Greening the bottom line: a new scale to discern consumer perceptions of a firm’s green orientation

Abstract

Purpose The purpose of this paper is to introduce a new scale designed to assess a firm's green orientation from the consumer's perspective. Its effects are tested on a managerially relevant outcome variable and an objectively measured product-performance indicator. Design/methodology/approach Four studies based on various data sources identify and operationalize a green-oriented firm. Leveraging signaling theory, a model tests the orientation’s impact on two outcome variables, behavioral intentions and revenue, demonstrating its relevance to both scholars and practitioners. Findings Previous research has explored consumers’ reactions to green products, announcements and initiatives in a piecemeal fashion. This study suggests that firms are perceived as green-oriented when they operate in an environmentally friendly manner, develop green products and publicize these accomplishments. Consequently, consumers’ identification of a firm as green-oriented affected their behavioral intentions, which positively influenced firms’ revenues. Research limitations/implications Green-oriented firms must incorporate environmental standards into production efforts and confidently trumpet such behaviors if they wish to profit from consumer perceptions. Practical implications To accrue positive behavioral intentions from consumers and to increase the firm’s revenues, marketers should invest in developing green-oriented products, operating in an environmentally friendly manner and publicizing these efforts. Understanding consumer perceptions is critical, as they are a leading indicator of firm performance. Originality/value This novel operationalization of a green orientation captures consumers’ perceptions, demonstrating that firms can significantly benefit from this consumer-aligned strategy.