Do we value goods constructed and customized by us more? A study of IKEA, effort justification and customization effect Author: Mantas Gudelevicius Student number: 11374241 Qualification: MSc Business Administration – Marketing track Supervisor: Joris Demmers Date of submission: 23rd of June, 2017 Word count: 12591 Statement of originality This document is written by Student Mantas Gudelevicius who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents. UNIVERSITY OF AMSTERDAM 2 Table of Contents Acknowledgements ................................................................................................................................. 5 Abstract ................................................................................................................................................... 6 1. Introduction ......................................................................................................................................... 7 2. Literature review: .............................................................................................................................. 11 2.1. Literature review ........................................................................................................................ 11 2.2. Customer participation in co-production within SD-logic .......................................................... 11 2.3. The Ikea Effect ............................................................................................................................ 13 2.4. Effort justification paradigm ...................................................................................................... 15 2.5. The customization effect ............................................................................................................ 16 2.6. Elaboration of conceptual model ............................................................................................... 18 3. Methodology ..................................................................................................................................... 19 3.1. Research strategy ....................................................................................................................... 19 3.2. Sample and measurements ........................................................................................................ 20 3.3. Variables ..................................................................................................................................... 22 3.3.1. Independent variable: customization.................................................................................. 22 3.3.2. Independent variable: construction .................................................................................... 23 3.3.3. Dependent variable: Valuation of origami .......................................................................... 23 3.4. Statistical procedure ................................................................................................................... 23 4. Results ............................................................................................................................................... 24 4.1. Pre-analysis ................................................................................................................................. 24 4.1.1. Age ....................................................................................................................................... 24 4.1.2. Gender ................................................................................................................................. 25 4.1.3. Conclusion of pre-analysis ................................................................................................... 26 4.2. Analysis ....................................................................................................................................... 26 4.3. Post Hoc tests ............................................................................................................................. 29 5. Discussion .......................................................................................................................................... 31 5.1. General discussion ...................................................................................................................... 32 5.1.1. Customization effect ........................................................................................................... 33 5.1.2. Effort justification and IKEA effects ..................................................................................... 34 5.1.3. Interaction effect ................................................................................................................. 35 5.2. Theoretical contributions ........................................................................................................... 36 5.3 Managerial implications .............................................................................................................. 37 5.4. Limitations and future research ................................................................................................. 38 References ............................................................................................................................................. 40 Appendix A: Pre-built origami pelican ................................................................................................... 47 UNIVERSITY OF AMSTERDAM 3 Appendix B: Instructions that builders received on how to construct origami. ................................... 48 Appendix C: The Schedule of the experiment ....................................................................................... 49 Appendix D: Questionnaires provided to participants of the experiment: ........................................... 49 List of Figures and Tables Figure 1: Conceptual model ................................................................................................................... 18 Figure 2: Plot of the results ................................................................................................................... 31 Figure 3: The mean values of evaluation between different conditions. ............................................... 35 Table 1: 4 different conditions of the experiment .................................................................................. 20 Table 2: Age effect on different conditions ........................................................................................... 25 Table 3: Chi square test ......................................................................................................................... 26 Table 4: Results of the experiment ........................................................................................................ 28 Table 5: Summary of hypothesis results. ............................................................................................... 28 Table 6: Post Hoc test for builder’s condition ....................................................................................... 30 Table 7: Post Hoc test for interaction condition .................................................................................... 30 UNIVERSITY OF AMSTERDAM 4 Acknowledgements First of all, I would like to express my gratitude to my thesis supervisor Joris Demmers, for his constant help and advice. It was a tough half-year and I am very happy that I was able to learn from such a great academic. Furthermore, I would like to thank all the lecturers and staff of the University of Amsterdam Business School, who have contributed towards my studies. I am grateful to all of them, for making my Master’s studies interesting and useful in professional life outside the university. Last but not the least, I would like thank my friend Andy Fekete, for his help and support during the final phase of this paper. UNIVERSITY OF AMSTERDAM 5 Abstract Nowadays, when consumers became extremely spoilt, marketer’s lack of new ideas of how to stimulate consumption and surprise their customers. If customers would place great value on the end product it would be easier to manipulate consumption (Caulkins et. al., 2006). Research of the IKEA and effort justification effects suggest that the more work one invests when constructing something, the more he/she will value it. The literature on customization effect also suggests that people would evaluate a product more if their preferences would be taken into the account during the production process. Literature, however, does not provide a clear view regarding the interaction of all of these effects on the evaluation of a product. Consequently, the research question: ‘To what extent do customization, effort justification and their interaction affect consumer’s evaluations of self-made goods?’ is answered to address this research gap. The present study has demonstrated that effort justification and interaction effects can positively affect the evaluation of a product. No significant effect was found on the influence of customization on the evaluation of a product. These results