To Buy Green or Not to Buy Green: Do Structural Dependencies Block Ecological Responsiveness?
Date
2020
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Article
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Abstract
Despite the significant increase in interest in sustainable business practices, decisions on
switching to more environmentally friendly input materials are understudied. In a conjoint
experiment, we presented 267 Finnish manufacturing firms with an opportunity to acquire an alternative, more ecological input material and investigated their willingness to switch to that materia l. We find that in general, firms are willing to substitute their current principal input with a more ecological alternative under conditions of functional parity. However, such willingness is contingent on the firm’s value creation structures. Specifically, if the products and processes driving the firm’s value creation rely more on tangible materials (high materiality), firms anticipate higher input-switching costs, which leads to inertia and slows the adoption of alternative, environmentally friendlier inputs. However, if a firm’s value creation is driven more by intangible assets, like intellectual property and amortizable development costs, input-switching costs appear lower. Such firms not only find it easier to adopt ecological inputs but may also derive greater benefit from leveraging the positive reputation effects associated with ecological improvements. By exploring how willingness to switch to an alternative input material is constrained by organizational structures, our findings contribute to research on input substitution and theories of external influence, like demand-side research, stakeholder theory, and ecological responsiveness.
Description
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Citation
Journal of Management, 2020, vol. XX, n°. X, Month XXXX:1–30
Keywords
Theories of external influence, Input substitution, Sustainability, Supply chain management, Ecological responsiveness, Conjoint analysis