Transparency Strategy in Internet-based Selling

Internet-based selling offers firms many new opportunities regarding the strategies for design of mechanisms to support consumer transactions. This chapter examines the use of transparency as a strategy for Internet-based selling for maximizing firms’ value from their selling activities on the World Wide Web. We define transparency as the extent to which a seller reveals private information to the consumer, and explore three of its most often observed dimensions: product, price and supplier transparency. We evaluate consumers’ responses to each kind of transparency in terms of their willingness-to-pay. We position the theory in the context of the online air travel (OTA) industry to showcase its applicability and the power of its theoretical insights in an appropriate real world context. We also generalize our findings to suggest some managerial guidelines that will help managers who want to make choices regarding transparency strategy in other Internet-related business contexts.