Overcoming Risk Aversion Regarding Energy Efficiency Practices through Mimetic Pressure and Financial Slack: Findings from the Moroccan Manufacturing Sector

Abstract

The Moroccan manufacturing sector consumes 24% of the country’s total energy production. Morocco is dealing with energy challenges related to its growing energy consumption, which has made energy efficiency a national priority. In this study, we construct a model that includes mimetic pressure and financial slack as drivers to reduce the intensity of risk aversion regarding electrical energy efficiency practices within companies. Our research model was empirically examined using survey data gathered from 193 manufacturing companies located in four Moroccan regions. Results show that risk aversion is negatively related to energy efficiency practices. Both mimetic pressure and financial slack are positively related to energy efficiency practices. Both mimetic pressure and financial slack reduce risk aversion. Mimetic pressure dampens the negative relationship between risk aversion and energy efficiency practices, while financial slack does not dampen the negative relationship between risk aversion and energy efficiency practices. This study shows the importance of mimetic pressure in reducing risk aversion regarding energy efficiency practices. Therefore, policymakers should publicize in the media companies that have gained from the adoption of energy efficiency practices and establish an award system of best energy efficiency practices in each industry. This study is an extension of the previous literature since we found that financial slack decreases the level of risk aversion, but this does not always translate into energy efficiency practices, as the previous literature assumes.

From “Fairly Good” to “Optimal” Energy Efficiency Practices within the Moroccan Manufacturing Sector: Are Financial Resources Sufficient?

“…One possible explanation is that companies' priority is to maintain competitive position within their sector, and they only adopt energy efficiency practices when their survival is at stake. In addition, companies adopt energy efficiency practices when it is established that other companies have benefited from them, which could be explained by companies' risk aversion regarding the adoption of energy efficiency practices (Bensouda and Benali, 2022c).…”

“…Financial slack is the sum of available cash and untapped debt potential (Bensouda and Benali, 2022c). Financial slack is the easiest category of slack resources to be transformed into other categories of slack (De Jong et al., 2021).…”

“…Mimetic pressure results from positive feedback from pioneers regarding the effectiveness of a practice, which influences other companies to replicate the same successful practice (Islam, 2020). Mimetic pressure could increase sustainable practices within companies (Ji, 2020), including energy efficiency practices (Bensouda and Benali, 2022c). In this aspect, we believe that mimetic pressure could reduce the intensity of companies' satisficing behavior regarding energy efficiency practices.…”

“…Reducing energy demand through energy efficiency requires efforts from companies operating in all sectors. In this aspect, most sectors are confronted with rigorous requirements in terms of energy consumption (Bouzarovski et al., 2021), particularly the manufacturing sector that has a central role in decreasing the energy efficiency gap (Bensouda and Benali, 2022c).…”

“…In addition, financial resources were considered as the ultimate catalyst for energy practices within companies (Abdmouleh et al., 2015). Companies' financial resources are referred to as "financial slack" which is the sum of available cash and untapped debt potential (Bensouda and Benali, 2022c). In this regard, a low level of financial slack is regarded as a strong barrier to energy efficiency within companies (Jalo et al., 2021).…”