Firms’ Policy Reference Frames and Political Strategy Choices in Environmental Policy Transitions

Prior research has not yet sufficiently explained why firms with similar organizational characteristics – i.e. comparable incumbents – may still vary in their political strategy choices when faced with (environmental) policy transitions. Based on comparative case studies of the four leading Swiss electricity utilities’ political strategies during Switzerland’s EnergieStrategie 2050 development, we find that firms’ selected policy reference frames critically explain variations in their political strategy choices via the induced loss aversion. When the firm selected a reference frame with a narrow (broad) problem reference and a close (distant) temporal reference, it was more likely to identify certain threats (probable opportunities) and as a result to engage in political influence (compliance) and value maintenance (creation). Further, we find that threat-mitigating policies may reduce certain threats’ salience, without which opportunity-creating policies may fail to succeed. We contribute to the literatures on business-government relationships, managerial cognition, (environmental) policy transitions, and derive policy implications.