Competition and Sustainability: The Impact of Consumer Awareness

Abstract

Sustainability, a broad concept that includes numerous environmental and social dimensions, has emerged as an important product evaluation criterion for consumers. We suggest the impact of sustainability on consumer behavior depends on two factorseach individual consumer's unique level of concern about sustainability, and the general level of awareness regarding the sustainability of competing products-that together determine the level of heterogeneity among consumer attitudes toward sustainability. We incorporate sustainability concern and awareness into a model of horizontal competition in a duopoly, where one firm's product is more sustainable than the other's. Our results suggest that marginal increases in awareness can benefit all firms, including the less sustainable one, when awareness is sufficiently high (the explicit goal of recent sustainability labeling initiatives). In several model extensions, we provide additional insights for the following cases: the sustainable firm controls the extent of its sustainability advantage, the sustainable firm can directly influence the general level of awareness, and the distribution of sustainability concern across consumers is nonuniform. Our results enable us to suggest several new insights for managers, both those whose products enjoy a sustainability advantage and those whose products do not.

Supplier integration, green sustainability programs, and financial performance of fashion enterprises under global financial crisis

“…They can also apply certification from green organizations and encourage customers to participate in product recycling activities. All these practices can satisfy stakeholders and improve brand reputation with more revenue generated (Galbreth and Ghosh, 2013;Schaltegger and Synnestvedt, 2002). Even though GSP adoption can mitigate the adverse effect of the financial tsunami, fashion enterprises should carefully determine the cost for improving green performance and brand reputation.…”

Sustainable Product Strategy in Apparel Industry with Consumer Behavior Consideration

“…Tsarenko et al [24] show that retailers could improve environmentally conscious consumption with adoption of sustainable business practices. Galbreth and Ghosh [25] investigate a model of horizontal competition with consideration of consumers' awareness of sustainability. They consider two firms' product have different sustainable levels.…”

Corporate sustainability interactions: A game theoretical approach to sustainability actions

“…ii) positive effect of competition-spillover It is likely that different sustainability actions will have different effects on the overall competition in the market (Galbreth and Ghosh, 2013). If the sustainability efforts of a company lead to an improved stakeholder perception of the whole industry, there may be sustainability spillovers and other companies may free ride the sustainability efforts of the leader company.…”

“…It is likely that different sustainability actions will have different effects on the overall competition in the market (Galbreth and Ghosh, 2013). The decomposition of competition into negative effect and positive effect (spillover) provide better understanding how strategic interactions influence the sustainability decisions of companies.…”