Multistage investigation into positive and negative consequences of greenwashing business practices. Implications for business strategies

Greenwashing, which involves false promises of environmental responsibility, has become a significant problem in an age where environmental issues are increasingly becoming more problematic. This paper delves into the effects of corporate greenwashing through multiphase research design and interpretative phenomenological analysis (IPA) approach to comprehend the lived experiences of employees working in the tourism and hospitality sector. Our qualitative study encompassed two rounds of data collection and followed the grounded theory approach to discern insights from the open‐ended essays using Gioia methodology. Taking support of the stakeholder theory and the signaling theory, this paper shows short‐term positive reputational effects of greenwashing when unexposed and the severe harm being caused when it is exposed. Furthermore, we report on how stakeholder perceptions and reactions differ between large and small organizations and conclude by proposing strategic recommendations to curb deceptive environmental claims. Our study not only advances theoretical comprehension by acknowledging the multifaceted nature of greenwashing consequences but also provides practical insights for businesses operating in this area to curb such fraudulent practices.