Association for Public Policy Analysis & Management

Organizational scholars have long been interested in the question of how firms adapt to adverse changes in their operating environments. Organizational adaptation describes in particular a change in a significant organizational attribute, such as a basic business strategy or organizational structure in response to environmental change. While firms may be able to cope with low to moderate levels of ecological adversity, their adaptive actions may become unfeasible and/or ineffective at higher levels of adversity. Firms may thus reach an adaptation limit, or a point at which available adaptation may no longer be sufficient to maintain their core business. Yet the mechanism by which firms may reach adaptation limits has not yet been adequately described in the organizational context.

This paper explores how ecological adversity may affect firm adaptation. Additionally, we explore how participation in a voluntary environmental program (VEP) moderates the link between ecological adversity and adaptation. We argue that firms facing moderate ecological adversity engage in the highest levels of adaptation, as firms experiencing low ecological adversity may have less need to adapt, while firms experiencing high ecological adversity may be less able to adapt. Normative pressures –in the form of an industry-sponsored VEP- moderate firm responses to ecological adversity, possibly constraining firms’ ability to adapt to ecological adversity with natural-resource-intensive practices because of the negative environmental effects generated by these adaptation practices.

We conducted a 13-year longitudinal analysis in the ski industry of ski resorts’ adaptation (measured as acres of ski resort slope expansion) to temperature conditions. The ski industry is on the frontline of ecological adversity associated with climate change, and is already adapting to protect its core business. The study included 71 western U.S. ski resorts, for a total of 798 firm-year observations. Our results indicated a non-linear, inverted U-shaped relationship between ecological adversity and adaptation, suggesting that firms facing moderate ecological adversity appear more likely to engage in higher adaptation levels while those experiencing low and high ecological adversity show a tendency for lower adaptation levels. Interestingly, we did not find that participation in an industry-sponsored VEP (the Sustainable Slope Program) constrained ski resorts’ adaption in the form of slope expansion.

Our proposed areas of contribution involve: First, we seek to extend the broader policy literature on organizational adaptation by suggesting that the logics of both traditional adaptation perspectives may collectively shape organizational response to ecological adversity. Second, we also contribute to the subset of the policy literature on organizational adaptation to changing conditions in the natural environment. This analysis shows that ecological adversity may undermine not just firms’ core business activities, but also the very adaptive efforts put in place to sustain these. Additionally, we contribute to the environmental policy literature on VEPs by suggesting that the normative pressures generated by voluntary environmental programs may not be enough to constrain firms’ from adapting to climate change adversity.