Working Paper | HBS Working Paper Series | 2015

Creating Reciprocal Value Through Operational Transparency

by Ryan W. Buell, Tami Kim and Chia-Jung Tsay

Abstract

We investigate whether organizations can create value by introducing visual transparency between consumers and producers. Although operational transparency has been shown to improve consumer perceptions of service value, existing theory posits that increased contact between consumers and producers may diminish work performance. Two field and three laboratory experiments in food service settings suggest that transparency that 1) allows customers to observe operational processes and 2) allows employees to observe customers not only improves customer perceptions, but also increases service quality and efficiency. In our fully specified models, the introduction of reciprocal operational transparency contributed to a 22.2% increase in customer-reported quality and reduced throughput times by 19.2%. Laboratory studies revealed that customers who observed employees engaging in labor perceived greater effort, better appreciated that effort, and valued the service more. Employees who observed customers felt that their work was more appreciated and more impactful, and thus were more satisfied with their work and more willing to exert effort. We find that transparency, by visually revealing operating processes to consumers and beneficiaries to producers, generates a positive feedback loop through which value is created for both parties.

Keywords: operational transparency; service quality; efficiency; customers; employees; perceived value; Value Creation; Production; Service Operations;

Citation:

Buell, Ryan W., Tami Kim, and Chia-Jung Tsay. "Creating Reciprocal Value Through Operational Transparency." Harvard Business School Working Paper, No. 14-115, May 2014. (Revised May 2015.)