Sustainability Orientation, Sustainability Implementation, and Brand Image in Service Firms
Funding: This work was supported by the University Research Grant (URG) 2019, Illinois State University.
ABSTRACT
This paper uses legitimacy theory and cognitive dissonance theory to explore the relationship between sustainability orientation, sustainability implementation, and brand image in the service sector. Specifically, we examine the mediating role of implementation—the translation of strategic intent into actionable practices—on customers' perceptions. Using multilevel analyses of 31 US service firms and a survey of 6891 customers, we find that sustainability implementation is a strong positive predictor of brand image. However, sustainability orientation alone has a negative direct effect on brand image, suggesting that stated commitments without corresponding action can harm perceptions. Crucially, sustainability implementation positively mediates the relationship between orientation and brand image. This research addresses a key gap in the literature by demonstrating that, in the service sector, genuine action, not just communication of intent, is essential for building a sustainable brand. From a practical standpoint, the findings highlight that strategic intent toward sustainability, while necessary, is insufficient. To avoid greenwashing perceptions, firms must couple their sustainability orientation with effective and visible implementation of environmental and social initiatives.
1 Introduction
The service sector increasingly recognizes the importance of sustainability, not only for operational efficiency but also for building a positive brand image (Calabrese et al. 2018; Han 2021). However, translating sustainability efforts into a positive brand image in the service context is more complex than in manufacturing, where sustainability can often be demonstrated through tangible product changes (e.g., Patagonia's use of recycled materials in its clothing or Tesla's electric vehicles). Service firms rely heavily on communication, employee behavior, and customer experiences, making them susceptible to perceptions of greenwashing, where sustainability claims are seen as exaggerated or misleading (Akturan 2018; Delmas and Burbano 2011; Jagani et al. 2024).
For example, consider a hotel chain that heavily promotes its commitment to water conservation in its marketing materials. However, guests observe wasteful practices like daily linen changes regardless of request or inefficient showerheads. Or, imagine an airline that boasts about its carbon offsetting program while simultaneously lobbying against stricter emissions regulations. These inconsistencies, readily apparent in the service delivery process, can lead customers to perceive the firms' sustainability claims as exaggerated or misleading—a clear case of greenwashing (Akturan 2018). Such perceptions can significantly damage brand trust and loyalty.
This research investigates the critical link between a service firm's sustainability orientation (its stated strategic intent), its sustainability implementation (the tangible actions it takes), and customers' perceptions of its brand image. We specifically examine the mediating role of sustainability implementation, addressing the following core question: Why does a strong sustainability orientation not always translate into a positive brand image in the service sector, despite the growing importance of sustainability by a firm's stakeholders?
We draw primarily on legitimacy theory (Hummel and Schlick 2016; O'Donovan 2002; Zelditch 2018) and cognitive dissonance theory (Festinger 1957; Harmon-Jones and Mills 2019; Morvan and O'Connor 2017) to address this. Legitimacy theory posits that organizations must operate within societal norms and expectations to be perceived as legitimate. For sustainability, this means firms must not only claim to be sustainable (orientation) but also demonstrate their commitment through verifiable actions (implementation). Cognitive dissonance theory explains the adverse customer reactions when a firm's claims and actions are misaligned.
We argue that legitimate sustainability implementation is the key and often overlooked mediating factor. Without demonstrable, consistent action, a firm's sustainability orientation may lack legitimacy, triggering cognitive dissonance in customers. This study contributes to both sustainability and brand management literature by empirically demonstrating the mediating role of implementation, emphasizing the importance of genuine action for building a sustainable brand image in the service sector, where intangibility and customer co-creation make legitimacy particularly vulnerable.
2 Literature Review
The increasing significance of sustainability in business has prompted organizations to recognize its potential to shape brand image and gain competitive advantage (Iglesias et al. 2019). This literature review synthesizes research on sustainability orientation and implementation, examining their implications for brand image within service firms. We integrate insights from legitimacy theory and cognitive dissonance theory and explicitly identify a key research gap in existing literature.
2.1 Sustainability Orientation and Implementation: A Legitimacy Perspective
Legitimacy theory provides the primary framework for understanding this relationship. Organizations seek to conform to societal norms and expectations to gain and maintain legitimacy—essentially, to be seen as “doing things the right way” (Hummel and Schlick 2016; O'Donovan 2002; Suchman 1995; Zelditch 2018). In today's world, sustainability is increasingly becoming a core societal expectation. Sustainability orientation, defined as a firm's strategic commitment to sustainability (Jagani 2019), is a crucial first step in signaling this commitment. However, a stated commitment alone is insufficient to establish legitimacy.
Without tangible actions, a firm's sustainability orientation can be perceived as empty rhetoric or, worse, greenwashing—making misleading or exaggerated claims about environmental or social performance (Akturan 2018; Delmas and Burbano 2011). Greenwashing directly undermines a firm's legitimacy because it violates societal expectations of honesty and transparency (Seele and Gatti 2017).
Therefore, sustainability implementation, the translation of strategic intent into concrete actions and practices, is critical. Effective implementation provides tangible evidence that a firm is genuinely committed, thus bolstering its legitimacy (Roxas and Coetzer 2012). This includes adopting environmentally responsible practices (e.g., waste reduction and renewable energy use) and socially responsible practices (e.g., fair labor standards and community engagement) (Markard et al. 2012; Raggio et al. 2020).
2.2 Brand Image, Cognitive Dissonance, and the Mediating Role of Implementation
Brand image represents the overall impression or perception that consumers have of a brand, resulting from the totality of their experiences, beliefs, feelings, and knowledge about it (Kotler et al. 2024). When customers perceive a firm as genuinely committed to sustainability through its actions, it enhances the brand image by establishing its legitimacy and demonstrating alignment with societal values (Kim and Hall 2015; Singh and Sharma 2022).
However, a disconnect between stated orientation and actual implementation triggers cognitive dissonance (Festinger 1957; Harmon-Jones and Mills 2019). Cognitive dissonance theory explains that individuals experience psychological discomfort when their beliefs conflict with reality or with other firmly held beliefs. Customers, who increasingly value sustainability, experience this dissonance when they perceive that a firm's actions are inconsistent with its sustainability claims—a perception of greenwashing (Ozbekler and Ozturkoglu 2020). This dissonance leads to negative brand evaluations, reduced trust, and potential damage to brand loyalty, directly harming the firm's legitimacy. Therefore, Rahman and Nguyen-Viet (2023) emphasize the need for transparent communication and a genuine commitment to sustainability.
The service sector is particularly vulnerable to this dynamic. Because services are intangible and often co-created with customers (Galvagno and Dalli 2014; Hilton et al. 2012; Vargo et al. 2008), customers have direct, often intimate, exposure to the firm's operations and practices. This heightened visibility makes it much more difficult for service firms to conceal inconsistencies between their sustainability claims and their actual actions. Therefore, genuine and consistent implementation is paramount for building a positive brand image through sustainability.
Although existing research has established a general positive link between sustainability practices and customer-related outcomes in the service sector (e.g., Chen 2015; Martinez-Conesa et al. 2017), the specific mediating role of sustainability implementation in the relationship between sustainability orientation and brand image has not been adequately explored, particularly within a framework that explicitly considers both legitimacy and cognitive dissonance. Much of the prior work has focused on either the direct effects of sustainability practices on outcomes like customer satisfaction or loyalty (Chen 2015; Martinez-Conesa et al. 2017), or on broader concepts of corporate social responsibility (CSR) and its impact on firm performance or reputation (Iglesias et al. 2019), rather than explicitly isolating the mediating mechanism of implementation between orientation and brand image. This study fills a critical gap by directly examining how implementing sustainability initiatives mediates the relationship between a service firm's stated sustainability orientation and customers' perceptions of its brand image using a robust theoretical framework that integrates legitimacy and cognitive dissonance. Therefore, this study provides an actionable understanding of how service firms can effectively leverage sustainability to build a positive brand image.
3 Theoretical Model and Hypothesis Development
3.1 Hypotheses Development
Grounded in legitimacy theory and cognitive dissonance theory, we propose a model to examine how sustainability orientation and implementation influence the brand image in service firms. This model (see Figure 1) explores the direct and indirect effects, emphasizing the crucial mediating role of implementation. Table 1 presents definitions of the constructs in the theoretical model. We posit that a stronger orientation leads to deeper implementation, which, in turn, positively impacts the brand image. However, we also consider that orientation alone may not directly affect brand image, highlighting the importance of implementation as the key linking mechanism.
| Variable name | Definition | Sources |
|---|---|---|
| Sustainability orientation | The extent of a service firm's strategic commitment to environmental, social, and economic sustainability | Jagani (2018); Jagani and Hong (2022) |
| Sustainability implementation | The extent to which a service firm translates its sustainability orientation into tangible actions | Dyllick and Hockerts (2002); Jagani (2018); Jagani and Hong (2022) |
| Brand image | Customers' overall perception of a service firm's brand | Hasanah and Aziz (2021); Martínez and De Chernatony (2004); Zameer et al. (2020) |
3.1.1 Sustainability Orientation and Sustainability Implementation
Although one might assume that a stated sustainability orientation would naturally translate into implementation, research on the “intention–behavior gap” (also attitude–behavior gap) suggests that this is not always the case (Gupta and Ogden 2006; Terlau and Hirsch 2015). Various factors, such as organizational inertia, competing priorities, or lack of resources, can hinder the translation of strategic intent into concrete action. Therefore, an explicit relationship between sustainability orientation and implementation is crucial. We hypothesize that a stronger sustainability orientation, characterized by a clear strategic commitment and top management support, will be more likely to overcome these barriers, leading to a deeper commitment to implementation, evidenced by significant resource allocation and integration into core operations. This deeper level of implementation is essential for achieving the legitimacy benefits explored in our subsequent hypotheses. Therefore, we hypothesize,
Hypothesis 1.A stronger sustainability orientation leads to a deeper commitment to sustainability implementation.
3.1.2 Sustainability Implementation and Brand Image
Legitimacy theory suggests that firms gain positive perceptions by aligning with societal expectations (Suchman 1995). In today's context, sustainability is a key expectation. Therefore, sustainability implementation, representing tangible actions, is crucial for building legitimacy. Unlike mere statements of intent (orientation), implementation provides concrete evidence of a firm's commitment. When service firms implement practices like waste reduction, energy conservation, or ethical sourcing, these actions become visible to customers, either directly or through credible reports (Markard et al. 2012; Raggio et al. 2020). This visibility signals genuine commitment, enhancing the firm's legitimacy and, thus, brand image (Kim and Hall 2015; Singh and Sharma 2022).
Furthermore, consistent implementation minimizes cognitive dissonance: A mismatch between claims and actions triggers dissonance and distrust (Ozbekler and Ozturkoglu 2020). By acting sustainably, firms avoid this, reinforcing credibility and positive perceptions. The service sector's inherent intangibility and close customer interaction heighten this dynamic (Galvagno and Dalli 2014; Hilton et al. 2012; Vargo et al. 2008). Customers directly experience the firm's practices, making genuine implementation essential. Previous service-sector research supports a direct link between sustainability practices and positive customer outcomes (Chen 2015; Martinez-Conesa et al. 2017). Therefore, we hypothesize,
Hypothesis 2.Sustainability implementation positively affects brand image.
3.1.3 Sustainability Orientation and Brand Image
Our primary theoretical lens, legitimacy theory, emphasizes the importance of demonstrable action for achieving legitimacy (Suchman 1995; Zelditch 2018). A stated sustainability orientation, while potentially serving as an initial signal of intent, is insufficient on its own to establish legitimacy in the eyes of increasingly discerning customers. Mere declarations or marketing messages about sustainability, without corresponding tangible changes in practices, can be perceived as “cheap talk” or, worse, as active attempts at greenwashing (Akturan 2018; Delmas and Burbano 2011).
This potential for perceived greenwashing directly connects to cognitive dissonance theory. When customers encounter a firm that claims to be sustainable (strong orientation) but observe practices that contradict those claims (weak implementation), they experience cognitive dissonance—a psychological discomfort arising from conflicting beliefs and information (Festinger 1957; Harmon-Jones and Mills 2019; Ozbekler and Ozturkoglu 2020). This dissonance can lead to negative evaluations of the brand, reduced trust, and skepticism toward the firm's sustainability efforts (Ozbekler and Ozturkoglu 2020).
In the service sector, the intangibility of offerings and the close interaction between customers and service providers exacerbate this issue. Customers are often directly exposed to the firm's operational practices, making inconsistencies between stated orientation and actual implementation readily apparent (Galvagno and Dalli 2014; Hilton et al. 2012; Vargo et al. 2008). This heightened visibility increases the risk that a strong orientation will be perceived negatively without corresponding strong implementation. Customers may view the orientation as a cynical marketing ploy rather than a genuine commitment. Hence, although a positive indirect effect of orientation is expected, we argue that any direct effect of sustainability orientation on brand image will be nonsignificant. The presence of strong, legitimate implementation is the necessary condition for a positive impact on brand image. Therefore, we hypothesize:
Hypothesis 3.Sustainability orientation has no significant direct effect on brand image.
3.1.4 Mediation Effect of Sustainability Implementation
Demonstrating a genuine commitment to sustainability is a crucial pathway to legitimacy, particularly for service firms where direct customer interaction provides high visibility of operational practices (Suchman 1995; Zelditch 2018). However, tangible actions—the implementation of sustainable practices—provide the credible evidence needed to support the firm's claims and build trust with stakeholders (O'Donovan 2002). Therefore, although a strong sustainability orientation sets the stage by signaling intent and directing resources, implementing that orientation directly generates positive effects on brand image. Implementation, by making sustainability visible and demonstrable, establishes the firm's legitimacy in the eyes of customers, aligning its actions with its words.
Cognitive dissonance theory further reinforces this mediating role. As discussed previously, a disconnect between claims (orientation) and actions (implementation) creates dissonance, leading to negative brand perceptions (Festinger 1957; Harmon-Jones and Mills 2019). Effective implementation prevents this dissonance by ensuring customers' experiences align with the firm's sustainability commitments. This consistency builds trust and reinforces the positive brand associations linked to sustainability. If implementation is weak or absent, the positive potential of the orientation is undermined, and the direct effect on brand image is likely to be nonsignificant or even negative (as posited in Hypothesis 3). Hence, sustainability orientation primarily influences brand image through its impact on implementation. The orientation provides the strategic direction and momentum. Still, the implementation creates visibility, builds legitimacy, avoids cognitive dissonance, and ultimately enhances brand image. This is particularly true in the service sector, where the intangibility of offerings and the close customer–provider interaction make genuine, visible implementation critical for establishing credibility (Galvagno and Dalli 2014; Hilton et al. 2012; Vargo et al. 2008). Therefore, we hypothesize,
Hypothesis 4.Sustainability implementation fully mediates the relationship between sustainability orientation and brand image.
4 Research Method
This study examines the mediating role of sustainability implementation in the relationship between sustainability orientation and brand image in service firms. We use two data sources to investigate strategy, practices, and brand image across two organizational levels. First, we analyze annual reports, sustainability reports, and websites of 31 service firms across seven industries to assess their sustainability orientation and implementation practices of firms. Second, we survey customers from the same 31 service firms to capture customer perceptions of brand image. Our data have a nested structure, with customer responses (Level 1) nested within firms (Level 2). Although multilevel modeling (MLA) is generally preferred for analyzing such data, we thoroughly investigated whether MLA was necessary in our specific case.
We initially estimated a null model (random intercept only) using the MIXED procedure in SPSS to assess the degree of clustering in brand image ratings within firms. This model included brand image as the dependent variable and a random intercept for FirmID. The intraclass correlation coefficient (ICC) from this model was extremely low (0.00, which is < 0.05), indicating no variance in brand image is attributable to differences between firms. This suggests that the vast majority of the variation in brand image is within firms, among individual customers. Furthermore, initial attempts to run the null model with an incorrectly specified FirmID variable (as a nominal variable) resulted in convergence warnings, further suggesting problems with model specification due to the lack of between-firm variance. After correcting the FirmID variable numeric and scale, the null model converged, but the ICC remained negligible.
To further investigate this, we separately examined each firm's descriptive statistics (means, standard deviations, minimums, and maximums) and stem-and-leaf plots for BrandImage. These analyses revealed a widespread pattern of zero values on BrandImage across many firms, as well as highly similar distributions of scores across firms. This visual evidence, combined with the near-zero ICC, strongly suggests that there is negligible meaningful clustering of brand image ratings within firms.
Based on this evidence, we concluded that MLA is not necessary for our data. The core assumption of MLA—that there is significant between-group variance to be modeled—is not met. Using MLA in this situation could lead to misleading results and provide no advantage over simpler, more appropriate methods. Therefore, we proceeded with ordinary least squares (OLS) regression using Andrew Hayes' Process macro (Models 4 and 4a) for SPSS to test our mediation hypotheses (Hayes 2022). Process is a well-established and widely used tool for mediation analysis. Using bootstrapping to estimate indirect effects provides robust results even with potential non-normality in the data, which is a consideration given the prevalence of zero values in our BrandImage measure. We also considered structural equation modeling (SEM). However, given our focus on direct and indirect effects (mediation) within a relatively simple model structure and sample size at the firm level, process provides a more efficient and appropriate approach.
This approach—carefully investigating the need for MLA and justifying the use of OLS based on empirical evidence—is consistent with recommendations in the MLA literature (Hox et al. 2010; Raudenbush and Bryk 2002). When the ICC is very low, the benefits of MLA are minimal, and OLS regression can provide valid and more parsimonious results.
4.1 Measures and Data Collection
Sustainability orientation was measured using triple-bottom-line (economic, social, and environmental) measures. Economic orientation was measured using six criteria, and social and environmental orientations were measured using five criteria each. These measures were adopted from Jagani (2018) and Jagani and Hong (2022). Consistent with Dyllick and Hockerts (2002) and Eccles et al. (2014), we recognize that the relationship between sustainability and economic performance is complex and not always directly positive. Therefore, we focus on implementing environmental and social practices as a distinct construct, separate from short-term financial outcomes.
Moreover, in well-established service firms, economic strength is often a given. Therefore, focusing on their environmental and social implementations is essential to differentiate their sustainability efforts. The measures of sustainability orientation and sustainability implementation are presented in Table 2a. When analyzing the companies' reports or websites, a subjective score of 1.0 was awarded if the researchers identified a criterion. If a criterion was vaguely presented, a score of 0.5 was awarded. A score of 0 was given if the researchers could not locate any mention of the criteria in the companies' reports or websites. We calculated the average of all criteria scores and then rescaled the result to a range of 0 to 10.
| Constructs and criteria |
|---|
| Sustainability Orientation |
| Economic |
| Strategic plans for revenue growth |
| Long-term measures for cost advantage |
| Clear guidelines on ROI on major initiatives |
| Contingency plans for potential disruptive failures |
| Holding executives accountable for economic performance |
| Communicating financial priorities to all employees |
| Social |
| Socially reputable service engagements |
| Adopting ethical guidelines for employee well-being |
| Fair sourcing policies for all suppliers |
| Employees' involvement in voluntary service activities |
| Support for philanthropic activities |
| Environmental |
| Plan for minimizing wastes |
| Guidelines for environmentally responsible practices |
| Communicates green sourcing policies for all suppliers |
| Training for responsible stewardship of raw materials |
| Supports for environmental goals |
| Sustainability Implementation |
| Social |
| Competitive compensation |
| Long-term employment |
| Philanthropic work |
| Worker safety |
| Environmental |
| Resource stewardship |
| Renewable energy usage |
| Minimizing waste |
| Recycling program |
We assessed brand image using eight items from Zameer et al. (2020), Hasanah and Aziz (2021), and Martínez and De Chernatony (2004). The measurement items from the brand image are listed in Table 2b. Each measurement item was measured on a Likert scale of 1–7. Data were collected via Amazon MTurk from customers of 31 companies, yielding 6891 completed responses (approximately 225 per company). Exploratory factor analysis (SPSS, maximum likelihood method) confirmed a single-factor structure for the scale. We calculated the arithmetic sum of the eight items for consistency with the independent variable and rescaled the result to a 0–10 range. Respondent profiles are shown in Table 3a (by company) and Table 3b (demographics).
| Please answer the following questions regarding the “Brand Image” of company X. (strongly disagree = 1 to strongly agree = 7) | Factor Loadings | References |
|---|---|---|
| Company X is regarded as the best benchmark of sustainability commitments | 0.800 | Zameer et al. (2020) |
| Company X cares about sustainability reputation | 0.874 | Zameer et al. (2020) |
| Company X addresses sustainability concerns | 0.895 | Zameer et al. (2020) |
| Company X is trustworthy about sustainability promises | 0.912 | Zameer et al. (2020) |
| Company X's competence provides me a good feeling | 0.879 | Hasanah and Aziz (2021) |
| Company X increases its corporate reputation through its sustainability practices | 0.889 | Hasanah and Aziz (2021) |
| Company X is better than its competitors | 0.853 | Hasanah and Aziz (2021) |
| Company X has distinctive qualities | 0.712 | Martínez and De Chernatony (2004) |
| Industry | # of companies | # of responses | % |
|---|---|---|---|
| Entertainment | 4 | 874 | 12.7 |
| Healthcare | 4 | 874 | 12.7 |
| Hotels | 5 | 1149 | 16.7 |
| Restaurants | 4 | 880 | 12.8 |
| Retail | 5 | 1146 | 16.6 |
| Shipping | 4 | 868 | 12.6 |
| Vehicle rental and transportation | 5 | 1100 | 16.0 |
| Total | 31 | 6891 | 100.0 |
| Region | # of responses | % | Age | # of responses | % | Household income | # of responses | % |
|---|---|---|---|---|---|---|---|---|
| Midwest | 1444 | 21.0 | 18–29 years | 1302 | 18.9 | < $25 k | 651 | 9.4 |
| Northeast | 1087 | 15.8 | 30–39 years | 2932 | 42.5 | $25 k to $50 k | 2257 | 32.8 |
| South | 2606 | 37.8 | 40–49 years | 1595 | 23.1 | $50 k to $100 k | 2868 | 41.6 |
| West | 1753 | 25.4 | 50–59 years | 737 | 10.7 | $100 k to $200 k | 954 | 13.8 |
| Undisclosed | 1 | 0.0 | 60+ years | 325 | 4.7 | > $200 k | 161 | 2.3 |
| Total | 6891 | 100.0 | Total | 6891 | 100.0 | Total | 6891 | 100.0 |
4.2 Validity and Reliability Analysis
To assess the reliability and validity of the Brand Image scale, we conducted a confirmatory factor analysis using maximum likelihood estimation, followed by calculations of Cronbach's alpha, composite reliability (CR), and average variance extracted (AVE). As shown in Table 2b, all eight items loaded strongly onto a single factor, with standardized factor loadings ranging from 0.712 to 0.912 (Malhotra 2018). This supports the unidimensionality of the scale. Internal consistency reliability was excellent, with a Cronbach's alpha of 0.954 and a CR of 0.955, both well above the recommended threshold of 0.7 (Nunnally and Bernstein 1994). Convergent validity was also strong, with an AVE of 0.729, exceeding the 0.5 threshold and indicating that the Brand Image construct explains a substantial proportion of the variance in its items (Fornell and Larcker 1981). These results, taken together, provide strong evidence for the reliability and convergent validity of the Brand Image scale.
Due to the limited sample size at the firm level (N = 31), we were unable to conduct the same statistical assessments of reliability and validity (exploratory factor analysis, Cronbach's alpha, CR, and AVE) for the sustainability orientation and sustainability implementation measures. Standard factor analysis techniques, and to a lesser extent, internal consistency reliability measures, are susceptible to sample size. With only 31 observations, the correlation matrix underlying these analyses would be unstable, and any resulting factor structure or reliability estimates would be unreliable and unlikely to generalize (MacCallum et al. 1999; Osborne and Costello 2004). Attempting to force these analyses with such a small sample would likely produce spurious results and could be misleading. Therefore, we rely on the content validity of Sustainability Orientation and Sustainability Implementation measures, ensuring that the selected criteria logically and comprehensively represent sustainability orientation and implementation constructs, as defined in our theoretical framework and supported by prior research (Dyllick and Hockerts 2002; Jagani 2018; Jagani and Hong 2022). In Section 6, we acknowledge this limitation of the firm-level measures.
4.3 Hypothesis Testing
Subsequently, we had one aggregate measure from a scale of 0–10 for each of the three constructs (sustainability orientation, sustainability implementation, and brand image). We used ordinary least squares in SPSS with Andrew Hayes Process Model 4 (Hayes 2022) to analyze our research model and test our hypotheses.
5 Results
The results of hypothesis testing are presented in Table 4. The results (Table 4, Panel A) reveal a significant positive relationship between sustainability orientation and implementation (b = 0.8063, p < 0.001). The relationship between sustainability implementation and brand image (b = 0.1997, p < 0.001) is also positive. Therefore, Hypotheses 1 and 2 are strongly supported. The direct effect of sustainability orientation on the brand image was negative (b = −0.1241, p < 0.001). This not only rejects Hypothesis 3 but suggests a complex interaction between sustainability and brand image. There are several potential reasons why a negative relationship might exist between sustainability orientation and brand image in service firms. They are identified and explained in Section 6. Hypothesis 4 states that sustainability implementation mediates the relationship between sustainability orientation and brand image. Indirect effects in Table 4, Panel C, show strong support for Hypothesis 4 (b = 0.161, p < 0.001). The total effect of sustainability orientation on brand image, without accounting for the mediating role of Sustainability Implementation, was statistically nonsignificant (b = 0.0369, p = 0.0642). This suggests that, overall, a service firm's strategic commitment toward sustainability (its orientation) does not, on its own, have a significant impact—either positive or negative—on how customers perceive its brand image (see Table 4, Panel B). These findings are also discussed in Section 6.
| Panel A: Hayes Model 4 results | |||||||
|---|---|---|---|---|---|---|---|
| Independent variable | Dependent variable | b | SE | t | p | LLCI | ULCI |
| Sustainability Orientation | Sustainability Implementation | 0.8063 | 0.0129 | 62.38 | 0.0000 | 0.7809 | 0.8316 |
| Model fit: R = 0.6008, R2 = 0.361, MSE = 1.721, F(1, 6889) = 3891.86, p = 0.0000 | |||||||
| Sustainability Orientation | Brand Image | −0.1241 | 0.0247 | −5.01 | 0.0000 | −0.1726 | −0.0755 |
| Sustainability Implementation | 0.1997 | 0.0184 | 10.83 | 0.0000 | 0.1635 | 0.2358 | |
| Model fit: R = 0.1312, R2 = 0.0172, MSE = 4.0322, F(2, 6888) = 60.35, p = 0.0000 | |||||||
| Panel B: Total-effects model | |||||||
|---|---|---|---|---|---|---|---|
| Independent variable | Dependent variable | b | SE | t | p | LLCI | ULCI |
| Sustainability Orientation | Brand Image | 0.0369 | 0.0199 | 1.85 | 0.0642 | −0.0022 | 0.0760 |
| Model fit: R = 0.6008, R2 = 0.361, MSE = 1.721, F(1, 6889) = 3891.86, p = 0.0000 | |||||||
| Panel C: Direct and indirect effects of sustainability orientation on brand image | ||||
|---|---|---|---|---|
| Division | Effect | SE/BootSE | 95% LLCI | 95% ULCI |
| Direct effect | −0.1241 | 0.0247 | −0.1726 | −0.0755 |
| Indirect effect via sustainability implementation | 0.1610 | 0.0162 | 0.1296 | 0.1929 |
| Completely standardized indirect effect | 0.0972 | 0.0095 | 0.0787 | 0.1159 |
- Notes: Unstandardized coefficients (b) reported. Bootstrap CI based on 50,000 samples. CI is 95%. Direct effect statistics: t = −5.0131, p < 0.00. Bootstrap CI based on 50,000 samples. CI is 95%.
Sustainability implementation consists of social implementation and environmental implementation practices. To check the mediation effects of these two practices, additional analysis with parallel mediators was conducted using Hayes Process Model 4a (Hayes 2022). In the new model, the independent variable is sustainability orientation, the dependent variable is brand image, and the two mediator variables are social and environmental implementation. The analysis of parallel mediation revealed an interesting pattern of relationships. Although Sustainability Orientation had a significant direct effect on both social implementation (b = 0.5403, p < 0.001) and Environmental Implementation (b = 1.072, p < 0.001) (Table 5, Panel A), indicating that a stronger strategic commitment to sustainability leads to greater adoption of both social and environmental practices, the direct effect of sustainability orientation on brand image (Table 5, Panel A) remained statistically nonsignificant (b = 0.0369, p = 0.0199). Moreover, each one of the practices, namely, Environmental Implementation (b = 0.0997, p < 0.001) and Social Implementation (b = 0.0999, p < 0.001), showed significant positive effect on brand image.
| Panel A: Hayes Model 4a results | |||||||
|---|---|---|---|---|---|---|---|
| Independent variable | Dependent variable | b | se | t | p | LLCI | ULCI |
| Sustainability Orientation | Social Implementation | 0.5403 | 0.0175 | 30.82 | 0.0000 | 0.5059 | 0.5747 |
| Model fit: R = 0.3481, R2 = 0.1212, MSE = 3.1667, F(1, 6889) = 949.87, p = 0.0000 | |||||||
| Sustainability Orientation | Environmental Implementation | 1.0722 | 0.0132 | 81.16 | 0.0000 | 1.0463 | 1.0981 |
| Model fit: R = 0.6991, R2 = 0.4888, MSE = 1.7984, F(1, 6889) = 6586.6733, p = 0.0000 | |||||||
| Sustainability Orientation | Brand Image | −0.1240 | 0.0277 | −4.48 | 0.0000 | −0.1782 | −0.0697 |
| Social Implementation | 0.0999 | 0.0148 | 6.73 | 0.0000 | 0.0708 | 0.1290 | |
| Environmental Implementation | 0.0997 | 0.0197 | 5.06 | 0.0000 | 0.0611 | 0.1383 | |
| Model fit: R = 0.1312, R2 = 0.0172, MSE = 4.0328, F(3, 6887) = 40.2295, p = 0.0000 | |||||||
| Panel B: Total-effects model | |||||||
|---|---|---|---|---|---|---|---|
| Independent variable | Dependent variable | b | SE | t | p | LLCI | ULCI |
| Sustainability Orientation | Brand Image | 0.0369 | 0.0199 | 1.85 | 0.0642 | −0.0022 | 0.0760 |
| Model fit: R = 0.6008, R2 = 0.361, MSE = 1.721, F(1, 6889) = 3891.86, p = 0.0000 | |||||||
| Panel C: Direct and indirect effects of sustainability orientation on brand image | ||||
|---|---|---|---|---|
| Division | Effect | SE/BootSE | 95% LLCI | 95% ULCI |
| Direct effect | −0.1240 | 0.0277 | −0.1782 | −0.0697 |
| Total indirect effect | 0.1609 | 0.0206 | 0.1206 | 0.2016 |
| Through social implementation | 0.0540 | 0.0082 | 0.0380 | 0.0702 |
| Through environmental implementation | 0.1069 | 0.0216 | 0.0645 | 0.1492 |
| Completely standardized total | 0.0971 | 0.0123 | 0.0731 | 0.1212 |
| Through social implementation | 0.0326 | 0.0049 | 0.0231 | 0.0422 |
| Through environmental implementation | 0.0645 | 0.0130 | 0.0390 | 0.0900 |
- Note: Unstandardized coefficients (b) reported. Bootstrap CI based on 50,000 samples. CI is 95%. Unstandardized coefficients (b) reported. Bootstrap CI based on 50,000 samples. CI is 95%. Direct effect statistics: t = −4.4793, p < 0.001. Bootstrap CI based on 50,000 samples. CI is 95%.
Examination of the indirect effects (see Table 5, Panel C) revealed that both Social Implementation and Environmental Implementation significantly mediated the relationship between Sustainability Orientation and Brand Image. The indirect effect through Environmental Implementation (b = 0.107, p < 0.001) was found to be stronger than Social Implementation (b = 0.054, p < 0.001). These findings suggest that though a firm's sustainability orientation alone may not directly enhance its brand image, the implementation of both social and, especially, environmental practices can serve as key mechanisms through which that strategic intent translates into positive customer perceptions. This highlights the importance of tangible actions in shaping the brand image and provides avenues for targeted sustainability investments. The results also convey that environmental implementation is a stronger mediator than social implementation. Section 6 also discusses why environmental implementation is a stronger mediator than social implementation in the relationship between sustainability orientation and brand image.
6 Discussion
This study investigated the complex relationship between a service firm's strategic emphasis on sustainability (sustainability orientation), its actions to implement those strategies (sustainability implementation), and the resulting impact on customer perceptions of brand image. Using a large dataset from 6891 customer responses from 31 service companies in the United States, our findings offer several key insights.
Our central finding is that sustainability orientation alone is not sufficient to enhance brand image. The direct effect of sustainability orientation on the brand image was negative and statistically significant, at p value of less than 0.001. This seemingly counterintuitive result strongly supports the importance of legitimacy theory and highlights the pervasive risk of perceived greenwashing. Simply claiming a commitment to sustainability, without demonstrably backing it up with tangible action, can damage brand image. This is consistent with existing literature highlighting how consumers react negatively to corporate communications perceived as misleading, exaggerated, or inauthentic (Akturan 2018; Delmas and Burbano 2011; Lyon and Montgomery 2015). These results suggest consumers are not willing to believe sustainability orientation on its own. Moreover, the study results show the significance of implementation and practices in mediating this process. When firms communicate a sustainability orientation without demonstrably backing it up with actions, consumers may perceive the firm as insincere or even actively engaging in deceptive practices (Nyilasy et al. 2014).
Several factors can explain this negative direct relationship. First, perceived greenwashing is a significant concern. Consumers have become increasingly skeptical of corporate sustainability claims, particularly in the service sector, where the intangible nature of offerings makes it more challenging to verify those claims (de Freitas Netto et al. 2020). Second, the increased scrutiny of sustainability claims plays a part. With growing media coverage of environmental and social issues, consumers are more informed and more likely to question corporate actions (CPG 2018). Third, there may be conflicting priorities within service firms. Sustainability initiatives can sometimes clash with operational goals like speed, convenience, and cost (e.g., using eco-friendly cleaning products that take longer to apply), leading to inconsistent customer experiences (Field et al. 2018). Finally, the intangible nature of services amplifies the complexity of sustainability in the service sector. Unlike product-based companies, where sustainability can be demonstrated through tangible features like recycled materials, service firms must often rely on less visible and more difficult-to-measure actions (Rahman and Nguyen-Viet 2023).
However, the study also revealed that sustainability implementation plays a powerful mediating role. When sustainability orientation is effectively translated into tangible practices, it does positively influence brand image. This finding aligns with legitimacy theory, which emphasizes the importance of conforming to societal norms and expectations to gain and maintain stakeholder approval (Hummel and Schlick 2016; O'Donovan 2002; Suchman 1995). By demonstrating their commitment through concrete actions, service firms establish their legitimacy in the eyes of consumers. This, in turn, mitigates the potential for cognitive dissonance, which arises when customers perceive a mismatch between a firm's stated values and its actual behavior (Festinger 1957; Harmon-Jones and Mills 2019).
Furthermore, our analysis revealed that environmental implementation has a stronger mediating effect than social implementation in the relationship between sustainability orientation and brand image. Several factors could contribute to this finding. Increased visibility and tangibility likely play a role. Environmental actions like waste reduction programs or the use of renewable energy are often more readily apparent to customers than social initiatives, which may be less directly observable (Leonidou and Skarmeas 2015). Heightened public awareness of environmental issues, driven by media coverage and global events, may also lead consumers to prioritize environmental performance (Peattie 2010). Additionally, in the US context, social initiatives are often subject to more stringent regulations, leaving less room for companies to differentiate themselves through voluntary social action. In contrast, environmental initiatives may offer more flexibility and opportunity for demonstrating leadership.
These results provide a compelling argument for service firms to move beyond sustainability rhetoric and embrace genuine, demonstrable action. Although a strategic commitment is a valuable starting point, the effective implementation, particularly of visible and impactful environmental practices, builds brand legitimacy, reduces consumer skepticism, and ultimately enhances brand image.
7 Implications, Limitations, and Conclusion
7.1 Theoretical Implications
This research makes several significant contributions to the theoretical understanding of sustainability, brand image, and the crucial role of implementation in the service sector. By integrating legitimacy theory and cognitive dissonance theory, we provide a more novel explanation for why a stated commitment to sustainability (orientation) does not automatically translate into a positive brand image and how genuine implementation acts as a critical mediating mechanism. Therefore, this research contributes to theory by (1) highlighting the critical mediating role of implementation in translating sustainability orientation into brand image, (2) integrating legitimacy and cognitive dissonance theories to explain the mechanisms underlying this relationship, (3) shifting the focus from a consumer-level attitude-behavior gap to a firm-level orientation–implementation gap, and (4) providing empirical evidence from the under-researched service sector context.
Prior research applying legitimacy theory to sustainability has often focused on the direct relationship between CSR activities and firm outcomes. This study extends legitimacy theory by demonstrating that in the service context, where intangibility and customer co-creation are paramount, implementation is the key to achieving legitimacy in the eyes of consumers. A stated sustainability orientation, without corresponding action, fails to establish legitimacy and can even damage brand image due to perceived greenwashing. This finding contrasts with earlier studies that might have assumed a more direct positive link between stated intentions and stakeholder perceptions (Suchman 1995), offering new research direction.
The incorporation of cognitive dissonance theory provides a powerful explanation for the negative consequences of a disconnect between sustainability orientation and implementation. When customers perceive greenwashing, they experience psychological discomfort (Festinger 1957; Harmon-Jones and Mills 2019), motivating them to resolve the inconsistency, often by downgrading their perception of the brand. This integration of cognitive dissonance with legitimacy theory offers a more complete picture of the consumer response.
Furthermore, when previous research has often framed the sustainability challenge within the context of an attitude–behavior gap at the consumer level (Berger 2019; Gupta and Ogden 2006), this study shifts the focus to the firm level, demonstrating a firm-level “orientation–implementation gap” that has significant consequences for brand image. Furthermore, few studies have used Hayes' Process Macro analysis (Model 4) to understand organizational goals, transformational leadership, participation and communication, education and training, and customer's perceptions of a brand, making this a contribution for researchers. The study supports earlier studies (Kim and Hall 2015; Martinez-Conesa et al. 2017; Singh and Sharma 2022) confirming that incongruence between actions and strategic intent can result in credibility issues among customers, negatively affecting brand image perception.
7.2 Managerial Implications
The findings of this study offer several actionable recommendations for managers, policymakers, and researchers. For service firm managers, the key takeaway is to prioritize implementation. A stated commitment to sustainability is insufficient; managers must invest in tangible, visible, and verifiable sustainability practices, particularly those related to environmental stewardship (Porter and Kramer 2006). Given the stronger mediating effect of environmental implementation, prioritizing initiatives that directly address environmental concerns (e.g., waste reduction, energy efficiency, and sustainable sourcing) is recommended. This does not diminish the importance of social initiatives but suggests that, in the current context, environmental actions may significantly impact brand image.
Transparent communication is crucial. Managers should avoid vague claims and instead clearly communicate specific actions, measurable results, and the impact of those actions (Delmas and Burbano 2011). Engaging customers in the co-creation of sustainability initiatives can foster a sense of shared responsibility and enhance perceptions of authenticity (Prahalad and Ramaswamy 2004). Continuous monitoring and measurement of both the environmental/social impact and the brand image impact of initiatives are essential for ongoing improvement using established frameworks like the Global Reporting Initiative (GRI) standards.
For policymakers, the study suggests strengthening greenwashing regulations and enforcing stricter rules to deter misleading claims (Lyon and Montgomery 2015). Incentivizing tangible implementation through tax breaks or subsidies, particularly in the service sector, could encourage greater corporate action. Promoting or mandating standardized sustainability reporting would also enhance transparency and allow for better consumer comparisons.
Finally, for researchers, this study opens several avenues for future inquiry. Further investigation of the orientation–implementation gap through qualitative research could reveal valuable insights into the processes at play. Replicating the study in different cultural contexts would explore the generalizability of the findings. Longitudinal studies could track the long-term effects of sustainability initiatives. Additionally, research could explore the role of specific communication strategies in shaping consumer perceptions of authenticity and legitimacy. Businesses, policymakers, and researchers can collectively contribute to a more sustainable and trustworthy service sector by pursuing these actions.
7.3 Limitations and Future Research Directions
Although this study provides valuable insights into the relationship between sustainability orientation, implementation, and brand image in the service sector, it is important to acknowledge several limitations. First, the firm-level measures of Sustainability Orientation and Sustainability Implementation were limited by the small sample size (N = 31). Due to this constraint, we were unable to conduct standard statistical assessments of reliability and validity (exploratory factor analysis, Cronbach's alpha, CR, AVE) for these constructs. Although we relied on the content validity of these measures, as established in prior research (Dyllick and Hockerts 2002; Jagani 2018; Jagani and Hong 2022), future research should strive to replicate these findings with a larger sample of firms, allowing for a more robust assessment of the measurement properties.
Second, the study's sample is limited to service firms in the United States. The relative importance of environmental and social implementation and the overall impact of sustainability on the brand image may vary across different cultural contexts and regulatory environments. Future research should replicate this study in other countries and regions to assess the generalizability of the findings. Cross-cultural comparisons could reveal valuable insights into how cultural values and norms shape consumer perceptions of sustainability.
Third, the study relies on self-reported measures about the brand image collected via Amazon MTurk from the customer's point of view. Although this approach allowed us to gather a large and diverse sample of consumer perceptions, there is always a potential for response biases (e.g., social desirability bias) that would limit the accuracy. Future research should employ a multimethod approach, triangulating customer perception data with more objectively collected data and different sources.
Finally, this study focuses primarily on the customer perspective. Future research could explore the perspectives of other stakeholders, such as employees, investors, and regulators, to gain a more holistic understanding of the impact of sustainability initiatives. Examining the internal organizational dynamics that facilitate or hinder the effective implementation of sustainability strategies would also be a valuable area for future investigation. Investigating potential conflicts between different stakeholders' expectations around social and environmental issues could also be fruitful.
8 Conclusion
This research provides compelling evidence that, in the service sector, a strategic commitment to sustainability (sustainability orientation) is not sufficient on its own to enhance brand image. While a necessary starting point, a stated orientation can even negatively impact consumer perceptions if not backed by genuine and visible action. Our findings demonstrate that sustainability implementation, particularly environmental implementation, serves as the critical mediating mechanism. Through tangible practices—actions that customers can see and believe—service firms build legitimacy, mitigate greenwashing skepticism, and ultimately build a stronger brand image.
This study contributes significantly to both theory and practice. As consumers increasingly demand corporate responsibility and as the service sector continues to grow in importance, understanding the nuanced relationship between sustainability and brand image is paramount. This research emphasizes that genuine, demonstrable action, not just aspirational rhetoric, is the key to building a truly sustainable and successful brand in the 21st century.
