Innovative Business Models in Ocean-Bound Plastic Recycling

Opher Baron (), Gonzalo Romero (), Zhuoluo Zhang () and Sean X. Zhou ()
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Opher Baron: Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada
Gonzalo Romero: Rotman School of Management, University of Toronto, Toronto, Ontario M5S 3E6, Canada
Zhuoluo Zhang: School of Management, Xiamen University, Xiamen 361005, China
Sean X. Zhou: CUHK Business School, The Chinese University of Hong Kong, Shatin, New Territories, Hong Kong

Manufacturing & Service Operations Management, 2024, vol. 26, issue 6, 2160-2178

Abstract: Problem definition : About 30 million tons of plastic waste reaches the oceans each year, mostly from low- and middle-income coastal countries. We study novel business models of firms aiming to reduce ocean plastic pollution with a triple-bottom-line (TBL) objective—a weighted sum of profit, environmental impact, and social impact. These firms sell (a) plastic offsets and (b) segregated plastic. Methodology/results : We develop and analyze models where a firm partners with a local plastic recycling supply chain to sell (a), (b), or both via collecting and recycling ocean-bound plastic. Considering additionality (i.e., that the firm can only sell plastic offsets based on recycled plastic that is additional to the plastic recycled without the firm’s presence), we solve the equilibrium outcomes by maximizing the firm’s TBL objective. For the special case of a for-profit firm, we show that additionality can decrease the firm’s social and environmental impacts when selling (a) only or when selling both (a) and (b). Additionality may also alter the effect of the local recycled plastic market (i.e., the number of collectors and the recycled plastic price) on the firm. We find similar insights under the TBL objective via a numerical study calibrated with real data. Managerial implications : When firms decide whether to integrate and promote additionality, they must be careful because it may not only reduce their profit but also, reduce their social and environmental impacts. Moreover, we find that selling both (a) and (b) can generate a much higher TBL objective value than selling either one alone. We also find that firms employing a TBL objective can generate much larger environmental and social impacts with a slight reduction in profits than profit-maximizing firms. Our model and results provide insights into new initiatives for tackling ocean plastic pollution.

Keywords: sustainable operations; business models; ocean-bound plastic (OBP) recycling; additionality; triple bottom line (TBL) (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormsom:v:26:y:2024:i:6:p:2160-2178

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