Environmental Factors in Operations Management: The Impact of Air Quality on Product Demand

Ying Ding, Yanping Tu, Jingchuan Pu, Liangfei Qiu

Research output: Journal article publicationJournal articleAcademic researchpeer-review

16 Citations (Scopus)

Abstract

The operations management literature has recently begun to analyze how novel data sources help practitioners better understand product demand. We extend this stream of research by analyzing how air quality, a prominent environmental factor that has received little attention in prior studies, can impact product demand. Specifically, we examine how air quality affects the demand for different product color options, and find a greater demand for blue-color product option on air-polluted days (vs. clear days). We attribute this pattern to compensatory consumption induced by need deprivation. Specifically, poor air quality deprives people of the visual experience of seeing a blue sky, leading them to seek compensation by acquiring blue-color options. By analyzing a three-year purchase-related dataset from an online retailer (Study 1) and conducting a field experiment (Study 2) and two laboratory experiments (Studies 3 and 4), we establish the external validity, internal validity, and robustness of this finding. We also provide empirical support for deprived visual experience as the mechanism: The proposed effect is driven by air quality indicators that affect visibility (Study 1) and is mediated by experienced visibility (Study 3). We further identify a theoretically relevant individual difference variable as a moderator: prior experience with air pollution, which strengthens the proposed effect in the laboratory setting because prior experience enables people to “relive” the deprived visual experience more vividly (Study 4). Given the prevalence of air pollution across the globe, our research sheds light on how practitioners can improve their operational decisions by factoring in air quality.

Original languageEnglish
Pages (from-to)2910-2924
Number of pages15
JournalProduction and Operations Management
Volume30
Issue number9
DOIs
Publication statusPublished - Sept 2021
Externally publishedYes

Keywords

  • air quality
  • compensatory consumption
  • demand forecasting
  • environmental factors
  • product options

ASJC Scopus subject areas

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

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