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APPROVAL

I hereby declare that I have checked this project and in my opinion, this project is adequate in terms of scope and quality for the award of the degree of

Bachelor of Technopreneurship (Honours)

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CUSTOMER ACCEPTANCE ON ECO-INNOVATION IN AUTOMOTIVE INDUSTRY

SITI FAIZATUL NATRAH BINTI AHMAD TERMIZI

Submitted in Partial Fulfilment of the Requirement for the Bachelor of Technopreneurship (Honours)

Faculty of Technology Management & Technopreneurship Universiti Teknikal Malaysia Melaka

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DECLARATION

“I hereby declare that the work of this exercise is mine except for the quotations and summarize that have been duly acknowledge”

Signature : ...

Name : Siti Faizatul Natrah binti Ahmad Termizi

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DEDICATION

To my beloved family especially mak, maklong, ayah, along, kakngah, kakcik, kak ekin, zulkarnain, ayahngah and all family members. Thank you for raising me with full of education and without all of you, I am nothing. Not to forget, thank you to my

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ACKNOWLEDGEMENT

Alhamdulillah and praise to Allah SWT The Most Gracious and Most Merciful. Subhanallah, in the name of Allah, all praise belongs to Allah SWT for giving me wisdom, strength, support and knowledge in exploring things, and also make this Final Year Project possible.

First and foremost, I would like to reveal my sincere gratitude and appreciation to my lovely supervisor, Dr. Norfaridatul Akmaliah Binti Othman for the continuous support for my research, patience, motivation, enthusiasm, and immense knowledge. By her guidance, I am managed to finish my final year project. I attribute the level of my Bachelor Degree because of her encouragement and effort because without this project, I am not able to graduate. I am deeply grateful for the guidance towards this project as her advice play an important role for this project.

Next, I would like to thank you to my beloved mother, Pn. Zunairiyah Bt Mohamad who always pray for me, give me full of love. Thank you to my dad, Mr Ahmad Termizi Bin Mohd Nor that always support me in whatever I do. Special thanks to my aunt, Pn. Zunainah Binti Mohamad who raised me until now. Without all of their guidance and education, I may not be able to finish my study in Bachelor Degree. Thank you too to my awesome siblings and family members who always support me in whatever I do.

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ABSTRACT

In the modern world, ecology and the economy are on cross road. Innovation processes toward sustainable development (eco-innovation) have received increasingly attention during the past years. Eco-innovation is a novel fuzzy concept getting growing attentions under global climate change. It is need of further clarification both theoretically and methodologically. The automobile sector is faced with numerous challenges of resource scarcity, reduction of carbon emissions from cars which contribute to climate change. The main purpose of this study is to know how the customer acceptance towards eco-innovation is is in automotive industry among Malaysian. A total of 100 usable questionnaires were coded and analyzed. Statistical techniques such as descriptive analysis, reliability, and validity were used in this study. This paper contributes to an increased understanding of how customer accepts in eco-innovation in automotive industry in Malaysia.

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ABSTRAK

Dalam dunia serba moden, ekologi dan ekonomi berada di jalan yang berlainan. Proses inovasi ke arah pembangunan mampan (eko-inovasi) telah menerima perhatian yang semakin mendalam pada tahun-tahun yang lalu. Eko-inovasi adalah satu konsep yang kabur dan novel dimana ia mendapat perhatian yang semakin meningkat di bawah perubahan iklim global. Ia memerlukan penjelasan lanjut kedua-dua teori dan metodologi. Sektor kereta berhadapan dengan pelbagai cabaran kekurangan sumber, pengurangan pelepasan karbon daripada kereta yang menyumbang kepada perubahan iklim. Tujuan utama kajian ini adalah untuk mengetahui bagaimana penerimaan tingkah laku pelanggan ke arah eko-inovasi dalam industri automotif di kalangan Malaysia. Sebanyak 100 borang soal selidik telah dikodkan dan dianalisis. Teknik statistik seperti analisis deskriptif, kebolehpercayaan, dan kesahihan telah digunakan dalam kajian ini. Karya ini menyumbang kepada pengetahuan tentang bagaimana pelanggan menerima dalam eko-inovasi dalam industri automotif di Malaysia.

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CONTENTS

DECLARATION ii

DEDICATION iii

ACKNOWLEDGEMENT iv

ABSTRACT v

ABSTRAK vi

CONTENTS vii

LIST OF TABLES x

LIST OF FIGURES xi

LIST OF ABBREVIATION xii

LIST OF SYMBOLS xiii

LIST OF APPENDIX xiv

CHAPTER 1 INTRODUCTION 1

1.1 Introduction 1

1.2 Problem Statement 3

1.3 Research Objectives 4

1.4 Research Questions 4

1.5 Scope of Study and Limitation 5

1.6 Significance of Study 5

1.7 Summary 6

CHAPTER 2 LITERATURE REVIEW 7

2.1 Introduction 7

2.2 Eco-Innovation 7

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viii

2.3 Automotive Industry in Malaysia 11 2.3.1 Eco-innovation in automotive

industry

12

2.3.2 Car manufacturer that involves in eco-innovation

13

2.4 Customer Acceptance 15

2.4.1 Customer acceptance factors of eco-innovation in automotive industry

15

2.5 Summary 19

CHAPTER 3 RESEARCH METHODOLOGY 20

3.1 Introduction 20

3.2 Theoretical Framework 21

3.2.1 Hypotheses 21

3.3 Research Approach 22

3.4 Research Design 23

3.4.1 Quantitative method 23

3.5 Location of Research 24

3.6 Sampling Technique 25

3.7 Data Collection 25

3.7.1 Primary data sources 26 3.7.2 Secondary data sources 26

3.8 Data Analysis 27

3.8.1 Descriptive analysis 27 3.8.2 Pearson correlation’s analysis &

regression

28

3.8.3 Reliability analysis 29

3.9 Validity 30

3.9.1 External validity 30 3.9.2 Internal validity 31 3.9.3 Construct validity 31

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ix

CHAPTER 4 DATA ANALYSIS & DISCUSSION 32

4.1 Introduction 32

4.2 Descriptive Statistic on Demographic 32

4.2.1 Gender 33

4.2.2 Age 33

4.2.3 Race 34

4.2.4 Highest education 34 4.3 Result of Descriptive Statistic for

Benefit-to-self, Perceived Quality, Environmental Benefit & Eco-innovation in Automotive Industry

35

4.4 Relationship between for Benefit-to-self, Perceived Quality, Environmental Benefit & Eco-innovation in Automotive Industry

36

4.5 Objectives and Hypotheses 39

4.6 Summary 42

CHAPTER 5 CONCLUSION & RECOMMENDATION 44

5.1 Introduction 44

5.2 Discussion on Respondent Background 44 5.3 Achievement of the Research Aim and

Objectives

45

5.4 Recommendation 46

5.5 Conclusion 47

REFERENCES 48

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x

LIST OF TABLES

NO TITLE PAGE

3.1 Cronbach’s Alpha for 30 Respondents 29

4.1 Gender of Respondents 33

4.2 Age of the Respondents 33

4.3 Race of Respondents 34

4.4 Highest Education of Respondents 34 4.5 Results of Descriptive Statistic for Benefit-to-self, Perceived

Quality, Environmental Benefit & Eco-innovation in Automotive Industry

35

4.6 Correlation between Benefit-to-self, Perceived Quality,

Environmental Benefit & Eco-innovation in Automotive Industry

36

4.7 Multiple Linear Regression between Benefit-to-self, Perceived Quality, Environmental Benefit & Eco-innovation in Automotive Industry

37

4.8 Simple Linear Regression between Benefit-to-self & Eco-innovation in Automotive Industry

39

4.9 Simple Linear Regression between Perceived Quality & Eco-innovation in Automotive Industry

40

4.10 Simple Linear Regression between Environmental Benefit & Eco-innovation in Automotive Industry

41

4.11 Multiple Linear Regression between Benefit-to-self, Perceived Quality, Environmental Benefit & Eco-innovation in Automotive Industry

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LIST OF FIGURES

NO TITLE PAGE

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LIST OF ABBREVIATIONS

ASEAN = Association of South-East Asian Nations AFV = Alternative Fuel Vehicle

BMW = Bayerische Motoren Werke BTL = Bio-Mass to Liquid

CRV = Comfortable Runabout Vehicle CVJ = Constant Velocity Join

CO2 = Carbon Dioxide

CNG = Compressed Natural Gas ICE = Internal Combustion Engine

ICT = Information and Communication Technologies MEI = Measuring Eco-innovation

OEM = Original Equipment Manufacturer

OECD = Organisation for Economic Cooperation and Development

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LIST OF SYMBOLS

% = Percent

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LIST OF APPENDIXES

NO TITLE PAGE

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CHAPTER 1

INTRODUCTION

1.1 Introduction

Eco-innovation is the development of products and processes and it has contributed to a sustainable development and yet it applies the commercial application of knowledge to extract directly or indirectly ecological improvements. Eco-innovation also includes a range of related ideas from environmental friendly technological advances to social acceptable innovative part towards sustainability. Nowadays, customers are more concerning about green effect and the importance of having green products which eco-innovation is an example of green technology.

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[image:17.595.117.550.153.459.2]

figures, automotive industry ranks amongst the top 20 in the world and disposes of the largest passenger car market in the ASEAN region.

Figure 1.1: ASEAN Cars Production & Sales 2012 (Source: 2013 Bangkok International Motor Show)

The focus in this research is about to study which factors that contributes customer acceptance towards eco-innovation in automotive industry. The factors that have been selected are benefit-to-self, perceived quality and also environmental benefit. There are a lot of factors that may contribute to the customer acceptance but in considering Malaysian culture, these three factors are more related for this research. It is because this type of technology, eco-innovation, is a new in Malaysia. In addition, these three factors can be seen in terms of the customer’s itself, vehicle and also the environment.

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that cover to indicate whether benefit-to-self, perceived quality or environmental benefit is the most significant to eco-innovation in automotive industry.

1.2 Problem Statement

Nowadays, the world is getting serious on greenhouse effect and ozone layer due to air pollution. The environmental global issues relocate industries to produce more environmental friendly product that will reduce damages towards global environment. Thus, it leads to adoption of green technology including automotive industry where eco-innovation is example for the issue. However, according to M.Nusaibah et.al (2011) Malaysian customers’ readiness to accept green technology is still need to be research.

Through eco-innovation that applied to automotive industry, car manufacturer can save the planet by replacing the compartment in vehicles’ engine by using an eco-innovation technology named, hybrid or electric engine. Eco-innovation can bring benefit to the customer and also to the environment when applied to human daily lives. It is also called an alternative energy that can replace the current energy which need more combustion and may lead to reformation of hazard.

Considering the issue, according to The Star (2008), eco-innovation in Malaysian automotive market is still considered as new unlike United States, Japan or Europe. Therefore, this research looks into the acceptance of Malaysian customer towards eco-innovation. This is because, customer acceptance are complex and it is change over time and are influenced by a multitude of factors.

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Therefore, with these three factors, this research is aim to explore the customer reaction towards new technology to achieve eco-innovation.

1.3 Research Objectives

The aim for this research is to explore the customer reaction towards new technology to achieve eco-innovation based on these three factors; benefit-to-self, perceived quality and environmental benefit. This aim is achieve through the following research objectives;

a) To investigate the relationship between benefit-to-self and eco-innovation in automotive industry.

b) To investigate the relationship between perceived quality and eco-innovation in automotive industry.

c) To investigate the relationship between environmental benefit and eco-innovation in automotive industry.

d) To identify the most significant factor that contributes to eco-innovation in automotive industry.

1.4 Research Questions

Based on research objectives, the research questions are as follow;

a) What is the relationship for benefit-to-self to eco-innovation in automotive industry?

b) What is the relationship for perceived quality to eco-innovation in automotive industry?

c) What is the relationship for environmental benefit to eco-innovation in automotive industry?

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1.5 Scope of Study and Limitation

The focus of this research is on customer acceptance towards eco-innovation in automotive industry in Malaysia. Based on customer acceptance, three factors have been choosing in order to measure the acceptance of the customer in this research. There are benefit-to-self, perceived quality and environment benefit.

In order to arrive at more specific research objectives and to clarify theoretical contribution of this research, a literature review is presented next starting with an introduction of eco-innovation, benefits of eco-innovation, automotive industry in Malaysia and some example of car manufacturer that involves in eco-innovation. Next, in the literature review, there are information about customer acceptance which those three factors; benefit-to-self, perceived quality and environmental benefit has been explained in order to get better understanding.

Thereafter the proposed integration of those three factors, theoretical framework is presented together with the objectives of this research followed by hypotheses. Data collection for this research was carried out in Klang Valley and Southern of Malaysia. Last but not least, the discussion of this research is carried out and followed by main conclusion and recommendation.

1.6 Significance of Study

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This research also has provided a data to relate the importance of having an eco-innovation vehicles and the relationship between the customer behaviour towards eco-innovation in automotive industry. From this, marketer or manufacturer can convince the customer’s on the benefit of eco-innovation in automotive industry.

1.7 Summary

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CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

This chapter discuss about the notions of eco-innovation in automotive industry and how the customer acceptance response in this new type of technology. It explores the relation between customer acceptances towards eco-innovation in automotive industry. The application of eco-innovation concept offers a promising way to move customer perception to a better lifestyle and respond to pressing global challenge such as climate change.

2.2 Eco-Innovation

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According to Klaus Rennings, (2009) the general definition for eco-innovation is neutral concerning the content of change and open in all directions. In contrast, putting emphasis on innovation toward sustainable development is motivated by concern about direction and content of progress. Thus, the additional attribute of innovations towards sustainability is that the innovation has reduce environmental burdens at least in one item and thus contribute to improving the situation in the problem areas.

Eurostat (1999, 2010) state that, innovation refers to the implementation of a new or significantly improved product (good or services), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations. Eco-innovation is altogether a new concept. In the MEI (Measuring Eco-Innovation) project for the European Commission, eco-innovation is defined as “the production, assimilation or exploitation of a product, production process, service or management or business method that is novel to the organization (developing or adopting it) and which results, throughout its life cycle, in a reduction of environment risk, pollution and other negative impacts of resources use (including energy use) compared to relevant alternatives”

Partly building on this definition, eco-innovation is defined in the OECD (2009) Report on sustainable manufacturing and eco-innovation as the creation or implementation of new, or significantly improved, products (goods and services), processes, marketing methods, organizational structures and institutional arrangements which without intent - lead to environmental improvements compared to relevant alternatives, OECD (2008).

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A number of definitions of eco-innovation were made and among these, according to the definition made European Commission, eco-innovation is every kind of innovations which can be sustained by reducing its effects on the environment and obtaining the use of natural resources including energy, more effectively and efficiency and which aims important and demonstrable advancement towards development (Carrillo-Hermosilla et al, 2010). When we evaluate according to the definition of eco-innovation presented above, eco-innovation can be divided into two categories; environmental innovations and non-environment innovations (A.N. Sankar, 2013).

Another classification about this issue is that made by Anderson (2008). According to this classification, eco-innovation is divided into 5 categories. There are extension innovations, integrated innovations, alternative product innovations, macro-organizational innovations and general purpose eco-innovations. For extension eco-innovation, it is a product where the products or services improving the general environmental performance of customer. These innovation are environmental solution in part of pool (a number of technologies and services cleaning emissions, diluting, recycling, measuring, controlling, and carrying the emissions) and source (deriving the natural resources and energy).

Figure

Figure 1.1: ASEAN Cars Production & Sales 2012

References

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