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Short on Time: Intertemporal Tensions in Business Sustainability Natalie Slawinski, Pratima Bansal

To cite this article: Natalie Slawinski, Pratima Bansal (2015) Short on Time: Intertemporal Tensions in Business Sustainability. Organization Science 26(2):531-549. https://doi.org/10.1287/orsc.2014.0960

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OrganizationScience Vol. 26, No. 2, March–April 2015, pp. 531–549 ISSN 1047-7039 (print) � ISSN 1526-5455 (online) http://dx.doi.org/10.1287/orsc.2014.0960

Short on Time: Intertemporal Tensions in Business Sustainability

Natalie Slawinski Faculty of Business Administration, Memorial University of Newfoundland, St. John’s, Newfoundland A1B 3X5, Canada,

[email protected]

Pratima Bansal Richard Ivey School of Business, Western University, London, Ontario N6A 3K7, Canada, [email protected]

This inductive study of five firms in Alberta’s oil sands examines how organizations attend to the intertemporal tensionsbetween the short term and long term that are inherent in business sustainability. Grounding our insights in organiza- tional responses to the climate change issue, we find that firms that juxtapose the short term and long term also confront the tension between business and society. These firms are, therefore, more likely to recognize the complexity of climate change and the need for integrated, multidimensional solutions. These insights contribute to prior research in business sustainability.

Keywords : business sustainability; intertemporal choice; paradox; qualitative research History : Published online in Articles in Advance February 5, 2015.

Introduction The Alberta oil sands in Canada contain the third-largest proven oil reserves in the world, behind Saudi Ara- bia and Venezuela. Unlike the light conventional crude that flows easily from Saudi wells, the heavy oil con- tained within Alberta’s oil sands has the consistency of thick, sticky tar. Separating the oil from the sand requires an intense amount of energy. In 2009, the oil sands accounted for 6.5% of Canada’s greenhouse gas (GHG) emissions, and the emissions were expected to double from 2010 to 2020 (Environment Canada 2011, Department of Natural Resources Canada 2012). The high level of GHG emissions associated with extracting this oil has led to some oil sands critics labeling it “dirty oil.” As evidence has mounted of the potentially devas- tating consequences of climate change, the world’s eyes have increasingly focused on Alberta’s oil sands.

Companies operating in Alberta’s oil sands face a dilemma. On the one hand, they can mitigate climate change ahead of regulations by investing in technologies that reduce GHG emissions, but the costs are high and the benefits are often distant and uncertain (Keith 2009). On the other hand, these companies can reap short-term profits by extracting the oil while waiting for govern- ment regulations to kick in. Although many companies have chosen to focus on immediate profits and to delay investments in GHG emissions reductions, others have chosen to forgo some short-term profits to mitigate cli- mate change in anticipation of future regulations and shifts in market demand.

Organizational scholars have argued that companies tend to focus on the short term at the expense of

the long term, even if they face suboptimal long-term organizational outcomes (Laverty 1996, March 1999) and potentially irreversible negative societal and eco- logical consequences (Hoffman and Bazerman 2007). Firms, therefore, confront an intertemporal tension: “The demands of today differ from the needs for tomorrow” (Smith and Lewis 2011, p. 389). This tension is further underscored by the tension between business and soci- ety; business tends to fall victim to short-term financial markets, whereas society tends to embody longer-term challenges (Graves and Waddock 1994).

Discussions of climate change are often embedded within business sustainability, which is the field of research that is based on the principle of intergenera- tional equity: business operations should not compro- mise the welfare of future generations (Bansal 2005, Gladwin et al. 1995, Hart and Milstein 2003). In spite of the need to balance the present with the future, which is at the heart of business sustainability, surprisingly lit- tle research has been directed at unpacking this tension in either business sustainability research or organiza- tion science more broadly. Instead, most sustainability research is aimed at the tension between business and society, irrespective of time.

Research on economic short-termism, on the other hand, acknowledges the trade-off between present and future needs and finds that individuals and organizations, when faced with this trade-off, typically focus on the short term at the expense of the long term (Laverty 1996, Marginson and McAulay 2008). This literature discusses several approaches to managing the intertemporal ten- sion, including the application of discount rates to cal-

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culate the net present value of an investment. However, discounting the future relative to the present can con- tribute to short-termism. We believe, therefore, that to advance the simultaneous goals of business and society, the following question must be addressed: How do firms attend to the tension between the short term and the long term inherent in business sustainability?

To answer this question, we conducted an inductive multicase study of the responses of five oil and gas firms to the climate change issue. Drawing from interviews, participant observations, and archival data, we devel- oped insights into how these firms address the intertem- poral tension inherent in climate change. We find that some practices support diverse temporal perspectives, which encourages firms to juxtapose the short term and long term. Other firms engage in practices that empha- size efficiency, which leads them to polarize the short term and long term. Firms that juxtapose time approach climate change as a complex issue for their firm and society, whereas firms that polarize time see the world through a short-term lens. In other words, the tension between the short term and long term is connected inti- mately to the tension between business and society.

Literature Review Business Sustainability The field of business sustainability applies the principles of sustainable development to the firm level of analysis (Bansal 2005). The World Commission on Environment and Development (WCED) defined sustainable develop- ment as development “that meets the needs of the present without compromising the ability of future generations to meet their own needs” (World Commission on Envi- ronment and Development 1987, p. 43). This seminal definition of sustainable development explicitly refers to the connection between the short term and long term, and the need to balance the two time frames. Today’s actions are assumed to influence the support systems of future generations (Meadows et al. 1992). Sustainability scholars and practitioners agree that to protect the needs of future generations, individuals and organizations must change the way they view, value, and manage time; that is, they need to simultaneously accommodate both short and long time frames, not just the short ones that businesses tend to emphasize (Elkington 1998, Gladwin et al. 1995).

Sustainable development thus requires organizations to simultaneously address ecological, economic, and social needs in both the present and the future (Barbier 1987, Gladwin et al. 1995). Such a conceptualization of sus- tainable development highlights the importance of bal- ancing the short term with the long term, especially if we, seven billion humans (and growing), are to survive and thrive without destroying the earth’s life support system upon which we rely (Shrivastava and Kennelly 2013).

In other words, humans need to consume resources now to survive; yet overconsuming resources now could undermine the survival of future generations. Many nat- ural resources are finite or scarce (e.g., mines and min- erals); their consumption today leaves fewer resources for future generations (Daly 2005, Ostrom 1990). Other resources are renewable, but they take time to renew. Excessive consumption within a period of time can create systems imbalances, and “[m]any subsystems of Earth react in a nonlinear, often abrupt, way, and are particu- larly sensitive around threshold levels” (Rockström et al. 2009, p. 472). We are currently exceeding some of these thresholds, including the climate system threshold, which could have potentially disastrous consequences for peo- ple and organizations (Whiteman et al. 2013). As such, there is an urgent need to understand the tension between human economic development in the short term and long term. In keeping with the original conceptualization of sustainable development by the WCED, we define busi- ness sustainability as the ability of firms to respond to their short-term financial needs without compromising their (or others’) ability to meet future needs. In other words, firms must balance their short-term performance with both their long-term needs and the long-term needs of society, including operating within the limits of the biosphere.

In the organizations and sustainability literature, how- ever, this intertemporal tension has not been given due attention. Instead, business sustainability is typically defined as the firm’s ability to manage its triple bottom line—in other words, its environmental, social, and eco- nomic goals (Bansal 2005, Elkington 1998, Hart 1995, Hart and Milstein 2003). Such an emphasis on the need to balance these goals, which is often streamlined to merely the balance of business (financial goals) with society (environmental and social goals), has resulted in a stream of research that examines the tension between business and society while neglecting time generally and, therefore, also disregarding the underlying tension between the short term and long term.

In addition, research in business sustainability is start- ing to blur with research in corporate social responsibil- ity, as both groups of scholars try to understand whether the relationship between business and society represents a trade-off or a win-win (Margolis and Walsh 2003, Orl- itzky et al. 2003). This question has resulted in numer- ous studies that test the relationship between financial performance and a range of social (Hillman and Keim 2001) and environmental performance indicators (Graves and Waddock 2000, Griffin and Mahon 1997, Klassen and McLaughlin 1996, Russo and Fouts 1997). However, because these studies have not fully considered intertem- poral tensions, they may be unable to accurately model the relationships they purport to capture.

The connection between short-term business interests and long-term societal interests has also been a focus in

economics in discussions of private and public goods. Private goods are excludable and rivalrous goods owned by individuals or firms, who are assumed to act ratio- nally to maximize their utility (Ostrom 1990). Public goods, on the other hand, are nonexcludable and non- rivalrous, such as water and air, and must be managed over the long term. Although this body of work does not explicitly discuss the differences in time horizons, the utility of private goods tends to be higher with short-term consumption. A tension thus results between short-term private interests and long-term public inter- ests. Scholars have argued that public goods must be managed over the long term to avoid a “tragedy of the commons,” whereby a public resource deteriorates from the overuse by individuals acting in their individual and immediate self-interest (Hardin 1968).

The majority of studies in the organizations literature have focused on addressing the tension between busi- ness and society in terms of overcoming the sustainabil- ity challenges faced by businesses. Many studies recog- nize that most individuals and firms underinvest in social and environmental causes because they heavily discount long-term, uncertain payback (Hoffman and Bazerman 2007), yet few scholars have acknowledged the impor- tance of intertemporal tensions to these decisions.

Intertemporal Tensions in Organizations In spite of the paucity of research on intertemporal ten- sions in the context of business sustainability, intertem- poral tensions within organizations have been explored in several literatures. Intertemporal tensions can take many forms, including frictions between clock and event times (Bluedorn and Denhardt 1988, George and Jones 2000) and gaps between meeting deadlines and ensur- ing safety or quality (Blount et al. 2005, Perlow et al. 2002). The tension between companies’ short-term and long-term needs has been identified as an important tension for firms to manage by several streams of organizations research, including in the literature on short-termism (Laverty 1996, Marginson and McAulay 2008), ambidexterity research (Tushman and O’Reilly 1996), and the paradox literature (Lewis 2000, Smith and Lewis 2011). Each stream of literature has pro- posed approaches to addressing the intertemporal ten- sion, which occurs when firms’ needs in the present potentially undermine or oppose their future needs (Smith and Lewis 2011). We discuss each literature in turn.

Some researchers have examined short-termism in organizations, including its causes and mitigation (see Laverty 1996 for an overview). Short-termism has been defined as “a preference for actions in the near term that have detrimental consequences for the long term” (Marginson and McAulay 2008, p. 274). Two fundamen- tal assumptions surface in this research. First, organi- zations must space their costs and benefits over time.

Researchers have noted that many firm-level decisions, such as workforce training and technology investments, require an intertemporal choice given that “the timing of costs and benefits are spread out over time” (Loewenstein and Thaler 1989, p. 181). For example, research and development (R&D) investments require expenditures today, and their benefits do not accrue until sometime in the future. Conversely, firms can forgo investments in R&D, but doing so risks eroding their future income stream, as competitors innovate new products or cus- tomer preferences change. The second assumption— related to the first—is more behavioral. Actors often choose short-term options for a variety of reasons, includ- ing individual biases, organizational aversion to risk and uncertainty, and the institutional arrangements of finan- cial markets. Decades of research have shown a bias by individuals, organizations, and institutions for the present over the future (Bazerman 1994, Bluedorn 2002, Das 1987, Kahneman et al. 1991, March 2008, Thaler and Benartzi 2004, Zimbardo and Boyd 2008).

Many organizations apply discounted cash flow analy- sis to solving the intertemporal choice problem (Laverty 1996). Discounted cash flow analysis is a formula that enables analysts to compare different investment options by normalizing future cash flows to the present using a net present value (NPV) calculation. Although NPV analysis appears objective, the analyst must choose a desirable discount rate that suits the organization’s objectives. But as Laverty (1996) has suggested, ‘‘Even though many observers argue that using discounted cash flow analysis and paying attention to maximizing the stock price produce the optimal outcome, critics sug- gest that these practices are, in fact, the most important causes of economic short termism” (p. 827). In this case, tools such as discounted cash flow analysis can lead to suboptimal trade-offs based on the assumptions made (Hayes and Abernathy 1980). It is important, therefore, to understand the normative assumptions that are at the foundation of such analyses (Laverty 1996, Marginson and McAulay 2008).

The ambidexterity literature explores the tension between “the exploration of new possibilities and ex- ploitation of old certainties” for long-run survival (March 1991, p. 71). Implicit within this tension is an intertemporal tension—sustained short-term exploita- tion will undermine long-term exploration, and vice versa (March 1991). This tension arises because orga- nizations must decide how to allocate scarce resources and because firms possess different knowledge manage- ment processes (Andriopoulos and Lewis 2009). Exploit- ing existing knowledge requires efficiencies to lever- age current capabilities, whereas exploration requires investments in search, variation, and experimentation to generate new knowledge and secure future means of competitiveness.

More recently, researchers have moved away from treating exploration and exploitation as an “either/or” choice and have instead begun to use a paradox lens, which takes a “both/and” approach (Gibson and Birkinshaw 2004, Raisch et al. 2009). Framing this ten- sion as a paradox allows researchers to explore how firms can manage the tensions that arise when the two capabilities coexist within organizations and how they can unleash the full potential of juxtaposing the two for long-term organizational success (Andriopoulos and Lewis 2009, Gibson and Birkinshaw 2004, O’Reilly and Tushman 2008). In the paradox literature, tension refers to contradictory demands, whereas paradox refers to the recognition that such tensions are interrelated and therefore should be considered simultaneously. As such, approaching a tension as a paradox requires actors to avoid the tendency to keep contradictory elements sepa- rate (Lewis 2000) and to embrace the linkages between the short term and long term that enhance performance in both time frames (Smith and Lewis 2011).

An important gap emerges in the above research. It remains unclear how firms actually attend to the intertemporal tension. As Laverty (1996) has noted, fur- ther research is needed into how firms balance the short term and long term to mitigate some of the detrimental effects of short-termism. Yet, to date, the focus of such research has been on ensuring the long-term success of organizations without recognizing that such success also relates to the long-term health of both society and the natural environment (Whiteman and Cooper 2000). For example, the paradox literature’s definition of sustain- ability, as “peak performance in the present that enables success in the future” (Smith and Lewis 2011, p. 382), highlights a focus on the organization, without mention of society. At the same time, balancing the short-term needs of companies with the long-term needs of society may be difficult for researchers to explore, given that business and society are often viewed as incommensu- rate, meaning they are difficult to compare along a com- mon metric (Espeland and Stevens 1998). However, such an omission may blind researchers from the important need to understand how firms attend to the intertemporal tensions inherent in business sustainability. This present project, therefore, aims to answer the following: How do firms attend to the tension between the short term and the long term inherent in business sustainability?

Methods We grounded our theoretical insights in five corporations operating in Alberta’s oil sands and focused our inquiry on the issue of climate change. We applied an induc- tive case study strategy to address our research question because of the conceptual gaps in how intertemporal ten- sions are actually managed in business sustainability.

We chose a multicase study method because we wanted to identify differences in firm responses to

intertemporal tensions. It was important to introduce variance in firm responses to validate our theorizing, yet we also needed to constrain variance across dimen- sions that were not the focus of this research and could thereby confound our theoretical insights. Therefore, we narrowed our field of vision to a specific geographical and industry context (Alberta’s oil sands) and a specific issue (climate change). Prior research has demonstrated that firm responses differ by industry because variances in extraction and manufacturing processes generate a range of environmental issues (Bansal and Roth 2000, Pinkse and Kolk 2009). Moreover, firm responses differ by region or geography because of variations in institu- tional arrangements (Christmann and Taylor 2012).

Research Context We focused on Alberta’s oil sands for several reasons. First, firms operating in this region confront similar social and environmental issues, such as water consump- tion, land use, and greenhouse gas emissions. Second, these firms are subject to the same regulatory envi- ronment and pressures from environmental nongovern- mental organizations (ENGOs) and the media. Finally, compared with the conventional oil and gas industry, developing the oil sands reserves requires longer-term investments, which can reach upward of 50 years.

We focused on the climate change issue for two rea- sons. First, oil sands production has a strong connection to the societal issue of climate change. This energy- intensive industry creates significant greenhouse gas emissions. Consequently, oil sands production is widely perceived to be a catalyst to climate change. Second, the climate change issue highlights the tension between short-term business interests and long-term societal needs. Carbon emissions can be reduced by increasing operational efficiency (known as energy efficiency); by substituting fossil fuels with renewable energy, such as wind or solar power; or by end-of-pipe solutions that capture carbon at its source and store it in deep under- ground geological reservoirs. The costs of these invest- ments are immediate and evident, whereas the bene- fits are global and long term (Keith 2009) and there- fore intangible and uncertain (Economist 2009). Experts argue that protecting the climate requires widespread and collaborative solutions among government, indus- try, and other sectors, which are difficult to mobilize. Evidence is also mounting that climate risks are grow- ing and are increasingly urgent, with potentially disas- trous long-term consequences (Homer-Dixon and Garri- son 2009, Intergovernmental Panel on Climate Change 2007). Therefore, climate change responses are a proxy for attending to intertemporal tensions in business sus- tainability. This research context not only allows us to address what we believe to be an important theoreti- cal puzzle but also affords us the opportunity to glean insights on an issue of significant practical importance.

Sample The sample consisted of five publicly traded firms in the oil and gas industry with subsidiary or corporate head offices in Calgary, in the province of Alberta, Canada. To protect the identities of the firms, we provide the fol- lowing pseudonyms: Techno, Project, Engaged, Vision, and Alternative. These five firms were all considered large players in the oil sands, ranging in size from 2,000 employees to just over 7,000 employees in Canada. Two of the firms operated only upstream—that is, they were involved only in exploration and production—whereas three were integrated firms, operating both upstream and downstream, which includes refining and retailing. However, in these more vertically integrated firms, we focused only on their upstream operations. We stud- ied oil sands operations only, even though four of the five firms also participated in conventional oil operations (e.g., drilling). Finally, of the five firms, three corporate headquarters were located in Canada, one in the United States, and one in Europe.

To select the initial sample of firms, we used exter- nal reports to explore the environmental performance of the major players in the oil sands. At the outset of this research, we investigated the sustainability performance of oil and gas firms operating in Alberta. Using per- sonal contacts and cold calls, we conducted pilot inter- views with the sustainability officers at nine firms that exhibited significant differences in their sustainability performance. We supplemented these insights with infor- mation gleaned from industry experts and consultants, and from archival materials, such as annual reports, websites, media accounts, and reports from the Car- bon Disclosure Project (CDP). The CDP is a nonprofit organization that collects GHG emission-related data, including information on energy use and the risks and opportunities of climate change, as voluntarily reported by thousands of the world’s largest companies. In recent years, numerous stakeholders, including investors and nongovernmental organizations (NGOs), have pressured oil and gas companies to use the CDP reports to account for their efforts to reduce climate change; as a result, many oil and gas companies now voluntarily report on their climate change strategies (Pinkse and Kolk 2009).

These pilot interviews made clear that we needed to narrow our field of vision. Whereas we initially explored the effects of sustainability performance in gen- eral, in such areas as aboriginal issues, water issues, and even layoffs during the financial crisis, we quickly realized that the temporal landscape varied significantly with each issue. We then narrowed our focus to cli- mate change, because, among all sustainability issues, it brought the intertemporal tension into full view; specif- ically, climate change exhibited the longest temporal frame for society, in contrast with the short-term busi- ness frame. We also realized that oil and gas companies can be involved in a range of extracting operations in

different parts of the world, including for conventional oil, heavy oil from the oil sands, and natural gas. As a result of the pilot interviews, we decided to focus specif- ically on the issues pertaining to the oil sands, which require long-term capital investments.

Of the nine companies we initially interviewed, eight qualified for this research, and we gained access to five of these companies. The three firms that we failed to access were likely among the least responsive to the cli- mate change issue, and we acknowledge their omission as a limitation of this research. Nevertheless, the five remaining companies in our sample demonstrated con- siderable variance in their climate change investments. Two of the five firms focused on shorter-term invest- ments, whereas three firms made longer-term invest- ments (see Table 1).

By sampling firms based on variances in their climate change investments, we were able to explore a range of approaches to managing the tension between the short term and the long term. Using publicly available doc- uments, such as the CDP reports and corporate docu- ments, we identified three categories of investments in climate change, each having a different time horizon: energy efficiency has short payback periods, whereas carbon capture and storage and renewable energy invest- ments have much longer payback periods.

Energy efficiency refers to investments in technologies or processes that reduce the energy used to extract oil from the sand. These technologies reduce energy used at the source, thereby reducing not only GHG emis- sions but also short-term costs. Renewable energy, such as solar, wind, and biofuels, is a longer-term invest- ment. For oil and gas companies, such an investment means replacing carbon-intensive sources of energy with cleaner sources of energy in the production process or investing in stand-alone projects to diversify energy holdings and to build the capability to deliver cleaner energy in a low-carbon future. Carbon capture and stor- age (CCS) captures carbon at the end-of-pipe and stores it in underground geological reservoirs, often in depleted oil reservoirs. CCS requires significant investments that have no immediate returns, given the current lack of stringent regulations. Such investments have the longest time horizons of any mitigation strategy, and their ben- efits are uncertain, as they depend on numerous condi- tions, including the feasibility of the technology and a substantial future price on carbon.

It is worth noting that the firms in our sample formed two clusters (one with two firms and the other with three) based on their efforts to mitigate climate change, which we explain in greater detail in the Findings sec- tion. Although the research was not designed in this way, we found the two firms in the one cluster formed a matched pair with two of the firms in the other cluster, in terms of size, age, internationality of the head office, and the vertical integration of operations. These matched pairs further help to validate our theorizing.

Table 1 Climate Change Investments

Category Techno Project Engaged Vision Alternative

Energy efficiency Compliance-driven investments

Compliance-driven investments

Comprehensive energy management plan, which includes targets and audits

Energy management systems and commitment to reducing energy intensity

Renewables Does not invest in renewable energy

Invests in internal and external research in biofuels; investigates solar, wind, and geothermal projects to generate future offsets

Invests in wind power and continuously assesses other climate-related investment opportunities

Invests in wind power and biofuels and conducts research on other alternative forms of energy

Invests in biofuels, hydrogen power, and wind power

CCS Uses CO2 sequestration to recover oil in depleted wells; mitigation is not the purpose for the investment

Invests in university research, awaiting cost-effective technology and regulatory certainty before investing significantly

Has limited investments in technologies for future CCS use and is engaged in an industry association working group on CCS

Focuses on collaborating with other companies and governments to accelerate the deployment of CCS

Focuses on developing expertise and partnerships to advance CCS to large-scale deployment within a set time frame

Note. CO2, carbon dioxide.

Data Sources We built reliability in our findings by drawing data from multiple sources, including in-depth interviews, archival data, secondary sources, and observations. We describe each below.

Interviews. Interviews were conducted in three waves. In the first wave, in February 2009, we narrowed the research question to focus exclusively on oil sands oper- ations and the climate change issue. We completed a second wave in June 2009. The final wave of interviews was conducted in September 2009, in an effort to vali- date our emerging theory with our key informants.

We aimed to interview a wide range of key informants from across each company to ensure that we fully under- stood the corporate perspective to climate change, rather than merely the views of a single individual. As this research is targeted to the firm-level of analysis, involv- ing a diverse range of people was necessary to identify commonalities that could be attributed to the firm.

In selecting managers to interview, our first point of entry was the sustainability officer, who became our key informant. Working together with the sustain- ability officer, we identified the senior managers and top executives in the organization who could provide insights into the organization’s approach to climate change. Consequently, we interviewed a broad range of executives, including managers from human resources, finance, operations, and public affairs. We also inter- viewed a total of nine managers in four other firms not included in our study, as well as five consultants and industry experts. These interviews helped to both enrich our understanding of the industry and validate our findings.

In total, we interviewed 60 individuals, generating more than 1,000 pages of interview notes. The inter- views lasted between 45 minutes and 2 hours, and the average length was 60 minutes. With the exception of four, all the interviews were recorded and fully tran- scribed. The first author was involved in all the inter- views, and the second author participated in approx- imately one-third of the interviews. Most interviews (53/60) were conducted at the interviewee’s site. The others (7/60) were conducted off-site or by phone. The interviews were open ended and semistructured to allow us to probe deeper for rich theoretical insights (Yin 1994). Our questions concerned each firm’s approach to climate change and the short- and long-term pressures facing the firm.

Archival Documents and Secondary Sources. Our sec- ondary sources included annual reports, sustainability reports, the Carbon Disclosure Project, internal and external communications, and independent media cover- age. These documents and sources validated our infor- mants’ responses and supplemented the insights we gained in the interviews. In addition, we examined numerous monographs pertaining to the Alberta oil sands and the climate change issue, which enriched our understanding of the research context.

Observations. The first author also observed two Alberta-based workshops for oil sands operators: one on climate change adaptation in 2008 and the other on carbon capture and storage in 2009. Both workshops included participants from industry, government, and academia. The first workshop was attended by represen- tatives from four of the five companies in our sample, and the second was attended by three of the participating

companies. Only Techno did not send a representative to either forum. The first author took detailed notes at each workshop. These observations allowed us to first observe unobtrusively how participants from four of the five firms in our study responded to the issues confronting their industry and then to potentially address any social desirability biases that might have arisen through direct questions. We found that the data from the observations were entirely consistent with the interview data. These observations also provided important insights into the research context.

Data Analysis The data were analyzed between waves of data collec- tion and again in their entirety after all the data had been collected. In this way, we could shape the inter- views to better address the overarching and evolving research question and to probe more deeply into our emergent findings. We also reanalyzed the data based on our cumulative learning at the end of the data collection process.

The data collection and initial analysis took place over a one-year period, from late 2008 to late 2009. All elec- tronic data were entered into QSR-NVivo, including the interviews and archival documents. NVivo enabled us to organize and code the voluminous data. Using NVivo, we coded our first-order concepts comprising the lan- guage used by informants. We then used the program to search for links between and among these first-order concepts. This process facilitated grouping the concepts together into second-order themes. Given the inductive process we followed, we allowed concepts and relation- ships to emerge from the data. The post-data collection analysis was conducted over a four-month period. We followed three stages in the data analysis: a within-case analysis, a cross-case comparison, and a theory-building stage (Miles and Huberman 1994).

In the first stage, both authors read through the data and identified key emerging themes for the two most divergent firms in their response to climate change. Based on these two companies, we then identified a set of codes pertaining to three factors: (1) responses to cli- mate change, (2) indications of intertemporal tensions, (3) and any other antecedents and consequences related to these intertemporal tensions. Applying axial coding (Strauss and Corbin 1990), we identified a set of codes that we developed more fully as we moved through each additional interview and company.

Consistent with most inductive qualitative work, we allowed concepts to emerge from the data. Three major categories of codes emerged: (1) the approach to the intertemporal tension, (2) the approach to the climate change issue, (3) and the practices related to climate change. We identified the approaches and practices that were shared within the firm to keep the analysis at

the firm level. To ensure within-case reliability, we pre- pared a summary sheet for each interviewee and then for each firm, based on all the interview responses. Using these summary sheets, we then searched for relationships within each firm among the first-order codes.

In the second stage, we conducted cross-case compar- isons using techniques proposed by Eisenhardt (1989). Both authors compared the concepts and relationships between the firms, and two separate approaches to cli- mate change and intertemporal tensions emerged. We consulted existing literature that described intertem- poral tensions. Through extensive discussions, both authors debated the emerging categories and relation- ships and discussed any discrepancies until agreement was reached.

In the third stage, the iterative process between data and theory pointed us to other literature in organiza- tion studies that address tensions between the short term and long term to help us frame the intertemporal ten- sion within the climate change issue. It was clear that the cases could be distributed between two clusters that reflected differences in practices and approaches to the intertemporal tension. The fifth firm showed elements of both groups, but the stark differences in the two clus- ters formed the basis of the theory that we present here. We present the data structures for these two clusters in Table 2.

Findings We found two main differences in how oil sands oper- ators attended to the intertemporal tension of the cli- mate change issue: firms either treated the short- and long-term implications of climate change separately or embraced the tension between the two. We briefly describe our overarching findings, followed by a descrip- tion of the practices that led us to these findings.

Techno and Project polarized the short- and long-term aspects of the climate change issue. Polarizing sepa- rated the opposing concepts (in this case, time frames) by placing each in a separate cognitive category and attributing a distinct meaning to each polarity. When firms polarize, they are forced to choose between oppos- ing concepts (Lewis 2000). These companies treated long-term climate change consequences separately from short-term decisions, focusing on reducing the short- term economic costs of their projects even when doing so meant more GHGs in the future.

By contrast, Engaged, Vision, and Alternative juxta- posed time, allowing managers in these firms to simul- taneously examine both the short-term and long-term implications of climate change, thereby confronting the tension between the two temporal polarities. Juxtapos- ing embraces contradictory elements rather than avoid- ing them (Smith and Tushman 2005). Engaged, Vision, and Alternative managers tended to see climate change

Table 2 Data Structure: Practices

First-order concepts Second-order concepts Aggregate dimension

Techno and Project —Economic modeling —No scenario analysis











Quantitative planning 









—Focused on getting position across —Focused on getting regulatory approval

One-way stakeholder engagement Efficient practices

—Find industry groups a waste of time —Belong only to industry associations

Limited industry and cross-sector collaboration

Engaged, Vision, and Alternative  



















—Economic modeling —Scenario analysis

Quantitative and qualitative planning

—Interested in both communicating their position and learning from others

—Willing to debate and discuss to bring about change

Two-way stakeholder engagement Diverse practices

—Actively involved in industry groups —Lead local, national, and international multisector organizations

Extensive industry and cross-sector collaboration

through both a short-term and a long-term lens, by dis- cussing the possible future directions of the issue and linking them to the present goals of their companies.

Differences in attending to intertemporal tensions were linked to distinct practices. Although the com- panies faced similar challenges in responding to the climate change issue, including pressure from NGOs, uncertainty in government regulations, and the high costs of climate change mitigation investments, we found important differences in the practices used to address the issue within their respective companies. The firms that polarized time engaged in practices that favored effi- ciency, and the firms that juxtaposed time engaged in practices that encouraged diverse perspectives. In par- ticular, the two groups differed considerably in their planning, stakeholder engagement, and outside collabo- ration practices. We describe each of the practices below. We begin with the efficiency-oriented practices of the firms that polarized time; we then show how their prac- tices differed from those of the firms that juxtaposed the short term and long term. Table 3 summarizes the evidence linking the practices that encouraged efficiency and those that encouraged diverse perspectives with each firm’s approach to intertemporal tensions.

Table 3 Summary of Evidence Linking Efficiency-Focused and Diversity-Focused Practices with Temporal Tensions

Practices

Overall Industry and Attending to Firms pattern Planning tools Stakeholder engagement cross-sector collaboration temporal tensions

Techno Efficiency Quantitative One-way (compliance focused) Limited Polarize Project Efficiency Quantitative One-way (compliance focused) Moderate Polarize Engaged Diversity Quantitative with plans to

introduce qualitative Two-way (willing to discuss issues to

get different viewpoints) Mixed Juxtapose

Vision Diversity Quantitative and qualitative

Two-way (willing to discuss issues to get different viewpoints)

Extensive Juxtapose

Alternative Diversity Quantitative and qualitative

Two-way (willing to discuss issues to get different viewpoints)

Extensive Juxtapose

Practices That Value Efficiency Three organizational practices, in particular, seemed to be consistent with polarizing time in Techno and Project: quantitative planning tools in strategic planning process, one-way engagement with stakeholders and prioritizing regulatory stakeholders, and few cross-sector or indus- try collaborations, preferring to innovate climate change solutions inside their firm. We describe each in turn.

Quantitative Planning. Both Techno and Project shared similarities in how they incorporated climate change into their strategic planning processes. For instance, both companies relied heavily on quantita- tive planning tools in their long-range planning, includ- ing “what-if” scenarios and sensitivity analyses, which allowed them to assess different carbon prices on the company’s cost structure. They also built economic mod- els to forecast such variables as the price of carbon. In addition, they used sensitivity analyses to examine the viability of their projects at multiple price points.

When asked how climate change was taken into account in decision making, managers talked mainly about forecasting the price of carbon based on present- day assumptions regarding the regulatory environment. Techno’s vice president of corporate planning activi-

ties explained that his firm treated carbon as an eco- nomic variable and used what-if scenarios to estimate the impact of a carbon price on various projects. When we asked whether Techno used qualitative scenarios to examine the long-term future, he replied that, no, “to be honest with you, once you get beyond a few years out it’s really a guess.” Managers at Techno regarded climate change as a highly uncertain issue that they needed to quantify and incorporate into their project decisions through economic modeling. Their main focus was understanding the near-term implications of the cli- mate change issue, which meant applying a range of carbon prices to project the costs of future projects.

At Project, managers took a similar approach to incorporate climate change into the company’s plan- ning. Project’s group responsible for climate change had developed a quantitative planning tool to assess var- ious options for mitigating climate change, by rank- ing each option according to its costs and benefits. The group struggled with how to “sell” these invest- ments to Project’s senior leadership, given that they applied the same hurdle rate used for other investments, without accounting for the softer societal benefits. The director of this group explained, “The challenge is how do you value these sustainability factors in such a way that the long-standing economic models that we use to evaluate projects can factor them in.”

When Techno and Project used quantitative planning tools to make climate change decisions, they polarized the short-term and long-term aspects of the issues. In try- ing to include climate change in existing economic mod- els, both firms used a metric that allowed comparison with other decision criteria, i.e., a carbon price, which turned the climate change issue into a cost for the com- pany. For example, Techno’s vice president of corporate planning explained, “We have done scenarios on cost of carbon, right, trying to figure out, you know, I don’t want to say if it’s material, but what the level of materiality would be on different proposals.” Project also attempted to commensurate the climate change issue to fit within its economic models. In both companies, climate change was treated as a cost, so that its effects could be mea- sured financially and discounted based on its net present value, much like other project expenses. Present costs and benefits were thus compared with future costs and benefits, pitting the short term against the long term. The short-term costs of mitigating climate change out- weighed the long-term costs of climate change impacts on the firm and society.

Managers in both firms argued that investments in mitigating climate change were too risky for their company. Both Techno and Project managers often enumerated the many costs associated with long-term investments. A senior executive of media relations at Techno explained that “you don’t blow your brains out

today” investing in long-term climate change mitiga- tion technology, and the director responsible for climate change at Project lamented the difficulties of convincing the senior decision makers to mitigate climate change because of the high costs: “We know we are going to have to reduce our emissions by some amount and that’s going to involve investments now for potential future benefit. So the challenge there of course is that there is no return. It’s a straight expenditure.” Respondents from both companies spoke frequently of the costs and risks, whereas the future benefits of such an investment were either ignored or assumed to be unknown and therefore dismissed by the company’s leadership.

One-Way Stakeholder Engagement. A second prac- tice that discriminated firms that polarized time from firms that juxtaposed time was their approach to stake- holder engagement. Managers at both Techno and Project explained that the primary reason their company engaged with stakeholders—especially with aboriginal groups and local communities—was to obtain regulatory approval, given that, to develop the oils sand project, consultation was a necessary aspect of the environmen- tal impact assessment process. At Techno, managers met primarily with aboriginal groups and local governments. Several managers, including the senior manager respon- sible for climate change, explained that they did not meet with NGOs because such meetings were not required by the regulatory process. Managers also emphasized the importance of getting their company’s point across in mail-outs, meetings, and other corporate communi- cations. This point was reinforced by the fact that the person responsible for engaging with local communities, including aboriginal groups, was from media relations. When asked how the company engaged with aborigi- nal groups, she explained that her role was to “work with them to help educate them.” She was also respon- sible for managing the relationship with elected govern- ment officials, with the goal to “help make the regula- tory process a bit easier.” Stakeholder engagement was viewed as necessary to help overcome regulatory hurdles as quickly and efficiently as possible. Any discussion about the longer-term implications of oil sands develop- ment was considered to be separate from the immediate concern of obtaining regulatory approval.

Managers at Project also focused on the delays of regulatory approval and prioritized their efforts to expe- dite the process. The director responsible for climate change explained how the company’s goal in commu- nicating with aboriginal communities was to “demon- strate to [them] that you should give us the social license to operate in your area because we are a progressive company.” Another senior manager in the same group discussed how the company was active in many areas including climate change but that it was not very good at relating these initiatives: “We have projects that are

going on based on societal benefits, but we aren’t doing a good job at communicating that to the world at large or stakeholders.” Several managers expressed the need for better one-way communications, but they rarely men- tioned two-way engagement.

Much like the practice of relying heavily on economic models, Techno and Project approached their dealings with stakeholders efficiently, pointing to the polarizing of the short- and long-term aspects of climate change. These companies engaged primarily with stakeholders required by the regulators and sought to convince these stakeholders of the benefits of developing their projects. Because of the purposeful way in which Techno and Project approached stakeholders, they failed to hear or understand the full scope of issues relating to climate change that extended beyond the present project. In other words, they were not exposed to additional attributes of the climate change problem, as were the other com- panies in the study (see below). The long-term climate change concerns of some groups, such as NGOs, went unheard by Techno and Project. Rather than attempt- ing to understand the long-term environmental conse- quences of short-term decisions, these companies treated the two as separate and focused on reducing the short- term economic costs of their projects even when doing so meant more GHGs in the future. Thus, by focus- ing stakeholder interactions on a narrow set of project development attributes, Techno and Project were able to limit conversations to the short term and polarize issues pertaining to the long term. Rather than hearing diverse perspectives on the issue, this narrow engage- ment with stakeholders reinforced the perception that climate change represents a cost to the company. Other attributes of the issue, including long-term environmen- tal consequences, were not taken into account.

Going It Alone. Regarding the third practice, both Techno and Project did not seem to value collaborations with industry peers and across sectors; however, one manager at Project did aim to generate such collabora- tions, although they were not widely known throughout the organization. Several managers at both Techno and Project indicated that such collaborations were time con- suming and that they preferred to pursue climate change initiatives independently—for instance, by developing proprietary energy-efficiency technologies. Finding com- petitive solutions to climate change was preferred to engaging in collaborative initiatives.

Limited industry and cross-sector collaboration served to further polarize the short term and long term; Techno and Project lacked access to other industry players or other sectors (including governments and university researchers) and the range of solutions they offered, including longer-term solutions. For instance, one gov- ernment department worked with companies to deter- mine what the regulatory landscape should look like, in

an effort to speed up the development of climate change mitigation technologies such as carbon capture and stor- age. However, by limiting their participation in collabo- rative initiatives, Techno and Project narrowed the solu- tion space for their company in tackling the climate change issue. Instead, they looked for internal solutions to the issue that would provide an advantage over com- petitors, a practice that tended to yield short-term tech- nological options such as increasing energy efficiency and thereby decreasing their costs. Indeed, both Techno and Project believed that climate change could be solved through technology. For instance, the senior manager of the environment group at Techno explained that “a lot of the environmental issues 0 0 0 that come with the business we’re in can be solved by technology,” and at Project, a manager in the environment group noted that “right now, I think the focus is on technology—we really think that that’s the answer to everything.”

Practices That Encourage Diverse Perspectives The climate change practices of the firms that juxtaposed time differed considerably from the practices of the firms that polarized time. Firms that juxtaposed time used qualitative scenarios in addition to quantitative planning tools, engaged in two-way conversations with a range of stakeholders, and collaborated extensively with other firms and across sectors to address climate change. All of these practices encouraged a diversity of perspectives, which took time, and were not always seen as an effi- cient use of company resources.

Quantitative and Qualitative Planning. In addition to forecasting through economic modeling, Vision and Alternative also generated scenarios—a planning tool that generates dialogue among managers by developing qualitative text-based insights into the deep future. Both firms used scenarios to paint different pictures of the future to help illustrate how climate change could impact the firm and the industry in the long run. When asked how climate change was incorporated in decision mak- ing, several managers at both firms pointed to the impor- tance of scenario planning for shaping their understand- ing and appreciation of the longer-term future, including the role that climate change would play.

A manager at Alternative said that the company’s approach to scenario planning helped him recognize “that what you want to be able to do is not predict the future but anticipate the different types of futures that could evolve 0 0 0.” Similarly, Vision developed sev- eral detailed scenarios of the energy sector in the coming decades, including examining how climate change pol- icy could shift and the implications for the company. A senior manager of environment insisted that these sce- narios were not used to predict the future, but rather to help guide strategic planning. He explained that “not that one [scenario] will happen; maybe all three will happen

over time, and then it just helps you develop road maps [so that] we can start pulling levers as necessary.”

Although Engaged did not formally use scenario plan- ning to make climate change decisions, the senior man- ager of corporate planning indicated that the company was beginning to experiment with the use of scenarios, having recognized their value for providing a broader view of issues, including climate change. In addition, the senior manager responsible for climate change was a member of several think tanks and national and inter- national advisory boards on sustainability and climate change issues, which provided both an opportunity for many conversations with a variety of experts on climate change and a broad, long-term perspective on the issue. As he explained, “If you’re going to achieve the kind of reductions they’re talking about—and they, governments of the world—of 20%, 30% by 2020, 40% by 2030, and 60%–80% by 2050—you’re going to have to fundamen- tally and definitively change the global energy system.”

Engaged, Vision, and Alternative balanced their use of quantitative planning tools with qualitative tools, such as scenario planning, in their climate change decision making. Qualitative tools encouraged dialogue, which allowed for diverse perspectives to emerge, includ- ing the consideration of both the short-term and long- term implications of climate change for their busi- ness. The impact of future scenarios was juxtaposed on current business planning, which enabled the poten- tially serious consequences of climate change to emerge. At Vision, managers often grappled with how to make investments in climate change mitigation today that would be beneficial in the future for both the firm and society. For instance, one manager explained,

You look at your business now and you look ahead to how you need to manage your business in the future— and you can put whatever time on that, whether it’s a 10- or 20-year [time frame]. So, it’s not just your next year. I think most people would agree that in that future the controls and regulations on business are going to be more strict, more demanding, and climate change will be part of that. And, so, as a business, as a world business, is it in our interest to preempt that?

Managers at Vision were similar to the managers at the firms that polarized time in their concern with their company’s short-term profitability and cash flow, but they differed in that they often grappled with the long- term implications of their decisions, including the impact on society. Vision’s environment manager understood how difficult it was to “balance fiduciary duties to its shareholders with its stated sustainability goals, and I think that’s a difficult one, but I think we’re probably better positioned than most to do that.”

Two-Way Stakeholder Engagement. In addition, all three companies spent considerable time and company resources interacting with and learning from a variety

of stakeholders on the climate change issue. Such learn- ing involved a significant amount of time and effort on behalf of managers. Stakeholders included NGOs, labor organizations, academia, and government, even though not all these stakeholders needed to be consulted for regulatory approval. Several managers at the three com- panies acknowledged the time, expense, and interper- sonal challenges associated with engagement, but they also recognized the benefits that accrued from their learning and improved decision making. The corporate social responsibility manager at Engaged believed that stakeholder engagement was about not only regulatory approvals and permits but also “working with them early” so that “you can say, okay, here are the things we can address and also here are the things we can’t address and why.”

A manager in the sustainability department at Vision recognized that stakeholder engagement “can really make the process much longer” but that “you’re get- ting higher quality [decision making].” He explained that his company had a long-term approach to engage- ment, rather than simply trying to gain regulatory approvals. He described how he was “particularly impressed by some of the ENGO outreach stuff that we’re doing 0 0 0 many of the things that [the ENGOs are] saying or doing might be diametrically opposed and yet 0 0 0 [we’re] finding common ground. And, you know, it’s a slow, baby-step type of process, but it’s starting to get some traction.”

Similarly, Alternative placed considerable importance on engaging with its constituents to learn about their positions on climate change. The senior manager respon- sible for sustainability argued that Alternative “has had a greater willingness to engage, and listen, and respond than some of our competitors. And, I think that [Alterna- tive] picked up earlier that there was business advantage, or there was perceived business advantage in approach- ing [Alternative’s] business in that way; to actually embrace these issues rather than keep them outside of the business.” He continued to explain the benefits of stakeholder engagement: “What I think is impor- tant on that is that it gets us into a debate 0 0 0 through engagement, your own thinking is challenged, and in the best possible world, you come out of that with better thinking.”

Because Engaged, Vision, and Alternative engaged in two-way dialogue with a variety of stakeholders, they were able to see greater dimensionality in the climate change issue, beyond the financial implications. The dialogue increased the attributes of the climate change issue, bringing to light the long-term implications of the issue and encouraging the juxtaposition of short- and long-term considerations.

For example, at Engaged, managers explained that their company’s action on climate change was linked directly to what other sectors, including the government

and NGOs, saw as important long-term steps in solving the issue. For example, the vice president of business development noted that “what you can do on climate change 0 0 0 is to be engaged 0 0 0 which is the approach that [Engaged] has taken right from the get-go.” He described how senior managers and the chief executive officer were very engaged with looking at the future of the issue while also linking it to the company’s more immediate goals. Climate change was viewed within the company as more than just a business problem. For instance, some managers viewed climate change as a political and envi- ronmental issue, whereas others highlighted the issue’s societal nature as it affects multiple groups, including aboriginal people whose traditional fishing and hunting grounds would be affected by changes to the climate.

Extensive Cross-Sector and Industry Collaboration. Finally, all three firms engaged widely in industry and cross-sector collaborations. Engaged, Vision, and Alter- native appointed managers whose exclusive responsibil- ity was to join or lead industry groups and collabo- rative networks that addressed climate change issues. These groups and networks often comprised other com- panies, including competitors, and sometimes included other sectors, such as government and academia. Several of these groups were assembled to address issues, such as climate change, that no single firm could address on its own. A view held by several managers at all three firms was that knowledge sharing would benefit their firm because the climate change issue was too com- plex to be addressed by any single firm. Such knowl- edge sharing not only broadened their perspectives on the issue but also extended the temporal perspective of managers. For example, one particular initiative involved a working group of members from companies, govern- ments, and NGOs who worked together to find ground- breaking solutions to environmental problems, including climate change. These initiatives were funded equally among the companies.

All three firms engaged in extensive collaborative ini- tiatives that required them to work on projects relat- ing to environmental issues, including climate change, with other companies and other sectors such as gov- ernment representatives and university researchers. Such work broadened the solution space of the climate change problem, such that a variety of short- and long-term solu- tions were discussed and considered, thus juxtaposing present and future. For example, all three companies were involved in initiatives on CCS, which represents significant short-term costs with uncertain long-term payback. But when approached jointly with others, such investments were less risky and allowed the companies to search for, and invest in, long-term industry solutions.

Managers at Vision also recognized the complexity of climate change and the need for a broader solution space. The manager responsible for climate change strat- egy explained the company’s position in the following

way: “The thing with climate change is it totally depends on how things unfold, but it could require you to use everything in your basket. Like, it could require a lot of different approaches to bridge the gap between where we are and where we need to be as a society, but as a company too.”

A similar position on climate change was evident at Alternative. The senior manager responsible for stake- holder engagement blended both the firm’s business and fiduciary responsibilities alongside its responsibility to society when discussing the company’s position on cli- mate change:

And, yes, we can quantify, we can set targets. But it’s also about the way we relate with people, whether they’re in communities or they’re within government, to really support and improve policy dimension and to promote technological innovation as well as making things better in the ways we’re operating today.

Discussion This research examines how firms attend to the intertem- poral tensions inherent in business sustainability. Busi- ness sustainability brings to the foreground the impor- tance of intergenerational equity, which centers on the tension of balancing short-term and long-term needs. Although previous literature has examined intertemporal tensions in the business context (Laverty 1996, Smith and Lewis 2011), much of it assumes that the tensions can be overcome by making the long-term conditions commensurable with the short-term conditions. How- ever, managing the intertemporal tensions that result from long-term and uncertain sustainability issues, such as climate change, has been relatively underresearched.

We used a multifirm case study approach to exam- ine the responses to climate change of five oil and gas firms operating in Alberta’s oil sands. We found that firms that emphasized efficiency in their practices polarized the short term and long term and focused primarily on the near-term business implications of cli- mate change. In doing so, they avoided the intertempo- ral tension and approached climate change as a business problem requiring efficient short-term solutions, which resulted in searching for solutions within the firm and avoiding collaboration with other firms and sectors.

By contrast, we found that firms that sought diverse perspectives juxtaposed the short term and long term, thus confronting the intertemporal tension and look- ing for both short-term and long-term solutions to cli- mate change. They approached climate change as a complex issue with implications for both their business and for society. Consequently, they looked within and outside the firm for solutions that would address both their business needs and societal needs, in the short and long run. Three practices in particular contributed

to diverse perspectives in approaching the intertempo- ral tension: quantitative and qualitative long-range plan- ning, which encouraged diverse perspectives on cli- mate change; two-way stakeholder engagement, which increased the attributes of the issue; and extensive indus- try and cross-sector collaborations, which broadened the solution space of the climate change problem (see Figure 1). These practices each resulted in juxtaposing the short term and long term to confront the intertempo- ral tension in business sustainability.

Temporal Myopia from Seeking Efficiency We found that our first group of companies shared prac- tices that emphasized efficiency, which polarized the short- and long-term aspects of climate change decision making. This polarization of time in turn contributed to temporal myopia, a term that refers to favoring the short term over the long term and to the “inability to assess the long term” (Marginson and McAulay 2008, p. 274). Three polarizing mechanisms in particular con- tribute to temporal myopia in firms: commensuration of the climate change issue with economic tools, reduction of the attributes of the issue, and the narrowing of the solution space.

The first mechanism that contributes to temporal myopia is the commensuration of time that occurs through the use of such economic tools as net present value and cost/benefit analyses. Decision makers intro- duce future projections into economic models, such as through discount rates, oil supply and demand, and car- bon prices, which become embedded in the analytical

Figure 1 Theoretical Logic-Linking Efficiency vs. Diversity-Focused Practices with Temporal Tensions

Practices

climate change with economic tools

Encourages multi- dimensional data on climate change

Preserves attributes of climate change problem

Broadens solution space of climate change problem

Reduces attributes of climate change problem

Narrows solution space of climate change problem

Quantitative planning

Quantitative and qualitative planning

One-way/limited stakeholder engagement

Two-way/extensive stakeholder engagement

Limited industry and cross-sector collaboration

Extensive industry and cross-sector collaboration

E ff

ic ie

nc y

D iv

er si

Polarizing mechanisms

Juxtaposing mechanisms

Temporal tensions

Polarize

Juxtapose

models. Consequently, the assumptions and projections are made commensurate and standardized to fit within existing planning tools, which reduces the complexity of the data and conveys a degree of precision and certainty that may not actually reflect the full range of insights of the decision makers. Force-fitting the assumptions and projections to a common metric to permit such cal- culations renders some aspects of issues irrelevant or unimportant (Espeland and Stevens 1998, 2008). For example, we found that quantifying the impacts of cli- mate change on the firm by calculating a price on car- bon led to a reduction in the complexity of the climate change issue and greater difficulty in seeing the various dimensions of the climate change problem, such as its long-term impact on society. In addition, the commen- suration that results from a cost/benefit analysis encour- ages a trade-off because different attributes of a decision become fungible and thereby can be directly compared, so that a choice can be made (Espeland and Stevens 1998). Consequently, companies can impose their own temporal preferences on decisions. Given the preferences for efficiency, these companies would generally elect short-term certain outcomes, over long-term uncertain outcomes, even when the long-term benefits are larger and partly accrue to society.

The second mechanism for temporal myopia is the reduction of the attributes of climate change. When companies limit their engagement with stakeholders, they constrain the number of attributes associated with the issue and focus only on those that fit within the company’s existing worldview, which refers to the

background assumptions that shape their language, thoughts, perceptions, and actions (Morgan 1980). In many companies, the dominant worldview, which is based on individualism, views its primary objective as the efficient allocation of resources. These resources, which include human, financial, physical, and natural resources, are treated as being almost perfectly substi- tutable (Gladwin et al. 1995). By treating all types of resources as substitutable, many of the important differ- ences among resources would be overlooked, including their time dimensions. For example, some types of cap- ital, such as human resources, take time to develop, yet the temporal aspects of capital would be muted. Cli- mate change, therefore, was considered an opportunity to reduce costs by improving energy efficiency. The reduc- tion of greenhouse gas emissions was secondary to cost efficiencies.

A third mechanism that underlies polarization is the narrowing of the solution space of the problem. Com- panies that do not engage in collaboration miss out on the creative tension that emerges from disparate points of view, which often yield some of the most innova- tive solutions to complex sustainability problems (Hart and Milstein 2003). To effectively confront or tran- scend tensions, including intertemporal tensions (Lewis 2000), firms need to rethink their perceptions, ques- tion their assumptions, and identify new ways of doing. For example, firms that value efficiency avoided indus- try and cross-sector collaboration because of the time required to build sufficient trust to reach frame-breaking solutions. Instead, these firms preferred to go it alone, relying on their own internal talents and resources. As a result, they focused on energy-efficiency innovations and thereby reduced the ambiguity and time inherent in building relationships.

Temporal Ambidexterity by Embracing Diverse Perspectives We found that, instead of polarizing different time frames, our second group of companies juxtaposed the short- and long-term aspects of climate change decision making. This second group differed from the first group by implementing practices that encouraged diverse per- spectives, which opened up alternative approaches to addressing the climate change issue, beyond efforts to increase energy efficiency. Three mechanisms in par- ticular contributed to temporal ambidexterity: involve- ment of multidimensional data, preservation of issue attributes, and the broadening the solution space to tackle these issues. Similar to ambidexterity, which refers to the ability to balance the exploitation of cur- rent competencies with the exploration of new domains (Andriopoulos and Lewis 2009), temporal ambidexterity refers to firms’ attempts to balance their short-term and long-term needs.

The first mechanism that contributes to tempo- ral ambidexterity is the eliciting of multidimensional data that often involves different perspectives of time. Balancing quantitative planning tools with qualitative tools introduces a broad range of information into the decision-making process. Even though quantitative data require that the assumptions be normalized along sin- gle, commensurable dimensions consistent with busi- ness decisions beyond climate change, juxtaposing firms also widened their field of view by using qualitative data. Qualitative planning tools, such as scenario anal- ysis, allowed firms to introduce greater dimensionality into the data, such as data on public policy and public opinion (Marcus 2009). Even the process of develop- ing scenarios encouraged dialogue with organizational members and with outside experts to deepen the under- standing of the complexities of the issue. These lengthy discussions often exposed information gaps and latent assumptions that led to more information and debate. Inevitably, these divergent perspectives involved differ- ences in temporal assumptions, including both the short- and long-term impacts of climate change on the firm and society. Such an approach to dealing with unfore- seen and improbable events has also been explored in the literature on disasters, whereby possibilistic think- ing complements probabilistic thinking to prepare for a variety of crises (Clarke 2008).

Second, stakeholder engagement introduced temporal ambidexterity by preservation of the attributes of climate change. Engaging in open dialogue with stakeholders, especially disparate or fringe stakeholders, exposes firms to diverse perspectives and helps them learn about sus- tainability issues (Basu and Palazzo 2008, Mirvis 2000, Zadek 2004). Many of these stakeholders are from the community and can include activist groups or aborigi- nal groups who oppose the company’s policies. When firms not only speak but also listen, they are able to see a broader range of time frames associated with the issue. In general, stakeholders that engage in the climate change issue have a longer time frame than what is typi- cally permitted by short-term business pressures, thereby revealing deeper insights into the future implications of firm actions.

The third mechanism that encourages temporal ambidexterity is the broadening of the solution space for addressing the climate change problem, which occurs when firms collaborate with other firms and across sec- tors, including with think tanks, universities, and govern- ments. Such collaborations increase the options that are explored while encouraging firms to think more holis- tically about how to address the climate change issue, not only to solve their short-term business challenges but also to contribute to a long-term solution for society.

To summarize, we provide three practices that help firms juxtapose the short- and long-term implications of

climate change: application of a broad range of decision- making tools, two-way stakeholder engagement, and collaboration with outsiders. By juxtaposing different time frames, firms exhibit temporal ambidexterity, which exposes the different time frames’ paradox—their oppos- ing yet interrelated nature. In other words, because short-term decisions seem so different from long-term decisions, it is often easy to see only one or the other. However, by following these three practices, firms can come to see the temporal connections rather than the trade-offs.

Connecting Time to Sustainability The heart of our contribution is to the sustainability literature. We show that business sustainability encom- passes two distinct yet interrelated tensions: the tension between business and society and the tension between the short term and the long term. Previous research in both corporate social responsibility and business sus- tainability has sought to reconcile business and societal goals. We argue here that intergenerational equity lies at the foundations of sustainability and encompasses an intertemporal tension. We show that business concerns are often more of a short-term nature, whereas societal concerns typically have longer time horizons, so that the two tensions are often confounded, and the busi- ness and society tension tends to dominate (Hart 1995, Shrivastava and Kennelly 2013, Whiteman et al. 2013). Although some of the practices that address the busi- ness and society tension, such as two-way stakeholder engagement, may also address the intertemporal tension, the two types of tensions represent separate pressures and thus require different theoretical lenses, tools of analysis, and even practices. Our paper points to the importance of addressing the intertemporal tension in addition to, rather than to the exclusion of, the business and society tension.

For example, temporal myopia results in actions that focus the firm’s attention on short-term win-wins between business and society. These firms are more likely to address climate change through energy effi- ciency, which reduces both greenhouse gas emissions and firms’ costs and, therefore, benefits both busi- ness and society. However, the long-term implications are less clear-cut. Reducing emissions at the source is arguably the best way of preventing pollution (Klassen and McLaughlin 1996). However, the long-term nature of climate change requires firms to address the basic premise of the sustainability of creating energy from fossil fuels. Failing to confront the intertemporal ten- sion tends to mask the more fundamental issues of how energy is produced and from where it is sourced. Senge et al. (2008) argue that promoting energy efficiency is a short-term solution that fails to address the whole sys- tem. These short-term solutions can conceal the deeper long-term problems that lurk beneath.

Business sustainability, at its core, addresses intergen- erational equity. A focus on win-wins and on shared value between companies and their stakeholders (Hart and Milstein 2003, Porter and Kramer 2011) skirts the underlying intertemporal tensions, yet sustainabil- ity requires meeting short-term business pressures while also serving long-term business and societal needs. The intertemporal tension is at the heart of sustainabil- ity, so addressing the business and society tension offers only a partial picture. Also, aligning business with soci- ety takes years or decades to realize, but the short-term focus of business obscures from view the longer-term wins for both the business and society. A full discussion of trade-offs and win-wins of business and society thus requires a forthright discussion of time.

Finally, although the economics and political sci- ence literatures have suggested that long-term societal concerns are best addressed through markets or the state (Ostrom 1990), our research shows that individ- ual firms can also work toward protecting common-pool resources, such as the atmosphere. Firms that juxtapose the short- and long-term aspects of an issue seek bene- fits in time frames that differ from when the costs are incurred, which exposes a wider range of solutions than are available to firms that polarize time. Firms that jux- tapose time can also see the connection between pri- vate and public interests and thus consider public inter- ests when pursuing private interests. Even though such actions may take the appearance of social concern, these firms may, in fact, merely recognize that their long- term private interests depend on a healthy and supportive community (e.g., achieving the social license to operate) and environment (e.g., adapting to climate change). Con- versely, it is possible that polarizing firms will contribute to climate change mitigation, for example, when govern- ments provide incentives to do so. However, these firms focus on efforts that require short-term costs and benefits to accrue in the same time frame. As a result, they often seek technology-based solutions without offering more effective and holistic solutions that address the complex- ity of social and environmental issues (Slawinski and Bansal 2012).

Sustainability as a Paradox Researchers argue that sustainability is rife with tensions and cannot be addressed through linear, causal analysis, or short-term solutions (Gladwin et al. 1995, Senge et al. 2008). Sustainability requires a systems view of organi- zations and the environments in which they are embed- ded. The more connected the systems, the more complex they become, and the greater the likelihood of paradoxes across several domains. A paradox lens, which seeks to understand how tensions are managed, is thus suited to handle the growing complexities of organizing, includ- ing managing the many tensions surrounding sustainabil- ity (Hahn et al. 2014). Similarly, “paradexity” research

highlights the convergence of paradox and complexity and the need to manage this complexity (Howard 2010). Juxtaposing rather than polarizing tensions often leads to more creative solutions (Lewis 2000).

The worldview that dominates in companies sepa- rates business from society. Events are discrete and often treated as isolated occurrences, decisions have narrow and local consequences, and individuals drive progress. Gladwin et al. (1995) label this worldview “technocen- trism,” which emphasizes atomistic individualism and reductionist reasoning. It also aligns with the economic logic described by Ferraro et al. (2005), in which various goals are treated as discrete and the pursuit of efficiency is the preeminent goal. Firms with a narrow, short-term worldview tend to frame the climate change issue as an economic problem requiring firm-centric technological solutions. Techno and Project shared an economic and technologically-based view of the world and, as such, approached climate change as a cost. In doing so, they avoided initiatives that did not offer immediate tangible benefits.

By contrast, firms that demonstrated temporal ambidexterity by juxtaposing time tended to coalesce around a broad view of the world characterized as inter- connected and complex, in which decisions have broad and global consequences and collaboration is key to resolving issues. This worldview is at least partly mov- ing toward the concept of “sustaincentrism” proposed by Gladwin et al. (1995), which focuses on complex relationships and holistic thinking. Multiple solutions are required to solve problems, and although mar- kets are needed to efficiently allocate resources, other policy instruments and economic incentives are also required. Temporally ambidextrous firms framed the cli- mate change issue as complex and multidimensional and believed that solutions required collaboration. Engaged, Vision, and Alternative appeared to share this worldview and, therefore, perceived the long-term costs of inaction as more problematic than the short-term costs of invest- ing in solutions.

Our research points to a significant challenge for busi- nesses’ efforts toward sustainability. If businesses con- tinue to approach sustainability issues from a techno- centric paradigm in which they seek to commensurate sustainability issues with economic issues, they reduce the attributes of the issues and take a narrow approach to finding a solution; as a result, companies will not address the fundamental challenges of sustainability. Instead, if the many tensions surrounding sustainability are juxtaposed and treated as a paradox, then alignment between business goals and societal needs will more likely emerge in the long run.

Managerial Implications Issues of sustainability, such as climate change, human health, and poverty, represent questions of intertemporal equity. Businesses must invest more today to benefit not

only themselves but also the broader society tomorrow. These are difficult challenges and are becoming increas- ingly difficult as the pressures for short-term financial returns seem to be escalating. In fact, the pressures for short-term returns are so high that firms must make deliberate efforts to exercise temporal ambidexterity; otherwise, they risk being unprepared for the future if they focus primarily on short-term efficiency. In this paper, we have offered specific practices by which firms can routinize their processes and practices to demon- strate this ambidexterity, such as introducing qualitative data into quantitative decisions, engaging a broad range of stakeholders, and collaborating with outsiders.

Boundary Conditions Inductive studies based on qualitative data must draw boundaries around the data collection process in order to manage the data burden. Our study imposed three such boundary conditions: the issue of climate change, the context of Alberta’s oil sands, and the sample of five large oil and gas multinationals. We intentionally con- trolled for variance in the issue and geographical context so that we could illuminate the intertemporal tensions at the intersection of these three boundary conditions. Although we suspect that our findings will generalize to other contexts, further work is needed to understand the limits to which our propositions are generalizable. For example, we anticipate that some industrial sectors may experience shorter time frames than oil sands, such as the high-tech sectors. High product turnover would likely aggravate the temporal myopia, making it even harder for firms to demonstrate temporal ambidexterity. Furthermore, the business and society paradox may not be experienced as acutely in industries that have small environmental footprints, such as in the services indus- try, even if these industries do experience intertemporal tensions.

We also focused on an issue that was particularly salient to the industry we were studying: climate change in the oil sands. We suspect that the proposed the- ory could apply to any issue characterized by signif- icant intertemporal tensions—i.e., decisions that must be made today for long-term impacts. For example, research and development activities are inherently rife with intertemporal tensions. Firms that focus on effi- ciency are less likely to invest in long-term research than firms that acknowledge different temporal perspec- tives. We encourage future researchers to explore similar questions for issues salient in other industries, such as e-waste in the high-tech sector.

We also add the caveat that none of the firms in our sample had fully addressed the climate change issue because the industry, by its very nature, has high green- house gas emissions. What we provide are insights into the breadth of approaches. However, we caution readers not to assume that one approach is better than the other.

We make no such claim here, as polarizing time enables firms to reduce greenhouse gas emissions quickly and efficiently, whereas the practices that help juxtapose time require time to accommodate diverse perspectives and build relationships. We encourage future researchers, therefore, to explore more fully the outcomes of these different approaches to intertemporal tensions, and not merely the practices and antecedents.

Conclusion Society needs a broad set of solutions to tackle some of our most complex and wicked problems, including climate change. If firms are to be part of the solution, they need to approach business and society as an interre- lated duality, rather than separating short-term business goals from long-term societal goals. Practices and pro- cesses that enable a long-term view may be critical to both firm survival and the tackling of complex societal issues. Indeed, business and societal success are inter- related: firm success depends on long-term societal and ecological health.

The importance of the connection between the intertemporal tension and the tension between busi- ness and society should not be overlooked. Paradoxes are often interwoven and reinforcing (Lüscher and Lewis 2008). Our research points to the possibility that intertemporal tensions are at the heart of other paradoxes that shape management theory, such as those between exploration and exploitation and between the individ- ual and collective. Therefore, firms that confront the intertemporal tension may also be better able to handle other such tensions. Our research suggests that business sustainability is not merely a topic that should be nar- rowly tackled by business and society researchers but that it can serve the dual purpose of informing a wider management community and addressing some of the most critical challenges confronting our society.

Acknowledgments The authors thank senior editor Klaus Weber and three anony- mous reviewers for their constructive feedback through the review process. They are grateful for feedback on earlier drafts of this manuscript from Mary Crossan, Alfie Marcus, Déborah Philippe, Monika Winn, Mark Zbaracki, and participants of the Davis Conference on Qualitative Research and the Group on Organizations and the Natural Environment. The authors are also appreciative of the funding they received from the Social Sciences and Humanities Research Council of Canada [Grants 864-2007-0083 and 410-2011-1981].

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Natalie Slawinski is an assistant professor of strategic man- agement in the Faculty of Business Administration, Memorial

University of Newfoundland. She received her Ph.D. from the Ivey Business School, Western University. Her research exam- ines the tensions inherent in sustainability, including between short-term business goals and longer-term societal needs.

Pratima Bansal is a professor and Canada Research Chair in Business Sustainability at the Ivey Business School, West- ern University (London, Canada). Her most recent research connects business strategy to sustainability by focusing on issues of time, space, and scale in organizations.