Cost Reduction Effect Research Articles

Interplay Between Servicizing and Remanufacturing: Economic and Environmental Implications

Problem definition: To investigate the interplay between servicizing and remanufacturing, two widely used strategies in the circular economy, and its impact on firms’ economic and environmental performance, we consider a profit-maximizing manufacturer who explores the possibility of jointly adopting the two strategies. Methodology and results: We develop optimization models that capture the main attributes for servicizing (pay-per-use, demand pooling) and remanufacturing (lower production costs, higher operating costs). We show that the presence of remanufacturing always makes servicizing less attractive to adopt, and having servicizing may discourage the adoption of remanufacturing if the remanufacturing cost reduction effect is not sufficiently large. The joint adoption of servicizing and remanufacturing is preferred when the remanufacturing cost is neither too high nor too low and the range of the remanufacturing cost that favors the joint adoption is further moderated by the firm’s pooling level and the operating cost of remanufactured products. Lastly, we find that when the firm adopts servicizing in the presence of remanufacturing with relatively high remanufacturing costs, it can reduce the number of remanufactured products with low environmental impact in the market and, thus, harm the environment, resulting in a misalignment between economic and environmental goals. Managerial implications: Our findings suggest that managers considering jointly adopting servicizing and remanufacturing must balance their competition on the low-usage end of the market with the potential complementarity due to remanufacturing cost reduction. Further, by showing the win-win conditions under which the joint adoption of servicizing and remanufacturing improves firms’ economic and environmental performance, we demonstrate that there are no one-size-fits-all circular economy strategies and call for caution when promoting these strategies across industries. Supplemental Material: The electronic companion is available at https://doi.org/10.1287/msom.2022.0379 .

Debtholders' reaction to sustainability reporting regulations: International evidence

AbstractThis study investigates the impact of mandatory sustainability reporting on the affected firms' debt financing costs. Leveraging sustainability disclosure regulations enacted in 36 jurisdictions from 1998 to 2022 and using a staggered difference‐in‐differences empirical approach, we find that the regulation adoption firms experience a reduction in the debt financing cost subsequent to the mandate. Channel tests reveal that the benefit of a lower cost of debt is driven by greater transparency on sustainable practices and improved sustainability performance, which lead to a lower level of default risk stemming from sustainability‐related concerns. Cross‐sectional analyses further indicate that the debt financing cost reduction effect is more pronounced if the sustainability reporting regulations are issued by a government institution, on a full compliance basis, and with stronger enforcement. Our results provide policymakers with further evidence on the ongoing discussion about the effectiveness of sustainability disclosure mandates.

Digital trade liberalization and quality upgrading: evidence from Chinese intermediate imports

ABSTRACT This article investigates how the import quality of intermediate products responds to digital trade liberalization using Chinese Customs data and the composite index of digital trade liberalization obtained from OECD database for 2014–2019. The results reveal that digital trade liberalization has significantly improved the quality of Chinese manufacturing intermediate imports. Further mechanism tests show that digital trade liberalization will boost the improvements through trade cost reduction effects. For the influence path, digital trade liberalization will promote the quality upgrading through both intensive and extensive margins. The heterogeneity analyses find that imports from countries with high economic developments experienced larger quality promotion than those from lower economic area. Meanwhile, the quality upgrading effects of digital trade liberalization are mainly reflected in Chinese non-comparative industries, such as downstream, digital-intensive, R&D-intensive and technology-intensive industries. Moreover, compared to homogeneous products and those by processing trade mode, the quality of intermediate imports for differentiated products by general trade are more responsive to the liberalization of digital trade barriers.

Digital technology and domestic value-added ratio in export: Evidence from China's pilot zones for integrating informatization and industrialization

Accelerating the penetration of digital technology into industrial transformation is an important concern for developing economies that dedicate to achieve high-quality development of foreign trade. Regarding China's pilot zones for integrating informatization and industrialization (PZII) as an exogenous shock of digital technology application, this study sheds light on effects of digital technology on domestic value-added ratio in export (DVAR) based on fine-grained firm-level data covering 2002–2013. Our finding reveals that digital technology improves firms’ DVAR, and the results remain consistent after conducting a series of robustness checks and addressing potential endogeneity. The heterogeneity analysis suggests that digital technology exerts significantly positive effects on DVAR of processing trade rather than general trade firms, foreign rather than domestic firms, and eastern rather than middle and western firms. The mechanism test discloses that digital technology positively affects DVAR through cost reduction effects and technology progress effects. Further investigation shows that market competition plays a positive role in moderating effects of digital technology on firms’ DVAR. Lastly, this study puts forward corresponding policy implications based on the conclusions.

Enhancing Enterprise Efficiency through Cross-Domain Supply Chain Linkage Management

In recent years, with the complexity and variability of international finance, debt, and geopolitical risks, the growth rate of domestic economic operations has slowed down. More enterprise groups are facing the transformation and upgrading from domestic leadership to internationalization, achieving revenue growth of nearly 10 billion yuan per year against the trend. The severe and complex internal and external environment has brought many challenges to the supply chain for enterprises. This article focuses on the goal of an “enterprise supply chain system focusing on value creation, strengthening system linkage, and improving overall chain efficiency,” aiming to find solutions to problems such as strong demand variability, frequent emergency needs, coexistence of project shortages and inventory surplus, long material turnover cycles, and high organizational complexity. By searching for key activities in the entire business chain of demand, design, production, service, and finance, implementing source planning, process control, system linkage, analysis and summary, and team collaboration, we have achieved more scientific demand forecasting, more accurate planning, more effective procurement cost reduction, more stable production performance supply, more convenient inventory sharing services, and more efficient integration of business and financial policies.

Predicting the economic feasibility of solar-based net-zero emission buildings (NZEBs) in the United States non-residential sector

Buildings have significantly contributed to high energy demand (30.3%) and GHG emissions (26.1%) worldwide. Consequently, many developed countries have set carbon-neutral targets for 2050, mandating that all new constructions thereafter be designed as net-zero emission buildings (NZEBs). To achieve this goal, one of the most practical sources of renewable energy, solar power, is employed in this study to estimate the economic feasibility of implementing NZEBs in the non-residential sector of the United States. While past studies have typically estimated the economic payback period of solar power technology by assuming fixed values for “PV energy conversion rates (%)” and “investment costs ($USD)”, this paper carefully investigated the economic feasibility of “solar-based NZEBs” by precisely tracking these dynamic future changes in PV panels. These techno-economic variables were carefully predicted using a statistical technique known as the five-parameter logistic (5 PL) function. The results show that Site 4 is the only solar region suitable for implementing “PV-integrated NZEBs”, reaching a payback period of 8.44 years in 2040 (Scenario 1). Furthermore, with small technological improvements in PV energy efficiency (%), buildings located in Site 3 and Site 4 can meet the net-zero emission target with payback periods of less than 10 years in 2034 (Scenario 2). Finally, starting in 2044, the “PV-integrated system” will have a payback period of approximately 7 years in most study locations, even without federal support for the solar investment tax credit (SITC). Accordingly, federal support for solar power generation will be more effective if the SITC rate is gradually reduced by 2.5% annually starting in 2033. In conclusion, this paper suggests the economic feasibility of implementing solar-based NZEBs in the United States non-residential sector by considering the synergetic effect of technological improvement and cost reduction in PV-integrated systems.

Can the development of Fintech mitigate non-performing loan risk?

This paper examines how commercial banks’ fintech development can mitigate non-performing loan (NPL) risk. This study adopted a two-fixed model and examined listed commercial banks from 2011 to 2022. Findings indicate that fintech development can mitigate NPL risk through pre-lending and post-loan cost reduction and revenue growth effects. This study contributes to theory and practice for advancing the growth of commercial banks while upholding the stability of the financial system. The findings provide a reference for nations using digital technology to maintain financial stability.

Achieving Homogeneous Microstructure and Superior Properties in High-N Austenitic Stainless Steel via a Novel Atmosphere-Switching Method

Powder metallurgy is widely used to fabricate high-nitrogen, nickel-free austenitic stainless steel. However, after sintering and nitriding, additional solution treatment is typically required to achieve uniform nitrogen distribution and a homogeneous austenite phase. This work proposes a novel method to eliminate the need for lengthy and high-temperature solution treatment by switching the nitrogen atmosphere to argon during the cooling process. The effects of different N2-Ar atmosphere-switching temperatures (750–1320 °C) on the phase composition, element distribution, microstructure, mechanical properties, and corrosion resistance of the studied steels were systematically investigated. Results show that cooling in the N2 atmosphere initially transforms the matrix to a fully austenitic structure enriched with nitrogen. Excessive nitrogen infiltration leads to Cr2N precipitation, inducing partial austenite decomposition and forming a multiphase structure comprising austenite, α-Fe, and Cr2N. Strategic switching from N2 to Ar reverses this reaction, yielding a high-nitrogen, chemically uniform austenitic structure. Specifically, switching at 1150 °C, the steel exhibits excellent mechanical properties and corrosion resistance, with a yield strength of 749 MPa, an ultimate tensile strength of 1030 MPa, an elongation of 38.7%, and a corrosion current of 0.06 mA/cm2, outperforming the steels cooled solely in N2 and subsequently solution-treated. This novel method offers advantages in cost reduction, energy saving, and operational effectiveness, highlighting its potential for broad industrial application.

The Effect of Cost Reduction as Part of Supply Chain Drivers’ Element and Customer Satisfaction on Purchasing and Logistics Performance

The Effect of Cost Reduction as Part of Supply Chain Drivers’ Element and Customer Satisfaction on Purchasing and Logistics Performance

“County-to-City Upgrading” Policy and Firm Innovation—Evidence from China

The “County-to-City Upgrading” policy represents a typical tool for central and local governments to promote the urbanization process through administrative empowerment. Do local governments’ policies promote innovation-driven high-quality and sustainable development? Under the context of the high-quality development of China’s economy, this paper examines the quantitative impact of the local governments’ “County-to-City Upgrading” policy on enterprises’ innovation. Using a staggered-DID model and the data from the Chinese Patent Database and the Industrial Enterprise Database from 2000 to 2013, the baseline results indicate that the policy not only increases the quantity of innovation but also improves the quality of innovation. The key findings of the research are the following: (1) The policy primarily promotes innovation activities among local enterprises through the cost reduction effect and resource accumulation effect. (2) The policy has a more significant impact on boosting innovation in the eastern regions as well as areas with stronger intellectual property protection. (3) The policy not only can advance technological and practical innovation but can also help enterprises overcome the problem of technological containment. (4) The policy has a prominent impact on green and low-carbon patents, which implies that it has become a significant drive pushing forward local green and sustainable development.

Secure and User-Friendly Smart Home Automation: A Mobile-Centric IoT Approach

Home automation systems (HAS), leveraging the power of the Internet of Things (IoT), are gaining significant attention for their potential to reduce costs, labor, and human error. As the demand for smart home technologies grows, effective energy management and cost reduction become increasingly important. This research explores the technical landscape of IoT-based HAS, focusing on remote control and management of home appliances through smartphones and dedicated applications. A comparative analysis of various HAS solutions will be conducted to evaluate their functionality, usability, and energy efficiency. Additionally, the study will examine the security and privacy implications of IoT-based home automation and potential barriers to adoption such as cost and complexity. By addressing these key issues, this research aims to contribute to the development of more effective and accessible smart home solutions.

ESG performance, heterogeneous creditors, and bond financing costs: Firm-level evidence

Exploiting credit spread to measure firm bond financing costs, this study explored the impact of environmental, social, and governance (ESG) performance on bond financing costs from the perspective of heterogeneous creditors. Our results revealed that national interbank bond market and qualified institutional investors are increasingly interested in aligning their capital with ESG-related investment opportunities. Thus, they require a low rate of return from firms with good ESG performance. In contrast, domestic legal and natural persons and ordinary institutional investors are unlikely to accept a low investment return in exchange for the positive impact of ESG. Additional robustness tests confirmed the results, including firm-fixed effects, variable substitution method, supplemental variable method, lagged variable approach, instrumental variable analysis, and propensity score matching. The results of mechanism analysis indicated that the bond cost reduction effect of ESG is achieved by improving firms’ information disclosure quality and reputation. In addition, because of trade-off theory and agency problems, the environmental and social factors of ESG have only a limited impact on bond cost reduction, whereas the governance factor markedly reduces bond costs.

Digitalization and carbon emission reduction technology R&D in a Stackelberg model

ABSTRACT This paper constructs a four-stage sequential game model considering digitalization and carbon emission reduction decisions, examines the effects of digitalization on firms’ emission reduction and carbon emission reduction technology R&D, and analyzes the optimal digitalization level. The results show that emissions reduction is correlated with the digitalization level, the cost-reduction effects, and the carbon tax rate; technology R&D benefits from digitalization support; there exists an optimal digitalization level that is nonlinearly affected by the carbon tax rate, and the digitalization level that satisfies the maximization of social welfare is higher, so the government should provide digitalization incentives.

Substantive green innovation or symbolic green innovation: The impact of fintech on corporate green innovation

The profound impact of fintech on the direction of corporate green innovation warrants an in-depth investigation, as it plays a crucial role in fostering a new engine of economic sustainable development. This paper provides firm-level evidence to explore a significant enhancement of fintech in total, substantive and symbolic green innovation, verifying that fintech is more conducive to substantive green innovation. This impact operates mainly through the effects of cost reduction, including pre-lending review and post-loan supervision, and expected return effects. However, the issue of the patent bubble brought by fintech through expected market return stimulation is worth noting.

Pengaruh Faktor Biaya, Faktor Pelayanan Dan Efektifitas Operasional Terhadap Performa Manajemen Logistik Perusahaan

Successful companies will always practice logistics, supply chain and inventory management in order to reduce costs and provide services and operational effectiveness. Logistics in the current state of business coordinates and integrates all physical and non-physical movements and unites them with the organization, as well as information aspects. This study aims to analyze the impact of corporate logistics management which includes transportation, warehousing, packaging, inventory and information management to improve efficiency and effectiveness. Reducing the cost of each logistics activity will affect the total cost burden and improve company performance. This article will determine and define what logistics activities are key to the success of the company. Empirical research is based on articles that have been adapted and abstracted and become hypotheses that are generally understood after validation and proven by the results of the findings in these articles. Adequate inventory, storage, warehousing, transportation and information management are the main keys that logistics managers should practice to reduce the overall cost of the company. These findings include the affirmation of the need for logistics managers to optimally manage all logistics activities in order to achieve cost reduction, service improvement and operational effectiveness.

Cost Reduction Effect of Blockchain on the Strategies of Two Competing Manufacturers: Which Channel Alliance Is Optimal?

Cost Reduction Effect of Blockchain on the Strategies of Two Competing Manufacturers: Which Channel Alliance Is Optimal?

Assessing the Level of Implementation of Cost Reduction Techniques on Educational Building Projects in Public Tertiary Institutions in Southwestern Nigeria

In the face of limited financial resources, public tertiary institutions are pressured to optimize expenditure on educational building projects. Effective cost reduction techniques can help bridge the gap between limited budgets and the need for quality infrastructure. This research investigates cost reduction techniques implemented on educational building projects in public tertiary institutions in southwestern Nigeria and its relationship with the type of tertiary institution. A quantitative research method was employed in the study using a questionnaire survey. The building projects considered were those completed between the years 2012-2022. 133 projects from 15 public tertiary institutions in southwestern Nigeria were surveyed using purposive sampling techniques. The mean item score and the Kruskal-Wallis test were employed for data analysis. The findings showed that amongst the 16 various cost reduction techniques investigated, value analysis/engineering, supply chain management, target value design, and budget control were top-ranked and used on many elements of the projects. At the same time, automation and circular economy were the least ranked cost reduction techniques used. The study further showed significant differences in implementing 7 of the techniques in the various tertiary institutions. It is concluded that integrating cost reduction techniques into existing policies and guidelines will facilitate the development of a standardized framework for their implementation across public tertiary institutions, promoting broad adoption and ensuring consistency in their application.

Economics of renewable hydrogen production using wind and solar energy: A case study for Queensland, Australia

This study presents a technoeconomic analysis of renewables-based hydrogen production in Queensland, Australia under Optimistic, Reference and Pessimistic scenarios to address uncertainty in cost predictions. The goal of the work was to ascertain if the target fam-gate cost of AUD 3/kg (approx. USD 2/kg) could be reached. Economies of scale and the learning rate concept were factored into the economic model to account for the effect of scale-up and cost reductions as electrolyser manufacturing capacity grows. The model assumes that small-scale to large-scale wind turbine (WT)-based and photovoltaic (PV)-based power generation plants are directly coupled with an electrolyser array and utilises hourly generation data for the Gladstone hydrogen-hub region. Employing first a commonly used simplified approach, the electrolyser array was sized based on the maximum hourly power available for hydrogen production. The initial results indicated that scale-up is very beneficial: the levelised cost of green hydrogen (LCOH) could decrease by 49% from $6.1/kg to $3.1/kg when scaling PV-based plant from 10 MW to 1 GW, and for WT-based plant by 36% from $5.8/kg to $3.7/kg. Then, impacts on the LCOH of incorporating curtailment of ineffective peak power and electrolyser overload capacity were investigated and shown to be significant. Also significant was the beneficial effect of recognising that electrolyser efficiency depends on input power. The latter two factors have mostly been overlooked in the literature. Incorporating in the model the influence on the LCOH of real-world electrolyser operational characteristics overcomes a shortcoming of the simplified sizing method, namely that a large portion of electrolyser capacity is under-utilised, leading to unnecessarily high values of the LCOH. It was found that AUD 3/kg is achievable if the electrolyser array is properly sized, which should help to incentivise large-scale renewable hydrogen projects in Australia and elsewhere.

How does manufacturing servitization effect global value chain upgrading? Tests based on the dual perspectives of “participation” and “division position”

Manufacturing servitization has become an important trend in the development of global manufacturing. Under the policy goal of global value chain upgrading, it is of great significance to discuss how manufacturing servitization affects the participation and position in global value chains (GVCs). Based on the OECD Input-Output Tables (OECD-ICIO) from 2008 to 2018, we calculate the level of manufacturing servitization in major economies. At the same time, based on the TIVA database, two indicators reflecting the upgrading of the global value chain are calculated from the dimensions of “participation” and “division position”. This paper empirically examines the mechanism and effect of manufacturing servitization on the upgrading of GVCs. Our findings reveal the following: (1) Manufacturing servitization has a significant enhancement effect on global value chain upgrading. (2) Manufacturing servitization can affect the upgrading of GVC through “cost reduction effect, technology spillover effect and specialization effect”. (3) Manufacturing servitization in developing countries has a greater promoting effect on the upgrading of GVC(4) For manufacturing industries with different levels of technological development, the promotion effect of manufacturing servitization on high-tech industries is more obvious. This paper has two main implications: On one hand, the government should not only increase support for the service sectors, but also promote the innovative development of the service sectors. On the other hand, it is necessary to improve the level of opening up to the outside world, make full use of the positive “spillover effect” of high-quality service elements, and promote the integration of production-oriented services and manufacturing.

Advancements in manufacturing and vibration analysis of functionally graded polymer composites: A review

Functionally graded materials are examined in-depth in this review study, which covers their classification, effect of environmental factors, cost reduction and efficient use, production processes, numerous theories and methodologies for vibration analysis. Classical lamination theory, First and Higher Order Shear Deformation Theories, and Carrera Unified Formulation. Also, numerical techniques such as Navier’s solution, Ritz and Galerkin’s methods are some of the methodologies that are covered. The article highlights the use of power, exponential, and sigmoidal laws to characterize material qualities as it examines the variety of FGM properties. Additionally, it examines the applications of FGMs and suggests possible future studies.