Greenwashing Crisis Communication in Hospitality Industry: Investigating the Negative Impact of Misleading Communication on Consumer Behavior from an Ethics Perspective

In recent years, companies in the hospitality industry have been facilitating more pro-environmental initiatives due to the increasing societal demands for companies to engage in corporate social responsibility (CSR). However, research indicates that when these claims or activities are challenged as misleading or accused of being inconsistent with the company's actual practices by the public, it can lead to a greenwashing crisis. When a greenwashing crisis occurs, due to fear of potential managerial and legal damage, many organizations choose to withhold the information or to deliver irrelevant truthful information in response to the crisis, which may be perceived as misleading. However, there is a lack of literature discussing how consumers perceive companies’ crisis communication strategies and whether those strategies are effective.

Therefore, this research aims to explore the consequences of two commonly used misleading crisis communication strategies (misleading by omission and misleading by paltering) in a foodservice greenwashing crisis context. Specifically, the present research examined how misleading by omission and misleading by paltering can influence consumer word of mouth and brand avoidance differently. This study further explored the underlying mechanism that explains the influence of misleading crisis communication on consumer behavior. In particular, perceived ethicality and brand trust were predicted as the mediators. Lastly, this study investigated the moderating effects of perceived crisis severity and information sources on the indirect impact of misleading communication on perceived ethicality, brand trust, and word of mouth and brand avoidance.

The findings of this research suggested that misleading communication has a direct impact on consumer word of mouth and brand avoidance. Specifically, when both misleading crisis communications are perceived negatively, omission leads to less word of mouth and more brand avoidance than paltering. Perceived ethicality and brand trust mediate the relationship between misleading communication and consumers’ behavioral intentions.

Moreover, this study found that perceived crisis severity has an interaction effect with perceived ethicality on brand trust, such that perceived ethicality has a greater impact on brand trust when the greenwashing crisis is perceived as less severe. Perceived crisis severity also moderated the indirect effect of misleading communication on perceived ethicality, brand trust, and consumer behavioral intentions, such that the indirect effect is stronger when the greenwashing crisis is perceived as less severe.

Lastly, the results of this study revealed a significant moderating effect of information sources on the relationship between misleading communication and consumers’ perception and behavioral intentions. Specifically, information sources and misleading communication have an interaction effect on perceived ethicality, such that omission leads to less consumer word of mouth and more brand avoidance compared to paltering when the greenwashing information was provided by an environmental non-government organization (NGO). Misleading communication has no significant impact on perceived ethicality when the greenwashing information was provided by a competitor. Information sources also moderated the indirect effect of misleading communication on perceived ethicality, brand trust, and consumer behavioral intentions, such that the indirect effect exists when the greenwashing information was provided by an environmental NGO, not by a competitor. Based on the findings of this research, theoretical and practical implications are discussed.