Creating Reciprocal Value Through Operational Transparency
Management Science (Forthcoming)
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 14-115
41 Pages Posted: 13 Jun 2014 Last revised: 19 Jun 2019
Date Written: November 24, 2015
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 two laboratory experiments in food service settings suggest that transparency that 1) allows customers to observe operational processes (process transparency) and 2) allows employees to observe customers (customer transparency) not only improves customer perceptions, but also increases service quality and efficiency. The introduction of this 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 process transparency perceived greater employee effort and thus were more appreciative of the employees and valued the service more. Employees who observed customer transparency 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
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