Non-market strategy for sustainability: Solar photovoltaic industry in Germany and China

Abstract

In the non-market strategy research literature, the complementary relationship between Corporate Social Responsibility (CSR) and Corporate Political Activity (CPA) has only recently started to emerge. By building upon the literature streams on non-market strategy and sustainability, this paper explores the mechanisms for sustainability industry emergence in both advanced and emerging economies. Based on qualitative data collected from two leading countries in the solar photovoltaic (PV) industry, our study takes a comparative perspective to elucidate two different approaches for building legitimacy for sustainability- related industries. The German economy is the world’s largest solar PV product consumer, and the German feed-in tariff became an important reference point for other countries in crafting renewable energy policy. The creation and regulatory support of the Aachen model in Germany was an entrepreneurial endeavour which practiced a political legitimacy-driven approach. As the largest solar PV production economy, the emergence of the Chinese solar PV industry was enabled through entrepreneurship by the practice of a social legitimacy-driven approach. Based on our analysis, we propose a conceptual framework towards a sustainability legitimacy theory. The overarching mechanisms underlying the emergence of the Chinese and German solar PV industries is the active involvement of national government and collective efforts and entrepreneurial activities involving cross- sector partnerships.