The issue of climate change has become – as we know – to one of the dominant themes of our time, and the way companies respond to it may have major implications for their future success.
Therefore, my dissertation completed last year at Johannes Kepler University Linz had – among others – a distinct focus on the strategic management of energy sector companies. More precisely, with a research article which has been published recently in the scientifc journal Review of Managerial Science after a comprehensive peer review process, I provide together with my co-author Ms. Prof. Dorothea Greiling insights into gas sector companies’ strategic responses to the institutional pressures of climate change.
The gas sector is particularly interesting in this context, since its traditional focus on the fossil fuel natural gas is fundamentally incompatible with the political objective of climate neutrality, and increasing pressure to fade out any fossil fuels might have a disruptive impact on the business models of these companies. Based on a qualitative research design, we found that the majority of companies exhibits a strategic response to climate change that matches one of the four ideal-type responses from a typology developed by Sprengel and Busch (2011), specifically for this context: ‘minimalist,’ ‘regulation shaper,’ ‘pressure manager,’ and ‘emission avoider.’ Consequently, the strategic responses within this sector vary substantially.
Additionally, there is a group of companies that perform a strategic response that cannot be assigned to any of the strategic response types distinguished in the typology of Sprengel and Busch (2011). All of these companies are regional energy utilities and, due to their public majority shareholders, act in proximity to the political domain. As a result, they assume their societal responsibility and seek to actively contribute to climate change mitigation and the achievement of further non-financial objectives (such as maintaining security of supply and ensuring affordable energy prices for end-users). However, they are equally committed to financial objectives (such as generating stable dividends for their public shareholder). Accordingly, their strategic response can be characterized by an attempt to actively balance these different objectives through a combination of actions taken by the different ideal types of strategic responses. In conjunction with their organizational characteristics, this can be considered a strong indicator for hybridity and their exposure to different institutional logics. We have therefore extended the existing typology of Sprengel and Busch (2011) by including the ‘trade-off seeker’ as a fifth response type, i.e., a mixed response informed by the previously established ideal-type responses. This is necessary to ensure a complete and consistent classification of all strategic responses observed and to account for the increasing relevance of hybrid organizations, which have to address climate change while exposed to different institutional logics.
Building on this classification, we have gone one step further and integrated these responses to institutional pressures triggered by climate change with the general framework of strategic responses to institutional pressures as proposed by Oliver (1991). This has allowed us to explored whether, how, and to which extent the companies in our sample depart from the theoretical ideal of conformity with these institutional pressures and reveal indications for decoupling, i.e., whether they exhibit strategic responses to institutional pressures that do not aim at full conformity with these pressures. Indeed, decoupling is inherent to all strategic responses to climate change except for the ‘emission avoider’ response. Even so, the purpose and intensity of decoupling differs with every response type. It ranges from a conscious and active attempt to balance different institutional demands and compromise between plural institutional logics (‘trade-off seeker’) to dismissing institutional pressures triggered by climate change (‘minimalist’).
Our findings have two main implications for future research. Firstly, our advanced typology aims to facilitate the classification of strategic responses to climate change particularly for complex institutional fields. Further research could test and further expand its applicability. Secondly, we contribute to a deeper understanding of decoupling in the context of strategic responses to climate change. It would be valuable to track the relevance of decoupling in this context in order to investigate whether and how the purpose and intensity of decoupling evolves as companies move along their path towards higher levels of environmental responsibility.
References used in this summary:
Sprengel DC, Busch T (2011) Stakeholder engagement and environmental strategy–the case of climate change. Bus Strat Env 20:351–364. https:// doi. org/ 10. 1002/ bse.684
Oliver C (1991) Strategic responses to institutional processes. Acad Manag Rev 16:145–179. https:// doi. org/ 10. 5465/ AMR. 1991. 4279002
Cite our article as:
Lebelhuber, C.; Greiling, D. (2021): Strategic response to institutional pressures of climate change: an exploration among gas sector companies. Review of Managerial Science. DOI: 10.1007/s11846-021-00449-w
Interested in details? See the full version of the article here.
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