How does corporate hypocrisy undermine corporate reputation? The roles of corporate trust, affective commitment and CSR perception

Abstract

Purpose Corporate hypocrisy occurs when a discrepancy exists between corporate talk and actions. As companies assume more extensive economic, societal and global roles, they are more likely to encounter situations in which their words and actions are inconsistent. Therefore, a company’s ability to cope with such situations is becoming increasingly important. This study aims to examine the negative effects of corporate hypocrisy on corporate reputation. First, it reveals the underlying mechanisms by presenting corporate trust and affective commitment as parallel mediators. Additionally, it explores how corporate social responsibility (CSR) perceptions mitigate the indirect effects of corporate hypocrisy. Design/methodology/approach Data were collected through an online survey conducted at two time points in the context of Korean retail banking companies. A total of 313 respondents participated in a two-wave online survey using a multistage sampling technique to ensure a representative population sample. This study used the Mplus-based Hayes’ PROCESS Macro to test the research hypotheses. Findings The results show that corporate hypocrisy negatively affects corporate reputation by impeding customers’ corporate trust and affective commitment. These negative indirect effects are mitigated when customers’ perceptions of CSR are high. Originality/value By establishing a parallel moderated mediation model that captures the impact of corporate hypocrisy. To the best of the authors’ knowledge, this study presents important academic and managerial implications that have not been provided in the literature.