Sustainability in the wake of crisis: Transforming climate change-induced disasters into drivers of renewable energy innovation in business

Hiva Rastegar, Aymen Sajjad, Gabriel Eweje and Kazunori Kobayashi

Journal of Economic Behavior & Organization, 2024, vol. 228, issue C

Abstract: This study examines how climate change-induced disasters affect renewable energy innovation in United States-based firms. To this end, we utilized the behavioral theory of the firm and the threat rigidity model to investigate strategic decision-making in the context of environmental crises. We employed a difference-in-differences approach combined with meta-analysis. Further, we analyzed data from 2013 to 2018 and found a significant increase in renewable energy innovation following climatological disasters, marked by an effect size of 0.74. However, firms exceeding their aspiration levels exhibit a smaller impact, reducing the effect on renewable energy innovation by 0.273 units. Additionally, firms with a frequent history of climatological disasters showed a decrease in renewable energy innovation, with an effect size of -0.349. Our research contributes to green innovation literature, particularly to renewable energy innovation discourse under climate challenges. It extends the behavioral theory of the firm to contexts of climatic uncertainty and applies the threat rigidity model to determine organizational adaptation. The study introduces a novel moderator: the firm's history of natural disasters, linking firm age with disaster frequency and severity. These insights are vital for enhancing strategic decision-making in the business and policy-making contexts, amidst the growing climate change challenges.

Keywords: Renewable energy innovation; Climate change-induced disasters; Behavioral theory of the firm (BTOF); Threat rigidity model; Firm's history of natural disasters (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:228:y:2024:i:c:s0167268124003913

DOI: 10.1016/j.jebo.2024.106777

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