Will consumers pay for responsible supply chains? – Tim Kraft, Karen Zheng

Tim Kraft, Visiting Assistant Professor of Operations Management

Karen Zheng, Associate Professor of Operations Management

From SupplyChainBrain

Do consumers place a monetary value on supply-chain visibility? Are they willing to pay more for a product that is “socially responsible”?

A new study led by two professors at the MIT Sloan School of Management suggests that the answer is yes – at least to a point. Tim Kraft, visiting assistant professor of operations management, and Karen Zheng, associate professor of operations management, set up a “behavioral lab” that mimicked the dynamics of a real-world supply chain. It consisted of a three-player game, with participants playing the roles of consumer, seller and worker.

The experiment examined whether a consumer is willing to pay more for a given product if the seller provides visibility into its treatment of factory workers. The decisions of all players directly impacted their ultimate payments. So how much of a premium did the “consumers” agree to pay for products of the socially responsible “seller”? How did their actions affect the lot of the “worker”? And can a limited experiment of this type really mirror behavior in the real world?

Listen to the full podcast at SupplyChainBrain.

Tim Kraft is a Visiting Assistant Professor of Operations Management at the MIT Sloan School of Management.

Karen Zheng is a Sloan School Career Development Professor and an Associate Professor of Operations Management at the MIT Sloan School of Management.

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