Perceived Firm Transparency: Scale and Model Development

Abstract

In the last few years alone, calls for transparency by consumers have grown louder. No longer are consumers willing to sit back and allow firms to make `closed door' decisions that benefit the company (and its executives) at the expense of consumers and society. This dissertation begins to answer the call for a greater understanding of transparency from both practitioner and academic perspectives. In particular, this dissertation focuses on systematically developing a succinct definition of perceived firm transparency, developing a valid measure of transparency, and empirically testing antecedents and consequences of transparency.\nTwo studies were conducted to develop the transparency scale following a thorough review of the transparency literature across six fields. Study 1 was dedicated to scale development and validation for the transparency construct. Study 2 was dedicated to further validating the transparency scale and testing its psychometric properties and validity.\nThe complete proposed model was tested in Study 3 utilizing scenarios in a between-subjects design with a student sample. Study 4 further tested the proposed model in a slightly more ecologically valid setting with a more diverse sample. Studies 3 and 4 showed that transparency has significant direct impact on reducing skepticism, and increasing trust, attitude toward the firm, and purchase intention; and these impacts are of substantial magnitude. Studies 3 and 4 also tested a few antecedents of perceived firm transparency including perceived firm reciprocity, perceived consumer effort, and negative information. Reciprocity and consumer effort both had a significant impact on perceptions of firm transparency in Studies 3 and 4, and negative information impacted perceptions of transparency in Study 3 only.\nAt its core, transparency means that a firm is perceived to be open and forthright with stakeholders. This dissertation shows that stakeholders reward firms for being transparent; and those rewards come in the form of decreased skepticism and increased favorable attitudes toward the firm, trust, and purchase intention. Managers can focus on increasing perceptions of transparency by providing stakeholders with opportunities for mutual conversations, by making easy for stakeholders to learn about the company and its offerings, and by sharing more balanced information about itself that reflects both the positives and the negatives.

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