Environmental pollution caused by conventional reverse logistics practices conducted by marginalized communities in developing countries is concerning. However, governments recognize this group’s potential to independently improve their welfare through e-waste processing i.e., informal e-waste businesses. This research aims to develop an engagement model for reverse logistics and evaluate the moderating effect of coping behavior on informal e-waste businesses’ performance by employing partial least-squares structural equation modeling . A sample of 474 informal e-waste businesses is used to test the model and the interrelationships. Findings reveal that the engagement model positively and significantly enhances business performance though coping behavior does not reveal a notable negative impact. Business performance measurement requires a balance among financial, environmental, and social impacts on society. Collaboration models can take the form of coaching programs; provision of low-tech machines; and bridging collaboration between OEMs and informal recyclers. Empowering them as business partners for OEMs and large-scale recyclers, having e-waste component shredders and air filter machines can also be implemented. The engagement model, coping behavior, and green business performance standardized and proposed in this research can be used as a reference for incubating informal e-waste businesses. Further research should focus on the role and commitment of governments in developing the e-waste business and identify factors that can improve coping behavior. This study contributes to the operations management literature by aligning reverse logistics practices with government policies on green business performance. Using a second-order SEM, this study explores engagement, collaboration, and empowerment models that can improve informal e-waste businesses’ performance.