CHEMICAL ENGINEERING TRANSACTIONS VOL. 51, 2016 A publication of The Italian Association of Chemical Engineering Online at www.aidic.it/cet Guest Editors: Tichun Wang, Hongyang Zhang, Lei Tian Copyright © 2016, AIDIC Servizi S.r.l., ISBN 978-88-95608-43-3; ISSN 2283-9216 Auxiliary Decision-making of Enterprise Green Innovation under the Background of Environmental Regulation Lisha Chen*a,b, Changqing Dinga, Fang Wuc aBusiness School of Hohai University, Nanjing 211100,China; bSchool of Business Administration of Nanjing Audit University, Nanjing 211815, China cSchool of foreign language and literature of Nanjing Tech University, Nanjing 210044, China chenlisha006@163.com Enterprise green innovation often facilitates/accompanies staff training and project operation. Not only does this innovation change the production process, but also it changes product design, adjusts the organization structure and the supply chain, and even leads to renewal of product image as well as influences the company strategy and market competitiveness. So when we make green innovation decision, we should not only take environmental performance as foothold, but also put the long-term company development and competitive as the ultimate goal. Based on the balanced scorecard, this paper aims to help enterprises make choice more effectively and comprehensively to take precedence in the green tide throughout the world, with several factors taken into account, such as evaluation system and method from the perspective of financial and environmental performance perspective, customer perspective, internal process perspective, learning and organizational development . 1. Introduction In recent years, the whole society is appealing for environmental protection and the government's environmental regulation is stricter. Low carbon, energy saving, clean production and environmental protection will be an inevitable world-beating trend. Under this background, the evaluation and selection of green innovation project will determine the development direction and prospects of enterprises. This paper chose pharmaceutical enterprises as the research object because the pharmaceutical industry has traditionally been referred to the conscience industry, to which market image is crucial. But in recent years, there are some negative events such as chrome overweight capsule events, which have severely damaged the image in the eyes of the public in the industry (Chen and Li, 2014). 2. Literature review and research hypothesis In the evaluation of green innovation activities, foreign scholars tried to consider the economic performance and environmental performance at the same time, and explored the relationship between them. They emphatically studied the evaluation index system and evaluation method of environmental performance. In general, foreign scholars built evaluation system of environmental performance from the angle of green supply chain, sustainable development, the product life cycle, comparability improvement, risk management and so on. Chinese scholars have carried out many related researches on the basis of fully absorbing foreign advanced experience. For example, (Shen, 2002) proposed set of AHP (C - EPSS) layer calculation model for building enterprise environment evaluation system in the process of evaluating the environmental performance of construction contracting enterprise of mainland and Hong Kong. (Luo and Ye, 2005) designed evaluation index system of green supply chain, established the multi-level fuzzy comprehensive evaluation model and formed a new strategic decision framework model. By analyzing the status quo and pollution characteristics of manufacturing enterprises, (Zhang, 2007) built new evaluation framework and index system. With the growing environmental awareness, enterprises need to carry out greener innovation activities. The existing theoretical researches can’t satisfy the needs of enterprises to carry out the strategy of green because they focus on short-term, local environmental performance evaluation. To conduct a comprehensive and long- term evaluation of green innovation activities, researchers need to construct a complete evaluation system. DOI: 10.3303/CET1651138 Please cite this article as: Chen L.S., Ding C.Q., Wu F., 2016, Auxiliary decision-making of enterprise green innovation under the background of environmental regulation, Chemical Engineering Transactions, 51, 823-828 DOI:10.3303/CET1651138 823 After years of development, the balanced scorecard is now an important tool of enterprise performance evaluation and it has also been used in enterprise environmental performance evaluation, but there are few literatures about the balanced scorecard applied in the auxiliary decision-making of green innovation project. Using the balanced scorecard to make the multi-angle analysis of utility and effect of enterprise green innovation projects can make up for the deficiency in the evaluation of a single financial or environment factor. The factors about the enterprise long-term development and the customer value of enterprise in balanced scorecard make the evaluations more comprehensive and more reflect the value-added aspirations. Therefore, the hypothesis this paper wants to mainly verify is: H1: Green innovation evaluation results based on the balanced scorecard is different from the traditional single guide decision-making. 3. Construction of evaluation index system of green innovation project Based on the balanced scorecard, we put forward the evaluation indexes from the perspective of financial and environmental performance, customer, internal process perspective, learning and organizational development to investigate cleaner production options comprehensively. Table 1: Evaluation index system of Enterprise green innovation First Grade Index Second Grade Index Three-grade Index Finance U1 Income index U11 Investment yield rate of environmental protection equipment U111 Yield rate of comprehensive utilization of "three wastes" U112 Cost of environment pollution U12 Environmental fines U121 Pollutant charge U122 Consumer U2 Evaluation of the government U21 Environmental impact assessment U211 Observation to “three simultaneous” management system U212 Mark of environmental products U213 Number of environmental award received U214 Evaluation of local residents U22 Number of complaints from local residents U221 Number of media exposure U222 Internal process U3 Resource consumption U31 Electricity consumption per unit U311 Water consumption per unit U312 Energy consumption per unit(gas) U313 Pollution index U32 Wastewater discharge per unit U321 Exhaust emission per unit U322 Solid waste amount per unit of output U323 Environmental management index U33 Rate of reaching the standard for Industrial waste water U331 Rate of reaching the standard for exhaust gas U332 Solid waste disposal rate U333 Elimination of backward production capacity U334 Resources recycling index U34 Cyclic utilization rate of industrial water U341 Comprehensive utilization rate of solid waste U342 Innovation and Learning U4 Acquisition of flexible capability U41 Steady-state adjustment according to requirements U411 Optimization of production methods U412 Flexibility of integration of external resources U413 The influence of advertising or promotional measures on consumers U414 Technology and equipment level U42 Environmental education and training U421 Investment of environmental technology innovation U422 Advancement of technology and equipment U423 824 3.1 Finance The main financial goal of enterprises is to realize value maximization. But to achieve environmental performance, enterprises inevitably need to invest in environmental management which will reduce the enterprise's profit. So it is reasonable to see that the enterprises’ enthusiasm on internal environment management is not high. 3.2 Customer At the customer level, how customer treat enterprise is mainly considered/taken into account. The dimensions of the performance evaluation indicators are government assessment and evaluation of local residents. 3.3 Internal process Internal process of environmental management is an important aspect of enterprise to improve internal environmental management performance, and it is the foundation of accomplishment of other sectors. This indicator can be considered from the following three aspects: enterprise cost and the current situation of environmental pollution, environmental pollution improvement, and the cyclic utilization of the enterprise for its environmental resources. 3.4 Innovation and Learning Innovation and learning perspective can be understood as development potential of enterprise, mainly to demonstrate whether we have internal special ability and characteristics of the key strategy. 4. The steps of evaluation method of green innovation activities based on AHP Using AHP to evaluate environmental performance of enterprises is relatively efficient and effective. The steps of using AHP to determine the weight of each index are as follows: Step 1: Construct analytic hierarchy structure Step 2: Construct judgment matrix When weighting the index to evaluate environmental performance of pharmaceutical enterprises, we need to judge matrix from three related workers; one is a professor who has been engaged in related research for a long time. The second one is a government official in environmental protection agency, and the third one is an internal worker in the pharmaceutical company. Matlab software is used to deal with the judgment result from the three experts layer by layer to determine the final weights of evaluation indexes. Step 3: Determine the priorities of various factors Determine the importance order of various factors by calculating maximum characteristic root and characteristic vector of matrix. (1)Calculate the product of each line element of priority matrix (2)Calculate n times squaring-roots of (3)Normalize the vector , is an eigenvector corresponding maximum characteristic root. (4)Calculate the maximum characteristic root of judgment matrix. \ (A.W)j is ith element of vector AW. (5)Consistency check Firstly, consult the mean consistency index RI value table. Table 2: RI value table Degree 1 2 3 4 5 6 7 8 9 RI 0.00 0.00 0.52 0.89 1.12 1.26 1.36 1.41 1.46 Then calculate matrix consistency index CI. 825 CI= (max-n)/ (n-1) Finally calculated random consistency ratio CR=CI/RL. If CR0.10, the Priority matrix is consistent, or the judgment matrix need to be adjusted. On the basis of industry application prospect and professional knowledge accumulation, the three experts marked the contribution of each scheme to three-level indexes according to data given by the scheme- proposed personnel. Then the mark is multiplied by the weight to get the score of each program. Thus we can determine the priority of the program, banish bad ones, and determine the priorities. 5. Case application and the result analysis 5.1 Description of the case Jiangsu ASK pharmaceutical co., LTD. (hereinafter referred to as ASK pharmaceutical) is a national-owned high technology enterprise which is the integration of research and development, production, marketing and sales for pharmaceutical and fine chemical. ASK pharmaceutical has 35 varieties, 64 specifications of injection products of digestion and antitumor. Table 3: Description of cleaner production plan Code Plan name Plan Instruction Cost B1 Improve the packaging technology Reduce the use of packaging materials, try to choose less environmental hazards, biodegradable and recycled packaging materials. Low/no fee C1 Update and modify pac king in cooling tower Cooling towers have been used 7 years, the packing inside need to be replaced. New added water chillers need to be connected with original cooling towers to increase the service efficiency of the cooling tower. High cost C2 Adopt evaporative cond ensation and straight tu be condenser to refrige rating unit The plan can reduce wastewater discharge and COD emissions, and can save water. High cost C3 Add a small oil free air compressor At night, only a handful of equipments such as lyophilizer need to use compressed air, if still use the current big air compressor, will cause energy waste. High cost C4 Energy saving retrofit of cooling water and chill ed water system By installing frequency conversion device, cooling water pump and chilled water pump can realize automatic frequency conversion. High cost M1 Computer aided design storage management s ystem This scheme can reduce the dosage of raw materials, produce comprehensive benefit of 22000 yuan/y. Low/no fee M2 Carry physical balance calculation This scheme can reduce pollution, save the amount of methanol 0.2 t/a, saving cost 10000 yuan/y. Low/no fee The energy and resource used by ASK pharmaceutical in its production process are mainly electric power, water and steam, at the same time discharging waste water, solid waste, waste gas and noise. Cleaner production audit group holds an activity with prize to encourage all staff to put forward rational proposal, and collects 23 optimization proposals about technology and devices. There are 5 high cost plans and 18 Low/no fee schemes among them. The high cost plans are the schemes that are determined to invest 50000 Yuan or above. Low/no fee schemes are those plans whose investment cost is below 50000 Yuan or no investment at all. This paper chooses seven representative schemes as the research objects, as shown in table2. 5.2 Green innovation decision-making evaluation based on factors evaluation method Clean production audit team of ASK pharmaceutical screened the clean production options and evaluated them from four aspects as below. 826 Table 4: Plan Scoring and sorting table Factor Weight W(1-10) Score R(1-10) B1 C1 C2 C3 C4 M1 M2 Environmental benefits 10 7 6 7 9 9 5 5 Economic feasibility 9 7 8 7 9 8 9 9 Technical feasibility 7 7 6 7 7 7 7 7 Exploitativeness 6 6 6 6 6 6 6 6 Aggregate score(W×R) 218 210 218 256 247 216 216 Priority 5 4 3 1 2 6 6 5.3 Evaluations of green innovation activities based on the balanced scorecard and AHP decision Calculate the average of the weight of the three experts (w) and score (s) of every solution, take several aggregation after two averages multiplication get expectancy value for each scheme, comparing expectations and that is the prioritization of scheme. Table 5: Weight of index of environmental performance evaluation for clean production project Index Weight Score (s) B1 C1 C2 C3 C4 M1 M2 U111 0.0821 90 85 85 90 90 100 100 U112 0.0575 90 U121 0.0710 70 80 U122 0.0317 70 70 U211 0.0316 70 100 70 U212 0.0286 0 U213 0.0205 80 85 80 U214 0.0244 80 85 80 U221 0.0600 70 70 U222 0.0709 70 70 U311 0.0362 90 90 90 U312 0.0160 90 86 90 U313 0.0321 U321 0.0382 85 70 U322 0.0327 85 70 U323 0.0333 70 U331 0.0255 70 U332 0.0212 70 U333 0.0159 70 U334 0.0244 U341 0.0408 U342 0.0245 90 U411 0.0093 90 90 90 95 U412 0.0203 90 85 U413 0.0396 95 U414 0.0898 90 90 U421 0.0048 90 U422 0.0111 90 U423 0.0058 90 90 90 90 W*S 31.2783 13.0312 46.3100 12.0018 13.4415 12.8544 45.1263 Priority 3 5 1 7 4 6 2 827 5.4 analysis and discussion Adding new facilities in C3 scheme (add small oil free air compressor) can reduce energy consumption by changing the situation in the evening when only a few devices such as the lyophilizer requiring air compressor. The company used a large air compressor which has caused the waste. According to the traditional evaluation method, the basic indexes are environmental benefit, economic feasibility, technical feasibility and exploitativeness, and C3 scheme is ranked first. But in comprehensive consideration of the contribution values of the scheme from financial perspective, customer perspective, internal process perspective, enterprise learning and growth perspective, C3 scheme is ranked the bottom. This is because of its features of locality, mechanical, end-of-pipe treatment. And B1 (improve the packing process), M2 (physical balance) which used to get low rank in traditional evaluation method is mentioned highly in the new framework of comprehensive evaluation. It is clear that new evaluation system pays more attention to the effect of ductility, integrity, and the ability to solve problem from the source. 6. Conclusion On the one hand, by paying attention to green innovation, companies can reduce energy consumption, reduce pollution, meet the requirements of relevant environmental laws and regulations, improve the corporate image; on the other hand, enterprises can use the "green" opportunity to review and combine product design, process, organization structure, etc., and use advanced technology and ideas to improve and reform the existing business. Through injection of environmental design and optimization of product process, companies can obtain innovation value and environmental benefits, gain market competitive advantages at the same time, and truly realize "from green to gold". Therefore comparing with management after pollution, by solving problem from the source up to value chain, enterprise can obtain greater opportunities to grow up. 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