How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice

Ryan W. Buell; Basak  Kalkanci

Article | Management Science | Forthcoming

How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice

by Ryan W. Buell and Basak Kalkanci

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;

Format: Print

38 pages

SSRN Find at Harvard

Citation:

Buell, Ryan W., and Basak Kalkanci. "How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice." Management Science (forthcoming).

Zameer Kassam Fine Jewelry (ZKFJ) designs custom engagement rings that tell the story of a couple’s relationship. The case describes the company’s process for engaging clients, which has historically been a relatively offline, high-touch experience. Obliged by social-distancing guidelines with the advent of the COVID-19 pandemic in early 2020, Zameer Kassam and his team had been forced to take many facets of the business online. Although clients still seemed delighted by their rings, Kassam wondered what might be being lost for his clients and employees in this new virtual medium. On the other hand, perhaps there were aspects of the process that could be improved through online delivery? Such a transition could represent an opportunity to grow the business.

Since its founding, Getaway’s service offering – tiny, modern cabins in the woods, located within a two-hour drive of major metropolitan areas – had been met with tremendous demand. Overworked and overconnected city dwellers reveled in the opportunity to take a break from their hectic lives, disconnecting in nature, and savoring meaningful moments with the people closest to them. What began with a fixed, nightly cabin rate of $99 a night had graduated over time to daily yield management, and a steady increase in prices to match rising demand. $159.. $179... $199.. With the onset of the global pandemic in March of 2020, the prospect of getting away to the woods, in rigorously-cleaned, socially-distanced cabins, became even more appealing to homebound consumers, and there was a step change in demand, and prices skyrocketed, crossing $369 in some markets. Should the company make as much money as quickly as possible to fund further growth, or does that risk that consumers will determine Getaway is too expensive and either never come, or never come more than once?

In 2015, the Department of Veterans Affairs (VA) ran the largest healthcare system in the United States, with over 1,700 sites of care that served nearly 9 million veterans. One year earlier, a scandal had erupted over a cover-up of the excessive wait times veterans faced to get medical appointments in some VA facilities. The fallout led to the resignation of the Secretary of Veterans Affairs, a criminal investigation by the Federal Bureau of Investigation, and the eventual replacement of 14 of VA’s top 17 leaders. This case documents the efforts of the new leadership team to improve access, regain trust, and transform the organization to address the broadening medical needs of the nation's growing veteran population.

Faculty & Research

How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice

Abstract

Citation:

About the Author

More from the Author