Influence of socio-environment factors towards acceptance of renewable energy products

Rai, Rachana; Pradhan, BB; Sharma, Neeta Dhusia; Jha, Ajeya Article Influence of socio-environment factors towards acceptance of renewable energy products Global Business & Finance Review (GBFR) Provided in Cooperation with: People & Global Business Association (P&GBA), Seoul Suggested Citation: Rai, Rachana; Pradhan, BB; Sharma, Neeta Dhusia; Jha, Ajeya (2019) : Influence of socio-environment factors towards acceptance of renewable energy products, Global Business & Finance Review (GBFR), ISSN 2384-1648, People & Global Business Association (P&GBA), Seoul, Vol. 24, Iss. 1, pp. 1-13, https://doi.org/10.17549/gbfr.2018.23.4.1 This Version is available at: https://hdl.handle.net/10419/224412 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0/ GLOBAL BUSINESS & FINANCE REVIEW, Volume. 24 Issue. 1 (SPRING 2019), 1-13 pISSN 1088-6931 / eISSN 2384-1648∣Https://doi.org/10.17549/gbfr.2019.24.1.1 ⓒ 2019 People and Global Business Association GLOBAL BUSINESS & FINANCE REVIEW www.gbfrjournal.org1) Influence of Socio-environment Factors towards Acceptance of Renewable Energy Products Rachana Raia†, BB Pradhanb, Neeta Dhusia Sharmac, Ajeya Jhad aAssistant Professor, Department of Management, Sikkim University, Samdur, East Sikkim, India bProfessor, Associate Director (Academics) & Department Head of Mechanical Engineering, Sikkim Manipal Institute of Technology, Majhitar, Sikkim Manipal University, East Sikkim, India cAssociate Professor, Department of Management Studies, SMIT, Sikkim Manipal University, East Sikkim, India dProfessor & Associate Director (R&D) SMIT, Sikkim Manipal University, East Sikkim, India A B S T R A C T Socio-environment is considered as one of the acceptance factors which plays a major role in customers’ decision making before purchases. Study based on socio-environment behaviour of an individual might differ from product to product and from place to place. Thus, research is conducted keeping in mind the renewable energy products, such as, solar water heater, biomass stove and solar street lamps domain and how the users and non-users display acceptance-based socio-environment inclination while purchasing renewable energy products. Results showed that users of renewable energy are more inclined towards socio-environment as compared to non-users of renewable energy products. Keywords: Renewable Energy Products, Socio-Environment, Users and Non-Users, Himalayan Region, Purchase Intention Ⅰ. Introduction Renewable energy has become the need of the hour for all the countries across the globe. The usage and acceptance of renewable energy must not be limited to industries and few domestic customers as it needs to expand in all possible sectors across the industries and domestic usage around the world. Hence, social acceptance of the renewable energy products requires in-depth research covering every demographic, topographic and psychographic segmentation. Recently, Received: Sep. 20, 2018; Revised: Dec. 12, 2018; Accepted: Feb. 22, 2019 † Rachana Rai E-mail: [email protected] Government of India has been focusing on the implementation of renewable energy through various schemes and encouraging research and development. For implementation of renewable energy there is a need to create public awareness. When we say public awareness, it includes society, thus the question arises as to what society consist of. Societies have patterns of social relationships between individuals who share same culture and an institution. One research emphasized on social research of acceptance of renewable energy technologies provided that a classification of personal, psychological and contextual factors must bring together public acceptance (Devine, 2008). Some studies have suggested the importance of visual appearance of the renewable energy products. In California, 40% installers of solar panel mentioned that the aesthetics GLOBAL BUSINESS & FINANCE REVIEW, Volume. 24 Issue. 1 (SPRING 2019), 1-13 2 of solar panels was a key factor for selecting a panel and recommending it to other homeowners (Chen et al . , 2013). US survey reported that 17% of respondents were not interested in installing solar panels as they found the panels unattractive 1) . In society, people have different tastes and preferences based on their demographics and personality, which is psychography. It is the study of personality, values, opinions, attitudes, interests, and lifestyles of individual consumers (Senise,2007). Furthermore, the study based on ecocentrism has also been carried out by a few researchers. Ecocentrism in a broadest term recognizes intrinsic value in all lifeforms and ecosystems. It is highlighted that ecocentrism is essential for solving environmental crisis, while arguing its importance from four perspectives: ethical, evolutionary, spiritual and ecological (Curry, 2011). Other researchers stated that environmental orientation is both direct and an indirect drivers of purchase intentions of low-involvement environmental goods (Coşkun et al., 2017). Another study conducted in Mexico, found that environmental attitudes of consumers influenced their willingness to pay a premium price for an environmentally-certified products. It is also observed that price may not be a common hindrance for the acceptance of the products (Husted et al., 2014). Another study found that knowledge of young consumers about green products determined their actual purchase, thereby, highlighting the importance of awareness related to renewable energy products (Kanchanapibul et al., 2014). It is also suggested that marketing managers and policymakers might consider a blend of customers ecological behaviors along with demographic and attitudinal variables, such as, perceived consumer effectiveness, environmental and social values, instead of myopic outlook, viz, high or low adoption levels of pro-environmental behaviors (González et al., 2015). Similarly, another researcher stated that eco-centric and anthropocentric contributes in explaining conservation behavior, membership in environmental organizations 1) Utility Customer Reasons for lack of Interest in Solar Panels in the United States, as of March 2016, from http://www.statist a.com/statistics/567212/reason-for-solar-panel-disinterest-in-theus-among utilitycustomers/ (Accessed 01 April 2017). and the indifference towards environment (Thompson and Barton, 1994). Another study related to Altruism refers to voluntary behavior that benefits others (Krebs, 1970). A strong positive correlation between altruistic orientation and individuals’ willingness to pay for environmental goods (Kumakawa, 2017). Women places more value in altruism as compared to men. Hence, gender differences in altruism is the basis of gender differences in environmentalism (Dietz et al., 2002). Similarly, there are other variables affecting green consumption, viz, altruistic values, environmental concern, environmental knowledge and being skeptical towards environmental claims (Mostafa, 2009). Another study conducted on green restaurant, found that high-altruism group showed a strong positive attitude towards consumption in green restaurants (Shen, 2017). While analyzing sample contributing to a Voluntary Contribution Mechanism based program, author found that altruism and egoism motives as underlying contributors (Oberholzer, 2001). In another study, authors had created a social – psychological model of environmental concern, where, social and institutional structure, values outlining general beliefs and worldviews, such as environmental concerns and altruistic norms were included (Stern et al., 1995). Studies regarding global identity showed that individuals with a glocal cultural identity exerted a positive relationship between materialism and environmentally friendly behaviour (Strizhakova & Coulter, 2013). Significantly, individuals with higher global identity also projected pro-environmental activism (Renger & Reese, 2017). Another study related to local identity revealed a sacrifice aspect, where it was found that core argument of local identity among consumers evoked sacrifice mindset (Xu et al., 2007). In simple words, people were ready to accept and purchase locally made products as against non-local products. Sometimes companies resort to positioning their products as having local roots with the aim of reducing consumers’ price sensitivity (Loureiro & Hine, 2002). Studies regarding environment-based purchasing behaviour, as conducted by authors on green tariff mechanism revealed that an individual’s contributions were directly linked with their spending pattern on private goods (Mitra & Moore, 2018). Advertising Rachana Rai, BB Pradhan, Neeta Dhusia Sharma, Ajeya Jha 3 campaigns which are directed towards increasing consumer demands for green energy should emphasize on psychological brand benefits along with environment and utilitarian benefits as it may lead to positive influence in purchase behaviour as suggested (Hartmann et al., 2012). In terms of attitudinal factors, adopters of eco-innovation exhibited high levels of pro-environmental values, beliefs and personal norms, similarly study related to environmental beliefs revealed that the adoption group had higher awareness related to consequences of using fossil fuels as compared to other groups (Jansson et al., 2011). And may be encouraged to do so by providing temporary subsidies for early adopters(consumers) where people need not wait (Ansar et al., 2009). Economist developed theoretical models to study external conditions of public goods, which indicated that individuals have little incentive to privately pay for public goods and that they chose to free ride without paying any costs (Olson, 1965). Meaning, they would want to get the benefits of renewable energy products which is purchased by neighbours. Coming to the studies related to environment based sustainable development, researcher mentioned that effective energy conservation nudges must be targeted (Costa et al., 2013). Also, that peoples’ biospheric values are related to moral obligation of reducing household energy (Steg et al., 2005). Another study revealed that paternalistic altruism is another form, where, an individual is concerned about satisfaction that others derive from a particular public good (McConnell, 1997). In simple words, it means that people get satisfied when they see others enjoying walk at the park. This outlook if adopted by every individual where everyone is working for the satisfaction of public, might help in achieving holistic sustainable development. However, according to Massachusetts Department of Environmental Protection, consumers’ may perceive green products to be of inferior quality due to low technical performance as compared to other conventional brands 2) . For studies related to energy consciousness, the researcher 2) Massachusetts Department of Environmental Protection (2002). Barrier/Motivation Inventory No. 3. Retrieved July, 2003 from http://www.state.ma.us. mentioned that attitude towards green electricity was associated to awareness of consequences of environmental problems to oneself and self-transcendent (Hansla et al., 2008). Several studies which has used demographical factors, socio-economic factors and psychology factors have shown that environmentally conscious consumers are better educated, have higher income, have higher socio-economic status and are politically liberal (Balderjahn, 1988). Research conducted on renewable energy is pan world addressing topics related to technology, designs and understanding its demand based on geographical and topographical configuration. However, when the focal point of research is on human behaviour and its probable connection towards adopting renewable energy, results vary ranging from one city to other and from one country to another as demographics are diverse and peoples’ taste and preferences alters from one product provider to another product provider. Suggestions, findings and recommendations based on renewable energy of one researcher based on one particular country may not be applicable to another country or city as there are differences in living standards and different demographics. It is clear from the literature review that most of the studies related to renewable energy are based on technical as well as behavioral prospective of customers. Also, there are wide research being carried on technology aspect of renewable energy in North East India, however, there are few researches related to understanding of consumer behaviour towards renewable energy has been carried out that too with a smaller number of parameters. Hence, present research is an attempt to understand, identify and close the gap between purchase decision and influence of socio-environment towards renewable energy products, which is equally important as it may help policy makers, manufacturers and marketers to modify strategies accordingly. The study is focused on Sikkim. This region is important as the political emphasis in the state of Sikkim is to conserve the phenomenal ecology of the state. The Government policies, unlike other regions of India, are significantly far ahead in ecological emphasis. This GLOBAL BUSINESS & FINANCE REVIEW, Volume. 24 Issue. 1 (SPRING 2019), 1-13 4 was the first State in India to ban usage of plastic. The coverage of forest in the State is 47.62% which is highest in India and is the only State where the forest coverage has increased in the last twenty years. It has also won award for Dhara Vikash Programme for conserving the rivers and streams of the State. It has also been declared as India’s most progressive state. Sikkim is the only region in the world which practices organic farming as declared by UN. In the year 2018, it has won the Future Policy Gold Award by Food and Agriculture organization of United Nation. The Government policies may have influenced Sikkimese people to be more eco-centric and therefore, this study is focused in this tiny region. Ⅱ. Methodology The research undertaken is empirical and descriptive in nature. The relationships between variables have been explored to test the hypothesis in this study. This empirical research is data-based followed by formulation and testing of the hypothesis to draw definite conclusions. The population for this research work constitutes of users and non-users of renewable energy of the chosen geographic region. The list of individuals using renewable energy products under study was obtained from Sikkim Renewable Energy Development agency (SREDA) which is the only agency supplying these products in Sikkim and from West Bengal Renewable Energy Development Agency, (WBREDA). The principle of Judgement and convenience sampling has been used to collect the samples. Despite its criticism, most researchers in humanities rely upon convenience sampling method (Fabrigar, L. R et al., 1999). However, samples have been collected from all the four districts of the State of Sikkim and two districts (namely Darjeeling and Kalimpong) of west Bengal which geographically are a part of Sikkim Himalayas. Non-users were also identified using a screening questionnaire. Total sample size is 600 with following breakup: 1. User/Non-user:174 non-user 426 users 2. Marital Status: 263 married 337 unmarried 3. Age (Years): 18-35 (115) 35-50 (250) Above 50 (235) 4. Income (Rs.): below 25,000 (233) 25,001-50,000 (225) Above50,000 (142) Existing validated tools have been used to measure socio-economic belief factors such as Ecocentrism, energy consciousness, environmentalism (purchasing behaviour and sustainability importance), global selfidentity and altruism 3) . The meaning of above-mentioned psychographic factors is given hereinunder; a) Eco-centrism: is a degree to which a person is nature-centered in his/her system of values. b) Energy Consciousness: a measure of the degree to which a consumer's sense of energy conservation influences his/her lifestyle. c) Environmentalism (Purchasing Behaviour): a measure as to how a person chooses to buy products that are considered least harmful for people and environment. d) Environmentalism (Sustainability Importance): is a degree to which a person values care towards environment and believes in making environmentally responsible decisions. e) Global Self-Identity: is the extent to which a person identifies himself with people around the world. f) Altruistic: importance a person places in his/her value system on social goals such as equality and cooperation. Ⅲ. Hypotheses Development Hypothesis is a specific testable prediction which describes what researcher expects will happen in a certain circumstance. Based on the objectives set, 3) www.marketingscales.com, an official website of Dr. Gordon C. Bruner II, where books, individual scale reviews, and the website is published and managed by GCBII Productions, LLC. Rachana Rai, BB Pradhan, Neeta Dhusia Sharma, Ajeya Jha 5 Socio-economic belief User Status Mean Significance Null Hypothesis Eco-Centrism Non-user of RE 11.03 0 Rejected User of RE 13.20 Energy Consciousness Non-user of RE 10.13 0 Rejected User of RE 12.02 Purchase behaviour based on environment Non-user of RE 10.43 0 Rejected User of RE 11.90 Environment based on sustainable development Non-user of RE 14.30 0 Rejected User of RE 16.94 Global Self-Identity Non-user of RE 29.33 0 Rejected User of RE 36.74 Altruism Non-user of RE 13.75 0 Rejected User of RE 17.61 Table 1. Socio-economic belief of respondents. the following hypotheses have been formulated for this study. Hypotheses generated are as under: H 01 : Users of renewable energy products do not have significantly higher socio environment friendly belief that non-users. H 1 : Users of renewable energy products have significantly higher socio environment friendly belief than non-users. H 02 : There are no factors influencing buying decision of users than non-users. H 2 : Users buying decision related to renewable energy products is influenced by various factors. Independent sample t-test method was used for analyzing data for socio-economic belief with the user status. This test is useful to determine if significant differences exist across two independent samples (users and non-users in this instance). The data was checked and found to follow normal distribution. For the hypothesis testing, the confidence limit was set at 95%. t-test was used to determine the significance of beliefs. The means selected for one sample test was taken as 3 being the mid value of the Likert scale. At 95% confidence limit for t – test is considered significant if it is Z value is beyond ± 1.96 and Significance (Sign.) less than 0.05. The significance level, ( α ), is the probability of rejecting the null hypothesis when it is true. For example, a significance level of 0.05 indicates a 5% risk of concluding that a difference exists when there is no actual difference. Alternately, there is a 5% risk of concluding that no differences exist when there is actual difference. Discriminant analysis has been used to determine the possibility of differentiating users and non-users on the basis of variables undertaken for the study. Result and discussion have been provided in next section. Ⅳ. Result and Discussions A. Analysis based on user status and socio-environment belief of respondents. Based on the questionnaire, the data were collected on socio-economic beliefs, such as, eco-centrism, energy consciousness, purchase behavior based on environment, environment based on sustainable development, global self-identity and altruism for both users and non-users of renewable energy products. Furthermore, mean value was computed, and significance level is analyzed. For this Independent T-test was conducted for analyzing data of Table 1, where, mean of two samples are compared, namely, for the same socio-economic belief for users of renewable energy products and non-users of renewable GLOBAL BUSINESS & FINANCE REVIEW, Volume. 24 Issue. 1 (SPRING 2019), 1-13 6 energy products. All correlations are statistically significant ( p < 0.05), refer significance column for p value. For eco-centrism, mean value of users (13.20) is high as compared to non-users (11.03), which indicates that users of renewable energy are nature centered in their values. It was found in one of the studies that early adopters of eco-innovation were confirmed of holding higher level of education as compared to non-adopters (Jansson et al., 2011). Hence, education may influence an individual’s inclination towards eco-centrism, as higher education suggests open mindset and increased learning ability. Powersa & Kocakuuml (2015) focused on wellness programs of employees in order to control rising health care premiums. Research assumes that as eco-centrism is important, Companies may adopt products of renewable energy as a first step towards employees wellness program. Similarly, for energy consciousness , mean value of users (12.02) is higher than non-users (10.13), indicating that their sense of energy conservation influences their lifestyle. According to a researcher, it is important to understand both psychological and economic perspective of why an individual participates in a premium priced, green electricity program (Clark et al., 2003). For purchase behaviour based on environment, mean value for user (11.90) is slightly higher than non-user (10.43), showing that users choose to buy products that are less harmful for people and environment. This was also found in the study on green tariff mechanism that an individual’s contributions are directly linked with their spending habits on private goods (Mitra & Moore, 2018). When it comes to behaviour of an individual, one of the authors suggested that study based on analysis of attitude, normative and control perceptions of leaders and their decision making could also be beneficial (Westaby et al., 2010). Also, that consumers are price sensitive toward green products and price affects consumers’ purchase decision (Anderson & Hansen, 2004; Ottman, 2000). Consumers may feel that they will not get value for money (Glegg et al., 2005). For environment based on sustainable development , mean value for user (16.94) is higher than non-users (14.30), indicating that users believe in making environmentally responsible decision. Similar studies indicated environmental benefits, potential of reducing long-term electricity costs and reduced risk of interruptions fuel supply in future of green electricity production (Wiser & Pickle, 1997). Several studies too suggested that consumers are prepared to pay more money for products labelled as ‘green’ (Bigsby & Ozanne, 2002; Vlosky et al., 1999). Thus, people might buy renewable energy products if it is promoted for sustainable development. Nonetheless, for global self-identity, mean value for users (36.74) are comparatively much higher than non-users (29.33), and that users identifies themselves with people around the world. There has been research related to global vs. local identity, where people buy products if it is locally made. Researcher opined that if consumers have a stronger local identity than they are willing to pay more for locally produced products (Loureiro & Hine, 2002). Finally, mean value for users (17.61) under altruism is also higher than that of non-users (13.75), signifying that users places value system on social goals. However, contradicting the result under pure altruism, the author revealed that an individual consider others contribution as a perfect substitute for their contribution (Mitra & Moore, 2018). In other words, some people do not feel obliged towards environment as other people are working for environmental benefit. Hence, null hypothesis (H 01 ) is rejected and alternate hypothesis (H 1 ) is accepted for all the factors under socio economic beliefs. In other words, users of renewable energy products have higher eco-centrism, shown higher energy consciousness, higher environment related purchase behaviour, have higher responsible decision towards environment, have high global self-identity and places more values on social goals. To further confirm the result from Table 1, discriminant analysis was conducted in order to identify potential users and non-users of renewable energy. We begin by checking the Eigen value. The larger the eigenvalue, the more of the variance in Rachana Rai, BB Pradhan, Neeta Dhusia Sharma, Ajeya Jha 7 Structure Matrix Function Global self-identity 0.682 Altruism 0.599 Eco centrism 0.520 Environment based on sustainable development 0.443 Energy consciousness 0.408 Environment based on purchase behavior 0.347 Table 3. Structure matrix for confirming socio-environment v ariable Standardized Canonical Discriminant Function Coefficients Function Eco-centrism 0.429 Energy consciousness 0.299 Environment (Purchase Behavior) 0.160 Environment (Sustainable Development) 0.062 Global self-identity 0.595 Altruism 0.463 Table 2. Canonical Discriminant Function Coefficients for socio-environment beliefs the dependent variable is explained by that function. We get an Eigen value to be 1.287 which is very not high but still acceptable. An eigenvalue indicates the proportion of variance explained. (Between-groups sums of squares divided by within-groups sums of squares). The larger the eigenvalue, the more of the variance in the dependent variable is explained by that function. Thus, it may be interpreted that it is worthwhile to use discriminant analysis in this instance. The value of corresponding Wilk’s Lambda is 0.437. Wilk’s Lambda is the ratio of the within-groups sum of squares to the total sum of squares. This is the proportion of the total variance in the discriminant scores not explained by the difference among groups. Value of Lambda varies between 0 and 1 and a small Lambda indicates that the difference is significant. In this case we find it to be weakly low. Chi-square is also the measure of whether the two levels of function significantly differ from each other based on the discriminant function. A high value (In this case it is 493.3 which is significantly high) indicates that the function discriminates well. The associated significance value indicates whether the difference is significant. In our case this is further confirmed as the significance value is near 0 – much below 0.05. In order to find the top three factors leading to the purchase of renewable energy, canonical discriminant function coefficient was conducted based on the result from Table 1. Table 2 enlisted standard canonical discriminant for socio-environment beliefs. The scores listed in Table 2 implies that global self-identity is the main socio-economic variable followed by altruism and eco-centrism and subsequently other variables follows. For this study a threshold of 0.4 differentiates meaningful functions from the non-meaningful ones. From the ranking it is understood that users of renewable energy identify themselves as the citizens of the world and is not limited to any State or a Country, followed by higher value on altruism and that their attitude towards energy conservation (eco-centrism) influences their lifestyle too. Their purchase decision seems to be influenced by these socio-economic variables. Hence, while promoting the renewable energy products, marketers might highlight testimonies of satisfied users while focusing on how their choice enabled them to synchronize their lifestyle and simultaneously uphold their global identity. To further validate whether these three variables, i.e., global self-identity, altruism and eco-centrism, are correct in the true sense, structure matrix test was performed as tabulated in Table 3. The result from Table 3 validate and confirm the first three socio-economic variable’s, namely, global self-identity, altruism and eco-centrism. This correlates the fact that the above socio-economic factors have influence on the purchase decision related to renewable energy products. To classify and to predict groups of users and non-users of renewable energy, the data was further analyzed and listed in Table 4. The table listed checks the count percentage, it is confirmed that 95.4% count for non-users and 95.3% count for users were confirmed, which is a satisfactory percentage of count. Hence it can be concluded that the results obtained GLOBAL BUSINESS & FINANCE REVIEW, Volume. 24 Issue. 1 (SPRING 2019), 1-13 8 Factors User Status Mean Significance Null Hypothesis Saves money Non-user of RE 5.78 0.008 Rejected User of RE 6.56 Beneficial Non-user of RE 7.30 0.033 Rejected User of RE 6.49 Convenient Non-user of RE 5.25 0 Rejected User of RE 6.69 Lower price Non-user of RE 4.40 0 Rejected User of RE 5.41 Buy if protects environment Non-user of RE 5.26 0 Rejected User of RE 7.76 Buy if provides local employment Non-user of RE 5.17 0 Rejected User of RE 7.70 Table 5. Factors leading to purchases of the renewable energy products Classification Results User status Predicted Group Membership Total Nonuser User Original Count Non-user of RE 166 8 174 User of RE 20 406 426 % Non-user of RE 95.4 4.6 100.0 User of RE 4.7 95.3 100.0 95.3% of original grouped cases correctly classified. Table 4. Classification result is satisfactory and may be scientifically accepted. Further, for testing hypotheses H 02 and H 2 , as mentioned in III and IV in hypotheses development section, is dealt here under. B. Analyzing factors leading to purchase based on user status of respondents. All correlations are statistically significant ( p < 0.05). From Table 5, researcher found that mean value for users (6.56) is more than non-users (5.78) when it comes to saving money . Under product beneficial factor , mean value for user (6.49) is less than non-user (7.30) which indicates that product benefit is an attractive factor for non-users of renewable energy. Similar result obtained for other factors too showed users mean value was higher than non-users. A study conducted by Wessells opined that assessing environmental attributes of products are difficult for consumer as compared to other product attributes (Wessells et al., 1999). Though consumers might find it difficult to assess but this factor must not be ignored. For convenient as a factor, users mean value (6.69) is higher than non-users (5.25), as that consumers purchasing decision is not grounded on environmental concern alone, but on convenience, availability, price and quality as revealed (Johri & Sahasakmontri, 1998). Low price as another factor too gained high mean value (5.41) of users as against non-users (4.40), study conducted by other researcher revealed that respondents are willing to sacrifice environmental certification for the sake of low price of the products (Anderson & Hansen, 2004). Another