Understanding Consumer Responses to Supply Chain Transparency : Signaling Trustworthiness and Justice

While an increasing number of firms become more transparent about their supply chains, we still lack an understanding of why Supply Chain Transparency (SCT) impacts consumer perceptions. This lack of insight may make firms leery of transparency, as being transparent might backfire. Deriving insights from signaling theory, we develop a deeper understanding of the mechanisms through which SCT signals drive consumer behavior. We use two vignette-based experiments (N1 = 195, N2 = 311) to test the resulting theoretical model. In Study 1, we propose and confirm both firm trustworthiness and perceptions of justice within the supply chain as the underlying mechanisms of the relationship between SCT and consumer perceptions. Study 2 expands on the understanding of these perceptions as explaining mechanisms to show that a lack of SCT is even more negative than actively disclosing bad supply chain practices. In doing so, we not only expand the use of signaling theory in supply chain management research at the consumer level, but also help refine our understanding of the underlying mechanisms of SCT. These findings align with the shifting social norms regarding consumer expectations for SCT and provide timely insights for firms interested in aligning their SCT with consumer expectations