How Transparency into Internal and External Responsibility Initiatives Influences Consumer Choice

Key Insights for Managers

To reduce the negative social and environmental impacts of their operations – and to attract customers – some companies tend to focus their efforts internally, improving their own processes, such as by paying a living wage or engaging in environmentally sustainable practices. Other companies tend to focus their efforts externally, such as by engaging in socially and environmentally oriented philanthropy.

Authors Ryan Buell and Basak Kalkanci found that providing consumers transparency into a company’s internal or external responsibility initiatives better motivated consumer purchases than generic brand marketing. They also found some evidence that providing transparency into the company’s internal responsibility initiatives improved sales more than providing transparency about its external responsibility initiatives.

These conclusions are based on a field experiment that randomly exposed consumers at point-of-sale kiosks to author-produced videos that depicted an apparel company’s internal or external social and environmental responsibility efforts. The analysis was based on retailer data from nearly 80,000 customer transactions.