An Intentionality-Based Model of Non-Market Strategies: Evidence from Climate Change Risk Disclosure and Carbon Reduction Target Setting
24 Nov 2022 (Thu)
LSK Rm1034
Mr Tae-Ung Choi, Northwestern University

We present a model of non-market strategies that accounts for intentional orientations. Following the elaboration of intentional orientations as manifested configurations of issue engagement, we define intentionally equivalent corporations as those who have similar configurations of engagement with a given array of issues. Against this backdrop, we theorize that intentionally equivalent corporations (a) use similar non-market strategies, (b) influence one another to a greater extent when it comes to the diffusion of a novel non-market strategy, but (c) make less progress on it as they face a greater degree of competition from one another. Using a proprietary dataset from CDP (formerly, the Carbon Disclosure Project), we test these ideas and demonstrate that intentionally equivalent S&P 500 corporations similarly disclose climate change risks and follow one another's adoptions of science-based carbon reduction targets. But as the degree of competition intensifies among intentionally equivalent corporations, corporations tend to reach their carbon emissions reduction targets more slowly. Our evidence supports the explanatory power of intentional orientations to explain how climate change non-market strategies are used and implemented, which is robust to alternative mechanisms such as networks of interlocking directorates, organizational ideology, and industry affiliation.