To buy green or not to buy green: Do structural dependencies block ecological responsiveness?
Despite the significant increase in interest in sustainable business
practices, decisions on switching to more environmentally friendly input
materials are understudied. In a conjoint experiment, we presented 267
Finnish manufacturing firms with an opportunity to acquire an alternative,
more ecological input material and investigated their willingness to switch
to that material. We find that in general, firms are willing to substitute
their current principal input with a more ecological alternative under
conditions of functional parity. However, such willingness is contingent on
the firm’s value creation structures. Specifically, if the products and
processes driving the firm’s value creation rely more on tangible materials
(high materiality), firms anticipate higher input-switching costs, which
leads to inertia and slows the adoption of alternative, environmentally
friendlier inputs. However, if a firm’s value creation is driven more by
intangible assets, like intellectual property and amortizable development
costs, input-switching costs appear lower. Such firms not only find it easier
to adopt ecological inputs but may also derive greater benefit from
leveraging the positive reputation effects associated with ecological
improvements. By exploring how willingness to switch to an alternative input
material is constrained by organizational structures, our findings contribute
to research on input substitution and theories of external influence, like
demand-side research, stakeholder theory, and ecological responsiveness.
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