The benefits and implementation of performance transparency: The why and how of letting your customers 'see through' your business

Omar Merlo, Andreas Eisingerich, Sei Auh, Jaka Levstek

    Research output: Contribution to journalArticle

    Abstract

    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.

    Original languageEnglish (US)
    JournalBusiness Horizons
    DOIs
    StateAccepted/In press - 2017

    Fingerprint

    Transparency
    Leverage
    Industry
    Empirical evidence
    Premium
    Benchmark
    Managers
    Product review

    Keywords

    • Customer reviews
    • Customer trust
    • Public disclosure
    • Transparency in business

    ASJC Scopus subject areas

    • Business and International Management
    • Marketing

    Cite this

    The benefits and implementation of performance transparency : The why and how of letting your customers 'see through' your business. / Merlo, Omar; Eisingerich, Andreas; Auh, Sei; Levstek, Jaka.

    In: Business Horizons, 2017.

    Research output: Contribution to journalArticle

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