Ibrahim, Muhammad_PhD thesis

301 Pages·2017·4.49 MB·English

Understanding Malaysian Food Retailers’ Perception of and
Attitude Towards Organic Certification
A thesis submitted in partial fulfilment of the requirements for the
Degree of
Doctor of Philosophy of Marketing
in the University of Canterbury
by Muhammad Azman Ibrahim
University of Canterbury
2016
ABSTRACT
This research focuses on Malaysian retailers' perception of and attitude towards organic
certification. Organic certification is one type of food certification that is used to demonstrate
product attributes in order to obtain consumer trust and also to differentiate between organic
and non-organic products. The primary purpose of food and organic certification is to provide
greater information and certainty to consumers as to the origins and nature of food as well as
to differentiate the product from those that do not fulfill certification requirements.
Certification also provides opportunities for retailers to develop operational and product
differentiation strategies that focusing on other qualities instead of pricing such as
convenience, providing variety, consistency, quality and safety. In addition, food and organic
certification may be important for retailers in strengthening their structural power in food
retail and as a retail sustainability strategy that influences consumer behavior related to
organic and related food products. The overwhelming majority of studies on food and organic
certification focus on consumer and producer perception rather than the retailer, yet retailers
contribute to consumer knowledge of, preferences for, as well as trust/mistrust in organic
products, as well as the overall availability of organic foods in the food supply chain. In
addition, previous research that has been conducted on the importance of food and organic
certification in food retail was mainly undertaken in developed countries, with organic food
retailing in developing countries and Malaysia specifically, little understood. Therefore, the
purpose of this research retailers' perception is to understand Malaysian food retailers’
perception of and attitude towards organic certification.
This research took a two-stage mixed method approach to collect data in order to fulfill the
research objectives. Research was undertaken by the use of a semi-structured interview with
public and private stakeholders in Malaysian food retailing as well as a survey of 102
Malaysian retailers. This research found that organic certification attributes are related to
trust, credibility, food safety and quality, environment and traceability. Participants perceived
that organic certification is important to ensure the safety and quality of organic food
products. Participants also noted that other food certifications have their importance in
determining the safety and quality of food products. In Malaysia, where the majority of the
population is Muslim, halal certification is perceived to be the most important assurance.
However, this research also suggested that organic certification is significant in its own right
for some markets while there are potential overlaps between different certifications. However,
respondents felt that consumers required greater education on the concept in order to not only
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encourage consumption of organic products but also to help give consumers greater
confidence in their purchasing. In addition, potential needs for improvements in the
certification and regulation framework were also identified.
Keywords: Food certification, alternative food networks, food retailing, organic certification, retailer, Malaysia.
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Table of Contents
Abstract ............................................................................................................................... ii
Table of Contents ............................................................................................................... iv
List of Figures .................................................................................................................. viii
List of Tables ..................................................................................................................... ix
Acknowledgement ............................................................................................................. xi
Acronyms .......................................................................................................................... xii
Chapter One: Introduction ............................................................................................. 14
1 Introduction ....................................................................................................................... 14
1.1 Food Certification Concept ........................................................................................ 14
1.2 Organic Principles ...................................................................................................... 17
1.3 Malaysian Organic and Food Retailing ...................................................................... 19
1.3.1 The Development of Organic Food Retailing ..................................................... 21
1.4 Research Objectives ................................................................................................... 22
1.5 Significance of the Research ...................................................................................... 23
1.6 Thesis Outline ............................................................................................................ 23
1.7 Chapter Summary ....................................................................................................... 24
Chapter Two: Food Certification and Standards ......................................................... 25
2 Introduction ....................................................................................................................... 25
2.1 Food Safety and Private Standards ............................................................................. 26
2.1.1 Functions of private standards ............................................................................ 27
2.2 The Development of Food Certification .................................................................... 30
2.2.1 Roles of third party certification ......................................................................... 31
2.2.2 Third party certification in food markets ............................................................ 32
2.3 The Organic Concept and Types of Certification ...................................................... 34
2.3.1 The Development of Organic Certification ........................................................ 36
2.3.2 Organic food as credence product ....................................................................... 38
2.3.3 Consumers trust on organic food products and certification .............................. 40
2.4 Other Types of Food Certification ............................................................................. 43
2.4.1 Sustainability certification .................................................................................. 43
2.4.2 Religious food certification ................................................................................. 51
2.5 Chapter Summary ....................................................................................................... 55
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Chapter Three: Food Retailing: Organic and Food Certification .............................. 56
3 Introduction ....................................................................................................................... 56
3.1 Emergence of Retail Power in Food Industry ............................................................ 57
3.1.1 Oligopoly ............................................................................................................ 57
3.1.2 Consumer preferences ......................................................................................... 58
3.1.3 Quality ................................................................................................................. 58
3.1.4 Private standards ................................................................................................. 59
3.2 Organic and Food Retailing Strategy ......................................................................... 62
3.2.1 Organic Retailing ................................................................................................ 63
3.2.2 Organic Food Products Barriers in Food Retailing ............................................. 66
3.3 Organic and Food Certification in Food Retailing ..................................................... 68
3.3.1 Third Party Certification (TPC) .......................................................................... 70
3.3.2 The Advantages of Organic and Food Certification ........................................... 71
3.4 Chapter Summary ....................................................................................................... 73
Chapter Four: Malaysian Retail Industry and Organic Certification ....................... 75
4 Introduction ....................................................................................................................... 75
4.1 Retail in the South-East Asia and Malaysia ............................................................... 76
4.1.1 The South-East Asia organic food industry ........................................................ 80
4.1.2 Certification ........................................................................................................ 83
4.2 Organic Foods in Malaysia ........................................................................................ 86
4.2.1 Organic Certification in Malaysia ....................................................................... 89
4.3 Overview of Literature ............................................................................................... 91
4.3.1 Product Attributes ............................................................................................... 92
4.3.2 Sustainability Attributes ...................................................................................... 93
4.3.3 Organic Certification Issues ................................................................................ 94
4.4 Chapter Summary ....................................................................................................... 96
Chapter Five: Research Method .................................................................................... 97
5 Introduction ....................................................................................................................... 97
5.1 Research Design ......................................................................................................... 97
5.2 Semi Structured Interview ........................................................................................ 105
5.3 Partial Least Squares (PLS) Structural Equation Modelling .................................... 107
5.3.1 Reflective Measurement Construct ................................................................... 110
5.4 Data Analysis ........................................................................................................... 110
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5.4.1 Evaluation of Measurement Models ................................................................. 111
5.4.2 Evaluation of Structural model ......................................................................... 113
5.5 Ethical Considerations .............................................................................................. 115
5.6 Chapter Summary ..................................................................................................... 116
Chapter Six: Findings – Semi – Structured Interview ............................................... 117
6 Introduction ..................................................................................................................... 117
6.1 Profile of Participants ............................................................................................... 117
6.2 Analysis .................................................................................................................... 118
6.2.1 Impacts of Organic and Food certification in Food Supply Chain ................... 119
6.2.2 Organic Certification Attributes ....................................................................... 124
6.2.3 Organic Certification Issues .............................................................................. 141
6.3 Chapter Summary ..................................................................................................... 151
Chapter Seven: Survey Findings .................................................................................. 155
7 Introduction ..................................................................................................................... 155
7.1 Demographic Profiles of Business and Respondents ............................................... 155
7.2 Data Analysis ........................................................................................................... 159
7.2.1 Descriptive Analysis ......................................................................................... 159
7.2.2 ANOVA Results ............................................................................................... 173
7.2.3 PLS-SEM Analysis ........................................................................................... 181
7.3 Chapter Summary and Conclusion ........................................................................... 194
Chapter Eight: Discussion ............................................................................................ 196
8 Discussion ........................................................................................................................ 196
8.1 Food certification and standards .............................................................................. 196
8.2 Organic and Food Certification in Malaysian Food Retailing ................................. 202
8.3 Summary and Conclusion ........................................................................................ 212
Chapter Nine: Recommendations and Conclusion .................................................... 214
9 Introduction ..................................................................................................................... 214
9.1 Overview of Thesis .................................................................................................. 214
9.2 Answering the Research Questions .......................................................................... 217
9.3 Limitations of the Study ........................................................................................... 221
9.4 Research Implications .............................................................................................. 222
9.5 Recommendations for Malaysian Food Retailing .................................................... 223
9.5.1 Enforcement ...................................................................................................... 225
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9.5.2 Education .......................................................................................................... 226
9.5.3 Marketing Strategy ............................................................................................ 226
9.6 Recommendations for Future Research ................................................................... 228
9.7 Conclusion ................................................................................................................ 229
References ....................................................................................................................... 232
Appendices ..................................................................................................................... 263
Appendix A. Information Sheet (English) ....................................................................... 264
Appendix B. Consent Form (English) ............................................................................. 267
Appendix C. Survey (English) ......................................................................................... 268
Appendix D. Information Sheet (Bahasa) ....................................................................... 278
Appendix E. Consent Form (Bahasa) .............................................................................. 281
Appendix F. Survey (Bahasa) .......................................................................................... 282
Appendix G. Information Sheet – Interview (English) ................................................... 292
Appendix H. Consent Form – Interview (English) .......................................................... 294
Appendix I. Interview Guide (English) ........................................................................... 295
Appendix J. Information Sheet – Interview (Bahasa) ..................................................... 297
Appendix K. Consent Form – Interview (Bahasa) .......................................................... 299
Appendix L. Interview Guide – Interview (Bahasa) ....................................................... 300

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LIST OF FIGURES
Figure 2.1: Third Party Certification Process in Distribution Channel .................................... 32
Figure 3.1: Global Market: Distribution of Organic Retail Sales ............................................. 64
Figure 4.1: South-East Asian Distribution Structure for Organic Food ................................... 81
Figure 4.2: Supply Chain in Malaysia ...................................................................................... 88
Figure 4.3: Malaysia Organic Scheme ...................................................................................... 90
Figure 4.4: Work Flow Chart for SOM Certification ............................................................... 91
Figure 4.5: Conceptual Framework .......................................................................................... 92
Figure 5.1: A simple path model of PLS-SEM ....................................................................... 109
Figure 5.2: The reflective measurement model (Mode A) ..................................................... 110
Figure 7.1: The Conceptual Framework of Malaysian Retailers’ Perception of and Attitude
towards Organic Certification ................................................................................................. 182
Figure 9.1: Recommendations of Flow Chart to Improve Organic Certification and Products
................................................................................................................................................. 224
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LIST OF TABLES
Table 1.1: Organic Principles ................................................................................................... 18
Table 2.1: Functions associated with private standards ............................................................ 28
Table 2.2: Examples of Food Certification ............................................................................... 33
Table 2.3: Organic Standards in US, the EU and Malaysia ...................................................... 35
Table 2.4: Distribution of Organic Agricultural Land by Region 2013 ................................... 36
Table 2.5: Countries with the Organic Certification Bodies 2011 – 2012 ................................ 36
Table 2.6: Muslim and Jewish Dietary laws ............................................................................. 52
Table 3.1: Examples of Private Retail Food Standards ............................................................ 61
Table 4.1: Wave of Retail Revolution in South-East Asia ....................................................... 77
Table 4.2: Organic certification standards and institutions in selected countries in the Asia-
Pacific region ............................................................................................................................ 84
Table 5.1: Previous Research Regarding Retailers’ Perception of and Attitude Towards
Organic and Food Certification .............................................................................................. 100
Table 5.2: Rule of Thumb for Model Assessment of Measurement Model ........................... 112
Table 5.3: Rule of Thumb for Model Assessment of Structural Model ................................. 114
Table 6.1: Profile of Participants ............................................................................................ 118
Table 6.2: Stage of Thematic Analysis ................................................................................... 119
Table 7.1: Summary of Business Demographics .................................................................... 157
Table 7.2: Summary of Respondent’s Demographics ............................................................ 158
Table 7.3: Perceptions of the Retail Attributes of the Respondent’s Retail Outlet ................ 160
Table 7.4: Product Attributes for Perceptions of Respondent’s Retail Outlet ........................ 161
Table 7.5: Sustainability Attributes for Perceptions of Respondent’s Own Retail Outlet ...... 162
Table 7.6: Food Certification as an Indication of Food Quality ............................................. 163
Table 7.7: Food Certification as an Indication of Food Safety ............................................... 164
Table 7.8: Food Certification in Food Retail Outlets as an Indication of Trust ..................... 164
Table 7.9: Food Certification and Indications of Authenticity ............................................... 165
Table 7.10: Food Certifications and Food Production, Processing, Transportation, and
Retailing .................................................................................................................................. 165
Table 7.11: Food Certifications and Positive Impacts on Customer Satisfaction ................... 166
Table 7.12: Food Certification as a Marketing Strategy ......................................................... 166
Table 7.13: Purpose of Food Certification for Increasing Confidence Levels among
Consumers............................................................................................................................... 167
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Table 7.14: Purpose of Food Certifications for General Food Product Types ....................... 168
Table 7.15: Provision of Information to Consumers by Different Forms of Food Certification
................................................................................................................................................. 168
Table 7.16: Purpose of Food Certifications for Non-Safety Attributes .................................. 169
Table 7.17: Food Certifications and Product Differentiation ................................................. 169
Table 7.18: Food Certifications and Supplier Control ............................................................ 170
Table 7.19: Food Certifications and Gaining Better Market Access ...................................... 170
Table 7.20: Food Certifications and Coordination in the Retail Supply Chain ...................... 171
Table 7.21: Food Certifications and Minimization of Transaction Costs ............................... 172
Table 7.22: Food Certifications and Minimization of Financial Liability .............................. 172
Table 7.23: Food Certifications and Retailer’s Responsibility for Policing the Safety and
Quality of Products ................................................................................................................. 173
Table 7.24: Food Certifications and Increased Efficiency in the Supply Chain ..................... 173
Table 7.25: Understanding the definition of food certifications ............................................. 175
Table 7.26: The purpose of food certification in general ........................................................ 177
Table 7.27: The purpose of food certification in supply chains ............................................. 179
Table 7.28: Advantages of food certification to food retailers ............................................... 180
Table 7.29: Process of PLS-SEM Assessment ....................................................................... 183
Table 7.30: Composite Reliability .......................................................................................... 184
Table 7.31: Outer Loadings .................................................................................................... 185
Table 7.32: Average Variance Extracted ................................................................................ 186
Table 7.33: Cross Loadings .................................................................................................... 187
Table 7.34: Fornell – Lacker Criterion ................................................................................... 188
Table 7.35: The HTMT Results .............................................................................................. 188
Table 7.36: Collinearity Assessment ...................................................................................... 189
Table 7.37: Significance Testing Result of the Structural Model Path Coefficients .............. 190
Table 7.38: Hypotheses Testing Result .................................................................................. 190
Table 7.39: The Effect Size f2 ................................................................................................. 192
Table 7.40: The Predictive Relevance Q2 ............................................................................... 193
Table 7.41: The Mediating Effects Analysis .......................................................................... 193
Table 7.42: Summary of Hypotheses ...................................................................................... 195
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