Does Greenwashing Pay Off? Understanding the Relationship Between Environmental Actions and Environmental Legitimacy

Do firms gain environmental legitimacy when they conform to external expectations regarding the natural environment? Drawing on institutional logic and signaling theory, we investigate sources of heterogeneity in the impacts of environmental actions on environmental legitimacy. Longitudinal data (1997–2001) about 325 publicly traded U.S. firms in polluting industries support the notion that environmental actions help firms gain environmental...