The role of institutional entrepreneurship in promoting the aviation industry’s carbon reduction practices: two case studies from northeast Asia
Creators: name: Wu, Benjamin
Publisher: name: RMIT University
Year: 2024
Subjects: classificationCode: 350105
subject: Management accounting
classificationCode: 350108
subject: Taxation accounting

description: This study examines initiatives to reduce aviation operators’ carbon emission advocated by social actors representing institutional entrepreneurs in the aviation industry in Northeast Asia. Further, it explores the role of institutional entrepreneurs in promoting emission reduction practices specifically through participation in international and local Emission Trading Schemes. Using two case studies - China Southern Airlines in China and Asiana Airlines in South Korea, qualitative data was collected through 20 semi-structured interviews with elite aviation carbon market executives and regulators. This data was then triangulated with secondary sources including sustainability reports, governmental regulations, and news items. Thematic analysis was undertaken using NVivo to generate key themes and findings.  The objective of this investigation is to explore the roles (if any) of institutional entrepreneurs in carbon emission reduction practices, including, but not limited to, the development of and participation in various CORSIA scheme and ETSs.

Using institutional entrepreneurship as the theoretical framework, findings show that the two cases mainly reduce carbon emissions through capacity building and cost optimisation. The analysis suggests that creating organisational culture and building corporate awareness are fundamental drivers for the two airlines to adopt various institutional entrepreneurship strategies and enact collective institutional entrepreneurship. It finds that, in the fast-growing aviation market of China (the second largest in the world), social actors enjoyed a favourable social status armed with abundant social and financial resources such as government subsidies. They transposed expertise and ideologies into the global markets by creating legitimacy through the socially accepted carbon offsetting mechanism. In contrast, for South Korea, inheriting a long-established environmental management culture and fertile field-excellence, the actors there created harmonious policy integration between externally driven power and internally reformed power. This enabled them to build Monitoring, Reporting and Verification (MRV) systems for sustainability transition and institutional change to achieve net-zero growth by 2030–2050.

This research makes significant contributions to institutional entrepreneurship theory. It fills the void on sustainability transition in the aviation industry in emerging markets. These are markets in non-Annex I or middle-income countries. It examines the differences in institutional strategies that transform the incumbent market system and contributes to cross-cultural comparative research on sustainable aviation transitions. It also responds to the call for more studies comparing sustainable transitions in different countries’ industrial and institutional contexts at different levels of development.

This thesis reveals that unique institutional entrepreneurial strategies in Northeast Asian countries are based inherently on cultural consensus or cognitive rules in their local market, which distinguishes them from Western countries. It provides evidence for the institutional entrepreneur’s enabling roles in fostering a culture-normative perspective. Findings show that institutional entrepreneur in China and South Korea leveraged field-level conditions in their respective countries to strengthen adoption of sustainability policies and gain advantages in the international aviation markets. It suggests institutional entrepreneurs can transcend the external pressure to internal organisational incentives by raising the standard of firm-level compliance and enhancing the benchmark comparability in sustainability transition. When actors occupy favourable social positions, they can represent national interests or be recognised as the legitimate pioneers in normalising ethical environmental practices in the industry. This thesis also advances prior literature by showing that it is effective for actors to work collectively with their affiliated forces in developing countries, including regulators and third-party agencies, to increase their corporate competitiveness by the inclusion of exemplary sustainability practices. This contrasts with the isolated and contested manner of individual social actors’ actions in developed Western countries.

Insights from this research have important practical implications for key stakeholders in various aviation carbon markets. This study shows that initiation of Emission Trading Scheme (ETS) systems by the central government of Northeast Asian countries can ensure the legality and administrative integrity of that ETS system. The environmental ministries need to communicate with their economic development counterparts to align their emission-reduction targets. For aviation operators and strategic financial professionals, adopting the practice of sustainability management, building rapport with consumers, community and like-minded individuals, and promoting social responsibility commitments are effective ways of building corporate awareness and facilitating social participation. For carbon market practitioners, particularly in emerging and growing aviation markets, the market differentiation role in product development that comes from achieving sustainable growth, and the respective United Nations Sustainable Development Goals (UNSDGs), can play a crucial role in organisations being effective.