Study of Organisational Strategy in Response to Climate Change Issues

Haigh, Nardia (2008). Study of Organisational Strategy in Response to Climate Change Issues PhD Thesis, School of Business, The University of Queensland.

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Author Haigh, Nardia
Thesis Title Study of Organisational Strategy in Response to Climate Change Issues
School, Centre or Institute School of Business
Institution The University of Queensland
Publication date 2008-08-17
Thesis type PhD Thesis
Supervisor Griffiths, Andrew B.
Steen, John T.
Subjects 350000 Commerce, Management, Tourism and Services
Formatted abstract Commentators have argued that climate change, or “…any change in climate over time, whether due to natural variability or as a result of human activity…” (McCarthy, Canziani, Leary, Dokken & White, 2001: 984), has become a critical issue for businesses and economic systems due to its unpredictability and financial impact. This dissertation presents the results of a study in which I investigated organisational response to climate change within Australia’s electricity supply industry. Two main research questions drove the study: (1) ‘How do organisations respond to climate change issues?’ (2) ‘How do responses compare along a product supply chain?’ In addressing these questions, and to develop theoretical insights, three streams of management literature were complemented to develop an a priori climate change response framework: The resource-based view, institutional theory, and sensemaking. In combination, these perspectives facilitated theory development about how organisations respond to climate change issues.
The study was undertaken by developing four organisation-level case studies with the cooperation of four electricity supply organisations: A generator, transmitter, distributor and retailer; taking in the length of the electricity supply chain. These case studies were used to develop six issue-level case studies, which are included in Appendix B. Data were collected using semi-structured interviews, historical document content analysis, and observation. Themes and patterns were derived from organisation-level and issue-level case studies using qualitative methods.
Six main climate change issues were identified: a carbon price, the need to manage GHG emissions, incremental changes in ambient and peak temperature and demand for electricity, water availability, the need to respond to stakeholder expectations, and more and stronger extreme weather events.
Seven aspects of the study contribute to management literature.
First, a climate change response framework was developed to explain organisational responses to the issues listed above. The framework includes four phases: Pre-formation, Formation, Sensemaking and Action. Unlike other issue response frameworks (cf. Daft & Weick, 1984; Thomas, Clark & Gioia, 1993), the climate change response framework does not assume issues arise out of scanning activities. Rather, it accommodates issues emerging through any means such as scanning, regulation, physical impacts, stakeholder pressure, or a combination of factors.
Second, by using the framework, three issue response patterns were identified that suggest organisational response is contingent upon the source of the issue as recorded in the Formation phase. Pattern one includes issues emanating from the natural environment; pattern two includes
Nardia Haigh, A Study of Organisational Strategy in Response to Climate Change Issues
issues emanating from both the natural environment and either regulative or normative institutions; and pattern three includes issues emanating from regulative or normative institutional influences.
Third, an inter-organisational macroculture (Abrahamson & Fombrun, 1994) was identified in relation to impacts from the natural environment, and was observed to be in decline among the organisations. Specifically, cultured-cognitive factors had historically caused the organisations to overlook impacts from the natural environment in relation to organisational strategy. However, managers had recently begun to consider these impacts during strategy development. In addition to this macroculture not having been identified previously, results identifying its decline differ from previous work which has investigated what determines the emergence and reproduction of macrocultures, and their affect on organisational performance and culture.
Fourth, the development of the climate change response framework, response patterns and the macroculture all include the dynamics of the natural environment as theoretically significant. They demonstrated that the RBV can accommodate the dynamics of the natural environment because these dynamics are inherently related to resources and are important to organisational strategies; therefore, competitiveness. This study extends Hart’s (1995) emphasis that strategies have biophysical constraints, by considering that these limits are not static, but change uncontrollably and non-negotiably with the dynamics of the natural environment and climate change.
Fifth, this study goes beyond most previous work on functional aspects of addressing issues by finding that functional coverage attained by an issue (i.e. the number of areas engaging with the issue and the degree to which multiple areas were coordinated in their efforts) influenced the overall comprehensiveness of response. These results are suggestive of Lawrence and Lorsch’s (1967) findings that inter-departmental integration was highest in more successful organisations; however, the basic pattern of having initiatives coordinated across functions also appeared to have the effect of breaking issues down into manageable portions, which is reminiscent of a ‘small wins’ approach (Weick, 1984). This suggested that combining concepts of functional coverage with small wins, which has not previously emerged in management literature, may be an appropriate approach for investigating or addressing climate change.
Sixth, a change occurred in the institutional environment during data collection; in that Prime Minister Howard’s Task Group on emissions trading (PM Task Group) was initiated. The PM Task Group investigated the implementation of emissions trading in Australia and reported that it could be implemented by 2012. This increased the likelihood of a carbon price being realised, which enabled changes in response to be observed in real-time. The results indicate that although
Nardia Haigh, A Study of Organisational Strategy in Response to Climate Change Issues
the PM Task Group was an external regulative stimulus, it did not change how a potential carbon price was categorised or labelled; though it did change some organisational actions. Results concurred somewhat with those of Balogun and Johnson (2004) and with IT assumptions, as subsequent interpretations of the carbon price issue reflected what had already been legitimised (Lindner & Rittberger, 2003; Zilber, 2002).
Seventh, an axiom was identified in the environmental sustainability literature whereby organisations closer to the primary-producing end of the industrial spectrum need to be and are more responsive to environmental sustainability issues than others. The underlying rationale of research question two was to explore whether this axiom of environmental sustainability held true for climate change issues. Results show it does hold true in many ways, which is counter-intuitive, because climate change issues can manifest in quite different ways in each part of the supply chain, and are not merely environmental sustainability issues.
Overall, climate change is presented as a phenomenon that is creating a range of important issues with which all organisations need to engage for long-term sustainability. This study responds to calls by management scholars (cf. Hart, 1995; Winn & Kirchgeorg, 2005) to include the natural environment within management frameworks, and the results demonstrate the case for including the dynamics of the natural environment within the RBV. The findings challenge the basis of some management theories and expand the scope of the natural environment beyond its role as a passive resource and waste repository provider, to that of having dynamic and strategically important roles in organisational strategy. The results indicate that management theorists and policymakers need to follow the lead of organisations by taking onboard the dynamics of the natural environment as theoretically and practically important to their work.

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