Does time heal corporate crisis wounds? The lasting effects of greenwashing and how proactive transparency can steal thunder

Abstract

Purpose This study examines the long-term effects of a greenwashing crisis on corporate image and credibility, investigating how time reduces the negative impact of such crises. Additionally, it explores the role of proactive disclosure in mitigating reputational damage. Design/methodology/approach We conducted two experiments to analyze how stakeholders perceive a company over time following a greenwashing crisis. The first experiment tested whether the duration of time (one month/one year/five/ten/25/50/70 years) since the crisis influenced corporate image and credibility. It also examined whether forgiveness or perceived obsolescence explained these changes. The second experiment assessed whether proactive transparency could mitigate the long-term negative effects of a past corporate crisis. Findings The results indicate that time alone does not heal corporate fraud: regardless of whether the crisis occurred one year or 70 years ago, corporate credibility and image remained negatively affected. However, as time passed, the negative effects weakened slightly, with participants becoming more willing to forgive. While some perceived the crisis as obsolete, this did not mediate its impact on company evaluations. However, proactive transparency significantly improved perceptions, neutralizing the long-term damage of greenwashing. Originality/value This study is one of the first to explore the long-term trajectory of crisis recovery and the role of proactive communication. It contributes to the greenwashing and crisis communication literature by demonstrating that corporate crises leave a lasting impact but can be mitigated through strategic transparency.