Multinational Oil Companies and the Adoption of Sustainable Development: A Resource-Based and Institutional Theory Interpretation of Adoption Heterogeneity |
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Authors: | Luis Fernando Escobar Harrie Vredenburg |
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Institution: | (1) SKOLKOVO Institute for Emerging Market Studies, Moscow School of Management, Unit 1608, North Star Times Tower, No. 8 Beichendong Road, Chaoyang District, Beijing, 100101, China;(2) Department of Strategy & Policy, National University of Singapore, Singapore, 117592, Singapore |
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Abstract: | Sustainable development is often framed as a social issue to which corporations should pay attention because it offers both
opportunities and challenges. Through the use of institutional theory and the resource-based view of the firm, we shed some
light on why, more than 20 years after sustainable development was first introduced, we see neither the adoption of this business
model as dominant nor its converse, that is the total abandonment of the model as unworkable and unprofitable. We focus on
multinational corporations (MNCs) because they were among the organizations first called to take action. In order to illustrate
the institutional pressures MNCs face and their strategic response to these pressures, we analysed four major oil and gas
multinationals subject to similar sustainable development pressures – climate change, biodiversity, renewable energy development
and social investment. We argue that normative and coercive isomorphism does not occur at the global level because sustainable
development is largely a stakeholder-driven rather than a broad social pressure. That is, host country interpretation of sustainable
development pressures varies across an MNC’s subsidiary network. Based on the analysis of the four major MNCs’ annual reports
from 2000 to 2005, we argue that mimetic isomorphism may occur, but since it implies the use of complex and intangible resources,
mimetic processes are slow, rare and discretionary. |
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