Consumer Trust in Social Responsibility Communications: The Role of Supply Chain Visibility

Abstract

Consumers are becoming more knowledgeable about companies' social responsibility (SR) practices. As a result, they are increasingly skeptical when companies do not provide clear information about these practices. One way to overcome this skepticism is to strengthen consumer trust through improved supply chain transparency. To create transparency requires a company to both gain visibility into its supply chain and disclose information to consumers. However, the current SR literature has only focused on the effect of disclosure on consumer trust, while the effect of visibility on trust in SR communications is not well understood. Our work addresses this gap. In this paper, we employ an incentivized human-subject laboratory experiment, an online vignette study, and causal mediation analysis to investigate the impact of visibility on consumer trust in a company's SR communication, and as a result, its impact on consumers' purchase decisions. To further enhance our understanding of consumer behavior, we examine how consumer heterogeneity and workers' conditions in the upstream supply chain influence our results. We find that increasing visibility always strengthens consumer trust. Also, opportunities exist for a trust-driven revenue benefit (due to greater visibility) when consumers are highly prosocial or have low general trust beliefs, or when the impact of an SR initiative is small. Our results underscore the crucial role that supply chain visibility plays in engendering consumer trust. Moreover, identifying trust as a mechanism to help explain the effect of visibility on sales of SR products offers actionable insights to improve a company's communication strategies.

Keywords: Supply chain visibility, consumer trust, social responsibility, prosociality, mediation analysis, behavioral operations, experiment