Research Question The circular economy, a "closed-loop" system designed so that products flow back into the production cycle after use, presents a fundamental shift in consumption, where considering disposal happens during or even before making the purchase decision. Companies like Adidas, Patagonia, H&M, and IKEA are embedding circular principles into their marketing strategy and implementing circular take-back strategies that allow consumers to bring products back to them so that they can be put back into the production cycle. Based on prior research, we know that people are strongly averse to creating waste and that wastefulness is aversive enough to motivate people and to influence consumer behavior (Arkes 1996; Bolton and Alba 2012; Donnelly, Lamberton, Reczek and Norton 2017; Sun and Trudel 2017; Trudel and Argo 2013; Trudel et al. 2016). We investigate whether making consumers think of disposal at acquisition through the promotion of take-back strategies increases product valuation. We base our hypothesis on the basis that participating in a takeback program uniquely affords increased perceived control over the product by allowing for a product to be fully utilized and allowing consumers to avoid the self-threat of being wasteful (Bolton and Alba 2012; Trudel, Argo, and Meng 2016). Method and Data We tested our main effect in an online study where a total of 300 respondents ascribed a significantly higher value to a product promoted in a circular take-back program ($28.93, SD = 9.23) vs. without the circular program ($26.07, SD = 8.24; F(1, 299) = 7.984, p = .005). It is possible however, that consumers ascribed more value to the product because of a general halo effect of the brand engaging in a sustainable initiative. We rule out this possibility in a subsequent study with 590 respondents, where participants attributed a significant higher value to a product promoted in a circular take-back program ($28.58, SD = 9.42) vs. on a donation to curbside recycling campaign ($25.69, SD = 9.51;; t(586) = 2.89, p = .008); vs. a campaign on CSR diversity commitment ($24.93, SD = 8.42; t(586) = 3.65, p = .001). In a serial mediation study, we show that participants in the circular disposal condition reported greater willingness to pay (ßcircular_ad= 9.42, SE = 3.63, 95% CI = [3.63; 17.95] and loyalty (ßcircular ad= .10, SE = .04; 95% CI = [.042, .184]) for the sofa because they experienced more disposal control and in turn more psychological ownership over the product. Summary of Findings Across a variety of products and using externally valid take-back program promotional materials, we show that people ascribe more value to the same product when they expect to participate in a circular take-back products. Underlying the increase in product valuation and loyalty, is the affordance of additional disposal control that is unique to circular take-back programs which increases the capacity for the product to garner psychological ownership. Results reveal that participating in a circular take-back program influences valuation, spending, and loyalty. An increase in psychological ownership when participating in a circular take-back program underlies the difference in product valuation. Specifically, the additional disposal control uniquely afforded by circular products, increases the capacity to garner psychological ownership. Experimentally manipulating antecedents of psychological ownership (i.e., the degree of control over the product and the self-identity link with the product) attenuates the observed differences in valuation. As supporting evidence, using field data consisting of 2368 consumers participating in a retailer's take-back program, we show that clients who participated in a take-back program increase spending over time. Key Contributions Our research makes two important theoretical contributions. First, we contribute to the psychological ownership literature and identify a product affordance, disposal control, that is unique to circular take-back program products, which increases the capacity to garner psychological ownership. Prior work has shown that physically controlling products by touching (Atasoy and Morewedge 2017; Peck and Shu 2009) or controlling when, how, where, or how much a product is used (Baxter, Aurisicchio, and Childs 2015), can garner psychological ownership. We introduce disposal control as a determinant of psychological ownership. Second, we add to the literature on disposal behavior and sustainable consumer behavior (e.g., Donnelly, Lamberton, Reczek, and Norton 2017; Trudel and Argo 2013; Trudel et al. 2016; Winterich, Nenkov and Gonzales 2019) by considering the effects of circular strategy on consumer decision making. Our findings have implications for managers debating whether or not to implement circular take-back strategies that make consumers think about disposal at acquisition. Our findings are also relevant for government and policymakers trying to encourage companies to implement EPR (Extended Producer Responsibility) schemes. Our research shows that companies can benefit from implementing circular take-back programs because it affords consumers increased disposal control which they value. [ABSTRACT FROM AUTHOR]
