Climate Change Discourse and Environment-Friendly Practices: A study of Renewable Energy Adoption By Indian Firms

Abstract

Firms compete not only in the business environment but also in the natural environment that provides the basic resources for production. The global discourse around climate change has put research on firms ' environmental behaviour a t the forefront of management scholarship. According to experts, the key solution to climate change is to reduce greenhouse gas (GHG) emissions in a rapid manner. Renewable sources of energy contribute very little to the GHG emissions as compared to fossil fuels, and thus adoption of renewable energy is an important environmental behaviour by firms in the con text of climate change. In this scenario, I explore the variation in firms' adoption of environment-friendly practices, and seek to understand firm ownership and institutional factors as some of the antecedents. I choose to stud y the adoption of renewable energy as a strategic environment-friendly practice in the emerging economy context where growth and sustainability are still less cohesive. By studying Indian manufacturing firms, I find that concentrated family ownership interacts with the sub-national institutional context in determining adoption of renewable energy. Similarly, by studying electricity generating firms in the country, I find evidence that global linkage through business group affiliation facilitates adoption, more so when the firm has higher importance to the business group. Overall, this study suggests that owner' motivations in adopting environment-friendly practices depend much on the institutional contexts of the firms. In the presence of conflicting economic and environmental demands, institutions and ownership can jointly determine environment-friendly practices, supporting the institutional complexity perspective of firm behaviour. From this understanding, managers can try to overcome adoption constraints, and policymakers can work towards ensuring better environmental compliances by firms.