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Article

The Effects of Water Footprint Management on Companies’ Reputations and Legitimacy under the Influence of Corporate Social Responsibility and Government Support: Contributions to the Chilean Agri-Food Industry

by
Marcelo Werneck Barbosa
* and
María de los Ángeles Raimann Pumpín
Department of Agricultural Economics, Pontificia Universidad Católica de Chile, Santiago 7820436, Chile
*
Author to whom correspondence should be addressed.
Water 2024, 16(19), 2746; https://doi.org/10.3390/w16192746
Submission received: 25 August 2024 / Revised: 18 September 2024 / Accepted: 26 September 2024 / Published: 27 September 2024
(This article belongs to the Special Issue Water Use/Footprint for Agricultural Products during Production, Trade and Consumption Processes, Volume II)
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Abstract

:
Water management initiatives are implemented under a concept called water footprint management (WF management). Different initiatives and pressures might have a positive influence on the implementation of WF management, such as the adoption of corporate social responsibility (CSR) practices, government support and coercive pressures. This study assessed the effects that CSR practices, government support, and coercive pressures have on the implementation of WF management initiatives. This study also evaluated the effects that the adoption of WF management has on firms’ reputations and legitimacy. A quantitative methodology was employed, in which a survey of 113 Chilean firms in the agri-food industry was carried out. Data were analyzed with the Partial Least Squares–Structural Equation Modelling method, which determines causal relationships between constructs. We found that CSR and government support exert a direct, positive, and significant influence on WF management. Also, WF management was found to have a direct, positive, and significant effect on firms’ reputations and legitimacy. CSR has a greater influence on WF management compared to government support, which shows that CSR initiatives are of paramount importance, surpassing the support provided by governments for the implementation of WF management practices. Considerable indirect effects of CSR on reputation and legitimacy were also observed. This study’s findings imply a crucial role for governments in prioritizing coercive pressures. In addition, it is imperative that agri-food firms foster their CSR programs to improve the implementation of WF practices, as the urgency of the situation cannot be overstated.

1. Introduction

The preservation of water, reduction of its withdrawal, and improvement of its quality are related to the sixth United Nations’ Sustainable Development Goal (SDG) [1]. The agriculture industry is one of the leading consumers of water resources [2] and is responsible for its degradation and pollution [3,4], which makes the management of water resources in agriculture a relevant research topic [5]. Water use assessment is supported by the concept of water footprint (WF), which is defined as the total volume of freshwater resources used, directly or indirectly, to produce goods and services, including water directly used in production processes as well as water indirectly consumed and polluted in production [6]. WF management supports mitigating the WF of a product across its entire supply chain [7,8,9], and it is necessary for managing agricultural freshwater resources and achieving environmental and economic sustainability in the agri-food industry [10,11].
Different initiatives and pressures might have a positive influence on the implementation of WF management. The first one is the adoption of corporate social responsibility (CSR), which comprises a long-term vision for organizations’ development and sustainable performance. It is a set of elements aimed at balancing the economic, environmental, legal, ethical, and social responsibilities a company assumes with its stakeholders [12]. Besides pursuing economic goals, CSR considers that organizations should operate within legal and ethical frameworks, standards, and requirements [13]. The second plausible positive influence on WF management adoption is government support, which can be provided in different forms, such as grants, tax incentives, laboratories, or direct public investment [14]. It positively affects firms’ abilities to research, innovate, adopt different technologies, and collaborate with other partners [14,15], as well as the development of environmentally and socially responsible initiatives. On the other hand, governmental and public institutions exert coercive pressures that force firms to implement sustainable practices and extend these requirements to their supply-chain partners. However, to the best of our knowledge, the possible effects that CSR practices, government support, and coercive pressures could have on WF management adoption have not been investigated so far.
Legitimacy can be defined as “the perceived appropriateness of an organization to a social system in terms of rules, values, norms, and definition [16]”. A firm’s reputation is a related concept, but it refers to comparisons with other organizations [16]. Several studies have focused on the environmental and social outcomes and benefits of WF management. However, to the best of our knowledge, no previous research has analyzed the effects of WF management adoption on a company’s legitimacy and reputation. This is a significant research gap, since improving reputation and legitimacy could be seen as an additional stimulus to implement WF management initiatives.
Based on the previously presented research gaps, this study aimed to assess the effects that CSR practices, government support, and coercive pressures have on the implementation of WF management initiatives. This study also aimed to evaluate the effects the adoption of WF management has on firms’ reputations and legitimacy. To that end, this quantitative study employed a survey of agri-food firms in Chile. The survey was designed to gather data on the companies’ CSR practices, government support, adoption of WF management, and their reputations and legitimacy. Data were analyzed using the Partial Least Squares–Structural Equation Modeling (PLS-SEM) method, a statistical technique that allows for the testing of complex relationships among variables.
Chile has been experiencing a severe drought for the last decade. This drought mainly affects the center of the country, with adverse effects on water availability, vegetation, and forest fires, which have led to social and economic impacts [17]. Moreover, climate projections estimate that droughts will be more frequent and intense in several regions of the world [18,19,20,21]. This scenario makes the country a suitable place to carry out this study.
The relationship between WF management initiatives and organizations’ legitimacy and reputations can be comprehended under the lens of the Natural Resource-Based View (NRBV), an extension of the Resource-Based View (RBV) theory, which states that firms can achieve competitive advantages with the development of strategic capabilities related to their environmental, economic, and social performance [22].
This study presents some relevant contributions to scholars, managers, and policymakers that will be further detailed. First, this study assesses the effects of CSR and government support on WF management and the impacts of WF management on agri-food firms’ reputations and legitimacy. Second, this study shows that firms require internal and external motivations to implement WF management programs. Third, this study shows that improvements in firms’ reputations and legitimacy due to enhancements in WF management programs may stimulate firms to manage their water resources better. These potential benefits offer some hope for the agri-food industry in the face of the water crisis.

2. Theoretical Background and Research Hypotheses

The WF indicator measures the direct and indirect (supply-chain) consumption of freshwater required to produce a product and execute business operations [6]. Green WF refers to rainwater consumption, blue WF includes the consumption of fresh surface water or groundwater, and grey WF measures the volume of water required to assimilate a critical pollutant [23,24]. Based on the definition of WF and previous studies [7,8], WF management has been defined as “the use of policies and actions at the strategic, tactical, and operational levels that support mitigating the WF of a product across its entire supply chain”. It is essential for promoting environmental sustainability in the agri-food industry [10].
The implementation of WF management initiatives should contribute to overcoming challenges such as the pollution of freshwater resources, the reduction of hazardous chemical substances, and the miscommunication of CSR agendas [25]. In the agriculture industry, some measures can be taken to reduce these effects and improve WF management, such as changing firms’ operations to regions with more water availability, cultivating crops that do not require much water, and using advanced technologies such as precision irrigation systems and water-efficient farming practices [26]. Thus, the adoption of WF management strategies can lead to several positive outcomes like improving corporate image, reducing costs, increasing revenues and efficiency, promoting product differentiation, and achieving competitive advantages [27].
Barbosa and Cansino [28] performed a systematic literature review to identify potential WF management practices and conducted content validity procedures to determine measurement items for a WF management construct. They identified seven WF management practices that are related to (1) the adoption of national and global standards for WF accounting, traceability, and assessment; (2) measurement of the WF throughout a supply chain; (3) mitigation of the risk of contamination; (4) water auditing and control systems; (5) the use of water-efficient technologies; (6) reusing and recycling wastewater; and (7) the identification of local risks to the water supply.
CSR can be seen as a set of companies’ policies and practices that go beyond profit-seeking or legal requirements [29]. It has been considered fundamental to companies meeting environmental and societal demands and improving their competitiveness [30]. Sarkar and Searcy [31] defined CSR as the way “firms assume their core economic responsibility and voluntarily go beyond legal minimums so that they are ethical in all their activities and that they take into account the impact of their actions on stakeholders in society, while simultaneously contributing to global sustainability.” The importance of CSR has positioned the area at a strategic level in many companies, where CSR topics are aligned with the organization’s objectives and actions [32]. CSR should include the adoption of policies that foster sustainable water use, since water stress has been considered a potential constraint on economic growth and a threat to environmental preservation and social justice [33]. Water disclosure and management initiatives in the context of CSR programs have been adopted by firms due to increasing socio-environmental concerns [26]. Previous research has focused on analyzing the effects that CSR implementation has on firms’ performance and the different dimensions of sustainability [34,35,36,37]. However, research on the effects of CSR initiatives on WF management is lacking. This fact grounds our first hypothesis:
H1: 
Corporate social responsibility has a positive effect on water footprint management.
Government support is “the extent to which a particular firm gains assistance such as favorable policies, incentives, and programs from the government and its administrative bureaus” [38,39]. It is implemented through several mechanisms like financial assistance (subsidies or relief from obligatory payments), technical assistance (digital and technological resources), and policy (regulations and tax exemptions) [9,40]. Firms can gain government support when they align their strategies with the government’s expectations and regulations [39]. Thus, governments play an essential role in supporting companies’ sustainable innovations. Governments support sustainable development by defining public policies and providing knowledge and financial resources for the adoption of sustainable practices in firms [41].
International markets have been more strict with environmental regulations and requirements [42], which include those related to water management. Since governments generally support firms to develop the required capabilities to fulfill the demands of national and international markets, the influence of government support on water management issues is a research gap that must be explored [9]. The role of government support has been analyzed in previous research focused on environmental issues [43,44], but not with the lens of WF management, which grounds our second hypothesis.
H2: 
Government support has a positive effect on water footprint management.
The concept of legitimacy, often understood as compliance with legal requirements, plays a significant role in shaping organizational behavior [45]. Legitimate organizations are those that usually act in a way that is compliant with formal, normative, cultural, or cognitive rules demanded by different stakeholders [46]. Legitimacy is a valuable strategic resource for enterprises and a sign of a company’s success [47]. The behavior of legitimate organizations is closely aligned with the general beliefs and values of society. An organization acquires legitimacy when it satisfies its own needs and expectations and the ones of external audiences [46]. Stakeholders understand that legitimate companies create value [48]. To manage their legitimacy, organizations must meet social expectations and stakeholders’ requirements, acting ethically and responsibly with a positive impact on society [49]. To achieve legitimacy, firms need to generate more value than the human, economic, and environmental resources it consumes. In this context, the value generated by agri-food firms must be higher than the tremendous amount of water resources they consume. Thus, organizational legitimacy assumes that companies act responsibly, meeting stakeholders’ social, environmental, and economic expectations [50].
Legitimacy is a crucial factor in achieving competitive differentiation. It provides companies with credibility, trust, support from stakeholders, and access to required resources [50]. A socially responsible firm is legitimate in the eyes of the public. Results of previous studies demonstrate that the implementation of environmental policies has had positive effects on companies’ legitimacy [49]. On the other hand, not addressing stakeholders’ pressures towards sustainability might turn into a threat to companies’ legitimacy [51]. However, organizational legitimacy is a multilevel [45] and complex concept that requires further investigation, especially in internationally oriented industries, which require different capabilities to develop legitimacy [47]. Gaining legitimacy is particularly important in the context of WF management, since drought effects have been only recently perceived by most companies and consumers. Moreover, the effects that the adoption of WF management initiatives has on firms’ legitimacy have not been studied so far. In this context, the third hypothesis of this study is stated.
H3: 
Water footprint management has a positive effect on an organization’s legitimacy.
Firm reputation is a concept related to but different from organization legitimacy [52]. While legitimacy emphasizes the social acceptance resulting from compliance with social norms and expectations, reputation is related to comparisons with other organizations [53]. Reputation is related to a firm’s relationship to internal and external stakeholders. It is an intangible asset that indicates value derived from a company’s past interactions with stakeholders [54] based on the perceptions and opinions of these stakeholders [55]. Firms have been aligning their corporate social initiatives due to an increasing concern about their reputations and the effects of their social and environmental responsibilities [56]. A firm’s reputation can be enhanced through financial soundness, quality products, superior management, socially responsible behavior [56], and participation in CSR practices [54].
Reputation and sustainability are related. Pham and Tran [57] observed a positive effect of CSR disclosure on firms’ reputations and financial performance. Carter et al. [58] found that reputation affects customers’ preferences only for sustainable products and not for regular products. Truong et al. [59] found that symbolic environmental actions negatively affect reputation, whereas substantive actions improve a firm’s reputation. Their findings suggest that firms should refrain from adopting opportunistic behavior in terms of publicizing information on their CSR initiatives. Firms’ inability to manage water resources could have similar adverse effects on reputation, and, consequently, firms that adopt WF management practices could achieve a better reputation. Despite the relevant positive consequences of a good reputation, the effects of the adoption of WF management practices on reputation have not been investigated until now. So, the fourth hypothesis of this study is presented.
H4: 
Water footprint management has a positive effect on an organization’s reputation.
The institutional theory [60] acknowledges different kinds of pressure on firms: coercive (from government regulations), normative (from the public), and mimetic (from competitors) [61]. CP is considered the most critical attribute that influences environmental practices [62]. In this sense, regulations, laws, and public policies can influence the adoption of sustainable activities in firms. CP forces organizations to improve their sustainable practices due to strict regulations [63]. Although firms’ responses to government regulations could yield increased competitive advantages [62,64], a recent study found that CP had a negative effect on the adoption of sustainable practices [65]. In the context of water management, more than voluntary behaviors may be required to encourage people and organizations to adopt water management initiatives in order to improve the sustainability of water provision. Therefore, coercive pressures could augment the effects that CSR practices have on WF management adoption, moderating their relationship. However, the impacts of coercive pressures on the relationship between CSR and WF management remain unknown. In this context, the final hypothesis of this study arises.
H5: 
Coercive pressures moderate the relationship between corporate social responsibility and water footprint management.
Figure 1 presents this study’s research model based on the hypotheses previously stated.

3. Methodology

This section presents this study’s methodology, describing each one of the following items: (1) participants, (2) data collection, and (3) data analysis.

3.1. Participants

In order to calculate the minimum required sample size to assess the research model, we used Hair’s recommendation [66], which states that the minimum sample size should be ten times the number of measurement items used to measure one construct. In our research model, the construct with the highest number of items is Legitimacy, which has nine indicators. Thus, the minimum required sample size was defined as 90 (10 × 9). The sample size of 133 used in this study is sufficient to assess the research model.
The study’s context is the Chilean agriculture industry. This study used a quantitative methodology based on a survey questionnaire to collect data. The National Society of Agriculture (SNA, Sociedad Nacional de Agriculture, in Spanish) supported the distribution of the questionnaire to associated Chilean agri-food firms. A total of 113 questionnaires were obtained. The respondents were professionals of agri-food companies who worked in business units related to sustainability, corporate social responsibility, marketing, and logistics and operations. The participants were knowledgeable and experienced professionals invited to participate in the survey by email. The participants filled out an informed consent authorizing the researchers to use their responses in this study anonymously.
The final sample obtained was 133 respondents. The respondents held high-position titles and were experienced professionals. More than a third (36.3%) were CEOs or general managers; 31% worked in operations, logistics, and supply-chain management; and 20.3% worked in sustainability. More than 66% of the respondents had worked at their current company for more than five years. Most of the firms are located in regions where the most agricultural production is present (Metropolitana, Bernardo O’Higgins, and Maule), but the survey included participants from the whole country. The participating companies produce the main crops in Chile, such as different kinds of fruits and grapes (including those for wine production), and engage in agriculture support activities. The participants could select multiple crops, so the number of respondents in each category exceeded the total number of responses obtained. Table 1 shows the profile of the survey’s participants.
According to the last Chilean Agricultural census [67], fruit production is mainly distributed across the regions of Maule, Bernardo O’Higgins, and Metropolitana. A considerable proportion of the production of other crops also occurs in these regions.

3.2. Data Collection and Research Instrument

The data collection instrument was a survey questionnaire whose measurement items were defined and validated in previous studies. The constructs’ definitions are presented in Table 2. All constructs were considered reflective. Items were measured in the questionnaire using a five-point Likert scale. Appendix A presents the measurement items (survey questions) that form the constructs used in this study and the corresponding studies in which they were defined.
To ensure the reliability of our survey, a pre-test of the questionnaire was conducted among a small sample of professionals to evaluate the understanding and readability of the survey items. The questionnaire pre-test was applied to 5 experts who assessed the clarity and readability of the survey questions [72]. The respondents provided recommendations to enhance the readability of the questions, and adjustments were made to the questions when necessary.
In this study, some actions were performed to limit this bias, like respondent anonymity, the use of valid scales validated by previous research, and sending follow-up e-mails to respondents to avoid non-response bias. In addition, we tested for Common Method Variance (CMV), which is a systematic error variance derived from the method used to measure the constructs of a research model [73], using Harman’s one-factor analysis [74]. Harman’s method showed that the first unrotated factor captured only 21% of the variance in the data. Hence, it did not capture most of the variance, showing that CMV was not an issue.

3.3. Data Analysis

The data analysis phase involved the use of the PLS-SEM method, suitable for the analysis of the research model [66]. PLS-SEM is a multivariate data analysis method that is highly efficient in parameter estimation and achieves considerable predictive power with very small sample sizes [66,75,76]. When using this method, the research model is represented by a measurement model, which represents the relationships between the constructs and their variables, and a structural model, which represents relationships or paths between the constructs [77]. A PLS package for R (PLSPM) [78] was used to assess the research model. The first step of the PLS-SEM method comprises examining the unidimensionality, convergent validity, and discriminant validity of the measurement model. The second step of the method comprises testing the structural model and determining the path coefficients for each relationship and the coefficient of determination (R2) of the endogenous constructs. Lastly, the goodness-of-fit (GoF) index was calculated.

4. Results

Measurement Model Evaluation

The unidimensionality test was performed with the Cronbach’s alpha (CA) index, which assesses if a set of variables measures their latent construct. These measurement items are considered unidimensional if they are highly correlated [78] and present a CA larger than 0.70 [79]. All CA values, shown in Table 3, were superior to 0.70, as recommended [66,78].
Convergent validity is the degree to which a variable is positively correlated with other variables of the same construct [66]. The first approach used to assess it was to analyze the indicators’ outer loadings. High outer loadings indicate that the associated variables share common characteristics. It is recommended that they should be greater than 0.708 [66]. In this study, most items presented outer loadings greater than 0.7. Researchers recommend that items with loadings between 0.40 and 0.70 should not be removed from a model if they contribute to content validity. Thus, in this study, for these reasons, the few variables falling into this category were kept.
The second approach employed to assess convergent validity was AVE, calculated as the sum of the squared loadings divided by the number of variables of the construct. It is expected that AVE values will be higher than 0.50, indicating that, on average, the construct explains more than half of the variance of its variables [80]. In this study, all AVE values were higher than 0.50. Appendix A reports the results of the convergent validity analysis.
Discriminant validity is the degree to which a construct is different from others [66]. The first approach used to assess discriminant validity was the cross-loading test, which states that an item’s outer loading on the construct should be greater than any of its cross-loadings on other constructs [66]. In this study, this characteristic was observed for all constructs. The second approach, the Fornell–Larcker criterion, determines that the square root of the AVE should be greater than its highest correlation with any other construct [66,80]. Table 4 depicts the square root of the AVE in its leading diagonal. The other cells represent the inter-construct correlations, which must be lower than the square root of the AVE. Thus, the model’s constructs demonstrate the required level of discriminant validity.
Running the PLS-SEM algorithm comprises calculating the path coefficients (hypothesized relationships among the constructs) and the coefficients of determination (R2) (combined effects of the exogenous construct on the endogenous construct) [66]. Figure 2 shows the values of these indices obtained for the structural model.
The bootstrapping test was employed to assess the precision of the parameter estimates. When using the bootstrap method, a certain number of samples (N) are created to obtain N estimates for each parameter in the PLS model [78]. The bootstrap confidence interval provides data on the coefficients’ stability by calculating an interval of possible values for the dependent parameter. A significant effect is reported if the number zero is not included in this interval [66]. All hypotheses were confirmed because none of the bootstrapping intervals contained the number zero. Table 5 depicts the path coefficients of the model’s relationships.
A moderating effect is observed when a construct changes the direction or impacts the strength of a relationship between two other constructs [78]. The moderating effect of CP in the relationship between CSR and WF management was calculated with the Product Indicator Approach, in which the items of the independent construct are multiplied by the indicators of the moderating variable. The moderating analysis and the bootstrapping test confirmed the moderating effect, thus confirming H5.
The GoF index, which uses communality values and R2 coefficients, was used to assess the quality and predict the performance of the research model [78]. In our study, a GoF index of 0.67 (67%) was obtained, which exceeds the recommended threshold [78], confirming the predictive power of the model.

5. Discussion

Droughts can lead to significant negative impacts on agri-food companies [81], so the adoption of WF management initiatives could probably support reducing some of these effects and achieving firms’ sustainable performance in the environmental, social, and economic dimensions [82,83]. In today’s global context, firms are pressured by governments and customers to act sustainably. Pressure from regulations and customers force companies to adopt sustainable practices that improve competitiveness, differentiate their products, and enhance their image, reputation, and legitimacy [84].
The results of this study provide compelling evidence that CSR and government support have a positive influence on WF management. The findings indicate that CSR and government support, when combined, can account for a significant 69% of the variance in WF management. This underscores the substantial potential for CSR and government support to drive the adoption of effective WF management practices. The path coefficients of the relationships between CSR and WF management and between government support and WF management are 0.74 and 0.14, respectively. These values suggest that a one-unit change in CSR can lead to a 0.74 change in WF management. Notably, the higher effect on WF management due to CSR implies that the implementation of CSR initiatives is of paramount importance, surpassing the support provided by governments for the implementation of WF management practices.
The findings indicate that WF management accounts for a significant 73% of the variance in an organization’s legitimacy and 64% of the variance in an organization’s reputation. These outcomes highlight the enormous potential that WF management has to contribute to the achievement of sustainable competitive advantages. The high values obtained for the path coefficients of the relationships between WF management and legitimacy and between WF management and reputation (0.86 and 0.80, respectively) corroborate the impact that WF management can have on a firm’s reputation and legitimacy.
Indirect effects can be calculated as the product of the path coefficients by taking an indirect path. Our study’s findings reveal considerable indirect effects of CSR on firms’ legitimacy and reputations. The indirect effect of CSR on legitimacy is equal to 0.63 (0.74 × 0.86), and the indirect effect of CSR on reputation is 0.59 (0.74 × 0.80). These findings show that, besides directly contributing to the improvement of WF management practices, CSR also indirectly contributes to firms’ reputations and legitimacy.
Our study showed that CSR has a positive and significant effect on WF management, confirming H1. According to Jones et al. [85], firms have been more committed to WF management because of business restrictions, concerns about environmental sustainability, and the need to keep the integrity of natural ecosystems [85]. Our findings are aligned with previous research that stated that firms are expected to be responsible for their impact on water resources and that concerns about sustainable water use and sustainable ways of production are increasing [33]. Researchers also reported that several firms have adopted practices concerned with water usage and governance within CSR initiatives [29]. Lastly, Lambooy [33] stated that firms comprehended that, besides concerns about CSR and reputation, they also have to promote sustainable water use because of social demands.
Our study identified that government support has a positive and significant effect on WF management, confirming H2. These findings are aligned with previous research that stated that investment in agricultural water management can be costly, and direct government support may be required to carry out WF management. Governments can support initiatives by providing financial, technical, and material support that fosters water accessibility, increases water storage, and promotes the efficiency of transportation and distribution of water [86]. Our findings support those of Barbosa [9], who observed that the lack of adequate government support can lead to environmental impacts, such as the ones caused by poor or absent WF management initiatives. Government policies can also promote and support specific irrigation methods. Researchers also stated that governments can support alliances and collaboration regarding water management issues. Margerum and Robinson [87] stated that governments can support the design of governance strategies to respond to partnership needs for sustainable water resource management.
Our study showed that WF management has a positive and significant effect on an organization’s legitimacy, which confirms H3. Legitimacy is associated with a positive evaluation of a firm and its activities and the degree to which a firm’s presence in the business environment is regarded as confident [88]. Legitimacy strategies include strategic adaptation, adopted when CSR initiatives are used to obtain positive responses from stakeholders [89]. Investing in CSR practices is the primary legitimization strategy that firms have been adopting in the current business environment.
Organizations gain legitimacy by aligning with institutional norms, behaviors, and beliefs that are established by society, governments, and public opinion [90]. Firms actively seek legitimacy to ensure their credibility with various stakeholders. Given that the implementation of sustainable agricultural activities like WF management is not only expected by society but also supported by governments, firms will continue to adopt these initiatives to gain legitimacy and various forms of support from governmental institutions [9]. This alignment with societal and governmental norms reassures stakeholders about the ethical direction of agri-food businesses [9].
Our study showed that WF management has a positive and significant effect on an organization’s reputation, validating H4. Firm reputation includes attributes perceived from its history and can predict a firm’s future performance in comparison to its competitors. Firm reputation reflects the overall impression stakeholders make of it, considering its activities, communications, and behavior [91]. It is a multidimensional concept, and it can be influenced by both social and environmental performance. It is achieved with the improvement of resources, products or services, and production processes [55]. Our study corroborates these findings by showing that WF management positively affects firms’ reputations, which are associated with environmental and social outcomes. Our study showed that CSR practices positively impact WF management, which, in turn, improves firms’ legitimacy. This finding is aligned with previous research that showed that CSR reinforces the alignment between firms and customers, positively impacting businesses’ performance [92]. Then, firms deliberately emphasize the adoption of certain CSR practices to optimize the legitimacy benefits obtained [89].
A firm’s reputation can be improved or reduced depending on the firm’s decisions to engage in CSR practices [37]. Our study showed that CSR practices improve WF management, which, in turn, improves firm reputation. CSR enhances a firm’s reputation and performance because a firm’s reputation and legitimacy are critical factors for business profitability and sustainability. A firm’s reputation influences consumer purchase decisions and willingness to pay for sustainable products [58]. When firms are committed to social and environmental initiatives, they increase their visibility and improve their image. However, when they fail to correspond to consumers’ expectations in this context, they suffer reputational damage [91]. CSR practices can improve a firm’s reputation by convincing stakeholders that firms can deliver valuable results [93].
Our study showed that coercive pressures moderate the relationship between CSR and WF management (H5), which implies that, in environments where coercive pressures are stronger, the effect CSR will have on WF management will also be higher. This finding is aligned with previous research that stated that regulatory pressure positively influences green production practices [55]. Firms undertake CSR initiatives in order to address the demands for CSR and reduce the potential adverse consequences of non-compliance [89], responding to the pressure from the external environment for legitimacy [93].

5.1. Theoretical, Managerial, and Policy Contributions

This study has contributed to scholars, practitioners, and policymakers. For scholars, the novel proposed research model extends the extant literature by delving into the relationships between CSR, government support, coercive pressures, and WF management. Moreover, this study reported the positive effects that WF management has on an organization’s reputation and legitimacy. This study also contributes to the development of the NRBV theory. This theory provides an appropriate lens to recognize positive outcomes of WF management adoption beyond sustainable performance. By empirically examining firms’ reputations and legitimacy, this study demonstrates that better managing natural resources (water, in this case) can lead to competitive advantages expressed by improvements in a company’s reputation and legitimacy. This study answers calls made by researchers to differentiate the effects and contributions sustainability practices have on and make to companies’ competitive advantages [94].
The findings of this study will likely stimulate companies to implement CSR programs and adopt WF management initiatives due to an improvement in their reputation and legitimacy. Previous studies have shown that a better reputation and legitimacy can yield benefits and competitive advantages to companies [37,45,55,95]. By understanding that investing in WF management helps firms increase their reputation and legitimacy, which, in turn, will increase their financial performance, companies will feel more motivated to adopt WF management programs. This study extends previous research by calling attention to the influence of WF management practices that involve freshwater management, wastewater treatment, and water-related risks [96].
Moreover, this study compiled data from Chilean agri-food companies, allowing us to provide an overview of the implementation of WF management practices in the agriculture sector. Of the WF management practices, our study found that the initiative related to reusing and recycling wastewater is the least adopted in the country and that the one related to the mitigation of the risks of contamination of products due to polluted water is the most widely adopted in the agriculture sector. This study will likely stimulate companies to incorporate the WF initiatives into their business strategies. In addition, since WF management also considers supply-chain partners, this study motivates and calls attention to the involvement of different stakeholders in this process, answering calls made by researchers who have asked for further research on the involvement of the different stakeholders in water governance [97]. This study also expects to call the attention of companies to the importance of effective communication strategies with stakeholders about their CSR activities so that the public is aware of the firm’s engagement with sustainable initiatives [57].
In addition, this study contributed to the research field by assessing these relationships in an emerging country (Chile) that has already been suffering the consequences of a mega-drought [17] and needs to urgently come up with solutions to manage water resources better. The intensification of agricultural activities has made the sector accountable for most of the consumption of water resources in the country [98]. So, this study’s findings may be of interest to other emerging economies facing drought-related problems, since their consequences are usually more severe in developing countries that strongly depend on natural resources and do not have the required capacity to deal with climate change [99].
Finally, the outcomes of this study provide tangible policy guidelines to Chilean authorities and policymakers in the Ministry of Agriculture and the Ministry of the Environment. Our findings call attention to the role the government has in WF management promotion, both by defining laws and regulations and by supporting sustainable initiatives. Although government support was found to have a positive and significant effect on WF management, the moderating effect of coercive pressures on the relationship between CSR and WF management is higher. This finding implies that the Chilean government should prioritize coercive pressures since they have a higher impact on WF management through the implementation of CSR practices. This outcome implies that, in the Chilean agriculture industry, the establishment of laws and regulations that protect the environment and foster cleaner production, the imposition of penalties due to environmental damage, and the continuous monitoring of the environmental pollution caused by agri-food firms have more significant benefits than initiatives related to government support like subsidies, financial and technical assistance, or training. This study also contributes to the efficiency and strategic use of water and responsible management of the water demand in high-consumption productive sectors [100] like the agriculture industry.

5.2. Limitations of This Study

This study is not free of limitations. First, this study’s methodology was based only on quantitative collection and analysis methods. We suggest that future research should extend our study by using qualitative methods (interviews and focus groups) to explore our findings and the relationships of the research model. Second, this study considered only Chilean agri-food firms. Despite the country’s current situation regarding the necessity of an improved water management system in the agriculture industry and the relevance Chile has to the exportation of agricultural commodities, expanding the study to other countries could provide exciting insights due to the specificities of other economies. Third, even though the sample used in this study comprised experienced and knowledgeable professionals in the agriculture industry and specific tests and procedures were undertaken to avoid biases derived from the method employed, it is still important to emphasize that the data collected reflect the respondents’ personal opinions. Finally, this study employed a cross-sectional questionnaire. A longitudinal study could assess the effects of the adoption of CSR practices and government support initiatives on WF management over time.

6. Conclusions

This study aimed to fill a significant gap in the field by assessing the unique effects of CSR and government support on WF management. Furthermore, it evaluated the distinct impacts of WF management on the reputation and legitimacy of agri-food firms in Chile. We also assessed the moderating effects of coercive pressure on the relationship between CSR and WF management. In a quantitative study involving 133 Chilean companies, we demonstrated that CSR and government support exert a direct, positive, and significant influence on WF management. Notably, in the agriculture sector, WF management was found to have a direct, positive, and significant effect on firms’ reputations and legitimacy. Indirect effects of CSR on firms’ reputations and legitimacy were also calculated and confirmed.
The outcomes and contributions of this study are of particular interest to scholars and practitioners in countries that have been facing water-related challenges. Our findings provide practical implications for the agri-food industry, particularly in Latin America. Chile, as a relevant exporter of several agricultural products, shares common characteristics of its production systems with other countries. Therefore, our study’s findings will inform and empower policymakers and managers in other Latin American economies, helping them make informed decisions for the future of their industries.
We also present some suggestions for future research. Future studies should qualitatively explore some aspects of our proposed research model, for example, identifying and prioritizing the CSR practices that more significantly contribute to WF management and the WF management initiatives that more directly impact firms’ reputations and legitimacy. Future studies should also explore the assessment of the research model, considering companies with different levels of CSR, WF management, reputation, and legitimacy. Companies with more mature CSR and WF management practices could obtain greater benefits in terms of reputation and legitimacy. We also suggest that future studies explore the proposed research model in other sectors, like the manufacturing and apparel industries.

Author Contributions

M.W.B.: Conceptualization, Data curation, Funding acquisition, Investigation, Methodology, Project administration, Resources, Software, Writing—original draft, Writing—review and editing. M.d.l.Á.R.P.: Data curation, Methodology, Software, Writing—original draft, Writing—review and editing. All authors have read and agreed to the published version of the manuscript.

Funding

This work was supported by ANID Iniciación, 11230058.

Data Availability Statement

Data will be made available upon request.

Conflicts of Interest

The authors declare no conflicts of interest.

Appendix A. Loadings, AVE, and Descriptive Statistics

ConstructItemItem DescriptionLoadingAVEAverageStandard DeviationReference
Coercive pressureCOE1In the agriculture industry, laws and regulations have provided direction on safeguarding environment and cleaner production.0.810.713.651.21Bag et al. [101]
COE2Government imposes penalty on environmental damage and resource wastages.0.88 3.451.16
COE3Government continuously controls and monitors the environmental pollution level of firms.0.83 3.031.15
Corporate social responsibilityCSR1The products offered by our company meet the demand of function of the target users or address an existing problem of society.0.880.634.281.03Le Thanh et al. [102]
CSR2The products provided by our company use ecofriendly material resources or renewable resources0.66 3.911.13
CSR3The quality of our company’s products is consistent with firm stated commitment.0.93 4.350.96
CSR4In our company, products’ information is being addressed to the users at a consistent and transparent manner basis.0.82 4.281.02
CSR5The products provided by our company do not involve child labor during manufacturing or production process.0.84 4.531.18
CSR6The products provided by our company is overall safe for the users.0.92 4.600.92
CSR7The products sold by our company include funding shares to charity activities.0.49 3.321.33
CSR8Our company has a particular plan on human resource development.0.67 3.761.20
Government supportGOV1Participation in government research and development projects is beneficial to our company. 0.710.613.591.24Roh et al. [44]
GOV2Government technical support and guidance help our company. 0.82 2.971.26
GOV3Technical information provided by the government helps our company.0.82 2.891.17
GOV4The government’s technical human resources and educational research support help our company.0.83 2.811.18
GOV5Government purchasing in the public sector helps our company.0.80 2.461.13
GOV6Government marketing support helps our company.0.68 2.541.26
GOV7Participation in government research and development projects is beneficial to our company. 0.78 3.221.31
Organization reputationREP1In general, our company has a good reputation.0.960.884.360.99Nguyen et al. [37]
REP2We are widely acknowledged as a trustworthy organization.0.96 4.301.02
REP3Our company is known to sell high-quality products and service.0.96 4.421.01
REP4Our company is known to comply with all laws regarding hiring employees and employees’ benefits0.93 4.321.04
REP5Our employees have the reputation of providing full and accurate information to all customers.0.94 4.251.00
REP6Our company is known for giving active support to programs with good social causes.0.89 3.731.23
Organization legitimacyLEG1Our company responds in an ethical and committed manner to the local organizations’ demands.0.890.624.051.05Del-Castillo-Feito et al. [49]
LEG2Our company promotes respect to international treaties and standards.0.90 4.271.06
LEG3Our company listens to customers’ needs and suggestions when developing products or services to satisfy them.0.89 4.221.08
LEG4Our company develops donations to different institutions to encourage the development of common good objectives.0.70 3.481.27
LEG5Our company ensures that its employees fulfill the ethical norms.0.87 4.331.07
LEG6Our company develops analysis to study the company’s impact on the local community.0.76 3.381.28
LEG7Our company handles claims regarding community’s impacts, local public, and private actors, and promotes meetings with them to find joint solutions.0.77 3.761.17
LEG8Our company develops and promotes marketing campaigns related to public interest issues.0.69 3.261.21
LEG9Our company knows the achievements of the NGOs with which it collaborates and controls the efficacy of this support0.58 3.121.19
Water footprint managementWAT1Our company promotes and adopts national and global standards for water footprint accounting, traceability, and assessment.0.830.683.671.21Barbosa and Cansino [28]
WAT2Our company promotes the measurement of the water footprint throughout the supply chain, cooperating with partners to be able to generate records of the volume of water used in products.0.91 3.421.24
WAT3Our company implements processes that mitigate the risk of contamination, avoiding or minimizing the use of substances (metals, pesticides, fertilizers, etc.) in products that may be polluting for water.0.85 4.121.16
WAT4Our company establishes water auditing and control systems0.83 3.651.26
WAT5Our company invests in water-efficient technologies.0.82 4.041.27
WAT6Our company reuses and recycles wastewater.0.60 3.051.39
WAT7Our company identifies the local risks of its impact on the water supply.0.89 3.671.03

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Water 16 02746 g001
Figure 1. Research model.
Figure 1. Research model.
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Figure 2. Path model.
Figure 2. Path model.
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Table 1. Firms’ and respondents’ descriptive characteristics.
Table 1. Firms’ and respondents’ descriptive characteristics.
CharacteristicCategoryNumber of Respondents%
Company sizeMicro (1–9 employees)3026.5%
Small (10–49 employees)2623.0%
Medium (50–199 employees)1513.3%
Large (more than 200 employees)4237.2%
Respondent’s positionCEO, general director/manager4136.3%
Operations, logistics, and supply-chain manager/director2219.5%
Operations, logistics, and supply-chain coordinator1311.5%
Sustainability coordinator1210.6%
Sustainability director119.7%
Time working at the companyLess than 1 year43.5%
1–3 years2320.4%
3–5 years119.7%
More than 5 years7566.4%
Country regionMetropolitana3631.9%
Bernardo O’Higgins1916.8%
Maule1513.3%
Main cropsPome fruits 2522.1%
Other fruits and nuts 2421.2%
Agriculture support activities 2017.7%
Grapes (for wine production) 1916.8%
Grapes1715.0%
Other agricultural services 1715.0%
Citrus fruits 1614.2%
Table 2. Construct operationalization.
Table 2. Construct operationalization.
Construct NameDefinitionReferences
Corporate social responsibilityThe set of practices that assure that companies’ financial responsibility must go beyond the minimum legal requirements, companies’ activities are executed ethically, and the impacts of firms’ activities on the environment and in society are taken into accountSarkar and Searcy [31]
Government supportThe extent to which a company gains different kinds of assistance from the governmentJi and Miao [38], Shu et al. [39]
Coercive pressurePressure exerted by external agencies and regulators that may affect companies’ structure or behaviorZeng et al. [68]
Water footprint management The use of policies and actions at the strategic, tactical, and operational levels that support mitigating the WF of a product across its entire supply chainBarbosa and Cansino [28,69], Aivazidou et al. [7]
Organization’s legitimacyCongruence between the social values associated with or implied by (organizational) activities and the norms of acceptable behavior in the larger social systemSuchamn [70]
Organization’s reputationProduct of collective judgments in relation to a company’s past actions and future prospects and its ability to create value in relation to competitorsBrammer and Millington [71]
Table 3. Unidimensionality test results.
Table 3. Unidimensionality test results.
ConstructsCronbach’s α
Corporate social responsibility (CSR)0.88
Government support (GOV)0.91
Water footprint management (WAT)0.89
Coercive pressures (COE)0.80
Reputation (REP)0.94
Legitimacy (LEG)0.91
Table 4. Loadings.
Table 4. Loadings.
ConstructsCOECSRGOVWATLEGREP
COE0.84
CSR0.780.79
GOV0.640.510.78
WAT0.760.810.520.82
LEG0.770.730.460.780.79
REP0.810.930.610.860.880.94
Table 5. Path coefficients and p-values for the structural model.
Table 5. Path coefficients and p-values for the structural model.
RelationshipPath CoefficientsHypothesis NumberHypothesis Supported?
CSR → WAT0.74H1Yes
GOV → WAT0.14H2Yes
WAT → LEG0.86H3Yes
WAT → REP0.80H4Yes
COE → (CSR → WAT)0.22H5Yes
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Barbosa, M.W.; Pumpín, M.d.l.Á.R. The Effects of Water Footprint Management on Companies’ Reputations and Legitimacy under the Influence of Corporate Social Responsibility and Government Support: Contributions to the Chilean Agri-Food Industry. Water 2024, 16, 2746. https://doi.org/10.3390/w16192746

AMA Style

Barbosa MW, Pumpín MdlÁR. The Effects of Water Footprint Management on Companies’ Reputations and Legitimacy under the Influence of Corporate Social Responsibility and Government Support: Contributions to the Chilean Agri-Food Industry. Water. 2024; 16(19):2746. https://doi.org/10.3390/w16192746

Chicago/Turabian Style

Barbosa, Marcelo Werneck, and María de los Ángeles Raimann Pumpín. 2024. "The Effects of Water Footprint Management on Companies’ Reputations and Legitimacy under the Influence of Corporate Social Responsibility and Government Support: Contributions to the Chilean Agri-Food Industry" Water 16, no. 19: 2746. https://doi.org/10.3390/w16192746

APA Style

Barbosa, M. W., & Pumpín, M. d. l. Á. R. (2024). The Effects of Water Footprint Management on Companies’ Reputations and Legitimacy under the Influence of Corporate Social Responsibility and Government Support: Contributions to the Chilean Agri-Food Industry. Water, 16(19), 2746. https://doi.org/10.3390/w16192746

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