green it - topic thinking 0922

8/8/2019 Green IT - Topic Thinking 0922

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Green signal and Its Impact on Price Premium and Product Evaluation

- Signaling Theory

1. Background

(1)Study purpose

This study evaluates the extent to which the value of IT product can be enhanced by

Green image and, more specifically, how environmental message appeals and source

credibility play a role in value formation. Drawing theories from Information systems,

marketing and psychology, this study expect to demonstrate that Green signal can add the

value to the quality of products, and show how this benefit accrues to customers from the

adoption of Green IT. The value of the Green Signal is exhibited in premium prices

customers are willing to pay for the Green IT.

(2)Study background

Recent years have seen increased attention being given to the issue of adopting Green IT

in the organizations because of legislation, customer pressure and social responsibility.

Many studies have found that Green IT has gathered great importance as a competitiveforce and a tool for competitive advantage and sustainable development. Therefore, what

the role of Green IT plays in organizations and how to use Green IT to improve

competition become a central place in the fields of management and Information Systems

nowadays. Despite the importance of the Green IT in the organizations, most of studies

focus only on organizational aspect. Little is known, however, about customers aspect

and how organizations can provide benefits by adopting Green IT to customers.

Customers are vital part of organization. Without considering customers perspective may

result in lacking of compressive view of the impact of Green IT on organizations.

Therefore, this study emphasizes on customers perspective about how they receive

Green IT signals and how they evaluate product quality of Green IT.

(3) Research Questions:

1. What kind of signals that consumers appreciate and look for when going through the


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purchasing process?

So this could perhaps be a two-phased study

a qualitative one perhaps a protocol analysis

a quantitative experiment).

2. Does producing signal compromise your ability to deliver the product/service that is

consistent with signal?

3. It might be interesting to compare the impact of eco-branding of products/services

and eco-compliance of organizational processes. Which is a better signal? Does one

override the effects of the other?

4. What impact does cost of the signal have on the consumer?

2. Theoretical Background

Prior studies have found that Green IT can bring several benefits for companies,

including generating cost saving, promoting innovation, premium pricing, enhancing the

brand image and differentiating from competitors(Orsato 2006). If companies have

adopted suitable strategies, these benefits may create competitive advantage. For better

understand these strategies, this study based on Orsatos Generic Competitive

Environmental Strategies focuses on two strategies to develop our research model.(1)Generic competitive environmental strategies


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Strategy 2: Beyond Compliance Leadership

Two key points of beyond compliance leadership are listed bellow:

1. Acknowledgement from public and customer for their efforts

2. Indirect influence on the image of a firm and eventually affect the shopping behaviorof consumers

3. improved the image consumers and shareholders have about their operations.

Strategy 3: Eco-Branding

Firms that intend to generate competitive advantage from strategies based on eco-

branding need to observe three basic pre-requisites:

1. consumers must be willing to pay for the costs of ecological differentiation;

Consumers need to perceive a clear benefit for their purchase

2. reliable information about product's environmental performance must be available to

the consumer;

Eco-Lable, such as Energy Star, ISO 14000 and KRAV

3. the differentiation should be difficult to be imitated by competitors.

Strategy 2 tells us the importance of acknowledgement of Green image from customers.

This implies that whether the Green image signals can correctly and clearly disseminate

to customers and, in turn, let customers recognize the companies effort on Green IT.Therefore, the first variable this study will explore is Environmental Signals (Message

appeals). The second variable is Perceived Quality, which represents the reorganization

of companies effort on Green IT from customers.

Strategy 3 provides the insights of how customers will react - willing to pay more and

product evaluation. Thus, this study will adopt these two variables as well. Furthermore,

the reliable information is another key to create strategy 3. Eco-Lable may be a good

indicator of credible source. Hence, Source Credibility will be another variable in our

model.

In sum, five variables are included in our research model : Environmental Signals

(Message appeals), Perceived Quality, willing to pay more, product evaluation and

Source Credibility.


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(2) Signaling theory

Signaling theory is the fundamental concept behind our research model. Signaling is theidea that one party (termed the agent) conveys some meaningful information about itself

to another party (the principal). For example, in Michael Spence's job-market signaling

model, (potential) employees send a signal about their ability level to the employer by

acquiring certain education credentials. The informational value of the credential comes

from the fact that the employer assumes it is positively correlated with having greater

ability. Based on Signaling theory, this study tries to answer few questions below:

How much time, energy, or money should the sender (agent) spend on sending the

signal?

How can the receiver (the principal, who is usually the buyer in the transaction)

trust the signal to be an honest declaration of information?

Assuming there is a signaling equilibrium under which the sender signals honestly

and the receiver trusts that information, under what circumstances will that

equilibrium break down?

(3)Literature

Environmental Signals (Message appeals): (Chang 2004; Goodwin and Etgar

1980)

Perceived Quality:(Dodds, Monroe, and Grewal 1991; Dsouza, Taghian, and

Khosla 2007; Grewal et al. 1998)

Willing to pay more:(Chan 2001; Dsouza et al. 2007; Homburg, Koschate, and

Hoyer 2005; Laroche, Bergeron, and Barbaro-Forleo 2001; Walter, Gupta, and

Su 2006)

Product evaluation:(Dsouza et al. 2007; Monroe and Chapman 1987) Source Credibility: (D'Souza et al. 2007)

Environmental Consciousness: (Junaedi 2007) (Chan 2001)

Signaling Theory: (Boulding and Kirmani 1993; Hoxmeier 2000; Levy and

Lazarovich-Porat 1995)

Competitive environmental strategies: (Orsato 2006)


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3. Structure and Experimental Design

(1) Research Structure

Independent variables: Message signals and Source Credibility

Moderator: Environmental Consciousness

Dependent Variables: Product Evaluation, Perceive Quality and Willingness to

pay more

(2)Experimental Design

2 X 3

Environmental Signals (Message Appeals)

Environmental Appeal( External Environment)

Benefits/Cost Appeal(User-Side)

Environmental Appeal +Benefits/Cost Appeal

SourceCredibility

Certification:Yes

Certification:No

Message Signals

Source Credibility

Product Evaluation

Perceived Quality

Willingness to pay more

Environmental Consciousness


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(3) Measurement

Willing to pay more

1. (Homburg et al. 2005)

We measured WTP with an open-ended question. Participants were asked the price that

they would be willing to pay for the restaurant visit. This type of measure has been

widely used in other studies in this area (e.g., Cameron and James 1987; Krishna 1991).

Table 2 provides the means of the WTP measures for the eight scenarios.(Homburg et al.

2005)

2. (Dsouza et al. 2007)

I prefer to purchase an environmentally safe product even if it is somewhat more

expensive.

I prefer to purchase an environmentally safe product even if it is somewhat lower in

quality.

3.(Laroche et al. 2001)

Environment Consciousness

1. (Chan 2001)

It frightens me to think that much of the food I eat is contaminated with

pesticides.

It genuinely infuriates me to think that the government doesn't do more to help

control pollution of the environment.

I become incensed when I think about the harm being done to plant and animal life


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by pollution.

When I think of the ways industries are causing pollution, I get frustrated and angry.

The whole pollution issue has never upset me too much since I feel it's some what

overrated.

2. (Mostafa 2006)

I know that I buy products and packages that are environmentally safe.

I know more about recycling than the average person.

I know how to select products and packages that reduce the amount of waste

ending up in landfills.

I understand the environmental phrases and symbols on product package.

I am very knowledgeable about environmental issues

Perceived Quality

(Dodds et al. 1991)

1. The likelihood that the product would be reliable is: (very high to very low)

2. The workmanship of product would be: (very high lo very low).

3.. This product should be of: (very good quality to very low quality)

4. The likelihood that this product is dependable is: (very high to very low)

5. This product would seem to be durable (strongly agree to strongly disagree)

Perceived Value(Dodds et al. 1991)

1. This product is a: (very good value for the money to very poor value for the

money)

2. At the price shown the product is: (very economical lo very un-economical)

3. The product is considered to be a good buy {strongly agree to strongly disagree)

4. The price shown for the product is: (very acceptable to very unacceptable)

5. This product appears to be a bargain (strongly agree to strongly disagree)


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4. Research Scenario

Apple iMac as an example ( I will think about a fiction product in our research but now,

in order to image the whole scenario easier, I use iMac as an example)

Please image that you are going to buy a new desktop. There are three desktops that you

like very much. So, you have to compare these three desktops now and make sure which

one is what you need. Assume that these three desktops all have similar features and

functions, please how much do you think for these three desktop may have?

Price:

Now, one of them has following appeal(s) in its official website:

Scenario 1: Environmental appeal and no Certification

Eliminating Toxic Substances

Its what iMac doesnt have that makes it more environmentally friendly. Its free

of many harmful toxins, including mercury, arsenic, BFRs, and PVC.

Scenarios 2: Environmental appeal and Certification

Eliminating Toxic Substances

Its what iMac doesnt have that makes it

more environmentally friendly. Its free of

many harmful toxins, including mercury,

arsenic, BFRs, and PVC.

iMac is designed to be energy

efficient right out of the box. It has

even earned the EPAs ENERGY STAR

qualification for its low power

consumption.

Scenarios 3: User appeal and no Certification


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Using our new iMac, you can save 15% of payment of electric bill by reducing the

amount of power wasted.

Scenarios 4: User appeal and Certification

Using our new iMac, you can save 15% of

payment of electric bill by reducing the


iMac isdesigned to be energy efficient rightout of the box. It has even earnedthe EPAs ENERGY STAR qualificationfor its low power consumption.

Scenarios 5: Environmental and User appeal, but no Certification

Using our new iMac, you can save 15% of

payment of electric bill by reducing the


Eliminating ToxicSubstances

Its what iMac doesnt have that

makes it more environmentally

friendly. Its free of many harmful

toxins, including mercury, arsenic,

BFRs, and PVC.

15%

Energy Save

15%Energy Save

15%Energy Save


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Appendix

(Laroche et al. 2001)

Appendix 2


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Ecolabes

The Mobius Loop indicates that a product can be recycled. Each arrow

represents an aspect of a successful recycling programme: collection, remanufacturing

into a new product, and finally purchase by the consumer. Please note that it does not

necessarily mean that the object has been recycled.

Common labels include yellow EnergyGuide tags found in North America as part of

theEnergy Starprogram, European Union energy labels, and theEnergy Saving

Recommended logo[8]administrated by the Energy Saving Trust in the United Kingdom.
http://en.wikipedia.org/wiki/Energy_Starhttp://en.wikipedia.org/wiki/Energy_Starhttp://en.wikipedia.org/wiki/Energy_Starhttp://en.wikipedia.org/wiki/European_Union_energy_labelhttp://en.wikipedia.org/wiki/Energy_Saving_Recommendedhttp://en.wikipedia.org/wiki/Energy_Saving_Recommendedhttp://en.wikipedia.org/wiki/Energy_Saving_Recommendedhttp://en.wikipedia.org/wiki/Ecolabel#cite_note-7http://en.wikipedia.org/wiki/Ecolabel#cite_note-7http://en.wikipedia.org/wiki/Energy_Saving_Trusthttp://en.wikipedia.org/wiki/Energy_Starhttp://en.wikipedia.org/wiki/European_Union_energy_labelhttp://en.wikipedia.org/wiki/Energy_Saving_Recommendedhttp://en.wikipedia.org/wiki/Energy_Saving_Recommendedhttp://en.wikipedia.org/wiki/Ecolabel#cite_note-7http://en.wikipedia.org/wiki/Energy_Saving_Trust


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Reference

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Chan, R. Y. K. (2001), "Determinants of Chinese consumers' green purchase behavior,"

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Chang, C. (2004), "How Mood and Ad-self-congruency Affect the Relative Influence of

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D'Souza, C., M. Taghian, P. Lamb, and R. Peretiatko (2007), "Green decisions:

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Dodds, W. B., K. B. Monroe, and D. Grewal (1991), "Effects of price, brand, and store

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