Supply chain transparency and willingness-to-pay for refurbished products

AuthorYanji Duan, John A. Aloysius
DOIhttps://doi.org/10.1108/IJLM-01-2019-0025
Pages797-820
Publication Date12 Aug 2019
Supply chain transparency
and willingness-to-pay for
refurbished products
Yanji Duan
Department of Marketing and Logistics,
University of North Florida, Jacksonville, Florida, USA, and
John A. Aloysius
Sam M. Walton College of Business,
University of Arkansas, Fayetteville, Arkansas, USA
Abstract
Purpose Researchers in supply chain transparency have called to expand the boundaries by disclosing
various types of information to multiple stakeholders. The purpose of this paper is to explore the effect of
transparency about supply chain sustainability on consumers as critical stakeholders and investigate the
effectiveness of message characteristics.
Design/methodology/approach This study utilizes two scenario-based experiments grounded in a
refurbished goods context: Study 1, which employs a 2 ×2 between-subject experiment investigates the
effects of product type and sustainable information provision on consumers evaluations, and Study 2, which
employs a 2×1 between-subject experiment examines the effects of sustainable information direction on
consumer evaluations. A total of 348 participants were recruited from the Amazon M-Turk platform across
the two experiments. Data are analyzed with regression analysis using the PROCESS macro in SPSS and the
JohnsonNeyman technique.
Findings Contrary to prior research that assumes that refurbished products are associated with lower
quality, qualityperceptions are moderated by individualsenvironmentalinvolvement (EI) and the information
presented by the firm. More importantly, consumer evaluations are influenced by specific characteristics of
sustainable supply chain messages: high EI individuals have higher willingness-to-pay a premium (WTPP)
when the messageis consistent with original beliefs(pro-attitudinal). In contrastto prior theory, there was no
difference in the WTPP of consumers with high EI and low EI for counter-attitudinal messages.
Practical implications The study shows that what to say, how to say it and to whom, are critical for
firms who seek to nudge consumers to support their sustainable practices.
Originality/value The value of communicatin g information on sustainability has been well establishe d.
However, little is know n about such association when the informat ion provided trades off environmental
benefits and product qua lity. This research addresses t he gap in a refurbished product cont ext. The
research studies the e ffect of sustainable suppl y chain transparency and m essage characteristics on
stakeholdersevaluations.
Keywords Sustainability, North America, Decision making, Mixed method
Paper type Research paper
1. Introduction
In response to increased concern for the environment from both consumers and
policymakers (Oglethorpe and Heron, 2010; Winter and Knemeyer, 2013; Wu et al., 2017),
firms are placing a greater emphasis on developing a sustainable supply chain (Brockhaus
et al., 2013). The sustainable supply chain is defined as the strategic, transparent
integration and achievement of an organizations social, environmental and economic goals
in the systemic coordination of key inter-organization business processes for improving the
long-term economic performance of the individual company and its supply chains(Carter
and Rogers, 2008, p. 368). Through building a sustainable supply chain, firms will be able to
reduce sustainability-related risk (Multaharju et al., 2017), motivate innovations, improve
performance (Dubey et al., 2017) and have opportunities to achieve competitive advantages
(Porter and Van der Linde, 1995; Golicic and Smith, 2013).
The International Journal of
Logistics Management
Vol. 30 No. 3, 2019
pp. 797-820
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-01-2019-0025
Received 20 January 2019
Revised 5 June 2019
Accepted 11 June 2019
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
797
Supply chain
transparency
Achieving a sustainable supply chain requires transparency, which involves
communicating with key stakeholders about the firmscurrent activities and incorporates
stakeholder feedback for supply chain improvement(Carter and Rogers, 2008; Carter and
Liane Easton, 2011; Morgan et al., 2018, p. 960). Different from supply chain visibility (i.e. the
ability for the firms to see across their supply chains) (Bartlett et al., 2007; Somapa et al.,
2018) and traceability (i.e. firmsability to track goods across their supply chain),
transparency shift its focus from internal supply chain partners to external stakeholders
such as consumers, governments and NGOs (Bell et al., 2016). Such inclusion of external
stakeholders is of particular importance since they are not only affected by firmsbehaviors
but also can influence firmsdecisions and performance through their reactions (Freeman
1984; Kim and Lee, 2012). Responding to the urgent call from stakeholders (e.g. consumers)
to build a sustainable supply chain, numerous firms communicate their sustainable
practices to external stake holders, aiming to achieve supply cha in transparency
(Christmann, 2004; Carter and Liane Easton, 2011; Busse, 2016). Target surveyed 7,500
vendors to develop its Sustainable Product Standard, which is used to disclose
sustainability-related information to its consumers. Everlane, an apparel company,
designed its radical transparency program and revealed all cost components, supplier and
factory information across SKUs to consumers. While such disclosure has become
increasingly prevalent, relevant academic research is still in its infancy (Egels-Zandén et al.,
2015; Baldassarre and Campo, 2016; Bell et al., 2016; Morgan et al., 2018). For those who
strive to achieve supply chain transparency, there is little direction from the academy
regarding whether such disclosure is beneficial and how to disclose the sustainable
information. Without answering the questions, the firms will struggle to justify the cost of
pro-environmental initiatives (The Sustainability Consortium, 2018).
Among the previous studies that have explored consumer reaction toward the
communication of information about sustainability, a positive association has been
identified in different contexts such as household, food products (Loureiro et al., 2001;
Sammer and Wüstenhagen, 2006; Cho, 2015). However, these prior studies have usually
been conducted in contexts in which the sustainable information has positive or neutral
product quality implications. While scholars have found that sustainable supply chain
communication can increase consumerspurchase intention and willingness-to-pay a
premium (WTPP), such labeling often signals intangible characteristics such as quality
(Loureiro et al., 2001; Sammer and Wüstenhagen, 2006; Grankvist and Biel, 2007). For
instance, when consumers buy organic food, it is not always clear whether they pay a
premium because of the sustainable practices of the selling firm, or because of the
perception of superior product quality. There is evidence that customer evaluation of a
product, based on information about the ethical attributes of the product, is mediated by
customer perceived quality (Bodur et al., 2016). Moreover, there is some empirical evidence
from previous studies that when the message has no positive implication for product quality
(e.g. paper), there is no positive relation between presenting firmssustainable information
and consumersevaluations (Borin et al., 2011). Hence, it is critical to explore the mechanism
that underlies the relationship between the sustainable supply chain communication and
consumer evaluations. This also gives an understanding as to the robustness, and what
boundary conditions may apply to prior findings. Perceived quality could be confound when
trying to understand whether the mere disclosure of information about sustainable practices
affects consumer evaluations.
Refurbished products may be viewed as favorable to the environment but do not signal
high quality (Bodur et al., 2014). Originating from reverse logistics, refurbished products
have important implications for recycling and waste reduction (The Sustainability
Consortium, 2016). However, prior research has shown that they generate inferior quality
perceptions due to high uncertainty and less rigorous standards (Thierry et al., 1995;
798
IJLM
30,3

To continue reading

Request your trial