Heterogeneity and Change in Environmental Strategy: Technological and Political Responses to Climate Change in the Global Automobile Industry

The formulation of strategy is generally treated as a rational process of matching corporate capabilities to market demands. But this does not always account well for the heterogeneity observed in corporate strategies toward complex environmental issues such as climate change. In this chapter, we propose that strategy is often developed in light of expectations and assumptions concerning a firm's internal competencies and the external market and nonmarket environments. These expectations, we propose, are shaped by institutional forces at multiple levels, including the firm, the national industry, the global industry, and the specific environmental issue. In particular, we argue that collective interpretations about the nature of and solutions to climate change constitute important drivers of strategy, and these collective interpretations are molded and contested within institutional fields. In addition to providing a fresh perspective on corporate environmental strategy, this chapter makes a number of contributions to institutional theory. First, we reject a strict dichotomy between the influence of the institutional environment and the competitive environment, as corporate perceptions of market trends are themselves subject to institutional construction. Second, we argue that tensions and political contestation across the complex terrain of interpenetrating and nested fields give rise to heterogeneity and change as integral features of institutional fields rather than difficulties to be explained away. Finally, we suggest that