FINANCING GREEN INNOVATION: A SIMULATION APPROACH FOR MANUFACTURING ENTERPRISES

Companies face complex decisions when considering investing in green technology innovation versus traditional products. Key factors include financial constraints, risk of failure, and retailer demand uncertainty and risk aversion for new green products. This study constructs three financing models to analyse green tech manufacturer financing strategies and how the likelihood of success and risk tolerance impacts stakeholder behaviours and profits. Results demonstrate interdependencies between financing model chosen, investment willingness, order volumes, and participant earnings based on the success probability and risk appetite towards unproven green innovations. The models provide nuanced insights into investor and retailer uncertainties surrounding green technology, highlighting how perceived chances of success alongside risk preferences influence funding availability, production scales, and profit outcomes. By quantifying these relationships, the study aims to guide manufacturer decisions and promote suitable financing structures to support wider adoption of sustainability-focused technological innovations.