When Sustainability is Not a Liability: The Halo Effect of Marketplace Morality

Prior research has suggested that consumers believe that products made using sustainable, environmentally friendly technologies are likely to underperform those made using traditional methods. We question the robustness of this assumption and identify scenarios in which sustainability is likely to have the opposite effect, strengthening rather than weakening consumers' product performance beliefs. Specifically, we argue that sustainability is likely to produce a halo effect able to attenuate and even override the negative impact of compensatory inferences underlying consumers' belief that sustainability comes at the expense of performance. We propose that this halo effect stems from consumers' view of the company as a moral agent engaged in a prosocial behavior. In this context, we identify two factors that are likely to influence the strength of the halo effect: the degree to which consumers view the company as a moral agent whose actions aim to benefit society and the degree to which moral concerns are prominent in consumers' minds. Following this line of reasoning, we identify two ways in which managers can increase the perceived performance of sustainable products: by associating sustainable benefits with the company rather than with its products and by emphasizing the societal benefits of sustainability. We test these predictions in a series of four empirical studies that show convergent evidence for our theorizing. Our findings have important public policy implications, documenting actionable strategies that managers can use to mitigate the potential negative impact of sustainability and strengthen the perceived performance of sustainable products.