Amid growing calls for transparency and social and environmental responsibility, companies are employing different strategies to improve consumer perceptions of their brands. Some pursue internal initiatives that reduce their negative social or environmental impacts through responsible operations practices (such as paying a living wage to workers or engaging in environmentally sustainable manufacturing). Others pursue external responsibility initiatives (such as philanthropy or cause-related marketing). Through three experiments, conducted in the field and lab, we compare how transparency into these internal and external initiatives affects customer perceptions and sales, and explore the psychological processes linking transparency to sales. The results provide converging evidence that transparency into a company’s internal responsibility practices can be at least as motivating of consumer sales as transparency into its external responsibility initiatives, incrementally increasing a consumer’s probability of purchase by 13.6% and 45.8% across our two field experiments, conducted in social and environmental domains, respectively. We further investigate the perceptual effects of transparency into internal and external responsibility initiatives and find that the underlying psychological mechanisms linking both types of transparency to consumer purchase intentions are highly consistent. Transparency into internal and external initiatives increases perceived altruism, cause sincerity, corporate ability, trust, favorability, and consumers’ beliefs that the company is an attractive employer, which in turn drives sales. Taken together, our results suggest that it may be in the interest of both business and society for managers to prioritize internal responsible operations initiatives, to achieve both top and bottom line benefits, while mitigating social and environmental harms.
Keywords: Sustainable Operations; corporate social responsibility; operational transparency; Corporate Social Responsibility and Impact; Environmental Sustainability; Consumer Behavior; Perception;
Citation:
Buell, Ryan W., and Basak Kalkanci. "How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice: Evidence from the Field and Lab." Harvard Business School Working Paper, No. 19-115, May 2019. View Details