Driver Driverss for the introd introduct uction ion of clean clean energy energy produc products ts and techno technolog logies ies:: differ differenc ences es and similarities among key industry sectors in the EU and Japan Masachika Suzuki Graduate School of Global Environmental Studies Sophia University !"# $ioi"cho %hiyoda"ku &okyo #'(")**+ J,-,. Abstract
$ey/ords: %lean energy corporate strategy sustainable reporting isomorphism country of origin effect %orresponding author: Masachika Suzuki ,ddress: Graduate School of Global Environmental Studies Sophia University !"# $ioi"cho %hiyoda"ku &okyo #'(")**+ J,-,. Email: suzuki0genv1sophia1ac12p Introduction1
3ntroduction of clean energy products and technologies has increasingly become a key strategic and managerial issue for firms in various industry sectors1 Many firms report their initiative and performance of clean energy in their corporate sustainability reports1 &here are substantial research suggesting both tangible and intangible benefits for the firms that have successfully adopte adopted d clean clean energy energy techno technolog logies ies includ including ing reduct reduction ion of opera operatio tional nal cost cost mitiga mitigatio tion n of regulatory regulatory risk successful successful marketing marketing products and technologi technologies es among among energy energy cost conscious conscious customers and enhancing their corporate brand1 &his &his paper paper address addresses es corpor corporate ate strate strategy gy on the introd introduct uction ion of clean clean energy energy produc products ts and technologies1 %lean energy products and technologies discussed in this paper include both rene/able energy technologies and energy efficiency improvement products and technologies1 3n partic particula ular r the paper paper sugges suggests ts invest investiga igatin ting g /hethe /hetherr or not there there are differ differenc ences es and similarities similarities bet/een the EU and Japan /ith respect respect to the drivers drivers for the introduction introduction of clean energy energy produc products ts and techno technolog logies1 ies1 Some Some compan companies ies recogn recognize ize clean clean energy energy as attrac attractiv tivee industry opportunities /hile other companies promote them as part of their corporate social respon responsib sibilit ility y initia initiative tives1 s1 &he &he result result of this this study study contrib contribute utess to the theore theoretic tical al discus discussion sion /hethe /hetherr /e can observ observee isomor isomorphi phism sm or 4count 4country ry of origin origin effec effect5 t5 in report reported ed corpor corporate ate strategy in the introduction of clean energy products and technologies1 1.
Focus Focus of of this this stud study: y: clea clean n energ energy y prod product uctss and and techn technolo ologie giess
%lean energy products and technologies include both rene/able energy and energy efficiency improvement products and technologies1 &he 3E, 63nternational Energy ,gency7 report entitled 4&rackin 4&racking g %lean Energy -rogress -rogress ('#85 addresses addresses key clean energy energy technologies technologies such as rene/able rene/able energy energy gas"fired gas"fired po/er generation generation electric and hybrid"ele hybrid"electric ctric vehicles as /ell as energy efficiency improvement technologies in buildings and technologies use for the smart grid system 63E, ('#871 ('#871 ,ccording ,ccording to the report report carbon carbon capture capture and storage storage technologie technologiess are also recognized as clean energy technologies 63E, ('#871 &he /ays /ays that that firms firms utiliz utilizee clean clean energ energy y produ products cts and techno technolog logies ies vary vary among among diffe differen rentt 1 Some parts of the paper 6mainly Section 8 through Section *7 /ere presented at the #9th %onference of the European oundtable on Sustainable -roduction and %onsumption 6ES%-7 in June ('#81
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industry sectors1 ;or the energy"intensive industry sectors such as oil and gas chemical steel cement and pulp and paper productions manufacturing is the main process /here firms tend to introduce clean energy products and technologies since there are large potentials in reducing the use of fossil"fuel based energy in this process1 ;or the firms in the consumer product industry sectors such as automobiles and electronics addressing clean energy products and technologies for their end"users is more relevant since the energy use at the consumption stage is much larger than the manufacturing process1 ;or the retail industry sector the integration of clean energy technologies into the supply chain management is essential in reducing energy use and cost in the logistics or transportation process1 ,s the introduction of clean energy products and technologies has increasingly become a key strategic and management issue for firms there have been substantial research on the utilization of clean energy products and technologies1
n the other hand the corporate strategy on clean energy products and technologies has only discussed until no/ as part of company?s climate change strategy1 2.
Structure of this paper
&he first part of this paper illustrates theoretical discussions on corporate strategy1 &his /ill help us to understand ho/ and /hy firms introduce clean energy products and technologies1 Section 8 demonstrates that according to previous research in business management there are internal and e@ternal factors leading to the formulation of corporate strategy1 >ne important internal factor is the level of firm?s resources and capabilities1 Some scholar argues that the firms /ith larger resources and capabilities tend to address environmental 6or clean energy7 issues more proactively1 Ahile the internal factors are often classified as 4firm"specific factors5 the e@ternal factors can be called as 4home country factors15 Sections + and * elaborate discussions among researchers on the conseBuences of receiving the e@ternal pressures upon firms1 Cased on the discussions some scholars might argue that bet/een European and Japanese firms for e@ample there are convergent trends on the corporate clean energy strategy since there is the pressure to handle clean energy issue in the global scale1 >n t he other hand some scholars might claim that as long as there are different sets of regulations as /ell as social e@pectations for clean energy in the EU and Japan corporate strategy on the topic /ould remain divergent bet/een the t/o regions1 >n the basis of the theoretical discussions from Section 8 through * Section 9 elaborates the drivers for the introduction of clean energy products and technologies1 3t attempts to classify different drivers discussed among previous research1 &he drivers include possibility for cost reductions and profit making opportunities mitigation of regulatory risk successful marketing products and technologies among energy cost conscious customers and enhancing their corporate brand1 Some firms promote clean energy products and technologies as ne/ products that have not launched yet in ne/ markets1 3n this case these firms recognize clean energy technologies as attractive business opportunities /hile other companies promote them as part of their corporate social responsibility initiatives1 Section ! summarizes discussions from Section 8 to 91 3n addition it suggests a design of an empirical study that e@amines similarities and differences in the drivers for the introduction of clean energy bet/een the EU and Japan1 &he study investigates /hether or not there are
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convergent or divergent trends in corporate clean energy strategy bet/een the EU and Japan1 &he result of the study may contribute to the discussion /hether or not /e can observe isomorphism or 4country of origin effect5 bet/een the EU and Japan /ith respect to corporate clean energy strategy1 &he last part of this paper suggests a possibility of further study1 3t discusses a relationship bet/een the introduction of clean energy products and technologies and the improvement of financial performance1 3t argues that there may be a positive relationship bet/een the introduction of clean energy and financial performance1 3f this is the case it may become a clear business case for firms to /ork on clean energy products and technologies1 3.
How do the firms mae a decision on the introduction of clean energy technologies!
3f the introduction of clean energy products and technologies is perceived as a key strategic issue in business operations ho/ do firms make a decision about it Ahile corporate energy strategy is relatively a ne/ research area there are t/o groups of research initiatives in environmental business and management useful in e@ploring this Buestion1 >ne group addresses internal factors such as the level of firm?s resources and capabilities /hile the other including institutional scholars looks into the influences from the e@ternal environment such as government regulations and pressures from non"governmental organizations 6.G>s7 and the civil society1 &hose /ho look into firms? resources and capabilities often associate the level of environmental initiatives /ith the size of the resources of a firm1 ,ccording to their argument the firms /ith more resources and capabilities tend to address environmental issues more proactively1 ,ccording to ivera and Delmas 6(''+7 the other group of scholars /ho look into internal factors highlights ho/ top managers? environmental beliefs values and attitudes play a critical role in determining corporate environmental management choices 6%ordano and ;rieze (''' Egri and n the other hand the institutional scholars recognizing the influences from the e@ternal environment in business decision"making heed attention to stakeholders surrounding the firms1 Sharma and
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".
#hat are the conse$uences of recei%ing e&ternal pressures! : 'on%ergent trends
Section 8 illustrates that institutional scholars pay an attention to the influences from the e@ternal environment in business decision"making1 Ahat are the conseBuences of receiving e@ternal pressures Some institutional scholars consider that the firms in the same 4organizational field5 begin to adopt similar structures and strategies yielding to common pressures for change 6
)he other trend in corporate en%ironmental strategy: *i%ergent trends
,lbeit /ith the convergent pressures there is a great degree of differences among firms in corporate environmental strategy1 Ahat are the sources of the heterogeneity 3ndeed the e@istence of the heterogeneity is normal as every firm has different corporate history culture and philosophy as /ell as business operations and marketing positioning1 ,ccording to the institutional scholars firms are also sub2ect to divergent pressures from the e@ternal environment1 ;or e@ample the regulatory pressures from the government tend to be formulated in the uniBue local regulatory culture and history1 &he characteristics of regulatory pressures and the /ay firms respond to such pressures are often country"specific 6or region"specific71 &he fashions that stakeholders influence firms also seemingly vary from one country to another1 &he natures of the roles and po/ers that stakeholders e@ercise are closely connected to the s ocial and cultural conte@ts of the country or the region1 Sethi and Elango 6#===7 label the home country factors as 4country of origin effects5 6Sethi and Elango #===71 ,ccording to Sethi and Elango the home country factors consist of #7 economic and physical resources and industrial capabilities (7 cultural values and institutional norms and 87 national government?s economic and industrial policies1 Sethi and Elango 6#===7 contend that those home country factors provide a po/erful influence on firm?s capabilities and strategies and create divergent pressures on firms in the formation of their corporate strategy 6Sethi and
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Elango #===71 Some scholars challenge the notion of 4globalization5 and contend that firm?s operations and strategies are attributable to the local environment 6$olk and evy (''+71 &hey dismiss the idea that economic globalization is contributing to an emergence of 4stateless5 firms 6$olk and evy (''+71 &hey maintain that fe/ multinational firms are truly global and most of the firms are regionally"oriented and therefore strategic management of the firms should be regional"focused 6ugman and Crain (''871 3n the publication titled 4Global or Stateless %orporations ,re .ational ;irms /ith 3nternational >perations5
,ey dri%ers for the introduction of clean energy technologies
&he discussions from Section 8 through * indicate that there are both internal factors and e@ternal pressures for firms to /ork on clean energy products and technologies1 &his section elaborates the drivers 6internal and e@ternal7 more specifically for corporate managers to consider in making strategic or managerial decisions on clean energy1 >ne common driver identified among previous research relates to regulatory support1 Many studies demonstrate results sho/ing that firms often take advantage of economic benefits associated /ith an introduction of regulations such as feed"in"tariff program ta@ incentives rene/able energy portfolios and clean energy funds 6Cird et al1 (''* ;o@on et al1 (''* Geller et al1 (''+ Menz (''* -ainuly (''# Shrimali and $niefe ('## Aang and %hen ('#' Aiser and Mark Colinger (''*71 ;or e@ample Curer and Austenhagen 6(''=7 illustrate that 4all other things being eBual investors in our sample perceived feed"in tariffs to be the most effective rene/able energy policy 6Curer and Austenhagen (''=715 Moreover de la &our et al1 6('#'7
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looking at the successful adoption of the on"grid -F system argues that the system has been entirely driven by incentive policies initially implemented in a limited number of industrialized countries 6de la &our et al1 ('#'71 ,nother e@ample is a /ide diffusion of /ind po/er generation in the US1 $aldellis and Hafirakis 6('##7 state that economic instruments including feed"in" tariffs and investment and production ta@ incentives are the primary drivers for the gro/th of /ind energy market 6$aldellis and Hafirakis ('##715 ,nother key driver relates to the fact that /ith the improvement of the technologies the cost for the introduction of the technologies falls do/n sometimes to the level /here corporate managers perceive significant cost reductions of purchasing electricity1 3n addition the corporate managers sometimes recognize an opportunity even to make profit through it1 Many researchers have observed this trend among firms 6Dinica (''9 Gross et al1 (''8 $aldellis and Hafirakis ('##71 Gross et al1 argues that the market gro/th take place if costs are to fall to levels that /ill ensure competitiveness /ith the lo/est cost fossil fuel alternatives 6Gross et al1 (''871 $aldellis and Hafirakis 6#'##7 found this trend in reality that the /ind energy production cost is found to be comparable /ith the respective of conventional fossil fueled generation methods even /ithout internalizing the e@ternalities 6$aldellis and Hafirakis ('##71 Dinica 6(''97 states that 4although some developers may be mainly interested in self generations others /ill invest motivated by some strategic considerationsIsuch as ne/ technological designs testing green image considerations local business opportunity or ideology1 >verall commercial motivation /ill be the main driver to invest 6Dinica (''9715 3n contrast some scholars argue that even /hen firms do not e@pect immediate financial returns they sometimes pursue clean energy pro2ects1 &his is particularly the case /hen they pro2ect a long"term intangible benefits through it 6Cyrne et al1 (''! Ginsberg and Cloom (''+ Menz (''* Heng et al1 ('#'71 ,n e@ample of prime importance is strong interests among customers for the clean energy products and technologies1 Heng et al1 6('#'7 demonstrates that 4the high" cost scheme activities for e@ample using energy efficient and clean technologies or using rene/able resources as ra/ materials reBuire significant financial investment but may not result in immediate economic benefit1
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(''! South/orth (''=71 Some firms address energy and environmental concerns associated /ith fossil"fuel based technologies and adopt clean energy products and technologies /ith less concerns in this area 6loyd and Subbarao (''= Moore and AKstenhagen (''+71 ,t this point loyd and Subbarao 6(''=7 argue that global energy and environmental security concerns are currently driving penetration of rene/able energy alternatives1 -.
esearch framewor for the analysis of the ey dri%ers for the introduction of clean energy products and technologies
Section ( through 9 illustrated theoretical discussions on corporate strategy for the introduction of clean energy products and technologies1 ;igure # summarizes those discussions belo/:
;igure #: %orporate strategy for the introduction of clean energy products and technologies
Cased on the theories discussed above this paper proposes an empirical study to e@amine similarities and differences /ith respect to the drivers for the introduction of clean energy bet/een the EU and Japan1 &he study is designed to test /hether there are convergent or divergent trends in corporate clean energy strategy bet/een the EU and Japan1 &he result of the study contributes to the discussions presented in Section + and * /hether or not /e can observe isomorphism or 4country of origin effect5 in reported corporate strategy in the introduction of clean energy products and technologies1
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&he analysis is based on the publicly available data reported by firms including corporate sustainability reports as /ell as data submitted to the %arbon Disclosure -ro2ect 6%D-71 ,s for European firms the coverage of the analysis are the firms included in the ;&SE #'' in England the %,% +' in ;rance the D,L in Germany the S/iss Market 3nde@ in S/itzerland and the Eurone@t #'' in Europe1 ,s for Japanese firms the firms listed under the .ikkei ((* are the targets of the analysis1 Many firms in both regions publish a sustainability report and provide data to the %D-1 Ahile the %D- is designed to ask firms about their climate change strategy it also addresses some Buestions about their clean energy strategy in its Buestionnaire to the firms1 /.
Further research: relationship between the introduction of clean energy technologies and impro%ement of financial performance
,s described in Section 9 there is a gro/ing understanding that the introduction of clean energy brings both tangible and intangible values to firms1
&his /ork /as supported by the Grant"in",id for oung Scientist 6C7 from Japan Society for the -romotion of Science 6(+!8'8**71 &he authors /ish to thank for the support1 F0'S
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Caron D1 -1 6#==*71 3ntegrated strategy " market and nonmarket components1 %alifornia Management evie/ 8! +!"9*1 Caron D1 -1 6#==!71 3ntegrated strategy trade policy and global competition1 %alifornia Management evie/ 8=1 Cird 1 Colinger M1 Gagliano &1 Aiser 1 Cro/n M1 and -arsons C1 6(''*71 -olicies and market factors driving /ind po/er development in the United States1 Energy -olicy 886##7 #8=!N#+'!1 CKrer M1 J1 and AKstenhagen 1 6(''=71 Ahich rene/able energy policy is a venture capitalist?s best friend Empirical evidence from a survey of international cleantech investors1 Energy -olicy 8!6#(7 +==!N*''91 Cuysse $1 and Ferbeke ,1 6(''871 -roactive environmental strategies: , stakeholder management perspective1 Strategic Management Journal (+ +*8"+!'1 Cyrne J1
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efficiency and rene/able energy use in Crazil1 Energy -olicy 8(6#(7 #+8!N#+*'1 Ginsberg J1M1 and Cloom -1.1 6(''+71 %hoosing the ight Green Marketing Strategy M3& Sloane Management evie/1 Gonzlez 1 6(''*71 ,nalysing the ;actors 3nfluencing %lean &echnology ,doption: , Study of the Spanish -ulp and -aper 3ndustry1 Cusiness Strategy and the Environment 8!6#7 ('N8!1 Gross 1 each M1 O Cauen ,1 6(''871 -rogress in rene/able energy1 Environment 3nternational (=6#7 #'*N((1 perations1 %alifornia Management evie/ 8+ #'!"#(91 3E, 6('#87 &racking %lean Energy -rogress ('#8 3E, 3nput to the %lean Energy Ministerial1 $aldellis J1 $1 O Hafirakis D1 6('##71 &he /ind energy 6r7evolution: , short revie/ of a long history1 ene/able Energy 896!7 #))!N#='#1 $olk ,1 6('''71 Economics of Environmental Management rganizations -olicy and the .atural Environment: 3nstitutional and
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Strategic -erspectives1 Stanford Stanford: Stanford University -ress1 loyd C1 O Subbarao S1 6(''=71 Development challenges under the %lean Development Mechanism 6%DM7I%an rene/able energy initiatives be put in place before peak oil Energy -olicy 8!6#7 (8!N(+*1 Menz ;1 %1 6(''*71 Green electricity policies in the United States: case study1 Energy -olicy 886#)7 (8=)N(+#'1 Moore C1 O AKstenhagen 1 6(''+71 3nnovative and Sustainable Energy &echnologies: &he ole of Fenture %apital1 Cusiness Strategy and the Environment #86+7 (8*N(+*1 .eu D1 Aarsame <1 and -ed/ell $1 6#==)71 Managing public impressions: Environmental disclosures in annual reports1 ,ccounting >rganizations and Society (8 (9*"()(1 -ainuly J1 1 6(''#71 Carriers to rene/able energy penetration a frame/ork for analysis1 ene/able Energy (+6#7 !8N)=1 -aladino ,1 O -andit ,1 -1 6('#(71 %ompeting on service and branding in the rene/able electricity sector1 Energy -olicy +*6('#(7 8!)N8))1 -rahalad %1 $1 O Crugmann J1 6(''!71 %ocreating Cusiness ? s .e/ Social %ompact1
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usso M1 and ;outs -1 6#==!71 , resource"based perspective on corporate environmental performance and profitability1 ,cademy of Management Journal +' *8+"**=1 Sethi S1 -1 and Elango C1 6#===71 &he influence of country of origin on multinational corporation global strategy: , conceptual frame/ork1 Journal of 3nternational Management * ()*"(=)1 Sharma S1 and Fredenburg <1 6#==)71 -roactive corporate environmental strategy and the development of competitively valuable organizational capabilities1 Strategic Management Journal #=!(="!*81 Sharma S1 and
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