Top Management Involvement in the Adoption of Energy Efficiency Projects

Abstract

This paper investigates the role of top management in the adoption of energy-efficiency initiatives. We study data from 175 energy efficiency assessments done by San Diego State University (SDSU) during 2000-2008 as part of the Department of Energy’s Industrial Assessment Center Program. We find that top management involvement leads to firms adopting 30% more of the savings identified in an assessment. We also find that when top management is involved, the average payback of adopted proposals is 57.7% longer. When top managers do reject a recommendation, they are more likely to cite operational barriers, as opposed to economic or organizational ones, than other employees are. Altogether, this suggests that top managers perceive less resource constraints than other managers do and adopt a longer perspective on energy efficiency investments. Overall, our findings shed new light on how top management involvement influences the adoption of process innovations.