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 that disclosure has on consumer trust, while the effect of visibility on trust in communications is not well understood. Our work addresses this gap. In this paper, we employ an incentivized, human-subject laboratory experiment 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 apply causal mediation analysis to answer our research questions. We find that increasing visibility always strengthens consumer trust. Furthermore, 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, our identification of trust as a mechanism to help explain the effect of visibility on sales of SR products can provide companies with more actionable recommendations.