Enhancing Sustainability in Renewable Energy Innovation: The Role of Peer Dynamics and Firm Characteristics Amid Climate Crises

Hiva Rastegar, Aymen Sajjad, Gabriel Eweje and Kazunori Kobayashi

Business Strategy and the Environment, 2025, vol. 34, issue 2, 2361-2377

Abstract: This study investigates peer influence on a firm's pursuit of renewable energy innovation following climate change–induced disasters. While mimetic pressures and competitive dynamics have been recognized as drivers of green innovation, the impact of external uncertainties, such as climate change–induced disasters, on these dynamics remains underexplored. This study fills this gap by revealing how firms pursue renewable energy innovation amid competitive pressures and environmental challenges. Utilizing the behavioral theory of the firm and the threat rigidity model, we analyze US firms' pursuit of renewable energy innovation following climatological disasters from 2013 to 2018 through a difference‐in‐difference‐in‐differences approach. Our findings reveal that peers' pursuit of renewable energy innovation can dampen a firm's own pursuit of renewable energy innovation postdisaster, and this effect is less pronounced among multinational enterprise subsidiaries. Theoretically, this study deepens our understanding of how climatological disasters shape competitive dynamics and innovation, challenging the view that competition invariably drives innovation. Practically, it provides insights into effective resource allocation and prioritizing collaborations for sustainability. For policy‐makers, the findings highlight the need for regulatory environments that encourage collaborative innovation and enhance resilience, directly contributing to Sustainable Development Goal 7 (affordable and clean energy) by promoting sustainable energy use.

Date: 2025
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