(In)compatibilities in sustainable luxury signals

There is an emerging trend of firms positioning themselves as both sustainable and luxurious. While it is unclear whether this offers new market opportunities, there remains a debate about the implications of signaling luxury and sustainability credentials together, particularly in the service context. In two studies, we build on Signaling Theory to examine: a) effects on customers of separately and jointly communicating sustainability and luxury signals; b) role of customers' value orientation (i.e., self-transcendence) in weakening/intensifying the influence of sustainable luxury signals; and c) the influence of different types and combinations of signals on customers' willingness to pay. Findings show that the consequences of combining luxury with sustainability signals depend on signal type (electronic word-of-mouth as aggregated ratings vs. independent certifications) and customers' level of self-transcendence. Negative outcomes are avoidable using independent certifications, particularly those that emphasize sustainability, indicating potential for effective sustainable luxury positioning and wider market reach.