TY - JOUR
T1 - Multinational energy utilities in the energy transition: A configurational study of the drivers of FDI in renewables
AU - Patala, Samuli
AU - Juntunen, Jouni
AU - Lundan, Sarianna
AU - Ritvala, Tiina
PY - 2021/7
Y1 - 2021/7
N2 - The global energy system has a long way to go to meet international climate goals, and significant investment in renewable energy is required to accelerate the energy transition (IRENA, 2016, 2019). We examine how firm- and country-specific conditions in the electric utility sector impact foreign direct investment (FDI) in renewables. Using a unique dataset of 289 greenfield investments by 17 multinational energy utilities, we employ a fuzzy set qualitative comparative analysis (fsQCA) that yields five causal configurations leading to FDI in renewables and four configurations leading to investment in non-renewables. Our results indicate that private MNEs are at the forefront of investment in renewables, and while state-owned MNEs (SOMNEs) do invest in them, they tend to follow strategies that are less risky compared to private MNEs and more responsive to host-country incentives. Our analysis suggests that for private MNEs, international experience is strongly associated with investment in renewables, while for SOMNEs it is associated with investment in non-renewables. Further, we also identify instances where MNEs contribute simultaneously to a ‘race to the top’ and a ‘race to the bottom’ by investing in both renewables and non-renewables in different markets, thereby reducing the pace of the energy transition.
AB - The global energy system has a long way to go to meet international climate goals, and significant investment in renewable energy is required to accelerate the energy transition (IRENA, 2016, 2019). We examine how firm- and country-specific conditions in the electric utility sector impact foreign direct investment (FDI) in renewables. Using a unique dataset of 289 greenfield investments by 17 multinational energy utilities, we employ a fuzzy set qualitative comparative analysis (fsQCA) that yields five causal configurations leading to FDI in renewables and four configurations leading to investment in non-renewables. Our results indicate that private MNEs are at the forefront of investment in renewables, and while state-owned MNEs (SOMNEs) do invest in them, they tend to follow strategies that are less risky compared to private MNEs and more responsive to host-country incentives. Our analysis suggests that for private MNEs, international experience is strongly associated with investment in renewables, while for SOMNEs it is associated with investment in non-renewables. Further, we also identify instances where MNEs contribute simultaneously to a ‘race to the top’ and a ‘race to the bottom’ by investing in both renewables and non-renewables in different markets, thereby reducing the pace of the energy transition.
KW - energy transition
KW - pollution havens
KW - FSA-CSA matrix
KW - FDI
KW - incentives
KW - state-owned enterprises
UR - http://www.scopus.com/inward/record.url?scp=85099103683&partnerID=8YFLogxK
U2 - 10.1057/s41267-020-00387-x
DO - 10.1057/s41267-020-00387-x
M3 - Article
VL - 52
SP - 930
EP - 950
JO - Journal of International Business Studies
JF - Journal of International Business Studies
SN - 0047-2506
IS - 5
ER -