Abstract
The pre-eminence of the production and consumption of nonrenewable fossil fuels is waning with the growth of renewable energy solutions. This long-term energy (LTE) transition is one of the global grand challenges, characterized by uncertain and evolving markets. Although this is a global issue, there are regional differences and non-linear trajectories that suggest that the LTE transition is a complex challenge for firms and countries. For international business scholars, questions related to the role and effect of multinational enterprises in the context of the LTE transition have opened new avenues for advancing theoretical, managerial, and policy understanding. Thus, we advance this body of research by presenting a framework that delineates important drivers and outcomes of the transition. In this way, we emphasize how MNEs both influence and are being influenced by the LTE transition. We identify theoretical perspectives that may be useful to address LTE transition challenges, and suggest avenues for future research on this global grand challenge.
Resume
The prominence of the production and consumption of non-renewable fossil fuels is diminishing with the increase in renewable energy solutions. This long-term energy transition (LTE) is one of the great global challenges, characterized by uncertain and changing markets. Although this is a global problem, there are regional differences and non-linear trajectories, which suggest that the LTE transition is a complex challenge for both businesses and countries. For international affairs researchers, questions related to the role and impact of multinational companies in the context of the LTE transition have opened up new avenues for advancing theoretical, managerial and political understanding. Thus, we are advancing this body of research by introducing an analytical framework that specifies the main drivers and consequences of the transition. In doing so, we highlight how multinational companies influence and are influenced by the LTE transition. We identify the theoretical perspectives that could be useful to meet the challenges related to the LTE transition, and suggest avenues for future research on this great global challenge.
Resumen
The preeminence of the production and consumption of renewable tidak ada fossil bahan mudah terbakar is declining with the growth of renewable energy solutions. The long-term energy transition (LTE) is one of the great global challenges, characterized by uncertain and changing markets. Although this is a global issue, there are regional differences and non-linear trajectories that suggest that the transition to LTE is a complex challenge for companies and countries. Untuk informasi lebih lanjut Oleh karena itu, we advance this body of research by presenting a framework that outlines the drivers and outcomes of the transition. In this way, we emphasize how multinational companies both influence and are influenced by the transition to LTE. We identify theoretical perspectives that may be helpful in addressing the challenges of transition to LTE and suggest opportunities for future research on this great global challenge.
Summary
The dominance of production and consumption of non-renewable fossil fuels diminuiis diminishing with the growth of renewable energy solutions. This long-term energy transition (LTE) is one of the greatest global challenges, characterized by uncertain and evolving markets. Although it is a global problem, there are regional differences and non-linear trajectories that suggest that the LTE transition is a complex challenge for companies and countries. For international business scholars, issues related to the role and effect of multinational companies in the context of the LTE transition have opened up new avenues for advancing theoretical, managerial and political understanding. Thus, we advance this body of research by presenting a model that outlines important drivers and outcomes of this transition. Thus, we emphasize how MNEs both influence and are influenced by the LTE transition. We identify theoretical perspectives that can be useful to address LTE transition challenges and suggest avenues for further research on this major global challenge.
INTRODUCTION
We’re at quite a unique moment where there are going to be a multitude of solutions and the question is going to be; ‘which ones do you want to play in?’ because there are some big opportunities and equally there are some big downside risks.
Brian Gilvary, BP former Chief Financial Officer, July 9, 2020
The long-term global energy transition (LTE), ie the shift from the production and consumption of non-renewable fossil fuels to the use of low-carbon and renewable energy solutions, is well underway. So far, the focus has shifted from questioning whether an LTE transition will take place to more nuanced debates about when and how. Indeed, there is a growth in renewable and low-carbon energy sources across a wide range of global energy supply and demand indicators (IEA, 2020a; Sovacool, 2016). Despite this growth, there are regional differences and non-linear trajectories that suggest that the LTE transition is a complex and evolving challenge for companies and countries. For example, reductions in carbon emissions in Japan and the European Union have failed to offset increases in China and India, and the same kind of imbalance is taking place in other parts of the globe, so overall emissions have actually increased since then. establishment of the Kyoto Protocol in 1997 (Ritchie & Roser, 2020). These and other data indicate the complexity of the task, and that governments, industries, businesses and consumers around the world struggle with this “great challenge” (Buckley et al., 2017).
For international business (IB) scholars, questions related to the role and effect of multinational enterprises (MNEs) in the context of the LTE transition have opened new avenues for advancing theoretical, managerial, and policy understanding. To date, the IB community has paid limited attention to global energy issues despite the ubiquity of energy challenges across regions and industries. Traditional fossil fuel energy production in particular has been treated as a specific and not particularly interesting context for theory development within IB (Shapiro et al., 2018). This is surprising given the global economic impact of energy production. In Canada alone in 2019, it accounted for 219 billion Canadian dollars, 10.2% of total gross domestic product (Natural Resources Canada, 2020). Despite the limited attention to energy issues in the IB literature, two growing perspectives on MNEs and global energy challenges have emerged to provide novel understanding. One focuses on MNEs as producers of renewable energy. Research adopting this perspective investigates the strategies of MNEs to create and implement renewable energy innovations (Amankwah-Amoah, 2015; Hallbäck & Gabrielsson, 2013; London & Hart, 2004), as well as engage in institutional work (Lawrence et al., 2013) to improve energy accessibility (Vera & Langlois, 2007). The second perspective focuses on MNEs as energy consumers, and, thus, their negative impacts on the environment or their attempts to improve their impacts through consuming renewable energy and low-carbon solutions. Research adopting this perspective looks at MNE strategies, such as locating where environmental standards are lax, pejoratively known as pollution havens (Eskeland & Harrison, 2003; Meyer, 2004) or strategies to improve environmental sustainability.
Although much of the focus of IB research on global energy challenges centers on energy consumption and production, as evidenced by these two perspectives, the LTE transition has a broader reach. What makes the LTE transition a “grand challenge” is that it involves many co-evolving, interacting components and many diverse stakeholders, and this makes progress difficult to assess (Buckley et al., 2017; S&P Global, 2020). The current economic, social, technological, and regulatory pressures for cleaner, more sustainable energy sources create a fundamental shift towards low-carbon and renewable energy production and consumption that impacts environmental sustainability, energy security, and energy accessibility worldwide. To this end, what role might multinational enterprises (MNEs) play in the LTE transition? What might their effect be? What are the theoretical, managerial, and policy implications? To call attention to these questions and to advance IB scholarship, we present a framework that connects the two perspectives we describe above by delineating important drivers and outcomes of the transition.
We unpack the drivers and outcomes of the global LTE transition in this introduction to the Journal of International Business Studies special issue on “The LTE transition and IB”, a part of “The Grand Challenge of Energy Transitions” joint initiative with the British Journal of Management. MNEs both influence and are being influenced by changes in the global economy (Cantwell et al., 2010), and we focus specifically on how they impact and are impacted by the LTE transition. In the remainder of this article, we review the various facets of our LTE transition framework in light of the challenges and opportunities it presents for MNEs. We also identify theoretical perspectives that may be useful in addressing questions raised in this special issue. We close by briefly reviewing the articles that appear in this special issue, then suggest avenues for future research on what is truly a grand challenge
THE LONG-TERM ENERGY TRANSITION: A POINT OF DEPARTURE
Buckley et al. (2017) call on IB scholars to do more to address grand challenges by, in part, broadening their perspective and engaging with others in allied social sciences to address global phenomena of great import. The LTE transition is one of those, both because it is a social issue of worldwide importance and because it provides a foundation for addressing rich IB research questions. The LTE transition refers to the global shift from nonrenewable, fossil-based systems of energy generation, storage, infrastructure, and consumption – including oil, natural gas, and coal – to low-carbon solutions and renewable energy sources like wind and solar (S&P Global, 2020). As mentioned above, the question is not if LTE transition will take place – the production of various sources of renewable energy has increased over the past 50 years (see Table 1) – but rather when and how.
For MNEs, understanding the economic, social, technological and regulatory drivers of low-carbon and renewable energy solutions and how they affect LTE transition outcomes is crucial to identifying the unique challenges they face and the opportunities made available to them. Here, we draw attention to our framework as it relates to MNEs (see Figure 1). We will expand on it, paying particular attention to the drivers and outcomes of the transition, and use key facets of it to advance multiple avenues of IB theorizing.
Drivers of the Long-Term Energy Transition: Interacting and Co-Evolving Components
The LTE transition is driven by the co-evolution and interaction of economic, social, technological, and regulatory components that shape the energy system via low-carbon and renewable energy solutions. We expand on these four main drivers of the LTE transition below.
The long-term energy transition: Drivers, outcomes, and the role of the multinational enterprise
Author(s): A. Erin Bass & Brigitte Grøgaard
ARTICLE
Cite this article
Erin Bass, A., Grøgaard, B. The long-term energy transition: Drivers, outcomes, and the role of the multinational enterprise. J Int Bus Stud 52, 807–823 (2021).
Keywords
- business and the environment
- energy
- global environment
- multinational corporations (MNCs) and enterprises (MNEs)
- long-term energy transition
- sustainability
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