Bachelor’s thesis
Economics and Business Administration
‘Do environmental friendly related factors influence consumers’ purchase behavior towards foreign versus domestic products?’
Julia Nicolae 10348247 Carsten Gelhard June 29th 2015
Author’s Declaration of Originality
This document is written by Julia Nicolae who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is 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 Abstract 5 Foreword 6 1. Introduction 7-8 2. Literature review 9-16 2.1 Literature gap 9-10 2.2 Factors of interest 10-16 2.2.1 Consumer ethnocentrism 11 2.2.2 Consumer attitude 12-13 2.2.2.1 Environmental concern 12
2.2.2.2 Consumers’ attitude towards environmental issues 12-13 2.2.2.3 Responsibility and inconvenience 13
2.2.3 Eagerness of environmental engagement 14
2.2.4 Values 14
2.2.5 Willingness to pay more for environmental friendly products 15 2.2.6 Foreign versus domestic purchase behavior 15-16
3. Research design 17-21
3.1 Design and data collection 17-18
3.1.1 Survey questions 17-18
3.1.2 Variable types 18
3.2 Level of analysis and sample 18-19
3.2.1 Sample size 19
3.3 Operationalization of the constructs and variables 19
3.3.1 Validity 19-20
3.3.2 Reliability 20-21
3.4 Analysis of quantitative data 21
3.5 Research papers 21
4. Results 22-26
4.1 Descriptive statistics 22
4.1.1 Sample characteristics – Gender 22
4.1.2 Sample characteristics – Age 22
4.2 Correlations 23
5. Discussion 27-30
5.1 Findings on willingness to pay 27
5.2 Findings on the foreign versus domestic purchase behavior 27-28
5.3 Implications for managers 28
5.4 Theoretical implications 28-29
5.5 Boundary assumptions 29
5.6 The advantages and limitations of the research design 29-30
5.7 Future research 30
6. Conclusion 31
7. References 32-34
Apendix A – Survey 35-39
Abstract
Globalization is something that it widely spread and in constant movement. Due to
globalization people are able to buy foreign products on a bigger scale than ever before. This new evolvement brings its own possibilities but also its own problems for the management of organizations. The current environmental issues have been broadly promoted in the media and play a constant role in our everyday life. Environmental problems are becoming a bigger problem within our society and are of high importance. Companies are promoting all sorts of environmental friendly products and try to sell it to consumers, while the consumers are trying to make decent purchase choices. The combination of environmental issues and the need for companies to understand foreign and domestic purchase behavior has made this into a valuable research. Organizations are trying to understand what the impact of different
consumer traits is on the willingness to pay for environmental friendly products and its effect on their purchase behavior towards foreign and domestic products. This research will try to provide information on what influences these behaviors. It will also give managers a good understanding of how they should market their products for a particular segment.
Foreword
This thesis was written as a part of my Bachelor in Business studies at the University of Amsterdam (UVA). I would like to say something about the factors that helped me to write my thesis. First of all I would like to thank my supervisor Carsten Gelhard for always responding on my mails, for always being very accurate in his answers and for being easy to approach. Secondly I would like thank my mother for always being supportive without being overbearing and for being loving and understanding. I would also like to thank all the people that filled out my survey. And last but not least I would like to thank all the people that were friendly and supportive during this whole process.
1. Introduction
A Japanese car, Italian shoes, American jeans and French cheese. Typical everyday items for western society. It is interesting to see that most purchases people make are not necessarily from a domestic producer. Whereas a century ago the ‘world’ was small and there was not a lot of choice in domestic or foreign products, while nowadays there is a massive variety of products to choose from. The current world has endless possibilities of travelling, trading and communicating. This gives a lot of options in our decision-making process. This same world also has a constant concern for different global issues. The public concern for different issues like climate change, human rights and labor standards has expanded enormously (Muller, 2006).
For example in America a lot of workers have lost their job, because of the sales growth of foreign products. American companies cannot compete against the low-cost factories in Asia, because of this a lot of Americans have lost their jobs. This discussion of buying foreign products or domestic products is an issue that concerns not only America but also a lot of other countries (Granzin & Olsen, 1998).
The importance of ecological friendly products has been thoroughly explained by Laroche et al. (2001). Currently, environmental and ecological changes on this planet are becoming increasingly more important in the media. For example the global climate change is been given a lot of attention in the media. Also the increase of environmentally compatible products on the market makes it of high importance to analyze and understand this field. In our current educational and political systems the importance of ecological issues are also widely promoted. Combining these factors together it is obvious that this theme is essential in understanding consumer purchase behavior.
Because of these environmental issues and the foreign versus domestic purchase behaviors it is interesting to research its influence on one another. How the attitude of consumers on environmental friendly products influences the willingness to pay more for these products and what their purchase behavior is regarding foreign and domestic products. This is of importance for organizations that are dependent on foreign versus domestic purchase behavior of their customers. This could be of interest to large multinationals, but also small domestic companies that face difficulties in their product placement.
Environmental friendly products are constantly being developed and brought on the market. A huge challenge that a lot of companies and their marketing department face is the analysis to really identify what kind of customers are willing to pay more for environmental
friendly products (Laroche et al., 2001). What variables are influencing the willingness to pay more for environmental friendly products and what is the influence of the willingness to pay for environmental friendly products on foreign versus domestic purchase behavior? Because of the media attention, the importance of the issue for our earth and the importance of the issue for managers and their marketing department it is essential that this topic is more thoroughly researched. Based on the findings from previous studies and the development of previous research there has been proposed a research question. The research question is: ‘Do environmental friendly related factors influence consumers’ purchase behavior towards foreign versus domestic products?’ This research question will be answered with the help of several hypotheses that will to try to explain foreign versus domestic purchase behavior.
2. Literature review
This literature review includes the literature gap, the important issues and limitations within the literature and the decision for including particular variables. The review also provides hypotheses, which will improve the understanding and answering of the research question. This literature review also incorporates different boundary limitations.
2.1 Literature gap
Globalization has expanded and accelerated the competition between foreign and domestic products (Nguyen et al., 2008). A lot of big companies nowadays have shifted from the traditional local approach to the more global approach with little to no local adaptation (Steenkamp & de Jong, 2010). Ritzer (2007) implies the difference between two sorts of consumer cultures. First of all there is the local consumer culture (LCC), which focuses on the home country of the consumer. The other consumer culture mentioned is the global consumer culture (GCC), which is linked to people’s believe in global citizenship and the desire to be part of a greater community. Even though GCC is becoming a bigger part of today’s consumer attitude, LCC is still very prominent in the attitudes of consumers (Crane, 2002). This shift of consumer culture brings a new field of research. This field tries to understand what kind of consumers are willing to buy these local products but also these new ‘global’ products that have almost no local adaptation. It also tries to understand what the motivation of consumers is to buy foreign or domestic products. Because of this shift in attitude there have evolved different views to explain the reasons for consumers to purchase foreign versus domestic products. It is dangerous to assume that consumer buying behavior is globalizing, since this is more an assumption than an actual fact (Keillor and Hult, 1999). Laroche et al. (2001) focuses on the importance of ecological friendly products and consumers perception on them. Public concern for environmental issues has increased over the past decade. The influence of this environmental concern on purchase behavior is of uttermost importance (Kim & Choi, 2005). Because of this combination in shift of foreign and domestic products and the increased public concern on environmental issues this has become an important topic. Therefore it is important to understand if environmental friendly related factors influence people in their attitude towards domestic products over foreign products.
The research that has been done on foreign versus domestic purchase behavior had several variables, but there are additional variables that might influence consumers’
in their limitations that their decision for variables could be questioned and that more
variables should be added in order to make it easier to generalize. This same study also points out the importance to do this study in another area, which in this research will be The
Netherlands. There is an obvious gap in the literature since there are several variables that are not included in the research. Therefore it is important that this research will incorporate several different variables to explain the reason behind consumers’ behavior.
Ha & Janda (2012) emphasize on the importance of doing more research in different countries. This research focuses only on South Korea. Nguyen et al. (2008) also emphasizes on the fact that their research was only done in Vietnam and that in order to obtain a full view on this topic, the research should be prolonged into different other countries. Therefore this research will be focusing on the Dutch population and derive a sample from this population. The generalization of research done in other countries is always more difficult. So there has been a lot of research but not particularly on the Dutch population, therefore this is a research that will add on to previous research but also incorporate a new important sample.
Parts & Vida (2001) reinforce the importance of further examination of other relevant product categories. Parts & Vida (2001) also include the need of independent measures of purchase behavior.
2.2 Factors of interest
Using constructs of a social nature is essential and valuable to understand and explain consumers’ choice and preference of foreign versus domestic products (Grazin & Olsen, 1998). Therefore there will be five different constructs used as variables to influence the foreign versus domestic purchase behavior. These construct are: consumer ethnocentrism, consumer attitudes, eagerness, values and the willingness to pay more for environmental friendly products. There will be a very elaborate construct used to understand and test the foreign versus domestic purchase behavior. These constructs are all derived from other previous research. There were indications for more research in different countries and the need for more variables in the research on foreign versus domestic purchase behavior
(Laroche et al., 2001; Nguyen et al., 2008). The construct on the willingness to pay more for environmental friendly products is seen as a mediator for the influence of the other constructs on foreign versus domestic purchase behavior. This is derived from the research of Alwitt & Pitts (1996), where they describe the influence of environmental attitude on consumers’
intentions to purchase environmentally friendly products. Because of the fact that this is one of the influences to purchase environmental friendly products it will be interesting to see what several different variables will do with the willingness to actually pay more for environmental friendly products. In further paragraphs the individual variables will be more thoroughly discussed, the reason for their appearance in this study will be explained and the hypothesis will be stated.
2.2.1 Consumer ethnocentrism
Consumer ethnocentrism refers to the appropriateness, the morality of purchasing foreign-made products over domestic products (Shimp & Sharma, 1987). This basically means that consumer ethnocentrism values the Dutch, domestic, products as good and the not Dutch, foreign, products as bad. Previous research has shown that in America this is a very important variable. Due to the increase of sales of imported products a lot of American workers have lost their job (Granzin & Olsen, 1998). Because of this there were several big campaigns in America where the main focus was on ‘Buy American’. Granzin & Olsens’ (1998) research is on evaluating the problem and testing whether consumer ethnocentrism is participating in this process of consumers’ preference to buy foreign products instead of domestic products.
Nguyen et al. (2008) shows that consumer ethnocentrism positively impacts the intention to purchase local products. The study was done in Vietnam and therefore not completely useful to generalize to the Dutch population. Therefore it is interesting to analyze whether
ethnocentrism also has a significant effect on the purchase of local products on a sample of the Dutch population. There is reason to believe that high ethnocentrism will have a positive relation on the willingness to pay for environmental friendly products. Since the assumption is that people who are high in ethnocentrism try to avoid foreign products for the good of their own country (Kaynak & Kara, 2002). This means that they want their purchase behavior to achieve a positive outcome for their own country. Consumers high in ethnocentrism want to achieve a positive outcome for their own society, which can be seen as their own
environment. Therefore the following hypothesis has been created.
H1: High ethnocentrism will have a positive relation on the willingness to pay for environmental friendly products.
2.2.2 Consumer attitude
Consumer attitude as a variable is split up by different constructs. These constructs can be identified by how consumers’ attitude is towards: the severity of environmental problems, the importance of environmental friendly products, the level of responsibility corporations have and the inconvenience of being environmental friendly (Laroche et al., 2001).
2.2.2.1 Environmental concern
Environmental concern, being part of the consumers’ attitude, is often described as the individuals’ goals around environmental issues associated with their own behaviors (Ohtomo & Hiroso, 2007). The belief of the consumers in the existence of environmental problems increases the level of concern. With this concern comes the desire to change their behavior to improve the environmental problems (Killbourne & Picket, 2008). Due to this knowledge the assumption is that consumers that acknowledge the severity of environmental problems will have a positive attitude on the willingness to pay more for environmental friendly products. Therefore the following hypothesis regarding this matter is proposed.
H2: A positive attitude towards the severity of environmental problems will have a positive relation on the willingness to pay more for environmental friendly products.
2.2.2.2 Consumers’ attitude towards environmental issues
Alwit & Pitts (1996) describe the influence of consumers’ environmental attitude on
consumers’ intentions to purchase environmentally sensitive products. Even if this influence is indirect there is still an influence. The assumption that the willingness to pay more for environmental friendly products is automatically incorporated in this outcome is more a vague assumption than a solid fact. Because this says something about the willingness to purchase environmentally sensitive products this does not immediately indicate anything about the willingness to pay more for environmental friendly products. Therefore this research will be more focused on the influence of the attitude of consumers’ intention and the influence that this attitude has on the willingness to pay more for particular products. The assumption will be that a positive attitude towards the importance of environmental friendly products will have a positive relation on the willingness to pay more for environmental friendly products. The following hypothesis is derived from this analysis.
H3: A positive attitude towards the importance of environmental friendly products will have a positive relation on the willingness to pay more for environmental friendly products.
2.2.2.3 Responsibility and inconvenience
Importance and convenience are the two most important attitudes in regard to ecological literature (Laroche et al., 2001). Importance focuses on the importance of ecological issues to the consumers’ own personal life and to the society as a whole. The perception a consumer can have about the severity of the ecological products might influence their willingness to pay more for ecologically friendly products (Laroche et al., 2001). The attitude ‘importance’ of environmental issues has been covered with the help of different variables. The perceived importance, regarding the environment, is seen as the level of which one expresses concern about ecological issues (Laroche et al., 2001).
That ecologically conscious consumers will help to improve and protect the
environment in different ways is researched by Suchard & Polonski (1991). With this comes the responsibility of consumers and corporations to act in a positive way towards the
environment. The assumption is that a positive attitude towards the level of responsibility of corporations will have a positive relation on the willingness to pay more for environmental friendly products. The following hypothesis is derived from this assumption.
H4: The positive attitude towards the level of responsibility of corporations will have a positive relation on the willingness to pay more for environmental friendly products.
Laroche et al. (2001) reveal that consumers that are willing to pay more for environmentally friendly products did not perceive it to be inconvenient to behave in an ecologically favorable manner. From this literature the following hypothesis is derived.
H5: The positive attitude towards the inconvenience of being environmental friendly will have a negative relation on the willingness to pay for environmental friendly products.
2.2.3 Eagerness of environmental engagement
Eagerness of environmental engagement is an essential part behind consumers’ attitude towards foreign and domestic products. Eagerness is conceptualized as a strong desire to take action and do something to improve the current environmental situation (Ha & Janda, 2012). It means that consumers’ are behaving in a pro-active way and are not passive towards environmental engagement. Eagerness would be expected to encourage engagement in opportunities to support environmental goals (Ha & Janda, 2012). Therefore eagerness is a good addition as a variable to understand consumers’ behavior. The logical theory would be that a consumer, which is high in eagerness, would be positive to pay more for environmental friendly products. With this in consideration, the following hypothesis has been created.
H6: A high eagerness of environmental engagement will have a positive relation on the willingness to pay more for environmental friendly products.
2.2.4 Values
Values are defined as desirable goals, which serve as guiding principles in the lives of the consumers (Schwartz, 1994). As Shrum (1994) indicates it makes intuitive sense that values that influence a person’s life, will influence their behavior towards a positive or societal good. Especially within the topic of environmental products, consumers’ values are important. If a person would engage in acts of environmental value, this would be driven by strong personal values (Laroche et al., 2001). Individualism and collectivism are of importance when looking at values that influence environmental friendly purchases (Laroche et al., 2001).
When it comes to collectivism it is important to note that individuals are more concerned about the impact of their behavior and actions on their surroundings (Leigh & Choi, 2007). Leigh & Choi (2007) also imply that individualistic behavior is more focused on personal interest and maximizing its own individual interest. In combination with the previous mentioned literature the following hypothesis have been created.
H7: Valuing collectivism will have a positive relation on the willingness to pay for environmental friendly products
H8: Valuing individualism will have a negative relation on the willingness to pay for environmental friendly products.
2.2.5 Willingness to pay more for environmental friendly products
The willingness to pay more for environmental friendly products will be assessed using the variables: ethnocentrism, attitudes, eagerness and values. This variable will be seen as a mediator for the foreign versus domestic purchase behavior.
Several studies have found that environmentally conscious people are not always willing to pay a premium for environmental friendly products (Ha & Janda, 2012). They don’t even show a consistent preference for purchasing such items. This means that there is an inconsistency between the environmental-consciousness and the willingness to buy more environmental friendly products and to pay more for environmental friendly products. Therefore it is essential to conduct more research on this topic and understand consumers’ behavior toward environmental-friendly products.
There is a global growing concern for the natural environment, which has led to a growing need of consumers looking for more environmental-friendly products (Jansson et al., 2010). This indicates that in the current environment this is a very relevant and important issue.
2.2.6 Foreign versus domestic purchase behavior
When evaluating the foreign versus domestic purchase behavior it is essential to understand and have different variables that might influence this behavior. For the understanding of foreign versus domestic purchase behavior there has been made use of an elaborate set of questions.
Balabanis et al. (2001) state that depending on the product category the effects on purchase behavior for foreign and for domestic products varies. Like Parts & Vida (2011) stated there has been research on different product categories, but it is essential to add more product categories gain a better understanding of the purchase behavior for foreign and for domestic products.
It is interesting to see that products from more-develop countries and politically free (like the Netherlands) are perceived as better than those form less-developed countries (Granzin & Olsen, 1998). Foreign versus domestic purchases have been researched in several studies by Laroche (2001) and Ha & Janda (2012). These studies emphasize the importance of research in this field and the importance of doing this research in different countries. The construct used involves an all-round consumer purchase construct focused on foreign versus domestic purchases.
Granzin & Olsen (1998) imply the relationship of different attitudes and ethnocentrism on the foreign versus domestic purchase behavior. Laroche et al. (2001) shows that there is a true connection of different values and attitudes and the willingness to pay for environmental friendly products. The willingness to pay for environmental friendly products is seen as a mediator between consumer ethnocentrism, attitudes, eagerness and values and the attitude towards foreign versus domestic purchase behavior. The assumption is that based on previous research the willingness to pay for environmental friendly products (indirectly ethnocentrism, attitudes, eagerness and values) will have a positive relation to purchasing domestic products. Therefore the following hypothesis has been created.
H9. The willingness to pay more for environmental friendly products will have a positive relation to purchasing domestic products.
3. Research design
This chapter will introduce the research design, the survey and the sample. This will all be covered through using literature to explain why certain decisions within the research design have been taken.
3.1 Design and data collection
In order to understand what the consumers’ preferences are, data will be gathered through a survey. Since this is a explanatory study, where there is a want to understand and analyze different relationships between data, a questionnaire is a good technique to use. A survey provides efficient opportunities to collect responses from a large sample before doing the quantitative analysis (Saunders et al., 2007). It is essential to have standardized questions which will be interpreted the same way by all respondents (Robson, 2002). Because this research is bounded with a timeframe, this is the easiest way to get as many respondents as possible.
Due to the fact that the questions are standardized it will be easier to see the
differences immediately. This way of researching is extremely helpful when analyzing and comparing the data (Saunders et al., 2007). It will be self-administrated, so the respondents through an online survey will complete it.
There will only be one moment of questioning every individual and therefore all the information must be collected at once. It will be completely designed and the depth of the analyses will be decided beforehand. Only this way the collected data will be efficient and helpful (Saunders et al., 2007).
The survey will be provided on the Internet using Qualtrics. This option gives you enough space to create your own survey, but at the same time save time because the data can be provided relatively easy afterwards. Qualtrics makes it easy to get your data and use it as your input in SPSS. The data will be checked and any missing values will be processed. The fact that it will be self-administrated gives it the anonymity the survey needs. This way the response bias will be low (Saunders et al., 2007).
3.1.1 Survey questions
This survey will be a questionnaire-based survey. The questions will be close-ended, using the likert-scale. There will be made us of 5/7 likert-scale, this is decided depending on the type of rating and the likely measurement error (Saunders et al., 2007). Because there will be several
series of statements, there is an urge to keep the same order of response categories. This way any confusion of the respondents is excluded (Dillman, 2007). There will be made use of different constructs from different studies. This way the validity of the constructs is maintained. There will also be control variables like age, gender and place of residence. 3.1.2 Variable types
Dillman (2007) distinguishes three types of variables, namely: opinion, behavior and attribute variables. Opinion variables record how the respondents feel or think about something. The behavior variable records how they would behave in a certain situation up till now or in the future. The attribute variables are variables that describe the characteristics of the
respondents. These questions are all included in our survey. Consumer ethnocentrism, attitudes and values are all opinion variables. Attitude towards foreign versus domestic products, eagerness and willingness to buy, are all behavioral variables. Age, gender and country of residence are attribute variables.
3.2 Level of analysis and sample
The level of analysis has been decided based on the time frame. The analysis will be done on a sample of the Dutch population. The questionnaires will be provided online; this way the response bias will be low.
First of all the questionnaire will be completed by ‘test’ respondents which can notify if any questions are to excluded or if there are any unclear questions. This is done to make sure nothing excessive will be added to the questionnaire. Secondly, the questionnaires will be posted on Facebook in different groups, mostly student-groups that are widely accessible by students and non-students. In order to get the right sample size there will be an active role played in sharing the survey. There will be made use of convenience sampling. Because the sample is posted online anyone can participate, it allows you to sample without bias (Saunders et al., 2007). Because the data will be collected randomly on Facebook there will be a
probability of over- and underrepresentation. Because the respondents that are in these Facebook groups are most likely students, there will be an over-representation of students. This also means that the age of the respondents will be lower than the average age of the Dutch population. And of course this also means that the level of education will be higher within our sample in comparison to the level of education within the Dutch population.
Due to these restraints it will be applicable to generalize over students, but it will not be useful to generalize over the whole population. Because only the Dutch residents are used as a population, it won’t be possible to generalize this over different countries.
3.2.1 Sample size
If the sample is bigger it has a better representation of the population. With this kind of sample technique the size of sample is better with over a few hundred (Saunders et al., 2007). But due to time constraints there has only been a sample of 242 respondents. Saunders et al. (2007) emphasize on the importance of a response rate. Though response rates are only used when there is a defined sample group. Because within this study that was not the case, there could not be calculated a reliable active response rate. Since it was distributed online on an online platform, there is no knowledge on how many people actually took note of the survey and did not fill it in. There was a total of 127 Dutch respondents and 77 respondents from other countries. The analysis will only be done on the 127 Dutch respondents. This means our sample for this research will be 127 respondents.
3.3 Operationalization of the constructs and variables
As explained earlier to operationalise the variables there has been made use of constructs from previous research. Consumer ethnocentrism is a construct from Parts & Vida (2011). The attitude towards foreign versus domestic products is a construct from Granzin & Olsen (1998). Attitudes, values and willingness to pay for environmental friendly products are all constructs from Laroche et al. (2001). And last but not least eagerness is a construct from Ha & Janda (2012). The variable consumer ethnocentrism focuses on the opinion the respondents have on the country they are living in comparison to the rest of the world. Attitudes and eagerness are connected to the opinion and behavior towards environmental products/concern. Values are of importance to understand the way respondents’ value different values like love and being helpful. The willingness to pay focuses on the willingness to pay more for
environmental friendly products. The attitude towards foreign versus domestic products will be measured using an elaborate construct which covers the most important issues.
3.3.1 Validity
In order to make the research as valid as possible, there will be an assessment of its validity. The use of several constructs on the attitude towards foreign versus domestic products will improve the validity of these questions. The validity of all the questions have been tested on
content validity, criterion-related validity and construct validity (Saunders et al., 2007). Content validity being the measurement questions actually provide coverage for the fact if the questions are ‘essential’. Criterion-related validity focuses on the ability to make accurate predictions. Construct validity measures if the questions actually measure what had to be measured. Because of the availability of the constructs and the times saved using them it was convenient and helpful to use these constructs. The constructs used were submissive to validity questions and were checked on validity within their own research, therefore there hasn’t been a separate validity measure within this research.
3.3.2 Reliability
Reliability can be defined as the extent to which the data collection techniques will yield consistent findings (Saunders et al., 2007). The reliability was tested through SPSS, using the Cronbach’s alpha. This is the most common measure of scale reliability (Field, 2009). New variables were created through combining several questions from the questionnaire. A Cronbach’s alpha higher than 0.7 means it’s a good scale. For consumer ethnocentrism the Cronbach’s alpha was 0.720. For the attitude towards the severity of environmental problems it was 0.738. For the attitude toward the importance of environmental friendly behavior it was 0.689. For the attitude towards the level of responsibility of corporations it was 0.560. For the attitude towards the inconvenience of being environmental friendly it was 0.799. For a
combination of all the attitudes the alpha was 0.813. For eagerness it was also 0.813. For collectivism it was 0.719 and for individualism it was 0.752. For the whole value section it was 0.813. For the attitude towards foreign versus domestic products it was 0.897. For the willingness to pay it was 0.804. Lance & Michels (2006), emphasize the importance of high reliabilities. Though they emphasize its importance they also explain that due to time
constrains it is possible to have lower Cronbach alphas. Of course it is essential to have high Cronbach’s alpha’s to increase the reliability of the research. As can be seen in the table below almost all the Cronbach’s alpha’s are above 0.7. Due to time constraints the alphas below 0.7 couldn’t be increased. Though, as can be seen in the table, they are all above 0.5.
Table 1: Cronbach’s Alphas of the constructs
3.4 Analysis of quantitative data
The data provided from Qualtrics will be used as input for SPSS. First only the data with respondents from the Netherlands has to be selected. Secondly the data has been processed for any missing data, inserting 999 on the empty spots. The frequencies were tested to see if there was no strange input in the data. Counter indicatives were created for the questions that needed to be adjusted. For the analysis of missing data there is made use of list wise deletion. List wise deletion analyzes only the cases without any missing data in variable. Due to the availability of enough respondents the problem of not enough respondents will not be a problem. Reliability checks will be done and different regression analysis to understand the relation between the different variables.
3.5 Research papers
The papers for the literature review will be found online on the website of the university library of the University of Amsterdam. Google scholar will also be used as a platform to collect the papers. The papers used for the constructs are papers with the same sort of analysis as this research. The constructs are used from papers that are accredited as an A-journal. The rest of the papers that will be used for this research will also be mostly A-journals in the particular field. Research in A-journals are peer-reviewed and are of the highest level in their field of research. The time frame of my paper review will be 25 years. 25 years is more or less an indication of the complete time frame and not a exact time frame. A shorter timeframe will exclude several essential changes (e.g. the rise of the internet, large multinationals
expanding). A larger time frame will exclude the accessibility of foreign products and will therefore not be accurate. This way the research papers found will be accurate for this period of time and the papers will be useful in examining this field of study.
4. Results
The previous paragraphs were focused on the design and all the measurements of this
research. In this part the results of the analysis will be shown. First of all the correlations will be discussed. After that the results of the linear regressions will be discussed.
4.1 Descriptive statistics
The descriptive statistics give insight in the sample characteristics.
4.1.1 Sample characteristics – gender
The sample had a total number of respondents of 242. But due to the fact that 38 surveys were left empty they were deleted. After that there were 2064 respondents left. Due to the fact that 77 respondents of the sample were not from the Dutch population these surveys were also not taken into account when doing the analysis. There were 127 respondents left from the
Netherlands. From these respondents there were 67 male respondents and 59 female
respondents. In percentages this means that there were 52.8% males and 46.5% females. The male percentage is slightly higher than the Dutch population that consists of 49.5% of males. This indicates that there is a slight over-representation of men and a slight
under-representation of women in comparison to the Dutch average. 4.1.2 Sample characteristics – age
The sample had an age range of 15 to 63 years. The highest percentage was found at the age of 21, with a percentage of 22,8% of the whole sample. Secondly was the age of 20, with a percentage of 20,5%. Thirdly was the age of 22 with a percentage of 13.4%. The rest of the percentages were spread between the age of 18 and 32. The reason behind this spread is due to the fact that students were the main respondents for this survey. The fact that the survey was spread on Facebook and on several student-platforms makes it easy to understand this overrepresentation of this age category. This is not completely representative for the Dutch population. The Dutch population has only 48.5% in the ages 0-40 while in this survey it is more likely to be 90%.
4.2 Correlations
In Appendix B an extended correlation table can be found. This correlation table shows what variables correlate with each other. They can be p<0.01 indicated with (**) or p<0.05
indicated with (*).
Table 2 : Correlations (see appendix B)
As can be seen from the table above there are several important correlations to be taken note of. As can be seen there is an important correlation between eagerness and foreign versus domestic purchase behavior with a significance of 0.001. Also willingness to pay for
environmental friendly products and foreign versus domestic purchase behavior is correlated with a significance of 0.004. The table shows other important significant correlations. The next part on linear regressions will give more insight on the specific correlations.
4.3 Linear regressions
In order to assess the different hypothesis the analyses have been done with linear regressions. First the relationship from all the different variables towards the willingness to pay more for
environmental products was tested. This was done stating the dependent variable (the willingness to pay for environmental products) and the independent variables. The independent variables used in the linear regression are ethnocentrism, severity of environmental problems, importance of environmental friendly behavior, level of
responsibility of corporations, inconvenience of being environmental friendly, eagerness, collectivism and individualism.
This first analysis shows that only eagerness is significantly correlated with the
willingness to pay for environmental friendly products. With eagerness having a beta of 0.513 and significance of 0.000 it is obvious that this variable is of uttermost important in this analysis. The correlation matrix shows that eagerness is positively correlated with the willingness to pay for environmental friendly products
Table 3: Dependent variable: Willingness to pay for environmental friendly products
As shown in the table, eagerness is the only variable which has a p <0.01 and/or a p <0.05 so it is the only significant factor in this analysis. As also shown in the table eagerness has a large beta, it’s even larger than 0.5 which means that in this model this variable explains more than half of the consumers’ willingness to pay for environmental friendly products.
Hypothesis 6 suggests that a high eagerness of environmental engagement will have a positive relation on the willingness to pay more for environmental friendly products, in
table 3 there can be seen the significance for this hypothesis, thus hypothesis 6 is supported.
Hypotheses 1, 2, 3, 4, 5, 7, 8, are not supported, as can be seen in table 3. The second regression done is to analyze the relation of the willingness to pay for
environmental products, which is seen as the mediator between the other variables, to the foreign versus domestic purchase behavior. This was done using the independent variable willingness to pay for environmental friendly products and the dependent variables foreign versus domestic purchase behavior.
Table 4: Dependent variable: foreign versus domestic purchase behavior (1)
The table shows that the willingness to pay has a correlation with a p<0.05 to the foreign versus domestic purchase behavior. Though the p is not smaller than <0.01, a p<0.05 is enough to conclude that the correlation is significant. With this analysis there can be stated that the hypothesis that is made on these variables has been confirmed.
Hypothesis 9 suggests that the willingness to pay more for environmental friendly products will have a positive relation to purchasing domestic products. In table 4 there can be seen the significance, thus hypothesis 9 is supported.
The third regression is done on the other variables. They were used as independent variables in order to find out whether these variables have a direct relationship to the foreign versus domestic purchase behavior instead of using the willingness to pay as their mediator.
Table 5: Dependent variable: foreign versus domestic purchase behavior (2)
This regression shows that actually ethnocentrism and eagerness have a direct correlation with the purchase behavior towards foreign versus domestic products. There was a beta of 0.521 and a significance of 0.000 for ethnocentrism and a beta of 0.248 and a significance of 0.008. It is interesting to note that ethnocentrism did not have a correlation with the
willingness to pay for environmental friendly products, but does have a correlation with the foreign versus domestic purchase behavior. This means that the hypothesis, which assumed that the willingness to pay would be the mediator for ethnocentrism within this analysis, is not correct. Ethnocentrism doesn’t have a correlation with the willingness to pay, but does have a direct positive relation to the foreign versus domestic purchase behavior. Eagerness also has a direct correlation with the attitude towards foreign versus domestic purchase behavior.
Because eagerness already had a correlation with the willingness to pay more for
environmental friendly products, eagerness has another validation of its connection to the foreign versus domestic purchase behavior. Eagerness has a direct and an indirect, with the willingness to pay more as a mediator, relation to the foreign versus domestic purchase behavior. What also is important to note is that there is a relation between age and the foreign versus domestic purchase behavior. With a beta of 0.169 and a significance of 0.035, it shows that it is significant and of importance.
5. Discussion
This part will discuss more thoroughly the findings of the research. The findings of this study will be linked to previous studies and will be compared. Finally the limitations of the study and suggestions for future research are discussed.
5.1 Findings on willingness to pay
The findings have shown that only two variables had an actual relationship with their dependent variable as assumed in the hypothesis. The significant finding was the relation of the independent variable eagerness to the willingness to pay more for environmental friendly products. In this research there has been made use of the mediator ‘willingness to pay more for environmental friendly products’. Earlier research indicated the significance of eagerness. In the study of Hu & Janda (2012) it was researched that eagerness will positively affect behavioral intention. Within this study eagerness has also had a significant relationship to the willingness to pay more for environmental products. This indicates that people that are eager to behave environmental friendly are willing to pay more for environmental friendly products. This is consistent with previous findings on behavior.
The inconsistency lies in the other variables. The variables attitude and values had no significant findings within this study. This is not consistent with previous research where these variables were used and showed significance. For example the study of Laroche et al. (2001) showed significance on attitude and value. It is important to understand why these findings were not consistent with the findings in this study. Because as shown in the methodology some of the constructs that were used in this study weren’t with a high Cronbach alpha this might indicate problems with the questions and the validity of the questions asked. Also the difference between the research done previously and this research is the country that has been used as population. Within different countries there can be a difference in the behavior and thinking patron of the population. For example Hofstede (1980) has put emphasize on the importance of understanding cultural difference between different countries.
5.2 Findings on the foreign versus domestic purchase behavior
Hypothesis nine was explained by the analysis done on the survey. The findings also show that there was an unexpected direct relationship between ethnocentrism and the foreign versus domestic purchase behavior, which was not stated as a hypothesis. Though this was indirectly
indicated within the assumption that the willingness to pay would be the mediator. The analysis showed that this mediator was not actually a mediator for the variable ethnocentrism. Rather, the variable ethnocentrism had a direct relationship to the foreign versus domestic purchase behavior. The construct on the foreign versus domestic purchase behavior had a significant relationship to the willingness to pay more for environmental friendly products. It is important to look at the reliability of the constructs used in this study. For the attitude towards foreign versus domestic products it was 0.897. This is the construct that actually showed a positive significant relationship between the willingness to pay and the purchase. Based on this Cronbach alpha it is a reliable variable and therefore there is a positive reliability that the last hypothesis has been accepted. There was another not anticipated finding. That was the finding that age had a significant relation on the foreign versus domestic purchase behavior.
5.3 Implications for managers
The implication for managers is that they gained a bigger understanding of the positive relation of the actual want of people to do something about the environmental problems (eagerness) and the willingness to pay more for environmental friendly products. Also the direct positive relationship of ethnocentrism and the foreign versus domestic purchase behavior is important. Next to these understandings they will also see the second implication of this research, the fact that the willingness to pay more for environmental friendly products positively influences the purchase behavior of foreign versus domestic products. This means that when creating a marketing campaign for a new environmental friendly product they should look more closely at the group they want to target. How do they view the world? How do they perceive eagerness to change environmental problems? These questions can help them understand why people would be willing to pay more for their product and if they would be willing to buy them if they act towards the targeted group as a domestic/foreign company. 5.4 Theoretical implications
There have been some contributions to the previous literature. The fact that eagerness has an influence on the willingness to pay more for environmental friendly products has been better explained through this research. In previous research by Hu & Janda (2012) there was a suggestion to the change in behavior through eagerness. With this research there has been confirmed that eagerness has an influence on the willingness to pay more for environmental
versus domestic purchase behavior. In previous research there was no indication that age mattered in the case or that it was of significance. It is interesting to note that in this survey the age showed a significant relationship. Also the fact that ethnocentrism has a positive relationship with foreign versus domestic purchase behavior is a not well researched variable and therefore a relationship which is an addition to literature.
5.5 Boundary assumptions
The conceptual framework that was provided has several variables based on previous
literature and gaps in the literature. Though this framework has provided important variables it is not likely to have incorporated all the variables that influence the willingness to pay and the consumers’ attitude towards domestic versus foreign products. This means that results and conclusions that will be drawn from this research will only be valid on the designated
variables. These variables have been chosen to give a ‘as broad as possible’ view on the independent variables that might influence the dependent variable. It is important to
understand what variables have been used. This means that in the results and conclusion some assumptions may be drawn but only based on these variables, other variables are not been taken into account. Therefore the conclusion and the results derived from this research might not be complete but merely a combination of the research done on the included independent variables and dependent variables.
5.6 The advantages and limitations of the research design
With questionnaires it is essential to create a ‘good’ questionnaire, which actually answers the questions you want it to answer. It has to collect the right data to answer your research
question and to completely achieve your objectives. Construct validity is essential for a good questionnaire. Bell (2005) argues that it is way harder to produce a good questionnaire than is often thought. This is essential since there is no chance to go back in time and change the questionnaire. Especially within this study it was essential to create a good questionnaire. Though due to time restraints it was difficult to make sure the questionnaire was clear to all the respondents. Only a couple ‘test’ respondents have done the questionnaire beforehand. If there would be more time there would’ve been more ‘test’ respondents. The complete questionnaire will influence the response rate, the reliability and of course the validity of the data (Saunders et al., 2007). The limitation of a survey is that you cannot actually see how respondents behave. You can only rely on what they say. An experiment would’ve been a
good measure, since an experiment would show how respondents would really behave
towards ‘foreign and domestic products’. The fact that you can obtain a lot of respondents in a relatively short time is the main advantage of a survey. Because the questions are standardized it is easier to compare and run statistical analysis on the given data.
5.7 Future research
For future research there are a couple of additional important issues to address. The most important thing is the addition of even more variables. To get an even greater understanding it is essential to include more variables in the studies, and therefore create a bigger study. With more variables you can rule out what ‘could be’ an effect and you really analyze and research what the effects of particular variables are.
Another thing that is important to take into account for further research is the fact that this research was only done within the Netherlands and there was only a Dutch sample. For future research there could be more research done on a cross-cultural level, where there could be an analysis of several countries in Europe. It would also be interesting to analyze on a cross-cultural level with very diverse countries, where the difference between those countries would be central. As previously measured low-developed countries and high-developed countries have a different way of perceiving domestic and foreign products. Therefore it would be interesting to further analyze these differences.
For future research a different sample could be taken from the Dutch population that might give a better overview of the whole population. In this study the focus was more on getting enough respondents, due to time restraints. In future research there could be me more emphasize on getting a sample systematically and making sure it is easier to generalize is over the population.
Future research might also incorporate income status, marital status and educational level in their analysis, to create a broader range of control variables. This way the
characteristics of the ‘foreign versus domestic’ buyer will be more elaborate and it will be helpful for managers and marketing departments to understand the specific consumers they should target.
Because of the previously mentioned time restraints this has been a cross sectional over a longitudinal study. In the future there should be more emphasize on longitudinal studies where the understanding of purchase behavior and willingness to pay is more
6. Conclusion
The main focus of this study was to gain a better understanding of the variables that influence, through the willingness to pay more for environmental friendly products, the foreign versus domestic purchase decisions. Different constructs from previous research was used to create a new questionnaire, age and gender were used as control variables. The variables were:
consumer ethnocentrism, attitude, eagerness and value. The quantitative information was collected through a survey and analyzed with the help of statistical tools.
Although not all variables seemed to influence the willingness to pay more for environmental friendly products, there were some important significant findings within the analysis. Thus the research question can be answered with the help of the following
information. The significant finding on the willingness to pay more for environmental friendly products was the positive relationship of eagerness. Eagerness also had a direct positive relation to the foreign versus domestic purchase behavior. Also the willingness to pay more for environmental friendly products had an influence on the foreign versus domestic purchase behavior. The direct positive relationship of ethnocentrism on foreign versus domestic
purchase behavior was also very interesting. It was especially interesting because it didn’t have a relationship to the willingness to pay for environmental friendly products, which was seen as the mediator. It only had a direct relationship to the foreign versus domestic purchase behavior. The variable age was an unanticipated variable that was important in this matter. It showed a significant direct relationship to the foreign versus domestic purchase behavior.
There have been interesting implications for managers. The most important
implication for managers is that they gained a bigger understanding of the positive relation of the actual want of people to do something about the environmental problems (eagerness).
Furthermore there have been some interesting findings and contributions to the previous literature. The fact that eagerness has an influence on the foreign versus domestic purchase behavior has been better explained through this research. This study has explained this behavior not only by incorporating the willingness to pay more for environmental products as a mediator for the attitude towards foreign versus domestic purchase behavior. It has also showed that eagerness has a direct influence on the foreign versus domestic purchase behavior. Also the new addition that ethnocentrism and age have a direct relation to the foreign versus domestic purchase behavior is very important as an addition to current literature.
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Appendix B
