Applied Mathematics and Nonlinear Sciences (aop) (aop)

Applied Mathematics and Nonlinear Sciences

https://www.sciendo.com

Research on green-driven product value creation process

Li Zhu1, 2,†

1. School of Economics & Management, Nanjing University of Science & Technology, Nanjing,
Jiangsu, 210094, China.
2. Taizhou Institute of Science & Technology, Nanjing University of Science & Technology, Taizhou,
Jiangsu, 225300, China.

Submission Info

Communicated by Z. Sabir
Received November 16, 2022
Accepted April 19, 2023
Available online October 9, 2023

Abstract
With the rapid economic development in recent years, environmental problems such as environmental pollution, resource
waste, greenhouse gas emission and habitat destruction caused by production activities have become increasingly serious.
This paper carries out a systematic analysis of the endogenous growth model of product value under green-driven
innovation and constructs the product R&D module, production module, raw material supply chain module and marketing
module, respectively, to improve the final product value. Finally, with the design and analysis of case-related indicators,
combining the characteristics of Company H itself and the availability of data and other factors, suitable indicators are
selected to measure the ability of green-driven innovation and product value of the enterprise, and Tobin’s Q value is
selected as the indicator to measure the value of the enterprise. The empirical test results show that: through green-driven
innovation H company green-driven innovation Tobin’s Q value increased by 13.35 points, and the regression coefficient
of green-driven innovation on product value is  = 0.613 (p<0.001), indicating that green-driven innovation has a
significant positive impact on product value. This paper empirically verifies the effectiveness of green-driven product
value addition, which has practical implications for strengthening the awareness of green innovation within companies
and improving product value.

Keywords: Green-driven innovation; Endogenous growth model; Production module; Product value; Tobin’s Q value.
AMS 2010 codes: 97M80

†Corresponding author.
Email address: zhuli0409@163.com ISSN 2444-8656
https://doi.org/10.2478/amns.2023.2.00570
© 2023 Li Zhu, published by Sciendo.
This work is licensed under the Creative Commons Attribution alone 4.0 License.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

1 Introduction

Since the reform and opening up, China has been pursuing economic development at the expense of
the social and ecological environment, and this brutal development approach has resulted in a series
of environmental problems, such as air pollution, climate warming, and sea level rise, which are
increasingly exposed [1-3]. In order to improve the ecological and environmental problems caused
by China’s rapid economic development over the years, the 2015 13th Five-Year Plan added “green”
to China’s development philosophy as one of the five major ideas to guide China’s future economic
development [4-5]. The green drive is an important driving force for the development of a green
economy in China, which is of great significance in adjusting the layout of China’s industrial structure
and promoting high-quality economic development [6].

Green sustainable development strategy requires industry to follow the path of green cycle
development, and green innovation, as an important way to transform green development, has become
the focus of both enterprises and governments [7]. The literature [8] shows that green innovation
(ESG) can effectively increase the value of firms and that there is a direct or indirect link between
environmental, social and governance practices and firm performance. The literature [9] used
indicators of green innovation to analyze the potential impact hotel industry on corporate performance
and found that the green innovation process has a positive and significant positive impact on corporate
value.

Green technology innovation has the dual benefits of environmental protection and economic growth
and is conducive to the greening, intelligence and informationization of heavily polluting enterprises,
which has a key role in enhancing their corporate value [10-12]. The literature [13] concluded that
green innovation has a significant positive impact on the sustainable performance of firms and their
production and operation structure and that green innovation plays a partially mediating role between
the material production management process and the sustainable performance of firm's operations.
The literature [14] argued that the use of mechanisms such as information sharing and green
innovation technologies in green-driven supply chain integration (GSCI) to improve product
production capacity could reduce the uncertain outcomes of green products in the production and
marketing process. The literature [15] showed that industrial structure, economic growth, and R&D
investment were central to influencing green innovation through the analysis of green innovation data
of Chinese regional enterprises from 2010 to 2019. The literature [16] analyzed panel data from 274
prefecture-level cities in China from 2005 to 2015 and found that environmental regulation promotes
green product productivity, while weighted environmental regulation in adjacent regions inhibits
green productivity. Thus the green-driven impact on firm product value may be more than a simple
linear relationship [17].

This paper discusses in depth the driving mechanism of enterprise product green innovation strategy
and the mechanism of green-driven innovation strategy on enterprise product value. Firstly, we
construct the product R&D module, production module, raw material supply chain module and
marketing module, analyze the core indicators, edge conditions and grouping paths that promote the
green innovation strategy of enterprises, and deepen the theoretical cognition of the green-driven
innovation strategy. Secondly, we construct a theoretical framework between green-driven innovation
and enterprise product value, explore and verify the mediating effect of green drive and endogenous
growth of product value and the moderating effect of green technology turbulence. Finally, the design
and analysis of indicators related to the case, combined with H company’s own characteristics and
the availability of data and other factors, selected appropriate indicators to measure the ability of
green-driven innovation and product value of the enterprise, the indicator to measure the value of the
enterprise was selected Tobin’s Q value.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

2 Endogenous growth model of product value driven by green

2.1 Product Development Module

In this paper, we divide the R&D investment into two parts in this module, namely, the R&D
investment in the product and the R&D investment in the technology for the production and utilization
of new energy. It is assumed that there are three sectors in the economic system: upstream, midstream
and downstream. The upstream R&D sector employs labor to develop emission reduction technology
and sells the technology to the midstream-specific intermediate product sector, which then produces
intermediate products for transmission to the downstream final product production sector, thereby
increasing the value of the final product. Figure 1 shows the value creation process in the product
development stage under the green drive.

Budget Environmental Hamiltonian function

Three green low-carbon behavior scenario models

constraints Quality
Green Low Carbon Behavioral Growth Model

Optimal conditions for

Family Representative consumption and physical
Consumption
Module home utility capital of representative
households
Benefit Carbon
Functions emissions

Pollution
emission Characteristics
R&D of emission knowledge stock of a balanced
reduction
Carbon growth path at
technologies
R&D R&D Emissions steady state
Module investment Research and Knowledge Stock
development of
new energy
sources

Figure 1. Green-driven product value creation in the R&D phase

This paper gives the carbon emission knowledge stock H irt corresponding to carbon emissions, and
this paper encapsulates the knowledge stock of carbon emissions and the knowledge stock of emission
reduction in the knowledge stock of pollution emissions resulting from the development of emission
reduction technologies H irt :

Hirt = Hirt1 + Hirt 2 (1)

Assuming that the government gives the corresponding R&D investment, the input behavior of R&D
is expressed as:

H = H irt + H  (2)

Among them:

H =  lH H (3)
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

Here,  denotes the productivity parameter, l H denotes the labor input used for R&D, and H 
denotes the R&D of new energy technologies.

In this model, the balanced growth path (BGP) in the steady state is characterized by

Yrt C kirt H
= = = = g , N = pirt = 0 (4)
Yrt C kirt H

2.2 Product production module

In the production module, we give the production function of the final product with respect to the
intermediate product and divide the intermediate product into the intermediate product of a specific
sector and the intermediate product of other sectors, and then combine the two based on the CES
function and maximize the static profit for the intermediate product. In the production function, we
consider the environmental quality, capital, labor, and emission inputs and obtain the first-order
conditions for the intermediate producer based on the profit function of the intermediate producer. So
the production function under the green drive yields the equilibrium growth path through the emission
reduction technology, and Figure 2 shows the creation process of the green drive on the value of the
product production chain.

Dynamic profit
Profit function
maximization
Environmental
Quality

First-order conditions for Capital Production

intermediate producers functions
Labor

Emission inputs
Static profit
maximization
Perfectly Monopolizing
competitive competitive Combination
Three green low-carbon behavior scenario models

variables
Green Low Carbon Behavioral Growth Model

market markets Sector-specific

intermediate Amount of
Production Final Intermediate products knowledge
Module product Products Intermediate diffusion
products from
other sectors

Budget Environmental Hamiltonian function

constraints Quality
Optimal conditions for
Family Representative consumption and physical
Consumption
Module home utility capital of representative
households
Benefit Carbon
Functions emissions

Figure 2. Value creation in the green drive for the production chain of products
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

The production function of the final product with respect to the intermediate product is derived under
the green drive:
1

Yrt =   yirt di  ,   [0,1]

1
1− 1−
(5)
 0 

Where Yrt is the final product produced in the t moment r region, yirt is the intermediate
product produced in the t moment r region i sector, and  is the degree of monopoly of the
intermediate product producer. yirt is a continuous intermediate product.

Under time t sector i  I region r , intermediate product yirt consists of two components i.e.
intermediate product Birt of other sectors and sector specific intermediate product Qirt based on
CES function:
 ir
 ir −1  tr −1  −1
  rr
yirt =  ir Qirt + (1 −  ir ) Birt ir 
 ir (6)
 

Where ir denotes the market share of the intermediate product in a given sector and  ir  0
denotes the elasticity of substitution of inputs. Maximizing t moment i sector r static profit of
intermediate product under region:
1 1
Max  Yrt = prtY Yrt −  pirtQ Qirt di −  pirtB Birt di (7)
Qirt , Birt 0 0

First-order conditions for Qirt and Bitr , respectively, to obtain the optimal relative input
requirements:
−  ir  ir
Qirt  pirt
Q
   ir 
= B    (8)
Birt  pirt   1 −  ir 
Q
Thus, all else being equal, the lower the sector-specific output price pirt , the more intermediate goods
Qirt are produced in a given sector, which in turn raises economic output Yrt .

The sector-specific production of intermediate goods Qit consists of two components, namely, the
amount of knowledge diffusion z jirt and the combination variable x jirr under the j firm i
sector:
1

Qirt =    j x kjirt dj +  (1 −  j )z kjirt dj 

J irt J irt k
(9)
 j =0 j =0 

Here,  j is the absorptive capacity of knowledge diffusion,  j  [0,1], J irt is the number of
intermediate goods under sector i region r in t moment. k  (0,1) measures the gains from
diversification.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

Maximizing the profits of sector-specific intermediate goods producers:

Jirt Jirt
max  Qirt = pirtQ Qirt −  p xjirt x jirt dj −  p zjirt z jirt dj (10)
x jirt , z jirt j =0 j =0

2.3 Raw material supply chain module

When relying on the green-driven supply chain for product value innovation, the situation of
undertaking the task of enhancing customer value science and technology innovation is similar to that
of cost reduction, and it can also be any one of the enterprise members in the supply chain. When the
entire green supply chain enhances product value innovation, set the supply chain innovation is
successful because the quality of the product becomes better and other reasons to make custo mers
feel the value of the new product. Figure 3 shows the green-driven raw materials supply chain module
product value creation process.

The ability to integrate scientific

and technological forces
Linking the three phases
of basic research, applied
results, and translational
technologies

Science and Number of

Green Innovation Physical capital
Technology Scientific
Knowledge Input input
Innovation Vitality Researchers

Emission Reduction
Basic Research Applied Research
R&D and Technology
Department Department
Innovation Department

Carbon and
Green Low Environmental Taxes
Carbon
Consumption
New power of science and tax
technology innovation
Green low-
Production Products Environmental Quality
carbon products

Labor

Figure 3. Green drive raw material supply chain module product value creation process

When Tc  is fixed, the higher the difficulty coefficient  of technological innovation to the product,
the smaller the value of the degree of customer value enhancement   . It reflects the relationship
between the cost of green-driven innovation, the difficulty coefficient of innovation, and the increase
in the value curve. Since the purpose of the green-driven innovation behavior is to enhance the value
2
obtained by the customer, so that r = , as the increase in customer value drives  to increase,
1+ 
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

which affects the increase in repeat purchase rate r , r with the change in  . Then the cost of new
production in the supply chain is: C = c1 + c2 + c3 . The new inverse market demand function due to
bQ(1 +  )
the increase in customer value is P = A − +  .
1 + 3

Then the total value of all firms in the supply chain at this point L2 is:

 bQ(1 +  ) 
L2 =  A − +    Q − ( c3 + c2 + c1 ) Q − Tc  (11)
 1 + 3 

When the customer value is raised, the demand curve shifts up, but at this time the price of the supply
chain unit product to the consumer is unchanged, so the new consumer surplus is:
Q
CS 2 =  PdQ − PQ
0

Q bQ (1 +  )   bQ (1 +  ) 
=   A− +   dQ −  A − Q
0
 1 + 3   1 + 3  (12)
bQ 2 (1 +  )
= +  Q
2(1 + 3 )

The value decision function of the supply chain at this point is:

 = L2 +  CS2
 bQ(1 +  )  1  bQ 2 (1 +  ) (13)
=  A− +    Q − ( c3 + c2 + c1 ) Q −  2 + +  Q
 1 + 3  2 2(1 + 3 )

By the first-order optimization condition as:

d 2bQ(1 +  )  bQ(1 +  )
= A− + (1 +  )   − c1 − c2 − c3 + (14)
dQ 1 + 3 (1 + 3 )

2.4 Product Marketing Module

When the supply chain carries out green-driven innovation to reduce product costs and maximize
supply chain value, the output of the products produced by the supply chain increases, the unit price
of the products decreases, and the consumer value increases due to value creation. This shows that
consumers can obtain products at a lower unit price, and at the same time, consumers are more willing
to repeat the products, and more value is created by the collaboration between the supply chain and
consumers and the reduction of production costs. Figure 4: The product value creation process of the
Green Drive product marketing module.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

Labor

Carbon emission Green low-

Production Products
reduction inputs carbon products
Virtual
Economic Green low-carbon Negative Tax
intermediate Environmental
System Quality Innovation Effect
products
Household Economic
Consumption utility Consumption growth Moistening effect
function equation
Carbon Behavior growth jump
emissions forced to improve the level
Consumption of environmental quality
Government options for
Government
Budget green low-
intervention
Constraints carbon behavior

Government Proportion of
subsidies for the government
abatement R&D spending on
and technology basic research
innovation sector intervention

Figure 4. The Green Drive product marketing module product value creation process

The total value created from the supply chain to the consumer at this point  2 is:

 2 
1 +   B + (1 +  )   B (3 − 2 ) +  (7 − 5 )  1
 1+   (15)
2 = −  2
2(2 −  ) b2
2

It is easy to prove that:

 2 1
= − 2 (16)
 2

3 Design and analysis of case-related indicators

3.1 Product Value

Product value is essentially the value of the product itself, consisting of two components: the tangible
assets inside the enterprise and the intangible assets that exist outside the enterprise [18]. There are
two main indicators chosen to measure the value of the product:

The first one uses economic value added to measure product value, which takes into account the
economic value added of the enterprise and can provide a comprehensive and accurate assessment of
product value. However, this method requires a detailed calculation of the economic value added by
each research subject, which is not suitable for large sample data research with large sample sizes,
and the discount rate will keep changing with the development of time, so its applicability is
somewhat limited.

The second one uses Tobin’s Q to measure the product value. When Tobin’s Q is greater than 1, it
indicates that the enterprise is in good business condition and has the intention to issue shares to
further enhance its value. On the contrary, when the enterprise value is less than 1, it indicates that
the enterprise’s business condition is not optimistic at this time, and the enterprise will adopt a tight
fiscal policy to reduce all financial expenditures, and the enterprise value will also decline. There are
several indicators to measure the enterprise value, and the research indicators are different for
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

different research objects. The green technology innovation investment of enterprises is more
reflected in the analysis of the future value of enterprises. Therefore, this paper intends to use Tobin’s
Q as a measure of the enterprise value of company H [19].

3.2 Selection of green-driven product value innovation indicators

3.2.1 Green driven product R&D innovation index selection

Green-driven product R&D value innovation refers to the investment of relevant R&D funds in the
product R&D process, which can reduce the harm brought by the production process to the social
environment. The product production process can focus on energy conservation, clean production
technology research and development innovation, ecological environment protection and restoration
through increased investment in research and development and related personnel training. Discover
new clean energy, continuously improve the instruments and equipment to enhance the utilization
rate of resources, reduce the emission of pollutants, break through the bottleneck of technological
innovation in end management, accelerate the R&D investment efforts, enhance independent
innovation capabilities, accelerate the development of a number of innovative green technologies
with independent intellectual property rights, and effectively improve the core competitive ability.
According to this provision, this paper selected five indicators for green R&D innovation such as
green R&D investment, the number of new green patents granted, the per capita training cost of green
innovation talents, the number of green invention patent applications, and the number of green utility
model patent applications, and Table 1 shows the specific green-driven product R&D value
innovation indicators [20].

Table 1. Selection of green product innovation indicators

Tier 1 Type of Nature of Evaluation
Secondary indicators
indicators Indicator Indicator Methodology
Green R&D Investment Quantitative Positive
New green patents granted Number of new green For quantitative
Green driven Quantitative Positive indicators of the
patents granted
product Green innovation talent per capita Average positive type,
development Quantitative Positive they are
Training Cost
and Green invention patent applications Number of normalized
innovation Quantitative Positive using a uniform
patent applications
Green Utility Model Patents Number of Patent formula
Quantitative Positive
Applications

3.2.2 Green-driven product marketing innovation index selection

Green-driven product marketing value innovation in the relevant provisions refers to the
strengthening of green technology research in the product design, production, consumption, recycling
and the entire life cycle are reflected in the innovation and green development. Therefore need to
address the innovation aspects of green product production and consumption links. Table 2 shows the
indicators selected for green-driven product marketing value innovation, which are integrated energy
consumption of 10,000 yuan product output value, the number of new product research and
development, new product sales rate, market growth rate, and market share capacity [21].
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

Table 2. Selection of indicators for green-driven product production value innovation

Tier 1 Type of Nature of Evaluation
Secondary indicators
indicators Indicator Indicator Methodology
Product output value of 10,000 yuan Quantitative Negative
Qualitative
Comprehensive energy consumption Quantitative Positive indicators are
Green
Number of new products developed Quantitative Positive generally described
driven
in linguistic terms
product Sales rate of new products Quantitative Positive and therefore the
marketing
Market growth rate Quantitative Positive metrics should be
unified.
Market share capacity Quantitative Positive

3.2.3 Selection of technological innovation indicators for green-driven product Production

By developing a series of new technologies to further enhance the utilization of pollutants emitted
from the production of products, the solid waste discharged is processed and manufactured through a
series of processes to achieve energy reuse. By setting strict green energy conservation standards
within the unit, clear limits are set on the number of pollutants emitted and the degree to which they
meet the standards, promoting the continuous improvement of energy conservation and ecological
protection. It is also necessary to continuously improve the level of R&D and investment in key
technology areas such as new energy and new technology, increase the investment in green
governance technology innovation funds, accelerate the introduction of talents in related areas, clarify
the key performance and indexes of green technology, and improve the mandatory standards for
product energy consumption, limit emissions, pollutant emissions, and carbon emissions in
accordance with the law.

Table 3 shows the green-driven production technology innovation indicators for selected enterprises,
which have 7 indicators such as blast furnace coal injection, new water consumption, wastewater
emission, COD emission, sulfur dioxide emission, nitrogen oxide emission and solid waste utilization
rate.

Table 3. Selection of green-driven production technology innovation indicators

Nature of Evaluation
Tier 1 indicators Secondary indicators Type of Indicator
Indicator Methodology
Blast furnace coal injection Quantitative Negative
New water consumption Quantitative Negative
Wastewater emissions Quantitative Negative
The discharged
Green drives COD emissions Quantitative Negative solid waste is
technological processed and
Bowl Dioxide Quantitative Negative
innovation in manufactured in a
product production Emissions Quantitative Negative series of ways to
reuse energy.
Nitrogen oxides Quantitative Negative
Emissions Quantitative Negative
Solid Waste Usage rate Quantitative Positive

3.2.4 Green-driven product raw material management innovation index selection

Green-driven product raw material management innovation refers to the entire production chain from
product raw material procurement, material management and material recycling within the enterprise,
whether the internal managers of the enterprise have established the consciousness of green
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

innovation, whether they actively create a green and low-carbon sustainable development concept
within the enterprise, and whether they form an enterprise culture of economic development and
environmental coordination.

This requires the internal managers of enterprises to establish an awareness of green innovation,
promote the formation of a green industrial chain, and continuously strengthen the formation of green
innovation corporate culture in daily production. Table 4 shows the selected green-driven product raw
material management value innovation indicators, which have four qualitative indicators such as
green innovation consciousness, enterprise’s sustainable development capability, advanced green
technology, and environmental protection capability.

Table 4. Value innovation indicators for raw material management of green drive products
Type of Nature of
Tier 1 indicators Secondary indicators Evaluation Methodology
Indicator Indicator
Green Innovation Awareness Qualitative Positive Qualitative indicators are
generally described in
Green drives Corporate Sustainability
Qualitative Positive verbal terms, so the
innovation in raw Capacity
metrics should be unified
material Green Technology
Qualitative Positive and a scoring system
management for Advancement
should be used to assign
products Environmental Protection
Qualitative Positive values to qualitative
Capability indicators

4 Test analysis of the impact of green drive on product value in Company H

4.1 Unit root test

Before constructing a model of the relevance of green drive to product value, it must be ensured that
all data variables are smooth. A variable smoothness test is a necessary condition for constructing the
model. If the relevant data do not pass the smoothness test when constructing the model, the analysis
method and statistical test model based on the model will lose their meaning, and the final conclusion
may be incorrect. Therefore, it is necessary to perform the smoothness test on the relevant data before
building the model.

If all the variables related to company H pass the smoothness test, then the VAR model can be
constructed directly. If the time series is not smooth, it is necessary to treat the data as data difference
and perform first-order or second-order difference until the variables are smooth and the model can
be constructed.

In the VAR model, to test the smoothness of the time series, generally use the unit root test, which
includes the ADF test, PP test, DF test, etc. Among them, ADF is one of the most common methods
for conducting unit root smoothness tests, and Table 5 shows the smoothness test of the variables
related to company H using the ADF method.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

Table 5. Tests for smoothness of variables related to company H using ADF method
Variables ADF test 1% critical 5% critical 10% critical P-value Test results
RD 1 -1.9653 -3.12737 -3.16601 -2.69884 0.206318 Unsteady
RD 1 first order differential -2.92365 -4.27004 -3.11736 -2.70063 0.172872 Stable
RD 2 -1.78119 -3.78305 -3.13291 -2.69166 0.300884 Unsteady
RD 2 first order differential -2.92659 -4.26958 -3.12398 -2.70087 0.11017 Stable
RD 3 -3.3384 -3.83349 -3.16234 -2.69485 0.39841 Unsteady
RD 3 first order differential -2.67245 -3.43787 -3.1619 -2.68215 0.196857 Stable
RD 4 -2.66986 -3.64831 -3.13146 -2.69117 0.210499 Unsteady
RD 4 first order differential -1.57017 -2.95196 -3.15363 -2.69778 0.478518 Stable
V -3.30466 -2.99581 -3.20001 -2.68067 0.093755 Unsteady
V first order differential -1.62272 -3.2604 -3.16813 -2.70293 0.45284 Stable

4.2 Stability check

An important prerequisite for constructing the model is to determine whether the model is smooth,
and only a smooth green-driven-to-product-value correlation model is convergent, and the next step
of analysis is meaningful. The overall stability of the model can be judged by the AR unit root test.
The EViews 10.0 software is used to determine the smoothness of the model, specifically if the scatter
points all lie within the unit circle, indicating that the correlation model has passed the smoothness
test. On the contrary, if the scatter points are all located outside the unit circle, it indicates that the
model is unstable, and the next analysis will be meaningless. Figure 5 shows the test results of the
green drive on the product value correlation model.

Where Figure 5(a) shows the test results of green R&D innovation and product value, it can be
visualized that Moran’s I = 0.726 and all scatter points fall within the circle. Therefore, the correlation
test model of green-driven product R&D innovation and product value is smooth and can be continued
to the next correlation test.

Figure 5(b) shows that the modes of the characteristic roots of green-driven product marketing
innovation and product value are all less than 1, i.e., the scatter points all fall within the unit circle,
and Moran’s I=0.689, indicating that the correlation test model of green-driven product marketing
innovation and product value is also smooth.

Figure 5(c) shows the test results of green-driven product technological innovation and product value,
which shows that the modes of the characteristic roots of green-driven product technological
innovation and product value are both less than 1. Moran’s I=0.733, i.e., the scatter points all lie
within the unit circle, so the model of green governance technological innovation and firm value is
also smooth.

Figure 5(d) shows the test results of green raw material management innovation and product value,
Moran’s I=0.845. The scatter points all lie within the unit circle, so the model of green raw material
management innovation and product value is also smooth.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

(a) (b)

(c) (d)

Figure 5. Results of the test of the green drive on the product value relevance model

4.3 Impulse Response Analysis

The analysis in this section includes the dynamic relationship between the impact of green-driven
R&D innovation on the product value of Company H, the dynamic relationship between the impact
of green-driven product marketing innovation on the product value of Company H, the dynamic
relationship between the impact of green-driven production technology innovation on product value
of Company H, and the dynamic relationship between the impact of green-driven raw material
management innovation on product value of Company H. The horizontal axis indicates the number
of lag periods of shock effects, the vertical axis indicates the degree of response of the response
variable to the shock variable, the solid line indicates the impulse response change curve, and the
dashed line indicates the range of deviation from the standard deviation of plus or minus two times.
When the curve lies above the number axis, it indicates a positive correlation, and below it, a negative
correlation.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

4.3.1 Dynamic relationship between the impact of green-driven product R&D innovation on
product value

Figure 6 shows the impulse response diagram of the dynamic relationship between the impact of
green-driven product R&D innovation on product value, where the shock variable is green-driven
product R&D innovation, and the response variable is product value. It can be seen that the enterprise
product value will show an upward trend at the initial stage of production factor input, which indicates
that green-driven R&D input will have a significant positive impact on the enterprise product value
during the input period. The reason for this analysis is that, at the initial stage of green-driven R&D
innovation, enterprises will continuously increase their investment in innovation funds, accelerate the
training of innovative high-tech talents, accelerate the research and development of green invention
application patents, green utility model patents, and increase the number of patent licenses, etc. All
of the above initiatives will promote the continuous rise of enterprise value. Starting from the 6th
period, this positive driving effect decreases, which is because the impact of green-driven R&D
innovation on enterprise product value will have different effects on enterprise product value
depending on the amount of production factor input. This reveals that enterprises should continuously
strengthen green-driven R&D innovation to ensure continuous and stable input of production factors
in order to promote its long-term positive driving effect on enterprise product value.

Figure 6. Impulse response of firm value to green product innovation

4.3.2 Dynamic relationship between the impact of green-driven product marketing

innovation on product value

Figure 7 shows the impulse response diagram of the dynamic relationship between the impact of
green-driven product R&D innovation on product value, where the shock variable is green-driven
product marketing innovation, and the response variable is product value. See that the enterprise value
shows a linear increase at the initial stage, which indicates that the green product innovation input
will have a significant positive impact effect on the enterprise value in the current period. The reason
for this analysis is that in the process of green product innovation, the company will continue to
improve the efficiency of green product development and speed up the development of innovative
products, and all of the above initiatives will directly contribute to the increase of enterprise value in
a short period of time. Overall, the active green product innovation of company H has played a
positive role in promoting the increase of enterprise value.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

Figure 7. Impulse response of firm product value to green-driven product innovation

4.3.3 The dynamic relationship between the impact of green-driven production technology
innovation on product value

Figure 8 shows the impulse response diagram of the dynamic relationship between the impact of
green-driven production technology innovation on product value, where the shock variable is green-
driven production technology innovation, and the response variable is product value. From the figure,
it can be seen that the green production governance technology innovation will have a significant
positive impact on the enterprise product value from period 1. The reason is that the enterprise's green
production technology innovation makes the energy consumption per unit of the products produced
by the enterprise decreases continuously, attracts more high-tech talents for company H and widens
the financing channel of Company H. The magnitude of the positive impact decreases from period 4,
which reveals that enterprises should follow the development trend of the times and the industry,
continuously carry out green technology innovation R&D activities, reduce the emission of harmful
pollutants, actively assume social responsibility, and create a green and healthy image in order to
make the positive impact of green governance technology innovation on enterprise value sustainable
in the long term.

Figure 8. Impulse response of firm product value to green production technology innovation
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

4.3.4 Dynamic relationship between the impact of green-driven raw material management
innovation on product value

Figure 9 shows the impulse response plot of the dynamic relationship between the impact of green-
driven raw material management innovation on product value, where the shock variable is green-
driven raw material management innovation, and the response variable is product value. As a whole
green management innovation has a smaller magnitude of impact on enterprise value compared to
green R&D innovation, green product innovation, and green governance technology innovation. The
reason behind this trend of impact is sustainable, and the reason behind it is that enterprises increase
the cultivation of employees’ awareness of green innovation, which forms the awareness of green,
low-carbon and sustainable development within the enterprise, prompting employees to develop the
awareness of active innovation and consciousness of protecting the environment, forming an efficient
and energy-saving environment. As a whole, it has improved the innovation level of products, reduced
the unit energy consumption of products, reduced the emission of wastewater, waste gas and solid
waste, and enhanced the value of the enterprise. Overall, green management innovation has a positive
contribution to the corporate value of Company H, and this effect is sustainable.

Figure 9. Impulse response of firm product value to green raw material management innovation

5 Conclusion

This paper constructs an endogenous growth model of enterprise product value for green-driven
innovation and proposes to adopt Tobin’s Q as a measure of enterprise value for Company H. The
possibility of green-driven product value addition is verified through the simulation with the
arithmetic case of enterprise H, based on the arithmetic analysis of the constructed production-based
value creation model of green innovation products and the changes of the influencing parameters in
the value creation process. And the following conclusions were drawn:

1) Tobin’s Q value of green-driven innovation in company H increased by 13.35 points, and the
regression coefficient of green-driven innovation on product value was (p<0.001), indicating
that green-driven innovation has a significant positive impact on product value.

2) The process of green product innovation by enterprises will continuously improve the
efficiency of green product research and development and speed up the development of
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

innovative products. Company H’s active green product innovation has played a positive role
in promoting enterprise value.

Funding:

This research was supported by Jiangsu Provincial University Philosophy and Social Science
Research Project. Funded by Jiangsu Provincial Department of Education: Research on the
Mechanism of Shared Service Platform User Value Co-creation (2020SJA2414).

References
[1] Li, G., Wang, X., Su, S., et al. (2019). How green technological innovation ability influences enterprise
competitiveness. Technology in Society, 59, 101136.
[2] Chien, F., Kamran, H. W., Nawaz, M. A., et al. (2021). Assessing the prioritization of barriers toward
green innovation: small and medium enterprises Nexus. Environment, Development and Sustainability,
1-31.
[3] Astadi, P., Kristina, S., Retno, S., et al. (2022). The long path to achieving green economy performance
for micro small medium enterprise. Journal of Innovation and Entrepreneurship, 11(1), 1-19.
[4] Ahmed, Z., Asghar, M. M., Malik, M. N., et al. (2020). Moving towards a sustainable environment: the
dynamic linkage between natural resources, human capital, urbanization, economic growth, and
ecological footprint in China. Resources Policy, 67, 101677.
[5] Yang, Y., Guo, H., Chen, L., Liu, X., Gu, M., & Ke, X. (2019). Regional analysis of the green
development level differences in chinese mineral resource-based cities. Resources Policy, 61.
[6] Pan, S. Y., Gao, M., Kim, H., et al. (2018). Advances and challenges in sustainable tourism toward a
green economy. Science of the total environment, 635, 452-469.
[7] Melander, L. (2017). Achieving sustainable development by collaborating in green product innovation.
Business strategy and the environment, 26(8), 1095-1109.
[8] Chouaibi, S., Chouaibi, J., Rossi, M. (2022). ESG and corporate financial performance: The mediating
role of green innovation: UK common law versus Germany civil law. EuroMed Journal of Business, 17(1),
46-71.
[9] Asadi, S., Pourhashemi, S. O. S., Nilashi, M., et al. (2020). Investigating influence of green innovation
on sustainability performance: A case on Malaysian hotel industry. Journal of cleaner production, 2020,
258: 120860.
[10] Feng, S., Zhang, R., Li, G. (2022). Environmental decentralization, digital finance and green technology
innovation. Structural Change and Economic Dynamics, 61, 70-83.
[11] Behera, P., Sethi, N. (2022). Nexus between environment regulation, FDI, and green technology
innovation in OECD countries[J]. Environmental Science and Pollution Research, 29(35), 52940-52953.
[12] Meirun, T., Mihardjo, L. W. W., Haseeb, M., et al. (2021). The dynamics effect of green technology
innovation on economic growth and CO 2 emission in Singapore: New evidence from bootstrap ARDL
approach[J]. Environmental Science and Pollution Research, 28, 4184-4194.
[13] Shahzad, M., Qu, Y., Zafar, A. U., et al. (2020). Exploring the influence of knowledge management
process on corporate sustainable performance through green innovation. Journal of Knowledge
Management, 24(9), 2079-2106.
[14] Wong, C. Y., Wong, C. W. Y., Boon-itt, S. (2020). Effects of green supply chain integration and green
innovation on environmental and cost performance. International Journal of Production Research, 58(15),
4589-4609.
 Applied Mathematics and Nonlinear Sciences (aop) (aop)

[15] Irfan, M., Razzaq, A., Sharif, A., et al. (2022). Influence mechanism between green finance and green
innovation: Exploring regional policy intervention effects in China. Technological Forecasting and Social
Change, 182, 121882.
[16] Singh, S. K., Del, Giudice, M., Chierici, R., et al. (2020). Green innovation and environmental
performance: The role of green transformational leadership and green human resource management.
Technological forecasting and social change, 150, 119762.
[17] Riti, J. S., Song, D., Shu, Y., et al. (2017). Decoupling CO2 emission and economic growth in China: is
there consistency in estimation results in analyzing environmental Kuznets curve? Journal of cleaner
production, 166. 1448-1461.
[18] Zhang, F., Zhu, L. (2021). Firm collaborative capability and new product development performance: the
mediating role of heterogeneous knowledge acquisition[J]. International Journal of Emerging Markets,
16(8), 1502-1524.
[19] Alattyih, W., Haider, H., Boussabaine, H. (2019). Development of Value Creation Drivers for Sustainable
Design of Green Buildings in Saudi Arabia. Sustainability, (11), 5867.
[20] Tasdemir, C., Gazo, R. (2019). Validation of Sustainability Benchmarking Tool in the Context of Value-
Added Wood Products Manufacturing Activities. Sustainability, 11.
[21] Castro-Gomes, J. P., Silva, A. P., Cano, R. P., et al. (2012). Potential for reuse of tungsten mining waste-
rock in technical-artistic value added products. Journal of Cleaner Production, 25, 34-41.