How Can Consumer Trust in Energy Utilities be Increased? The Effectiveness of Prosocial, Proenvironmental, and Service-Oriented Investments as Signals of Trustworthiness

Abstract

The transformation of the electricity infrastructure into the smart grid requires energy utilities to increase consumer involvement. However, in the United States, consumers’ trust in utilities is low, which impedes consumer involvement. Drawing on the literature on corporate social responsibility and signaling theory, we examine possible strategies for increasing trust. We hypothesize that utility prosocial, proenvironmental, and service-oriented investments increase consumer trust, and that this increase, in turn, is positively associated with consumers’ willingness to participate in utility programs. We test our hypotheses through online vignette experiments in the context of smart meter apps for household energy management. Our results show that utility proenvironmental investments have the strongest and most consistent effect on consumer trust, and the effect of utility behavior on consumer willingness to use the app is mediated by trust. Our findings contribute to the organizational trust literature and have practical implications for utilities seeking to increase consumer involvement.