Scaling up Circular Economy:
How do Consumers Evaluate a Circular Value Proposition?
MSc Business Administration - Strategy
Amsterdam Business School - University of Amsterdam Supervisor: Dr. Ed Peelen
Student name: Laura Dorothea Kende - 13718320 EBEC: EC 20220406120451
Date: 24th June 2022, final version
Statement of Originality
This document is written by Laura Dorothea Kende who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Table of contents
1. Introduction 6
2. Literature Review 8
2.1 Circular Economy 8
2.2 Product Service System 10
2.2.1 Product Service System Categories 10
2.2.2 Sharing 11
2.2.3 Sharing Business Models and Revenue Generation 12
2.2.4 Use-oriented PSSs including Sharing Services 14
2.3 Consumer Evaluation 16
2.3.1 Consumer Evaluation of a Use-oriented PSS 17
2.3.2 Awareness of Sustainability 20
2.3.3 Age 22
2.3.4 Trust 23
3. Data and Method 25
3.1 Research Design 25
3.2 Sample 26
3.3 Measures and Data collection 27
3.3.1 Independent Variable 27
3.3.2 Mediator 28
3.3.3 Dependent Variable 29
3.3.4 Moderators 30
3.3.5 Control Variables 30
4. Results 33
4.1 Data Cleaning Check 33
4.1.1 Descriptive Statistics 33
4.1.2 Dummy Coding and Normality Check 34
4.1.3 New Variables 34
4.1.4 Reliability 35
4.2 Statistical Analysis 35
4.2.1 Correlation 35
4.2.2 Hypotheses 38
4.2.3 Additional Findings 51
5. Discussion and Conclusion 53
5.1 Discussion 53
5.2 Implications 55
5.3 Limitations and Suggestions for Future Research 57
5.4 Conclusion 59
Appendix A - Survey Protocol 89
Appendix B - Frequency Test 98
Appendix C - Normality Check 99
Appendix D - Test for Multicollinearity 101 Figures and Tables
Figure 1: Conceptual Model 25
Figure 2: Conceptual Model including Hypotheses Results 44
Table 1: Cronbach’s Alpha 35
Table 2: Means, Standard Deviations, Correlations of Thesis Variables 37
Table 3: Friedman’s ANOVA 38
Table 4: Linear Regression 38
Table 5: Linear Regression 38
Table 6: Linear Regression 39
Table 7: Linear Regression 39
Table 8: Regression Analysis for Mediation Effect of Consumer Evaluation 40 Table 9: Regression Analysis for Mediation Effect of Consumer Evaluation 41
Table 10: Direct and Indirect Effects 41
Table 11: MANOVA for Moderation Effect of Awareness of Sustainability 42
Table 12: MANOVA for Moderation Effect Age 43
Table 13: MANOVA for Moderation Effect of Trust 44
Table 14: Cross table including Control Variable Gender 46 Table 15: Cross table including Control Variable Location 47 Table 16: Cross table including Control Variable Income 49 Table 17: Means, Standard Deviations, Number of Evaluating Use-oriented PSSs by People
Owning a Private Car 51
Table 18: Frequency of Reasons For Participation in Car Sharing 52 Table 19: Frequency of Reasons For No Participation in Car Sharing 52
Researchers agree that converting the current mainly linear economy to a circular economy is a keystone on the road to a carbon-neutral economy. This thesis aims to assess how consumers evaluate a circular value proposition. To answer this research question, a survey was conducted that presented four different car sharing models that differed in their degree of circularity, and participants were asked to rate these models. The study showed that the higher the degree of use-orientedness of a service and thus circularity the higher is the consumer rating of the service. Furthermore, a higher degree of trust positively moderates the consumers’ evaluation of a use-oriented PSS. Based on that, various implications were derived. In particular, suppliers should make sure to provide offerings which are safe, trustworthy, easy to use and which are of high quality. In addition, offerings should be sustainable and suppliers should emphasize this, along with the trust aspect, when promoting and developing marketing strategies. Lastly, circular offerings and especially sharing services should be characterized by reduced responsibility of the customer and costs.
Scientists anticipate that global resource consumption will triple by 2050 compared to 2020, with the world's population expected to rise to 9 billion (European Commission, 2020).
This will result in an enormous growth in waste generation (The World Bank, 2022), overexploitation of resources, and increased volatility in numerous markets (Ellen MacArthur Foundation, 2013). Thus, there is an urgent need for action, especially for a new economic model (Ellen MacArthur Foundation, 2013; European Commission, 2020). A promising response to these challenges builds the Circular Economy (CE) which could replace the prevailing linear economy and its take, make and dispose system in a very efficient way. The CE is an economic system that reduces, reuses, recycles and recovers materials in production, distribution and consumption processes. Thereby, it aims at increasing environmental quality, economic prosperity and social equity (Kirchherr et al., 2017). However, recent literature argues that implementing circular principles in products and services requires a shift in the company's business model and thus, in the value proposition to the customer (Lewandowski, 2016). A business model is defined as a simplified presentation of how firms create, capture and deliver value and the interrelationship between them (Geissdoerfer et al., 2018). Its central dimension is the value proposition (Barquet et al., 2013), which describes the value embedded in an offering and the promised benefits for customers and other stakeholders (Boos et al., 2013). To implement circular principles, recent literature claims that companies can use various measures such as selling refurbished products, or processing of recycled materials (Hopkinson et al., 2018; Ellen MacArthur Foundation, 2013; Frishammar & Parida, 2019; Geissdoerfer et al., 2018). Nevertheless, the focus of this thesis is on the concept of a product service system (PSS), which can be defined as a marketable set of products and services that together meet customers' needs in an economic and sustainable manner (van Halen et al., 1999; Tukker, 2004). It can be seen as an innovative strategy whereby suppliers
develop and offer services in addition to a core product (Manzini et al., 2003). In this thesis, these services represent sharing services as they involve the CE’s principle of reuse but also emphasizes several other CE’s goals, like social cohesion, local jobs or resource efficiency (Schwanholz & Leipold, 2020). Sharing services provide the temporary and collaborative use of consumable products. Furthermore, reuse through sharing is considered one of the least resource-, information-, and labor-intensive ways to increase a product's efficiency and extend its life (Schwanholz & Leipold, 2020).
However, it is less well known and has not yet been empirically tested how consumers evaluate a circular consumable service and thus a circular value proposition (Schwanholz &
Leipold, 2020; Kirchherr et al., 2017). Moreover, several papers criticize that consumer acceptance of circular business models is not researched in abundance so far (Catulli et al., 2017) and that the value observed by consumers and other stakeholders through the value propositions is rarely addressed (da Costa Fernandes et al., 2019). Hence, it is very important to examine the perceived experiential, economic, environmental, and social value to better understand the customer (Geissdoerfer et al., 2016) and to determine its attitude and motivation towards adopting circular value propositions (Ramani et al., 2010). Therefore, the research question of the thesis is: Scaling up Circular Economy: How do Consumers Evaluate a Circular Value Proposition? Among others, answering this research question will provide guidance to help managers to develop an attractive circular value proposition (Antikainen et al., 2020). Besides, it highlights which aspects and relationships of firms and users require special attention when the value proposition is a circular one (Chen & Wang, 2019). The thesis is structured as follows. First, a literature review describes the current state of knowledge about the CE, PSSs and consumer evaluation. Then, the applied methodology used and the empirical results are explained before interpreted. Finally, the thesis ends with a discussion and a conclusion.
2. Literature Review
2.1 Circular Economy
Recent literature provides different definitions of CE, particularly since CE involves various principles and processes which all aim towards circularity (Masi et al., 2018, Bocken et al., 2016). For instance, Katz-Gerro & Lopez Sintas (2019) explain CE “as a closed system, in which [...] resources circulate and recirculate inside the economy” (Katz‐Gerro, & Lopez Sintas, 2019: p. 485). However, in this thesis, the definition by the Ellen MacArthur Foundation (2013) is adopted, which defines CE as an “industrial system that is restorative or regenerative by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products and systems” (Ellen MacArthur Foundation, 2013: p. 7). For this paper, the holistic definition of the Ellen MacArthur Foundation is applied as it includes both the overarching goals and concrete principles and measures of CE.
The flow of the current ‘end-of-life’ concept is that companies extract and process resources, apply energy to those materials to make a product, and finally sell it to an end user. Lastly, users typically discard the product after usage. In addition to that, material prices are generally low, so firms use larger quantities of cheap resources to keep costs as low as possible. At the same time, customers are demanding more than the earth can sustainably provide, resulting in a decreasing overall natural capital (Ellen MacArthur Foundation, 2013).
As a result, a transition to a new economic model is urgently needed. Because of the great potential of CE as a promising solution, it even serves a vital role in the EU's so-called Green Deal, which calls for a climate neutral Europe by 2050 through action plans, laws, and strategies affecting the industry, society and biosphere in Europe (European Commission,
2019). Herein, the CE is connected to the 17 sustainable development goals formulated by the United Nations, which include challenges related to business, sustainability, poverty, gender equality, education among others (United Nations, 2015). Therefore, the CE aims to connect with sustainability which is defined as meeting present needs without compromising the ability of future generations to meet their needs, taking into account the finite nature of the earth's resources in the face of human development, and synergies and trade-offs between economic, environmental and social objectives (WCED, 1987). Thus, CE takes into account all relevant stakeholders by affecting the micro level (products, companies, consumers), meso level (eco-industrial parks) and macro level (city, region, nation and beyond), with the goal of achieving sustainable development (Kirchherr et al., 2017).
In order to achieve its goals the CE concept proposes three strategies. Primarily, slowing down resource cycles by repairing or remanufacturing and improving product quality, thereby extending their service life. Next, closing resource cycles by recycling materials and products and lastly, narrowing resource flows, through reducing the number of components or materials needed to build each product, indicating resource efficiency (Bocken et al., 2016).
In doing so, the CE follows the principles of reducing waste, building resilience through diverse systems, using renewable resources to generate energy, building and thinking in systems by connecting individual parts and stakeholders, and reusing and reintroducing products and resources (Ellen MacArthur Foundation, 2013). The reuse and hence the more intense use of durable goods through the introduction of a sharing system is a promising solution to current environmental problems as it leads to more resource efficiency among others and as consumer perception of this solution has been little studied, the focus will be on this principle (Schwanholz & Leipold, 2020).
In sum, the adoption of CE practices is highly important and an effective solution to change the linear economy, especially in industries where, for example, a wide variety of materials
are required such as the automotive industry (Buruzs & Torma, 2017). Due to this, companies need to change value-related processes (Frishammar & Parida, 2019) as well as their value proposition (Reim et al., 2015). As a result, transitions toward innovative business models, such as a PSS business model (European Commission, 2020), are needed to successfully implement circularity in products, services and organizations (Oghazi & Mostaghel, 2018;
Frishammar & Parida, 2019; Bocken et al., 2018; da Costa Fernandes et al., 2020).
2.2 Product Service System
2.2.1 Product Service System Categories
A PSS that includes integrated solutions of products and services to meet customer needs and creates value (Goedkoop et al., 1999, Boehm & Thomas, 2013) can be product-, outcome-, or use-oriented (Tukker, 2004). Firstly, a PSS is product-oriented when it involves the regular sale of a product, but additional services are provided to the customer to ensure its functionality, such as repair or maintenance. In contrast, a PSS is result-oriented when customer and provider arrive at an agreement on a specific result or outcome (Tukker, 2004), for example, cleaning services whereby consumer and provider agree on a certain level of cleanliness as outcome (Reim et al., 2015). However, in this paper, the focus is on use-oriented PSSs as the objective of this study is to investigate how buyers evaluate a business model in which the use and availability of the core product on demand is offered, which meets the definition of a use-oriented PSS (Tukker, 2004). Specifically, the core product is provided through a rental or leasing offering (Tukker, 2004), for example, through a sharing service such as the one considered in this study. The focus will be on this type of PSS as previous literature claim that research is needed in order to understand the behaviors and drivers associated with use-oriented PSS adoption (Akbar & Hoffman, 2018, Mashhadi et
Sharing involves distributing things, for example having similar interests or beliefs, communicating, copying digital files, or combining communication with distribution by uploading digital content (John, 2012). In this, recent literature does not provide a clear and common definition of sharing, though it is associated with sharing and exchanging resources efficiently (Agarwal & Steinmetz, 2019; Belk, 2010; Botsman, 2013; Schwanholz & Leipold, 2020). In an economic context, and as considered in this thesis, sharing is often about temporary and collaborative use of (Botsman & Rogers, 2010; Schwanholz & Leipold, 2020;
Arvidsson, 2018) and access to underutilized products (Botsman, 2013) and hence represents an alternative to ownership (Bardhi & Eckhardt, 2012). In addition, sharing products are heterogeneous, especially in terms of their nature. However, in most cases, sharing goods are consumer durables and goods, such as cars or bikes, capital goods, like machines, or intangible goods and services, such as knowledge (Agarwal & Steinmetz, 2019). Furthermore, recent literature claims that sharing occurs either through economic transactions (Botsman, 2013) or through quid pro quo exchanges that involve non-monetary exchanges or benefits (Agarwal & Steinmetz, 2019; Botsman & Rogers, 2010). In this paper, the focus is on the collaborative use of material consumer goods that occurs through economic interactions, as for-profit businesses are considered that aim to become more circular and thus more sustainable. The reason for that is that companies have a relatively high potential impact on circularity and hence, are able to majorly contribute to the sustainable development of the environment (Bocken et al., 2017; Kirchherr et al., 2017; Urbinati et al., 2017). In sum, sharing is often associated with a variety of non-ownership consumption forms, such as collaborative consumption or access-based consumption (Bardhi & Eckhardt, 2012; Botsman
& Rogers, 2010) which relates to the definition of a use-oriented PSS explained above.
2.2.3 Sharing Business Models and Revenue Generation
Recent literature distinguishes three main types of sharing business models. Primarily, according to the consumer-to-consumer (C2C) business model, resources are shared between co-equal customers. Goods are either exchanged without a transfer of ownership, such as lending, co-using and renting, or with a transfer of ownership, such as giving away or reselling (Agarwal & Steinmetz, 2019). Next, business-to-business (B2B) sharing models have received little attention in recent research, but are becoming increasingly important (Agarwal & Steinmetz, 2019) due to the current climate situation, as they allow companies to share raw materials and resources, production capacity, and logistics services to achieve higher levels of responsiveness and efficiency (Antikainen et al., 2018) and lower levels of resource usage and thus, decreasing amounts of waste (Ellen MacArthur Foundation, 2013).
Finally, the business-to-consumer model (B2C) involves sharing services and thus on-demand access to the core product offered by a company, such as bike or car sharing services (BIHK, 2017). Thereby, the B2C business model is arranged like a traditional business model, in which firms offer products and services to customers and channel demand through digital platforms such as an app or website. Hence, a personal interaction between the business and the consumers does not take place (Agarwal & Steinmetz, 2019). This business model is discussed in this thesis as it builds the most discussed business model in the sharing literature (Hawlitschek et al., 2016).
Furthermore, in a use-oriented PSS B2C business model, responsibility and ownership remain with the company during the time of use (Reim et al., 2015), and thus, customers enjoy a full service as the firm takes care of all services such as cleaning, repairing, insurance or remanufacturing (Antikainen et al., 2020, Cohen et al., 2008). This allows consumers to access and pay for a product only for the time of usage (Manninen et al., 2018). Therefore, companies make profits from the short-term use (Kumar et al., 2018) of the transfer of a
certain amount of utility in an exact period of time (Ritter & Schanz, 2019) and thus, it is called a utility bound transaction (Ritter & Schanz, 2019). Since a certain amount of utility is delivered to the customer and the consumer pays for exactly the amount used, every transaction is unique and thus B2C sharing usually takes place in singular transaction markets (Ertz et al., 2016, Ritter & Schanz, 2019). Herein, sharing providers do not need to invest in large business components such as capital equipment because they already have the core product, which keeps costs low and profit margins higher (Kumar et al., 2018). Furthermore, particular focus should be placed on fostering a sense of community among users and on reducing uncertainty (Constantiou et al., 2017; Finck & Ranchordas, 2016) to retain consumers (Ertz et al., 2016). Hence, sharing providers need to bind consumers via brands, prices, advertisements, logos, trademarks and other communication cues (Ertz et al., 2016) to maximize the number of short-term rentals in order to generate revenue (Kumar et al., 2018).
Consequently, it is extremely important to provide a unique and difficult-to-imitate offer (Ritter & Schanz, 2019) and to attract and retain a critical mass of customers by building trusting relationships and keeping the quality of the sharing service at a high level (Kumar et al., 2018) which will be explained in detail later. Through this, users are more likely to have lasting good and satisfying experiences with a high-quality service which keeps the company's reputation high (Chen & Wang, 2019; Perren & Kozinets, 2018) and lead to referrals, which in turn attract new potential customers (Kumar et al., 2018). In this way, the critical mass of satisfied customers can be achieved and hence the profit can be increased.
This allows firms to raise their prices and thus their profits, as loyal and satisfied users are more willing to pay higher prices for high-quality products and to accept a price increase (Sethuraman & Cole, 1999). Otherwise, in the case of B2C sharing offerings, there is a high risk that consumers will turn away and resort to a competing offering meaning that they would have to be won back or new ones would have to be acquired (Kumar et al., 2018). As a
result, efficient marketing measures should be oriented toward the consumers’ behavior and culture (Eckhardt & Bardhi, 2016, Lamberton & Rose, 2012) and must be tailored to the consumers gained, retained and lost or new (Kumar et al., 2018).
2.2.4 Use-oriented PSSs including Sharing Services
Recent literature claims that providing a use-oriented PSS business model including sharing services, as considered in this thesis, is increasingly seen as an enabler of the circular economy (e.g. Urbinati et al., 2017, Ellen MacArthur Foundation 2013, Pieroni et al., 2016) and thus a promoter of a more sustainable lifestyle (Schwanholz & Leipold, 2020). Thereby, the use-oriented PSS’s circular value proposition includes sharing services as additional value creation activity (Vandermerwe and Rada, 1988, Gebauer et al., 2006) and reduces the core product to a part of the proposition (Oliva & Kallenberg, 2003, Gebaueret al., 2006). A circular value proposition is a strategic concept that allows organizations to better analyze and describe their skills and capabilities from a strategic and operational perspective (Martinez &
Bititci, 2006). In this, the value promised to customers is embedded in (Boons &
Lüdeke-Freund, 2013) and delivered through the products and services offered (Nußholz, 2017). In sum, the concept of a product has changed; it is now a complex system, composed of a physical core and intangible assets, such as sharing services offered to customers (Gilles
& Christine, 2016). In addition, some firms completely switch to a PSS business model, while others operate both the PSS and traditional sales offer. In this work, the latter case is considered and thus the traditional purchase offer remains in place (Pieroni et al., 2016). This is because innovation is required at all levels of the firm, both operational and strategic, to become more sustainable and circular (Pezzotta et al., 2014). Hence, implementing sharing services to achieve circularity (Ellen MacArthur Foundation, 2013) requires a change in the company's business model and a shift to a circular value proposition formulated in the
first be familiarized with (Veryzer, 1998) and trust sharing systems and hence with circular products before they are confronted with fully circular business models (Khoa et al., 2020).
Moreover, the benefits promised to the consumers should be based on a circular strategy and circular principles (Nußholz, 2017, Aminoff et al., 2017), such as access for the whole society, remanufacturing, waste reduction or material reuse (Ellen MacArthur Foundation, 2013). Therefore, the offering should be designed to proactively preserve the economic and environmental value contained in products, parts, and materials (Stahel, 1994, Lifset &
Graedel, 2022, Frosch & Gallopoulos, 1989). However, in terms of sharing services implemented in a PSS, providers constantly remanufacture, repair and reuse product parts which extends the product’s lifetime (Ellen MacArthur Foundation, 2013; Mont, 2004) and reduces the amount of products used (Kastalli & Van Looy, 2013). Thus, underutilized resources are fully exploited and fewer materials are needed for production and distribution which leads to a decreasing net consumption of scarce resources and a reducing amount of products ending up in landfills (Botsman & Rogers, 2010, Prothero et al., 2011). In sum, a use-oriented PSS including sharing services is very effective to achieve more circularity (Reim et al., 2015) as it intensifies the use of material products (Tukker, 2015) and thus extends the life cycle of resources (Kjaer et al., 2018) and the product through reintroduction to the consumer market (Schwanholz & Leipold, 2020). Consequently, reduced need for raw materials and cheaper offerings for a more equal society will be achieved (Antikainen et al., 2020). Therefore, since the circular value proposition is implemented in the whole value chain, all stages of the product life cycle are considered and adjusted, from reduced material extraction and manufacturing over consumer use to repair, recycling and reuse (Manninen et al., 2018). As a result, the economic and environmental value (da Costa Fernandes et al., 2020) as well as closed resource flows are secured and resource efficiency is increased resulting in greater circularity and higher levels of sustainability (Nußholz, 2017).
Furthermore, offerings should be targeted to appropriate customer segments while building valuable customer relationships to reduce barriers and uncertainties regarding the new business model offered (Nußholz, 2017). Though, sharing services provides various benefits for the society and local communities as they are associated with additional job offers in local communities (Cherry & Pidgeon, 2018), access on demand and increased awareness of sustainability in the society (Antikainen et al., 2020). Moreover, in terms of car or bike sharing, additional transportation possibilities are provided to local communities for coping longer distances which are not accessible by walking or public transportation (Ferrero et al., 2018). In addition, as products are used collaboratively by multiple consumers (Botsman &
Rogers, 2010), sharing services result in an overall decreased need for private ownership (Bocken et al., 2016) and thus potentially lower costs for customers (Antikainen et al., 2020).
As can be seen, a use-oriented PSS including sharing services builds an effective way of creating an environmentally and socially sustainable offer for customers while the company has the incentive to make its core product as material- and cost-efficient as possible (Prieto et al., 2019, Botsman & Rogers, 2010). Besides, in terms of increasing urbanization and growing population, collaborative usage of utilities like cars are needed (Krassimira, 2011).
Hence, as sharing services take into account the needs of society, individual consumers as well as of the environment the CE’s principles are met (da Costa Fernandes et al., 2020, Nußholz, 2017).
2.3 Consumer Evaluation
Consumer evaluation, also known as consumer testing or consumer research, is defined as the assessment of the features or performance of existing or new products and services from the customer’s perspective (Saint-Denis, 2018). Specifically, their perceived value is derived from the overall evaluation of a product’s or service’s usability based on
benefits they receive in relation to the costs they pay (Khoa, 2020, Zeithaml, 1988). These benefits can be economic, psychological or functional in nature (Kartajaya et al., 2019) or can even result in a social impact or change of life (Almquist et al., 2016). Primarily, economic benefits are monetary or non-monetary (Bolton & Lemon, 1999) which also includes energy and mental aspects (Ahola et al., 2000). Furthermore, psychological or emotional benefits refer to the generation of positive emotions of the consumer, for instance, anxiety reducing aspects, fun or providing access to specific products or services (Almquist et al., 2016). Next, functional value is related to the fundamental values of the involved actors, which are associated with practical purposes that are reflected in a particular function in their daily life, such as quality, information, or simplification (Almquist et al., 2016). In addition, change of life delivered values are associated with the ability to change or influence the perspective on which the consumers perceive and analyze the world, such as providing hope, motivation or self actualization (Almquist et al., 2016). Lastly, social impact defines values referring to the search for the common good, with an emphasis on improving the lives of individuals (Almquist et al., 2016). In sum, consumer evaluation, as described in previous literature, includes a number of different elements (Almquist et al., 2016).
2.3.1 Consumer Evaluation of a Use-oriented PSS
From the previous literature it can be concluded that a use-oriented PSS including a sharing service has numerous benefits for consumers. First of all, sharing services is often the more sustainable option and improves personal health as well as the neighborhood environment (Derikx & van Lierop, 2021). The reason for this is that, for example, car sharing reduces traffic and air pollution in cities and towns (Agatz et al., 2011). Furthermore, users can communicate with others by using a shared product together and thus PSS sharing offerings provide consumers the opportunity to satisfy their social needs (Akbar & Hoffmann, 2018). Also, sharing offerings may help create a sense of greater acceptance in society for
individuals (Sheth et al., 1991, Sweeney & Soutar, 2011), as high quality products are usually offered at affordable prices (Antikainen et al., 2020) and thus, also people who cannot afford private ownership are able to consume and use a specific product (Eckhardt et al., 2019). This also reduces financial risk as customers do not have to invest money to own a product (Antikainen et al., 2020) but get access to it while paying for the usage time (Bardhi &
Eckhardt, 2012). Based on that, recent literature claims that sharing services are usually characterized by easy payment systems which makes them really consumer-friendly (Mattia et al., 2019). Besides, the service offers access on demand (Antikainen et al., 2020), which provides convenience for the consumer (Khoa et al., 2020) as people can use it at any time depending on their needs (Antikainen et al., 2020). Moreover, as the responsibility for e.g.
manufacturing or cleaning remains with the supplier (Antikainen et al., 2020), customers experience a high level of relief and an effective and functional product (Khoa et al., 2020) with a long service life (Frishammar & Parida, 2019). Also, trying the newest products, brands or styles without spending a lot of money satisfies the buyers' need for novelty (Armstrong et al., 2015). Finally, Ramos and colleagues (2020) claim that sharing products with others provides consumers with more comfort, e.g., car sharing provides more comfort during travel than using other transportation options. As a result, consumers can use high-quality and safe products at a lower cost and with less responsibility, allowing them to participate more equally in society (Cohen et al., 2008). However, sharing services also have some drawbacks that can discourage consumers from using them, such as lack of knowledge how to use the sharing service’s digital platform (Falco & Kleinhans, 2018, Derikx & van Lierop, 2021), trust issues (Botsman & Rogers, 2010), concerns of privacy or fear of potential imperfections with the compensation system (Hong, 2017). In order to test the consumer acceptance and evaluation of use-oriented PSSs in this study, four different use-oriented PSS will be presented with Model 1 having the highest degree of use-orientedness and Model 4 the
lowest which will be explained in more detail below (cf. chapter 3.3.1). To gain more validity, a so-called pretest (Fisher, 2020) was conducted in which a handful of people were asked whether they would rate Model 1 as the most use-oriented and Model 4 the least. As a result, 9 out of 10 agreed that Model 1 provides the highest degree of use-orientedness and Model 4 the lowest with a decreasing order in between. In sum, as the benefits of a use-oriented PSS for the consumers seems to outweigh and sharing services are characterized as being flexible and thus provide new functionality to better meet customer needs (Gilles & Christine, 2016) the first hypothesis of my model is:
Hypothesis 1: Model 1 will be accepted compared to Model 2, Model 3 and Model 4 (Figure 1).
In addition, consumers are recognizing and accepting the enhanced value of sustainable offerings more and more each year (Mostaghel & Chirumalla, 2021). Thereby, value builds a multi-perspective construct that integrates various benefits across organizational boundaries (Gilles & Christine, 2016). Hence, it consists of many different elements and thus, propositions with a greater variety of value aspects are more likely to get accepted in the market (Almquist et al., 2016). Since a use-oriented PSS including sharing service offerings add value to all stakeholders involved (Zott et al., 2011) such as society, the environment, and consumers (Shao et al., 2019), customers should be more likely to adopt a PSS circular value proposition as well. Furthermore, existing literature argues that buyers tend to adopt new circular products when they represent simplicity and are aligned with existing products (Mylan, 2015). Hence, as a use-oriented PSS still provides the same product, customers should be already familiar with it and thus, likely to adopt its circular value proposition. In addition, as explained above, sharing services are marked by decreasing responsibility for the
user, and as consumers value less responsibility in a circular economy model, they should be more willing to accept a circular value proposition as well (Elzinga et al., 2020). Lastly, the payment structure in a B2C business model which involves a use-oriented PSS is usually very simple (Mattia et al., 2019) and payments are generally low (Antikainen et al., 2020), as explained earlier. Since the payment structure is one of the main aspects for consumer adoption of CE models, this aspect also influences customer acceptance of a circular value proposition (Elzinga et al., 2020). Thus, the second hypothesis of my model is:
Hypothesis 2: The positive relationship between use-oriented PSS and acceptance of a circular value proposition is mediated by consumer evaluation (Figure 1).
2.3.2 Awareness of Sustainability
A widely accepted definition of sustainability was formulated by the World Commission on Environment and Development (1987: p. 15) and defines sustainability as a
“development that meets the needs of the present without compromising the ability of future generations to meet their own needs”. Over the years, sustainability has become a popular concept in a variety of fields, such as environment, policy or health (Simion et al., 2013), whereby it involves aspects of economic, environmental, and social domains (Msengi et al., 2019). However, awareness of sustainability is usually associated with the environment and, in particular, with pollution (Malik et al., 2017), which is adopted in this thesis as well.
Thereby, awareness of the environment involves concern and comprehension of environmental issues (Chen et al., 2019). Specifically, recent literature defines awareness of sustainability and its issues as to understand the fragility of the environment and the importance of its protection in terms of ecological awareness. It is related to the growth and
its problems, including human actions and impacts (Raymundo et al., 2019), which is also adopted for the research of this thesis.
Over the last decades, public knowledge and awareness regarding issues surrounding sustainability have increased (Msengi et al., 2019). In particular, it is argued that younger people (Hassan et al., 2010) and employees of sustainable and environmentally conscious companies (Garbie, 2015) are highly aware of sustainable development and their own responsibility for the natural environment (Hassan et al., 2010). Especially younger people claim that they are very disappointed about air and river pollution and some even started to recycle and conserve energy and water (Hassan et al., 2010). This is due to the fact that young people are trained during the course of their education (Hassan et al., 2010) and employees by their sustainable employer, and thus develop a greater awareness of sustainability (Garbie, 2015). This might lead to an implementation of sustainability principles and practices into their private life (Garbie, 2015), such as reading or informing family and friends about sustainability (Hassan et al., 2010). In addition, the impact of human behavior on nature gives increasing rise to public and governmental concern (Casey & Sieber, 2016). In particular, outstanding events, such as special treaties to combat climate change, sensational industrial accidents such as at the BP refinery in Texas City in 2005, or the Fukushima earthquake in 2011, which caused an explosion at the Fukushima nuclear power plant, lead to global attention and awareness of the sustainable development of the natural environment (Casey &
Sieber, 2016). This results in rising demand for eco-friendly products and services as well as more sustainable companies (Casey & Sieber, 2016). Hence, governments (Spar & La Mure, 2003) and organizations (Flammer, 2013) experience greater pressure from external activists to establish needed regulations, policies and measures (Spar & La Mure, 2003). Therefore, firms are more punished for poor behavior toward the environment and society (Flammer, 2013) which is also reflected in the stock market following environmentally damaging
announcements (Flammer, 2013). Moreover, public concerns regarding the natural environment and thus, awareness of sustainability, are rising in a time of social media, as people are able to share information about issues (Ferguson et al., 2012).
As a result, public awareness of sustainability seems to be increasing over time (Msengi et al., 2019), and since a use-oriented PSS with sharing services is a highly sustainable offering (Urbinati et al., 2017), the third hypothesis of my model is:
Hypothesis 3: The positive relationship between use-oriented PSS and consumer evaluation is moderated by awareness of sustainability, such that this relationship is stronger for higher levels of awareness of sustainability (Figure 1).
Furthermore, recent literature argues that age influences the evaluation of a use-oriented PSS that includes a sharing service (Ozcan et al., 2017; Shaheen et al., 2015).
Specifically, it is claimed that young people who live in urban areas (Ozcan et al., 2017) are likely to be early adopters of sharing services (Shaheen et al., 2015). The term "young" here refers specifically to Generation Z, which includes those born in 1995 and later (Bassiouni &
Hackley, 2014), and Millennials, who were born from the early 1980s to the early 2000s (Godelnik, 2017). They are seen as the main driver for sharing offers (Tabassum et al., 2020), as they are more willing to try new things (Dias et al., 2017) and to communicate as well as collaborate (Tabassum et al., 2020). Besides, young people tend to care more about social and environmental challenges, leading to an identity that is less based on ownership (Tabassum et al., 2020) and more on relationships and experiences (Silver, 2015). In addition, it is argued that older people prefer to own things, are less willing to change their habits (Prieto et al., 2019) and find it more difficult to use digital applications for sharing services (Dias et al.,
sharing services because of their digital and technological nature (Duffet, 2020). In sum, it is argued that sharing has become an integral part of young people's lifestyles (Godelnik, 2017), as it allows younger generations to access many products, which fulfills their desire for self-expression (Botsman & Rogers, 2010) and improves their social capital (Adams, 2015).
Hence, the third hypothesis of my model predicts:
Hypothesis 4: The positive relationship between use-oriented PSS and consumer evaluation is moderated by age, such that this relationship is stronger for lower levels of age (Figure 1).
As can be derived from the previous paragraphs, trust is a crucial phenomenon regarding sharing services and has even been referred to as its currency in previous literature (Botsman & Rogers, 2010). The reason for that is that gaining consumer trust in particular is considered one of the most important hurdles (Chen & Wang, 2019) that providers must overcome when launching sharing services (Voeth et al., 2015). Therefore, companies should focus on building a trustworthy, safe and reputable service (Chen & Wang, 2019). Thereby, trust is defined as “psychological state comprising the intention to accept vulnerability based upon positive expectations of the intention of or behavior of another” (Rousseau et al., 1998:
p. 395). According to Anderson and colleagues, 1987, trust is a key factor in the quality of any type of relationship, along with power, communication and goal compatibility. Moreover, studies claim that trust can be differentiated between cognitive as well as affective trust (Johnson & Grayson, 2005). The former one is defined as “a customer’s confidence or willingness to rely on a service provider’s competence and reliability” (Moorman et al., 1992:
p. 315), such as customers’ knowledge about a supplier through observations (Johnson &
Grayson, 2005). On the other hand, affective trust is known as the perception of confidence placed in a partner based on feelings of care and concern shown by them (Johnson-George &
Swap, 1982; Rempel et al., 1985). In contrast, Jones and Leonard (2008) hypothesized internal trust, such as perception of website quality, as well as external trust, such as third party recognition. In addition, in a more recent study, Leonard (2012) distinguished between trust in the seller and trust in the buyer, which are assumed to influence buying or selling behavior together with seller and buyer risk. However, as this thesis considers B2C markets, the focus will be set on internal trust as well as trust in the seller. Thereby, cognitive trust is taken into account since the survey participants are asked to indicate their trust in sharing providers’ competence, honesty and reliability (Moorman et al., 1992).
In a B2C market users of sharing services usually interact on the digital sharing platform provided by the product supplier and sometimes even with other users (Hawlitschek et al., 2016). The digital platform thus acts as an intermediary between the two sides of the market and may or may not prove trustworthy (Hawlitschek et al., 2016) as it may be subject to privacy concerns (Joinson et al., 2010), website quality (Gregg & Walczak, 2010; Yoon &
Occeña, 2015) or uncertainties related to platform reputations and sharing service suppliers (Gao et al., 2017). Previous research states that buyers pay more attention to the reputation of the sharing service platform before trusting it (Gao et al., 2017). Besides, an increased degree of the user's familiarity with the sharing service platform positively influences the consumer’s trust in it (Gao et al., 2017). Even the product and associated experiences themselves may be related to trust concerns (Gefen et al., 2008), especially since there are usually no official quality standards, sovereign regulations, or controls for these novel markets (Avital et al., 2015). To overcome these challenges, sharing service providers need to ensure that they always provide a high-quality and secure service (Chen & Wang, 2019). Furthermore, they may provide tutorials (Gao et al., 2017), standardized payment (Constantiou et al., 2017;
Finck & Ranchordas, 2016), rating systems, or verification mechanisms (Teubner, 2014) to help customers use their sharing service more effectively (Gao et al., 2017) and to build a
critical mass of loyal customers (Kumar et al., 2018). As a result, trust related to sharing services is a fundamental but complex phenomenon (Julsrud & Priya Uteng, 2021) which leads to the fifth hypothesis:
Hypothesis 5: The positive relationship between use-oriented PSS and consumer evaluation is moderated by trust, such that this relationship is stronger for higher levels of trust (Figure 1.)
Figure 1: Conceptual Model, own work
3. Data and Method
The following section deals with the measures of the study whereby the independent, dependent and control variables as well as the mediators and moderators are described and justified.
3.1 Research Design
In order to answer the research question a quantitative study in the form of a survey was designed and conducted as it is a simple tool for testing hypotheses and generalizing results. Thus, the method was correlational survey based (Op den Kamp, 2022). Herein, the survey addressed car sharing to make measuring consumer evaluation of a use-oriented PSS
with sharing services more descriptive and easier. In addition, the questionnaire of the survey was prepared and conducted using the online survey software Qualtrics (Qualtrics, 2022).
Furthermore, each participant received exactly the same questionnaire and thus, self-reported measures were applied. The reason for that is to ensure that each participant self-selects the responses in relation to its beliefs, attitudes, or intentions (Lavrakas, 2008) and without interference. As a result, each respondent chose the answers that are most suitable for him or her.
The sample was formed by non-probability convenience sampling whereby participants were reached and targeted through personal messaging to my private network and various social media sites such as LinkedIn, Facebook and Instagram. However, since this was not enough to reach an appropriate number of participants, the online tool MTurk was used to fill up the survey with the missing participants. MTurk allows users to specify how many responses are required and whether participants should have certain characteristics, such as having a driving license (Amazon Mechanical Turk, 2022). As car sharing was considered in the survey, the population of interest were consumers of the automotive industry, and thus people with a driver's license. Therefore, at the beginning of the survey, respondents were asked to indicate whether they hold a driver's license. However, since the population of interest is very large (Statista, 2021; CBS, 2022), it is limited to the Dutch as well as to the German population that has a driver's license as the author has professional experience in these countries. With a confidence interval of 95% and a margin of error of 5%, the G*Power analysis displays that 368 participants would be required (G*Power, 2014).
Though, due to strong time limitation to conduct the survey, 150 participants were sufficient to analyze the data and arrive at valid results (Memon, et al., 2020). While the response rate is
difficult to predict, the goal was to reach as many participants as possible during the survey period of four weeks. Moreover, to provide as true a picture as possible of the population of interest, the demographic data of age, gender, income, and place of residence of the participants was included as control variables, which are discussed in more detail below.
3.3 Measures and Data collection
3.3.1 Independent Variable
To measure the independent variable Use-oriented PSS, four different use-oriented PSS models were presented in the form of car sharing, which are distinguished by their different degrees of use-orientedness. A fictitious car manufacturer was assumed who provides a sharing service in addition to its traditional sales offering. Primarily, Model 1 describes a car sharing model which offers cars for short-term trips (max. five hours) within a city via an app where consumers have to register as a member and are able to rate the service provided. Furthermore, the payment is low (0.20€ per hour of driving) and the fictitious car manufacturer vouches for any responsibilities, such as repairing, fueling, cleaning or insurance. Model 2 provides long-term car sharing for holidays or weekend trips (max. three weeks) via a website where consumers are able to choose between several car models and rate the service. The payment is relatively high (80€ per day) but up to three people are allowed to drive the car and responsibilities for cleaning, insurance and repairing lies with the provider whereas consumers are responsible for fueling. Model 3 supplies private car sharing, where private individuals can rent their cars to other consumers for a maximum of three days.
The service is offered via an app where consumers are able to chat and rate other customers.
The price is €4.00 per hour and responsibilities, such as repairing or cleaning, stays with the car provider whereas insurance is supplied by the app provider. Finally, Model 4 shows private ridesharing, in which individuals can offer rides via an app where consumers can
communicate and rate each other. There is no maximum of rideshares and the price is set by the car provider and hence, the consumer uses the ridesharing service at his or her own risk.
However, the car provider is responsible for repairing, fueling and cleaning the car. As a result, while the first two car sharing models, short-term and long-term car sharing, are characterized by a higher degree of use-orientedness, the last two models, private car- and ridesharing, tend to have a lower degree of use-orientedness. The reason for that is that the fictitious car manufacturer in the first two models not only supplies a platform for car sharing but other services, such as fueling, repairing, or remanufacturing, as well. These two models differ, however, in that in the second model, long-term car sharing, the consumer is responsible for insurance and for refueling whereas in the first model, short-term car sharing, In contrast, regarding private car sharing, the fictitious car manufacturer only offers an app where consumers can connect with each other and rent out their private vehicle to each other.
However, the fictitious car manufacturer is responsible for the insurance during the usage time of the car. Lastly, private ridesharing features the lowest degree of use-orientedness as the fictitious car manufacturer only provides an app and website where users can connect and offer rides to each other. Thereby, any responsibilities for repairing, fueling or insurance, for example, remain with the party thus the customer offering the ride.
In order to measure the mediator Consumer Evaluation of the theoretical model, participants were requested to rank these models according to their preferences (1-4) to analyze whether participants prefer models with a higher degree of use-orientedness and hence, the mediator of the conceptual model was measured. Furthermore, two trap-questions, known as instructional manipulation checks (Liu & Wronski, 2018), were involved where participants are asked how many different models were shown and which
model belongs to the displayed picture. As a result, it could be verified whether the respondents read and memorized the four different models correctly and to avoid suboptimal answers which lead to unintended variance (Berinsky et al., 2014).
3.3.3 Dependent Variable
To measure the dependent variable Acceptance of a Circular Value Proposition participants were asked to indicate how likely they are to accept each car sharing model presented since these models represent a circular offering and therefore also have a circular value proposition. For this purpose, a seven-point Likert scale (1 Strongly disagree - 7 Strongly agree) (Dawes, 2008) was provided on which respondents can specify how likely they are to accept the respective model. Here, a higher score indicates that the participant is more likely to accept the respective model. Furthermore, participants were asked about their acceptance of a circular value proposition by consenting (or not) to eight items emphasizing the advantages of car sharing, such as “To travel more sustainably”. Next, participants were asked about reasons not to participate in car sharing by consenting (or not) to nine items, such as “It is insecure and unsafe”. By comparing the ratio of positive and negative responses for or against car sharing the consumers’
evaluation is measured. The multiple-choice questions were adopted from Derikx & van Lierop (2021) and the answer options were taken from Mattia et al. (2019), Derikx & van Lierop (2021) and Gu et al. (2019). All three constructs from which the questions and answers were taken have a Cronbach's α of at least 0.7.
In order to measure the three presented moderators of the model (Figure 1), Awareness of Sustainability, Age and Trust, several question types were used. The first moderator, Awareness of Sustainability, (nominal variable) was tested by providing a nominal
scale (1 Yes - 0 No) adopted from Hassan et al. (2010) (Cronbach’s α = 0.81). Specifically, 15 statements about awareness of sustainable practices, values, behaviors, and attitudes were presented, and participants were asked to choose Yes or No based on whether or not they practice the action described in the statement or whether or not they can identify with the beliefs and feelings explained in the statement. An example item of the applied scale is “I feel disappointed with air pollution”.
Secondly, the moderator Age (ratio variable) was measured by asking participants to provide information about their age, for which a blank field is provided where they can enter their age, using a question from the online survey tool Qualtrics.
Finally, to test the last moderator of my model, Trust (interval variable), a seven-point Likert scale (1 Strongly disagree - 7 Strongly agree) (Dawes, 2008) was used. Herein, statements from Hawlitschek et al., 2016, (Cronbach’s α ≥ 0.7) and Turel et al., 2008, (Cronbach’s α ≥ 0.8) were used. Finally, participants were asked to indicate whether they agree, disagree, or neither agree nor disagree with each statement whereby relatively high scores indicate higher agreements with the statement. An example item is “Car sharing services keep the interests of the consumers in mind”.
3.3.5 Control Variables
The study includes several control variables to enhance the robustness of the results as well as the internal validity of the whole study (Nielsen & Raswant, 2018).
Primarily, participants were asked to provide information on their Gender which builds a nominal variable as it includes the answer options female, male, third gender as well as prefer not to answer. Recent studies on sharing services have shown that there is a significant difference between women and men in using sharing services (Sharma, 2019;
Mahadevan, 2018; Coley & Burgess, 2003) as males and females process information and
stimuli differently under various conditions (Coley & Burgess, 2003). For example, previous literature argues that men are generally more likely to favor utility and perceive less risk in sharing services (Dittmar et al., 2004) and hence, gender differences exist in the perception of trust as well (Kyriakidis et al., 2015). On the other hand, it is well known that women generally place more value on sustainability (IJISD 2009; OECD 2008) and social benefits than men (Dittmar et al., 2004) which both go hand in hand with use-oriented PSSs including sharing services (Reim et al., 2015). In sum, there are significant differences between men and women with regard to the use and evaluation of sharing services. Therefore, this variable was used as a control variable in this research and will be referred to as Gender. Secondly, Income (ratio variable) also builds an aspect that has the potential to influence consumer evaluation of a use-oriented PSS and thus the acceptance of a circular value proposition. Eckhardt et al. (2019) claim that sharing services provide access to products for consumer segments who otherwise could not afford it and hence builds a good alternative for low-income workers, students or seniors (Cohen et al., 2008). People with lower incomes or fewer financial resources are therefore more likely to share services with others, so differences can be made between people with lower and higher incomes (Fremstad, 2018). Through applying this variable as a control variable it could be measured whether the level of income influences the consumer evaluation of a use-oriented PSS. Here, participants were requested to categorically indicate their annual income by choosing the appropriate income level, such as Less than
€25,000, €25.000-€50.000 or €100.000-€200.000 (Elwell, 2014). This variable will be referred to as Income.
Lastly, the place of participants’ residence (nominal variable) was controlled as recent studies claim that individuals living in cities are more likely to use sharing services (Cohen & Kietzmann, 2014; Ozcan et al., 2017). Specifically, car sharing services are
generally more used in urban areas than in rural areas due to problems such as congestion (Prieto et al., 2019) or restrictions (Ferrero et al., 2018). Furthermore, due to the demographic trends of declining household size and increasing urbanization promotes the sharing of private goods (Fremstad et al., 2018). Finally, sharing services offered through a digital platform tends to be more successful in dense areas as individuals can be better matched with underutilized products (Yates, 2018). As can be inferred from previous literature, consumers' place of residence plays an important role in their participation in sharing services. Therefore, this variable was also queried in this study by asking participants where they are located with a question applied from Qualtrics (Qualtrics, 2022). In this way, we could measure which group of participants is more likely to use sharing services and thus accept a circular value proposition. This variable will be referred to as Location.
In the end, respondents were asked to indicate whether or not they own a private car, as it might be interesting to investigate whether owning a private car influences participation in car sharing services and thus the adoption of a usage-based PSS with a circular value proposition (Derikx & van Lierop, 2021). However, this binary check does not control for a potential influence on the results and thus, does not act as a control variable. This extra variable will be referred to as Own Car.
The following parts analyze the results of the survey and test the hypotheses made earlier. Specifically, the dependent, independent, moderating, mediating, and controlling variables are analyzed and discussed using IBM's program SPSS (IBM, 2022).
4.1 Data Cleaning Check
4.1.1 Descriptive Statistics
A total of 327 people filled in the questionnaire. In order to check for missing data, a frequency test was performed in SPSS (cf. Appendix B), which examined all included variables. Unfortunately, 26 questionnaires were filled in incompletely which is why they were excluded from the sample to ensure that any systematic biases are not involved (Kitchenham et al., 2003). Furthermore, 147 respondents answered the so-called trap questions wrong (Liu & Wronski, 2018). Moreover, since the target group is consumers in the automotive industry, all participants who do not have a driver's license had to be filtered out at the beginning, which amounted to a total of six participants. Furthermore, a test for so-called outliers, known as observations or cases of a variable in the survey sample was run on the whole data set (Ghosh & Vogt, 2012). Three outliers could be found in the variable Age and one in Awareness of Sustainability. As outliers can bias other statistics, such as means or standard deviations (Cheng, 2022), the outliers found were excluded from the data set as well. As a result, 146 respondents filled out the questionnaire completely and correctly and thus, the analysis was based on a sample size of 146 participants. This size is still sufficient to analyze the data and arrive at valid results (Memon et al., 2020). In general, the sample size is composed of 70 women and 76 men, with an average age of 34 years, the youngest being 18 years old and the oldest 77 years old (cf. table 2).
4.1.2 Dummy Coding and Normality Check
Primarily, the variables Gender, Own Car and Location in the data set were recoded into categorical, binary variables, so-called dummy variables, in order to indicate the absence or presence of something and to include these variables into regression analyses (Cohen &
Cohen, 1983; Myers et al., 2013). Here, regarding the new variable of Gender, male displays
the value 1 as before but female indicates the value 0 instead of 2. The same was done for the variable Location and Own Car: whereas the terms city and yes still have the value 1, the new value for rural area and no is 0.
Lastly, a normality check was conducted for all variables included to test whether the data are symmetrically distributed around the center of all scores, known as normal distribution (Das
& Imon, 2016). Consequently, Age has a skewness outside the thresholds (1.07), however, an above-average number of participants are between the ages of 20 and 30 which is why the distribution is leptokurtic that is characterized by a more pointed than the normal distribution (cf. Appendix C) (Cheng, 2022). Furthermore, in order to check for normality for the binary variables Own Car, Gender and Location a graphical representation in the form of a histogram was used. As could be derived from the histograms for Gender and Own Car the datas are distributed normally (cf. Appendix C). Regarding the variable Location a platykurtic distributions which is flatter than the normal distribution (cf. Appendix C) (Cheng, 2022) could be investigated. However, this is due to the fact that above average participants are living in cities (cf. Appendix C).
4.1.3 New Variables
New variables were formed as a function of the existing variables to test the hypothesis and to calculate the correlation. Primarily, in order to analyze the independent variable, a categorical variable was created including all four presented models with value 1 implying model 1, value 2 implying model 2, and so on. Secondly, a mean variable was created regarding Acceptance of Circular Value Proposition which includes all items from the Likert scale. Moreover, a sum variable was developed which sum up how many of the 12 statements from the nominal scale the respective participant affirms. Therefore, it was possible to measure whether the respondent had a greater awareness of sustainability, which
affirmative statements. Lastly, a mean variable was created regarding the moderator Trust containing all 12 items of the Likert scale.
Finally, the reliability of the scales used were measured which allowed us to investigate the internal consistency of the scales used (Cronbach, 1951). Here, reliability tests were applied for the variables Trust, Awareness of Sustainability and Acceptance of Circular Value Proposition. As can be seen in Table 1, all three variables feature a Cronbach's Alpha greater than 0.7. The Cronbach's Alpha measures the internal consistency which is the degree to which items of a scale are homogenous (Cronbach, 1951). If the relation is lower than 0.7, the scale or some of its questions are not acceptable (Adadan & Savasci, 2012).
4.2 Statistical Analysis 4.2.1 Correlation
Using SPSS, a so-called correlation matrix after Pearson was conducted which calculates correlation coefficients for all combinations of the thesis variables (Table 2).
Furthermore, means and standard deviations can also be seen for each thesis variable. The variable Driver's License shows no results since all participants who reported not having a driver's license were excluded from the data set, as explained above. Hence, the answer as well as the result for this question is the same for every respondent in the data set. As mentioned earlier, it can be inferred from the correlation matrix that the average age of the respondents is 34, that more of them live in cities and tend to have a greater awareness of
sustainability and the environment, and that almost exactly the same number of men and women participated. Furthermore, just under two thirds of the participants stated that they owned their own car. Lastly, the variables were tested for multicollinearity (cf. Appendix D) however, all VIF values were slightly above 1 and thus, nothing conspicuous was found (Daoud, 2017).
Primarily, in order to test Hypothesis 1, Friedman's ANOVA was conducted because the question measuring the independent variable in the theoretical model is a ranking question asking participants to rank the models according to their preference. As mentioned earlier, the four models are distinguished by varying degrees of use-orientedness, with Model 1 having the highest, Model 2 the second highest, and so on. As can be seen in Table 3, Model 1 has the highest average ranking value, Model 2 the second highest, Model 3 the third highest and Model 4 the lowest average ranking indicating that the consumers are likely to positively evaluate use-oriented PSS as Model 1 has the highest degree of use-orientedness and Model 4 the lowest. Therefore, Hypothesis 1 claiming that Model 1 is most likely to be accepted compared to Model 2, Model 3 and Model 4 is confirmed.
In addition, a linear regression analysis was conducted in order to test for significant differences between the four models. As can be derived from Table 4, Model 1 has the most significant positive relation with Consumer Evaluation (p<0.001, b=0.98, t=43.10). Thus, with Model 1 increasing by one unit, Consumer Evaluation increases by 0.98 units.
Furthermore, Model 2 (Table 5) has a significant positive relation with Consumer Evaluation, however, the effect is smaller compared with Model 1 (p=0.049, b=0.16, t=1.98). Therefore, when Model 2 increases by one unit, Consumer Evaluation increases by 0.16. In contrast, Model 3 (p<0.001, b=-0.40, t=-5.89) and Model 4 (p<0.001, b=-0.74, t=-9.11), have even a significant negative relation with Consumer Evaluation (Table 6,7). This means that when Model 3 or Model 4 increase by one unit, Consumer Evaluation decreases by 0.40 and 0.74 respectively. As a result, Model 1 is the most positively evaluated compared to Model 2 which was evaluated as the second best and Model 3 and 4 were even evaluated negatively.
Hence, a further confirmation of Hypothesis 1 can be seen suggesting that Model 1 is the most likely to be accepted compared to Model 2, Model 3 and Model 4.
Secondly, in order to test the mediating effect (Consumer Evaluation) and thus the second hypothesis, a regression analysis was conducted using the plug-in system PROCESS (v4.1) (Hayes, 2022). As can be derived from Table 8, Use-oriented PSS has a significant positive relationship with the Consumer Evaluation of Model 1 and 2 and a significant negative relationship with the Consumer Evaluation of Model 3 and 4, as already explained above.
However, the relationship between Acceptance of Circular Value Proposition and Consumer Evaluation is not significant with respect to every model. As can be seen in Table 9, Consumer Evaluation of Model 2 (p=0.043, b=1.23, t=2.05), Model 3 (p=0.029, b=1.37, t=2.21) and Model 4 (p=0.046, b=1.22, t=2.02) have a significant positive relationship with
Acceptance of Circular Value Proposition. In contrast, Consumer Evaluation of Model 1 (p=0.228, b=0.90, t=1.21) does have a non-significant positive relationship with Acceptance of Circular Value Proposition. Moreover, there is no significant indirect ([-1.23, 2.38];[-0.17, 0.41]; [-0.88, 0.36]; [-1.42, 0.67]) as well as direct effect ([-0.31, 1.42]) between Use-oriented PSS and Acceptance of Circular Value Proposition as the confidence intervals include zero (Table 10) (Mallinckrodt et al., 2006). Therefore, the second hypothesis is rejected.
Lastly, to test the three moderating effects (Awareness of Sustainability, Age, Trust) of the theoretical model (Hypotheses 2-5) a MANOVA in SPSS was conducted. In the process of testing the moderating effects Consumer Evaluation of each model built the dependent variables, Use-oriented PSS the predictor variable and Awareness of Sustainability, Trust and Age the moderators, respectively. Furthermore, the assumptions of a MANOVA were checked and consequently, the prerequisites of multivariate normality, homoscedasticity, linearity, and independence and randomness were met (Salkind, 2010).
Primarily, as can be derived from Table 11, Awareness of Sustainability has a non-significant effect on the relationship between Use-oriented PSS and Consumer Evaluation (Model 1:
p=0.671, ηp²=0.15, Model 2: p=0.155, ηp²=0.22, Model 3: p=0.069, ηp²=0.25, Model 4:
p=0.238, ηp²=0.20). Although Wilks' Lambda is significant (F(88,409)=3.24, p<0.001, ηp²=0.41, Wilk’s Λ=0.12) and hence implying that the model is efficient and that there is statistical difference between the four presented models (Patel & Bhavsar, 2013), Hypothesis 2 is rejected since the interaction effect is non-significant. In addition, in order to test for homogeneity of variance, Levene's test of equality of error variances was conducted, however, all p-values were above 0.05 and thus the model is efficient (Tovohery, 2020).
Secondly, Table 12 shows that Age has a non-significant effect on the relationship between Use-oriented PSS and Consumer Evaluation (Model 1: p=0.045, ηp2=0.41, Model 2:
p=0.336, ηp²=0.33, Model 3: p=0.016, ηp²=0.45, Model 4: p=0.790, ηp²=0.25) as well. The prerequisite of homogeneity of variance is met and Wilks' Lambda is significant