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Optimal supply chain performance: risk aversion to green innovation

Hao Zhang (College of Architecture and Urban-Rural Planning, Sichuan Agricultural University, Chengdu, China)
Xingwei Li (College of Architecture and Urban-Rural Planning, Sichuan Agricultural University, Chengdu, China)
Zuoyi Ding (College of Architecture and Urban-Rural Planning, Sichuan Agricultural University, Chengdu, China)

Management Decision

ISSN: 0025-1747

Article publication date: 8 July 2024

Issue publication date: 12 December 2024

287

Abstract

Purpose

Although many countries are focusing on the management of construction and demolition waste (CDW) resource utilization, the effect of risk aversion of the green innovation-led enterprise on the performance of the CDW resource utilization supply chain is unclear when considering different green innovation contexts (green innovation led by the building materials remanufacturer or by the construction waste recycler). This study aims to investigate how the level of risk aversion of the green innovation-led enterprise affects CDW resource utilization under different green innovation contexts based on contingency theory.

Design/methodology/approach

Using Stackelberg game theory, this study establishes a decision model consisting of a building materials remanufacturer, construction waste recycler and CDW production unit and investigates how the level of risk aversion of the green innovation-led enterprise under different green innovation contexts influences the performance level of the supply chain.

Findings

The conclusions are as follows. (1) For the green innovation-led enterprise, the risk-averse behaviour is always detrimental to his own profits. (2) For the follower, the profits of the construction waste recycler are negatively correlated with the level of risk aversion of the green innovation-led enterprise in the case of a small green innovation investment coefficient. If the green innovation investment coefficient is high, the opposite result is obtained. (3) When the green innovation investment coefficient is low, the total supply chain profits decrease as the level of risk aversion of the green innovation-led enterprise increases. When the green innovation investment coefficient is high, total supply chain profit shows an inverted U-shaped trend with respect to the degree of risk aversion of the green innovation-led enterprise.

Originality/value

(1) This study is the first to construct a green innovation context led by different enterprises in the CDW resource utilization supply chain, which provides a new perspective on green management and operation. (2) This study is the first to explore the operation mechanism of the CDW resource utilization supply chain based on contingency theory, which provides new evidence from the CDW resource utilization supply chain to prove contingency theory. At the same time, this study examines the interactive effects of the green innovation cost coefficient and the degree of risk aversion of green innovation-led enterprises on the performance of supply chain members, expanding the contingency theory research on contingencies affecting enterprise performance. (3) This study will guide members of the CDW resource utilization supply chain to rationally face risks and achieve optimal supply chain performance.

Keywords

Acknowledgements

This work was supported by National Natural Science Foundation of China (grant number 72204178), National College Students Innovation and Entrepreneurship Training Plan (grant number 202410626004), Sichuan Science and Technology Program, and Natural Science Foundation of Sichuan, China (grant number 2023NSFSC1053).

Citation

Zhang, H., Li, X. and Ding, Z. (2024), "Optimal supply chain performance: risk aversion to green innovation", Management Decision, Vol. 62 No. 12, pp. 3996-4020. https://doi.org/10.1108/MD-07-2023-1281

Publisher

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Emerald Publishing Limited

Copyright © 2024, Emerald Publishing Limited

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