Why companies fail to respond to climate change: Collective inaction as an outcome of barriers to interaction

Abstract

The urgent need to combat climate change is now globally accepted. Collective action at a global level is the key ability to respond to the threat of climate change. No individual company alone has the necessary resources and capabilities to tackle the unprecedented challenge of climate change. Companies need to engage in give-and-take exchange relationships with other companies to address climate change. Research on how companies interact with each of their counterparts to respond to the challenge of climate change is limited. Existing research on climate raises questions about 1) how companies interact in response to climate change and 2) why companies fail to craft collective responses to climate change? In an attempt to shed light on these questions, we use the network approach as a theoretical perspective to account for the ever increasing connectivity and interdependence in the business landscape and theorize on the consequences these phenomena may have for the study. The study is based upon an empirical investigation of public-private networks in Germany. Findings indicate that companies fail to collectively respond to climate change due to the multiplicity of interests of actors involved in the network which is aggravated by 1) economic reasoning; 2) weak actor bonds; and 3) differing perceptions of the rules of the game. As such, the present study contributes to our understanding of collective responses to the ever evolving challenge of climate change.