Credibility Thresholds in Corporate Sustainability Discourse: Evidence of Accelerated Backlash Under Greenwashing Signals

Abstract

This study examines whether corporate sustainability discourse generates uniformly positive employee reactions or whether its effects are bounded by credibility dynamics. Drawing on signaling theory and legitimacy perspectives, we propose that sustainability communication exhibits a non-linear relationship with employee evaluations. Specifically, we argue that sustainability intensity initially enhances employee evaluations but produces diminishing and eventually negative returns beyond a credibility threshold. Furthermore, we theorize that greenwashing signals reshape this non-linear relationship by altering its curvature and shifting the turning point to lower levels of sustainability intensity. Using a longitudinal firm-year panel design, we test these arguments with weighted fixed-effects models and turning-point estimations. The results reveal a significant inverted-U relationship between sustainability discourse intensity and employee evaluations. Importantly, greenwashing signals do not independently reduce evaluations; instead, they amplify the negative curvature of the relationship and significantly lower the credibility threshold at which evaluative backlash emerges. These findings extend sustainability and management research by demonstrating that sustainability communication is not a uniformly beneficial strategic tool. Rather, its effectiveness depends on perceived credibility and contextual trust conditions. By introducing the notion of a shifting credibility threshold, this study provides a more nuanced understanding of how sustainability discourse influences internal stakeholder evaluations.