Elon professor co-authors article on corporate benefits to ‘green strategy’

In a new article published by the International Journal of Production Economics, Assistant Professor Xin Liu helps show how government subsidies and consumer awareness influence a firm’s decision to do more than pay lip service to earth-friendly business practices.

Governments help to incentivize “green” business practices through subsidies and tax benefits. At the same time, and across many industries, consumers who value the environment often favor the goods of firms that limit their impact on the earth.

But as one Elon University researcher and her colleagues from two other institutions conclude in new research, that doesn’t mean firms will always maximize long-term profits when they might instead aim to keep current costs lower for a short-term benefit.

Finding that balance through a model that looks at up-front subsidies for committing to a strong green strategy, recurring subsidies for achieving environmentally friendly goals that go above minimal regulations, and consumer demand was the aim of Assistant Professor Xin Liu’s latest scholarship.

“A dynamic model considering consumer green awareness and environmental subsidy” appears in a recent issue of the latest issue of the International Journal of Production Economics.

Liu joined with Xiaoya Han from the University of Shanghai for Science and Technology and Moutaz Khouja of the University of North Carolina at Charlotte to analyze a firm’s optimal green strategy in a dynamic environment. Their research is supported by grant from the National Natural Science Foundation of China.

Their conclusion: Firms should take advantage of some features and consumer “green awareness” to improve profits, though “other factors including environmental subsidy and green cost structure” can affect a company’s bottom line. Yet firms that consistently ignore or deprioritize green strategies do so at their peril where “the myopic firm will make a lower profit.”

Liu joined the Department of Marketing and International Business in 2017 after completing her doctorate in management science and engineering from University of Science and Technology of China. Her research centers around operations management, supply chain management and marketing interface.

At Elon, she teaches courses of management information system, ops and supply chain management, logistics and distribution, supply chain management performance and advanced ops and supply chain management. Her research centers around operations management, supply chain management and marketing interface.