In this chapter we analyze the challenges that European multinational enterprises (MNEs) in the electric utility industry face in the transformation of the electric utility industry, going from a production and value chain-based business model toward more customer oriented and network-based business models. More specifically, we describe and analyze how seven European MNEs respond and change business models to navigate in the new sustainable energy landscape. We use business model innovation theory to identify patterns among MNE electricity utilities engaging in the sustainable transformation of the energy landscape electric utility industry. We identify two types of incumbent responses to the sustainable transformation of the electric utility industry: proactive and reactive Goliaths. We observe that cooperation between successful start-ups, Emerging Davids, and Proactive Goliaths with new innovative business models, organizing the cooperation in separate units, and disconnected from the core business could leverage the sustainable transformation of industries.
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Jessica Lagerstedt Wadin, Kajsa Ahlgren and Lars Bengtsson
The role of multinational enterprises (MNEs), particularly in an American context, has evolved from one defined by shareholder primacy to one that must consider a greater panorama of stakeholder interests. The traditional view of capitalism is giving way to a modern view, in which global issues like climate change have rallied citizens around the world toward an expectation that corporations will take greater responsibility for the stewardship of social and environmental conditions. What Donaldson calls “non-perfectionist moral languages” are adequate to theorizing corporate ethics in the traditional view, but the modern international business environment requires a “perfectionist moral language” to undergird it. Non-perfectionist languages imply a fundamentally limited moral aspiration, and lead to a systemic deferral of responsibility. Perfectionist languages, on the other hand, presuppose an unlimited moral aspiration and invite the MNE to take full ownership of any consequences that follow from corporate operations. Emmanuel Levinas, a twentieth-century French philosopher whose unique conception of ethics has recently become a popular resource for theorists in nearly every field of inquiry, sketches out a perfectionist moral language that provides a fresh approach to the ethical dimension of multinational decision making. His theory prioritizes the other over the self, inverting the order of relations at the basis of traditional capitalism. This leads to an ethics that eschews reliance on formal frameworks and quantifiable metrics, focusing instead on the felt responsibility for individual, vulnerable stakeholders. MNE managers are empowered to envision possibilities for profitably utilizing corporate capabilities and resources in service to others. The MNE becomes a steward of its stakeholders’ well-being and, in so doing, aspires as a matter of course to maximize social and environmental health in the communities in which it operates.
Alfred Marcus and Joel Malen
For multinational enterprises (MNEs) to contribute to the far reaching commitment nations made at the 2015 Paris Accord on Climate Change, they must take up the task of introducing cleaner energy solutions. However, the efforts made by MNEs to innovate are fraught with uncertainty. Increasingly, MNEs are addressing this uncertainty by acquiring successful start-up firms working in cleaner energy technology spaces. Such firms are typically supported by venture capital (VC) funding – either from dedicated private VC firms or through VC activates of the MNEs themselves. Understanding how MNEs are able to promote the diffusion of clean energy technologies therefore requires attending to the strategies VCs and start-up firms use to navigate the inherent risks of innovation they confront. Attempting to convert society’s need for cleaner energy into a business opportunity exposes such firms to formidable technological, political, and economic challenges that cannot be anticipated beforehand. In this chapter, we identify the steps that investors (Khosla Ventures, KPCB, Intel Capital, and Google Ventures), and young firms (First Solar, Suntech, Tesla, and Better Place) took to make mitigate the risks. The chapter highlights the late and calculated entry of the VCs, their diversification, and the side-benefits for established firms like Intel and Google of having their corporate VC arms invest in cleaner technologies. For the start-up firms the risk mitigation techniques that the chapter brings to light are their reliance on patient capital, the flexible business models that they used, and their ability to gain and establish stakeholder confidence by adopting staged, but achievable, goals. Important lessons for MNEs aiming to commercialize cleaner energy technologies emerge from this chapter’s analysis. The uncertainty of investing in these technologies, especially in their most advanced forms, where they are really likely to make a dent in alleviating climate change, remains substantial. For MNEs to succeed in advancing the wide-scale adoption and diffusion of these technologies, they must hedge their bets. They must scan the activities of specialized ecologically devoted entities to determine where profitable opportunities may lie, broadly diversify their bets on these opportunities to assure that they have some likelihood of success, and try to secure for themselves some side-benefits in the face of inevitable failure. To build socially responsible cleaner energy businesses that enable the world to deal with challenge of climate change, they must be patient in their support, flexible in the strategies they adopt, and careful about the scope of their goals to assure that they are achievable.
Jerome Baddley, Amit Arora, Anshu Arora, John R. McIntyre, Petra Molthan-Hill and Reginald Leseane
The paper highlights the role of environment laws and legislation in achieving sustainability for the food industry. We present a real life case study of a food sector company, Riverside Bakery, a subsidiary of the Pork Farms Group in the United Kingdom; and illustrate carbon footprint calculations within the regulatory framework of the UK government. We illustrate how to measure and calculate the carbon footprint of a company on the basis of Scope I, II, and III emissions by identifying and quantifying all sources of energy consumption. Our calculations indicate a 9.56 per cent decrease in carbon footprint of the company as compared to baseline year. The calculations illustrated in our case study can be replicated by companies in emerging economies by using country-specific conversion factors. Since small companies in emerging economies lack the resources and knowledge to implement sustainability initiatives, our case study can serve as a small step for these companies towards the ultimate goal of becoming environmentally sustainable and reduce their carbon footprints. Previous research suggests that small and medium enterprises (SMEs) possess various organizational characteristics for promoting and implementing internal sustainability related practices but lack capabilities for external communication and reporting. On the other hand, such SMEs while transitioning to large multinational enterprises (MNEs) develop capabilities to promote external communication and reporting but find themselves constrained in internal implementation due to their increased size. The paper provides a road map to measure and manage carbon footprint of easily identifiable major emission sources in a SME, which can continue to be monitored as the company grows and expands internationally; thus, delivering financial benefits even after the transition phase.
Rohan Crichton, Thomas Walker and Alpna Patel
Climate change is upon us and, now more than ever, humankind is searching for meaningful solutions to this global problem. However, climate change is a complex situation and intertwined in this grand challenge are the debilitating issues of poverty and environmental degradation in the developing world. Organizations have been part-and-parcel of the problem, yet they hold the solutions as well. Our paper aims to decipher and enhance these solutions through a detailed investigation of the literature and via several case studies of responsibly led organizations that already make a difference in the developing world. We propose a model of how poverty and environmental degradation can be mitigated by pro-environmental-social strategic human resource practices, mediated by responsible leadership. We conclude with a discussion of our findings, explore implications for organizations, suggest future research, and discuss contributions to the transdisciplinary literature.
Sanjay Bhāle and Sudeep Bhāle
Food production and its efficient distribution is a critical issue the world over. There are a lot of changes happening in the global market, especially in the emerging markets compared to the western part of the globe in relation to food production and its supply. In recent years these markets have witnessed explosive growth of the middle class, driven by greater industrialization and urbanization. An emerging middle class creates changing dietary habits, such as consuming more carbohydrates, a more fibrous diet, and fresh organic food. This whole phenomenon is more resource intensive, which puts local supply chains under greater pressure. These factors, combined with climatic uncertainties in the regions, make the production and distribution of food a critical issue. However, the issue can be addressed if a viable value chain is established. A value chain denotes integration of different levels of production and distribution in a manner that adds value to the product and each step by attaining process specialization and quality improvement. The improvement in efficiency is derived from the factors related to production and carries importance for future competitiveness of the product. This paper is of qualitative type that aims to highlight the significant aspects of value chain building in the market of agriculture produce. It discusses the concept with the help of a case where an enterprise has created a system helping farmers to build capabilities in agriculture produce. It highlights key initiatives taken by an Indian enterprise, the Indian Tobacco Company, to establish a structured approach of value chain in agribusiness though collaboration. Collaboration among the various stakeholders along the food value chain is more important than ever. The interdependencies between stakeholders are no longer in silo, mainly because most functions are closely linked along the chain. This model also encompasses stakeholders anywhere in the network. It also maintains a regional balance by focusing on strategic alliances between big as well as small farmers, storing/processing units, and distribution and sales enterprises that seek to create more value of the front end (farmers) of the chain and operate efficiently with other farmers to create significant volume, which in turn creates economies of scale.
Juliana Kucht Campos, Patr'cia Alcântara Cardoso, Antônio Andre Cunha Callado and Maja Izabela Piecyk
Changing the way people, companies, and governments behave is critical for mitigating the impacts of global warming, and multinational enterprises (MNEs) have been acting as catalysts of change. Besides corporate actions, they have the power to engage business partners in initiatives for improving supply chain transparency, setting environmental and social standards, employing eco-efficient measures and technologies, and triggering joint efforts to reduce risks and improve supply chain sustainability. Given this context and based on public documents from 26 MNEs from developed and developing countries, companies’ sustainable supply chain initiatives were classified into 92 specific types. Results from the qualitative analysis showed that each researched industry – Basic Material & Energy, Automotive & Commercial Vehicles, Consumer Goods, and Transport & Logistics Services – has specific characteristics in regard to supply chain efforts to mitigate climate change and improve sustainability. Furthermore, results from the quantitative analysis confirmed that MNEs have been focusing on internally focused initiatives while still lacking measures related to distribution activities. The most significant result, however, pertains to logistics service providers (LSPs). After running statistical tests, the relatively low number of sustainability initiatives undertaken by service providers compared to producers was confirmed. Nevertheless, due to their strategic supply chain position – closer to the customers and suppliers – LSPs have an opportunity to reinvent themselves in order to act as sustainability transformers in the near future. In order to play this strategic role, these companies first need to structure basic standards and policies that guide managers, employees, and business partners to promote considerable reductions in the impact of corporate operations on people and the environment. Moreover, the alignment of company’s strategies and sustainability efforts, creation of teams to manage the issue, and promotion of internal communication and education are complementary initiatives that support motivating and changing the sector’s mindset. They can also generate additional value for their customers when designing new services that mitigate climate change, drawing their attention to the chances of extending sustainability throughout the supply chain. In this sense, supply chain collaboration schemes can be triggered by LSPs, transforming this highly polluting and “commodity-deliver” sector into an innovative and value creator.
The end of the Second World War saw the emergence of a plethora of multinational and international organisations led by the United Nations, being constituted to lead the comity of nations on an agreed path of dignity and development. Around the same time, often away from the lime light, the multinational business enterprises, often unlinked and unknown to one another, quietly emerged to create wealth through markets. Although the national governments struggled through the maze of real politic to create a semblance of the dream of a United World Order, the multinational enterprises went on to achieve an incredible model of a Globalised Economy and a global consumer without too many people noticing it! Soon, there was hardly any aspect of life that remained untouched by the multinational enterprise (MNEs) and it was reported that the top 20 MNEs had a combined turnover that was higher than the gross domestic products of the 100 poorest countries of the world! But interestingly, in addition to the legal provisions governing them, the primary responsibility of the corporation was towards its shareholders. Wealth creation was therefore aimed primarily at adding value to the shareholder, and its primary responsibility began and ended with its shareholders. It was then realised that shareholder value creation may be achieved at the cost of social good and environmental well-being. To overcome this problem, the concept of corporate social responsibility (CSR) was introduced which would ensure that businesses would be obliged to spend a part of their profits either for the community or the environment as a part of their CSR. However, in a situation where 0.7 percent of the world population has 45.6 percent of the wealth, and where 8.2 percent of the population has control over 86.2 percent of world wealth, and if consumption levels of the developing nations were to reach the levels of the developed nations, one Planet Earth would not be enough! In terms of reach and efficiency, there is no doubt that the MNE would be the vehicle of choice to take the world to its desired destination of both inclusive and sustainable development. The challenge is to bring about the required design modification in both its philosophy and its functioning and thereby create a new organisational design. Can it rise to the challenge?
Maria da Conceição da Costa Marques
The current tendencies in public accounting are based on a conceptual framework consisting of a set of inspiring principles of accounting standards and practices, according to which entities subject to public accounting should prepare the financial information with the objective of obtaining an image of reality. Accounting can play an important role in supporting, collaborating, and coordinating between different partners, with the participation of stakeholders and citizens in decision-making processes. Modern public sector management relies on management information systems that enable accurate, reliable, and up-to-date information on the state and the economic and financial performance of the states on the same terms as any other economic entity. International Public Sector Accounting Standards (IPSAS) are the standards to achieve these objectives. IPSAS 19 proposes to define provisions, contingent liabilities, and contingent assets, as well as identify the circumstances under which provisions should be recognized, how they should be measured, and what disclosures should be made about them. This rule should be applied in accounting for provisions, contingent liabilities, and contingent assets by entities that prepare and present financial statements in accordance with the accrual regime (except for the exceptions and exclusions provided for in the standard) and apply to all entities of the public sector that are not Government Business Enterprises. The main theme of this study is the new aspects of public accounting and IPSAS 19 and concerns provisions, contingent liabilities, and contingent assets. In the case of provisions, these are reflected in the Balance Sheet and Income Statement, while liabilities and contingent assets are disclosed in certain circumstances in the notes to the accounts.