Business innovation and waste management sustainability: the case of door-to-door collection

Purpose of the paper: The paper analyses the relationship between innovative kerbside recycling programs and the costs and profits of firms entrusted with waste collection. In particular, the paper disaggregates the effects of implementing and operating the green collection scheme and especially the increasingly popular door-to-door system. Methodology: It uses a panel of around 70 Italian firms specialized in waste management to estimate a short-run cost-profit function system, where recycling rates depend on the adopted collection schemes. The empirical model is framed within the triple-bottom-line paradigm, based on interconnections between environmental, economic and social sustainability. Findings: Results show that costs increase following the implementation of environmentally friendly programs while they decrease when recycling rates increase, possibly due to savings from the disposal side. Notable increases in profit level emerge just after the implementation of greener collection techniques as a result of enhanced mark-ups. The interpretation of this effect invokes a process of social legitimacy of the firms as theorized in the context of the institutional theory. Research limits: The paper might be improved by considering a more detailed analysis of the issue of vertical integration, concerning in particular the direct management of incinerators and landfills. Practical implications: The paper contributes to understanding the balance between costs and profitability when advanced recycling programs are put in place, especially for budget-constrained municipalities. Originality of the paper: The paper analyses and provides interpretation to the unexplored nexus between recycling programs and firm profits.