PACIS 2020 Proceedings

Abstract

Aided by the Internet of Things (IoT) technologies, more firms are competing in the smart green product market. IoT-enabled smart green products possess environmental value, network value, together with the conventionally functional value. However, how should competing firms design smart green products and set pricing strategies has not been deeply studied from the perspective of consumer environmental awareness and network externality. This study builds an analytical model to investigate the competitive implications for IoT-enabled products. Interestingly, we find that the firm without a competitive advantage on functional value may outperform the advantaged firms by designing greener products. By leveraging the environmental value, the disadvantaged firm can realize a larger share and higher profit especially when consumers’ environmental awareness is high. This finding highlights the interplay between functional value and environmental value on optimal strategies of product design and pricing for IoT-enabled smart products.

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