Journal
JOURNAL OF CLEANER PRODUCTION
Volume 113, Issue -, Pages 873-883Publisher
ELSEVIER SCI LTD
DOI: 10.1016/j.jclepro.2015.11.032
Keywords
Porter hypothesis; Environmental innovation; Hedonic price approach; Product commoditization; Chlorofluorocarbon-free; Energy-consumption efficiency
Categories
Funding
- Service Innovation Human Resource Development Promotion Program of the Research Institute for Economics and Business Administration, Kobe University
- Ministry of Education, Culture, Sports, Science and Technology, Japan [24530561]
- Grants-in-Aid for Scientific Research [24530561] Funding Source: KAKEN
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The purpose of this study is to determine whether environmentally friendly attributes that are innovated in response to environmental standards contribute to creating a competitive advantage. Because manufacturers of products with only commoditized value cannot achieve a competitive advantage, they need to add differentiated value including environmentally friendly attributes through product innovation. In this situation, environmental standards have a potential to encourage them to undertake product innovation. Thus, this study analyzes not only whether a product with environmentally friendly attributes that reflect environmental standards receives a price premium, but also whether product commoditization that is associated with drastic price declines has occurred for the product. The methodology for these analyses is a hedonic price regression using data for refrigerators sold in the Japanese retail market during 1998-2012. The main findings are as follows. First, the fundamental value of refrigerating has been drastically commoditized in the last 15 years. Second, products that are chlorofluorocarbon-free and energy-consumption efficient reflecting environmental standards have a price premium. Third, the price premium for each attribute has specific trends during the period. These findings support the view that a product's environmentally friendly attributes that reflect environmental standards more or less compensate for the commoditized value through the price premium; therefore, product innovation in response to environmental standards helps create a competitive advantage, especially where product commoditization has occurred. (C) 2015 Elsevier Ltd. All rights reserved.
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