Over recent decades, organizations have increasingly adopted eco-labels to signal their products' sustainability and ethical attributes. While this proliferation reflects consumer demand and institutional pressures, it has also raised concerns about how eco-labels are perceived in terms of credibility, quality and expensiveness, and how these perceptions influence willingness to pay a premium. This study further examines whether such perceptions depend on receiver's trust in the government. Hence, this study integrates signaling theory and the elaboration likelihood model to answer how source-related signals (government vs private labels) interact with receiver-related information processing (trust in government) to influence consumer perceptions and willingness to pay a premium.
This study employs a between-subjects factorial experimental design to investigate the influence of eco-label source, government versus private certification, on consumer perceptions of credibility, quality and expensiveness, and how these perceptions subsequently shape willingness to pay a premium for eco-labeled products. Furthermore, this study checks the moderating role of trust in government for the relationship between eco-label sources (government and private) and consumer perceptions of credibility, quality and expensiveness.
The findings of the study indicate that the perceptions of credibility, quality and expensiveness do not significantly differ for the two eco-label sources (government and private) at a 95% confidence interval. Still, perceptions of expensiveness vary at a 90% confidence interval, such that a product with a government eco-label is perceived to be less expensive than a private eco-labeled product. Among the three consumer perceptions, only quality demonstrates a significant positive association with willingness to pay a premium. Furthermore, the inclusion of the moderator, trust in government, alters these relationships: under conditions of high trust in government, the associations between government eco-label and credibility, as well as between government eco-label and quality, become significant.
The study demonstrates that both the source of eco-labels (government vs private) and trust in government shape consumer perceptions of eco-labeled products, which in turn influence their willingness to pay a premium. The key finding is that government eco-labels are not always superior to private certifications, except under conditions of high institutional trust. The study provides practical insights and theoretical contributions by extending the body of knowledge on eco-label credibility, consumer evaluations, trust in institutions and sustainable consumption.
