Tim Kraft

Managing the Chemicals and Substances in Products and Supply Chains

This chapter explores the challenges that companies face in managing the chemicals and substances found in their products and supply chains. The topic is presented from both a practice and an academic perspective. Based on the authors’ work with an environmental nonprofit, a model is presented that examines levers available to both companies and nonprofits for improving the environmental performance of suppliers. The chapter concludes by discussing potential future research directions with respect to chemicals management and sustainable supply chains.

Assessing Consumers’ Valuations of Socially Responsible Products with Controlled Experiments

This chapter discusses the use of controlled experiments to study consumers’ valuations of socially responsible products. We review three common experimental methodologies: conjoint analysis, controlled laboratory experiments, and controlled field experiments. We contrast these methods with examples and highlight the strengths of each method. Despite the large literature on consumers’ valuations of social responsibility, few studies link consumers’ valuations with a company’s supply chain strategy. We present a recent study that fills this gap by utilizing a controlled laboratory experiment to investigate how the level of supply chain transparency may influence consumers’ valuations of a company’s social responsibility practices. We conclude by discussing a few interesting topics for future studies.

Supply Chain Visibility and Social Responsibility: Investigating Consumers' Behaviors and Motives

We design an incentivized human-subject experiment to study the impact of supply chain transparency on consumers’ valuations of a firm’s social responsibility practices. Lower transparency is modeled by higher uncertainty in the compensation that a worker receives for making a product. To deepen our understanding of consumers’ decision-making, we investigate how much of consumers’ valuations can be attributed to indirect reciprocity (i.e., consumers rewarding a firm for the responsible treatment of its workers). We also analyze how heterogeneity in consumers’ prosocial orientation (i.e., willingness to sacrifice one’s own benefit to improve the payoff of a person one directly interacts with) impacts the roles of transparency and indirect reciprocity in consumers’ valuations. Our results demonstrate that consumers are willing to pay a higher price under a higher level of transparency. In addition, there exists an important interplay among transparency, indirect reciprocity, and consumers’ prosocial orientation. High prosocial consumers do not exhibit indirect reciprocity. Their valuations are primarily driven by the social outcome (i.e., the worker’s pay) rather than by the knowledge about the firm’s effort. In sharp contrast, indirect reciprocity has a strong positive effect on low prosocial consumers’ valuations when transparency is high. However, as transparency decreases, we first observe a negative effect of indirect reciprocity on low prosocial consumers’ valuations, and then indirect reciprocity disappears. Our results provide insights into the benefits that a company can derive from increased transparency and how a company can better communicate its social responsibility practices to consumers.