The Difficulty of Climate Change Adaptation in Manufacturing Firms: Developing an Action-Theoretical Perspective on the Causality of Adaptive Inaction
Abstract
:1. Introduction
2. The Relevance of Strategic Adaptations for Manufacturing Firms
3. The State of Research on the Causality of Adaptive Inaction
4. Conceptual Foundations: The Employed Model of Action and Its Implications for Applying the Term Agency
- who intend to increase the resilience of their firms to climate change,
- who aim at maximizing the economic utility of the firm, and
- who are disposing of limited information.
5. Outlining the Explorative Research Design
6. Emerging Agency Restraints along the Dimension of Time
6.1. Managers’ Adaptive Agency with Regard to Investment Horizons
Discussion of Requirements and Opportunities of Action
Proposition of Agency Restraints
Deduction of Predictions
6.2. Managers’ Adaptive Agency with Regard to Long-Term Strategic Planning
Discussion of Requirements and Opportunities of Action
Proposition of Agency Restraints
Deduction of Predictions
- consider long innovation lead time to prevail in their firm (PRET2.1) or
- have high confidence in experiencing a long lifespan of the firm (PRET2.2).
6.3. Managers’ Adaptive Agency with Regard to Institutionalized Time Horizons
Discussion of Requirements and Opportunities of Action
Proposition of Agency Restraints
- risks that adaptations induce sunk costs due to uncertain changes in political framework conditions (PROT3),
- uncertain value contribution of long-term adaptations due to the content of, and due to the time horizons imposed by, reporting legislations (PROT4), and
- enforcement costs of imposing a long-term orientation to informal institutions (PROT5).
Deduction of Predictions
- if they are aware of adaptation options whose effectiveness and efficiency is scarcely depending on political framework conditions (PRET3),
- if participating in voluntary reporting schemes, which incentivize the reporting of climate risks and adaptations, such as the Carbon Disclosure Project (PRET4), or
- if they are in charge of such companies, which already dispose of informal institutions oriented at long-term risk management (PRET5).
6.4. Managers’ Adaptive Agency with Regard to Time Horizons Imposed by Significant Other Actors
Discussion of Requirements and Opportunities of Action
Proposition of Agency Restraints
Deduction of predictions
6.5. Managers’ Adaptive Agency with Regard to Early Mover Disadvantages
Discussion of Requirements and Opportunities of Action
Proposition of Agency Restraints
- by efficiency risks of conducting adaptations under immature framework conditions (PROT7) and
- by risks of facing adjustment costs (PROT8).
Deduction of Predictions
- who already perceive relevant business impacts of framework conditions, which relate to climate adaptations (PRET7), or
- who consider the available practical knowledge required for adaptations as sufficiently developed (PRET8).
7. Emerging Agency Restraints along the Dimension of Knowledge
7.1. Managers’ Adaptive Agency with Regard to Risks of Negative Externalities
Discussion of Requirements and Opportunities of Action
Proposed Agency Restraints
Deduction of Predictions
- estimating to dispose of high informational capacities (PREK1.1) or
- if estimating that the measure in question is connected to a low complexity and to a low severity of potential ecological, social and economic consequences (PREK1.2).
7.2. Managers’ Adaptive Agency with Regard to Risks of Inducing Vulnerability-Increasing Lock-In Effects
Discussion of Requirements and Opportunities of Action
Proposed Agency Restraints
Deduction of Predictions
- which are connected to long-lived investments (PREK2.1) and
- which are only reversible at high costs (PREK2.2).
8. Emerging Agency Restraints along the Dimension of System Boundaries
8.1. Managers’ Adaptive Agency with Regard to Cross-Tier Dependencies of Resilience-Increasing Innovations
Discussion of Requirements and Opportunities of Action
Proposed Agency Restraints
Deduction of Predictions
8.2. Managers’ Adaptive Agency with Regard to Cross-Tier Dependencies of Climate-Sensitive Risk Management
Discussion of Requirements and Opportunities of Action
Proposed Agency Restraints
- limitations due to having a low power position in the supply chain network (=PROSB1),
- costs of developing, introducing and enforcing a climate-sensitive management of cross-tier risks (PROSB2), and
- risks of trusting the information disclosed in cross-tier risk management (PROSB3).
Deduction of Predictions
- if considering the position of their company within the supply chain as powerful (=PRESB1),
- if considering the company to be disposing of large (e.g., financial and personnel) capacities (PRESB2.1),
- if considering climate risks as highly relevant for business success (PRESB2.2), and
- if trust exists in business partners along the supply chain (PRESB3).
9. Discussion
10. Conclusions
Acknowledgments
Author Contributions
Conflicts of Interest
References
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Challenges | Proposed Agency Restraints | Predicted Prerequisites for Adaptations | ||
---|---|---|---|---|
Conducting long-term adaptations (T) | PROT1 | Opportunity costs of lost returns from investments with shorter time | PRET1 | Consideration of climate risks as highly relevant for business success |
horizons | ||||
PROT2 | Uncertain value contribution of long-term strategic planning | PRET2.1 | Consideration that long innovation lead time prevails in the firm | |
PRET2.2 | High confidence in a long lifespan of the firm | |||
PROT3 | Risks that long-term adaptations induce sunk costs if changes in political | PRET3 | Awareness of adaptation options whose effectiveness and efficiency is | |
framework conditions occur | scarcely depending on changing political framework conditions | |||
PROT4 | Uncertain value contribution of conducting long-term adaptations due | PRET4 | Situation of the firm to be participating in voluntary reporting schemes | |
the content of, and due to the time horizons imposed by, reporting | which incentivize the disclosure of climate risks | |||
legislations | ||||
PROT5 | Enforcement costs of imposing a long-term orientation to informal | PRET5 | Situation of the firm to be already disposing of informal institutions | |
institutions | oriented at long-term risk management | |||
PROT6 | Risks of reduced attractiveness for some investors if allocating resources | PRET6 | Situation of the firm to be family-owned or financed by strategic | |
to optimizing long-term instead of short-term performance | investors | |||
Conducting adaptations at an early point in time (T) | PROT7 | Efficiency risks of conducting adaptations under immature framework | PRET7 | Consideration of present framework conditions, which relate to |
conditions | adaptations, as already having a relevant impact on business success | |||
PROT8 | Risks of facing future adjustment costs | PRET8 | Consideration to dispose of sufficient practical knowledge on expectable | |
climate impacts and on adaptation options | ||||
Conducting adaptations despite uncertain effects of the measure (K) | PROK1 | Reputational risks of inducing negative externalities | PREK1.1 | Consideration of the firm to dispose of high informational capacities |
PREK1.2 | Estimation that the respective measure is connected to a low complexity | |||
and low severity of ecological, social and economic consequences | ||||
PROK2 | Risks of inducing vulnerability-increasing lock-in effects | PREK2.1 | Awareness of adaptation options which are not connected to long-lived | |
investments | ||||
PREK2.2 | Awareness of adaptation options which are reversible at low costs | |||
Conducting adaptations despite cross-tier dependencies in supply chains (SB) | PROSB1 | Constraints to conducting resilience-increasing innovations and | PRESB1 | Consideration of the company’s position within the supply chain as |
cross-tier risk management in case of adverse actor constellations | powerful | |||
PROSB2 | Costs of developing a climate-sensitive, cross-tier risk management | PRESB2.1 | Consideration that the firm disposes of large (e.g., financial and | |
personnel) capacities | ||||
PRESB2.2 | Consideration of climate risks as highly relevant for business success | |||
PROSB3 | Risks of trusting information disclosed in cross-tier risk management | PRESB3 | Perception of trust in business partners |
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Meinel, U.; Schüle, R. The Difficulty of Climate Change Adaptation in Manufacturing Firms: Developing an Action-Theoretical Perspective on the Causality of Adaptive Inaction. Sustainability 2018, 10, 569. https://doi.org/10.3390/su10020569
Meinel U, Schüle R. The Difficulty of Climate Change Adaptation in Manufacturing Firms: Developing an Action-Theoretical Perspective on the Causality of Adaptive Inaction. Sustainability. 2018; 10(2):569. https://doi.org/10.3390/su10020569
Chicago/Turabian StyleMeinel, Ulrike, and Ralf Schüle. 2018. "The Difficulty of Climate Change Adaptation in Manufacturing Firms: Developing an Action-Theoretical Perspective on the Causality of Adaptive Inaction" Sustainability 10, no. 2: 569. https://doi.org/10.3390/su10020569
APA StyleMeinel, U., & Schüle, R. (2018). The Difficulty of Climate Change Adaptation in Manufacturing Firms: Developing an Action-Theoretical Perspective on the Causality of Adaptive Inaction. Sustainability, 10(2), 569. https://doi.org/10.3390/su10020569