Abstract
Companies are increasingly challenged for action on climate change. Most studies on business responses to climate change focus on cross‐sector comparisons and neglect intra‐sectoral dynamics. This paper investigates the influence of supply chain position and regional affiliation on climate change strategies within a particular industry. We present a generic framework integrating both market and non‐market responses to climate change. We argue that climate change strategies comprise several corporate activities that have different foci of interaction and four main objectives: governance, innovation, compensation and legitimation. Using a global sample of 116 automotive companies, we conduct a cluster analysis and identify four types of strategy. We find that the sophistication of automobile manufacturers' strategies significantly differs from that of suppliers. Regional affiliation and firm size prove to be determinants of the strategy type pursued. We cannot find evidence for a relationship between financial performance and a company's strategic approach to climate change. © 2017 The Authors. Business Strategy and the Environment published by ERP Environment and John Wiley & Sons Ltd
Highlights
I N RECENT YEARS, INCREASING PRESSURE HAS BEEN EXERCISED ON BUSINESSES TO CONSIDER CLIMATE CHANGE AS A RELEVANT strategic issue
Motivated by these research gaps, the research objective of the present paper is to develop a better understanding of the characteristics and determinants of corporate climate change strategies in the automotive industry, whilst taking into account supply chain and institutional aspects
We provide a definition for corporate climate change strategy and depict activities that can be part of it
Summary
I N RECENT YEARS, INCREASING PRESSURE HAS BEEN EXERCISED ON BUSINESSES TO CONSIDER CLIMATE CHANGE AS A RELEVANT strategic issue. Before the ratification of the Kyoto Protocol in 2005, companies focused on socio-political action, i.e. non-market responses, e.g. through influencing law-making procedures to be favorable for their business (Kolk and Pinkse, 2005; Lee, 2012a). The number and stringency of climate regulations increased in subsequent years, accompanied by a rising environmental awareness of the public and investor requests for transparency on corporate greenhouse gas (GHG) emissions and strategies to reduce them. This resulted in a shift towards market responses, i.e. proactive managerial and technological measures, such as the establishment of carbon inventories, investments in ‘green’ products and cleaner production processes (Jeswani et al, 2008; Weinhofer and Hoffmann, 2010).
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