This week the focus is on the public’s view of companies’ CSR activities.

When does greenwashing pay off?  
Do firms gain environmental legitimacy when they conform to external expectations regarding the natural environment? Drawing on institutional logic and signalling theory, the researchers investigate sources of heterogeneity in the impacts of environmental actions on environmental legitimacy.

Longitudinal data (1997–2001) about 325 publicly traded U.S. firms in polluting industries support the notion that environmental actions help firms gain environmental legitimacy. However, some actions instead can harm this legitimacy if environmental performance deteriorates and the firm is subject to intense scrutiny from non-governmental organisations.

Thus, an important contribution of this research is to identify conditions under which greenwashing can backfire.

Pascual Berrone, Andrea Fosfuri and Liliana Gelabert. 2017. Does Greenwashing Pay Off? Understanding the Relationship Between Environmental Actions and Environmental Legitimacy.  
Journal of Business Ethics, 144(2), 363–379.


Green scepticism: Causes and consequences
Consumer scepticism of corporate environmental activities is on the rise. Yet research on this timely, intriguing, and important topic is scarce for both academics and practitioners. Building on attribution theory, the authors develop and test a theoretically anchored model that explains the sources and consequences of green scepticism.

The study findings reveal that consumers’ perceptions of industry norms, corporate social responsibility, and corporate history are important factors that explain why consumers assign different motives to corporate environmental actions. In addition, the results show that while intrinsic motives exert a strong negative effect on green scepticism, extrinsic motives have no discernible effect.

Furthermore, the findings indicate that green scepticism prompts consumers to seek more information about the products, sparks negative word of mouth to friends and acquaintances, and forestalls purchase intentions. The study offers several implications for corporate and public policy makers and presents fruitful research directions.

Constantinos N. Leonidou and Dionysis Skarmeas. 2017. Gray Shades of Green: Causes and Consequences of Green Skepticism. 
Journal of Business Ethics, 144(2), 401–415.


Media bias and the persistence of the expectation gap in auditors
Prior research has documented the continued existence of an expectation gap, defined as the divergence between the public’s and the profession’s conceptions of auditor’s duties, despite the auditing profession’s attempt to adopt standards and practices to close this gap.

In this paper, the authors consider one potential explanation for the persistence of the expectation gap: the role of media bias in shaping public opinion and views. They analyse press articles covering 40 U.S. corporate fraud cases discovered between 1992 and 2011. The researchers compare the auditor’s duties, described by the auditing standards, with the description of the fraud cases as found in the press articles.

Furthermore, the authors draw upon prior research to identify three sources of the expectation gap: deficient performance, deficient standards, and unreasonable expectations. The results of the analysis provide evidence that

(1) the performance gap can be reduced by strengthening auditor’s willingness and ability to apply existing auditing standards concerning fraud detection;

(2) the standards gap can be narrowed by improving existing auditing standards; and

(3) unreasonable expectations, however, involve elements beyond the profession’s sphere of control.

As a result, the expectation gap is unlikely to disappear given the media’s tendency to bias, with an overemphasis of unreasonable expectations in their coverage of frauds and press articles tending to reinforce the view that the auditor should take more responsibility for detecting fraud, irrespective of whether this is feasible at a reasonable cost. In addition to the primary role of the press in perpetuating the expectation gap, a second reason for continuation of the expectation gap is that the rational auditor will have difficulty in assessing subjective components of fraudulent behaviour.

Jeffrey Cohen, Yuan Ding, Cédric Lesage and Hervé Stolowy. 2017. Media Bias and the Persistence of the Expectation Gap: An Analysis of Press Articles on Corporate Fraud. 
Journal of Business Ethics, 2017, 144(3), 637–659.


Customer perceived ethicality on affect, perceived quality, and equity in brands
In the current socioeconomic environment, brands increasingly need to portray societal and ethical commitments at a corporate level, in order to remain competitive and improve their reputation. However, studies that relate business ethics to corporate brands are either purely conceptual or have been empirically conducted in relation to the field of products/goods.

This is surprising because corporate brands are even more relevant in the services sector, due to the different nature of services, and the subsequent need to provide a consistent high-quality customer experience across all the brand–customer interactions and touch-points. Thus, the purpose of this article is to study, at a corporate brand level and in the field of services, the effect of customer perceived ethicality of a brand on brand equity.

The model is tested by structural equations, using data collected for eight service categories by means of a panel composed of 2179 customers. The test of measurement equivalence between these categories is conducted using generalisability theory. Confirmatory factor analysis marker technique is applied in order to check for common method variance. The results of the hypothesised model indicate that customer perceived ethicality has a positive, indirect impact on brand equity, through the mediators of brand affect and perceived quality. However, there is no empirical evidence for a direct effect of customer perceived ethicality on brand equity.

Vicenta Sierra, Oriol Iglesias, Stefan Markovic and Jatinder Jit Singh. 2017. Does Ethical Image Build Equity in Corporate Services Brands? The Influence of Customer Perceived Ethicality on Affect, Perceived Quality, and Equity. 
Journal of Business Ethics, 2017, 144(3), 661–676.


Do Facebook ethical communities strengthen consumers’ ethical consumption behaviour? 
It has been proposed that the social networking site Facebook is suitable for building communities and strengthening customer relationships, and also many organisations that promote ethical consumption have established online communities there. However, because of the newness of ethical online communities, little is known about the extent to which consumer participation in them produces positive outcomes.

The present study aims at exploring such outcomes: first, the authors identify consumer-perceived benefits from ethical community participation, and second, they explore whether these benefits influence the activity promoted (in this case, ethical consumption), as well as consumer loyalty toward the ethical Facebook community. The results of an online survey of ethical community participants reveal that informational benefits reinforce consumers’ ethical consumption behavior. Social and entertainment benefits, in turn, have a positive influence on loyalty to the community.

The study further reveals that the consumers’ prior commitment to ethical consumption influences the perceived benefits: the affective commitment to ethical consumption has a positive, and the continuance commitment a negative influence on the benefits. Thus, the more consumers feel they engage in ethical consumption because of an emotional attachment, the higher the perceived benefits from online community participation are.

The more consumers perceive that their ethical consumption is driven by lack of choice, the fewer the benefits. Overall, the perceived benefits were at a relatively low level, which is somewhat alarming and highlights the need to manage the communities more efficiently.

Johanna Gummerus, Veronica Liljander and Reija Sihlman. 2017. Do Ethical Social Media Communities Pay Off? An Exploratory Study of the Ability of Facebook Ethical Communities to Strengthen Consumers’ Ethical Consumption Behavior.
Journal of Business Ethics, 2017, 144(3), 449–465.