Business responses to climate change regulations : evidence from the Saudi automobile industry

Alhassoun, Abdulmohsen and Mouzas, Stefanos and Awanis, Sandra (2025) Business responses to climate change regulations : evidence from the Saudi automobile industry. PhD thesis, Lancaster University.

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Abstract

Businesses must adopt sustainable practices to comply with climate change regulations, which exercise pressures by imposing strict requirements, financial burdens, and operational changes. For businesses, adapting to these pressures is crucial for maintaining competitiveness and long-term viability. Given their significant impact on business strategies, climate change regulations are thus a central focus of this thesis. Management and business literature often capture business responses to climate change regulations as isolated processes, focusing solely on individual businesses. However, this perspective overlooks the role of interactions within business networks. This thesis examines how businesses respond to climate change regulations, by adopting a network approach that highlights how interfirm adaptation emerges through continuous business interactions. By integrating a behavioural lens into the network approach, this thesis advances our understanding of business responses to climate change regulations and delivers a novel conceptual framework for adaptive business responses. At empirical level, the thesis adopts a sequential mixed-methods research design to investigate how businesses respond to climate change regulations within the Saudi automobile industry. The qualitative phase explores business interactions in responding to climate change regulations. Findings from 28 interviews suggest that businesses respond to climate change regulations through interfirm adaptation. Product and process adjustments emerge from interaction within business networks, facilitated by resource entitlements, resource mobilisation, resource exploitation, business relationships, economic exchanges, and legal contracts, while hindered by behavioural biases encompassing present bias, reference points, and loss aversion. The quantitative phase aims to validate the conceptual framework of adaptive business responses to climate change regulations. Findings from 99 participants confirm the significant influence of interactional and behavioural factors on activity-related aspects, which in turn influence interfirm adaptation. This contribution of the thesis has broader implications for businesses operating within networks, emphasising the value of business relationships that foster continuous interactions. Such interactions facilitate resource integration and activity linking, ultimately enhancing interfirm adaptation to external pressures like climate change regulations.