Corporate Environmental Reputation Research Articles

The green reputation: Corporate culture and environmental reputation risk

This study examines the corporate culture outcomes over the Environmental Reputation Risk (ERR). We show that firms with a strong corporate culture are associated with a lower ERR. In particular, the relationship is stronger among corporate cultural values that emphasize innovation, respect, and product and service quality, and it is more significant among firms with higher managerial opportunistic incentives. Moreover, a strong culture is associated with a lower environmental cost. Overall, our results suggest that corporate culture plays a disciplinary role in preventing managers from conducting environmentally irresponsible activities.

Impact of environmental performance and policy on firm environmental reputation

PurposeThis study investigates the impact of corporate environmentalism on corporate environmental reputation. Corporate environmentalism comprises both environmental performance and environmental policy, thus distinguishing a firm's actual environmental performance from the intent of its environmental policy. The moderating effect of advertising is also investigated.Design/methodology/approachThe study derives four hypotheses from the literature and tests these by means of a Tobit model and a unique combination of databases.FindingsResults show a link between environmental policy and corporate environmental reputation, but not between environmental performance and corporate environmental reputation. Additionally, results reveal the moderating effect of advertising to be negative, suggesting that advertising contributes only marginally toward improving corporate environmental reputation.Originality/valueThis study is one of the first to investigate the complementary effect of environmental management, environmental policy and advertising on corporate reputation.

Corporate environmental reputation management and financial performance of environmentally sensitive companies in Nigeria

Business activities have direct and indirect effects on their immediate environment. The degree of impact a business venture would have on the environment depends on the nature of business. This wo...

Corporate environmental reputation: Exploring its definitional landscape

AbstractDespite its growing strategic importance, the concept of Corporate Environmental Reputation (CER) still lacks a specific definition and content delimitation in the literature. This fact, together with its difficult differentiation from other similar constructs, hides the key role of this construct in the connection between management and environmental studies and in the development of corporate environmental management strategies. To address this issue, in this research, we develop a literature review on CER conceptualisation, operationalisation and measurement, and analyse its main effects on firm competitiveness and performance drawing on the Institutional Theory and the resource‐based view. As a result, we propose a CER definition, highlighting its main characteristics and drivers and delimitating it in relation to closely related concepts such as green corporate image and corporate environmental legitimacy.

The Halo Effect and Social Evaluation: How Organizational Status Shapes Audience Perceptions on Corporate Environmental Reputation

Although firms generally strive to enhance social evaluations, scholars have noted that such evaluations may not completely reflect actual performance of the firms. Extending this approach to the domain of environmental sustainability, we focus on the importance of social evaluation heuristics and explore how a firm’s status, or generalized evaluation not directly linked to environmental performance, plays a key role in shaping audience perceptions on its environmental reputation. Using multiple sources of data on 178 global companies’ green reputation, status, and environmental performance, our study shows that a firm’s status significantly enhances its environmental reputation assessed by general consumers and that the status effect varies significantly according to media frames. These findings illuminate the richness and complexity in the relations between status, reputation, and media-provided information in the area of environmental sustainability.

The influence of managerial satisfaction on corporate environmental performance and reputation

AbstractOrganizational studies have widely debated the relationship between job satisfaction and job performance. Some papers have dealt with managerial satisfaction and businesses' performance adopting agency theory to interpret the results. However, no studies have yet considered the relationship between the satisfaction levels of an environmental manager and corporate environmental performance. This paper thus analyses the role played by the environmental manager's satisfaction in enhancing corporate environmental performance and reputation. The paper uses data from a survey of 412 Eco Management and Audit Scheme registered organizations. The results show a positive relationship between managerial satisfaction and environmental performance, whereas no such positive relationship was found when considering eco‐innovation performance. In addition, the environmental manager's satisfaction has a positive and indirect influence on the corporate environmental reputation. These results contribute to the literature on agency theory and aim to extend the debate between job satisfaction and job performance to the sustainable business field.

To Be or to Seem: The Role of Environmental Practices in Corporate Environmental Reputation

Although the literature has shown the benefits of corporate environmental reputation, little is known about how this reputation develops. Based on impression management theory, we examine how a firm’s environmental practices create its environmental reputation. We undertake a fine-grained analysis by distinguishing between high and low environmental external visibility practices and examining the effect of decoupling environmental practices (i.e., using only practices that are highly visible) on environmental reputation. We also propose that corporate environmental disclosure moderates these relationships. The hypotheses are tested on a sample of 241 U.S. firms included in Newsweek’s Green Rankings. Our results suggest that managers should avoid decoupling because such practices heavily jeopardize environmental reputation. In contrast, developing a balanced set of both high and low environmental external visibility practices, enhanced through environmental disclosure, pays for environmental reputation.

Consumer Responses to Corporate Environmental Actions in China: An Environmental Legitimacy Perspective

As a result of the increasing public attention to environmental crises, corporate environmental actions and their effects are a current research hotspot. This study examines how two types of corporate environmental actions (symbolic and substantial environmental actions) influence consumers’ perceptions of environmental legitimacy and subsequent purchase intentions. Using experimental method, this study finds that (1) substantial environmental action induces significantly higher perceptions of environmental legitimacy than symbolic environmental action, (2) this effect can be attenuated by corporate environmental reputation, and (3) consumer-based environmental legitimacy has a significantly positive effect on consumers’ purchase intentions. These findings have interesting implications for both researchers and practitioners involved in green marketing.

Signaling Environmental Commitment to stakeholders: Creating Corporate Environmental Reputation

Firms earn corporate environmental reputation when the stakeholders interpret that the firm is able to create value in the environmental dimension. Although the relevance of corporate environmental reputation has been shown in the literature, little is known about its development to date. Previous research examining its construction has mainly focused on the role of corporate environmental disclosure. In contrast to these studies, we focus on how other substantive proactive environmental practices (signals) can have a positive influence on corporate environmental reputation and, how these practices have a moderating effect on the relationship between disclosure and corporate environmental reputation. We test these relationships using a sample of 160 North American companies. Our results show that in order to improve corporate environmental reputation it is not enough to disclosure, but it is necessary that the company sends additional signals to convince stakeholders that it effectively is creating value in the environmental dimension.

Do actions speak louder than words? An empirical investigation of corporate environmental reputation

In this study, we investigate the extent to which firms’ environmental performance is reflected in perceptions of their environmental reputation and whether environmental disclosure serves to mediate the negative aspects of poorer environmental performance associated with those assessments. We also examine whether differences in environmental performance and environmental disclosure appear to be associated with membership selection to the Dow Jones Sustainability Index (DJSI), a factor we also believe may be associated with perceptions of environmental reputation. Based on a cross-sectional sample of 92 US firms from environmentally sensitive industries, we find that environmental performance measured using Trucost environmental performance scores is negatively related to both reputation scores and membership in the DJSI. We argue this is due to the more extensive disclosure levels of firms that are worse performers and the finding of a significant positive relation between environmental disclosure and both the environmental reputation measures and DJSI membership. Finally, we show that the DJSI designation positively influences perceptions of corporate reputation. Overall, our results suggest that voluntary environmental disclosure appears to mediate the effect of poor environmental performance on environmental reputation. Perhaps more troubling, our results also suggest that membership in the DJSI appears to be driven more by what firms say than what they do. Thus, like voluntary disclosure, the DJSI may actually be hindering improved future corporate environmental performance.

Firm Resources, Quality Signals and The Determinants of Corporate Environmental Reputation: Some UK Evidence

Using the example of the creation of corporate environmental reputation, the article offers a theoretical extension of the resource-based view of the ®rm to include quality signaling via the channel of accounting disclosure. The proposed framework is then tested via an empirical survey into the relationship between environmental disclosure and environmental reputation. The results suggest that implementation, monitoring and disclosure of environmental policies and their disclosure in annual reports contribute significantly to the creation of environmental reputation. Diverse institutional share ownership and low systematic risk are also associated with positive environmental reputation. Prior financial performance has no impact and there is no evidence that environmental reputation is created by a financial halo effect or by the availability of slack financial resources.

The importance of corporate environmental reputation to investors

PurposeThe purpose of this paper is to explore how corporate environmental reputation (CER) affects the association between current annual stock returns and current and future annual earnings. In particular, it seeks to examine the potential usefulness of CER to investors in predicting future earnings.Design/methodology/approachThe paper uses the returns‐earnings regression model introduced by Collinset al.to examine the importance of CER for investors. It uses a sample of 889 non‐financial firms listed on the London Stock Exchange from 1996 to 2004.FindingsThe paper finds that firms with higher levels of CER scores exhibit higher levels of share price anticipation of earnings than firms with lower levels of CER scores.Originality/valueThis paper is the first direct evidence that CER contains value‐relevant information. Such information is potentially useful to investors in anticipating future earnings.

Newsweek’s measure of corporate environmental reputation and the ‘financial halo effect’

We present in this study the results of our investigation into whether the Newsweek magazine measure of corporate environmental reputation (reported as part of Newsweek’s ranking of the 500 greenest corporations in the United States) suffers from a ‘financial halo effect’. Prior studies (e.g., Brown and Perry, 1994) document that other measures of corporate reputation (Fortune Most Admired scores and their sub‐components) are positively biased by recent financial performance, and as such, we seek to determine whether the same problem exists with this newly available measure. Using the Brown and Perry (1994) model and a sample of 474 of the 500 corporations included in the Newsweek listing, we find that the reputation measure appears to be influenced by at least some aspects of financial performance with firm size having by far the greatest impact. We also find, however, that the impact of firm size and profitability are less pronounced for companies operating in environmentally sensitive industries. The primary implication of our analysis centres on the use of the Newsweek scores in studies attempting to understand differences in corporate environmental reputation. Our findings underscore the need, particularly for studies including companies from non‐environmentally sensitive industries, to control for the confounding impacts of corporate financial performance.

Quantity versus quality: the impact of environmental disclosures on the reputations of UK Plcs

The theoretical framework of this paper integrates quality-signalling theory and the resource based view of the firm to test the differential effects of the quantity and quality of environmental disclosures on the firm's environmental reputation. Uniquely, the study uses a quality-adjusted method of content analysis, so that sentences are not merely counted but also weighted to reflect their likely significance. Investments in research and development and diversification, as potential methods of enhancing of environmental reputation, are also considered. In doing so the paper complements and extends the work of [Toms, J.S., 2002. Firm resources, quality signals and the determinants of corporate environmental reputation: some UK evidence. British Accounting Review 34 (3), 257–282]. The results confirm the framework and models tested in the original paper on more recent data and also suggest that quality of environmental disclosure rather than mere quantity has a stronger effect on the creation of environmental reputation amongst executive and investor stakeholder groups. Research and development expenditure, and under certain circumstances, diversification, also add to reputation.

FIRM RESOURCES, QUALITY SIGNALS AND THE DETERMINANTS OF CORPORATE ENVIRONMENTAL REPUTATION: SOME UK EVIDENCE

Using the example of the creation of corporate environmental reputation, the article offers a theoretical extension of the resource-based view of the firm to include quality signalling via the channel of accounting disclosure. The proposed framework is then tested via an empirical survey into the relationship between environmental disclosure and environmental reputation. The results suggest that implementation, monitoring and disclosure of environmental policies and their disclosure in annual reports contribute significantly to the creation of environmental reputation. Diverse institutional share ownership and low systematic risk are also associated with positive environmental reputation. Prior financial performance has no impact and there is no evidence that environmental reputation is created by a financial halo effect or by the availability of slack financial resources.

Stakeholder trust: How do I get it?

A damaged corporate environmental reputation can cost your company business—and may take years to overcome. Building stakeholder trust should be central to every firm's corporate strategy in today's environmentally conscious world. © 2000 John Wiley & Sons, Inc.

Stakeholder trust: How do I get it?

A damaged corporate environmental reputation can cost your company business—and may take years to overcome. Building stakeholder trust should be central to every firm's corporate strategy in today's environmentally conscious world. © 2000 John Wiley & Sons, Inc.

Part VI: How Should Reputations be Managed in Good Times and Bad Times?: Corporate environmental reputation: comparing two industries

Reputations rise and fall. In this Part of the Corporate Reputation Review attention focusses on companies whose star is waning. The presentations made at the Stern School of Business conference and now published below comprise a distillation of the insights gained by a senior crisis-management practitioner, as well as three case studies and three more empirically-oriented crisis communication studies. Included in panelists' presenta- tions are theoretical frameworks which seek to explain the behavior of managers and opponents during crisis situations.