TY - JOUR
T1 - The benefits and implementation of performance transparency
T2 - The why and how of letting your customers 'see through’ your business
AU - Merlo, Omar
AU - Eisingerich, Andreas
AU - Auh, Seigyoung
AU - Levstek, Jaka
N1 - Publisher Copyright:
© 2017 Kelley School of Business, Indiana University
PY - 2018/1/1
Y1 - 2018/1/1
N2 - While some organizations swear by the benefits of transparency and are eager to learn and implement transparency practices, many managers are still reluctant or even afraid to use them. Our research reveals that only a few innovative companies have taken steps to leverage a potentially useful form of transparency: the provision of accessible and objective information to customers (e.g., sharing unbiased benchmark data, publishing unfiltered customer comments, or providing candid product reviews that may praise but also criticize the company's products). Our study also shows that many companies remain wary and view greater calls for transparency as a challenge to be managed rather than an opportunity to be traded upon. This is partly due to limited research into the performance benefits of giving customers access to objective information, and lack of practical guidelines on how to actually implement it. This article addresses these shortcomings. First, we investigate whether performance transparency leads to customer outcomes that can be profitable for an organization and, second, we analyze the characteristics of successful transparency initiatives in a wide range of industries. Our research shows that customers exhibit more trust and are willing to pay a premium to deal with transparent businesses. Also, it uncovers seven effective strategies to leverage transparency. This article provides convincing empirical evidence for the benefits of performance transparency and the ways in which management may implement it successfully.
AB - While some organizations swear by the benefits of transparency and are eager to learn and implement transparency practices, many managers are still reluctant or even afraid to use them. Our research reveals that only a few innovative companies have taken steps to leverage a potentially useful form of transparency: the provision of accessible and objective information to customers (e.g., sharing unbiased benchmark data, publishing unfiltered customer comments, or providing candid product reviews that may praise but also criticize the company's products). Our study also shows that many companies remain wary and view greater calls for transparency as a challenge to be managed rather than an opportunity to be traded upon. This is partly due to limited research into the performance benefits of giving customers access to objective information, and lack of practical guidelines on how to actually implement it. This article addresses these shortcomings. First, we investigate whether performance transparency leads to customer outcomes that can be profitable for an organization and, second, we analyze the characteristics of successful transparency initiatives in a wide range of industries. Our research shows that customers exhibit more trust and are willing to pay a premium to deal with transparent businesses. Also, it uncovers seven effective strategies to leverage transparency. This article provides convincing empirical evidence for the benefits of performance transparency and the ways in which management may implement it successfully.
KW - Customer reviews
KW - Customer trust
KW - Public disclosure
KW - Transparency in business
UR - http://www.scopus.com/inward/record.url?scp=85030848379&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85030848379&partnerID=8YFLogxK
U2 - 10.1016/j.bushor.2017.09.007
DO - 10.1016/j.bushor.2017.09.007
M3 - Article
AN - SCOPUS:85030848379
SN - 0007-6813
VL - 61
SP - 73
EP - 84
JO - Business Horizons
JF - Business Horizons
IS - 1
ER -