Integrated market and nonmarket strategies: Empirical evidence from the S&amp;P 500 firms’ climate strategies

Younsung Kim

doi:10.1017/bap.2021.18

Abstract

AbstractFirms with well-formulated competitive market strategies could still fail due to their lack of effective nonmarket strategy. Climate change poses significant threats to firms and presents firms’ need to develop nonmarket strategy integrated with market strategy. Relying on the unique dataset of US S&P 500 firms’ responses to climate change, this study seeks to ask why some firms attempt to engage in climate policy making, while others do not do so. The results found that firms with organizational resources and capabilities underlying their carbon market strategy are more likely to support mandatory climate policy. It sheds light on the significance of integrated market and nonmarket strategies, particularly when business opportunities are controlled more by governments than by markets.

Highlights

In employing the two-step econometric modeling technique to address endogeneity, this study found the positive relationship as the first kind of empirical evidence
Some firms may utilize already executive bodies such as an Environment, Health, and Safety Department, while others may form specific teams or departments dedicated to climate change that may promote crossfunctional cooperation for actual carbon reductions (Carbon Disclosure Project, 2008)
With respect to climate policy, this study focuses on proposed climate legislation or regulations that would include market-based instruments

Summary

Introduction

Their market successes depend on their products and services, efficiency in operations, internal organization, the organization of supply chains, distribution channels, and alliance networks. Firms with well-formulated market strategies around such components could still fail due to other nonmarket factors. As the defining issue of our time, climate change pushes firms into a highly uncertain, unpredictable business environment. Regulatory risks challenge firms because, in many parts of the world, climate policies that would affect firms’ market stances have not yet been fully established or implemented (Helm, 2008; Boiral et al, 2012; Kim and Darnall, 2016; Bodle et al, 2016)

Methods

Results

Conclusion