The role of institutional pressures in greenwashing: a two-phase study on company behavior

Purpose: The study has analyzed the impact of economic, coercive, normative and mimetic institutional pressures on corporate greenwashing within various industries and time frames. It has also studied the moderating effect of consumer skepticism in the context of greenwashing practices in order to understand how actual sustainability initiatives can be achieved. Design/methodology/approach: This study used a longitudinal research design and covariance-based structural equation modeling (CB-SEM) analysis of survey responses regarding greenwashing practices during two periods (February–May 2023 and March–June 2024). The respondents of the online surveys were 1,756 managers in Indian corporations. The response rate was 504 in Phase 1 and 452 in Phase 2. Thus, institutional pressures and consumer skepticism were measured longitudinally. Findings: According to our study, many pressures, such as economic, coercive, normative and mimetic, contribute a lot to driving greenwashing practices. Furthermore, the impacts of green skepticism may vary depending on the context. In particular, while in both periods of studies, its influence on the mimetic pressures-greenwashing relationship remains, it diverges concerning economic and normative pressure. Coercive pressures significantly affect greenwashing regardless of whether there is any presence of skepticism, among other things. Practical implications: These results reveal intricate connections between regulatory and societal norms encouraging compliance with minimal environmental standards. The findings from this study suggest that increased transparency and consumer scrutiny can help to reduce greenwashing practices and promote genuine sustainability. Originality/value: Our research mainly examines how different pressures are related to a low level of trust toward environmental initiatives and impact corporate environmental claims collectively. Therefore, conducting more extensive studies covering several industries and geographical locations is essential. There is also a need to understand further the role digital platforms and cultural contexts play in influencing the occurrence of greenwashing.