Adaptation of enterprises to the requirements of sustainable development in the light of new institutional economics

Abstract

PurposeThis article seeks to explain the mechanism of adapting enterprises to the requirements of sustainable development. It aims to base this analysis on the concept of new institutional economics.Design/methodology/approachThe theoretical basis of new institutional economics is used to understand and explain the behaviour of enterprises in relation to the natural environment.FindingsThe article finds that new institutional economics, compared to rather formalised and abstract mainstream economics, may be quite successfully used in answering why economic entities undertake actions for environmental protection.Practical implicationsNew institutional economics may be used as a tool for understanding e.g. why some instruments aiming at environmental protection are more effective and efficient than other instruments. It may provide useful knowledge about the institutional environment while creating new environmental protection instruments. More empirical studies on a greater number of enterprises (not only individual case studies) are necessary to find out which institutions and mechanisms mentioned in the paper are crucial, and which should be supported in order to achieve environmental goals.Originality/valueThere are a great number of empirical papers containing case studies, but only few theoretical attempts to generate a synthesis. This paper fills this gap.