When policy mixes meet firm diversification: sugar-industry investment in bagasse cogeneration in Mexico (2007–2020)

Alma Lucia Garcia Hernández*, Simon Bolwig*, Ulrich Elmer Hansen*

*Corresponding author

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In the literature on sustainability transitions, increasing attention has been devoted to the conceptualization and analysis of policy mixes. However, previous research has scarcely examined the relationship between policy mixes and their effects on the actors being targeted. Furthermore, it has neglected the issue of the heterogeneity of target groups and its effect on their responses to policy mixes. In this paper, we aim to fill this knowledge gap by developing a conceptual framework integrating insights from the literature on the policy mix with that on firm diversification strategies. Our framework conceptualizes firms’ responses to the policy mix based on their respective incentives and opportunities for undertaking investments aimed at diversifying their core business activities. The framework is applied empirically to an in-depth analysis of the effects of the policy mix on investments in grid-connected bagasse cogeneration undertaken by sugar-mill companies in Mexico from 2007 to 2020. The results show that the variation in firms’ diversification strategies depends critically on the different incentives and opportunities for innovation experienced by the studied firms. The paper argues that, while the policy mix is an important factor in firm diversification, additional firm-specific and firm-external factors should also be considered. A theoretical implication of the findings is that the agency of firms as 'mediators' of change deserves greater attention from the policy mix literature. A key policy implication is the need to pay closer attention to the heterogeneity of target groups when designing and implementing policy.

TidsskriftEnergy Research & Social Science
StatusUdgivet - sep. 2021
Udgivet eksterntJa

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