The impact of climate change on firm adaptation: the case of the wine industry

Abstract

Purpose The purpose of this study was to test the effects of climate change, as manifested in both temperature and rainfall changes, on adaptive practices in a sample of wine firms operating in South Australia. Given that firms’ adaptation to the external environment can be advanced through effective internal learning systems, a further purpose was to explore the moderating effect of absorptive capacity. Design/methodology/approach The authors used a survey as well as secondary sources to collect data. Regression analysis was used to test the hypotheses. To test the robustness of the results, alternative measures of temperature and rainfall changes were used. Findings By studying 207 wine firms, the analysis suggests that climate change is significantly and positively associated with adaptive practices. Further, as hypothesized, absorptive capacity positively moderates both relationships. Research limitations/implications The use of a single industry in a specific location limits the generalizability of the results. Implications suggest that when the effects of climate change are considered the natural environment might be accorded salient stakeholder status. Further, when absorptive capacity is high, firms appear to adapt to climate change at a greater rate, suggesting that internal learning systems are important. Originality/value This is one the few studies in the business literature that considers the effects of actual physical changes in the natural environment on firm behaviour. Further, the paper is one of the few to incorporate natural stakeholder-based theory as a means of exploring climate change. The research paves the way for future studies of responses to such changes.