Temporal-orientation in organizational decision-making: Factors affecting willingness to execute energy efficiency investments in business premises

Abstract

The building and construction sector is one of the major energy users and emission sources. Traditionally, companies have not been especially interested in improving energy efficiency of their premises, which results in an energy efficiency gap, the gap between feasible energy efficiency investments and executed energy efficiency investments. This paper combines literature on energy efficiency gap and companies' temporal orientation as a part of their decision-making. The aim of the study is to assess the factors that affect the temporal orientation of a company's decision-making as well as willingness to pay for energy efficiency investments. We conducted a web-based survey targeted to Finnish top managers in industrial small- and medium-sized companies. As a result, we conclude that explanations for energy efficiency gap are more behavioral in nature as the resources of the company or the financial uncertainty of the investment do not affect the decision-maker's temporal orientation or willingness to pay for energy efficiency investments. The behavioral aspects on the other hand, such as the manager's climate change skepticism and manager's past decisions to invest in energy efficiency, do have an impact on the decision-maker's willingness to pay.