How does greenwashing drive out pure corporate social responsibility practices? Disentangling effects of corporate social responsibility and irresponsibility signals on financial performance
authors
keywords
- CSI
- CSR
- Greenwashing
- Signaling theory
- Corporate finance
document type
COMMabstract
There is a fundamental interest in management research: whether, how, and when corporate social responsibility (CSR) leads to corporate financial performance. Despite tremendous past effort, the available answers are still unsatisfied. We address this gap by suggesting a fresh viewpoint: the existence of corporate social irresponsibility (CSI) and the dynamic relationships between CSR and CSI. Specifically, we ground on signaling perspective to explore the long-term financial impact of both responsibility and irresponsibility-related signals in their relational mechanisms. Using a sample of the largest American companies on a built temporal configurational framework, we show that firms trend away from pure CSR or CSI strategies to fall back into specific combinations of CSR and CSI signals to support the high level of financial performance. In these configurations, firms that persist in their irresponsible activities can thus sprinkle a few responsible actions to maintain their financial performance over the years. These greenwashing practices have imposed itself massively at the expense of all other practices in recent years. These results bring some theoretical implications to signaling theory and corporate social performance research.