The Role of Buying Center Members Individual Motivations for the Adoption of Innovative Hybrid Offerings - The Case of Battery Electric Vehicles in Corporate Fleets This paper investigates the adoption of innovative hybrid offerings in the case of battery electric vehicles (BEVs) in corporate fleets. In an exploratory research using depth interviews with 16 experts for BEVs, different buying center roles as well as their individual motivations for the adoption of BEVs could be identified. We develop a twotier typology of buying center members individual motivations relating to both personal interests (such as environmental concern) and role-based motivations (such as the promotion of the corporate image). These motivations either foster or hinder the adoption of BEVs in corporate fleets. Based on the typology, implications for theory, for management practice and for government can be developed to enhance the adoption of BEVs in corporate fleets. Keywords: Hybrid offerings, innovation, individual motivations, battery electric vehicles, organisational buying behavior Track: Business-to-Business Marketing 1
1 Introduction In the past, more and more manufacturers have started to combine their products with services to strengthen their positions in highly competitive markets and to deliver a higher value to the customer (e.g., Shankar, Berry, & Dotzel, 2009; Ulaga & Reinartz, 2011). These innovative combinations of products and services in business markets are referred to as hybrid offerings (Ulaga & Reinartz, 2011). However, not only the combination of products and services may be innovative such as bundling a machine with training and financial services. The nature of the hybrid offering s products and services themselves may be highly innovative and so far unknown to the customer. Then the success of those innovative hybrid offerings mainly depends on the business customers decision to adopt those hybrid offerings. The case of battery electric vehicles (BEVs) in corporate fleets is an example of such innovative hybrid offerings. The hybrid offering consists of innovative products such as the vehicles being charged with electricity instead of fuel as well as the battery charging infrastructure. BEVs and the infrastructure are accompanied by a number of services such as servicing of the vehicles and the infrastructure, IT-Services controlling the charging of the BEVs, consulting services regarding the integration of BEVs into the existing, fuel-based fleet, back-up services (e.g., provision of extra vehicles in case of default of BEVs) or emergency services (e.g., telephone hotline). All components of the hybrid offering are highly innovative and unknown to most of the fleet customers. Many car manufacturers such as Renault, Nissan, Smart, Mitsubishi and BMW have started to produce and offer BEVs. Moreover, new players have emerged in the market integrating BEVs, the charging infrastructure and accompanying services into a hybrid offering. Although many Governments are subsidizing BEVs, the adoption of BEVs in corporate fleets still remains at a low, almost negligible level. The total costs of ownership (TCO), in comparison to fuel-based vehicles, are often mentioned as barriers for the adoption of BEVs in corporate fleets. However, we feel that this view is not differentiated enough to explain why corporate fleet customers have rarely adopted hybrid offerings regarding BEVs so far by. The resulting research questions can be formulated as follows: (1) What drives (and impedes) customers decision to adopt highly innovative hybrid offerings in the case of BEVs in corporate fleets? (2) How can car manufacturers, system integrators and Government foster the adoption of BEVs in corporate fleets? A closer look at the literature reveals that the current research on hybrid offerings fails to provide a detailed analysis on the part of the customer. In particular, the analysis of the customers adoption-decision when all the components of the hybrid offering are highly innovative has been neglected so far. In contrast, the technology acceptance model (TAM) (e.g., Davis, 1989) or the theory of reasoned action (TRA) offer a more detailed explanation of the adoption of innovative products and services in companies. However, these theories very much focus on the use of software in companies when the decision to purchase and integrate a new software program into the company has already been made. The level of the analysis, i.e. the user level, is therefore inappropriate to answer our research question. Therefore, we base our research on the more general organizational buying behavior literature. In particular, we use Webster and Wind s (1972) role model of the buying center in order to provide a more fine-grained explanation of the adoption of innovative hybrid offerings on the part of the customer. Moreover, we use exploratory research in order to investigate the role of the buying-center members in the adoption of innovative hybrid offerings. We discovered that buying center members individual motivations are a key in the corporate adoption process of innovative hybrid offerings. 2
With this research we make the following contributions to the literature. First, using the buying center model, we identify different buying center members being involved in the adoption-decision of innovative hybrid offerings in the case of BEVs in corporate fleets. Second, we identify different individual motivations of different buying center members having an impact on the adoption decision. We provide a typology of personal as well as rolebased motivations and we indicate a positive or negative impact on the adoption decision. In doing so, we extend the current literature on hybrid offerings by providing a more detailed analysis of the adoption decision of innovative hybrid offerings on the customers side. The remainder of this paper is organized as follows. In the next section, we briefly outline the literature relating to the adoption of innovative hybrid offerings. Thereafter, we outline the methodology used in this research. In the fourth section, we introduce the typology of buying center members individual motivations and their impact on the adoption decision of the BEV hybrid offering. The paper concludes with implications for theory, management and government, limitations as well as with potential avenues of future research. 2 Literature Review From about the 1990es onwards, manufacturers in different industries have started to enhance their products with additional, accompanying services to exploit new sources of revenue. Lately, the notion of hybrid offerings has gathered increasing attention in academic research (e.g., Shankar, Berry, & Dotzel, 2007; Shankar, Berry, & Dotzel, 2009; Ulaga & Reinartz, 2011). According to Ulaga and Reinartz (2011), hybrid offerings are combinations of industrial goods and services for business markets. For example, Shankar, Berry, and Dotzel (2007) introduce a typology of four different types of hybrid offerings regarding the complementarity and independence of the product and service. However, they also include bundles of products and services for consumer markets. Shankar, Berry, and Dotzel (2009) provide rules how to develop successful hybrid offerings. Ulaga and Reinartz (2011) investigated manufacturing firms relevant capabilities to successfully provide hybrid offerings. As mentioned above, in our case, the hybrid offering consists of BEVs, the charging infrastructure as well as additional services. All elements of the hybrid offering are highly innovative in nature - not only the combination of products and services. Therefore, we use the term innovative hybrid offering accommodating BEVs level of innovativeness. In order to explain the adoption of innovative hybrid offerings, we consulted the literature relating to technology acceptance. For example, the technology acceptance model focused on perceived usefulness and perceived ease of use as the main drivers of users adoption of IT systems (e.g., Davis, 1989). Based on Davis (1989), the technology acceptance model has been further elaborated. Later publications have found that intrinsic motivations (Venkatesh, 2000) as well as extrinsic motivations such as subjective norms (Venkatesh, Morris, Davis, & Davis, 2003) or image (Moore & Benbasat, 1991) have an impact on users acceptance of new technologies. However, this line of research very much focuses on employees individual decisions to use a new technology (e.g., a software) and neglects management s prior decision to purchase and integrate the new technology into the company. To answer our research question, we turned to the more traditional and well-established organizational buying behavior literature. For example, buying center model (Webster & Wind, 1972) provides a deeper understanding of the roles involved in organizational buying decisions. According to the buying center model, different roles such as the decider, buyer, user, influencer and gatekeeper are involved in the decision process. Later, Bonoma (1982) added the initiator to the buying center. The model is descriptive in nature. In order to explain the adoption of innovative hybrid offerings further insights are necessary into the factors 3
driving the adoption decision for different members of the buying center. From the technology acceptance literature, it can be presumed the buying center members individual motivations play a pivotal role in the adoption process. 3 Methodology Apart from the literature research, we started our exploratory research with informal discussions with both researchers and practitioners who were involved in governmentally funded projects investigating the adoption of BEVs. However, so far the research of these informants very much concentrated on the end-consumer s perspective and less on the fleet customer s perspective. Therefore, we decided to conduct depth interviews with experts from diverse fields relating to BEVs to get an encompassing picture of the research topic (Eisenhardt & Graebner, 2007; McCracken, 1988). We selected car manufacturers, utilities, system integrators, associations, consultancy companies as well as other researchers as the groups being most informed about BEVs. The aim was to uncover new insights in the drivers and barriers of adoption of BEVs in fleets and the actors in the decision process. We designed a semi-structured interview guideline. The first part of the interview was narrative in nature, i.e., respondents were asked to narrate what they perceive were the drivers and barriers for the adoption of BEVs in corporate fleets and who were the actors involved. In the second part, precise, standardized questions were asked regarding the drivers and barriers of the adoption of BEVs as deduced from the literature. All questions were open questions. The expert interviews were conducted by telephone from April to June 2013. Only two interviewers conducted the interviews to avoid any interviewer bias. They reciprocally followed and controlled interviews to ensure comparability. On average, the expert interviews lasted 32 minutes. They were recorded on a virtual telephone conference platform, downloaded as an audio file and transcribed verbatim. Three researchers were involved in developing the coding plan (Gläser & Laudel, 2010). In a first step, the two researchers who conducted the interviews independently developed a coding plan. In a second step, the coding plans were compared and discussed involving the third researcher. The resulting coding plan referred to the roles of the buying center as well as other actors involved in the adoption. Moreover, coding referred to the drivers and barriers of adoption relating to the different roles of the buying center. Based on the coding plan, the codes were allocated by one researcher and verified by the other two researchers. 4 A Typology of Buying Center Members Individual Motivations The experts indicated that different persons are involved in the decision to adopt BEVs in corporate fleet. These persons could be related to different roles taken from the buying center model as suggested by Webster and Wind (1972) and Bonoma (1982). In particular, the decider (e.g., the general manager or the owner), the buyer (e.g., purchasing agents and fleet managers) and the user (e.g., staff using the cars) could be identified as playing a pivotal role in the adoption process. Moreover, the roles of initiators (e.g., staff in the Marketing, HR or CSR department), influencers (e.g., consultants or network partners) and gatekeeper could be identified. From the interviews, we found that deciders and buyers play the most important role in the adoption decision of BEVs. Therefore, we subsequently focus on these two roles and their individual motivations in the adoption process. Individual motivations relate either to personal interest as intrinsic motivations being linked to a person s characteristics or to role-based motivations as extrinsic motivations rooted in the company s structure. 4
4.1 Deciders Regarding the deciders individual motivations, our findings show that personal interests have a positive impact on the adoption of hybrid offerings. Experts mentioned subject-related interests like technological curiosity or environmental friendliness as major factors for executives to adopt BEVs. To gain experience with new technologies as well as a sense of duty towards the environment can be reasons for executives to promote the adoption of BEVs. This instance is summarized by expert EF3 : I would say that for general managers the decision... is similar to endconsumers vehicle purchases: On the one side, there is the desire to try a new technology, simply driven by a general affinity towards technology. This can also be ecologically motivated. Also because a) one is interested in technology and b) one wants to do good for the earth or the environment and concentrates specifically on innovations with an affinity to technology that can contain an ecological variant or ecological aspects. Therefore, the environmental concern is an aspect. Another personal motivation for deciders is the function as a role model for other employers. Several experts mentioned that members of the executive board have to keep their influence on employees in mind. For example expert EI1 stated: To a certain degree, top management.. serves as a role model and if top management drives such a vehicle [battery electric vehicle], employees will deal with this topic differently. In contrast to these personal interests, executives have to act in order to reach the company s goals resulting in role-based motivations. Our experts underlined that high costs (total cost of ownership) of BEVs will have an influence on the companies (financial) performance and thus reducing the chance of adoption. On the other hand executives have interest in promoting the corporate image. Expert EV1 stated: I think that the image is good and if the company says, for my business model this pays off or it promises to break even, then I have an added value because I can position my company as a company that uses this new mobility: quiet, clean and so on. This is, I think, an important aspect. 4.2 Buyers The second role this paper focuses on is the role of the buyer. Here experts indicate the the fleet manager and purchasing agent as relevant members of the buying center. The strongest motivations of these individuals are role-based and directly connected to their task: In my view, the fleet manager has a clear task in most of the cases: to ensure firm's mobility at the lowest possible costs, with an emphasis on the latter. (EI3) However, fleet managers also have got personal interests which will influence the adoption of BEVs. Expert ED1 indicates that switching to BEVs and implementing an IT solution for managing the fleet is connected to a loss of power: For fleet managers, our system [a system with battery electric vehicles that ensures a service level regarding the availability of vehicles] means a reduction of number of vehicles in the fleet. This is, so to say, virtually a loss of loss of power. Therefore, the more cars (s)he has, the more important (s)he is. In addition, fleet managers and purchasing agents want to be popular with their staff by buying those cars the employees want to drive: And this includes a certain vehicle as a status symbol. And the battery electric vehicles you can buy in Germany at the moment do not follow this principle. These 5
cars are micro-vehicles and compact cars. And this is simply a mental barrier. (EF4) Table 1 summarizes the analysis above. Moreover, it proposes a typology of different buying center member s individual motivations relating to either personal interests or role-based motivations. Moreover, it indicates a positive () or negative (-) impact on the adoption decision regarding the integration of BEVs into a corporate fleet. Buying Center Role Decider Buyer User Influencers Gatekeeper Initiator Position in the Organization General manager / owner Fleet manager Motivations involved in the adoption of BEVs Impact on Personal interest Role based Adoption personal interest in new technologies personal interest in ecology role model function /- performance of the company - competitive advantage /- corporate image popularity with staff protection of power - fleet costs - fleet availability - personal interest in new Purchasing technologies agent fleet costs - Staff driving brands - BEVs status symbol /- Consultants sale of consulting services Network recommendations, word of members mouth /- Fleet manager avoid changing established systems - Marketing department HR department CSR department improving the corporate image as environmentally friendly and / or innovative fit to the company s core business competitive advantage on the job market motivation of staff sustainability and ecologic strategies societal concerns about the environment Table 1: A Typology of Buying Center Roles and Motivations to adopt BEVs 5 Implications and Future Research Based on our findings, implications for theory can be deduced. First, this study underlines the importance of the buying center and its members in the adoption of innovative hybrid offerings. Therefore, the study offers a detailed investigation into the customer s view on innovative hybrid offerings. Second, it enhances the technology acceptance research by considering the first stage of technology adoption, i.e., the investment decision on a corporate level. Third, it takes the rather descriptive buying center model to a more exploratory level. In addition, management practice (e.g., car manufacturers, system integrators, utilities) can profit from our research results. To identify the roles of buying center members and addressing their individual motivations can help selling BEVs successfully to fleet customers. For example, car manufacturers must design attractive and prestigious models since fleet 6
managers are forced to purchase models which are attractive for the employees and in turn, because the cars are perceived as status symbols. Test driving events can also help to address deciders and buyers personal interests and to convince them of the technological advantages of BEVs Furthermore implications for government can be deduced. Since role-based motivations force deciders and buyers to make cost-effective purchasing decisions, subsidies and discounts should be discussed to enhance adoption. To address personal interests of deciders and buyers as well as role-based motivations, certifications of eco-friendly fleets could be introduced. 6 Limitations and Future Research Our research shows some limitations which simultaneously indicate avenues for future research. First of all, our case of BEVs is a very special and complex case of innovative hybrid offerings. To generalize our results, future research will have to explore other cases compared in order to deduce more general implications for innovative hybrid offerings. Second, our research only indicates the direction of the impact of different buying center member s motivations on the adoption decision. In order to assess the weight of each motivation on the adoption of innovative hybrid offerings, a large-scale quantitative analysis will be necessary. Finally, the role of moderators and mediators in the adoption of innovative hybrid offerings will have to be investigated in future research. References Bonoma, T. V. (1982). Major sales: Who really does the buying? Harvard Business Review, 60 (3), 111-119. Davis, F. D. (1989). Perceived Usefulness, Perceived Ease of Use, and User Acceptance of Information Technology. MIS quarterly, 319-340. Eisenhardt, K. M., & Graebner, M. E. (2007). Theory Building from Cases: Opportunities and Challenges. Academy of Management Journal, 50 (1), 25-32. Gläser, J., & Laudel, G. (2010). Experteninterviews und qualitative Inhaltsanalyse (Vol. 4). Wiesbaden: VS Verlag für Sozialwissenschaften (in German). McCracken, G. (1988). The long interview (Vol. 13). Newbury Park, Calif: Sage. Moore, G. C., & Benbasat, I. (1991). Development of an instrument to measure the perceptions of adopting an information technology innovation. Information systems research, 2 (3), 192-222. Shankar, V., Berry, L. L., & Dotzel, T. (2007). Creating and managing hybrid innovations. Proceedings of the AMA Winter Educators Conference, San Diego, CA. Shankar, V., Berry, L. L., & Dotzel, T. (2009). A practical guide to combining products and services. Harvard Business Review, 87 (11), 94-99. Ulaga, W., & Reinartz, W. J. (2011). Hybrid Offerings: How Manufacturing Firms Combine Goods and Services Successfully. The Journal of Marketing, 75 (6), 5-23. Venkatesh, V. (2000). Determinants of perceived ease of use: Integrating control, intrinsic motivation, and emotion into the technology acceptance model. Information systems research, 11 (4), 342-365. Venkatesh, V., Morris, M. G., Davis, G. B., & Davis, F. D. (2003). User acceptance of information technology: Toward a unified view. MIS quarterly, 425-478. Webster, F. E., & Wind, Y. (1972). A general model for understanding organizational buying behavior. The Journal of Marketing, 36 (1), 12-19. 7