Institutional decoupling and the limited implementation of certified environmental technologies

Abstract

New environmental policies and initiatives increasingly drive firms to develop sustainable technologies, yet it is unclear why firms often decide not to capture value from the technologies that they create. We argue that the under-implementation of environmental technologies can be explained by the concept of institutional decoupling, which suggests that organizations may engage in symbolic actions without necessarily taking the risk of implementing a new technology in a less established market when there is no decisive evidence of its commercial viability. Focusing on the Korean Green Certification Program, a government-initiated review system for environmental technologies, we find that the timing of certification is a key source of variation in the implementation of certified technologies. Our findings also show that the main effect is conditioned by performance feedback and niche density—the factors that shape a firm's risk perceptions. Implications for organization studies, sustainable innovation, and environmental policies are discussed.