Multinational energy utilities in the energy transition: A configurational study of the drivers of FDI in renewables

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Journal Title
Journal ISSN
Volume Title
A1 Alkuperäisartikkeli tieteellisessä aikakauslehdessä
Date
2021-07
Major/Subject
Mcode
Degree programme
Language
en
Pages
Series
Journal of International Business Studies
Abstract
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.
Description
Keywords
energy transition, pollution havens, FSA-CSA matrix, FDI, incentives, state-owned enterprises
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Citation
Patala, S, Juntunen, J, Lundan, S & Ritvala, T 2021, ' Multinational energy utilities in the energy transition: A configurational study of the drivers of FDI in renewables ', Journal of International Business Studies, vol. 52, no. 5, pp. 930-950 . https://doi.org/10.1057/s41267-020-00387-x