Path-dependent thinking and ecoproducts An empirical study of socio-cognitive models and product propositions of ford and volvo cars

Book chapter, 2017

The debate as to whether it pays to be 'green' or under what circumstances it pays to be green may underestimate the issue of the ability of companies to create value in environmentally benign offerings captured from customers or other economic actors. This chapter address this issue by looking into why two companies in the automotive industry do not sell their environmentally benign car offers in sufficiently high volumes and briefly compares with two alternative and potentially more successful offerings. The study reveals that the industry's perceived reluctance towards becoming more environmentally friendly may not be rooted in a lack of willingness, lack of ethics or lack of belief in the strategic relevance of environmental issues. Instead, it may be caused by institutionalised perceptions and engineering practices creating a bias in the understanding of consumers' behaviour-driven expectations on environmentally benign products. Consumers follow rational choice on environmental issues in situations of high private cost, relatively independent of their attitude. The study indicates that 'high cost' may be very low, which suggests a need for innovative solutions addressing not only the monetary issue but also the symbolic, behavioural and organisational attributes of the product. Findings from the comparison suggest a potential solution in bundling common-good and private-good attributes.