Supply Chain Study: Consumers Demand Transparency. But Is It Rewarded?
Transparent supply chains boost consumer trust—if the results are positive. But what if they aren’t? A new paper by Kühne Logistics University (KLU), in collaboration with the University of Tennessee and Tilburg University, published in the Journal of Business Logistics, reaches a surprising conclusion. The researchers advise companies: It’s better to publish mixed results than none at all.
Social Consciousness Among Consumers Is Becoming Increasingly Important
More and more people are listening to their social conscience when making purchases: How fair are a company’s wages along the supply chain, and are employees treated decently? The Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG) requires companies to investigate precisely these kinds of questions and publish the results—though not down to the last detail. As a result, companies remain uncertain as to whether they should truly make all information—including negative information—transparent.
Companies Fear the Publication of Negative Information
Full transparency carries risks, especially when the LkSG requirements have not yet been fully implemented. “It’s not surprising that publishing positive information leads to positive effects, as it signals fairness and trust,” confirms co-author Prisca Brosi, professor of human resource management at Kühne Logistics University. According to Brosi, companies, on the other hand, fear that negative information could lead to public criticism, declining sales, or regulatory scrutiny. But that doesn’t have to be the case.
Prof. Brosi: “Realistic signals are rewarded”
“Our research has shown that mixed results regarding compliance with corporate due diligence are perceived in a nuanced way. While the disclosure of shortcomings leads to lower perceived fairness, this is offset by a positive effect. A realistic portrayal of the process is rewarded with trust and positive word-of-mouth.” Based on this finding, Brosi advises companies to be more confident: “Companies should have the courage to publish mixed results. Realistic signals are rewarded—and are definitely better than none at all.”
Method: Simulated e-commerce product page
To confirm their hypothesis, the researchers—Prof. Emily C. Dickey, PhD (Haslam College of Business at the University of Tennessee), Prof. Dr. Prisca Brosi (KLU), and Prof. Jan Fransoo, PhD (Tilburg University)—conducted two studies based on what is known as signal theory: What signals do the various forms of transparency disclosure convey? To this end, approximately 780 participants from the U.S., aged 19 to 66, evaluated the e-commerce product page of a fictional clothing company. One study examined the reaction to consistently positive information compared to no information at all. Another study examined the effect of combining positive and negative information. Since trust is crucial for word-of-mouth, the surprising finding of the study was that the mixed information was ultimately perceived positively. “A good sign for greater transparency,” says Prof. Brosi.
More information:
- Dickey, E. C., P. Brosi, and J. C. Fransoo. 2026. “Signaling Fair Practices: Supply Chain Transparency and Consumer Responses to Fair Wage and Labor Disclosures.” Journal of Business Logistics 47, no. 3: e70080. https://doi.org/10.1111/jbl.70080
- Prof. Dr. Prisca Brosi: Profile & media photos for download
