The Interplay between Perceived Business Uncertainty and Organizational Capabilities in Firms' Response to Climate Change

Su Yol Lee, Chonnam National University
Robert Klassen, (No Affiliation)

ABSTRACT
With climate change emerging as one of the most important issues increasing uncertainty to the business circle, firms have shown different reactions. Why do firms differ in adopting and implementing carbon management practices (CMPs) in response to the global warming issue? This paper attempts to explore this question with particular attention to two factors: external business uncertainty and internal organizational capabilities. In this paper, we investigated whether business uncertainty, organizational learning and lean production capabilities influenced the adoption and implementation of CMPs as well as examined how organizational capabilities? moderate the relationships between business uncertainty and the level of CMPs. The results of a cross-sectional survey and hierarchical regression analyses indicate that (a) perceived business uncertainty decreases the adoption of CMPs, in particular those conducted within an organization; (b) organizational learning and lean production capabilities strongly facilitate the adoption and implementation of CMPs; and (c) lean production capability positively moderates the impacts of business uncertainty on the adoption of CMPs. This study provides guidance for managers and academics considering how to identify, design, and manage the dimensions of a firm?s practices in response to the global warming issue within organization as well as with other organizations.

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Updated 07/09/2013