Purpose Under Pressure: How Uncertainty Shapes Investment Decisions in Purpose-Driven Firms

How does corporate purpose shape firm-level investment decisions under regula-tory uncertainty? While research has increasingly highlighted the role of purpose in guid-ing organizational behavior, less is known about how purpose interacts with environ-mental uncertainty to influence strategic investment choices. This paper elaborates theory by examining the interplay between corporate purpose, regulatory uncertainty, and investment decision-making in the context of hydrogen energy transition. Drawing on a qualitative case study of the BalticSeaH2 initiative and 17 interviews with partici-pating firms, we explore why firms that initially joined a purpose-driven initiative later di-verged in their investment paths—some advancing, some delaying, and others with-drawing. We find that the interaction between a firm’s commitment to purpose (strong vs. weak) and the level of regulatory uncertainty (low vs. high) shapes distinct invest-ment logics. Purpose-driven firms often frame uncertainty as an opportunity—investing in innovation, shaping policy, or adopting hybrid strategies—while weaker-purpose firms tend to delay or withdraw amid high uncertainty. We develop a 2×2 framework to theorize how these interactions produce divergent strategic responses.