Abstract
Purpose
This study investigates how internal corporate governance mechanisms (IGMs) shape greenwashing behaviours with a particular attention to the differences between family firms (FFs) and non-family firms (Non-FFs).
Design/methodology/approach
Drawing on agency, legitimacy, socioemotional wealth (SEW) and faultlines perspectives, this study proposes that greenwashing as a behavioural response to competing organisational incentives and institutional pressures. Using a global sample of top-listed FFs and propensity score matched non-FFs, we employ quadratic regression model to test the relationship between IGMS and greenwashing, and further explore exogenous events, legal contexts, socio-linguistic determinants, and SEW endorsement.
Findings
Our results reveal a U-shape between IGMs and greenwashing, indicating that IGMs initially reduce but subsequently increase greenwashing beyond a threshold. In addition, FFs exhibiting stronger behavioural sensitivity to IGMs changes than non-FFs.
Research limitations/implications
This study highlights the importance of examining the non-linearity of effectiveness of IGMs. Future research may explore how generational transition influences the turning‐point.