducing EI—on the rate of EPI over time. We demonstrate that improvements in these operational capabilities contrastingly alter the timing of investments in EPI. Lastly, we demonstrate that a firm capable of leveraging EPI to enhance product functionality or command a reputational premium in the marketplace pursues a remarkably different pattern of EPI over time compared to a cost‐focused firm that only responds to regulatory forces. Date: 2019 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:28:y:2019:i:2:p:407-420 Ordering information: This journal article can be ordered from Access Statistics for this article Production and Operations Management is currently edited by Kalyan Singhal More articles in Production and Operations Management from Production and Operations Management Society |
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