Corporate culture and carbon emissions

Abstract

ABSTRACT The burning global concern about climate change and its adverse effects on all aspects of human life highlights the need for academic research on the factors that affect carbon emission – the major cause of climate change. In this study, we examine whether corporate culture matters in shaping a firm’s environmental responsibility, particularly corporate carbon strategies. Utilizing the Competing Value Framework to quantify corporate culture, we find that a one standard deviation shift towards Compete culture would result in a 13.6% decrease in firms’ CO2 emissions, whereas a one standard deviation shift towards Create culture is associated with a 9.5% increase in firms’ direct CO2 emissions but has no significant effect on total CO2 emissions. This impact is more pronounced for firms with higher growth, smaller size, firms in ‘dirty’ industries, firms facing no emission limit, or those in states that have low environmental performance. Our findings suggest the promotion of Compete culture across all firms as an effective strategy to curb carbon emissions.