The assistant professor of marketing shared research examining organizational green level decision making in a dynamic environment.
Xin Liu, assistant professor of marketing in the Martha and Spencer Love School of Business, presented research on green strategic decision making during the 2021 INFORMS (Institute for Operations Research and the Management Sciences) annual meeting.
Liu discussed “A Dynamic Model Considering Consumer Green Awareness And Environmental Subsidy,” which she co-authored with Moutaz Khouja, UNC Charlotte and Xiaoya Han, University of Shanghai for Science and Technology.
During their session, the authors discussed considering the minimal regulatory green level (MRGL), optional above-regulatory green level (ARGL), government subsidies and demand from consumers with green-awareness in order to determine a firm’s optimal green level.
The presentation abstract reads: “We consider a firm’s green level decisions in a dynamic environment. The firm must meet a minimal regulatory green level (MRGL) and has the option of committing to a green level above the MRGL and receive a one-time subsidy from the government. A firm which commits to an above-regulatory green level (ARGL) must achieve that level in every future period. Furthermore, government provides an additional end-of-period subsidy for the firm if its green level in that period exceeds the ARGL. The firm faces demand from consumers with green-awareness. We derive the firm’s optimal green level. We show that the optimal green level in each period converges to a constant steady-state green level characterized by simple conditions. For specific forms of green cost, government subsidy, consumer memory and green preferences, we derive closed-form expressions for the firm’s steady-state optimal green level and examine its sensitivity to the problem parameters. We find that an increase in consumer green sensitivity and memory level may not make beneficial for the firm to raise its committed ARGL depending on environmental subsidy. Moreover, if the firm ignores long-run implications of its product green design strategy, it may systematically adopt a suboptimal low green level and thus make a lower profit.”
Liu joined Elon in 2017 after receiving her doctorate in management science from the University of Science and Technology of China. Her research interests include operations management, supply chain management, and marketing interface.