When Words and Actions Don’t Match: How Greenwashing a Firm’s Supply Chain Practices Can Backfire

Abstract

We study how individual-level consumer evaluations and firms' value are negatively impacted when firms' claims about their environmental supply chain management (ESCM) initiatives are revealed to be misleading. Drawing on signaling theory, we propose that consumers interpret firms' disclosure of ESCM initiatives as a signal of the company's commitment toward pro-social behaviors and that these signals positively influence consumers' purchase intentions. When, however, it becomes evident that there is a lack of signal fit, we propose that consequently there will be a negative effect on evaluations of the firm. In a pretest, based on Information Manipulation Theory we use a vignette-based experiment to evaluate consumer reactions to a comprehensive set of possible means of greenwashing environmental supply chain initiatives, We find that individual-level consumers are most sensitive to