How Companies Respond to Climate Change

Tobias Finke (Lancaster University Management School)
Stefanos Mouzas (Lancaster Univeristy Management School)
Alan Gilchrist (Lancaster University Management School)

Abstract : EXTENDED ABSTRACT The overwhelming scientific consensus on the urgency of mitigating the potentially disastrous consequences of increasing levels of greenhouse gas emissions in the atmosphere and the emerging intergovernmental agreements on climate change have formed an external pressure that requires companies to develop business responses. Previous research has attempted to explain such responses to climate change mainly by drawing upon Carroll’s (1979) continuum of corporate social responsiveness. Accordingly, businesses would follow either defensive, accommodative or proactive approaches when they respond to climate change. These studies, however, are limited in its explanatory value as they view business responses to climate change as a task completed by an individual company rather than a task of companies embedded within wider business networks. In this study we proceed from the perspective that companies are, in fact, influenced by the interactions occurring as a result of continuous give-and-take exchange relationships. The urgent need to move beyond the view of companies as “isolated units” has been called for repeatedly (e.g., Wittneben et al., 2012, p.1435), but continues to receive little attention in the organizational studies literature. This study addresses this gap in the literature by adopting a network approach on business responses to climate change. It is through this move from the atomistic level of analysis and explanation to that of the business network that constitutes our theoretical lens to examine the empirical evidence that derives from five case studies of British energy supply companies. Indeed, by employing the network approach as a novel theoretical lens in the study of business responses to climate change, we provide a more comprehensive explanation of how companies respond to climate change. Key Words: Networks, Energy, Climate Change, Resources, Biases, Herding

The Role of Soft Budget Constraints in the Development of the Chinese Solar Industry

Max Jerneck (Stockholm School of Economics)

Abstract : The role of soft budget constraints in the development of new industries is ambiguous. On the one hand, they may accelerate growth by raising investment and intensifying competition. On the other, they may dull incentives to cut costs, raise efficiency and innovate. This article will explore this question in the context of the Chinese solar photovoltaics (PV) industry. I will test two hypotheses. One is that soft budget constraints have a negative effect on innovation, and that the innovation that has occurred in China is thanks to foreign or domestic investors who enforce discipline. The other hypothesis is that soft budget constraints support innovation, based on the idea that competition between local governments and their client firms in contemporary China resemble competition between business groups (keiretsu) in postwar Japan. The study will be based on secondary sources about the Chinese PV industry, including academic articles, trade publications and business reports. Focus will be on the relation between firms, local governments, the central government and various financial entities, domestic and foreign. Interactions between different levels of jurisdiction will be central. By studying the trajectory of the largest Chinese PV producers from 1999 - 2019, I aim to ascertain whether soft budget constraints helped or hurt innovation in the industry. Implications are relevant for policies to promote carbon industries to mitigate climate change.

Extraterritoriality in the Context of Nationalism and Legal Imperialism: Implications for Multinationals and Climate Policies

Lin Lerpold (Stockholm School of Economics)
Örjan Sjöberg (Stockholm School of Economics)
Erik Wikberg (Stockholm School of Economics)

Abstract : Multinationals are currently operating in an (re-)emerging context of legal imperialism linked to the use of extraterritorial regulation. As a geopolitical phenomenon, legal imperialism involves actions by nation-states extending and enforcing political policy beyond their boundaries by means of unilaterally imposed legislation, thereby potentially infringing on the sovereign status of other jurisdictions. We consider two recent types of new trade regulations with extraterritorial reach that have come into effect during 2018, the US sanctions on Iran and the EU trade deal sustainability clause and explore the implications of this form of extraterritoriality on multinationals’ strategies, the one clearly unilateral, the other at least nominally bilateral and subject to negotiations between parties. The growing impact of extraterritorial jurisdiction is a phenomenon that has received little scholarly attention in the international business literature, despite being relatively salient in international relations and legal studies. This lacuna is unfortunate since understanding extraterritorial jurisdiction holds implications for the theory of the firm and international business, also significant managerial implications for MNEs as well as nation-state policymakers. It may also put the discussion on the role and nature of globalisation in a slightly different light.

The Evolution of Rules: Enacting Environmental Rules Through Un Climate Change Conferences.

Stefanos Mouzas (Lancaster University)
Lars-Gunnar Mattsson (Stockholm School of Economics)

Abstract : How can we explain the evolution of rules? Drawing on a longitudinal empirical study of UN climate conferences involving 10,000 to 20,000 delegates in the period from 2005 to 2018, this empirical study aims to explain the process of enacting rules to reduce greenhouse gases. The study examines the dynamic interplay between actors’ interests and actors’ entitlements in generating reference points. This dynamic interplay appears critical in understanding the causal powers that affect the evolution of rules.