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The Intentions with Which the Road is Paved: Attitudes to Liberalism as Determinants of Greenwashing

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Abstract

Previous literature has shown contradictory results regarding the relationship between economic liberalism at the country level and firms’ engagement in corporate social action (CSA). Because liberalism is associated with individualism, it is often assumed that firms will engage in mostly symbolic rather than substantive social and environmental actions; in other words, they will practice “greenwashing.” To understand how cultural beliefs in the virtues of liberalism affect the likelihood of greenwashing, we disentangle the effects of the distinct and co-existing beliefs in the virtues of economic liberalism. We begin by conducting an exploratory qualitative analysis of managers’ sentiments on this matter, based on a focus group methodology. We then use these investigative elements to articulate a comparison of the conflicting theoretical arguments: in liberal contexts, are firms, as social entities, inherently selfish or pro-active when it comes to CSA? We empirically test our hypotheses on a large-scale dataset. Finally, we show paradoxically that in countries where beliefs in the virtues of competition are strong, firms are more likely to greenwash, while in countries where beliefs in the virtues of individual responsibility are prominent, firms are more likely to focus on concrete actions. These findings suggest that in contexts where weak governments are seen as ideal, firms might feel the need to step into fill institutional voids, in contexts in which competitive mindsets dominate, this tendency is counterbalanced.

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  1. Australia, Austria, Belgium, Bermuda, Brazil, British Virgin Islands, Canada, Cayman Islands, Chile, China, Colombia, Cyprus, Czech Republic, Denmark, Egypt, Finland, France, Germany, Gibraltar, Greece, Guernsey, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Jordan, Korea; Republic of, Kuwait, Luxembourg, Malaysia, Marshall Islands, Mauritius, Mexico, Morocco, Netherlands, New Zealand, Nigeria, Norway, Oman, Panama, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Russian Federation, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Taiwan; Republic of China, Thailand, Turkey, Ukraine, United Arab Emirates, UK, USA.

  2. FTSE 250 (UK), S&P 500, NASDAQ 100, Russell 1000 (US), S&P Composite (Canada), SMI (Switzerland), DAX (Germany), CAC 40 (France), S&P ASX 200 (Australia) DJ STOXX (Europe), MSCI World (World).

  3. Albania, Andorra, Argentina, Armenia, Australia, Azerbaijan, Bangladesh, Belarus, Bosnia and Herzegovina, Brazil, Bulgaria, Burkina Faso, Canada, Chile, china, Colombia, Croatia, Cyprus, Czech republic, Dominican republic, Egypt, el Salvador, Estonia, Ethiopia, Finland, France, Georgia, Germany, Ghana, Great Britain, Guatemala, Hong Kong, Hungary, India, Indonesia, Iran, Italy, japan, Jordan, Kyrgyzstan, Latvia, Lithuania, Macedonia, Malaysia, Mali, Mexico, Moldova, Morocco, Netherlands, New Zealand, Nigeria, Norway, Pakistan, Peru, Philippines, Poland, Puerto Rico, Romania, Russian Federation, Rwanda, Serbia, Serbia and Montenegro, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Tanzania, Thailand, Trinidad and Tobago, Turkey, Uganda, Ukraine, US, Uruguay, Venezuela, Vietnam, Zambia, Zimbabwe.

  4. Australia, Brazil, Canada, Chile, China, Cyprus, Czech Republic, Egypt, Finland, France, Germany, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Jordan, Republic of Korea, Malaysia, Mexico, Morocco, Netherlands, New Zealand, Norway, Philippines, Poland, Russian Federation, Singapore, South Africa, Spain, Sweden, Switzerland, Republic of Taiwan, Thailand, Turkey, US, UK.

  5. The Economic category includes three of the 18 sub-ratings: Performance, Shareholder Loyalty, Client Loyalty.

    The Environment category includes three of the 18 sub-ratings: Emission Reduction, Product Innovation, Resource Reduction.

    The Social category includes seven of the 18 sub-ratings: Product Responsibility, Community, Human Rights, Diversity and Opportunity, Employment Quality, Health & Safety, Training and Development.

    The Governance includes five of the 18 sub-ratings: Board Functions, Board Structure, Compensation Policy, Vision and Strategy, Shareholder Rights.

  6. Standardization of a variable is a transformation resulting in a new variable with a mean null and standard deviation of 1. For a random variable X with realizations x, the standardization mathematical formula is as follow: \({\text{Standardized}}\;(x) = \frac{x - E(X)}{\sigma (X)}.\)

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Acknowledgments

The authors are grateful to the GDF-Suez Chair in Business & Sustainability, and the Society and Organizations (SnO) Research Center, both at HEC Paris. They would also like to thank the reviewers for their helpful comments and the editor Joëlle Vanhamme for her guidance.

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Authors and Affiliations

  1. Saïd Business School, University of Oxford, Park End St, Oxford, OX1 1HP, UK

    Thomas J. Roulet

  2. Department of Strategy, IPAG Business School, 184 bd, Saint Germain, 75006, Paris, France

    Samuel Touboul

  3. Affiliated Researcher at S&O Research Center, HEC Paris, 78351, Jouy-en-Josas, France

    Samuel Touboul

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  1. Thomas J. Roulet
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Correspondence to Thomas J. Roulet.

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Roulet, T.J., Touboul, S. The Intentions with Which the Road is Paved: Attitudes to Liberalism as Determinants of Greenwashing. J Bus Ethics 128, 305–320 (2015). https://doi.org/10.1007/s10551-014-2097-8

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  • DOI: https://doi.org/10.1007/s10551-014-2097-8

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