Download as pdf or txt
Download as pdf or txt
You are on page 1of 19

This article was downloaded by: [FU Berlin]

On: 07 May 2015, At: 04:59


Publisher: Routledge
Informa Ltd Registered in England and Wales Registered Number: 1072954
Registered office: Mortimer House, 37-41 Mortimer Street, London W1T 3JH,
UK

Journal of Foodservice
Business Research
Publication details, including instructions for
authors and subscription information:
http://www.tandfonline.com/loi/wfbr20

A Comparative Study of
Consumers' Green Practice
Orientation in India and the
United States: A Study from
the Restaurant Industry
a a
Kirti Dutta , Venkatesh Umashankar , Gunae Choi
b c
& H.G. Parsa
a
Indian Institute of Management of Technology
(IIMT) , Gurgaon, INDIA
b
Hospitality Management , Johnson & Wales
University , Charleston, NC, USA
c
Rosen College of Hospitality Management ,
University of Central Florida ,
Published online: 11 Oct 2008.

To cite this article: Kirti Dutta , Venkatesh Umashankar , Gunae Choi & H.G. Parsa
(2008) A Comparative Study of Consumers' Green Practice Orientation in India and the
United States: A Study from the Restaurant Industry, Journal of Foodservice Business
Research, 11:3, 269-285, DOI: 10.1080/15378020802316570

To link to this article: http://dx.doi.org/10.1080/15378020802316570

PLEASE SCROLL DOWN FOR ARTICLE


Taylor & Francis makes every effort to ensure the accuracy of all the
information (the “Content”) contained in the publications on our platform.
However, Taylor & Francis, our agents, and our licensors make no
representations or warranties whatsoever as to the accuracy, completeness,
or suitability for any purpose of the Content. Any opinions and views
expressed in this publication are the opinions and views of the authors, and
are not the views of or endorsed by Taylor & Francis. The accuracy of the
Content should not be relied upon and should be independently verified with
primary sources of information. Taylor and Francis shall not be liable for any
losses, actions, claims, proceedings, demands, costs, expenses, damages,
and other liabilities whatsoever or howsoever caused arising directly or
indirectly in connection with, in relation to or arising out of the use of the
Content.

This article may be used for research, teaching, and private study purposes.
Any substantial or systematic reproduction, redistribution, reselling, loan,
Downloaded by [FU Berlin] at 04:59 07 May 2015

sub-licensing, systematic supply, or distribution in any form to anyone is


expressly forbidden. Terms & Conditions of access and use can be found at
http://www.tandfonline.com/page/terms-and-conditions
A Comparative Study of Consumers’ Green
1537-8039
1537-8020
WFBR
Journal of Foodservice Business Research,
Research Vol. 11, No. 3, July 2008: pp. 1–23

Practice Orientation in India and the United


States: A Study from the Restaurant Industry
Kirti Dutta
Dutta et al. OF FOODSERVICE BUSINESS RESEARCH
JOURNAL

Venkatesh Umashankar
Gunae Choi
H.G. Parsa
Downloaded by [FU Berlin] at 04:59 07 May 2015

ABSTRACT. By considering differences in culture and economic


conditions in two different countries, India and the United States, this
study investigates the psychological factors (consumers’ attitudes,
behavioral intentions, and involvement) in relation to Green practices
(GP) in the restaurant industry as measured by three concerns (health,
social, and environmental). Next, the study examines how these factors
affect consumers’ willingness to pay for GP. Results from principal
component analyses and multinomial logistic regressions with data
from India (n = 196) and the United States (n = 200) (collected from
customers at two comparable commercial restaurants in each country)
show that there is a clear difference in consumers’ attitudes, behavioral
intentions, and involvement in GP and the relationship of these factors
to the consumers’ willingness to pay. The findings of this study showed

Kirti Dutta and Venkatesh Umashankar, Indian Institute of Management of


Technology (IIMT), Gurgaon, INDIA.
Gunae Choi, Hospitality Management, Johnson & Wales University, Charleston,
NC, USA.
H.G. Parsa, Rosen College of Hospitality Management, University of
Central Florida.
Address correspondence to: H.G. Parsa, Rosen College of Hospitality
Management, University of Central Florida, 9907 Universal Blvd, Orlando, FL
32819, USA, (407) 903-8048 (E-mail: hparsa@hmail.ucf.edu).
Journal of Foodservice Business Research, Vol. 11(3) 2008
Available online at http://www.haworthpress.com
© 2008 by The Haworth Press. All rights reserved.
doi:10.1080/15378020802316570 269
270 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

that consumers in the United States have a higher degree of involve-


ment in environmentally and socially responsible practices in restau-
rants, which have the most significant effect on consumers’ willingness
to pay up to 10% or higher on menu prices for GP. In contrast,
consumers in India have a higher degree of involvement in health and
visibility than consumers in the United States, which is the major driver
of their willingness to pay more than 10% or higher on menu prices
for GP.

KEYWORDS. Green practices, consumer behavior, restaurants, envi-


ronment, cultural differences
Downloaded by [FU Berlin] at 04:59 07 May 2015

INTRODUCTION

Increasingly, more consumers value corporate social responsibility


(CSR), considering it sensitively as their purchasing criterion (Mohr &
Webb, 2005; Brown & Dacin, 1997; Allen & Root, 2004). Mohr et al.
(2001) address the situation in which consumers use their purchasing
power to express wider political and social concern, and such trends
affect a wider pattern of behavior regardless of their age, income, and
occupation. Many studies (e.g., Creyer & Ross, 1996; David, 2005) also
support the notion that CSR practices significantly affect the evaluation
of a company’s reputation, purchase intent, buying choices, customer
loyalty, and other postpurchase outcomes. In turn, to meet these increas-
ing CSR concerns of consumers, although there are no standards as to
how companies adopt and implement the fact that they are ethical, more
companies are considering CSR as a critical strategy issue (e.g., pre-
mium pricing and competitive brand advantages) and embracing CSR
programs (e.g., signing agreements such as the Ethical Trading Initia-
tive [ETI]) (Stodder, 1998; Miller & Sturdivant, 1977; Bhattacharya &
Sen, 2004).
As one example, Starbucks Corp. voluntarily practices CSR performance
(i.e., employees’ contribution of $10 to a charity for each hour; con-
tracts with coffee growers who use environmentally friendly harvesting
methods; funds to healthcare clinics for schools for those growers’
workers). Several restaurant companies such as McDonald’s, Wendy’s,
Burger King, and Yum Brands have adapted several Green practices,
including banning of trans fats, minimizing fluorocarbons, going
smoke free, adapting to the Americans with Disabilities Act, and so on.
Dutta et al. 271

According to the Green Restaurant Association, more than 127 restaurants


are Green Certified (www.dinegreen.com, 2007). Among CSR practices
in the restaurant industry are Green practices (GP), which have been
also perceived as a necessary condition for sustaining business and
maintaining harmonious relationships with stakeholders. This trend has
led restaurants to develop attitudes and tools that can support more GP,
which come at a price, and the cost of adopting GP is necessarily passed
on to consumers.

LITERATURE REVIEW
Downloaded by [FU Berlin] at 04:59 07 May 2015

CSR Versus Green Practices


According to Carroll (1991), CSR encompasses economic benefits and
socially desirable goods and services, which include complying with the
legal and ethical standards set by the society. Maignan and Ferrell (2001)
describe CSR as “the extent to which businesses assume the economic,
legal, ethical, and discretionary responsibilities (i.e., reflect society’s
desire to see businesses participate actively in the betterment of society
beyond the minimum standards set by the economic, legal, and ethical
responsibilities) imposed on them by their various stakeholders” (p. 459).
Webster (1975, p. 188) describes a socially conscious consumer as
“a consumer who takes into account the public consequences of his or her
private consumption or who attempts to use his or her purchasing power
to bring about social change.” Mohr et al. (2001) addresses four dimensions
of CSR, including obeying laws and ethical norms, treating employees
fairly, protecting the environment, and contributing to charities. Similarly,
CSR actions addressed by Bhattacharya and Sen (2001) include fair
human practices (i.e., employee supports and diversity), ethical codes of
conduct (i.e., the environment, non-U.S. operations, and product manu-
facturing), and community services (discretionary). From the public policy
point of view, CSR is described as a citizenship function with moral, ethical,
and social obligations that provide mutually beneficial exchanges
between an organization and its public. CSR, in sum, is a way of sustaining
business and protecting the environment through cooperation between
businesses and consumers.
Among CSR practices, GP includes the following: developing procedures
that conserve energy and other natural resources in the production process
(Porter & Kramer, 2002), creating advertisements and other promotional
272 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

messages that accurately reflect a company’s commitment to the environment


(Kangun, Carlson, & Grove, 1991), setting prices for Green products that
balance consumers’ sensitivity to cost against their willingness to pay
more for environmental safety (Granzin & Olsen, 1991), and reducing
pollutants and conserving resources in the transportation of products to
market (Bohlen, Diamantopolous, & Schlegelmilch, 1993). With pressure
from public policy and consumer demand on GP, many restaurateurs have
been largely involved in GP, such as banning smoking in restaurants,
actively enforcing the American Disabilities Act (ADA), participating
in recycling practices, offering healthy menu choices, labeling menu
items more accurately, energy conservation practices, and reduction of
Downloaded by [FU Berlin] at 04:59 07 May 2015

pollutants, etc.
In this study, India (a developing country) and the United States
(a developed country) are selected to be compared with regard to
restaurant consumers’ GP orientations and willingness to pay.
These two countries are selected for this study because they are con-
sidered good representatives of developed and developing nations,
respectively.

Green Practices and Consumerism in the United States


With respect to Green consumers, it is reported that while the effectiveness
of CSR efforts varies with the perceived motivation of the CSR practices
and the consumers’ own characters or values, consumers try to improve
the world through their purchase and consumption behaviors by responding
more strongly to information about the level of a company’s CSR (Smith,
2003). Mohr, Webb, and Harris (2001) defined socially responsible
consumer behavior as “a person basing his or her acquisition, usage, and
disposition of products on a desire to minimize or eliminate any harmful
effects and maximize the long-run beneficial impact on society” (p. 47).
Many researchers (e.g., Aaker, 1996; Sen & Bhattacharya, 2001)
demonstrate that CSR strongly influences consumers’ attitude, product
preference, and judgment of product attributes. Mohr and Webb (2005)
found evidence showing that CSR affects consumers’ purchase intentions
more strongly than does price, and thus a low price cannot compensate for
a low level of social responsibility. According to Springen and Miller
(1991), consumers would pay up 10% more for socially responsible prod-
ucts. Choi and Parsa (2006) have reported that a majority of customers are
willing to pay up to 10% in the hospitality industry from their study from
the United States.
Dutta et al. 273

Green Practices and Consumerism in India


As one of the top five industrialized countries in the world, India is
expected to rank fourth economically based on its purchasing power
parity after China, the United States, and Japan by the year 2020. India
is also expected to surpass China in population by 2040 (Sengupta,
1995). Compared with more developed countries, India is a very young
nation, with more than 70% of its population below the age of 40, and
almost 50% below the age of 20. As these young Indian consumers
become aware of quality and international brands, they are willing to
pay for premium products and services. This explains the increasing
demand for luxury and leisure-related products and services in India.
Downloaded by [FU Berlin] at 04:59 07 May 2015

Moreover, with increasing incomes, declining household size, urbaniza-


tion, and growing number of women in the workforce (NCAER, 1997),
consumer tastes and demands on foods and beverages have become
sophisticated as they have become more quality conscious in food and
beverage products (Regmi, 2001). This has led to consumers’ higher
health concerns, even in lower income groups (Sarin & Barrows, 2005).
Furthermore, along with the development of the service sector, India is
becoming more industrialized. In the years 2000 through 2004, con-
sumer spending on food and beverages grew at an annual average rate of
6.1%, in line with the country’s GDP growth (Consumer Goods
Forecast, 2005). It is expected that rising disposable incomes, a youthful
population, and increasing consumerism will support growing demands
for food and beverages in the next several years in India (The Economist
Intelligence Unit Limited, 2005)
In terms of food culture in India, it is reported that Indians strongly pre-
fer fresh and local spices and ingredients compared to processed foods.
Moreover, there is a higher demand for certain domestic fruits. Indians
generally eat less processed foods than residents of other countries, while
American consumers eat far more ready-to-cook or ready-to-eat foods
(Cavanaugh, 2004). Foods in India are often purchased fresh and then
prepared at home, while Americans are likely to eat away from home
(Blisard et al., 2002). However, Blandford (1984) points out that increas-
ing income levels in developing countries promote global “urban” eating
patterns, resulting in higher consumption of Western-style foods. In fact,
there is a clear trend that international brands (that is, North American–
style processed foods) are entering India’s food market to take advantage
of increasing demands on international brand foods and beverages
(Forecast, 2005).
274 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

There are approximately 22,000 registered restaurants in India. In addition,


more than 100,000 roadside restaurants (dhabas) sell their prepared foods in
small stalls in cities and on highways. Furthermore, most of the 1,568 regis-
tered hotels in India also serve food. Hotels and other tourist-related busi-
nesses can obtain licenses to import consumer foods. Hotels can import most
food items, with the exception of beef products, mineral water, carbonated
soft drinks, beer, and gin (Sarin & Barrows, 2005). Additionally, a growing
number of specialty restaurants and fast food outlets have opened in the last
few years, including a number of foreign restaurant chains (e.g., Domino’s,
Pizza Hut, Pizza Express, McDonalds, TGIF, KFC, and Baskin-Robbins.
Downloaded by [FU Berlin] at 04:59 07 May 2015

HYPOTHESES

Consumers’ Attitudes, Behavior Intentions, and Involvement


in Relation to WTP
In the United States, most consumers expect businesses to benefit
society and are willing to pay a premium price for a minimal adverse
impact on the environment. They therefore pay up 10% more for socially
responsible products (Springen & Miller, 1991). Although no studies
were reported from the foodservice industry in previous literature, many
studies report that consumers are willing to pay more for Green products
to reward firms that show a strong record of GP (Stodder, 1998; Creyer &
Ross, 1997). According to Arnold and Handelman (1999), consumer
product choices are affected by environmental, community, and ethical
dimensions rather than price and quality. Many studies also show that
consumers who have more positive attitudes and behavioral intentions
toward a company with high GP are willing to pay more for the products
and services provided by the firm (Murray & Vogel, 1997; Lord, Parsa &
Putrevu, 2004; Folkes & Kamins, 1999). So far, although there are mixed
results in regard to whether companies with high GP produce better
returns, many studies find a strong correlation between companies with
higher sustainability ratings and good returns (Willifer, 2005).
To assess the relationship between American and Indian consumers’
attitudes, behavior intentions, and involvement in GP and their willingness to
pay, the following hypotheses were formulated.

H1: Consumers’ high attitude on health concerns is directly related


to their (WTP) higher prices needed to support GP.
Dutta et al. 275

H2: Consumers’ high attitude on environmental concerns is directly


related to their WTP higher prices needed to support GP.

H3: Consumers’ high attitude on social concerns is directly related


to their WTP higher prices needed to support GP.

H4: Consumers’ high behavioral intentions in relation to health


concerns are directly related to their WTP higher prices needed to
support GP.

H5: Consumers’ high behavioral intentions in relation to environ-


Downloaded by [FU Berlin] at 04:59 07 May 2015

mental concerns are directly related to their WTP higher prices


needed to support GP.

H6: Consumers’ high behavioral intentions in relation to social


concerns are directly related to their WTP higher prices needed to
support GP.

H7: Consumers’ involvement in GP (health, environment and social


concern) is positively associated with their WTP higher price
needed to support GP.

Indians prefer fresh fruits and vegetables and local spices and ingredients
to processed foods, while American consumers eat far more ready-to-cook
or ready-to-eat foods (Cavanaugh, 2004). Foods in India are often pur-
chased fresh and then prepared at home, while Americans are likely to eat
away from home (Blisard et al., 2002). Based on this information, the fol-
lowing hypothesis is formulated.

H8: Indian consumers pay more attention to health concerns than do


American consumers.

In terms of consumer culture, unlike Americans, Indians are known to


have relatively low tolerance for risk and low level of individualism
(Smith, 2003). From this fact, it is assumed that Indian consumers will not
be willing to pay for GP even if they may have high GP orientation.
Based on this information, the following hypothesis is formulated.

H9: Indian consumers in general are willing to pay less compared to


the American consumers.
276 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

METHODOLOGY

Data Collection and Survey Instrument


Data were collected from India (n = 196) and the United States (n = 200)
by using paper-and-pencil surveys over a one-month period at two com-
mercial restaurants comparable in terms of size. Each customer was given
a copy of the survey before the meals were consumed. Completed forms
were collected after the guests left. The survey instrument had three major
sections: Section I consisted of two subsections. One subsection measured
consumers’ attitude for health, environmentally, and socially responsible
practices (16 items). The other subsection measured their behavioral
Downloaded by [FU Berlin] at 04:59 07 May 2015

intentions with respect to those practices by a restaurant (16 items). Section II


was comprised of 12 items to measure consumers’ involvement in GP
(12 items). Section III consisted of 14 items to measure general informa-
tion about the respondents, including two items to measure consumers’
willingness to pay more for environmentally and socially responsible
practices.
Demographic Data
In the United States, a total of 202 valid responses were received with a
response rate of 36.0%. More than 50% of the respondents were male,
nearly 20% of the respondents earned over $80,000 per year, and more than
70% of the respondents had eaten out more than twice a week. The respon-
dents’ ethnicity was Caucasian (56.0%), African American (15.8%), and
Asian American (6.9%) (Table 1). In India, a total of 196 valid responses
were received with a similar response rate of the U.S. data. More than 70%
of the respondents were male; and more than 90% had eaten out more than
twice a week. Income was distributed unevenly between high income and
low income, with relatively small middle class (Table 2).
Data Analysis
Principal component analysis was performed to identify the key
dimensions with factors accounting for eigenvalues greater than 1 being
included in the model. Respondents’ ratings on items were subjected to
principal component analysis, with Varimax Rotations (orthogonal rota-
tion) to reduce potential multicollinearity among the items and to improve
reliability on the data as well. The coefficient alpha of reliability was
computed for each factor to see each dimension’s internal consistency.
Dutta et al. 277

TABLE 1. Descriptive profile of restaurants in the


United States (n = 202)

Age
Under 18 years 5.4% 49–59 years 24.3%
18–29 years 10.4% 60–64 years 15.8%
30–34 years 26.8% 65–69 years 1.5%
35–39 years 2.3% 70–74 years 0.4%
40–44 years 4.5% Over 74 years 5.4%
45–49years 3.2%
Employment
Working full-time 48.5% Retired 15.8%
Self-employed 6.9% Unemployed 6.4%
Downloaded by [FU Berlin] at 04:59 07 May 2015

Full-time student 4.5% Working Part-time 3.0%


Homemaker 3.0%
Gender
Male 52.0% Female 48.0%
Education
Bachelors degree 34.2% Some college 24.8%
High school diploma 10.9% Some high school 9.4%
Graduate work 9.4%
Ethnicity
Caucasian 56.9% African American 15.8%
Hispanic 3.0% Others 0.55
Income per Year
Under $20,000 10.4% $20,001–$34,999 6.4%
$35,000–$49,999 9.4% $50,000–$64,999 12.4%
$65,000–$80,000 11.4% Over $80,000 18.3%

A. Result of Principal Component Analyses


In the U.S. data, three factors loaded from items for measuring con-
sumers’ attitudes were named: (1) Health Concerns, (2) Environmental
Concerns, and (3) Social Concerns, respectively. Two factors obtained
from items for measuring consumers’ involvement in GP were named:
Low Involvement and High Involvement in such practices. The 16 items
were reduced to three orthogonal factor dimensions, which explained
50.634% of the overall variance. This indicates that the variance of the
original values was captured fairly well by these three factors. The Health
Concerns factor explained 32.044% of the total variance and had an
eigenvalue of 5.127. The second factor, Social Concerns, has explained
11.341% of the total variance and had an eigenvalue of 1.815. The third
278 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

TABLE 2. Descriptive profile of restaurants in the India (n = 196)

Age
Under 18 years
18–29 years 55.8% 40–44 years 9.4%
30–34 years 16.0% 45–49years 0.0%
35–39 years 16.0% Over 50 years 3.0%
Employment
Working full-time 38.2% Retired 3.4%
Self-employed 18.0% Unemployed 0.0%
Full-time student 13.5% Working part-time 20.2%
Homemaker 6.7%
Downloaded by [FU Berlin] at 04:59 07 May 2015

Gender
Male 72.6% Female 27.4%
Education
Bachelors degree 38.2% PhD / professional 20.2%
High school diploma 16.3% Others 3.4%
Masters degree work 6.2%
Income per Year
Under Rs 15,000 2.9% 90,001–1,25,00 16.3%
Rs 15,100–30,000 8.1% 1,26,00–1,50,00 7.6%
Rs 30,001–50,000 11.6% 1,51,00–1,75,00 3.5%
Rs 50,001–70,000 7.0% 1,76,00–2,25,00 4.1%
Rs 70, 001–90,000 13.4% 2,26,00–2,50,00 3.5%
Rs 2,51,00–3,00,00 1.2% More than 3,10,00 13.3%

factor, Environmental Concerns, provided 7% of the total variance and


had an eigenvalue of 1.160 (Table 3).
In the India data, two factors loaded from items for measuring consumers’
attitudes were named: (1) Health Concerns and (2) Environmental and
Social Concerns, respectively, which explained around 49.732% of over-
all variance. The “Health Concerns” factor explained 32.356% of the total
variance and had an eigenvalue of 4.248. The second factor, “Environ-
mental and Social Concerns,” explained 17.375 % of the total variance
and had an eigenvalue of 1.216 (Table 4).

Descriptive Statistics of WTP. As can be seen in Table 5, the frequency


of consumers’ WTP for environmentally responsible practices was not
much different from the socially responsible practices in the U.S. data.
About 50% were willing to pay up to 3% more above the regular menu
price, while approximately 15% were willing to pay more than 10%
above the regular menu price (Table 5).
Dutta et al. 279

TABLE 3. Consumers’ attitudes toward green practices in the


United States

Factor 1: Health Factor 2: Social Factor 3: Environmental


Concern Concern Concern

• Offer nutrition • Community and charitable • Participate in recycling


information on activities (.733) paper (.791)
all menus (. 808) • Contribute money / food • Participate in
• Offer ingredient to local charities (.694) pro-environmental
list on menu (.761) • Join professional activities (.776)
• Avoid genetically activities (.607) • Participate in recycling
modified foods (.619) activities (.772)
Downloaded by [FU Berlin] at 04:59 07 May 2015

Overall mean value: Overall mean value: Overall mean value: loading
loading (.729), loading (.678), mean = 3.92, (.729), mean = 4.39,
mean = 3.91, SD = .990. SD = .991. SD = .955.
eigenvalues = 5.127. eigenvalues = 1.815. eigenvalues = 1.160
Variance = 32.044. Variance = 11.341. Variance = 7.249

Note: reliability of Alpha = .839. The missing values in each item are replaced with mean
value of each item, thus total N = 202.

TABLE 4. Consumers’ attitudes toward green practices in India

Factor 1: Health Concern Factor 2: Environmental and


Social Concern

• Offer nutrition information on all • Participate in energy


menus (. 802) conservation (.738)
• Offer written mission statement • Increase employee
on menu (.790) benefits (.738)
• Offer ingredient list on • Participate in recycling
menu (.733) paper (.663)
• Offer local ingredient on • Contribute money / food to
menu (.665 ) local charities (.599)
Overall mean value: loading Overall mean value: loading
(.729),mean = 3.82, SD = .976 (.729),mean = 3.72, SD = .920
eigenvalues = 4.248. eigenvalues = 1.125.
Variance = 38.618. Variance = 11.367.

Note: reliability of Alpha = .803. The missing values in each item are replaced with
mean value of each item, thus total N = 196.

However, compared to the U.S. data, the India data on WTP showed a
large variation between consumers’ WTP for environmentally responsible
practices and for socially responsible practices. Consumers in India seem
280 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

TABLE 5. Consumers’ WTP for socially and environmentally


responsible practices in the United States

Environmentally Socially Responsible


Responsible Practices% / (n)
Practices% / (n)

No Intent to Pay 23.7% 23.7%


1–3% 28.9% 16.19%
4–6% 22.0% 26.6%
7–9% 11.0% 8.5%
More than 10% 14. 5% 16.4%
Total 100% (202) 100% (202)
Downloaded by [FU Berlin] at 04:59 07 May 2015

TABLE 6. Consumers’ WTP for socially and


environmentally responsible practices in India

Environmentally Socially Responsible


Responsible Practices% / (n)
Practices% / (n)

No intent to pay 34.12% 33.7%


1–3% 0.59% 16.2%
4–6% 0.59% 16.18%
7–9% 2.9% 5.2%
More than 10% 61.80% 28.74%
Total 100% (196) 100% (196)

to value environmentally responsible practices more than socially respon-


sible practices. More than 60% of the respondents showed their WTP
more than 10% above the regular menu price for environmentally respon-
sible practices. The India data, in contrast to the U.S. data, showed a
greater contrast between those unwilling to pay for GP at all, versus
those who were willing to pay more than 12% above the regular menu
price (Table 6).
B. Multinomial Logistic Regressions Analyses
Two separate two multinomial logistic regressions were used to inves-
tigate the relationship between consumers’ attitudes, behavior intentions,
and involvements and their WTP for GP. Two separate models were pro-
posed for socially and environmentally responsible practices. Applying a
logistic regression model in this study was a reasonable decision, since
Dutta et al. 281

this logistic regression is a linear probability model where the error terms
are not assumed to be continuous, homoscedastic, or normally distributed
without a supporting test of equality.

Independent Variables. The name of each independent variable was


labeled by using factor names derived from factor analyses (in the United
States: attitude for health concern, attitude for environmental concern,
attitude for social concern, behavior intentions for health concern, behavior
intentions for environmental concern, behavior intentions for social con-
cern, high involvement in GP, low involvement in GP, age, income, and
education; in India: attitude for health concern, attitude for environmental
Downloaded by [FU Berlin] at 04:59 07 May 2015

and social concern, behavior intentions for health concern, behavior


intentions for environmental and social concern, high involvement in GP,
low involvement in GP, age, income, and education). The value of each
independent variable was measured by the factor scores of items. The
demographic variables were tested in this study as independent variables.

Dependent Variables. Two dependent variables were used: (1) WTP


for environmentally responsible practices and (2) WTP for socially
responsible practices. Five levels of WTP were recorded in three categories
(low (Yi1), medium (Yi2), and high (Yi3), respectively, based upon the
sample size in each category in each country. In the three-outcome-
category model used in this study Y = 2 (medium) is the reference or
baseline outcome to form logit functions by comparing Y = 1(low) and
Y = 3 (high).

Result of Multinomial Logistic Regressions Analyses. As a result of


fitting a three-category logistic regression model, the following results
were obtained. In the likelihood ratio test, income was found to be a sig-
nificant factor among the demographic variables in both United States
and India. In India, consumers’ attitude of health concern was reported as
significant, while, in the United States, consumers’ high involvement in
GP was reported as significant among the variables loaded from principal
factor analyses. In the regression analyses in the United States, the differ-
ent degree of behavioral intentions for GP was the major reason that con-
sumers were WTP low or medium for GP. And the level of attitude on
environmentally responsible practices and the level of involvement in GP
were the major indicator affecting WTP medium or high for GP. On the
other hand, in India, the level of attitude on health concern and involve-
ment in GP were the major indicators affecting WTP low or high for GP.
282 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

IMPLICATIONS AND SUGGESTIONS

The higher level of Green consciousness noted in the context of a


developing nation, India, is very interesting. Thus, hospitality firms may
want to consider implementing Green practices in their businesses and
communicating what they have done so as to gain greater consumer
patronage and eventual greater consumer loyalty. In contrast, lack of
emphasis on Green practices in the United States is a surprise considering
the emphasis placed on environmental issues in the United States. But a
closer examination reveals that consumers in the United States are con-
cerned more about environmental issues such as pollution than about
Downloaded by [FU Berlin] at 04:59 07 May 2015

energy conservation. In contrast, Indian subjects are more attuned to


energy conservation and recycling than pollution and smog. It is an
interesting contrast to notice between the consumers of developing and
developed countries. Unlike their Indian counterparts, American consumers
appear to discriminate between social and environmental issues.
In case of willingness to pay, U.S. consumers are more willing to pay
for Green practices than are Indian consumers. This difference is deeply
rooted in the Indian psyche that government, not the consumer, is respon-
sible for initiating and maintaining Green practices. This belief arises
from the fact that most of the major projects in India are undertaken by
the government, central or state, not by the private enterprises.
Future research in this area may include different types of Green prac-
tices and consumers’ attitudes about them, behaviors to support them, and
involvement with them. Future research may include other service indus-
tries such as banking, healthcare, education, insurance, or industries that
manufacture such things as fertilizers, automobiles, appliances, electrical
devices, and computers. For the current study, the data were collected at
urban locations in India and the United States. Thus, expanding this
research to rural areas may reveal significant differences in consumer
attitudes, behaviors, and involvement in Green practices and their
willingness to pay for such practices.

CONCLUSION AND DISCUSSION

Statistical results through factor analyses and multinomial regression


analyses with SPSS strongly indicated that consumers in India have a
higher degree of GP consciousness in health and visibility than consumers
in the United States, as was expected. Interestingly, we found that Indian
Dutta et al. 283

consumers’ attitudes and behavior intentions toward social concern were


highly correlated with their attitudes and behavior intentions toward
environmental concerns (loading to one factor), while those of American
consumers were not. American consumers appeared to discriminate
between social and environmental concerns (loading to two different
factors). Furthermore, there were higher variations in Indian consumers’
WTP than variations in American consumers’ WTP. In addition, a larger
number of consumers in India chose not to pay to support GP than did
consumers in the United States. However, and interestingly, there also
was a larger group of Indian than American consumers who were willing
to pay more than 10% above the regular menu price.
Downloaded by [FU Berlin] at 04:59 07 May 2015

The results of this study indicated that consumers in India are relatively
more willing to engage in GP than are Americans, but a majority of them
are not willing to pay for those practices, but expect businesses to take
full responsibility for GP. This difference may be due to Indians’ per-
ceived risk of paying more in the absence of accurate information about
firms’ current GP. These results may reflect relatively low tolerance for
risk among Indians versus higher tolerance for risk among Americans.

REFERENCES

Aaker, D. (1996). Building Strong Brands, New York: The Free Press.
Allen, J., & Root, J. (2004). The new brand tax. Wall Street Journal, September 7, p. B2.
Arnold, S., & Handelman, J. (1999). The role of marketing actions with a social
dimension: Appeals to the institutional environment. The Journal of Marketing,
63(3), 33–48.
Bhattacharya, B. C., & Sen, S. (2004). Doing better at doing good: When, why and how
consumers respond to corporate social initiatives. California Management Review,
47(1), 9–19.
Blandford, D. (1984). Changes in food consumption patterns in the OECD area. European
Review of Agricultural Economics, 11, 43–65.
Blisard, N., Lin, B., Cromartie, J., & Ballenger, N. (2002). America’s changing appetite:
Food consumption and spending to 2020. Food Review, 25(1), 2–9.
Bohlen, G., Diamantopolous, A., & Schlegelmilch, B. (1993). Consumer perceptions of
the environmental impact of an industrial service. Marketing Intelligence & Planning,
11(1), 37–48.
Brown, T. J., & Dacin, P.A. (1997). The company and the product: Corporate associations
and consumer product response. Journal of Marketing, 61(January), 68–84.
Cavanaugh, B. (2004). Organic. Nation’s Restaurant News, 38(25), 42.
Celsi, R., & Olson, J. (1988). The role of involvement in attention and comprehension
processes. Journal of Consumer Research, (September), 210–224.
284 JOURNAL OF FOODSERVICE BUSINESS RESEARCH

Commission of the European Communities, Promoting a European framework for


corporate social responsibility, green paper (Brussels: European Commission, 2001).
Consumer Goods Forecast Asia & Australasia. December 2005, 44–53.
Creyer, E., & Ross, W. T. (1996). The impact of cooperate behavior on perceived product
value. Marketing Letter, 7(2), 173–185.
David, V. (2005). The Low Value of Virtue. Harvard Business Review, 83(6), 26.
Davis, D. E., & Stewart, H. (2002). Changing consumer demands create opportunities for
U.S. food system. Food Review, 25(1), 19–23.
Economist Intelligence Unit (2004). Retrieved July 8, 2004, from www.eiu.com
Energy Services and Telecom Report (1998, March 27). Booming “Green power” market
makes PG&E reconsider residentials, 5–6.
Folkes, V. S., & Kamins, M. A. (1999). Effects of information about firms’ ethical and
unethical actions on consumers’ attitudes. Journal of Consumer Psychology, 8(3),
Downloaded by [FU Berlin] at 04:59 07 May 2015

243–259.
Granzin, K., & Olsen, J. (1991). Characterizing participants in activities protecting the
environment: A focus on donating, recycling, and conservation behaviors. Journal of
Public Policy and Marketing, 10(2), 1–27.
Kangun, N., Carlson, L., & Grove, S. J. (1991). Environmental advertising claims:
A preliminary investigation. Journal of Public Policy and Marketing, 10(Fall), 47–58.
Lord, K. R., Parsa, H. G., & Putrevu, S. (2004). Environmental and social practices:
Consumer attitude, awareness and willingness to pay. In D. Scammon, M. Mason, &
R. Mayer (Eds.), Marketing and Public Policy: Research Reaching New Heights (25–28).
Salt Lake City, UT: American Marketing Association.
Maignan, I., & Ferrell, O. C. (2004). Corporate social responsibility and marketing: an
integrative framework. Journal of the Academy of Marketing Science, 32(1), 3–17.
Miller, K. E., & Sturdivant, F. D. (1977). Consumer responses to socially questionable
corporate behavior: An empirical test. Journal of Consumer Research, 4(June), 1–7.
Mohr, L. D., Webb, J., & Harris, K. E. (2001). Do customers expect companies to
be socially responsible? The impact of CSR on buying behavior. The Journal of
Consumer Affairs, 35(1), 19–32.
Mohr, L., & Webb, D. (2005). The effects of corporate social responsibility and price on
consumer responses. Journal of Consumer Affairs, 39(1), 20–37.
Murray, K. B., & Vogel, C. M. (1997), Using a hierarchy of effects approach to gauge the
effectiveness of corporate social responsibility to generate goodwill toward the firm:
Financial versus nonfinancial impacts. Journal of Business Research, 38(2), 141–159.
Nayga, J. R. (2000). Nutritional knowledge, gender, and food label use. The Journal of
Consumer Affairs, 34(1), 97–103.
Choi, G., & Parsa, H. G. (2006). Green Practices II: Measuring managers’ psychological
attributes & willingness to charge for Green practices. Paper presented at Hospitality
and Tourism Graduate Student Education and Research Conference, Seattle, WA.
Regmi, A. (2001). Changing structure of global food demand and trade. Review of
Agricultural Economics Agriculture and Trade Report, 11, 43–65.
Sarin, S., & Barrows, C. (2006). An examination of current food and beverage trends in
India and an assessment of potential demand for luxury food and beverage products:
Implications for managers. Journal of Services, Special Issue, 217–237.
Dutta et al. 285

Sengupta, A. (1995). Financial sector and economic reforms in India. Economic and
Political Weekly. Retrieved July 8, 2004, from www.state.gov
Smith, S. M., & Alcorn, D. S. (1991). Cause marketing: A new direction in the marketing
of corporate social responsibility, Journal of Consumer Marketing, 8(3), 19–35.
Smith, C. (2003). Corporate social responsibility: Whether or how? California Management
Review, 45(Summer), 52–76.
Springen, K., & Miller, A. (1991,). Doing the right things. Newsweek, 42.
Stodder, G. S. (1998, July). Goodwill hunting. Entrepreneur, 118–121.
Watson, A. (2002, October 17). “Organic” label frustrates small farmers. Knight Ridder
Tribune Business News, p. 1.
Webster, F. E., (1975). Determining the characteristics of the socially conscious
consumer. Journal of Consumer Research, December, 188–196.
Willifer, M. (2005). Comment corporate social responsibility: Ensure brands talk
Downloaded by [FU Berlin] at 04:59 07 May 2015

responsibly—or make CSR a waste of time. Marketing Week, 28(24), 9.

You might also like