Challenging to Change? Examining the Link Between Public Participation and Greenwashing Based on Organizational Inertia

Abstract

This study investigates the impact of public participation on corporate greenwashing behavior among listed companies in China from 2011 to 2019, set against a backdrop of increasing global environmental regulations. Corporate greenwashing, characterized by misleading environmental claims, poses a significant barrier to sustainable development. Despite the recognition of public participation in social governance, organizational inertia often prevents companies from responding effectively. Our analysis reveals that public participation leads to stricter environmental regulations, thereby reducing greenwashing practices. This finding remains robust through various tests, including variable substitution and model adjustments. However, we also find that higher levels of organizational inertia weaken the positive influence of public participation on combating greenwashing. Thus, this study underscores the necessity of establishing mechanisms for public participation that can effectively shape corporate decision-making, offering crucial insights for enhancing corporate accountability and advancing sustainable practices.