How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice

40 Pages Posted: 10 May 2019 Last revised: 6 Feb 2020

See all articles by Ryan W. Buell

Ryan W. Buell

Harvard Business School

Basak Kalkanci

Georgia Institute of Technology - Scheller College of Business

Date Written: February 4, 2020

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, consumer behavior, operational transparency, field experiments

Suggested Citation

Buell, Ryan W. and Kalkanci, Basak, How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice (February 4, 2020). Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 19-115; Georgia Tech Scheller College of Business Research Paper No. 19-09. Available at SSRN: https://ssrn.com/abstract=3385443 or http://dx.doi.org/10.2139/ssrn.3385443

Ryan W. Buell (Contact Author)

Harvard Business School ( email )

Soldiers Field Road
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HOME PAGE: http://www.hbs.edu/rbuell

Basak Kalkanci

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St.
Atlanta, GA 30308
United States

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