Entry of new organizations, including multinational enterprises from emerging markets, raises the ethical question of will they benefit society. The concept of legitimacy answers this question because it is the overall assessment of the appropriateness of organizational ends and means. Moreover, gaining legitimacy enables EMNEs to succeed in new host countries. Past work examined collective level indicators of the legitimacy of MNEs, but recent research recognizes the importance of individuals’ perceptions as the micro-foundation of legitimacy. This study first uses new (...) pragmatism, deontology, and utilitarianism to demonstrate that legitimacy is fundamentally an ethical concept—a perspective that has been overlooked in management research. Second, this study uses a seven-step procedure to develop and validate a measure of individuals’ perceptions of the legitimacy of Chinese EMNEs operating in The Netherlands, a developed country. Six dimensions of legitimacy were identified. The study also finds support for this legitimacy judgment process linking the dimensions: validating knowledge → propriety judgments → generalized judgment. This work provides additional micro-foundations to research on legitimacy and contributes to the ongoing process of construct validation. Future research could use the validated measure in other settings and use specific ethical theories in depth to refine the concept of legitimacy. (shrink)

Many firms are striving to improve their environmental positions by presenting their environmental efforts to the public. To do so, they are applying green marketing strategies to help gain competitive advantage and appeal to ecologically conscious consumers. However, not all green marketing claims accurately reflect firms’ environmental conduct, and can be viewed as ‘greenwashing’. Greenwashing may not only affect a company’s profitability, but more importantly, result in ethical harm. Therefore, this research extends past greenwashing studies by examining additional influences on (...) and outcomes of perceived greenwashing. To do so, we conducted two studies, an interview study with consumer product and consulting firms, as well as an experiment examining consumers interacting with a company website. For these studies, we used multiple methods, including interviews, questionnaires, and neurophysiological techniques. We found that perceived greenwashing relates not only to environmental and product perceptions, but also to consumers’ happiness while interacting with the website. We also found that website interactivity relates to perceived greenwashing, environmental and product perceptions, and to the amount of interaction with the website. We conclude by discussing managerial and ethical implications for research and practice. (shrink)

Contemporary research highlights multiple societal and environmental benefits in addition to potential economic advantages associated with renewable energy utilization. As federal and state incentives for investments in RE technologies become more prevalent, RE sources represent increasingly viable alternatives to established fossil fuel energy. RE utilization is recognized as a key component of “green” product innovation that helps firms reduce the environmental impact of production processes and diminish their ecological footprints and energy consumption. Yet, despite consistent evidence that corporate sustainability initiatives (...) are favorably associated with firm performance, the limited research that examines associations between RE initiatives and firm performance yields mixed results and an explicit link has yet to be established. Drawing on the natural resource-based view of the firm, we examine the association between RE utilization and firm financial performance over time. Annual ROI, Tobin’s Q, and operating margin for large U.S. firms identified as exceptional users of RE in the EPA’s Fortune 500 Top Green Power Partners list are compared with their respective industry medians over a 7-year period and post hoc bootstrapping and sensitivity analyses are performed to further validate the study findings. Our research advances current knowledge about the influence of RE utilization by demonstrating that top RE user firms consistently generated superior financial performance compared to their industry competitors. As such, the study findings lend credence to the existence of a business case that complements the societal and environmental benefits of RE utilization. (shrink)

This article proposes a conceptual mapping to outline salient properties and relations that allow for a knowledge transfer from the well-established greenwashing phenomenon to the more recent machinewashing. We account for relevant dissimilarities, indicating where conceptual boundaries may be drawn. Guided by a “reasoning by analogy” approach, the article addresses the structural analogy and machinewashing idiosyncrasies leading to a novel and theoretically informed model of machinewashing. Consequently, machinewashing is defined as a strategy that organizations adopt to engage in misleading behavior (...) about ethical Artificial Intelligence /algorithmic systems. Machinewashing involves misleading information about ethical AI communicated or omitted via words, visuals, or the underlying algorithm of AI itself. Furthermore, and going beyond greenwashing, machinewashing may be used for symbolic actions such as lobbying and prevention of stricter regulation. By outlining diverse theoretical foundations of the established greenwashing domain and their relation to specific research questions, the article proposes a machinewashing model and a set of theory-related research questions on the macro, meso, and micro-level for future machinewashing research. We conclude by stressing limitations and by outlining practical implications for organizations and policymakers. (shrink)

Greenwashing is a phenomenon that is linked to scandals that often occur at the supply-chain level. Nevertheless, research on this subject remains in its infancy; much more is needed to advance our understanding of stakeholders’ reactions to greenwashing. We propose here a new typology of greenwashing, based on the locus of discrepancy, i.e. the point along the supply-chain where the discrepancy between ‘responsible words’ and ‘irresponsible walks’ occurs. With three experiments, we tested how the different forms of greenwashing affect stakeholders’ (...) reactions, from both ethical and business perspectives. We developed our hypotheses by building on attribution theory, which seeks to account for how observers construct perceptions about events. We had anticipated that the more internal, controllable and intentional the discrepancy is, the greater the blame attributed to a company is, and the lower the intention to invest will be. When greenwashing occurs at a company level, this results in a higher level of blame attribution, while the intention to invest falls. Indirect greenwashing refers to a misbehaviour perpetrated by a supplier who claims to be sustainable, and which results in a less negative impact on a supplied company. We also propose the vicarious greenwashing, which occurs when the behaviour of a supplier is in breach of a company’s claims of sustainability. This type of greenwashing is nevertheless detrimental to investment. The findings here advance our understanding of how greenwashing shapes stakeholders’ reactions, and highlight the need for the careful management of the supply-chain. (shrink)

Greenwashing is a phenomenon that is linked to scandals that often occur at the supply-chain level. Nevertheless, research on this subject remains in its infancy; much more is needed to advance our understanding of stakeholders’ reactions to greenwashing. We propose here a new typology of greenwashing, based on the locus of discrepancy, i.e. the point along the supply-chain where the discrepancy between ‘responsible words’ and ‘irresponsible walks’ occurs. With three experiments, we tested how the different forms of greenwashing affect stakeholders’ (...) reactions, from both ethical and business perspectives. We developed our hypotheses by building on attribution theory, which seeks to account for how observers construct perceptions about events. We had anticipated that the more internal, controllable and intentional the discrepancy is, the greater the blame attributed to a company is, and the lower the intention to invest will be. When greenwashing occurs at a company level, this results in a higher level of blame attribution, while the intention to invest falls. Indirect greenwashing refers to a misbehaviour perpetrated by a supplier who claims to be sustainable, and which results in a less negative impact on a supplied company. We also propose the vicarious greenwashing, which occurs when the behaviour of a supplier is in breach of a company’s claims of sustainability. This type of greenwashing is nevertheless detrimental to investment. The findings here advance our understanding of how greenwashing shapes stakeholders’ reactions, and highlight the need for the careful management of the supply-chain. (shrink)

AbstractEnduring unethical behavior in trading has generated much research interest, and scholars disagree on the reasons for this situation. According to MacIntyre (2015), this has to do with the personal traits of traders, whereas Rocchi and Thunder (2019) argue this is due to permissive work environment that can potentially be changed to favoring ethical trading. We contribute to this debate by exploring how interactions between organizational culture and management control systems (MCSs) may affect the enduring unethical behaviors of traders. We (...) conceptualize this with the concepts of organized hypocrisy (Brunsson 1986, 1989, 1993) and decoupling (Meyer and Rowan 1977). An in-depth case study of fraud (Jerome Kerviel at Societe Generale), informs the empirical inquiry. We develop the concept of organized decoupling to characterize how the MCSs are articulated with the organizational culture favoring unethical behavior, while being used as a ‘safety mechanism’ to manage the legal and reputational risk of the bank. The analysis highlights three key features of the organized decoupling of MCS: physical distance, technical distance and social distance. The study contribution lies in showing that decoupling is not only emergent but might be intended and therefore organized. The findings also raise doubts on the role of MCSs in monitoring trading activities as presented by investment banking institutions and regulators, suggesting more organized hypocrisy, and raising significant concerns regarding the creation of tolerable work environment welcoming ethical behaviors in the investment banking sector. (shrink)

Given that services differ from goods in terms of intangibility, heterogeneity, and inseparability, customers may evaluate green services differently from how they evaluate green goods. Previous research has investigated customers’ perceptions and purchase decisions regarding green products. However, limited attention has been paid to the impact of green practices on customer evaluations of the service experience as well as important contingencies that bear on this relationship. Drawing on stakeholder theory, our study examines the impact of green practices on customer evaluations (...) and further considers the influences of environmental- and firm-level contingencies. We test our model with a multi-source dataset in the Chinese hotel industry. The findings indicate that green practices improve customer evaluations of the service experience. This positive impact is, however, weaker in external environments characterized by high internet penetration and market complexity but is stronger for hotels with innovative services and for business hotels. Our findings provide novel insights into the environmental ethics and stakeholder management literatures by revealing the role of green practices in promoting positive service evaluations as well as the contingent influences of external environments and internal firm-level characteristics. (shrink)

We investigate the impact of perceived greenwashing on customer satisfaction. Unlike prior research that largely examines customer perceptions associated with irresponsible behavior, we focus on cases where firms overcommit and/or do not deliver on promised socially responsible actions. We theorize that this type of greenwashing is associated with lower customer satisfaction because customers perceive greenwashing through the lens of corporate hypocrisy. Using data from the American Customer Satisfaction Index (ACSI) for U.S. companies during the period 2008–2016, we document a negative (...) link between perceived greenwashing related to green product innovation (GPI) and the ACSI index. We demonstrate that this effect is primarily triggered by corporate policies exceeding the corresponding implementation actions and not by lower levels of implementation. We also show that a firm’s capability reputation mitigates the negative effect of greenwashing on customer satisfaction. Moreover, we conduct an experiment and provide evidence confirming that GPI greenwashing is in fact perceived by customers as corporate hypocrisy. (shrink)