Impact of Consumer's perceived Greenwashing in Advertisements on Green Brand Equity of the Firm: A moderated mediation model using elements of Green Branding

Abstract

Purpose: Recent rise in global warming has led to more sustainable choices by consumers and increasing focus on environmental responsibility by the firms (Chen et al., 2016). Green marketing has emerged as an effective medium to advertise green messages such as "environmental friendly" to its consumers. However, not all firms have the capabilities to market green products to its audience which has led to an increase in practice of "greenwashing" by the firms; a practice of "misleading consumers regarding the environmental practices or environmental benefits of the product or service" (Parguel et al., 2011). If such unethical practices are unmasked by consumers this may have a detrimental effect on brand evaluations variables of the firm. Using Attribution Theory (Harvey and Weary 1984; Heider 1944; Kelley and Michela 1980), this study investigated relationship between consumer's perceived greenwashing in advertisement and green brand equity of the firm using two separate mediators brand credibility and green brand image. Furthermore, this study used perceived brand age of the brand as a boundary condition to test a moderated mediation model where it analyzed whether brand age plays a role in creating difference in perceptions of consumer about greenwashing in advertisements and its negative impact on green brand equity of the firm via two mediators green brand image and brand credibility. Research Questions: This thesis investigated whether or not perceived greenwashing in advertisements by consumers have a negative impact on green brand equity of the firm. Furthermore, this thesis explored whether green brand image and brand credibility mediates the relationship between independent variable greenwashing and dependent variable green brand equity. Specifically this thesis investigated whether effect of greenwashing on green brand equity varies based on consumer's perception of brand age; such that whether or not impact of greenwashing on green brand equity is different for brand perceived as older by consumer as compared to those consumers who perceived brand as younger using a moderated mediation model. Method and Analysis: This study utilized a quantitative research strategy and a pen & paper/online survey was conducted. All constructs were latent variables for which data was collected using existing items in the literature. All variables were measured on a Likert Scale. Respondents were shown a print advertisement prior to filling the questionnaire. The print Page 3 of 106 advertisement chosen of a petroleum brand; Pakistan State Oil (PSO) was chosen which presented both elements of claim and executional greenwashing. From a total of 300 questionnaires distributed to a convenience sample of general consumers in Lahore who are familiar or used this brand, 282 have been used in the data analysis. The collected data were analyzed using confirmatory factor analysis (CFA) to analyze the measurement model whereas the structural model was analyzed using path model for simple mediation and moderated mediation (Taylor et al., 2008). Results: Results of the CFA confirmed reliability and validity of constructs. Results for structural analysis show perceived greenwashing in advertisements by consumers not only directly but indirectly as well effects green brand equity of the firm through brand credibility whereas green brand image does not mediates this relationship. Furthermore, results of moderated mediation analysis concluded that perceived brand age of the brand does play an important role in differentiating the impact of greenwashing on green brand equity of the firm for brands perceived as older as compared to younger by consumers; where the path co efficient calculated for consumers who perceived PSO to be older or mean age brand were significantly different from consumers who perceived PSO as a younger brand. Furthermore, the negative impact of greenwashing turned positive with the inclusion of information about perceived brand age of the firm.