Consumer Behavior Research Project

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| |Consumer Behavior Research Project 2011 | | |[pic] | |6-12-2011 |Engaging in environmental responsibility increases the profitability of a company. | | | |

Consumer Behavior Research Project 2011
Engaging in environmental responsibility increases the profitability of a company.


More and more people are becoming aware of the importance of taking care of our environment. Almost everybody has heard about environmental problems (likely) caused by human consumption. In order to stop the constant decline in natural resources and the excessive demand of consumers, things need to change. Business has to change their philosophies into a focus on not harming human and ecosystems (Hofstra, 2011). But in our ‘free market economy’ companies need to be able to make a profit or at least break-even from a change, before they will embrace it. That is why this research papers answers the question: Can a company increase their profitability by engaging in environmental responsibility? To answer this question, the following problem statement was formulated:

Engaging in environmental responsibility increases the profitability of a company.

Two sub questions need to be answered first:

1. Do consumers want eco-friendly products?

2. Do customers act upon their environmental believes?

3. Is there empirical evidence of increased profits by engaging in environmental responsibility?

The first two sub questions are questions that must be answered positively for the hypothesis to hold. Without consumers willing to purchase products from environmentally responsible companies, there is no way that companies can make extra profit from engaging in environmental responsibility. Although a positive answer on the first two questions is a condition for the hypothesis to hold, it is still no conclusive evidence that engaging in environmental responsibility will increase profits. For conclusive evidence empirical proof is needed, which will be provided in the third sub question. The expectation is that engaging in environmental responsibility will increase the profitability of a company.

Methodology of the research

The first two sub-questions will be answered by examining the results of the provided questionnaire (among 24 respondents by e-mail). Several statistical tests will be used to determine the significance of outcomes and the relationship between several variables.

In order to research the third sub-question of the research project, to test whether firms make more profits when they engage in an environmental responsibility, a literature study will be provided to review studies that look at the market value of firms. Due to the limited amount of time and resources for this research project, the use of existing science and literature is required to give a useful insight into the problem statement. These sources will provide an overview of the profitability of firms that are engaged in environmental responsibility.

Theoretical background

Our research considers 2 backgrounds.

First, to research consumers, that is, the demand for environmentally responsible produced products, the assumption is made that consumers are aware of the impact consuming has on the environment. Recent years, media has reported frequently about environmental changes induced by mass consumptions and its corresponding mass production. Furthermore, more products use labels to signify they are produced in an eco-friendly manner. Also companies actively try to build their ‘green’ image with...
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