The Greenwashing Paradox: Signal Degradation and the Rise of Heuristic Substitution

The increasing number of sustainability claims may reduce the perceived reliability of formal eco-labels, creating an environment in which greenwashing can erode institutional trust. This study explores how consumers navigate significant information asymmetry when standardized environmental signals are absent. Using a qualitative research design, we conducted focus group discussions with Hungarian- and Romanian-speaking consumers in Transylvania, Romania, a multiethnic transitioning market. Computational text analysis, including topic modeling, was used to support this interpretive approach and effectively decode the complex typologies of green claim evaluation. The findings suggest that signal degradation among the participants was associated with culturally embedded heuristic substitution rather than a uniform rejection of green claims. Romanian-speaking participants described more analytical, information-seeking heuristics that are tightly integrated into routine purchasing decisions. Conversely, Hungarian-speaking participants articulated a looser connection between generalized skepticism and their purchasing routines. This study contributes to signaling theory and administrative science by suggesting that standardized governance tools may be less effective when they are not aligned with localized trust structures. Reconceiving greenwashing as a failure of signal fit rather than as deceptive marketing communication, the study contributes to a process-oriented understanding of how consumers evaluate sustainability claims under uncertainty. Future research should quantitatively test these heuristic pathways across diverse regulatory and cultural environments.