Deregulation and environmental differentiation in the electric utility industry
Article first published online: 20 DEC 2006
Copyright © 2007 John Wiley & Sons, Ltd.
Strategic Management Journal
Volume 28, Issue 2, pages 189–209, February 2007
How to Cite
Delmas, M., Russo, M. V. and Montes-Sancho, M. J. (2007), Deregulation and environmental differentiation in the electric utility industry. Strat. Mgmt. J., 28: 189–209. doi: 10.1002/smj.578
- Issue published online: 20 DEC 2006
- Article first published online: 20 DEC 2006
- Manuscript Revised: 17 JUL 2006
- Manuscript Received: 7 FEB 2005
- environmental differentiation;
- electric utility;
- renewable energy;
- productive efficieny
This paper analyzes how economic deregulation impacts firm strategies and environmental quality in the electric utility industry. We find evidence that the deregulation introduced to this historically staid industry has stimulated environmental differentiation. Differentiation is most likely to appear where its point of uniqueness is valued by customers, and we confirm this relationship in our sample. Specifically, utilities that served customers who exhibited higher levels of environmental sensitivity generated more ‘green’ power. The tendency for firms to differentiate in this way is lessened if they are relatively more dependent on coal-fired generation or relatively more efficient. Thus, there is evidence that firms sort themselves into either differentiation or low-cost strategies as the competitive realities of a deregulated world unfold. Deregulation and the ensuing environmental differentiation illustrate how utilities exploited formerly unmet customer demand for green power. The result has been greater levels of renewable generation and, hence, a cleaner environment. Copyright © 2007 John Wiley & Sons, Ltd.