When Do Firms Greenwash? Corporate Visibility, Civil Society Scrutiny, and Environmental Disclosure
Michael W. Toffel
Harvard Business School (HBS) - Technology & Operations Management Unit
December 20, 2012
Harvard Business School Organizational Behavior Unit Working Paper No. 11-115
Harvard Business School Technology & Operations Mgt. Unit Working Paper No. 11-115
Under increased pressure to report environmental impacts, some firms selectively disclose relatively benign impacts, creating an impression of transparency while masking their true performance. What deters selective disclosure and leads firms to instead make disclosures more representative of their environmental performance? We hypothesize that selective disclosure, a novel symbolic strategy firms use to manage stakeholder perceptions, is mitigated by two forms of organizational visibility. Firms with greater domain-specific visibility have specific characteristics that make them especially vulnerable to stakeholder criticism and as a result are less prone to selective disclosure. In contrast, more generically-visible firms are deterred from selectively disclosing only when they are subjected to civil society scrutiny. We test our hypotheses using a novel panel dataset of 4,484 public companies in many industries, headquartered in 38 countries, during 2005-2008, when environmental disclosure increased among global corporations. We find that domain-specific visibility mitigates selective disclosure, that it mitigates selective disclosure more so than generic visibility, and that generic visibility mitigates selective disclosure only in the presence of civil society scrutiny. This research contributes to understanding how corporations manage the symbolic use of information and how corporate behavior is influenced by civil society scrutiny embedded in institutional processes.
Number of Pages in PDF File: 63working papers series
Date posted: May 10, 2011 ; Last revised: December 21, 2012
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