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Article

What Makes People Pay Premium Price for Eco-Friendly Products? The Effects of Ethical Consumption Consciousness, CSR, and Product Quality

by
Zhao Qi Sun
1 and
Sung Joon Yoon
2,*
1
School of Business Administration, Shandong Women’s University, Jinan 250300, China
2
Department of Business Administration, Kyonggi University, Suwon 16227, Republic of Korea
*
Author to whom correspondence should be addressed.
Sustainability 2022, 14(23), 15513; https://doi.org/10.3390/su142315513
Submission received: 9 October 2022 / Revised: 15 November 2022 / Accepted: 15 November 2022 / Published: 22 November 2022
(This article belongs to the Special Issue Marketing Innovation and Consumer Values in Sustainable Business Strategy)
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Review Reports Versions Notes

Abstract

:
With environmental issues rapidly emerging on a global scale, a growing number of the companies are paying greater attention to the behavioral outcome of general consumers who are more or less prone to purchasing eco-friendly products. Based on this background motivation, this study takes a new theory-driven approach to understanding what makes consumers purchase eco-friendly products at a premium price. For this purpose, this study drew on the Theory of Planned Behavior (TPB) to validate the factors affecting the purchase of eco-friendly products by employing variables such as attitude toward eco-friendly companies, subjective norm, perceived behavioral control, and ethical consumption consciousness. In addition, this study adopted the social responsibility of eco-friendly companies and the quality perception of eco-friendly products as moderating variables. The results indicate that attitudes toward eco-friendly products and ethical consumption consciousness have a positive impact on intention to buy eco-friendly products at a premium price. In addition, the social responsibility of environmentally friendly companies was found to moderate the effects of attitudes of eco-friendly products and the subjective norm on the intention to pay prem ium price. The results of this study may provide strategic directions as to how companies should create their corporate images not only as an environmentally friendly brand, but also an ethically responsible company.

1. Introduction

Currently, environmental issues are widely emerging on a global scale, compelling many scholars and business practitioners to investigate all aspects of consumption activities affecting environmental preservation including energy waste [1]. Recently, to address this global issue, many studies have applied the socio-economic indicator to evaluate the socio-economic performance of the bio-economy [2]. Some other studies began to adopt the concept of circular bio-economy as an alternative model to approach eco-friendly consumption with regard to the sustainability of bio-based products [3].
Motivated by this new thrust of efforts to understand consumers’ eco-friendly behavior, this study takes a new theory-driven approach to understand what makes consumers pay premium price for eco-friendly products. To this end, this study attempts to draw on the Theory of Planned Behavior (TPB) to verify the relationship between attitude, subjective norm, perceived behavioral control, and consumer’s intention to pay premium price for eco-friendly products. In addition, this study attempts to extend this theory by adding one more variable, ethical consumption consciousness, to verify its impact on eco-friendly consumption decision. Next, this study introduces the social responsibility of eco-friendly companies and eco-friendly product quality as moderating variables to verify their effect on purchase behavior. It was conceived that it is very useful to employ previously validated TPB theory to explain consumers’ eco-friendly behavioral intentions, because this behavior involving eco-friendly purchase is intimately embedded with several precursors shaping consumer’s predisposed attitude towards eco-friendly companies, social norms about eco-friendly behavior, and the extent to which an individual perceives oneself in control of making one’s own decisions.
A perusal of the current literature reveals that there seems to be a lack of empirical attempts to explain eco-friendly behavior from a theoretical perspective. It is also remarkable that this study adds to the current literature on TPB theory by adding the ethical consumption consciousness of eco-friendly products to existing TPB model to see this improves the model’s predicting power concerning consumers’ intention to pay premium price for eco-friendly products.
This study is composed of five sections, where (1) Introduction describes the rationale and necessity for this study, (2) Literature Review and Research Hypotheses discusses previous literature relevant to central constructs used for this study’s conceptual framework and research hypotheses, (3) Research Methods and Materials describes details of research design, data collection, and data analysis, (4) Results and Discussion discusses the findings of the analytical outcome and its implications, and (5) Discussions and Implications provides theoretical and practical implications of the findings along with limitations and future research directions.

2. Literature Review and Research Hypotheses

2.1. Characteristics of Eco-Friendly Products

Since the 1970s, research on eco-friendly products has focused mainly on demographic characteristics of consumers purchasing eco-friendly products [4]. Environmentally friendly products are defined as “environmentally beneficial products that consider the environment in all aspects, such as raw materials and processes for making products” [5]. Eco-friendly products are products that provide low cost and high quality to consumers. Furthermore, eco-friendly companies are viewed as sustainability-oriented companies, which manufacture products that, using resource-saving methods, minimize environmental pollution throughout the entire process of production [6].
Previously, many studies concluded that promoting eco-friendly marketing could help predict consumers’ sustainable consumption behavior [7,8,9]. For instance, one study reported that, attitudes toward organic food could significantly affect consumers’ the intention to buy organic food [8]. It was also found that consumers are receptive to premium pricing of a company’s eco-friendly products when they trust the company and believe that the company pursues sustainable management practices [10]. Some other studies tried to understand what makes consumers form positive attitudes towards eco-friendly products. For instance, previous studies found that awareness of environmental issues contributes to increased eco-friendly attitudes [9]. Furthermore, a previous study reported that consumer norms regarding eco-friendly products leads consumers to display eco-friendly behavior [11]. In addition, other studies reported that consumers’ normative judgement towards others’ eco-friendly behavior forms the basis of eco-friendly product purchase [12,13].

2.2. Theory of Planned Behavior

2.2.1. Theoretical Premises

Theory of Planned Behavior (TPB) is a model developed by expanding the Theory of Reasoned Action (TRA) [14]. TPB explains the behavior that individuals exhibit by assuming rationality in humans’ decision making, but this theory was initially criticized for this assumption because, in reality, there are many elements that go beyond individual control, thus there is a limit to explaining these elements only with rationality. In addition, actual behavior requires money, time, opportunities, resources, etc., and not all of them can be subject to individual control [15]. To compensate this setback associated with TRA, the theory incorporated perceived behavioral control as a prerequisite for behavioral intent and combined it with behavioral attitude and subjective norms to prose the three as having a direct effect on actual behavior as well as behavioral intention [14,16].
Attitude and perceived behavioral control are factors that explain individual characteristics, and subjective norm may be viewed as a social factor. These three components (attitude, subjective norm, and perceived behavioral control as predictors of behavioral intention) have been utilized by many in previous research on numerous social science disciplines in the context of an individual’s decision-making process [17]. In particular, since there are many uncertainties in targeting specific behavior that individual is to perform, many previous studies have found that perceived behavioral control plays a prominent role in explaining an environmental factor that is not in an individual’s direct control [18,19]. TPB has received a wide recognition from many fields based on a systematic conceptual framework to explain causal factors for human behavior [20,21]. In general, TPB was proven more useful in predicting behavioral intentions than actual behavior [22].
TPB touches not only on the causal relationship between behavior-related variables [23,24], but also on new variables (i.e., past behavior experience, prior knowledge, etc.) [16,25,26]. In view of the theoretical strengths presented above, this study attempts to predict the intention to pay premium price for eco-friendly products using the theory of planned behavior.

2.2.2. Extended Theory of Planned Behavior

It has been reported in previous studies that adding new variables or modifying paths to improve the explanatory power of variables of human behavior or behavioral intent have been proven to improve the understanding or explanatory power of TPB’s original model [15]. Introducing additional variables into the TPB, or expanding or deepening the theory through path modification enables deeper expansion of theoretical premises [27]. Some researchers have recognized limitations in predicting behavioral intentions with only three variables in TPB, and have improved explanatory power by adding new variables [14,17]. This practice is particularly widely used in research that verifies the structural relationship among factors affecting consumers’ purchase behavior. For example, some studies have applied the Extended Theory of Planned Behavior (ETPB) using additional variables to confirm the superiority of ETPB over TPB [28,29]. Several researchers have proposed additional factors such as involvement, prior knowledge, motivation, and belief to improve the explanatory power [16,30,31].

2.3. Intention to Pay Premium Price

Price premium is defined as “a price that a consumer pays excessively over a fair price when recognizing the true value of a product” [32]. Premium price is one of several ways to evaluate products from the perspective of consumers [33]. Traditional economics assume that premium price occurs due to information imbalance. The seller who delivers products with high quality can demand a high price [33]. Premium price also can accrue perceived value through high trust in consumers who would otherwise pay unnecessary costs due to consumers’ lack of information [34].
Premium pricing also demonstrates the psychological mechanism involved in consumers’ assessment of a company in terms of their attitude, attribution, and cognition regarding companies’ social responsibility activities [35]. Recent research shows that if consumers shop in public places where many consumers can watch, they tend to buy more expensive green products than ordinary products in order to signal to others that they are environmentally friendly consumers [36]. Consumers who choose green products get psychological rewards by emitting a conspicuous signal that they are keenly aware of environmental protection and have the ability to pay extra for the environmental protection and society [37].

2.4. Research Hypotheses

2.4.1. Attitude of Eco-Friendly Product and Intention to Pay Premium Price

Attitude refers to a ‘learned tendency to generally respond favorably or unfavorably to a specific object’ [38]. According to theory of reasoned action, consumer behavior is subject to attitudes because it reflects the mental structure of consumer attitudes [31]. The theory further posits that human intention to perform specific behaviors is determined by human attitudes [39]. Predicting and changing consumers’ attitudes toward sustainability and stability in eco-friendly marketing is a key factor in predicting consumer behavior in marketing discipline [7]. According to a study by Kang and Jeong (2008), negative attitudes toward organic food tend to lower the intention to consume organic food [8]. Another study found that the premium price of the company is effective only when consumers trust the company and have more positive attitude toward the company than consumers who do not trust the company [10]. Knowledge and awareness of environmental issues can increase the formation of eco-friendly attitudes, and in general, increased eco-friendly attitudes lead to favorable purchasing behavior for eco-friendly companies [9,40,41,42].
Therefore, the attitude towards eco-friendly behavior may be viewed to have a positive effect on behavioral intention. Thus, based on the results of previous studies, the following hypothesis is proposed for the positive relationship between attitude of eco-friendly products and intention to pay premium price.
 Hypothesis 1 (H1). 
Attitude of eco-friendly product will have a positive effect on intention to pay a premium price.

2.4.2. Subjective Norm of Eco-Friendly Product and Intention to Pay Premium Price

Subjective norm refers to the degree of perceived social pressure on whether or not to perform a specific action [14]. Thus, norm is an important factor in understanding eco-friendly behavior by consumers, which contains a normative notation [43]. Eco-friendly norms refer to the degree of perception of others’ opinions and acceptance of others’ opinions about eco-friendliness in performing individual actions, and the degree to which one is willing to comply with the collective opinion formed by reference groups in the process of performing actions [44,45]. So far, many previous studies reported that eco-friendly norms are an important factor for consumers to engage eco-friendly behavior [11]. Eco-friendly norms work because the basis of judging one’s behavior being right or wrong is affected by the people around one [12,13].
People adhere to eco-friendly norms with a view to obtaining approval from by their reference groups or others important to them [12,46]. If one believes that eco-friendly norms guide individuals to perform eco-friendly behaviors, and if one agrees that such behaviors are important to your society or others, and then one will perform eco-friendly behaviors due to social pressure [47,48]. Furthermore, many previous studies confirmed that norms have a direct effect on behavior or intention [13,49].
Based on the results of previous studies on the effects of norms on behavior, we can expect that the subjective norms concerning eco-friendly products will lead one to comply with the collective views of reference groups and press one to pay the premium price for eco-friendly products. Hence, this study proposes the following hypothesis.
 Hypothesis 2 (H2). 
Subjective norm will have a positive effect on intention to pay a premium price for eco-friendly product.

2.4.3. Perceived Behavioral Control of Eco-Friendly Product and Intention to Pay a Premium Price

Perceived behavioral control assumes that consumers have resources, such as time, money, and technology, that they need to perform an action, and the more they feel that there is no obstacle or difficulty in performing the action, the more they perceive control over their actions [50]. Perceived behavioral control refers to how much one perceives having control over one’s behavior [51]. In other words, it refers to the degree to which one perceives a task as easy or difficult to perform and considers it as a factor that affects behavioral intention [52]. Perceived behavioral control is a concept that encompasses self-efficacy and controllability, which indicates the degree to which an individual’s actions take place in his control [14]. Perceived behavioral control presumes the ability and confidence that an individual needs to perform an action easily. Besides this self-perceived control, there must be external resources, such as money and time, that should play a role in promoting an action [53].
Even if consumers have a favorable attitude and subjective norms for performing behavior, if they do not possess sufficient control over the behavior, this can decrease their intention to act [54].
Judging from these previous studies, perceived behavioral control would facilitate an individual’s decision to purchase eco-friendly products. Furthermore, propelled by perceived easiness of the task backed up by his own ability and confidence, the individual would be susceptible to paying a higher price for eco-friendly products. Based on this reasoning, this study proposes a research hypothesis that predicts a positive relationship between the perceived behavioral control level for eco-friendly products and the intention to pay the premium price for eco-friendly products.
 Hypothesis 3 (H3). 
Perceived behavioral control about eco-friendly product will have a positive effect on intention to pay a premium price.

2.4.4. Ethical Consumption Consciousness and Intention to Pay a Premium Price

Ethical consumption refers to consumption that embraces consideration of individual interest and social interest simultaneously and includes consumption behavior that fulfills social responsibility based on individual consumers’ moral beliefs [55]. This kind of consumption expands the scope of consumption behavior by considering not only product quality, but also production process. In other words, consumers not only rely on efficiency and rationality, but also consider social responsibility in product choice. These consumers might have ethical consumption mindedness or consciousness because they are aware of the importance of socially responsible ethical consumption behavior, which includes paying higher price for the eco-friendly products.
Previous research on ethical consumption has expanded consumption behaviors, such as purchasing, using, disposing, and resource allocating behaviors to include ethical investment, sharing, and donation activities [55]. The concept of ethical consumption has received wide scholarly attention by previous research. For instance, a study of specific aspects of ethical purchase behavior connected environmentally friendly consumption behavior with social consciousness on solving real problems, such as environmental pollution and resource depletion [56].
This study, in an attempt to predict the intention to pay premium prices for eco-friendly products, introduced the ethical consumption consciousness factor as an additional component of the planned behavior model. Based on rationale discussed earlier, it is plausible to predict a positive relationship between ethical consumption consciousness and the intention to pay premium prices for eco-friendly products. Thus, we propose the following hypothesis.
 Hypothesis 4 (H4). 
Ethical consumption consciousness will have a positive effect on intention to pay a premium price for eco-friendly products.

2.4.5. Eco-Friendly Company’s Social Responsibility

Corporate social responsibility (CSR) was defined as “corporate activities related to social obligations of the companies, exclusive of economic activities which is a fundamental company function” [57,58]. Consumers reward companies that faithfully implement corporate social responsibility, and the most apparent way to show this appreciation is to buy the products at a higher price. Conversely, companies that behave unethically may lower their corporate reputation [59]. Previous research reported that the environmentally friendly perception could exert a big influence on consumers, and that high environmental awareness results in a higher purchase intention [60]. It was further found that the sales of products that do not protect the environment decreased, and sales of green products increased [61].
What is notable in previous finding is that corporate social responsibility activities not only involve psychological factors such as cognition, attribution, and attitude, but also affect behavioral decisions such as premium prices, purchase intention, customer loyalty, and word of mouth [35]. Consumers who trust enterprises with good social responsibility activities have a favorable evaluation of the enterprise and purchase intention than consumers who do not trust them [35]. Because the ultimate goal of any company is to increase its corporate competitiveness through consumers’ trust and loyalty, it is very important to exhibit their commitment to social responsibility, and one of the ways to accomplish this goal is becoming an eco-friendly company. Previous research reported that if companies successfully convey the results obtained through environmental R&D and investment, their sales immediately increased [62]. In addition, consumers reported in a survey that 95% felt serious about the environment, valued environmental responsibility, and linked environmental responsibility activities to the purchase intention of eco-friendly products [63].
Based on the review of previous findings discussed so far, it seems clear that corporate social responsibility activities are a critical factor that positively reinforces the attitudinal formation of eco-friendly products, and has a positive effect on premium pricing. Therefore, this study proposes that the consumers’ perception of social responsibility activities of eco-friendly companies will strengthen the relationship between consumers’ behavioral antecedents (attitude, subjective norms, perceived behavior control, and ethical consumption consciousness) and their intention to pay a premium price. Therefore, this study proposes the following hypothesis.
 Hypothesis 5a (H5a). 
Eco-friendly company’s perceived social responsibility will moderate the relationship between attitude of eco-friendly product and intention to pay a premium price.
 Hypothesis 5b (H5b). 
Eco-friendly company’s perceived social responsibility will moderate the relationship between subjective norm of eco-friendly product and intention to pay a premium price.
 Hypothesis 5c (H5c). 
Eco-friendly company social responsibility will moderate the relationship between perceived behavioral control of eco-friendly product and intention to pay a premium price.
 Hypothesis 5d (H5d). 
Eco-friendly company’s perceived social responsibility will moderate the relationship between ethical consumption consciousness and intention to pay a premium price.

2.4.6. Eco-Friendly Product’s Quality Perception

Consumers do not consider only the composition or physical characteristics of the product when evaluating its overall quality. Consumers associate quality with sensory factors (color, sound, scent, etc.) and perceptual factors (price–quality correlation, brand awareness, brand image, store image, etc.) [64]. The quality of products perceived by consumers is formed by utilitarian benefits, and if this pragmatic issue is satisfied, it has a positive effect on consumer satisfaction, otherwise it causes dissatisfaction [65].
Previous studies also found that perceived quality has a significant effect on the formation of purchasing behavior [66]. Furthermore, previous research found that service quality is a leading indicator of customer satisfaction, and customer satisfaction has a positive effect on purchase intention [65]. In another similar study, researchers found that the rise of perceived quality increases customer satisfaction and affects purchase behavior [67].
There are some previous studies done on the effect of perceived quality on the purchase of eco-friendly products from the value-specific point of view. For instance, consumers intend to purchase eco-friendly foods even if they are about 3% higher than the price of generic products [68]. Similarly, another study found that U.S. consumers intend to purchase eco-friendly fruits even if they are about 5% more expensive [69]. These studies illustrate that eco-friendly companies can improve consumers’ perception of product quality, and consequently increase their desire to buy products through increased consumer awareness.
Based on these previous study results, it is arguable that consumers who perceive positive product quality of the eco-friendly products will be more favorable in their evaluations of the product (i.e., attitude, subjective norm, perceived behavioral control, and ethical consumption consciousness) and thus have stronger intention to pay a premium price for eco-friendly products. Therefore, based on this reasoning, this study predicts that the quality perception of eco-friendly products will positively moderate the relationship between the antecedents of eco-friendly products attitude-formation and the intention to pay premium prices. Thus, the following hypothesis is proposed.
 Hypothesis 6a (H6a). 
Quality perception of eco-friendly product will moderate the relationship between attitude of eco-friendly product and intention to pay premium price.
 Hypothesis 6b (H6b). 
Quality perception of eco-friendly product will moderate the relationship between subjective norm and intention to pay premium price.
 Hypothesis 6c (H6c). 
Quality perception of eco-friendly product will moderate the relationship between perceived behavioral control and intention to pay premium price.
 Hypothesis 6d (H6d). 
Quality perception of eco-friendly product will moderate the relationship between ethical consumption consciousness and intention to pay premium price.

3. Research Methods and Materials

3.1. Research Model

To conduct an empirical analysis of this study, a research model was built based on the research hypotheses presented earlier and shown in Figure 1. To elaborate on the research model’s theoretical foundation, the study built its basic theoretical framework on the theory of planned behavior (TPB) which was originally developed by Fishbein and Ajzen (1975), which is a cognitive information processing model designed to predict behavioral intention, and consists of three components: (1) attitude, (2) subjective norm, and (3) perceived behavioral control. This paper’s conceptual framework expanded this model to embrace one’s ethical consumption consciousness in an attempt to predict consumers’ intention to pay premium price for eco-friendly products. In addition, this study incorporated two moderating variables: (1) perception of CSR activities and (2) perceived quality of eco-friendly products.

3.2. Scale Measures and Operational Definition

In this study, an eco-friendly product is defined to encompass the concept of green products, low-carbon products, well-being products, and organic products. Survey respondents were given some real-life examples of eco-friendly products, such as “eco-friendly foods, eco-friendly cars, eco-friendly solar power systems (e.g., solar lighting), and ‘low-carbon certified household products (e.g., detergent)” for illustration purpose. The operational definition of the variables used in this study was modified to suit the purpose of this study as shown in Table 1.

3.3. Data Collection

In this study, in order to measure the study variables, a questionnaire was prepared by modifying the measurement scales validated by previous studies. The questionnaire for each variable used 7-point Likert scale, as shown in Table 1. This study collected survey data from university students (undergraduate and graduate) located in and near a major Korean university. We used a judgmental sampling method because we screened the survey participants to select those who answered yes to a question of whether they have previously purchased eco-friendly products. The reason for selecting university students as survey respondents is that they have a relatively large amount of eco-friendly knowledge. We have added three more references in support of the claim that university students possess a high level of environmental consciousness below [75,76,77]. 300 questionnaires were distributed, out of which 253 copies were collected, and 232 copies were finally used for analysis, excluding non-response questionnaires and unreliably answered questionnaires. Although the use of university students is justifiable based on previous study finding, it is, however, possible that this sampling method can potentially limit the generalizability of the findings, compared to the results of a survey done on wider spectrum of the public.

4. Results and Discussion

4.1. General Characteristics of the Sample Respondents

In order to understand the demographic characteristics of 232 participants after the questionnaire survey, the study conducted frequency analysis on gender, age, monthly income, occupation, and final education. The results are shown in Table 2.

4.2. Results of Validity and Reliability Tests

In this study, the results of exploratory factor analysis on the study measures are reported in Table 3. The KMO value was 0.94, indicating that the selection of variables was appropriate. The total variance explained was 75.28%, which was statistically acceptable level. The commonality of variables representing the ratio explained by the extracted factors was high at 0.5 or more, thus indicating acceptable level of convergent validity.
The reliability analysis of the extracted factors revealed Cronbach’s alpha coefficients ranging between 0.83 and 0.95, and the ethical consumption consciousness was parted into two factors. According to the survey, one factor indicates the intention to participate voluntarily, and another factor may be named as the ethical intention to consume. Accordingly, there is appropriate level of internal consistency among the factored variables. Based on the result of exploratory factor analysis of the items, the measures have construct validity, as the factor loadings are all 0.50 or higher.

4.3. Correlations

The correlation coefficients between the variables used in this study were all positive (+), and the coefficients were found to be significant at the 0.05 significance level. The results of the correlation analysis are shown in Table 4. This indicates that the theoretical validity based on the direction and effectiveness of the relationship is acceptable for hypothesis testing.

4.4. Hypotheses Verification

In this study, the causal relationship and moderating effect of the variables used in the research model are verified using multiple regression analysis. First, the results of multiple regression analysis to analyze the predictive variables’ effect on intention to pay premium price are shown in Table 5. Attitudes toward eco-friendly products (beta = 0.34, t = 4.61, p = 0.00) was found to have a significant effect at 0.05 level. Therefore, the attitude towards eco-friendly products was proven to be an important factor in the intention to pay premium price. Thus, H1 predicting that attitude of eco-friendly product will have a positive effect on intention to pay premium price is adopted. The subjective norm about eco-friendly products is (beta = 0.04, t = 0.63, p = 0.53) and has insignificant effect at the 0.05 significance level. Therefore, the H2 stating that the subjective norm of an eco-friendly product will have a positive effect on intention to pay a premium price is rejected. Perceived behavioral control of eco-friendly products (beta = 0.04, t = 0.82, p = 0.41) was insignificant at the 0.05 significance level. Therefore, H3 predicting that perceived behavioral control would have a positive effect on intention to pay premium price is rejected. Ethical consumption consciousness (beta = 19, t = 3.20, p = 0.00) was found to have a significant effect at 0.05 level. Specifically, the intention to participate in ethical consumption (beta = 0.25, t = 4.46, p = 0.00) and intention to consume (beta = 0.19, t = 3.30. p = 0.00) were both found to have a significant effect on intention to pay premium priceat 0.05 level.
Table 6 is the result of testing whether the eco-friendly company’ social responsibility plays a moderating role between 5 antecedent variables (attitude, subjective norm, perceived behavioral control, intention to participate voluntarily, ethical intention to consume) and premium price intention. R2 increased to 48% in Model 1, 49% in Model 2, and 54% in Model 3. The significance probability of F value’s change in the third stage was 0.00 and was significant at the 0.05 significance level. The interaction variable between attitude and eco-friendly company social responsibility (β = −0.26, p < 0.05) was statistically significant, and it can be concluded that the eco-friendly company social responsibility moderates the relationship between the attitude and the intention to pay premium price of eco-friendly products. Accordingly, 5a is adopted. The interaction variables between subjective norm and eco-friendly company social responsibility (β = 0.26, p < 0.05) were statistically significant, and thus eco-friendly company social responsibility was found to moderate the relationship between the subjective norm and the intention to pay a premium price for eco-friendly products. Accordingly, 5b is adopted. The interaction variable between the perceived behavioral control and the eco-friendly company social responsibility (β = −0.12, p > 0.05) is statistically insignificant, thus the eco-friendly company’s social responsibility does not moderate the relationship between perceived behavioral control and intention to pay premium price of eco-friendly products. Accordingly, 5c was rejected. The interaction variable between ethical intention to consume and eco-friendly company social responsibility (β = 0.17, p < 0.05) was found to be statistically significant, thus eco-friendly company’s social responsibility moderates the relationship between ethical intention to consume and intention to pay premium price of eco-friendly products. The interaction variable between intention to participate voluntarily and eco-friendly company’s social responsibility (β = 0.10, p > 0.05) is statistically insignificant, and thus eco-friendly company’s social responsibility does not moderate the relationship between intention to participate voluntarily and intention to pay premium price of eco-friendly products. Accordingly, hypothesis 5d is partially adopted.
Table 7 shows the result of testing whether the eco-friendly products’ quality perception plays a moderating role between antecedent variables (attitude, subjective norm, perceived behavioral control, ethical intention to consume, intention to participate voluntarily) and intention to pay premium price for eco-friendly products. R2 increased to 48% in Model 1, 49% in Model 2, and 52% in Model 3. Since the significance probability of F-value’s change amount in the third stage was 0.01, it was significant at the 0.05 significance level. The interaction variable between attitude and eco-friendly product quality perception (β = −0.30, p < 0.05) was statistically significant, and it can be judged that eco-friendly products’ quality perception moderates the relationship between attitude and intention to pay premium price of eco-friendly products. Accordingly, 6a is adopted. The interaction variable between subjective norm and eco-friendly product quality perception (β = 0.25, p < 0.05) was statistically significant, thus the eco-friendly product quality perception was confirmed to moderate the relationship between the subjective norm and the intention to pay premium price. Accordingly, 6b is adopted. The interaction variable between perceived behavioral control and eco-friendly quality perception (β = −0.02, p > 0.05) is statistically insignificant, and this confirms that eco-friendly perception of product quality does not moderate the relationship between perceived behavioral control and intention to pay premium price. Accordingly, 6c is rejected. The interaction variable between ethical intention to consume and eco-friendly product quality perception (β = 0.17, p < 0.05) was found to be statistically significant, thus perception of eco-friendly products’ quality perception moderates the relationship between ethical intention to consume and intention to pay premium price. The interaction variable between intention to participate voluntarily and eco-friendly products’ quality perception (β = 0.04, p > 0.05) is statistically insignificant, thus eco-friendly products’ quality perception does not moderate the relationship between intention to participate voluntarily and intention to pay premium price. Accordingly, hypothesis 6d is partially adopted.

5. Conclusions and Implications

5.1. Summary and Discussions on Findings

The results of verifying the hypothesis derived in this study are summarized in Table 8.
The finding on the effect of perceived product quality as a moderator on eco-friendly purchase intention may find its support from some previous studies. For instance, consumers intend to purchase eco-friendly foods even if they are about somewhat higher than the price of generic products [68,69]. However, these studies did not connect quality perception with specific aspects of consumers’ attitudes or norms about buying eco-friendly products, which this study did.

5.2. Theoretical Implications

The study findings suggest important theoretical implications. The theoretical implications of this study are as follows. The verification of this study’s research hypotheses showed that subjective norms and perceived behavioral control did not affect premium payment intention. This result demonstrates that the attitudinal evaluation of the purchase behavior of eco-friendly products is more important than social influence or individual perceived behavior control in consumers’ eco-friendly consumption decisions. In other words, the attitudinal, subjective evaluation of behavior itself is more significant than one’s social norm or one’s perceived control over eco-friendly purchase behavior.
This study verified the influence of ethical consumption consciousness as a valid component of an extended theory of planned behavior. This result suggests that consumers consider ethical consumption values to be an important factor in eco-friendly consumption decisions. In other words, the perception of voluntarily participating in the purchase of eco-friendly products or participating in ethical consumption contribute to increasing consumers’ behavioral intention to pay premium price for eco-friendly products.
This study found that the degree of corporate social responsibility perception and perceived quality perception play a moderating role in the attitude of eco-friendly products and subjective norms in premium payment intention. This result illustrates that not only the degree of awareness of social responsibility but also the perceived quality of the eco-friendly products is an important factor in a consumer’s decision pay premium prices. This result provides useful theoretical implications in that the consumers’ decision to the purchase eco-friendly products at a premium price requires not only a company’s corporate to have an eco-friendly image, but also practical concern for product quality. This particular revelation contains important research implications for researchers in that the intention to pay premium price requires evaluations of not only social factors, but also pragmatic concern for product quality. Future studies need to investigate how consumers give these two factors different weights. It seems a desirable approach for researchers to investigate the differences in the influence of these two variables using different product categories.

5.3. Practical Implications for Sustainable Business Strategies

In addition to the theoretical implications presented above, the results of this study provide potentially important sustainable business implications that can be used in practice. The influence of ethical consumption consciousness proved to be a valid component of extended theory of planned behavior. This particular finding indicates that consumers consider ethical consumption value as part of eco-friendly consumption decisions. To elaborate on this finding, the perception of voluntarily participating in eco-friendly product purchases, and participating in ethical consumption influenced intention to pay premium for eco-friendly products. Eco-friendly companies can use this finding to develop sustainable business strategies. For instance, companies can mount publicity intensive communication campaigns that are geared toward enhancing corporate image as a socially responsible company. One way to effectively achieve this goal would be to develop an integral theme of the publicity-heavy communication that places an emphasis on inviting the consumers to join in their company’s efforts to implement sustainable business practices in the entire process of manufacturing, sales, and distribution of products.
Another more practical way to develop a sustainable business strategy would be to convince the customers to believe that the company produces high quality products. Previous research showed that just appealing to the socially responsible image of a firm while having poor product quality fails to earn customers’ loyalty [5]. Therefore, it seems a desirable sustainable business strategy for an eco-friendly company to develop a socially responsible image which is backed up by advertisements or promotions designed to enhance the customers’ perception of the company’s products having high quality.
Finally, eco-friendly companies need to implement a sustainable strategy by encouraging the purchase of eco-friendly products and connect this purchase behavior with a socially conscious act of ethical consumption. A previous study found that subjective norm plays a salient role in causing people to perform ethical consumption [78]. Therefore, eco-friendly companies need to develop a sustainable communication campaign that is intent on stimulating consumers’ norms about buying eco-friendly products and connect this with an act of ethical consumption.

5.4. Recommendations and Limitations

It is possible for future researchers to introduce the concept of consumer citizenship to explain the mechanism related to how ethical consumption values influence eco-friendly behavior. Previous studies have found that consumer citizenship is responsible for exhibiting eco-friendly behavior [79,80] and ethical consumption behavior [81,82]. In addition, customer citizenship strongly affected CSR perception [83,84]. Therefore, future studies need to explore whether customer citizenship, through mediation of CSR perception, influences consumers’ intention to pay premium for eco-friendly products.
This study contains a few limitations as follows. First, there is a limit to the generalization of the study findings in that this study used university students (undergraduate and graduate). Therefore, future studies are recommended to improve the generalizability of the study by conducting research on a wider population. Second, this study broadly defined eco-friendly products, citing low carbon products, and well-being products as eco-friendly products. Future research may be able to gain a more focused result if it investigates separate product category of eco-friendly products. Third, future studies may add more person-specific traits such as demographic variables (income, age, gender, etc.) and psychographic variables (personality and motivation).

Author Contributions

Conceptualization, Z.Q.S.; methodology, Z.Q.S.; formal analysis, Z.Q.S.; conceptualization, S.J.Y.; supervision. All authors have read and agreed to the published version of the manuscript.

Funding

This research received no external funding.

Institutional Review Board Statement

Not applicable.

Informed Consent Statement

Not applicable.

Data Availability Statement

All data generated and analyzed during this study are included in this article.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 14 15513 g001 550
Figure 1. Research model.
Figure 1. Research model.
Sustainability 14 15513 g001
Table
Table 1. Measures and Operational Definitions.
Table 1. Measures and Operational Definitions.
FactorMeasurementItemReference
Attitude of eco-friendly productOverall level of perceptions regarding eco-friendly product formed by previous knowledge and awareness.11Yang (2014) [70]
Subjective NormPerception of other people’s opinions on and the degree of acceptance of eco-friendly purchase behavior.4Yang (2014) [70]
Perceived Behavioral ControlThe level of control over action due to self-perception regarding having resources, such as time, money, and time, which facilitate a targeted behavior.3Ajzen(1988) [50]
Ethical Consumption ConsciousnessThe level of awareness toward ethical consumption behaviors based on social and ethical norms.5Karp (1996) [71], Kim (2012) [72]
Intention to Pay Premium PriceThe degree of willingness to pay a higher price for a product purchase.3Castaldo et al. (2009) [73]
Eco-friendly Company’s Social ResponsibilityThe level at which consumers expect a company to perform social charity activities, regional and cultural events, environmental protection, and economic responsibility.12Kim et al. (2005) [74]
Quality Perception of Eco-friendly Product’sThe perceived quality level of an eco-friendly product is formed by the subjective judgment of the consumer.3Han (2013) [64]
Table
Table 2. Demographic characteristics of the sample respondents.
Table 2. Demographic characteristics of the sample respondents.
VariableCategoryNo.%VariableCategoryNo.%
GenderMale10244AgeUnder 2083.4
Female13056Under 3020186.6
For education levelHigh school graduates15667.2Under 40177.3
University graduates5423.3Under 5062.6
Graduate degree229.5OccupationStudent20487.9
Monthly incomeBelow 2 million won (approximately $700)19784.9Office workers156.5
2 million won–3 million won229.5Service professionals41.7
3 million won–4 million won93.9Managers20.9
4 million won–5 million won31.3Others73
Over 5 million won10.4Total232100
Table
Table 3. Reliability and validity of measures.
Table 3. Reliability and validity of measures.
FactorVariables ItemsComponentsExtraction
12345678
AttitudeAttitude 40.830.010.050.080.020.15−0.110.100.77
Attitude 70.800.08−0.04−0.06−0.080.060.07−0.030.71
Attitude 20.77−0.05−0.120.100.160.13−0.080.010.77
Attitude 60.750.11−0.090.050.12−0.02−0.04−0.080.77
Attitude 30.740.030.120.03−0.080.27−0.030.010.75
Attitude 10.740.07−0.040.030.14−0.02−0.02−0.040.72
Attitude 110.730.050.060.02−0.03−0.150.17−0.080.72
Attitude 90.700.020.20−0.03−0.11−0.040.25−0.040.73
Attitude 50.70−0.010.040.140.07−0.050.07−0.080.72
Attitude 80.680.06−0.010.030.08−0.040.11−0.140.73
Attitude 100.520.070.260.00−0.09−0.050.25−0.210.69
Eco-friendly
Company
Social
Responsibility		Responsibility 5−0.020.790.09−0.01−0.010.05−0.08−0.020.65
Responsibility 12−0.020.760.160.030.020.12−0.040.040.71
Responsibility 10.050.74−0.160.10−0.07−0.100.16−0.250.8
Responsibility 2−0.080.73−0.160.15−0.08−0.080.19−0.340.81
Responsibility 40.130.73−0.100.050.12−0.090.01−0.130.74
Responsibility 30.040.70−0.150.08−0.09−0.050.12−0.340.77
Responsibility 110.030.700.190.06−0.060.170.010.160.7
Responsibility 80.080.690.24−0.06−0.020.160.020.040.73
Responsibility 90.120.68−0.01−0.030.120.020.060.120.6
Responsibility 70.090.660.08−0.100.110.29−0.020.070.76
Responsibility 100.050.660.130.140.080.17−0.080.220.69
Responsibility 60.170.64−0.08−0.010.230.06−0.040.060.67
Intention to participate voluntarilyConsciousness 50.100.080.760.080.08−0.080.09−0.150.8
Consciousness 40.080.150.710.070.21−0.170.10−0.130.8
Perceived Behavioral ControlControl 2−0.07−0.070.100.92−0.060.13−0.11−0.070.81
Control 30.01−0.010.020.9−0.040.000.070.050.82
Control 10.140.11−0.130.730.16−0.170.060.110.76
ethical intention to consumeConsciousness 2−0.090.020.110.010.870.090.02−0.090.82
Consciousness 3−0.060.050.130.010.830.050.11−0.130.84
Consciousness 10.160.06−0.080.080.75−0.120.060.010.77
Eco-friendly Product Quality PerceptionQuality Percept 20.090.16−0.050.040.050.760.09−0.050.83
Quality Percept 10.010.20−0.120.010.100.760.07−0.110.82
Quality Percept 30.130.08−0.090.09−0.060.720.19−0.120.77
Subjective NormNorm 4−0.110.030.330.06−0.090.180.72−0.010.73
Norm 30.200.010.000.070.230.050.690.100.83
Norm 20.24−0.02−0.110.030.270.090.630.070.78
Norm 10.29−0.06−0.130.050.250.130.51−0.040.71
Intention to Pay
Premium Price		Intention to Pay 20.17−0.060.090.040.240.18−0.06−0.680.80
Intention to Pay 10.20−0.090.150.070.160.16−0.06−0.670.76
Intention to Pay 30.100.190.240.030.130.060.00−0.610.75
Eigenvalue17.73.852.011.831.631.451.241.08KMO. 0.94 Approx. Chi-Square 375.91 sig.0.00
Variance (%)43.369.394.904.473.983.533.032.63
Total variance explained (%)43.3652.7557.6562.1266.1069.6372.6675.28
Cronbach a0.950.950.900.830.890.910.900.89
Table
Table 4. Correlations of latent variables.
Table 4. Correlations of latent variables.
Division12345678
Attitude1
Norm0.71 **1
Control0.43 **0.37 **1
Intention to consume0.56 **0.52 **0.35 **1
Intention to participate0.46 **0.44 **0.28 **0.41 **1
Intention to Pay0.62 **0.52 **0.35 **0.53 **0.52 **1
Social Responsibility0.58 **0.47 **0.36 **0.41 **0.41 **0.48 **1
Quality Perception0.55 **0.48 **0.28 **0.40 **0.28 **0.42 **0.63 **1
Note: ** Sig (p) < 0.05.
Table
Table 5. Regression Analysis on Hypothesis Testing.
Table 5. Regression Analysis on Hypothesis Testing.
Unstandardized CoefficientsStandardized CoefficientstSig.
BStd. ErrorBeta
(Constant)0.080.34 0.230.82
Attitude0.410.090.344.610.00
Subjective Norm0.050.080.040.630.53
Perceived Behav Control0.050.060.040.820.41
Ethical Intention
to consume		0.200.060.193.200.00 ***
Intention to participate0.210.050.254.460.00 ***
Dependent variable: Intention to Pay
Note: *** Sig (p) < 0.001.
Table
Table 6. Test of hierarchical moderated regression for Eco-friendly Company Social Responsibility.
Table 6. Test of hierarchical moderated regression for Eco-friendly Company Social Responsibility.
Model 1Model 2Model 3
Variableβtpβtpβtp
Attitude (A)0.344.610.00 ***0.313.920.00 ***0.283.470.00 ***
Norm (B)0.040.630.530.040.550.580.081.150.25
Control (C)0.040.820.410.030.630.53−0.03−0.490.63
Ethical Intention
to consume (D)		0.193.200.00 ***0.193.110.00 ***0.274.320.00 ***
Intention to participate (E)0.254.460.00 ***0.234.150.00 ***0.193.420.00 ***
Social Responsibility (M) 0.101.600.110.122.030.04 *
(A) × (M) −0.26−2.650.01 *
(B) × (M) 0.262.960.00 ***
(C) × (M) −0.12−1.870.06
(D) × (M) 0.172.130.04 *
(E) × (M) 0.101.470.14
F-value42.0135.6823.09
R20.480.490.54
Change of R20.470.470.51
Change of p0.000.110.00
Notes: * p < 0.05; *** p < 0.001.
Table
Table 7. Test of Hierarchical Moderated Regression for Eco-friendly Products’ Quality Perception.
Table 7. Test of Hierarchical Moderated Regression for Eco-friendly Products’ Quality Perception.
Model 1Model 2Model 3
Variableβtpβtpβtp
Attitude (A)0.344.610.00 ***0.314.060.00 ***0.263.230.00 ***
Norm (B)0.040.630.530.030.430.670.081.140.25
Control (C)0.040.820.410.040.790.430.030.590.55
Ethical Intention to consume (D)0.193.20.00 ***0.193.060.00 ***0.253.980.00 ***
Intention to participate (E)0.254.460.00 ***0.254.480.00 ***0.213.730.00 ***
Quality Perception (M) 0.081.390.170.122.030.04 *
(A) × (M) −0.3−2.760.01 *
(B) × (M) 0.252.720.01 *
(C) × (M) −0.02−0.320.75
(D) × (M) 0.172.150.03 *
(E) × (M) 0.040.630.53
F-value42.0135.4721.85
R20.480.490.52
Change of R20.470.470.50
Change of p0.000.170.01
Notes: * p < 0.05; *** p < 0.001.
Table
Table 8. Summary of Hypothesis Tests.
Table 8. Summary of Hypothesis Tests.
Research HypothesesOutcome
H1Attitude of eco-friendly product will have a positive effect on intention to pay a premium price.Accept
H2Subjective norm will have a positive effect on intention to pay a premium price for eco-friendly product.Reject
H3Perceived behavioral control about eco-friendly product will have a positive effect on intention to pay a premium price.Reject
H4Ethical consumption consciousness will have a positive effect on intention to pay a premium price for eco-friendly products.Accept
H5aPerceived social responsibility will moderate the relationship between attitude of eco-friendly product and intention to pay a premium price.Accept
H5bPerceived social responsibility will moderate the relationship between subjective norm and intention to pay a premium price.Accept
H5cPerceived social responsibility will moderate the relationship between perceived behavioral control and intention to pay a premium price.Reject
H5dPerceived social responsibility will moderate the relationship between ethical consumption consciousness and intention to pay a premium price.Accept
H6aQuality perception of eco-friendly product will moderate the relationship between attitude of eco-friendly product and intention to pay premium price.Accept
H6bQuality perception of eco-friendly product will moderate the relationship between subjective norm and intention to pay premium price.Accept
H6cQuality perception of eco-friendly product will moderate the relationship between perceived behavioral control and intention to pay premium price.Reject
H6dQuality perception of eco-friendly product will moderate the relationship between ethical consumption consciousness and intention to pay premium price.Accept
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Sun, Z.Q.; Yoon, S.J. What Makes People Pay Premium Price for Eco-Friendly Products? The Effects of Ethical Consumption Consciousness, CSR, and Product Quality. Sustainability 2022, 14, 15513. https://doi.org/10.3390/su142315513

AMA Style

Sun ZQ, Yoon SJ. What Makes People Pay Premium Price for Eco-Friendly Products? The Effects of Ethical Consumption Consciousness, CSR, and Product Quality. Sustainability. 2022; 14(23):15513. https://doi.org/10.3390/su142315513

Chicago/Turabian Style

Sun, Zhao Qi, and Sung Joon Yoon. 2022. "What Makes People Pay Premium Price for Eco-Friendly Products? The Effects of Ethical Consumption Consciousness, CSR, and Product Quality" Sustainability 14, no. 23: 15513. https://doi.org/10.3390/su142315513

APA Style

Sun, Z. Q., & Yoon, S. J. (2022). What Makes People Pay Premium Price for Eco-Friendly Products? The Effects of Ethical Consumption Consciousness, CSR, and Product Quality. Sustainability, 14(23), 15513. https://doi.org/10.3390/su142315513

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