Firms' responses to environmental misconduct accusations under the condition of contested practice complexity: Evidence from the palm oil production industry

Abstract

Public accusations of misconduct by environmental organizations exert reputational pressure on firms. The targeted firms are thus faced with the decision of responding accommodatively or defensively. Situational crisis communication theory (SCCT) holds that such accusations require an accommodative response to reduce the reputational threat. However, defensive response behavior is frequently observed, and insights from the sociocognitive perspective explain that corporate conceptualizations of the contested practice (and hence threat) shape targets' responses. We integrate and extend prior research by (1) explicating the need for attention to the condition of contested practice complexity and (2) theoretically developing and empirically testing (using a sample of palm oil producers accused of illegal deforestation by Greenpeace) the impact of targeted firms' engagement in environmental alliances and past environmental misconduct experience, two key manifestation variables of practice meaningfulness. Overall, in line with calls for a more comprehensive understanding, we provide new insights into the question of when and why targeted firms respond accommodatively or defensively to environmental organizations' demands that they change their practices.

ESG rating divergence and corporate green innovation

“…Extending beyond the literature on the uncertainty and risk of ESG rating divergence (see e.g., Avramov et al, 2022; Christensen et al, 2022; Dumrose et al, 2022; Wang, Tian & Shangguan, 2023), we further investigate how this negativity of ESG rating divergence affects corporate green innovation. Consistent with the literature on how firms respond to external pressures, risks, and threats (see e.g., Chen, Zhu, et al, 2023; Comyns et al, 2023; Patten, 1992; Wang, Song & Wang, 2023; Zhang et al, 2020; Zhou & Wang, 2020), our study provides empirical evidence that firms tend to offset the threat to their legitimacy and green reputation from ESG rating divergence by releasing reliable green signals through green innovation.…”

“…T A B L E 3 ESG rating divergence and corporate green innovation. Comyns et al, 2023;Patten, 1992;Wang, Song & Wang, 2023;Zhang et al, 2020;Zhou & Wang, 2020), our study provides empirical evidence that firms tend to offset the threat to their legitimacy and green reputation from ESG rating divergence by releasing reliable green signals through green innovation.…”

Exploring business stakeholder engagement in sustainable business practices: Evidence from the US pet amphibian industry

“…Emergence of risk anywhere along a given business supply chain can have impact on sustainability of individual business entity as well as the entire industry (Hofmann et al, 2014; Pereira et al, 2023). Literature on business strategy in environmental context has argued that natural environment can be impacted adversely by misconduct of corporate entities (Comyns et al, 2023), whereas incentives can encourage pro‐environmental corporate behavior (Poudyal et al, 2012). Social science research can be useful in assessing the knowledge, perceived risk, attitudes, and behavior of businesses and offer new insights to explain business's relative preference for and acceptability of regulatory and market‐based mechanisms to promote sustainable business practices.…”