Disclosure and transparency in sustainable supply management: is it worth it?

Purpose This study investigates whether supply chain transparency through sustainable supply management (SSM) disclosure influences consumer purchase behavior. When firms understand this behavior, they can optimize operations and craft clearer, more impactful supply-chain sustainability disclosures. Design/methodology/approach Two controlled laboratory experiments and a natural field experiment are used to evaluate various elements of SSM disclosures. The first laboratory experiment examines consumer willingness to pay a premium for products with SSM disclosures, when compared across firms. The second laboratory experiment examines consumer response to SSM disclosures across different products offered within the same firm. The field experiment evaluates whether consumers are willing to buy or pay a premium in actual market situations where SSM information is disclosed. Findings Results demonstrate significant consumer preferences for products accompanied by SSM disclosures. The analysis of the natural field experiment indicates that consumers are inclined to purchase more from firms that transparently communicate their SSM practices. Further, we find that at least some consumers are willing to pay a premium for products with SSM disclosure. The laboratory experiments, on the other hand, fail to provide significant evidence that consumers are willing to pay more for products with SSM disclosures. These results offer insights into how signaling and legitimacy concerns within the downstream supply chain shape consumers' purchasing behavior and, in turn, firm performance. Practical implications A proactive communication strategy on firm SSM engagement can gain market share and build competitive advantage. The costs associated with gathering SSM information can potentially be offset by greater market share and premium pricing. Regulators and policymakers can support efforts for supply chain transparency by providing impetus for consumer requests for such information and encouraging firms to supply it. Originality/value This research uniquely integrates a series of behavioral experiments to robustly assess the influence of supply chain transparency on consumer purchasing behavior. Through legitimacy and signaling theoretical lenses, our study shows the reason for firm strategic communication in SSM efforts. There is an emphasis on how supply chain decisions related to collaboration and facilitating transparency are critical to organizational market competitiveness due to consumer preferences and behavior. The role of transparency and legitimacy in sustainable supply chain management is further advanced.