Signaling theory explains the presence of information asymmetry between signalers, who possess superior information, and receivers, who have more limited knowledge. Signalers convey observable cues to demonstrate credibility, quality, or commitment, which receivers then use as a basis for evaluation and decision making ( Connelly et al., 2011; Giachetti et al., 2024). Within this framework, signals must be credible; otherwise, receivers are likely to disregard them and refrain from responding ( Gomes et al., 2023). Recent studies have linked the consumption of environmentally friendly products to consumers’ willingness to pay more through the lens of signaling theory ( Lopes et al., 2024; Macchione Saes et al., 2025). When the environmental quality of a product is difficult to observe, corporate signals can reduce information asymmetry, making marketers’ ability to clearly communicate environmental benefits critical for shaping consumer perceptions and purchase intentions ( Baskoro et al., 2023). In practice, sustainability signals often take the form of eco-labels and certifications that differentiate products in the marketplace and enhance perceived value ( Baskoro et al., 2024). Such signals foster trust and strengthen willingness to pay more when consumers perceive that a brand’s commitment to environmental standards is accountable and verifiable ( Le & Tang-Le, 2024). Sustainability signals are also associated with social identity, particularly among younger consumers who interpret green purchasing as an expression of personal values and self-image ( Huh & Kim, 2024). Moreover, consistent sustainability communication can reinforce perceptions of price fairness and the price–quality relationship, thereby increasing consumers’ acceptance of premium pricing ( Konuk, 2023; Lin et al., 2020). Accordingly, signaling theory provides a robust theoretical foundation for understanding how sustainability communication and cues shape trust and drive consumers’ willingness to pay more for environmentally friendly products.

Consumers are willing to pay higher prices for brands perceived as credible and authentic. This pattern has been documented both in the context of sustainable products more broadly ( Kamboj & Matharu, 2021) and in the context of green products specifically, where green brand equity and brand credibility strengthen consumers’ willingness to pay more ( Akturan, 2020). From a psychological perspective, credibility helps consumers assess risk and product quality, thereby increasing their acceptance of premium prices. Moral and ethical value dimensions may further reinforce this tendency when products are perceived as aligned with consumers’ personal beliefs and values ( Hwang, 2018). Brand experience and perceived authenticity also deepen the influence of credibility on willingness to pay more ( Safeer et al., 2021). Evidence from the food safety context similarly shows that trust in product attributes increases consumers’ willingness to pay higher prices ( Bozoglu et al., 2019). Conversely, when credibility is questioned, consumer scepticism increases and willingness to pay more declines ( Bie et al., 2025; Zhan et al., 2021). Overall, the literature consistently indicates that perceived credibility is a key determinant of willingness to pay more by reinforcing trust, authenticity, and consumers’ perceived ethical value. H1:

Higher levels of perceived credibility lead to a greater willingness to pay more for sustainable products.

Consumers who hold more optimistic projections regarding the future state of the environment and demonstrate stronger sustainability concerns tend to assign higher value to green products and are therefore more willing to pay premium prices. Environmental concerns and perceived product quality reinforce green purchase intentions, which, in turn, have implications for consumers’ willingness to pay more ( Nekmahmud & Fekete-Farkas, 2020). In addition, consumers exhibit a higher willingness to pay for products that carry sustainability labels, indicating that a future-oriented green mindset plays an important role in shaping value perceptions and preferences ( Huh & Kim, 2024). Communication and transparency regarding sustainability practices also enhance perceived product value and strengthen willingness to pay more ( Wongprawmas et al., 2015). Furthermore, consumer education on sustainability and the environmental consequences of purchasing decisions serves as a critical driver that reinforces green future expectations and consumers’ commitment to paying premium prices ( Kamboj & Matharu, 2021). Overall, green future estimation influences willingness to pay more because it reflects consumers’ beliefs that current consumption choices can generate positive environmental outcomes in the future. H2:

Higher levels of green future estimation lead to a greater willingness to pay more for sustainable products.

Green advertising is increasingly used to translate rising environmental awareness into consumers’ acceptance of price premiums. Experimental studies show that exposure to green advertising and green (vs. non-green) appeals can increase willingness to pay, largely by strengthening perceived green value, and the effect depends on how the message is framed and made more concrete ( Guo et al., 2024; Gutentag & Antonia Russell, 2025; Zheng et al., 2022). Willingness to pay also rises when eco-friendly ads are perceived as relevant and meaningful and when consumers are receptive to green advertising through trust-building mechanisms ( Gotlieb, 2019; Nguyen-Viet & Thanh Tran, 2024). Credibility cues further support premium price acceptance, whereas skepticism toward green advertising can weaken it ( Al Mamun et al., 2023; Nguyen-Viet & Nguyen, 2024). H3:

Green advertising has a significant positive effect on consumers’ willingness to pay a premium.

Green advertising that emphasises environmental benefits can enhance brand credibility when the message is delivered transparently and honestly, and aligns with genuine sustainability practices ( Kumar & Tripathi, 2019). Advertiser characteristics can also strengthen advertising credibility; high levels of attractiveness and expertise make green messages more persuasive and enhance brand credibility in consumers’ eyes ( Khandelwal & Singh, 2023). Furthermore, hedonic involvement and emotional appeals in advertising enhance favourable attitudes toward advertisements and, in turn, contribute to the development of perceived credibility. Green cues within advertisements serve as positive signals of brand responsibility, especially when sustainability messages remain consistent across various communication channels, including social media ( Gonzalez-Lafaysse & Lapassouse-Madrid, 2016). Taken together, the literature suggests that green advertising contributes to higher perceived credibility when truthful claims, effective message sources, and coherent sustainability communication underpin it. H4:

Green advertising has a positive and significant effect on perceived credibility.

Beyond promoting environmentally friendly products, green advertising increases awareness of the environmental consequences of consumption behaviour, thereby fostering more optimistic expectations of a green future ( Kahraman & Kazançoğlu, 2019). When companies communicate their sustainability commitments effectively, consumers are more likely to believe that their support for green products contributes meaningfully to long-term environmental improvement ( Khaireddine et al., 2023). This process is strengthened when advertising provides transparent, clear information, because credible environmental claims encourage consumers to form more optimistic expectations about future environmental outcomes ( Prasad et al., 2017). Additionally, when advertising highlights practical benefits and fosters emotional alignment with sustainability values, consumers pay closer attention and show greater optimism about future environmental outcomes. ( Vafaei-Zadeh et al., 2024). Thus, clear, credible, and relevant green advertising can play a critical role in reinforcing green future estimation, as it underpins consumers’ psychological orientations toward green attitudes and consumption choices. H5:

Green advertising positively and significantly influences green future estimation.

Green advertising can increase willingness to pay more (WTPM) through two complementary psychological pathways, namely perceived credibility and green future estimation. When green advertisements communicate environmental claims clearly, consistently, and transparently, consumers are more likely to perceive the brand as credible. This enhanced credibility strengthens trust in the product’s environmental benefits and makes the acceptance of premium pricing more justifiable ( Akturan, 2020; Kumar & Tripathi, 2019; Prasad et al., 2017; Rahman & Nguyen-Viet, 2023). At the same time, green advertising can reinforce consumers’ beliefs that their current consumption choices contribute to improved environmental conditions in the future. As a result, the long-term value of green products is perceived as higher, which in turn encourages a greater willingness to pay more ( Huh & Kim, 2024; Kamboj & Matharu, 2021; Nekmahmud & Fekete-Farkas, 2020). Therefore, green advertising serves not merely as a promotional message but also as a catalyst for trust and future-oriented optimism, which explains why consumers are willing to pay a premium for environmentally friendly products ( Akturan, 2020; Zabkar & Hosta, 2012). H6:

The effect of green advertising on willingness to pay more is mediated by perceived credibility.

The present study employed a quantitative research design and collected primary data via an online questionnaire. The target respondents were consumers who had prior experience purchasing environmentally friendly products, such as eco-friendly packaging, natural soaps, recycled tissue products, reusable plastic bags or bottles, LED lighting, and food products manufactured using environmentally sustainable processes. A convenience sampling technique was applied. In total, 500 questionnaires were distributed directly to consumers who were connected to MSMEs operating in the East Nusa Tenggara Province (Nusa Tenggara Timur, NTT), Indonesia. These consumers were selected because they are considered potential agents of change in promoting the adoption of environmentally friendly products, particularly sustainable packaging made from lontar leaves. In addition, NTT specifically Kupang City, was chosen as the study location due to the high concentration of MSMEs that utilise lontar-based materials, making the region a relevant and contextually rich setting for examining consumer responses to sustainable packaging initiatives ( Dadag, 2024).

After data screening, 401 valid responses were retained from the 500 distributed questionnaires for analysis. The screening procedure involved a set of preliminary questions designed to ensure respondents’ relevance to the research context. Specifically, respondents were asked: (1) whether they had previously purchased environmentally friendly products; (2) whether they paid attention to the materials used in products during purchase decisions; and (3) whether they had purchased and used product packaging made from lontar leaves or similar natural materials. Only respondents who confirmed prior experience in purchasing environmentally friendly products and demonstrated awareness of sustainable packaging materials were allowed to proceed to the main questionnaire. As a result, 401 respondents met the inclusion criteria and constituted the final sample for analysis. This sample size is considered adequate for the analytical approach employed in this study. Hair et al. (2020) the minimum sample size was determined using the ten-times rule, which suggests a sample size of at least 10 times the number of indicators used in the model. In this study, the measurement model comprised 11 indicators; therefore, the minimum required sample size was 110 respondents.

Ultimately, 401 valid responses were obtained and used for data analysis, representing a response rate of approximately 82%. A descriptive analysis was conducted to provide an overview of respondents’ socio-demographic characteristics. As presented in Table 1, 56% of the respondents (n = 224) were female, while 44% (n = 177) were male. In the context of NTT, female consumers tend to engage more frequently in shopping activities than male consumers, as women in Kupang city are more commonly responsible for managing daily and household needs. This distribution of roles results in a higher observed shopping frequency among women than among men.

The measurement model was evaluated using partial least squares structural equation modelling (PLS-SEM) in SmartPLS. PLS-SEM is a widely applied statistical technique for examining complex relationships among latent variables, which makes it particularly suitable for predictive-oriented research objectives ( Hair et al., 2017). Screening questions were included in the questionnaire to ensure that only respondents with prior experience purchasing environmentally friendly products were included in the study. In addition, all measurement items were adapted to the local context of lontar-leaf packaging products and were translated using a back-translation procedure to ensure linguistic accuracy and conceptual equivalence.

Construct reliability and validity were assessed using Cronbach’s alpha, Composite Reliability (CR), and Average Variance Extracted (AVE). The results indicate that all constructs demonstrate satisfactory reliability, with Cronbach’s alpha and CR values exceeding the recommended threshold of 0.70, and adequate convergent validity, as evidenced by AVE values above 0.50. Discriminant validity was further evaluated using the Fornell–Larcker criterion and the heterotrait–monotrait (HTMT) ratio. The findings confirm that each construct is empirically distinct from the others ( Fornell & Larcker, 1981; Henseler et al., 2015). All indicators exhibit outer loadings above the recommended threshold of 0.70, indicating that the measurement items are appropriate and internally consistent in capturing their respective constructs. The highest loading is observed for green future estimation (GFE1 = 0.910), while the lowest loading appears for green advertising (GA3 = 0.852); nevertheless, both values remain well within acceptable PLS-SEM standards. In addition, all variance inflation factor (VIF) values are well below the threshold of 5, suggesting no multicollinearity issues.

Table 2 summarises the results of the reliability and validity assessments. Overall, the measurement model demonstrates adequate robustness and is suitable for proceeding to the structural model evaluation, particularly for examining the relationships among green advertising (GA), green future estimation (GFE), perceived credibility (PC), and willingness to pay more (WTPM).

3.2.1 Fornell-Larcker criterion

The Fornell–Larcker criterion was used to assess discriminant validity by comparing the square roots of the Average Variance Extracted (AVE) for each construct (diagonal values) with the inter-construct correlations (off-diagonal values). As shown in Table 3, the diagonal values for all constructs (bolded) exceed the corresponding correlations within the same rows and columns. This result indicates that each construct explains its own indicators more strongly than it relates to other constructs, thereby confirming adequate discriminant validity ( Fornell & Larcker, 1981).

For example, the square root of the AVE for WTPM is 0.866, which exceeds its correlations with GA (0.587), GFE (0.651), and the other constructs in the model. Therefore, the measurement model satisfies the requirements for discriminant validity, indicating that all constructs are empirically distinct and have been measured appropriately in this study.

3.2.2 HTMT criterion

The heterotrait–monotrait (HTMT) ratio was employed to further assess discriminant validity by examining inter-construct correlations. Table 4 presents the HTMT results. All HTMT values in this study fall below the conservative threshold of 0.85. The highest HTMT value is 0.848, observed between GA and GFE. These findings indicate that each construct is empirically distinguishable from the others, thereby providing additional support for discriminant validity ( Henseler et al., 2015).

In addition, the lowest HTMT value, which occurs between WTPM and GA (0.701), also remains well within the acceptable range. Therefore, the HTMT criterion confirms discriminant validity, indicating that the latent constructs in this study are distinct from one another both conceptually and statistically.

The structural model was employed to examine the hypothesised relationships among latent variables within the conceptual framework, using the PLS-SEM approach. In this study, the structural model evaluates both direct and indirect effects among the key constructs, including independent, dependent, and mediating variables ( Hair et al., 2019, 2017). Path coefficients indicate the direction and strength of the relationships among constructs, whereas the coefficient of determination (R ²) reflects the proportion of variance in each endogenous variable explained by its predictors. Higher R ² values indicate greater model explanatory power. The statistical significance of each path was assessed using p-values or t-statistics obtained through bootstrapping. Mediation effects were evaluated by examining indirect effects, while moderation effects were assessed through interaction terms.

Table 5 reports the R ² values, which indicate the proportion of variance in each dependent variable explained by its predictors. WTPM shows an R ² value of 0.546, indicating that the model explains 54.6% of the variance in WTPM and demonstrates strong predictive power. In contrast, PC has an R ² value of 0.501, suggesting that the model accounts for 50.1% of the variance in PC and that additional factors outside the current framework may play a substantial role in shaping credibility perceptions. GFE yields an R ² of 0.476, indicating that the model explains 47.6% of the variance. The moderate R ² for GFE indicates that the included predictors, such as green advertising, may not fully capture the primary determinants of green future estimation in the context of environmentally friendly packaging. These findings further suggest that GFE may function more prominently as an intervening construct, strengthening relationships among key variables, while also serving as an endogenous variable directly influenced by other constructs in the model.

From a methodological perspective, the relatively lower R ² value for PC does not undermine the model’s overall robustness, as both WTPM (R ² = 0.546) and PC (R ² = 0.501) demonstrate adequate explanatory power. Nevertheless, these results signal that future research should extend the nomological network of credibility by incorporating additional constructs, such as trust, attitudes, source attractiveness, and social awareness. Expanding the theoretical framework in this way would provide a more comprehensive explanation of credibility formation and enhance the model’s predictive capability regarding PC.

Hypothesis testing was conducted using PLS-SEM to examine the direct effects among the model’s constructs. A structural path was considered statistically significant when the p-value was below 0.05, and the t-statistic exceeded 1.96. The results indicate that PC has a positive and significant effect on WTPM (β = 0.425, t = 8.129, p < .001), which supports the proposed hypothesis. GFE also exerts a positive and significant influence on WTPM (β = 0.380, t = 7.522, p < .001). In contrast, GA does not have a significant direct effect on WTPM (β = 0.024, t = 0.414, p = .679). However, GA shows a strong and significant effect on PC (β = 0.708, t = 15.901, p < .001) and on green future estimation (β = 0.690, t = 17.092, p < .001). A summary of these direct effects is presented in Table 6.

The indirect effect along the GA → PC → WTPM pathway is statistically significant (β = 0.301, t = 6.502, p < .001), which indicates that perceived credibility serves as an important mechanism through which green advertising influences willingness to pay more. When green advertising intensifies, consumers tend to perceive the brand as more credible, and this enhanced credibility increases their readiness to accept premium prices. In a similar manner, the indirect effect of green advertising on willingness to pay more through green future estimation is also significant (GA → GFE → WTPM; β = 0.262, t = 6.988, p < .001). This finding suggests that stronger green advertising fosters more optimistic expectations of future environmental benefits, which, in turn, encourage consumers to pay more for environmentally friendly products.