New Working Paper by Caetano Penna.
How do corporate actors respond to social and environmental problems? Firms usually hold assets useful for promoting technological innovation that may help address a ‘societal’ problem (or ‘societal issue’). However, they often face little incentive to promote such innovation, because the costs associated with societal problems are not reflected in markets. Sometimes incumbents not only do not innovate, but also put up active resistance, through e.g. challenging scientific findings connected to the problem or lobbying against
regulations. Yet, past examples show that at some point incumbents can change their strategies and become more seriously committed to developing and marketing technological solutions to a given societal problem. This article draws lessons from two theory-informed
historical case studies on how corporations responded to social and environmental problems: the response of American automakers to the issue of local air pollution and the response of American automakers to the issue of car safety. The first case saw automakers developing and selling cars with catalytic converters, which significantly contributed to diminish the level of car emissions of conventional pollutants. The second case saw automakers not only developing car safety features, but also embracing the ‘safety theme’ in their advertising practices and ‘mission’. However, innovations in both cases only came about after long periods of struggle between those calling for change (such as activists and policy-makers) and automakers resisting change, in what can be seen as the ‘issue life-cycle’ process. The article uses a conceptual model of issue life-cycle to draw five lessons about how corporations respond to social and environmental issues. It concludes with implications for contemporary strategies by social movement organizations and policy-makers.