Energy transition and non-energy firms’ financial performance: Do markets value capability-based energy transition strategies?
Energy Economics, vol.136, 2024 (SSCI, Scopus)
- Publication Type: Article / Article
- Volume: 136
- Publication Date: 2024
- Doi Number: 10.1016/j.eneco.2024.107658
- Journal Name: Energy Economics
- Journal Indexes: Social Sciences Citation Index (SSCI), Scopus, International Bibliography of Social Sciences, PASCAL, Periodicals Index Online, ABI/INFORM, Agricultural & Environmental Science Database, Business Source Elite, Business Source Premier, Compendex, EconLit, Environment Index, INSPEC, PAIS International, Public Affairs Index
- Keywords: Business, Energy transition, Financial performance, Strategy, Sustainability
- Middle East Technical University Affiliated: Yes
Abstract
Energy transition has become a major challenge that will shape the global agenda in the coming decades. In addition to governments and major energy firms, non-energy firms also play a significant role in the energy transition with their growing share in renewable energy supply and other pro-environmental investments. Using the Resource-based View and Dynamic Capabilities perspectives, we discuss non-energy firms’ capability-based energy transition strategies and explore the channels through which these strategies affect their financial performance. We test our hypotheses using S&P 500 firms’ data and show that capability-based energy transition strategies have had a positive moderating effect on the relationship between the renewable energy sector performance and non-energy firms’ financial performance in the short term. Furthermore, these strategies have had a positive moderating effect on the relationship between fossil fuel prices and non-energy firms’ financial performance in the long term. Our findings indicate that capability-based energy transition strategies created a virtuous investment–return opportunity for non-energy firms between 2009 and 2021.