The Halo Effect and Social Evaluation: How Organizational Status Shapes Audience Perceptions on Corporate Environmental Reputation

Abstract

Although firms generally strive to enhance social evaluations, scholars have noted that such evaluations may not completely reflect actual performance of the firms. Extending this approach to the domain of environmental sustainability, we focus on the importance of social evaluation heuristics and explore how a firm’s status, or generalized evaluation not directly linked to environmental performance, plays a key role in shaping audience perceptions on its environmental reputation. Using multiple sources of data on 178 global companies’ green reputation, status, and environmental performance, our study shows that a firm’s status significantly enhances its environmental reputation assessed by general consumers and that the status effect varies significantly according to media frames. These findings illuminate the richness and complexity in the relations between status, reputation, and media-provided information in the area of environmental sustainability.