Corporate Strategy and Climate Change: Heterogeneity and Change in the Global Automobile Industry

Abstract

Transportation accounts for nearly one-third of US greenhouse gas emissions, so any mitigation strategy requires the constructive engagement of the automobile industry. The task of strategic planning for low-emission technologies by automobile companies is particularly demanding, however, in the face of environmental issues such as climate change, due to their long-term, market transforming potential, and the high level of uncertainty concerning environmental science, technological and market developments, and policy responses. It is not surprising, in this context, that there is considerable variation in responses across companies in the same industry. The authors examine differences between response strategies between auto companies in the US and Europe. While economic and market structures partly explain the greater tolerance in Europe for carbon emission limitations, we argue that perceptions of corporate strategic interests are premised upon attitudes toward climate science, the prospects for low emission technologies, anticipations concerning consumer responses, and expected policy responses. These expectations and understandings are shaped and constituted through a company's own institutional structure and history, as well as interactions with the external institutional environment, including industry associations, universities, the media, and national and international governance structures. In this paper the authors also discuss a number of economic, political, organizational, and technological factors that have caused a dramatic shift in climate strategies in recent years.