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  • February 2021
  • Article
  • Management Science

How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice

By: Ryan W. Buell and Basak Kalkanci
  • Format:Print
  • | Pages:38
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Abstract

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 two experiments conducted in the field and complementary online experiments, we compare how transparency into these internal and external initiatives affects customer perceptions and sales. We find that transparency into both internal and external responsibility initiatives tend to dominate generic brand marketing in motivating consumer purchases, supporting the view that consumers take companies’ responsibility efforts into account in their decision making. Furthermore, 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 6.40% and 45.85% across our two field experiments, conducted in social and environmental domains, respectively. 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; Operations; Environmental Sustainability; Consumer Behavior; Perception

Citation

Buell, Ryan W., and Basak Kalkanci. "How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice." Management Science 67, no. 2 (February 2021): 932–950.
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About The Author

Ryan W. Buell

Technology and Operations Management
→More Publications

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More from the Authors
  • Elevate Employees, Don't Eliminate Them By: Ryan W. Buell
  • Multi-location Workers in Multinational Firms? Tradeoffs in Contextual Specialization of Employees and Organizational Outcomes By: Hise O. Gibson, Ryan W. Buell and Prithwiraj Choudhury
  • Surfacing the Submerged State: Operational Transparency Increases Trust in and Engagement with Government By: Ryan W. Buell, Ethan Porter and Michael I. Norton
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