Irene Lau (Hong Kong Public Administration Association)
Increasing stringent regulation and transparent information disclosure are current trends that companies need to face arising principally from unprecedented climate change. Such responses to a low carbon economy overtly influence not only the society and environment but also a company’s financial performance. The Porter Hypothesis explains how environmental regulations directly influence sustainability strategies and overall performance of individual company. Limited studies examine why companies respond differently when facing the same regulation pressures and the influence of company reaction on its own performance in a minimal-competitive environment. This study synthesises the Porter Hypothesis by adding resource-based view theory, stakeholder theory and institutional analysis to examine the case of two Hong Kong electricity suppliers in the period between 1994 and 2015. Semi-structural interviews and archival materials from these two companies as well as reports from the Hong Kong Government are the major sources of data.
The results indicate that company resources influence company response regarding environmental regulations. In addition, the importance of a company’s anticipated institutional change cannot be neglected. This study also finds that a company needs to consider a trade-off between financial objectives and non-financial objectives in terms of its impact on society and the environment. This study contributes to the understanding of organizational responses to sustainability issues and their performances in a minimal-competitive context. It also offers practical suggestions for policy makers and companies to focus on their sustainability strategies in the future.