The Effect of Moderators in Green Marketing: Stakeholder Evaluation and the Effect on Green Brand Equity and Perceived Greenwasing

Abstract

While transparency is widely accepted as one of the key practices to gain stakeholders' trust, prior research has surprisingly found that transparency does not always pay off. Given a company with a high perceived contribution to a sustainability problem (e.g. an oil company), communicating efforts to reduce the problem is shown to negatively affect green brand equity and to increase perceived greenwashing. However, this insight is based on a single experiment and limited to the specific companies and messages in this study. It is premature to conclude that companies in low-sustainability industries cannot gain from communicating their sustainability efforts. The purpose of this research is to gain a more comprehensive understanding of the aforementioned relationships by investigating the presence of moderating variables. Specifically, focus is given to explaining why the company engages in the sustainability issue and the use of relativity messages (e.g. being better than others). A 2x2x2 factorial design and a three-way ANCOVA analysis were used to test for the main effect and the interaction effects on both green brand equity and greenwashing as dependent variables. No support was found for a relationship between perceived contribution to the problem and green brand equity. This is contradictory to previous findings, and indicates that this relationship might be more complicated than first thought. On the other hand, this study revealed that perceived contribution to a sustainability problem increases perceived greenwashing. Moreover, including the purpose of the initiative (why the company is engaged) in a sustainability message directly increases green brand equity and reduces perceived greenwashing. No evidence was found for any effect of using relativity nor for any interaction effects. These findings contribute to a deeper understanding of stakeholders’ evaluation of green claims, which help bring clarity to the process of determining the most efficient strategies in green marketing.