The influence of supply-chain transparency on consumer trust: The mediating role of ethical sourcing

The need to be transparent about supply chains has been paramount, mirroring the consumer’s growing awareness about ethical sourcing practices. Building on signaling theory, this study explores the association between supply-chain transparency (SCT) and consumer trust (CT) and the role of perceived ethical sourcing (PES) in this association. Using a mixed-methods approach involving quantitative surveys and qualitative interviews with executives to gain the desired level of insight about SCT, PES, and CT dynamics, the study finds a strong positive association between SCT and CT mediated by PES. Beyond that, the study suggests that transparent supply-chain behaviors significantly boost CT where ethical sourcing is credible. The study also finds that the type of product moderates the SCT–CT association, but purchase frequency has little moderating effect. Implications of the study indicate the adoption of the more transparent and moral sourcing policy more widely. This will not only create CT but also make companies more responsive to customer concerns. Contributing to the extant literature on the field of SCT and PES by yielding insights that can be valuable to organizations seeking to establish and maintain CT where consumer purchase is market dominant, the study suggests the following. JEL classification: D12, M31, L67