Which is the relationship between the product’s environmental criteria and the product demand? Evidence from the French food sector

Abstract

The purpose of this paper is to identify which environmental criteria can influence the product demand in a context of business-to-business. These criteria can be related to the product's environmental characteristics, to the organization strategies or green practices developed by the firms and to the supplier selection process. Building the conceptual framework from the literature review, a set of environmental criteria were extracted, selected and validated. These criteria were used as a basis for the definition of a questionnaire survey that was sent to 5820 professionals from the food industry in France. The analysis of the 248 complete answers shows that the environmental characteristics of the product can influence product's demand. The most influential attribute to improve the product's environmental quality that increases the product's demand is the introduction of organic labelled raw materials. Besides, the practices that influence mostly the product demand are related to the geographical proximity with the stakeholders. Moreover, the results show that the most important selection criterion when choosing a supplier is the importance given to the quality and environmental performance of components offered. Hence, we show that in the French food market, as opposite to what is usually assumed in many research works, the carbon emissions yield during the production process and transportation process have still no significant impact on products' demand. Lastly, in this work, we quantify the demand increase that company can achieve when enhancing the environmental quality of its products. We show that the impact of the enhancement of those criteria on the demand can have different aspects. 55.6% of respondents advocate for a demand increase and most of them (33.6%) estimate this increase between 5 and 10% of the initial demand. Finally, some respondents (4.8%) indicate that the enhancement of environmental quality does not necessarily increase the demand. However, without efforts to enhance the environmental quality of their products, the demand can decrease. These findings allowed concluding that the business-customers are becoming more and more exigent by privileging organic labelled and local products and making that the companies analyse the geographical proximity with the stakeholders as a key factor during the selection process. We provide companies managers in food industry with better understanding about the environmental criteria that increase the products demand helping them to target the right decisions and to be efficient in their process of environmental quality enhancement. We also assess and try to quantify and give an estimation about the demand evolution regarding the enhancement of product's environmental quality. Our findings are also helpful for Operational Research community.

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