Co-Evolution in Relation to Small Cars and Sustainability in China

Abstract

This article explores how the institutional context, including central and local governments, has co-evolved with business in relation to small cars and sustainability. This issue is very relevant for business and society in view of the environmental implications of the rapidly growing vehicle fleet in China, the economic importance attached to this pillar industry by the government, and citizen interest in owning and driving increasingly larger cars. The interactions between different levels of government, and with business (both domestic and foreign-invested) in countries with a large role for the state is a novel area of study in the business-society area and a complex one given the multitude of objectives and interests involved in industry competitiveness, economic development, energy security, and sustainability. The article shows that the central government has adopted policies to further the production and use of small cars, which it perceives as serving environmental, economic, and social goals. Concurrently, however, many local governments imposed restrictions on small cars and have, implicitly or explicitly, favored larger cars. There seems to be a clear linkage to municipal ownership of those domestic automobile companies which, via joint ventures with foreign firms, focused more on larger cars. By adopting a co-evolutionary approach focused on macro-level interactions, the case helps to shed some more light on concrete sustainability challenges, and broader government–business interactions in a highly institutionalized setting, contributing insights on issues that have remained underexposed in business and society research.

Driving the electric bandwagon: The dynamics of incumbents' sustainable innovation

“…What has been specific to the automobile industry in a sustainable technology context is the substantive influence of coercive isomorphism. Emission standards, fiscal incentives, and industrial policy have been key in pushing automobile companies in the direction of sustainability, generally, and sustainable product innovation, more specifically (Kolk & Tsang, 2017;. Although most policies originated in specific national settings, there has been a convergence overall, as governments tend to take similar measures (Bohnsack et al, 2015).…”

“…Although EVs experienced a revival from 2006 onwards, the wave of activities in the period 2006-2009 had an overwhelming focus on prototypes, concept, and test cars, and was accompanied by publicly expressed doubts about the future of EVs. Government policy in the form of emission standards, fiscal incentives, and industrial policy clearly put pressure on the automobile industry(Kolk & Tsang, 2017;Pinkse et al, 2014). In addition, in 2008, the launch of the Tesla Roadster received a lot of public attention and, arguably, put pressure on the incumbent car manufacturers to become more active.…”

The Influence of the Government on Corporate Environmental Reporting in China: An Authoritarian Capitalism Perspective

“…Although Matten and Moon's (2008) framework is applied to explain the differences in CSR as an explicit/implicit element in the institutional frame-work of the United States and Europe, there has been less of a consensus in its application beyond that. Some, taking a narrower interpretation of the frame-work, have argued that the position of traditionally statecentric countries such as China is beyond its scope and that there is a need for a different type of theo-retical base (Kolk & Tsang, 2017). In contrast, others have adopted a wider interpretation and note that although Matten and Moon did not explicitly address the less developed or government-dominated economies, an extension of their framework is relevant beyond the United States and Europe.…”

“…However, the relationship between different levels of government and firms in terms of CSR or environmental policy has not really been studied. In the study of the interactions between central and local governments in China in the execution of policy with regard to small cars and sustainability, Kolk and Tsang (2017)…”

“…However, the relationship between different levels of government and firms in terms of CSR or environmental policy has not really been studied. In the study of the interactions between central and local governments in China in the execution of policy with regard to small cars and sustainability, Kolk and Tsang (2017) found there are conflicts of interest between the central Chinese government and the local Chinese governments, which could weaken efforts to support CSR. Despite these findings, many studies have either combined the different levels of government into an entity called the state or have mainly focused on the influence of the central government, thereby ignoring the nuances of power and influence exercised by the local or provincial governments (Hofman et al, 2017; Marquis & Qian, 2014).…”