Corporate transparency and purchase intentions
How corporate transparency directly and indirectly influences purchase intentionstowards fashion brands
MSc. BA – Marketing Track
Master’s Thesis
(6314M0306Y)
Name: Mickey Smit Student id: 10678069 Thesis supervisor: J. Demmers
Word count: 13,707
Table of content
STATEMENT OF ORIGINALITY ... 3 ABSTRACT ... 4 1. INTRODUCTION ... 5 2. LITERATURE REVIEW... 9 2.1CORPORATE RESPONSIBILITY ... 9 2.2CORPORATE TRANSPARENCY ... 14 2.3PURCHASE INTENTIONS ... 16 2.4ORGANISATIONAL ASSOCIATIONS ... 20 2.5PERCEIVED QUALITY ... 23 2.6INFORMATION POLARITY ... 26 2.7INFORMATION SOURCE ... 27 2.8CONCEPTUAL MODEL... 32 3. METHOD ... 34 3.1RESEARCH DESIGN ... 34 3.2SAMPLING PROCEDURE ... 35 3.3RESEARCH INSTRUMENT... 363.4MEASUREMENT AND DATA COLLECTION ... 37
3.5DATA ANALYSIS ... 42
4. RESULTS ... 44
5. GENERAL DISCUSSION ... 49
5.1THEORETICAL IMPLICATIONS ... 51
5.2PRACTICAL IMPLICATIONS ... 54
5.3LIMITATIONS AND FUTURE RESEARCH ... 55
6 CONCLUSION ... 57 7 REFERENCES ... 59 8 APPENDICES ... 68 APPENDIX A ... 68 APPENDIX B ... 71 APPENDIX C ... 73 APPENDIX D ... 74 APPENDIX E ... 75 APPENDIX F ... 76
Corporate transparency and purchase intentions
How corporate transparency directly and indirectly influences purchase intentionstowards fashion brands
Statement of Originality
This document is written by Student Mickey Smit, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Abstract
This thesis has investigated how corporate transparency leads to increased purchase intentions. It tested the direct effect of information disclosure on purchase intentions and it tested a mediating role of organisational associations and perceived quality. Consumer type is included as a moderating variable. Furthermore, effects of polarity regarding CSR information are tested for organisational associations and perceived quality, and source based effects are tested for organisational associations.
Empirical research is conducted within a fashion industry context to measure multiple hypotheses. Quantitative data is retrieved by means of online distributed closed-question surveys. An experiment, characterised by a factorial between-subjects design, is done with a sample of 175 respondents - divided over five groups accounting for three conditions - providing descriptive outcomes.
This study found no support for a direct positive relation between transparency and purchase intentions. Yet, results showed a positive relation between transparency and purchase intentions as mediated by organisational associations, which extends on literature by introducing a new way in which transparency affects purchase intentions. This study also found that organisational associations are influenced by information source and polarity concerning CSR performance.
Moreover, it was found that perceived quality, a reliable predictor of purchase intentions, is positively influenced by information polarity concerning CSR. This supports the theory that extrinsic cues impact perceived quality and extends literature in that it identifies CSR performance as an extrinsic cue that positively affects perceived quality.
1. Introduction
Do you know who makes your clothes, do you understand the impact of production, and, arguably more important, do you care to know? These questions are becoming increasingly important for today’s consumers and marketers. Tragic events, such as the collapse of the Rana Plaza factory in Bangladesh, have increased people’s awareness and put more emphasis on the disclosure of information related to labour conditions, ethical conduct, and general corporate social responsibility (CSR) (“Fashion Transparency Index Reveals Even Top Brands Lagging in Supply Chain Transparency”, 2017).
When the Rana Plaza factory collapsed in April 2013, killing more than eleven hundred people and injuring at least twenty-five hundred people, the Western world was confronted with the poor labour conditions in third world countries. Almost thirty international fashion brands were soon identified as employers and as business partners of the factory, causing pressure on companies, particularly in the fashion industry (Comyns & Franklin-Johnson, 2015). Large international brands promised to improve the safety of labourers and other CSR conditions, yet the absence of significant visible improvement is causing activists and consumers to call for more transparency (Abrams, 2016).
This year, Fashion Revolution, the largest fashion activism movement, released the 2017 Fashion Transparency Index, which “ranks 100 of the biggest fashion companies on their social and environmental policies, practices and impacts” (“Fashion Transparency Index Reveals Even Top Brands Lagging in Supply Chain Transparency”, 2017). It reviews the degree to which firms disclose information regarding their suppliers, supply chain policies and practices, and social and environmental impact. The movement tries to encourage brands to disclose information on business practices, preferably full disclosure, and seeks to increase consumer awareness (“Fashion Transparency Index 2017”, 2017).
Fashion Revolution started the #whomademyclothes online campaign to create more awareness for CSR and to inspire people to act. The campaign quickly reached 129 million people via social media, indicating that people want to be informed about a company’s actions, policies, and production (“Fashion Transparency Index 2017”, 2017). The degree of information disclosure is referred to as the state of transparency, which could be strengthened by companies and by secondary sources, such as newspapers (Dapko, 2012; Hess, 2012).
Corporate transparency is used repeatedly in business these days to describe the practice of dissolving information asymmetry (i.e., providing information not previously possessed by outsiders) at the firm level by a firm (Bushman, Piotroski, & Smith; 2004; Chang, Cho, & Shin, 2007, as cited by Kim, Lee, & Yang, 2013). Transparency increasingly becomes a responsibility solely of the company at stake. Traditionally, firms have mostly legal and economic obligations. E.g. financial reporting is often required by law and demanded by stakeholders.
Other corporate responsibilities are also increasingly receiving attention in recent times. A shift from legal and economic responsibilities towards ethical and philanthropic responsibilities is evident, meaning that consumers demand that companies better acknowledge their social and environmental responsibilities (Carroll, 2016). Moreover, consumers demand to be informed about these practices (Cohn & Wolfe, 2013), which is why it is essential to investigate what the benefits and effects in general are of this responsibility called transparency.
Since consumer trust in companies meeting their ethical responsibilities is currently low, disclosing sufficient information seems important to regain consumer trust (Mohr & Webb, 2005). Corporate transparency, however, does not necessarily lead to positive
interpretation in all situations. Consumers can view vague information disclosure on social and environmental commitment as superficial impression management (Bansal & Kistruck introduction, 2006), illustrating that people can be sceptical when a company discloses positive information. As corporate transparency can be viewed by consumers as an effort to enhance or restore a company’s reputation (Forehand & Grier, 2003), it is interesting to study under what conditions corporate transparency does work beneficially for companies. If properly communicated, information disclosure on topics such as CSR could lead to desired outcomes for companies, such as positive brand associations and purchase intentions (Groza, Pronschinske, & Walker, 2011).
Corporate transparency in general reportedly influences purchase intentions in a positive way (Auger, Burke, Devinney, & Louviere, 2003; Dapko, 2012). Purchase intentions are the most reliable predictor of behaviour (Ajzen, 1991) and one of the most desired attitudinal outcomes in business (Chang & Liu, 2009). The idea that it could be influenced by disclosing information that is already available to the firm, encourages to find out how this works. The growing importance of CSR for business (Carroll, 2016) provides ground to choose CSR information disclosure as topic of the experiment (see appendix A for the texts used in the experiment).
Previous research sometimes shows contrasting findings on the direct relation between corporate information disclosure on CSR and purchase intent. For example, Lee and Shin (2010) found that companies’ social contribution affects purchase intention and that environmental contribution does not. Other research finds that especially environmental emphasis leads to higher purchase intentions (Li, Fu, & Huang, 2015). To investigate the relation between transparency and purchase intentions further, two perceived partial
predictors of purchase intentions are included in this study, namely organisational associations and perceived quality (Aaker, 1996).
The first mediating variable, organisational associations, includes beliefs about the trustworthiness, honesty, and customer care of an organisation (Netemeyer et al., 2004). This concept is an important dimension of the well-described constructs customer-based brand equity (CBBE) and brand associations (Aaker, 1996; Keller, 1993). These constructs are related, as brand associations could be viewed as part of CBBE. CBBE is universally considered an important objective in business, as it is a reliable predictor of purchase intent. It could presumably be influenced by corporate transparency through organisational associations and perceived quality, another dimension of CBBE (Aaker, 1996; Keller, 1993).
Perceived quality is the level of quality that consumers subjectively assign to a product (Zeithaml, 1988). Aaker (1996) and Keller (1993) define both perceived quality and perceived value. Perceived value is essentially perceived quality divided by price (Aaker, 1996) and for simplicity reasons, only perceived quality is elaborated in this study. Perceived quality is integrated as a mediating variable; it is expected to be affected by corporate transparency, since consumers sometimes value products or services based on extrinsic cues if physical assessment is impossible (Kirmani, 1990; Mohr & Webb, 2005). Hence, disclosure of positive information might result in a different level of perceived quality than no disclosure or disclosure of negative information. This might have a mediating effect on purchase intent, as perceived quality influences purchase intentions (Spears & Singh, 2004).
Summarily, to analyse the effects of corporate transparency on the various concepts and to contribute to literature, multiple hypotheses are developed and tested to eventually answer the following research question: “How does transparency lead to increased purchase intentions?” With this research, I aim to contribute to the literature on transparency and
purchase intentions in several ways. Firstly, a hypothesis (H1) is developed to test the direct relation between transparency and purchase intentions. Consumer type is integrated as a variable that possibly moderates this relation. Secondly, one main hypothesis (H2) tests a mediating effect of organisational associations on the previous relation. Thirdly, I intent to find a mediating effect of perceived quality on the relation between transparency and purchase intentions (H3). Moreover, with hypotheses 4a/b and hypotheses 5a/b I seek to confirm presumed effects of information polarity (positive – negative) and information source (company – newspaper) on organisational associations and perceived quality.
This paper continues with a literature review in Chapter 2, which elaborates on the concepts in this research. In Chapter 3, the methods and measures chosen to test and analyse the hypotheses are described in the method section. Chapter 4 discusses the results, which are analysed with respect to theory in Chapter 5. Implications for theory and more practical implications are presented in the same chapter, as are the limitations of this research and possibilities for future research. Finally, the most important findings and contributions are summarised in Chapter 6.
2. Literature review
2.1 Corporate responsibilityDisclosing information about social and environmental management has become essential for firms. This follows increased consumer social and environmental awareness (Bansal & Kistruck, 2006; Cohn & Wolfe, 2013) fused with and strengthened by consumer mistrust due to the financial crisis and incidents such as the Rana Plaza disaster (Abrams, 2016). As analysed by Vaccaro and Echeverri (2010), consumers expect to be thoroughly informed about
corporate social and environmental initiatives and performance and wish to see a positive impact on the environment (Hartmann & Ibáñez, 2007; Ramkumar & Petkova, 2007; Wüstenhagen & Bilharz, 2006).
People view brands that meet their responsibilities and act ethically as integer. Integrity is a prominent dimension of brand authenticity, which is something that consumers increasingly seek in a brand. Brand authenticity is critical in impression brand management. A sole definition is hard to assign to authenticity. It relates to brand identity (Beverland, 2005) and indicators of authenticity that are often mentioned are aspects as originality, relevancy, genuineness, and credibility. CSR is therefore integral in brand management nowadays (Morhart, Malär, Guèvremont, Girardin, & Grohmann, 2015). Perceived integrity and credibility used to be less prominently present in corporate management, illustrating a shift in corporate responsibility (Carroll, 2016).
According to Carroll (1991), there are four perceived layers of responsibility in business (Figure 1). These layers build from economic responsibilities to
legal responsibilities to ethical responsibilities to philanthropic responsibilities and they function as the infrastructure for the responsibility of companies to society. The bottom two layers have been traditionally emphasised; however, society’s emphasis is changing. Stakeholders increasingly demand information about performance related to the top layers (Carroll, 2016). Standardised reports are traditionally used to disclose information related to
the bottom two layers (Hess, 2012). Standardised reporting is also used to communicate CSR performance, yet ethical and philanthropic responsibilities are often closer related to online
interaction (Press & Arnould, 2014), corporate statements or no disclosure at al (Angjelova & Sundström, 2015).
Legal and economic responsibilities
Corporations increasingly use social reporting to disclose information on their performance in the field of CSR (Hess, 2012). Nevertheless, information about financial results are still of value for stakeholders, particularly for shareholders, suppliers, and governments. Society expects a company first to make profits and to sustain itself. While doing so, companies must comply with the law and fulfil all legal obligations towards society (Carroll, 2016). To avoid corruption, regulatory authorities increasingly pressure companies to provide financial information (Overcoming opacity, 2015). Disclosing (often static) financial information is usually required by law and the greater part of financial information is presented in a company’s balance sheet (Das Neves & Vaccaro, 2013). The information on the balance sheet is important to assess the well-being of the organisation, which is what shareholders, boards, and governments want to know.
Lately, governmental anti-corruption laws also demand the inclusion of CSR performance in corporate reports. Guidelines for structuring these reports are given by the Global Reporting Initiative (GRI) (Hess, 2012). This is one of the most frequently used corporate reporting formats for companies around the globe (Watts, 2015). Responsibilities forming the top layers of Carroll’s Pyramid of Corporate Social Responsibility (1991) (Figure 1), have become the most important in business (Carroll, 2016).
Philanthropic and ethical responsibilities
While reporting of financial actions is often mandatory, reporting social and environmental practices is more up to the company (Bushman et al., 2004). Reporting environmental, social, and governance performance information is mandatory in only some countries, such as Denmark (Watts, 2015). CSR is defined as “the responsibility of a corporate entity to be as profitable as possible while not only meeting all legal requirements but also going beyond those requirements to behave ethically and philanthropically” (Kang & Hustvedt, 2014). Here, the apparent change in corporate responsibilities explained by the Pyramid of Corporate Social Responsibility (Carroll, 1991) are put in one sentence. The top two layers that are now present in the evaluation of the responsibilities of business are comprised of ethical and philanthropic values.
Ethical responsibilities go further than legal ones. Laws are essential yet not sufficient, which means that even if a company operates within the law, the company might engage in unethical or morally unacceptable behaviour (Carroll, 2016). Even when companies comply with the law, a visible impact on society or nature could create stakeholder attention and consequently pressure. For example, environmentalist groups target wood industry firms even though they operate within the law (Jiang & Bansal, 2003). It indicates that complying with official regulations is not enough anymore and it might pay off if corporations take their responsibilities and contribute positively to the well-being of their stakeholders beyond the law.
Philanthropy goes possibly even further, since this type of behaviour is always entirely voluntary. Every type of business giving, such as monetary donations and employee volunteerism is included. Consumers expect corporations to be good citizens—opposing Friedman’s theory (1970), which states that the main purpose of doing business is making
profits—just as they are themselves (Carroll, 2016). Philanthropy is a dimension of CSR that could be turned into a dynamic capability, enhancing a competitive advantage. This corporate giving strategy initially provides positive intangible return to the firm, such as reputation augmentation (Cantrell, Kyriazis, & Noble, 2015).
However, philanthropy and CSR management are tricky. Whereas stakeholders frequently address the need for CSR attention, they sometimes view visible support of society and the environment as superficial impression management. This calls for consideration of the information disclosure approach (Bansal & Kistruck, 2006).
Communication of CSR
CSR is clearly an important factor in business these days (Carroll, 2016) and the increased stakeholder attention requires a more sophisticated approach for the communication of corporate social and environmental performance (Morsing & Schultz, 2006). Research shows potential benefits of the communication of CSR (Maignan, Ferrell, & Hult, 1999) and potential detriments of CSR communication, indicating a need to further study the relation of CSR disclosure on potential outcomes (Bansal & Kistruck, 2006; Morsing & Schultz, 2006).
As information disclosure provides implications for stakeholder attitude, it also plays a critical role in the quest to improve the environment. When stakeholders demand a more comprehensive disclosure of information, firms feel compelled to increase CSR to increase stakeholder attitude (Vaccaro & Echeverri, 2010), a relation that is acknowledged by the Dutch Ministry of Economic Affairs (2001). The ministry stated that the disclosure of information through sustainability reports increases CSR performance of brands (Quaak, Aalbers, & Goedee, 2006). Conversely, an increase in CSR performance would stimulate companies to disclose this information as it generally causes positive stakeholder attitude (Cantrell et al.,
2015). This indicates that the disclosure of purposeful information by a company, referred to in this paper as corporate transparency, stimulates CSR and vice versa.
2.2 Corporate transparency
Corporate transparency is “the extent to which a stakeholder perceives a firm’s conduct is open and forthright regarding matters relevant to the stakeholder” (Dapko, 2012, p. 5). Some authors (Chang et al., 2007; Kim et al., 2013) define it as a level of activity taken by the firm to dissolve information asymmetry at the firm level. A definition by Bushman et al. (2004, p. 210) is somewhat more detailed: “the widespread availability of firm-specific information concerning publicly listed firms in the economy to those outside the firm”. All definitions contribute to the overall understanding of corporate transparency in this paper.
Chang et al. (2007) posit that transparency refers to actively providing information, while other authors (Bushman et al., 2004; Dapko, 2012) refer to transparency as a state, i.e. the information is available. For consistency, ‘corporate transparency’ is viewed as active information disclosure by a company in this paper, such that ‘transparency’ is information disclosure in general. Bushman et al. (2004) add that corporate transparency involves providing firm-specific information to those outside the firm. A take-away from the explanation by Dapko (2012) is that it must concern matters relevant to the stakeholder. Thus, the description of corporate transparency in this paper that seems to be most complete is “the level of activity taken by the firm to provide firm-specific information, relevant to the stakeholder, at the firm level to those outside the firm”.
Whether companies decide to provide firm-specific information is not always a matter of choice. Decisions to disclose information are influenced by consumers’ ‘right to know’ and pressuring factors such as investors and government institutions (Hess, 2007). Corporate
reporting can be voluntary, yet is often mandatory (Bushman et al., 2004). While this acknowledges that information disclosure can be voluntary, it must be noted that lack of disclosure increases customers’ suspicion and should therefore be avoided (Creyer, 1997).
Mandatory information disclosure includes various information aspects, such as price, financial results (Carter & Curry, 2010) and CSR activities (Ellen, Webb, & Mohr, 2006). Voluntary information disclosure concerns communicating the truth to consumers. It closely relates to brand trustworthiness and credibility, dimensions of brand authenticity that are increasingly valued. Corporate transparency is thus specified as a positive influence on brand authenticity, a concept perceived in literature (Gilmore & Pine, 2007, p.5) as the prevailing purchasing criterion (Morhart et al., 2015).
Das Neves and Vaccaro (2013) identify two main understandings of corporate transparency, one being static and one being dynamic. The static perspective entails disclosing information through standardised reports, such as sustainability announcements. Dynamic reporting refers to an interaction between company and consumer in which they exchange information or work together. Press and Arnould (2014) call this narrative transparency and describe it as a means to increase communication, mutual knowledge, and consumer relations.
Although companies are not necessarily expected to show their CSR practices, since it makes them vulnerable for critique from stakeholders to improve their performance, most large corporations in the USA have adopted these social reporting practices (Hess, 2012). Companies increasingly seek dialogue with consumers and try to convince them of their social and environmental intentions (Press & Arnould, 2014). Corporations also increasingly engage in voluntary social reporting and several governments are also mandating the inclusion of environmental and social responsibility reporting in periodical reports (Hess, 2012).
Corporate transparency concerns multiple business aspects, ranging from dimensions such as corporate social responsibility (CSR) to more financial aspects (Cohn & Wolfe, 2013). For instance, an apparel retailer could disclose information about where they source their materials from or about what the firms’ net profits are. The level of corporate transparency is likely to increase in the future, since transparency is demanded more and more by corporations and consumers (Dapko, 2012). The worldwide emphasis on CSR is increasing at a rapid pace too, hence it is no surprise that CSR related practices, such as material sourcing, classify indicators of transparent organisations as important (Cohn & Wolfe, 2013).
Transparent organisations will in most cases be rewarded by consumers. Corporate transparency is found to be beneficial for the well-being of the company in four ways: reduced scepticism, increased trust, more favourable attitudes, and increased purchase intention (Dapko, 2012). All concepts are included in this paper, starting with purchase intentions in the next section.
2.3 Purchase intentions
Chang and Liu (2009, p. 1690) mention that: “Purchase intention is a consumer’s plan to buy a specific brand”. Predicting purchase intentions is essential for a company’s well-being. Customer purchase intentions are known to lead to higher market share, higher profits, or higher share value, making them a desired end state for companies (Chang & Liu, 2009). According to the theory of planned behavior (Ajzen, 1991), purchase intentions are the primary intermediary between attitudes and behaviour. Moreover, several studies acknowledge purchase intention as the most definite predictor of purchasing behaviour (Morwitz & Schmittlein, 1992; Pecotich, Pressley & Roth, 1996; O’Cass & Lim, 2002), affirming the importance of this field of study.
That consumers value the role of companies in society and companies’ environmental responsibilities is reflected in their purchasing behaviour. Especially today, consumers show higher purchase intentions towards products from transparent companies that are environmentally-oriented than towards products from companies with less visible environmental performance (Grimmer & Bingham, 2013).
The effects of information disclosure on purchase intentions must be understood (Grimmer & Bingham, 2013). Research found that the importance of corporate transparency for purchasing decisions has risen and now stands alongside quality and price. People stated that transparency became more important in the past years when deciding to buy products from a company (Cohn & Wolfe, 2013). The perceived level of environmental and social responsibility is, for some people, reason to intent to engage with a company, indicating that purchase intentions will be higher if this type of information is disclosed properly versus when it is not disclosed and people stay unaware of the companies’ CSR performance (Auger et al., 2003).
Pickett-Baker and Ozaki (2008) suggest that effective communication will increase purchasing directly as well. As purposeful information disclosure equates to transparency (Press & Arnould, 2014), it is used in this paper to describe the level of transparency in the conceptual model. As people simply want to be informed about whether a company is social and environmentally responsible (Dapko, 2012), transparency in the empirical research indicates information disclosure regardless of source. Research showing consumer preference for transparency (Auger et al., 2003; Cohn & Wolfe, 2013; Pickett-Baker & Ozaki, 2008) is reason to test the following hypothesis.
H1: Information disclosure is associated with higher levels of purchase intentions than non-disclosure
Differences in consumer type
People are undisputedly becoming more demanding for transparency (Dapko, 2012). The #whomademyclothes campaign during the Fashion Revolution Week in 2016 reached 129 million people via social media, demonstrating the increase in awareness and demand for transparency specifically on the topic of CSR (“Fashion Transparency Index 2017”, 2017). However, some brands disclose noticeably more than others. For example, Adidas chooses to be reasonably transparent (score of 49% on transparency) while Dior discloses absolutely nothing (score of 0% on transparency) (“Fashion Transparency Index 2017”, 2017). That non-disclosing brands can still be successful indicates that consumers do not all value transparency.
People have different preferences and values, which is expressed in their purchasing behaviour. Consumers vary in their responsiveness for CSR practices and the degree to which CSR emphasis is important to people is called environmental involvement. Some consumers are more likely to be influenced by environmental concerns (high environmentally involved consumers) than others (low environmentally involved consumers) (Grimmer & Bingham, 2013).
Increasing transparency can have three implications for the level of consumer purchase intent: it could increase, it could decrease, and it could maintain the current level. Consumers’ positive valuation of transparency supposedly influences purchase intentions in a positive way (H1), however, as transparency often drives up costs and consequently product
price, purchase intentions for consumers who care less about transparency could decrease as they are not willing to bear these costs (Auger et al., 2003).
Knowing your customers and understanding their preferences seems to be critical for effective brand management. In this paper, consumers are divided into three groups: luxury shoppers, mid-class shoppers, and lower-class shoppers. Many luxury brands, such as Dior, Prada and Lacoste, included in the Fashion Transparency Index (“Fashion Transparency Index Reveals Even Top Brands Lagging in Supply Chain Transparency”, 2017), scored lower than 30 percent on transparency.
Most low-end brands such as H&M and Zara – brands that were viewed as adopters of a controversial CSR policy - scored relatively high and the undisputed top scoring brands, introducing ground-breaking new technology and using plant-based materials for their products, are Adidas and Reebok (“Fashion Transparency Index Reveals Even Top Brands Lagging in Supply Chain Transparency”, 2017), denoted as mid-end brands in this study. People’s intention to buy from a brand is proposedly positively influenced by information disclosure (H1) and I expect that people intent to buy from brands which they identify with. An evaluation of the level of transparency of 100 brands in 2017 shows that the majority luxury brands disclosure less information than other brands, implying lower attention on transparency for luxury shoppers, which leads to the following hypothesis.
H1a: The effect of transparency on purchase intentions (H1) is moderated by consumer type, such that information disclosure leads to higher purchase intentions for mid-end shoppers and low-end shoppers than for high-end shoppers
A direct effect of transparency on purchase intentions is proposed (H1). As purchase intentions are also often predicted by other constructs such as CBBE, brand associations (Aaker, 1996; Keller, 1993), and brand authenticity (Morhart et al., 2015), possible mediating variables are discussed too. Organisational associations; a dimension of both CBBE and brand associations and a construct closely related to emphasized aspects of brand authenticity such as credibility and honesty, is therefore thoroughly reviewed.
2.4 Organisational associations
Organisational associations relate to consumer beliefs about a company’s trustworthiness, honesty, and care for their customers (Netemeyer et al., 2004). They include the values, people, and programs behind the brand (Aaker, 1996). Organisational associations are believed to positively influence purchase intentions, as they are a prominent dimension of CBBE, a known predictor of purchase intentions (Aaker, 1996; Keller, 1993).
CBBE as a complete construct is the value added to the product because of associations with the brand name (Aaker, 1996). For example, an unknown brand produces the exact same shoes as Nike, but the customer still views the Nike shoes as being superior. The extra value is explained by positive associations with the brand Nike.
CBBE, extensively described in earlier literature (Aaker, 1996; Keller, 1993), has four dimensions to be studied. Two dimensions, organisational associations (this section) and perceived quality (Section 2.5), are defined, discussed and included in the research. Following the “information integration theory” (Anderson, 1981), this study measures attitudes arising from an initial neutral state. The other CBBE dimensions; brand awareness and brand loyalty, are only relevant if the study includes existing brands (Agarwal & Rao, 1996) and are perceived as absent in this research.
Organisational associations and perceived quality are also regarded as elements of brand associations. Brand associations as an overarching concept relates to what the brand means to consumers (Aaker, 1996; Keller, 1993; O’Cass & Lim, 2002). Aaker (1996) further identifies a third perspective of brand associations; ‘the brand-as-person’ (brand personality). In this study only ‘the brand as-product’ (perceived value) in Section 2.5 and ‘the brand-as-organisation’ (organisational associations) in this section are included, since the research method involves a fictive company with no unambiguous personality. This is chosen to avoid having to account for previous held thoughts on brands in evaluating consumer attitude (Anderson, 1981).
Previous literature (Aaker, 1996; Keller, 1993; O’Cass & Lim, 2002) suggests that increased purchase intentions are positively related to CBBE and brand associations. Organisational associations, as an important dimension of both constructs, is thus expected to positively influence purchase intentions, which is presented in sub-hypothesis 2a.
H2a: Organisational associations have a positive effect on purchase intentions
As explained by the “information integration theory” (Anderson, 1981), two qualities are expected to influence a neutral attitude on a fictive brand in this study. These qualities, value and weight, explain whether people perceive information as favourable and important. Attitudes are eventually formed after combining existing thoughts with new information (Anderson, 1981). If existing thoughts are absent, attitude completely depends on new information and associations.
Additionally, Keller (1993) introduces the idea of secondary associations. He posits that organisational associations can be influenced in three situations. First, a consumer could
derive associations from direct experience. Second, secondary associations can be created when consumers are informed about the product or service through company information disclosure, independent commercial sources, or word of mouth. This indicates that disclosure of information in general influences organisational associations.
A third way that secondary situations are created is through inferences based on existing brand associations. This third situation is called “probabilistic consistency” (Dick, Chakravarti, & Biehal, 1990) and occurs when people infer product or organisational characteristics based on an overall assessment of the brand and aspects such as social status (Keller, 1993). It describes the tendency of people to assign attributes such as quality to products or services based on concrete information such as price (Dick et al., 1990). Especially the last two situations where belief associations are created through extrinsic cues, encourages further research on inferred association.
Keller (1993) posits that attributes of separate entities could be transferred to an organisation through secondary associations. These associations are formed from “primary attributes related to; the company, the country of origin, the distribution channels, a celebrity spokesperson or endorser of the product, or an event” (Keller, 1993, p. 11). This indicates that information disclosure could provide attributes that create secondary associations for consumers, which eventually influence organisational associations. Assuming an initial neutral state and assuming consumers create secondary associations following information disclosure (Keller, 1993) while expecting that people attach much value to corporate transparency (Dapko, 2012), people must perceive higher levels of organisational associations in the condition of transparency. Sub-hypothesis 2b therefore tests the following:
H2b: Information disclosure is associated with higher levels of organisational associations than non-disclosure
It is hypothesised that transparency affects purchase intentions directly (H1) and the relation is also expected to be influenced by organisational associations. Whereas corporate transparency is expected to lead to favourable organisational associations (H2a) contributing to the desired state of high CBBE and brand associations (Aaker, 1996; Keller, 1993), organisational associations are proposed to enhance purchase intentions (H2b). The following hypothesis is developed to test for this mediation.
H2: The effect of transparency on purchase intentions is mediated by organisational associations, such that information disclosure leads to higher levels of organisational associations, and organisational associations positively affect purchase intentions
2.5 Perceived quality
Perceived quality is a second dimension of brand associations and part of CBBE. Where many studies (Aaker, 1996; Keller, 1993) integrate perceived value as a valuation dimension, perceived quality is used in this study, as it is essentially perceived value divided by price. Perceived value could be more important for companies relying primarily on low pricing, such as low-cost airlines. Still, perceived quality is a more appropriate construct, as it relates more to the prestige and the respect of a brand, while perceived value is more about the functional benefits (Aaker, 1996).
Perceived quality is not the objective and concrete quality of a product, rather it refers to the quality level that consumers subjectively assign to a product or brand (Zeithaml, 1988).
The main definition used in this paper correspondingly views perceived quality as the customer’s judgment of the overall excellence, esteem, or superiority of a brand (with respect to its intended purposes) relative to alternative brands (Kirmani & Zeithaml, 1993; Netemeyer et al., 2004). Perceived quality is considered one of the most essential parts of CBBE (Aaker, 1996).
As perceived quality is one of the highest valued constructs of CBBE, it is often paired with desirable business outcomes. In a 1989 study (Aaker, 1989) in which 248 companies were asked about the aspect leading to the strongest competitive advantage, perceived quality was mentioned the most. According to multiple studies (Aaker & Jacobson, 1994; Bou-Llusar, Camisón-Zornoza, & Escrig-Tena, 2001), perceived quality is undeniably related to long- and mid-term profits and positively associated with short-term goals, such as purchase intent, for instance in relation with CBBE. Since perceived quality is an important dimension of CBBE and previously positively associated with purchase intentions (Aaker, 1996; Aaker & Jacobson, 1994; Keller, 1993), a positive relation between perceived quality and purchase intentions is inferred.
H3a: Perceived quality has a positive effect on purchase intentions
Quality perception is based on intrinsic and extrinsic information which could be obtained through physical interaction with a product or service and via promotional messages, such as ads (Kirmani & Zeithaml, 1993). Intrinsic cues relate to the physical attributes of a product and are usually the most prominent predictor of perceived quality (Kirmani, 1990) and purchasing decisions (Spears & Singh, 2004). Nonetheless, when intrinsic cues are absent, people tend to base their perceptions on extrinsic attributes, which are product related yet not part of the
product itself (Kirmani, 1990). Consumers have a habit of appraising products under all circumstances and in the absence of sufficient product information, they observe the information that is available (Brown & Dacin, 1997). For example, when an apparel brand promotes new jeans without showing the actual clothing, consumers are not able to assess the physical quality of the product. Perception now shifts to extrinsic cues, such as price or ad expenditures.
Secondary associations play a major role in product evaluation (Keller, 1993) especially when physical assessment of the product or direct experience of a service is unattainable (Brown & Dacin, 1997; Kirmani, 1990; Kirmani & Zeithaml, 1993). Increased consumer valuation of transparency (Cohn & Wolfe, 2013; Dapko, 2012) implies that the level of information disclosure can influence perceived quality as an extrinsic cue. The expectation that a transparent condition will generate more favourable extrinsic cues than a non-transparent condition and consequently positively influences perceived quality, is therefore tested through hypothesis 3b.
H3b: Information disclosure is associated with higher levels of perceived quality than non-disclosure
The direct relation between transparency and purchase intentions (H1) is predicted to be positively influenced by perceived quality, in that transparency positively affects the level of perceived quality and perceived quality in turn directly affects purchase intentions in a positive way. This mediated relation is defined in hypothesis 3.
H3: The effect of transparency on purchase intentions is mediated by perceived quality, such that information disclosure leads to higher levels of perceived quality, and perceived quality positively affect purchase intentions
2.6 Information polarity
Hypothesis 4a is derived from the “information integration theory” (Anderson, 1981). It follows the belief that if the message is positive, secondary associations will be positive and consequently organisational associations must be positive. Similarly, a more negative report will most likely lead to more negative secondary associations and in turn to more unfavourable organisational associations (Keller, 1993). Strengthened by the knowledge that stakeholders increasingly value CSR (Carroll, 2016) and assuming no initial familiarity with a company, people will presumably regard positive information disclosure on social and environmental performance more favourably than negative information disclosure (Anderson, 1981).
H4a: Positive information disclosure is associated with higher levels of organisational associations than negative information disclosure
Positive information disclosure in general ensures more positive corporate associations, yet it also causes a higher evaluation of the company’s products (Brown & Dacin, 1997). Correspondingly, consumers appear more often choose products related to organisations that they view as transparent and environmentally-friendly (Dapko, 2012). This seems to be due to people wanting to feel positive about their actions, enhancing their desired self-concept (Pickett-Baker & Ozaki, 2008).
Mohr and Webb (2005) suggest that CSR adds value to a product, which indicates that knowledge of a company’s positive CSR policy could contribute to the perceived quality of a firm or a product. Moreover, a product is expected to perform better if it is perceived as green, illustrating an existing link between CSR and product quality in the mind of consumers (Pickett-Baker & Ozaki, 2008). Such extrinsic cues can influence perceived quality, especially in the absence of physical attributes (Kirmani, 1990). This indicates that when information disclosure is recognised as positive (e.g., positive information on CSR performance), perceived quality should be higher than when information disclosure is negative. Since perceived quality proposedly influences purchase intentions in a positive way, the following hypothesis is developed.
H4b: Positive information disclosure is associated with higher levels of perceived quality than negative information disclosure
2.7 Information source
Information can be derived from various sources; corporate information disclosure which is defined as corporate transparency, and transparency by media indicating media information disclosure (Press & Arnould, 2014). All types of information disclosure can influence consumer attitude through secondary associations (Keller, 1993). Whether source difference influences organisational associations is discussed next.
Consumer scepticism
Corporate transparency might have other objectives besides an informative purpose, such as reputation building, where media information disclosure is more objective (Hess, 2012). As
Dapko (2012) found that transparency initially reduces scepticism, this study investigates whether scepticism is higher in the case of positive corporate transparency than in the case of positive media information disclosure. Positive corporate information disclosure could either decrease scepticism and stimulate consumer attitude, and thus increase organisational associations (Dapko, 2012), and spur consumer scepticism, presumably reducing positive associations.
Scepticism occurs if people presume immoral intentions for disclosure. Stakeholders demand a certain level of disclosure of CSR policy from the company they engage with as long as the subject of disclosure represents the true purpose. Attitude towards the firm worsens if consumers perceive the firm to be deceptive (Forehand & Grier, 2003). For example, if a brand adopts a CSR strategy and claims only public serving motives, such as the well-being of society, this might sound deceptive since most consumers expect brands to pursue profits too. Consumer suspicion of the wrong intentions, such as enhancing corporate image, leads to less favourable organisational associations (Sen & Bhattacharya, 2001).
As disclosure of positive information on CSR practices appears to be beneficial for companies, the issue of a communication strategy is delicate. Management seeks to discover the most profitable communication strategy (Angjelova & Sundström, 2015). Possibly the most rewarding option is the silence strategy, a state in which companies disclose nothing on the CSR subject. This has proven to be an effective way to avoid scepticism, yet the consequence is that consumers might not notice the effort and accomplishments concerning CSR practices (Morsing & Schultz, 2006). Moreover, it allows third parties, such as newspapers, to publish articles that do not represent the company’s desired message (Du, Bhattacharya, & Sen, 2010).
While Du et al. (2010) see this as a problem and Angjelova and Sundström (2015) tried to find more effective forms of corporate information disclosure, my point of view is that an equally positive newspaper article could generate both the desired outcome of positive information transmission and avoidance of scepticism. Hypothesis 5a therefore tests whether a newspaper article that includes all positive information a company wishes to disclose generates more positive organisational associations. If statistically supported, this study justifies the fear of consumer scepticism and introduces a need to find ways to increase control over media information disclosure.
H5a: Positive newspaper information disclosure is associated with higher levels of organisational associations than positive corporate information disclosure
Corporate honesty
As consumers are sometimes rather sceptical about intentions for corporate information disclosures, corporate honesty is an essential topic to discuss concerning the relation between corporate transparency and organisational associations (Forehand & Grier, 2003; Sen & Bhattacharya, 2001). Transparency refers to addressing the requests for information by stakeholders and not per se to disclosing the truth. Disclosing information that a stakeholder asks for could result in a distorted description of a company’s activities as consumers do not always know what to expect. Communicating the truth is more complete and relevant (Das Neves & Vaccaro, 2013).
Das Neves and Vaccaro (2013) describe this relation more extensively. They posit that corporate reports are often incomplete, inconsistent and incomparable, which makes it hard to assess the truth. Thus, a state of balanced disclosure—in which all relevant information is
communicated—is not always reality (KPMG, 2013, p. 76). It seems naïve to think that companies disclose the whole truth and it is important to keep in mind that in some cases organisations use these reports for brand and reputation management more than for informative purposes (Hess, 2012).
Perceived corporate honesty and sincerity are major clues of positive brand associations (Sen & Bhattacharya, 2001) and brand authenticity (Morhart et al., 2015), and must therefore be guaranteed especially now that social media blows up the possibilities of discovering and revealing unethical practices. The media has never been able to reach consumers this fast and the possibilities of spreading customer opinions has never been this high (Hewett, Rand, Rust, & Van Heerde, 2016), meaning that it becomes riskier to withhold information for stakeholders.
It is easily said that companies must always be honest, however, it can be challenging for managers who feel uncomfortable with admitting mistakes or controversial policies. They fear consumer criticism and perhaps even legal consequences (KPMG, 2013, p. 76). As it is not always easy to disclose negative information or challenges, information disclosure does not always represent an accurate reflection of the company’s business and issues (KPMG, 2013). Management is often hesitant to provide negative information, because it seemingly puts the company in a negative light. However, disclosing negative information has been found to generate positive response under some conditions. Consumers are expected to acknowledge the difficulty in telling a negative story (Eisend, 2006) and attribution theory (Jones & Davis, 1965; Jones & McGillis, 1976; Kelley, 1972, 1973) describes the tendency of people to assign more credibility to a brand due to the inclusion of negative information.
In Eisend’s study (2006) on two-sided advertising, he concludes that attribution theory explains the underlying process for two-sided messages and thus the effects of inclusion of
negative information. He names multiple conditions influencing the extent to which credibility is affected (e.g., credibility is higher if an organisation initially discloses information than when the organisation is forced). It signals that disclosure of negative information does not necessarily leads to more positive associations, because it depends on several factors.
Accordingly, timing is essential for information disclosure. Groza et al. (2011) found that proactive communication is often better than reactive communication. Consumers who obtain negative information after company engagement show less favourable organisational associations than consumers who are informed before engagement. Perceived corporate honesty is especially low when a secondary source is the transmitter of information (Abendroth & Heyman, 2013). This goes primarily for negative news, which feels unnatural for companies to disclose (KPMG, 2013, p. 76). As consumers nowadays have easy access to information via the internet through media, social media, and networks, the truth will surface someday (Labrecque, vor dem Esche, Mathwick, Novak, & Hofacker, 2013).
Negative information disclosure is associated with lower organisational associations, yet perceived honesty and trust most likely influence attitude in a positive way (Dapko, 2012; Eisend, 2006; Forehand & Grier, 2003). Perceived honesty is presumably lower in the newspaper information disclosure than corporate information disclosure. The fact that disclosed negative information decreases organisational associations, yet negative corporate information disclosure increases perceived honesty and trust (Dapko, 2012; Eisend, 2006), contributes to the expectation that organisational associations are more positive (i.e. less negative) when the negative information is given by the company. This is tested through the following hypothesis:
H5b: Negative corporate information disclosure is associated with higher levels of organisational associations than negative newspaper information disclosure
As scepticism and perceived honesty have direct influence on organisational behaviour yet no proven effect on perceived quality, no significant source-based effects on perceived quality are expected to exist. For exploratory purposes, an effect of source on perceived quality is tested but it is not included in the conceptual model.
2.8 Conceptual model
This study measures how and under what conditions corporate transparency affects purchase intentions. This could provide useful theoretical and possibly more managerial insights, as purchase intentions are a strong predictor of purchase behaviour (Ajzen, 1991). The fashion industry was chosen as the research environment because of the increasing pressure on fashion brands to report on social responsibility initiatives and practices (“Fashion Transparency Index 2017”, 2017).
Purchase intentions have been evaluated in the fashion industry before (O’Cass & Lim, 2002), yet research in another country and the stronger inclusion of brand associations, such as organisational associations and perceived quality (Aaker, 1996), should add to the literature and provide theoretical and managerial implications regarding both corporate transparency and purchase intentions.
The direct effect of transparency on purchase intentions is tested through hypothesis 1. Hypothesis 2 is developed to test for a mediation effect of organisational associations on the relation between transparency and purchase intentions. Hypothesis 3 is created to look for mediation of perceived quality on the same relation as described above. Two
sub-hypotheses (H2b/H3b) were included to describe the relation between transparency and the mediating variables, while two other hypotheses (H2a/H3a) test the relation between the mediating variables and the dependent variable, purchase intent. The variables information source and information polarity were integrated to test for a direct effect on respectively organisational associations and perceived quality. A moderating variable, consumer type, is used for supplementary insights on the direct relation between transparency and purchase intentions. All relations are visualised in the conceptual model (Figure 2) The method used to investigate the hypotheses and ultimately the research question is described in the following section.
3. Method
3.1 Research designThe approach for measuring the research question and hypotheses is described in this chapter. This study combines existing literature with original insights from empirical research. Existing literature is used to explain the basic relations between the dependent variable (purchase intentions) and independent variable (transparency), mediated by organisational associations and perceived quality. The empirical context of this study is the fashion industry. The fashion industry is consciously chosen due to the increasing ethical pressure on this industry as consumers become increasingly aware of the industry’s impact socially and environmentally (Comyns & Franklin-Johnson, 2015).
The research has an experimental design, a design often used when a change of an independent variable is expected to influence a dependent variable (Saunders, Lewis, & Thornhill, 2012). It has a factorial between-subjects experimental design including three conditions (information disclosure – non-disclosure; newspaper information disclosure – corporate information disclosure; positive information disclosure – negative information disclosure), divided over five groups of respondents. A survey strategy is used to gather quantitative data for a test on the developed hypotheses. This is a deductive approach and it indicates a cross-sectional time horizon. Surveys are used to measure an effect at one point in time, making the research essentially descriptive, yet a possible forerunner of explanatory future research (Saunders et al., 2012).
Multiple studies include the separate variables integrated in this study, providing validated questions for every construct (Toepoel, 2015). These validated sets of items were used to investigate the relations between the illustrated concepts. Measurement and analysis
of the data is more comprehensively described in chapters 3.4 and 3.5. The sampling procedure and research instrument are elaborated first in the following chapters.
3.2 Sampling procedure
The population for this research consists of people buying clothes, practically all people worldwide. There is no specific target group, although diversity on shopper type is desired to some extent. After accepting the pre-measure results, obtained from twenty-seven randomly selected first contacts on social media, the questionnaire was distributed via an anonymous link on diverse social media platforms. The link was sent in several chat-groups, on Facebook, and via an e-mail list. The respondents were randomly selected and this sampling procedure could be best described as haphazard sampling or sometimes referred to as convenience sampling (Saunders et al., 2012). It should be noted that primarily respondents relatively close to the researcher were approached, belonging to a certain social group. To control for this situation, descriptive items were included in the first part of the survey.
In total, 225 people were reached of which 175 people completed the survey. Deficient responses have been removed. The responses are nearly equally divided over the different texts, leaving all five texts with over thirty responses (Table 1). Of the 175 respondents, the majority is between 18 and 25 years of age (Table 2) and highly educated (Table 4), implying that someone is finishing or has received a bachelor’s or master’s degree. Almost twice as
much respondents are male (Table 3) and in this study – conducted in the Netherlands – the majority is Dutch (Table 5). This is due to the sampling method and replication of the study under the same conditions requires special effort. It has been taken in to account that the external validity of the research is not particularly high. The sample seems to be representative for a relatively high educated young (Dutch) consumer group. Outcomes might differ in a setting with deviant characteristics.
3.3 Research instrument
Perceived social pressure and ethics related to CSR warned me for possible participant bias (Saunders et al., 2012). This was reason to distribute surveys on the internet, since socially desired responses are less frequent with this type of self-administered modes (Dillman, Smyth & Christian, 2014; Kreuter, Presser, & Tourangeau, 2008). The experiment included five slightly different texts, manipulating for transparency, source, and polarity. The surveys were essentially the same, only differing in a small aspect of the provided messages and lay-out. The randomizer option on the survey building website Qualtrics assured that every respondent was randomly assigned to one of the five texts.
The link was first distributed on December 19, 2017, and the experiment closed on December 28, 2017. Respondents were allowed to complete the survey at their convenience, reducing participant error. Before guiding them to the questions, the respondents have been informed on the purpose of the research. The information has been given carefully to reduce bias and enhance validity of the data used to draw conclusions (Podsakoff, Mackenzie, & Podsakoff, 2012). Initially, a short message from the researcher to the respondents is given on the privacy and expectations of the participants.
Since the survey was self-administered, a high degree of privacy was assured (Saunders et al., 2012; Toepoel, 2015). The respondents were notified that participation is completely voluntary and that they would be able to quit whenever they want to. They have been informed that no answers are wrong and they are free to answer in any way they feel is most appropriate. The information obtained in this experiment is confidential and will under no circumstances be publicized without permission of the participant. Lastly, an indication of the duration and the e-mail address of the researcher was provided. The survey questions are placed in Appendix B.
3.4 Measurement and data collection
Five texts were written and manipulated to each control for a condition. The messages are essentially the same, only manipulating for transparency, information polarity, and information source. It was assumed that respondents give different attitudinal answers for all conditions since attitude depends on context (Tourangeau, Rips, & Rasinski, 2000). The influence of information disclosure is measured on one dependent variable, purchase intentions. Two mediating variables - organisational associations and perceived quality – and three moderating variables – information polarity, information source, and consumer type –
to were integrated to gain additional insights in the hypothesised relation. Three main hypotheses test the direct and indirect effect of information disclosure on purchase intentions while sub-hypotheses test simple direct effects and a moderating effect. The five texts used have been pre-measured first for internal validity purposes.
Pre-measure
Thirty first connections on social media were approached to voluntarily participate in the pre-test. A small explanation introduced the respondents to the concepts that are necessary to understand for completing the questionnaire. Twenty-seven respondents eventually completed the survey. They were asked whether they perceived the given text as
transparent/non-transparent and positive/negative/neutral. Only if the texts were perceived the same as intended, the experiment could be justified as an appropriate measure of the effects.
The pre-measure was thus developed to validate the perception of the messages (see Appendix C for the pre-measure). For every type, people were asked to give their thoughts on the transparency and the polarity of the message. Eleven questions (8.1%) on the
transparency of the message and respectively eight polarity questions (5.9%) were answered wrongly in total. People answered two questions perfectly as intended for this study. For in total six questions, the means of the answers did not significantly differ from the intended answer, indicating a successful transmission of the message. For four questions, the answers differed significantly (p < 0.05) from the intended choice, meaning that for these questions (possible answers valued as 0 and 1) the mean of answers was significantly different (> 0) from the intended answer (0). Consequently, the messages had to be adjusted to reflect the core idea better. Moreover, one outlier is removed due to strong suspicion of bias and the
‘don’t know’ option is taken out to stimulate people to take a deeper look instead of going for an easy answer.
Table 6: Definitions of key concepts
Key Concept Definition Reference
Transparency (IV)
➢ Information disclosure
➢ Non-disclosure
“the level of activity taken by the firm to provide firm-specific information, relevant to the stakeholder, at the firm level to those outside the firm”
Bushman et al., (2004); Chang et al., (2007); Dapko, (2005); Kim et al., (2013) (combination of definitions)
Purchase intentions (DV) “a consumer’s plan to buy a
specific brand”
Chang & Liu, (2009)
Organisational associations (MV1) “consumer beliefs about a
company’s trustworthiness, honesty, and care for their customers”
Netemeyer et al., (2004)
Perceived quality (MV2) “the customer’s judgment of the
overall excellence, esteem, or superiority of a brand (with respect to its intended purposes) relative to alternative brands”
Kirmani & Zeithaml, (1993); Netemeyer et al., (2004)
Manipulations
The first manipulation is transparency. As discussed in the literature review, corporate transparency relates to the act of dissolving information asymmetry by a company (Bushman et al., 2004; Chang et al., 2007) (see Table 6 for an overview of the main variables). To maintain a narrow focus and because it is an increasingly important concept for business and society (Carroll, 2016) only transparency regarding CSR and labour has been included in the texts. Five short texts, four transparent and one non-transparent, have been developed so that there is a control condition where the variable transparency is absent (Field & Hole, 2002). The five texts control for three conditions; transparency (level: information
disclosure/non-disclosure), information polarity (level: positive information/negative information), and information source (level: newspaper information disclosure/corporate information disclosure).
One text is intended to be neutral and non-transparent. Two texts reflect a newspaper article and two texts reflect a message by a fictive company. Within both sources one text is positive while the other is negative to study all moderating variables independently (Field & Hole, 2002). These two manipulations were included due to possible skepticism towards positive corporate information disclosure (Forehand & Grier, 2003) and perceived honesty related with negative corporate information disclosure (Abendroth & Heyman, 2013). For internal validity purposes, the texts were the same (Field & Hole, 2002). Only the clues about the source differed. The lay-out of the messages is adjusted to resemble actual newspaper articles and company messages (Appendix A).
Purchase intentions
Purchase intentions are often viewed as the best predictor of purchasing behavior (Ajzen, 1991) and higher profits and market share (Chang & Liu, 2009). Purchase intentions are presumed to be predicted by organisational associations (Aaker, 1996; Keller, 1993; O’Cass & Lim, 2002) as well as perceived quality (Aaker, 1996; Aaker & Jacobson, 1994; Keller, 1993). Consumer purchase intentions are measured using a four-item ( = 0.717) 7-point Likert-scale (1 = completely disagree, 7 = completely agree), derived from the research of Moon, Chadee, and Tikoo (2008). The items were slightly adapted to fit this research and showed sufficient internal consistency ( > 0.7) (George & Mallery, 2003). Two items were related to the purchase intentions of the respondent and two items regarded the degree to which
respondents would recommend the brand to friends or expect friends to buy the brand (Appendix A).
Organisational associations
Organisational associations, presenting how a consumer perceives aspects as trustworthiness and honesty of a firm (Netemeyer et al., 2004), is implemented as a mediating variable on the relation between transparency and purchase intentions. The variable is measured using four items, (Likert-scale; 1 = completely disagree, 7 = completely agree), that were adapted from a previous study on CBBE (Netemeyer et al., 2004). Netemeyer et al., (2004) included these four items on organisational associations in the second study within his research. Small adaptations were made to align the items with this study on the fictive brand MS Apparel. An item became for instance “MS Apparel is honest with its customers”. The reliability analysis showed sufficient internal consistency (George & Mallery, 2003) for the items on organisational associations ( = 0.803).
Perceived quality
Four items from the same study (Netemeyer et al., 2004) were used to measure perceived quality, which is defined as the subjective evaluation of a product of service (Zeithaml, 1988). Only the brand name had to be included in the items for validation. The answers ranged from 1 to 7 (Likert-scale; 1 = completely disagree, 7 = completely agree). Perceived quality is usually based on the physical evaluation of a product (Spears & Singh, 2004), however, if the physical product is not present, people tend to base quality on extrinsic cues such as messages (Kirmani, 1990). Thus, respondents are expected to answer the questions based on the information provided in the provided text. An example of an item is “I can always count on MS
