Effect of the food traceability system for building trust: Price premium and buying behavior

Facing a series of food-related accidents, consumers worldwide have become more concerned with the safety of the food they consume. The Food Traceability System has been introduced in many countries to reduce the uncertainties originating in the food purchasing process by providing information about the entire food process, from farm to table, in terms of quality and safety. However, this relatively new information system has not yet been explored with an academic approach. The main goal of this study was to determine whether reduced uncertainty provides benefits for producers and consumers, thereby warranting the adoption of the food traceability system. We also analyzed the factors and mechanisms that explain consumer behavior within the system. We have modified and applied the uncertainty model of Pavlou et al. (MIS Quarterly 31(1):105–136, 2007) derived from the principal–agent perspective in order to fulfill our research objectives. Through a survey conducted in Korea, we found that Korean consumers were not only willing to purchase greater quantities of food, but also willing to pay more for food managed with the traceability system. The results of this study indicate that the mitigated uncertainty given by the traceability system plays a key role in price premium and purchase intention. In addition, mitigated uncertainty has a larger impact on purchase intention than on price premium, implying that consumers are inclined to buy more rather than pay more. These results provide valuable suggestions for producers for how to deal with increased costs resulting from adoption of the system. We also found that in the context of the Food Traceability System, perceived uncertainty was mitigated as a result of a reduced fear of seller opportunism originating from increased trust and reduced information asymmetry originating from increased product diagnosticity, informativeness, and trust. Reduced fear of seller opportunism had a stronger impact than reduced information asymmetry on perceived mitigated uncertainty.

[1]  Kar Yan Tam,et al.  Understanding the behavior of mobile data services consumers , 2008, Inf. Syst. Frontiers.

[2]  Yogesh Kumar Dwivedi,et al.  Guest Editorial: A profile of adoption of Information & Communication Technologies (ICT) research in the household context , 2008, Inf. Syst. Frontiers.

[3]  Victor Callaghan,et al.  Affective e-Learning in residential and pervasive computing environments , 2008, Inf. Syst. Frontiers.

[4]  Ben Light,et al.  Social networking and digital gaming media convergence: Classification and its consequences for appropriation , 2008, Inf. Syst. Frontiers.

[5]  Ángel Herrero Crespo,et al.  Explaining B2C e-commerce acceptance: An integrative model based on the framework by Gatignon and Robertson , 2008, Interact. Comput..

[6]  Jose Maria Gil,et al.  Risk perception and consumer willingness to pay for certified beef in Spain , 2007 .

[7]  E. Forås,et al.  Challenges regarding implementation of electronic chain traceability , 2007 .

[8]  Jihye Park,et al.  Consumers’ channel choice for university-licensed products: Exploring factors of consumer acceptance with social identification , 2007 .

[9]  Katerina Pramatari,et al.  RFID-enabled traceability in the food supply chain , 2007, Ind. Manag. Data Syst..

[10]  LiangHuigang,et al.  Understanding and mitigating uncertainty in online exchange relationships , 2007 .

[11]  Paul A. Pavlou,et al.  Understanding and Mitigating Uncertainty in Online Exchange Relationships: A Principal-Agent Perspective , 2007, MIS Q..

[12]  Ioannis Manikas,et al.  Traceability data management for food chains , 2006 .

[13]  Paul A. Pavlou,et al.  Understanding and Predicting Electronic Commerce Adoption: An Extension of the Theory of Planned Behavior , 2006, MIS Q..

[14]  P. Pavlou,et al.  Understanding and Mitigating Uncertainty in Online Environments: A Principal-Agent Perspective , 2006 .

[15]  D. Dickinson,et al.  Experimental Evidence on Willingness to Pay for Red Meat Traceability in the United States, Canada, the United Kingdom, and Japan , 2005, Journal of Agricultural and Applied Economics.

[16]  M. McEachern,et al.  Consumer perceptions of meat production: enhancing the competitiveness of British agriculture by understanding communication with the consumer , 2005 .

[17]  C. Greene,et al.  Price premiums hold on as U.S. organic produced market expands , 2005 .

[18]  Susan Miles,et al.  Public attitudes towards genetically-modified food , 2005 .

[19]  Jill E. Hobbs,et al.  Information asymmetry and the role of traceability systems , 2004 .

[20]  Izak Benbasat,et al.  Virtual Product Experience: Effects of Visual and Functional Control of Products on Perceived Diagnosticity and Flow in Electronic Shopping , 2004, J. Manag. Inf. Syst..

[21]  Fred Kuchler,et al.  Food Traceability: One Ingredient in a Safe and Efficient Food Supply , 2004 .

[22]  Paul A. Pavlou,et al.  Building Effective Online Marketplaces with Institution-Based Trust , 2004, Inf. Syst. Res..

[23]  Adrie J. M. Beulens,et al.  Managing traceability information in manufacture , 2003, Int. J. Inf. Manag..

[24]  Paul A. Pavlou,et al.  Evidence of the Effect of Trust Building Technology in Electronic Markets: Price Premiums and Buyer Behavior , 2002, MIS Q..

[25]  Xueming Luo.  Uses and Gratifications Theory and E-Consumer Behaviors , 2002 .

[26]  Roger W. Spencer,et al.  Quality, Uncertainty and the Internet: The Market for Cyber Lemons , 2002 .

[27]  L. Frewer,et al.  Impact of BSE on attitudes to GM food , 2001 .

[28]  Sirkka L. Jarvenpaa,et al.  Consumer trust in an Internet store , 2000, Inf. Technol. Manag..

[29]  Qimei Chen,et al.  Attitude Toward the Site , 1999 .

[30]  Harvey Meyer,et al.  WHEN THE CAUSE IS JUST , 1999 .

[31]  Robert E. Smith,et al.  Consumer Processing of Product Trial and the Influence of Prior Advertising: A Structural Modeling Approach , 1998 .

[32]  Stanton G. Cort,et al.  Information Asymmetry and Levels of Agency Relationships , 1998 .

[33]  Colin Camerer,et al.  Not So Different After All: A Cross-Discipline View Of Trust , 1998 .

[34]  Kent B. Monroe,et al.  Causes and consequences of price premiums , 1996 .

[35]  Robert H. Ducoffe.  ADVERTISING VALUE AND ADVERTISING ON THE WEB , 1996 .

[36]  Manoj K. Agarwal,et al.  An empirical comparison of consumer-based measures of brand equity , 1996 .

[37]  D. Aaker.  MEASURING BRAND EQUITY ACROSS PRODUCTS AND MARKETS , 1996 .

[38]  Paul R. Milgrom,et al.  Economics, Organization and Management , 1992 .

[39]  I. Ajzen.  The theory of planned behavior , 1991 .

[40]  C. Shapiro.  Premiums for High Quality Products as Returns to Reputations , 1983 .

[41]  D. F. Blankertz,et al.  Risk taking and information handling in consumer behavior , 1969 .

[42]  Stefania Borghini,et al.  European advances in consumer research , 2008 .

[43]  G. Jung,et al.  The Adoption of Traceability Systems by Farmers and Its Consumers' Recognition , 2007 .

[44]  [The General Food Law]. , 2004, Tijdschrift voor diergeneeskunde.

[45]  H. F. Gale,et al.  Electronic Outlook Report from the Economic Research Service , 2004 .

[46]  Jagdip Singh,et al.  Agency and trust mechanisms in consumer satisfaction and loyalty judgments , 2000 .

[47]  Kjell Grønhaug,et al.  Why Perceived Risk Failed to Achieve Middle Range Theory Status: a Retrospective Research Note , 1995 .

[48]  A. Tversky,et al.  Prospect theory: analysis of decision under risk , 1979 .