Institutional entrepreneurship in the supranational organizational field : the institutionalization of shale gas in the EU

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Master thesis

MSc. Business Administration- International management Track

Institutional entrepreneurship in the supranational

organizational field: The institutionalization of shale

gas in the EU.

March 16th, 2015

Final draft

Written by: Morraya Fatima Zahara Benhammou Student ID: 5870615

Word count: 13574 (Excluding tables)

Supervised by: Ms. F. Ciulli

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Statement of originality

This document is written by Student Morraya Fatima Zahara Benhammou who

declares to take full responsibility for the contents of this document. I declare

that the text and the work presented in this document are original and that no

sources other than those mentioned in the text and its references have been used

in creating it. The Faculty of Economics and Business is responsible solely for

the supervision of completion of the work, not for the contents.

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Acknowledgements

Firstly, I would like to express my sincere gratitude to my supervisor, Ms. Francesca Ciulli for her great support, guidance and patience through the process of writing my thesis. Secondly, I would like to thank the entire international management team for helping me complete my master successfully and sparking my interest in the different courses. Lastly, I would like to thank my family and friends and especially my mother for always believing in me.

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Abstract

Most management research emphasizes the impact of institutions on multinational enterprises (MNEs) and discusses institutional change with regards to domestic organizations. Limited attention has been given to the role played by MNEs as institutional entrepreneurs in

influencing institutions in the supranational organizational field, Based on a single embedded case study conducted on the institutionalization of shale gas by the shale gas MNEs in the European Union (EU), this study explores the mechanisms of institutional entrepreneurship adopted by MNEs at the supranational organizational field level. The analysis leads to the examination of four mechanisms adopted by MNEs to implement their institutional entrepreneurship actions: collective action, multiple framing and theorization, mobilizing allies and affiliation and lobbying. Additionally, the paper explores the dearth of unified resistance as a facilitating factor for these mechanisms.

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6 1. Introduction

Institutional entrepreneurship, defined as “activities of actors who have an interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones” (Maguire, Lawrence and Hardy, 2004: 657), has received increasing attention in academic literature in recent years. Scholars have shifted away from new institutional theory’s focus on institutional stability and organizations’ isomorphism driven by the need for legitimacy (Weber, 1930; DiMaggio and Powell, 1983) and they have instead increasingly studied institutional change and agency (e.g. Dacin et al., 2002; DiMaggio,1988; Hardy and Maguire,2008).

While most literature on institutional change has focused on the role played by domestic organizations (Battilana et al., 2009; Dacin et al., 2002; Dacin et al., 2007) recent literature has underlined the importance of examining MNEs as agents of change (Kostova et al., 2008; Pacheco et al., 2010; Regner and Edman, 2013). It has been argued that MNEs, more than domestic firms, have the ability to change institutions as they possess specific characteristics enabling them to do so (Hardy and Maguire, 2008).

So far institutional entrepreneurship has been researched in the home institutional environment (Greenwood and Suddaby, 2006; Maguire, Hardy and Lawrence, 2004) and in the host institutional environment (Kwok and Tadesse, 2006; Regner and Edman, 2013). Research, however, has been lacking in identifying the mechanisms that underlie MNEs’ institutional entrepreneurship and it remains unclear how organizations, in particular MNEs, promote and achieve change in the supranational institutional environment. Battilana et al. (2009) have considered the activities necessary in the implementation of institutional entrepreneurship in the context of domestic firms while Regner and Edman (2013), emphasizing on MNEs’ activities in host countries, identify the mechanisms through which subunits respond to host country institutions. Yet, scholars have not researched, to my knowledge, how MNEs implement institutional entrepreneurship in the supranational organizational field following a disruptive event.

The aim of this paper is to research the mechanisms of institutional entrepreneurship adopted by MNEs with the aim to institutionalize a new and controversial practice in the supranational field, addressing the following question: “How do MNEs, through institutional entrepreneurship, institutionalize a practice successfully in supranational organizational fields?” This paper aims to answer this question through the study of the shale gas MNEs that came to be under a lot of public scrutiny for attempting to institutionalize shale gas in the EU,

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as the consequences of the extraction of shale gas are seen as hazardous to the environment and the health of the citizens. A longitudinal, single embedded case study will be conducted, with the MNEs as the embedded unit of analysis. The study will focus on the period 2008-2014, and will analyze how the shale gas MNEs have implemented institutional entrepreneurship in the supranational EU organizational field. Data in the form of news articles will be collected from international newspapers, environmentalist reports will provide further information about the opposing interest groups, press releases and legislative pieces by the regulatory institutions will be investigated and lastly, MNE and business associations’ websites will be consulted to illustrate the different actors and their various perspectives.

This study aims to contribute to the field of international management and expand the literature by offering a better understanding of how MNEs can fulfill their role as institutional entrepreneurs in the institutionalization of new and controversial practices. More specifically, this paper aims to explore the supranational organizational field and in particular, the mechanisms adopted by MNEs with the aim of institutionalizing these practices. The research identifies interaction patterns between MNEs and other actors that might lead to institutional change.

The extensive literature review in section 2 will consist of a description of the main constructs of this study: agency, institutional entrepreneurship and its process, institutional change and (supranational) organizational fields and institutions. Section 3 will present the methodology and consists of the research design, the case selection and background, the data collection and validity, the data coding and the data analysis, after which the results will be presented in section 4 to examine how the shale gas MNEs were able to implement institutional entrepreneurship in the EU after the 2008 Russia- Ukraine gas dispute. The discussion will ensue hereafter in section 5. Finally, implications for future research and conclusive words will be laid out in section 6.

2. Literature review

2.1 Old and Neo-institutionalism

Institutional theory focuses on the processes by which structures, rules, norms, routines and practices become ingrained guidelines for social behavior (Scott, 2004). Within this theory two dominant streams of research have emerged; old and new institutionalism.

Old institutionalism focuses on agency, vested interest and power (Selznick, 1949). According to Greenwood and Hinings (1996), old institutionalism acknowledges the existence

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of institutional change and the active role of organizations. Contrarily, new institutionalism focuses on “the embeddedness of organizational fields and the centrality of classification, routines, scripts and schema (DiMaggio and Powell, 1983; Meyer and Rowan, 1977)” (Greenwood and Hinings, 1996: 1023). The most discussed process within this approach is isomorphism which entails that organizations become increasingly similar, despite their distinctive evolution, to conform to existing institutions (DiMaggio and Powell, 1983). One of the reasons for this uniformity as coined by Weber (1930) is the ‘iron cage’ which refers to the increased rationalization of society. According to the author, the need for efficiency is the main driver for isomorphism. Drawing on Meyer and Rowan (1977), DiMaggio and Powell (1983) revise the “iron cage” stating the search for legitimacy as the reason for isomorphism. Legitimacy is defined as “a generalized perception or assumption that the actions of an entity are desirable, proper or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995: 574). This results in specific practices within a specific institutional context which are seen as legitimate (Meyer and Rowan, 1977) and are therefore adopted by organizations, making divergence from them all the more difficult. Surely, organizations have to adapt to the practices of the institutions they conduct business in, in order to gain legitimacy themselves.

Therefore, new institutionalism emphasizes how institutions shape the behavior of agents such as organizations, where the homogenization processes might be determined by institutional constraints (DiMaggio and Powell, 1983). Proponents of old institutionalism oppose these ideas of efficiency and legitimacy by focusing on institutional change and agency instead.

New institutional theory is widely acknowledged in explaining organizational action but has been largely criticized for overemphasizing homogeneity and discarding institutional change (Dacin et al., 2002).

2.2 Institutional change

Academics have shown that institutions can drive change and can be subject to change themselves over time (Dacin et al., 2002; Hardy and Maguire, 2008). Institutional change according to North (1990) relates to all organizations that serve different societal functions such as business, government and education and to how they are transformed as a response to a changing world. Institutions emphasize the underlying rules and norms of society which define the governance and structure of these societal functions (North, 1990).

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Oliver (1992) identifies three sources of pressures for change on institutional norms and practices: functional, relating to competitiveness and efficiency, political, relating to shifts in interest and power distributions and lastly, social, which relates to heterogeneous beliefs. Greenwood et al. (2002) describe the process of institutional change and identify the pressures that exist and which deinstitutionalize existing norms and practices. However, the deinstitutionalization of existing norms and practices does not directly lead to the breakdown of these norms and there is a need of theorization and legitimation by actors to explain the failure of the old and provide the justification for the new (Greenwood et al., 2002).

Actors who initiate change are often met with a lot of resistance due to the subjectivity of the institutional environment which depends on social values, beliefs and norms. Institutional change can lead to confusion as it alters strongly held norms, values and practices (Scott, 1995). North (1990) states that institutions persist due to formal rules that are nested in a hierarchy, whereby changing each level is increasingly costly and, due to informal constraints, these institutions have developed habitual behavior. This persistence according to the author is not an indication of efficiency but rather of legitimacy (North, 1990).

Institutional change is a complex construct. As stated before, institutions inflict change on organizations or actors but it is important to note that these actors are also capable of influencing institutions and perhaps even changing these (Battilana et al., 2009). The following section will shed light on actors’ agency.

2.3 Reintroduction of agency in institutional theory: institutional entrepreneurship

As discussed previously, old institutional theory focused on change and breaking through the status quo (Selznick, 1949, 1957). Later academic research on institutional theory has tended to focus on continuity and stability instead of the importance of change, de-emphasizing agency in neo-institutional theory (DiMaggio and Powell, 1983; Meyer and Rowan, 1977; Weber, 1930; Zucker, 1983).

Bridging old and new institutionalism integrates institutional stability and institutional change and facilitates the reintroduction of agency, power and interest to institutional theory (Greenwood et al., 2008). This in turn lays the foundation for institutional entrepreneurship. DiMaggio (1988) re-introduces the notion of agency to institutional theory, arguing that: “new institutions arise when actors with sufficient resources see in them an opportunity to realize interests that they value highly” (DiMaggio, 1988: 14). He calls these actors “institutional entrepreneurs”. These institutional entrepreneurs take initiative to change existing institutions

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or creating new ones, thereby reviving parts of “old institutionalism” (Selznick, 1949, 1957). The construct of institutional entrepreneurship has further been defined by Maguire et al. (2004:657) as: “activities of actors who have interest in particular institutional arrangements and who leverage resources to create new institutions or to transform existing ones”.

Battilana et al. (2009) propose that two conditions need to be met in order for actors to be seen as institutional entrepreneurs; agents initiating divergent change and secondly, the active participation in implementing said changes. According to Pacheco et al. (2010), the institutional entrepreneur is able to defy the existing rules and practices and capable of institutionalizing these changes (Garud and Karnoe, 2003), which is confirmed by Battilana et al. (2009). The latter argue that change agents can be seen as institutional entrepreneurs but not necessarily the other way around as institutional entrepreneurs can be actors who engage in changing institutions but do not necessarily succeed in doing so (Battilana et al., 2009; Hardy and Maguire,2008). According to these authors, individual institutional entrepreneurs play a highly influential and even determining role in creating and transforming institutional practices. Indeed, Hardy and Maguire (2008) argue that other authors: “are more cautious of attributing too much agency or causality to specific actors and instead emphasize the collective, incremental and multi-level elements of institutional entrepreneurship as a process.” (Hardy and Maguire, 2008: 98). Individual institutional entrepreneurs thus do not always play a determining role. In complex fields, change is said to need cooperation from different actors with similar or diverging interests as individual organizations cannot carry out change by themselves (Wijen and Ansari, 2007; Hiatt et al., 2009). Many institutional changes are complex social processes constituted of different interests and perspectives. Wijen and Ansari (2007) propose collective institutional entrepreneurship to alleviate the complexity of the field. However, according to Greenwood and Suddaby (2006) it is unclear how agents visualize new practices unfold as they are embedded in the environment they attempt to change. The notion of institutional entrepreneurship is thus paradoxical, as organizations’ practices and actions are determined by existing institutions and institutional entrepreneurs seek to break with these institutions by changing them (DiMaggio, 1988; Hoffman, 1999; Holm, 1995; Seo and Creed, 2002).

2.4 Institutional theory and international business

Institutional theory literature has mainly focused on domestic firms as a unit of analysis (Kostova et al., 2008; Regner and Edman, 2013). Although, recently, scholars have increasingly applied institutional theory to studies focusing on MNEs, limited attention has

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been given to the discussion of how institutional theory constructs can be applied to the context of international business and, more specifically, to MNEs ( Regner and Edman, 2013; Kostova et al., 2008).

Indeed, according to Kostova et al. (2008), so far, international management literature has adopted a too narrow view of institutional theory. Limited attention has been given to the fact that MNEs are different from domestic firms due to their complex internal structures and their operations in different institutional environments, which hinder or facilitate their activities in home and host institutions (Hardy and Maguire, 2008; Pinkse and Kolk, 2010; Regner and Edman, 2013). More importantly, literature has failed to mention institutional entrepreneurship activity by MNEs in the supranational institutional environment.

In the application of institutional theory to MNEs, two key aspects emerged as particularly relevant: the fact that MNEs, more than domestic firms, actively engage in changing institutions (Kostova et al., 2008) and the fact that the concept of organizational field cannot be applied to the MNE context as MNEs: “face multiple, fragmented, nested, or often conflicting institutional environments. Such conditions, coupled with spatial, language, cultural, and organizational barriers, preclude sufficient interorganizational interactions, which are fundamental to structuration and field formation” (Kostova et al., 2008, p.998).

2.4.1 Institutional entrepreneurship in international business

According to Kostova et al (2008), a key feature of MNEs is their agency; they argue that institutional theory, with its focus on isomorphism and stability, is not suitable to investigate it. Phillips and Tracey (2009), adopting a more nuanced position, instead stress that recent works on institutional theory, by bringing together old and new institutionalism, have given more attention to agency and that the field of international management could benefit from this; they also suggest that scholars should use the unique nature of the MNEs to break through the limits set by traditional institutional theory to enrich institutional literature. In particular, both Kostova et al. (2008,2009) and Phillips and Tracey (2009) stress the relevance of the institutional entrepreneurship concept for the investigation of MNEs. Yet, few studies have examined MNE commitment to change institutions. For example, Regner and Edman (2013), by investigating how MNEs react to host country institutions, have identified as possible response institutional innovation. Yet studies which investigate MNEs using the concept of institutional entrepreneurship are lacking in examining mechanisms which facilitate institutional change led by MNEs, while, as argued by Kostova et al (2009:

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173), it is particularly important to investigate “the mechanisms through which institutional entrepreneurship and institutional change occur”.

Institutional entrepreneurship activities can be the work of powerful actors located in dominant positions (Hardy and Maguire, 2008) who are not necessarily deeply rooted in these institutions because they do not operate in a single organizational field but in a multiplicity of organizational fields (Phillips et al., 2009). This exposes them to a plurality of different practices and is especially the case for MNEs, making them particularly interesting to study institutional dynamics (Hardy and Maguire, 2008; Kostova et al., 2008; Phillips and Tracey, 2009).

MNEs are subject to a plurality of institutions in their national institutional environment, in their host institutional environment but also at the supranational institutional environment where they deal with formal and informal institutions that may put pressure on them. Being subjected to different and sometimes conflicting institutions might facilitate change initiation by these MNE as it enables them to envision alternative options of institutional arrangements (Seo and Creed, 2002). This also means that there is a plurality of actors that the MNE has to manage (Hardy and Maguire, 2008).

2.4.2 Supranational organizational field and institutions

New forms of energy and their widespread impacts on a large number of markets, the environment, people and their health are a global issue in which the supranational institutional environment is to be considered. I believe this is going to be particularly salient in the case of the institutionalization of shale gas in the EU, as the EU is a fragmented institution made up of twenty eight distinct member states and markets. This adds another level of complexity to the analysis of MNEs and their institutional entrepreneurship actions. The global relevance of the issue and the attempt at institutionalization of a new practice targeting the EU as opposed to separate EU member states entails that it cannot be analyzed on a country to country basis as it has implications for the entire region (Pinkse and Kolk, 2012).

The advantages of being active in the supranational institutional environment are that MNEs can be instrumental in transferring best practices from one country to another(Christmann,2004) and leverage knowledge and experience from other contexts. MNEs are well positioned to form and transmit global behavioral norms because of their access to supranational stakeholders such as NGOs and IGOs (Pinkse and Kolk, 2012). This is especially advantageous when these norms meet the expectations of stakeholders. However, I

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expect this to be particularly difficult for MNEs who attempt to institutionalize a practice that does not coincide with the expectations of stakeholders, and instead, I believe that the transfer of knowledge from other institutional environments and the bad reputation of the shale gas MNEs’ extraction activities will lead to resistance from supranational stakeholders.

2.4.2.1 Transnational and Supranational institutions

So far, literature has researched the home and host institutional environment and discussed the MNEs’ actions on a country-to-country basis. However, due to MNEs operating across their national borders, often in many different host environments simultaneously, the study of supranational institutions has become particularly interesting (Phillips et al., 2009).

Transnationalism literature explores institutional environments that transcend (national) boundaries and has done a lot of work to overcome methodological and theoretical nationalism of institutional and organizational theory, which has been responsible for keeping research nation-bound (Collins,2007).

According to Hannerz (1996), ‘transnational’ depicts actions of public and private actors across diverse national contexts and across geographic scope. This is offered as an alternative to “international” as the latter only depicts agreements between national states (Morgan, 2006). Transnational institutions can take two forms; they can consist of the imposition of a preferred national model which may lead to complexities in achieving a true transnational institution (Djelic,1998), or they can consist of multiple national interests but these do not attempt to dominate each other which facilitate the development of transnational social actors (Morgan, 2006). Transnational institutions will prevail if they become arenas that shape and are shaped by transnational actors (Morgan, 2006).

However, transnational institutions only concern actions across diverse national contexts and fail to concern norms, rules and practices that govern systems, transcending national boundaries and authorities, also known as supranationalism (Best,2005). A supranational institution is not just a medium for regional agreement but rather consists of the norms, rules and values that are accepted as governing a particular system. Additionally, supranationalism is not a bipolar notion; some concerns are subject to national sovereignty as well as subject to common rules adopted at a higher level, when in other cases, intergovernmental cooperation may apply. Moreover, a supranational institution does not entail a monolithic super state but rather a set of actors interacting to combine various rules and instruments (Best, 2005).Supranationalism entails that sovereign states agree to play by

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norms which are adopted at a higher level of organization. In the case of conflict between national law and community law, the latter overrules. MNEs’ mechanisms through which institutional entrepreneurship activities are implemented in supranational institutions are expected to be salient as the supranational institutional environment consists in facing decision-making within international organization, whereby power at the supranational institutional level is held by independently elected officials or representatives elected by the legislative actors and people of the member states (Leal-Arcas, 2007). Member states still have power, but they share this power with other actors (Leal-Arcas, 2007). Moreover, decisions are made based on majority vote, which makes it possible for a member state to be coerced to implement decisions involuntarily by the other member states. I expect this to influence on MNEs who institutionalize new and controversial practices as they might take advantage of the supranational power at the expense of potential resistance from individual member states (Lindseth, 2003). Supranational institutions consist of multiple member states and are thus subject to fragmentation, which is a concept that relates to an “institutional setting in which distinct institutions exist and interact” (Biermann et al., 2009:17).

As previously stated, the focus of institutional theory so far has been on institutions affecting organizations through regulative, normative and cognitive pressures. Instead, the next section will discuss the organizational field, whereby, aside from formal institutions, the institutional environment at large and the interactions of the actors constituting it are important in building and changing institutions.

2.4.2.2 Organizational fields

Organizations are embedded in institutional environments where they seek support and legitimacy (Scott and Meyer, 1991; DiMaggio and Powell, 1983, 1991). The organizational field is a central concept in new sociological institutionalism which was introduced by DiMaggio and Powell (1991) to develop an understanding of these institutional environments (Coni-Zimmer, 2014).

Bourdieu (1990, 1993) discusses an agent’s actions within its political, economic and cultural environment as defined by a network of social relations. The organizational field is seen as the domain where an organization’s actions are structured and defined by the environment in which it operates. As the discussion on inter-organizational relations evolved, literature extended the field to include organizations not only bound by geographic scope or missions but also observes the organizational field as a recognized area of institutional life,

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including suppliers, competitors, regulatory agencies and others (DiMaggio and Powell, 1983, Wooten and Hoffman, 2008).Since its introduction, there have been many meanings proposed of the organizational field in the attempt to improve the concept and its operationalization (Machado-Da-Silva et al., 2006). According to DiMaggio and Powell (1991) the structuration of a field depends on interactions among field participants leading to isomorphism. Scott (1995) builds on these findings and argues that the organizational field is: “a community of organizations that partakes of a common meaning system and whose participants interact more frequently and fatefully with one another than with actors outside the field” (Scott, 1995:56). These interactions determine the boundaries of a field. The field may encompass any entity that has an impact on an organization in a coercive, normative or mimetic manner, such as government, exchange partners, trade associations, interest groups, sources of funding and the general public (Scott,1995).

Prior institutional scholars were criticized for the emphasis given to homogeneity and isomorphism in the organizational field (Hoffman, 1999). Later research perceived the field to be dynamic, depicting interaction patterns around organizations with conflicting points of view rather than centering on similar meanings and opinions (Hoffman, 1999; Wooten and Hoffman, 2008). The field constituents, including actors who cherish existing practices engage in a debate regarding a given issue (Hoffman,1999). The field thus becomes more defined with regards to actors contesting one another; creating more opportunity for agency and the deviation from the existing norms and practices (Hoffman, 1999; Wooten and Hoffman, 2008). Therefore, rather than analyzing the diffusion of existing practices, norms and rules, research on organizational fields has increasingly focused on processes of conflict and change.

However, the theory of organizational fields does not apply MNEs. Kostova et al., (2008) argue that “organizational fields in the neo-institutional sense, do not exist in the MNE context, or are ill-defined at best. MNEs and their subunits face multiple, fragmented, nested or often conflicting institutional environments”(Kostova et al., 2008: 998). Moreover, early literature on organizational fields has focused on empirical cases from regions or sectors in the national context (DiMaggio and Powell, 1991; Hoffman, 1999; Phillips et al., 2009; Scott, 1995), overlooking the supranational institutional environment. More recently, research has applied the construct of organizational fields to processes of transnational politics (Djelic and Sahlin-Andersson 2006; McNichol 2006; Dingwerth and Pattberg 2009) and this is particularly interesting as supranational institutions are on the rise (Gruber, 2000).

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2.4.2.3 Transnational and supranational organizational fields

Scant attention has been given in management literature to organizations in transnational relationships; instead research on organizational fields has so far mainly focused on state boundaries with less attention given to transnational institutions (Collins, 2007). The main difference between traditional organizational fields and transnational ones is that the latter takes into consideration two or more nationally organized formal and informal institutions (Collins, 2007).

Coni-Zimmer (2014) argues that transnational organizational fields are social spaces where organizations interact with each other. In line with traditional organizational fields, different subpopulations of organizations can be part of the transnational organizational field. She also argues that belonging to a field lies in the empirical identification of the interactions between the various actors (Coni-Zimmer, 2014). To my knowledge, there have so far not been any studies discussing supranational organizational fields. Transnationalism can make nation state institutions sensitive to their home state policy preferences or make them act as their agents (Ellinas and Suleiman, 2011). Supranationalism on the other hand allows for consensus within an institution in favor of deeper integration. Supranational institutions can be seen as organizations that bind transnational institutions (Ellinas and Suleiman, 2011). Biermann et al., (2009) analyze the overarching system of public and private institutions, practices, regulations, decision-making processes and organizations that are active in a given issue area of world politics. I expect the supranational organizational field to be shaped by national institutions and field interactions.

This paper therefore assumes that a supranational institution encompasses the transnational institutions. Moreover, supranational organizational fields are assumed to encompass transnational organizational fields. For the purpose of this paper, it is assumed that all actors participating in the debate around the institutionalization of shale gas by the shale gas MNEs make up the supranational organizational field. Furthermore, the actors constituting the supranational organizational field will be deduced from the data and will observe that the supranational organizational field is one that is fragmented as it is shaped by different national institutions and deals with interactions beyond the national boundaries.

2.5 Process of institutional entrepreneurship

After having discussed institutional entrepreneurship by MNEs and their interaction with other actors in the organizational field, the following sections will describe the process of

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institutional entrepreneurship, describing how organizations initiate institutional entrepreneurship following disruptive events and how extant literature has described the mechanisms through which different organizations have implemented institutional entrepreneurship in different institutional environments.

2.5.1 Disruptive events as enabling factors

Institutional interaction and institutional change are most discernible in times of crises and disruptions. As argued by Hoffman (1999), disruptive events can break with the stability that is promoted in new institutional theory by triggers such as jolts and crises or new product introductions which can be responsible for initiating institutional change. Moreover, fields in crisis are said to be conductive of institutional change as existing tensions and contradictions are brought up that moderate the effects of the paradox of embedded agency and facilitate institutional change (Hoffman, 1999; Sine and David, 2003). According to Hoffman(1999), disruptive events have been vital in the explanation of change processes as they have been shown to create uncertainty for organizations, leading to the initiation of action which strays from established practice (Meyer, 1982). Similarly, Sine and David (2003) suggest that jolts and crises serve as catalysts for action as they allow actors to engage in search processes that delegitimize existing institutional norms and bring to light alternative structures as well as entrepreneurial opportunities.

2.5.2 Mechanisms

While mechanisms by which MNEs implement institutional entrepreneurship have been discussed in response to disruptive events in national institutional contexts (Hoffman, 1999; Greenwood and Suddaby, 2006) and in a host country institutional context (Kwok and Tadesse, 2006; Regner and Edman, 2013) context, literature has failed to do so in the supranational organizational field.

Battilana et al. (2009) have investigated the mechanisms through which institutional entrepreneurs implement institutional change but without a consideration for the type of field in which these actors operate and for the type of institutions they aim to change. Building on Lewin’s (1947) three-phase model of change, Battilana et al. (2009) have identified three main activities adopted by institutional entrepreneurs: developing a vision, mobilizing people and motivating people to achieve and sustain the vision. Implementing institutional change is particularly difficult as agents may run into institutional defenders who benefit from the norms and practices that are institutionalized, thus being resistant to any change that might

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potentially take away the existing institutions they were benefiting from. Developing a vision consists of institutional entrepreneurs introducing new practices in ways that can be accepted and can appeal to the parties involved. The institutional entrepreneur needs to explain the problem it wants to solve and why the alternative is better than the incumbent practices. This happens through diagnostic, prognostic and motivational framing. Diagnostic framing emphasizes how the existing organizations fail, exposing problems with current practices and assigning blame (Suddaby and Greenwood, 2005). Prognostic framing means the new practice is framed to be superior over the existing practice and lastly, motivational framing entails providing reasons to support the implementation and the promotion of the new vision (Misangyi et al., 2008). The expectations are that in dealing with the supranational institutional environment which consists of multiple, fragmented institutions, MNEs will use multiple frames to have their new practices accepted by the parties involved. In order to do so, the institutional entrepreneurs must be able to identify with the interests of others (Fligstein, 1997).

The next step is to mobilize allies. Change can only be implemented if it is supported, thus institutional entrepreneurs should make sure they get support by mobilizing allies (Greenwood et al., 2002). This happens through the use of discourse, thus organizations should convince allies by having impeccable skills in communication.

The last mechanism identified by Battilana et al. (2009) is the influence of field characteristics. Agents that operate in fields where isomorphic pressures and highly institutionalized pressures are present need to make sure that their vision falls into place with the interest and values of the members of the institutions. If however, the field is heterogeneous, an agent needs to make sure to find common ground to ensure all different actors can agree with the new vision. Although the mechanisms identified by Battilana et al. (2009) are particularly relevant for the study of institutional entrepreneurship, they do not integrate the institutional complexity experienced by MNEs discussed in the previous sections.

Regner and Edman (2013) focus on MNEs and identify three mechanisms that allow for institutional change in host country institutional environment: reflexivity, role expectations and resources. The authors however only study mechanisms focusing on the host country context, thus ignoring the different institutional contexts an MNE deals with.

Furthermore, David et al. (2013) state that based on prior research, institutional entrepreneurs undertake three kinds of activities: theorization, affiliation, and collective

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action. The authors argue that institutional entrepreneurs have to theorize the change they desire to achieve; this entails identifying problems and justifying specific novelties as a solution to these problems. These findings show that a key activity of institutional entrepreneurs is the theorization of change as consistent with existing field and organizational practices and routines (Greenwood et al., 2002; Maguire et al., 2004). Additionally, David et al. (2013), state that institutional entrepreneurs legitimate themselves by affiliation to legitimate actors in order to “borrow” legitimacy from these partners. Lastly, cooperation can help institutional entrepreneurs against the resistance from those who value the instated institutions (Rao et al., 2000; Wijen and Ansari 2007; Hiatt et al., 2009). The complexity of developing and implementing new norms and practices leads to collective action by institutional entrepreneurs with their competitors, international organizations and such (David et al., 2013). These three activities highlighted are likely to be important in all contexts but David et al. (2013) expect that these activities take different forms and have different targets in emerging fields than in mature fields because of the different challenges the contextual environment poses. However, the authors, in discussing organizations as institutional entrepreneurs, fail to examine organizations that operate across borders; MNEs or the institutional environments in which these activities take place. I expect theorization and collective action to be particularly salient at the supranational institutional environment level as cooperation might facilitate the institutionalization of new practices when taking into consideration strong resistance from interest groups.

Lastly, lobbying entails the use of political strategies and power and can be used to promote the vision and interest of the collective or single institutional entrepreneur (Levy and Scully, 2007). Some authors describe how the extent to which power can be employed depends on the social resources and social position of the institutional entrepreneur or their capacity to mobilize actors and resources (Battilana et al., 2009;DiMaggio, 1988). Lobbying tactics are often seen as an important tool for institutional entrepreneurs (Pacheco et al, 2010). When institutional change results from formal policy-making, foreign investors (MNEs) are still able to isolate themselves from the effects hereof through lobbying pivotal political actors (Henisz and Zelner, 2005). The expectation is that lobbying is more important in the supranational institutional environment relative to any other institutional environment as lobbying at that level overrules national opponents.

While mechanisms by which MNEs implement institutional entrepreneurship have been discussed in response to disruptive events in a home country institutional context (Hoffman, 1999; Greenwood and Suddaby, 2006) and in a host country institutional context

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(Kwok and Tadesse, 2006; Regner and Edman, 2013) context, literature has failed to do so in the supranational organizational field. This leads to the following research question: “How do MNEs, through institutional entrepreneurship, institutionalize a new and controversial practice successfully in a supranational organizational field?”

3. Methodology

3.1 Research design

In exploring how institutional entrepreneurs realize the institutionalization of new and controversial practices, this paper focuses on the case of the institutionalization of shale gas in the EU. This study will use an exploratory single embedded case study as it is feasible within the time frame and because it is most suitable for investigating contextually rich phenomena and events (Yin, 2013). The aim is to build on existing theory, which will facilitate the efficient development of the international management field and will help its applicability to practice. Moreover, the paper aims to explore the concept of institutional entrepreneurship across borders, on a supranational level with the aim of integrating international business with institutional theory. A case study is the most appropriate method for extending existing theory as it deals with exploring phenomena (institutional entrepreneurship, multiple institutional embeddedness and institutional change) which are too complex to measure quantitatively (Yin, 2013). The embedded units of analysis are MNEs as part of the supranational organizational field. The supranational organizational field and its constituents will be derived empirically, from the data.

This research uses multiple sources of information in the data collection process but does not employ multiple methods. The latter would entail a more comprehensive approach but is unfeasible due to time constraints. The single case design implies that generalizability is limited, because replication of the findings in other cases might prove to be difficult (Yin, 2013). However, this study has a high degree of reliability as there are will be detailed accounts of the data collection process. Furthermore, there is a high degree of construct validity and data triangulation, as multiple sources of data and perspectives are used regarding the case (Yin, 2013). The next section discusses the selection of the case study and gives a narrative account of the events prior to the attempted institutionalization of shale gas in the EU, which will serve as a background story to the case.

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To study the process of institutional entrepreneurship by a group of MNEs and, more specifically, the mechanisms through which the new practice institutionalization happens, this paper selects the shale gas case through theoretical sampling; on the basis of its potential to represent important theoretical constructs (Patton, 2001). The case study conducted has as an embedded unit of analysis the following shale gas MNEs from different home countries (see table 1): Chevron Corporation, Shell, Total, and ExxonMobil Corporation, who have attempted to institutionalize shale gas in the EU. The focus on these four MNEs specifically is due to the fact that they were the most active in the process of institutionalization of shale gas. They have been part of the main lobby groups and have been the most outspoken on the matter and In particular, the focus will be on the period following the disruption of gas supplies to Europe due to a transit disagreement between Russia and Ukraine which has formed the disruptive event (Hoffman,1999) and has put the security of gas supply back on the map of the EU energy policy ( EY.com, 2013). The institutionalization of what is perceived to be the next energy revolution in the EU (Weijermars and McCredie,2011)has been subject to substantial scrutiny from environmentalists, not only at the national level, from opposing member states, but also in the supranational organizational field, as the MNEs are accused of damaging the environment through fracking.

Shale gas is an unconventional, natural gas found in shales which are fine-grained sedimentary rocks in which the gas is locked. Sophisticated machinery and advanced technology are necessary to extract the majority of the gas. In order to do so, two methods are used, being horizontal drilling and hydraulic fracturing, also known as ‘fracking’. The former entails the drilling of a vertical well to reach the targeted shales. Once the drill has reached a certain depth, it will stretch itself horizontally into the gas basin. Millions of liters of water mixed with sand and chemicals are injected into the well which causes explosions within the shale, allowing for the gas to easily be released (Buisset et al., 2012).Shale gas is a controversial source of energy as it requires these vast amounts of water and the practice of fracking has been shown to have contaminated water with dangerous levels of methane (Harvey, 2011).

Europe is estimated to potentially hold trillions of recoverable cubic meters of shale gas across different member states. The location, the size and the commercial viability of these reserves are yet to be determined (“Shale gas Explained”, 2014). Shale gas and its controversial extraction methods have led to heated debates across the EU and its member

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states as the industry promises cheap shale gas, following the US example but communities and environmental groups worry about the serious threats relating to water supplies, pollution risks and potential health impacts (Tansey, 2014). Fossil fuels are running out and are not a durable source of energy; furthermore, renewable energy, generated from natural resources such as sunlight and wind and heavily depending on these, has not proven to be reliable enough to function as a sustainable alternative to fossil fuels. This has opened the way for unconventional fossil fuels such as shale gas to be considered as a viable option. The exploitation of shale gas, however, has exclusively taken place in the US and has been a tremendous success leading to energy companies to consider opportunities abroad, of which the EU (Buisset et al., 2012). The EU, however, is in its primal phase of shale gas exploitation with shale gas exploration having started only a few years back in a few places in the EU such as Poland, Sweden, Denmark and the UK (Buisset et al., 2012). Many European gas companies have already set up shale gas projects, seeing them as the solution for the pending energy problem that the EU faces. It is considered relatively clean compared to oil, it is not as expensive and unreliable as renewable energy and it is a source of energy that allows for less dependency on imported Russian natural gas. However, the public and environmental opposition to these projects is growing at a fast pace, causing some countries (e.g.; France, Romania, Bulgaria) to take measures against shale gas exploration, going as far as to ban shale gas (Buisset et al., 2012).

Although the operations of the shale gas MNEs and industry have been condemned by the general public, the shale gas MNEs and the business associations they are part of, which comprise many prominent and resourceful MNEs, have succeeded in avoiding strong regulation and bans against the development of shale gas so far. The European Commission has given recommendations “that support Member States in the exploration and production of natural gas from shale formations and ensure that the climate and environment are safeguarded, resources are used efficiently, and the public is informed” (“Commission recommendation”,2014).

Furthermore, Jose Manuel Barroso, EU Commission president, in 2014 claimed that shale gas was at the heart of the new energy strategy. He stated that: “the EU has done a lot in the aftermath of the gas crisis of 2009 to increase its energy security. Yet, it remains vulnerable. The tensions over Ukraine again drove home this message. In the light of an overall energy import dependency of more than 50% we have to make further steps. Increasing energy security is in all our interest. On energy security, Europe must speak and act as one” (Harvey, 2014).

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Having become institutional entrepreneurs at the supranational level through the institutionalization of shale gas, the shale gas MNEs represent a particularly interesting case to investigate how MNEs successfully implement institutional entrepreneurship of a new and controversial practice.

Table 1: Multinationals and their home countries

MNE Home country

Total S.A. France

Royal Dutch Shell plc Netherlands, United Kingdom

Chevron Corporation U.S.A.

ExxonMobil Corportation U.S.A.

3.3 Data collection and validity

In order to investigate how MNEs implement institutional entrepreneurship at the supranational level, in the institutionalization of a new practice, secondary data in the form of documentary and archival data is collected. The study uses multiple sources of data from various perspectives of different actors which helps the construct validity of this research through data triangulation. This also allows the identification of the constituents of the supranational organizational field of which the shale gas MNEs; these are summarized in table 2. Firstly, media coverage by international newspapers (e.g. The Guardian and the New York Times) relating to shale gas institutionalization and the actors responsible will be analyzed. Secondly, documentation such as NGO reports and anti-shale gas interest group reports are used as sources to understand the perspective of these interest groups (Friends of the earth Europe, Pact Europe). Furthermore, information from the oil and gas MNEs and pro-shale business associations will be collected from official websites to understand the pro-shale gas MNEs’ activities from their perspective (OGP.org, BusinessEurope, shalegas-europe.eu, shell.com, total.com, chevron.com) and their influence as part of the shale gas industry on the EU to increase our understanding of institutional entrepreneurship at the supranational organizational field level. Lastly, EU institutions’ recommendations, documents and laws will be used to understand the decision making at the supranational level (eur-lex.europa.eu, euractiv.eu). The categories and sources of data, respectively, are summarized in table 3.

The longitudinal nature of this research leads to the collection of data in the period from January 1st 2009, when the gas price and transport dispute between Ukraine and Russia reached its peak, leading to the blocking of gas supplies to several EU countries, until July, 2014 when strict EU regulation was fended off by the gas shale MNEs.

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Focusing on this period allows investigating how the shale gas MNEs implemented institutional entrepreneurship at the EU supranational level. This time frame is long enough to observe the preliminary development of shale gas in the EU by the shale gas MNEs and realistic given the limited time available.

Table 2: The members of the EU supranational organizational field Supranational organizational field

Friends of the Earth Europe Food and Water watch

European Union regulatory institutions; Parliament, Council, Commission. National institutions

Shale gas MNEs

Energy intensive industries

Competitive energy industries: Coal industry, renewable energy industry and nuclear energy industry

Academia

Table 3: Data categories and sources

Category Sources

Newspapers and media The Guardian The New york times Euractiv.com

Environmental reports and press releases Friends of the Earth Europe Food and Water Watch Business associations websites Shalegas-europe.eu

Europeanenergyforum.eu Amchameu.eu

OGP.org MNE websites, reports, FAQs, About Chevron.com

Shell.com Total.com

corporate.exxonmobil.com Consultancy firm reports ey.com

McKinsey.com Pacteurope.eu Legislative recommendations Eur-lex.europa.eu

Europa.eu 3.4 Data coding and analysis

The secondary data will be analyzed through thematic coding in order to distinguish the relevant from the irrelevant data. These themes are the fundamental concepts the paper

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aims to describe (Ryan and Bernard, 2003). In line with Hoffman (1999:11), who states that: “Institutions are reflected in the content, rhetoric and dialogue patterns among field constituents”, the purpose of thematic coding is to identify what actor did what and to classify the relevant data to help answer the research question. To proceed to the thematic coding, the Nvivo software is used; this will help reduce research bias by ensuring systematic data analysis. These codes leave a pattern to emerge, with the aim to answer the research question. The paper then proceeds to analyze the key events through data coding. The data is coded from an a priori approach; the constructs are established before the analysis and are derived from the theory illustrated in section 2.5.2.: framing (diagnostic, prognostic and motivational), mobilizing allies, field characteristics, reflexivity, role expectations, resources, theorization, affiliation, collective action and lobbying .These codes will help depict complex data in a simple manner to make better sense of the empirical data at hand. The codes deduced from the literature are summarized and defined in table 3. The paper will provide evidence as to what the mechanisms are used by MNEs to institutionalize shale gas at the EU supranational organizational field.

Table 3: Summary and definition of codes/mechanisms

Mechanisms/c odes Definition Framing; diagnostic, prognostic and motivational

Diagnostic framing seeks to make explicit the failing of the existing organization or broader field,

expose problems with current institutionalized practices and assign blame (Suddaby &

Greenwood, 2005). Prognostic framing, promoting a new arrangement as superior to a previous arrangement, engaging the institutional entrepreneur in de-legitimating existing institutional arrangements supported by opponents (Creed et al.,2002; Suddaby & Greenwood, 2005), and in legitimating the new arrangement to stakeholders and potential allies(Déjean et al., 2004; Demil & Bensédrine, 2005).Motivational framing, entails providing compelling reasons to support the new vision being promoted (Misangyi et al., 2008).

Mobilizing

allies Divergent change is unlikely to be implemented without support; institutional entrepreneurs must mobilize allies (Fligstein, 1997; Greenwood et al., 2002) and create alliances and cooperation (Fligstein, 2001; Lawrence, Hardy, & Phillips, 2002).

Field

characteristics The process of implementing divergent change is also likely to be influenced by field characteristics (Wijen & Ansari, 2007), in particular, levels of institutionalization and fragmentation.

Reflexivity MNEs leverage reflexivity which is the ability to see beyond local norms and regulatory

conditions of their host country environments. It allows MNE subunits to recognize institutional differences and contradictions (Regner and Edman, 2013).

Table 4: (Continued) Role

expectations Different assumptions and beliefs about MNE subunits which result in different regulative, normative and cognitive conditions, allowing the MNEs to engage with local institutions in a different manner compared to local domestic actors (Regner and Edman, 2013).

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Resources MNEs can transfer resources from their operations in other organizational fields, including institutional experiences, knowledge, social skills and capital (Regner and Edman, 2013).

Theorization Institutional entrepreneurs identify broad classes of situations as comparable and motivate new arrangements as effective. This involves specifying problems and justifying new arrangements as solutions to these problems (Strang and Meyer 1993).

Affiliation Institutional entrepreneurs affiliate themselves to legitimate actors in order to “borrow”

legitimacy from their partners. Ties to high-status partners can create legitimacy (Podolny 1993). Collective

action Cooperation between institutional entrepreneurs can help them to counter the inevitable resistance from those who value the instated institutions (Rao et al. 2000, Wijen and Ansari,2007, Hiatt et al.,2009)

Lobbying The use of political strategies and power which can be used to promote the vision and interest of the institutional entrepreneur (Fligstein, 1997).

4. Results

Table 5a: Collective action

Actors Arguments Illustrative quotes Mechanism

EU Energy intensive industries

Need lower energy

prices to be competitive “Natural gas prices are three to four times higher than in the US. This puts pressure on EU energy-intensive industries using gas.”

Collective action Business associations and MNEs as part of these organizations Business associations and their members fine-tune their arguments

“shale gas development can take place within an

adequate and responsible regulatory regime” Collective action

Table 5b: Multiple framing and theorization

Royal Dutch

Shell plc Meeting emission reduction targets, half the CO2 emission of coal, abundance of supply

“Shell sees renewables as a major part of the future energy mix but this analysis has shown that increased reliance on gas in the near term saves money and jobs, delivers on climate targets and allows new technologies to be improved before large scale deployment.”

Framing and theorization

Total S.A. Reserves represent between 120 and 150 years’ worth of natural gas supply. Abundant source of energy.

“We make no exceptions to our commitment to produce energy sources sustainably and in a manner compatible with environmental

stewardship, regulatory requirements and local residents.”

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27 Table 5b: (Continued)

Chevron This clean-burning fuel holds promise for nations around the world seeking to strengthen energy security and generate economic growth.

“This clean-burning fuel holds promise for nations around the world seeking to strengthen energy security and generate economic growth.”

ExxonMobil Perceives shale gas as a clean-burning energy and says it is socially responsible to maintain the environment and to ensure the safety of communities.

“Throughout the entire unconventional gas life cycle – from exploration to decommissioning – care is taken to minimize the disruption to the community and protect the environment.”

Table 5c: Affiliations and mobilizing allies

University of

Durham Hydraulic fracturing has never been linked to groundwater

contamination.

Professor Davies invited DG Environment to a panel discussion to launch ReFINE (Researching Fracking in Europe), an “independent research consortium” which will provide comprehensive, unbiased, academic research into the issues around shale gas extraction.”

Affiliation and mobilizing allies Massachusetts institute of technology Environmental risks of fracking are manageable.

An influential Massachusetts Institute of Technology (MIT) Energy Initiative study, which concluded that the environmental risks of fracking are “challenging, but manageable”

Affiliation and mobilizing allies

Table 5d: Lobbying

Actors Arguments Illustrative quotations Mechanism

Shale gas

Europe Energy independence, job creation, more competitive prices

“Oil and gas companies welcome regulation based on responsible science and commit to putting their

technical expertise at the disposal of policy-makers and regulators”.

Lobbying

European

Energy forum Europe’s economy and its people need energy which is sustainable, affordable, secure and reliable.

“Our speakers will explain how shale gas creates many market opportunities, has a positive economic impact and will make energy prices more competitive which would be beneficial especially for energy-intensive industries. Shale gas development can also increase innovativeness in the European Union, which is required within Europe 2020 initiatives in order to ensure a stable and high-level economic growth.”

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28 Table 5d: (Continued)

AmCham EU A free energy market will help promote security of supply.

“Energy supply security requires a regulatory environment that promotes a liberalized market framework. When the market functions efficiently, supplies move, innovation is encouraged, and

competition drives down consumer costs. Mandating a specific energy mix will limit innovation and could result in higher costs and reduced reliability”.

Lobbying The international oil and gas producer association (IOGP)

Shale gas can help meet rising energy demand.

“there has been no case of hydraulic fracturing

operations contaminating drinking water resources” Lobbying

BusinessEurope Competitiveness, security of supply, energy dependence.

“We think that we have to balance climate policy, but also cost competitiveness and security of supply. And of course, recently, the issue of security of supply has been added an extra element of external dependence”

Lobbying

Sources 5a-5d: chevron.com, shell.com, shalegas-europe.eu, euractiv.com, foeurope.org,

theguardian.com, OGP.org, europeanenergyforum.eu, total.com, amchameu.eu, eur-lex.europa.eu.

MNEs respond to complex institutional settings seeking to create new institutions or changing existing ones. The data analysis has identified that MNEs adopt four types of mechanisms to institutionalize successfully a new and controversial practice at the supranational organizational field level: collective action which entails working together with competitors and associated industries, multiple framing and theorization, whereby a new practice is promoted as being superior to the multiple existing institutions within the supranational organizational field and whereby reasons are given as to why these new practices should be institutionalized, mobilizing allies and affiliation whereby social and financial resources are used to gain support from other actors and lastly, lobbying which refers to the MNEs using discursive, financial and social resources such as former and current institution officials to promote their new practices. These mechanisms are particularly successful in the absence of unified resistance by interest groups. The illustrations of the coding results per mechanism are found in tables 5a, 5b, 5c and 5d respectively. The results are further discussed in the subsections below.

4.1 Collective action

In examining the data, the findings suggest that MNEs who attempt to introduce a new and controversial practice anticipate resistance from interest groups and thus engage in

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collective action with other supranational institutional field constituents in order to build a strong fence against the opposition. In the literature review, collective action is described as being able to facilitate the institutional entrepreneur in his initiative against the resistance of those who value the institutions that are already in place (Rao et al., 2000, Wijen and Ansari, 2007, Hiatt et al., 2009).

Collective action is important in complex institutional situations because of the supranational nature of the institution. The single institutional entrepreneur is not powerful enough to bring about change. However, not only does collective action help against resistance related to instated institutions but the findings show that it facilitates the institutionalization of new controversial practices. The shale gas MNEs (e.g. Total S.A., Chevron, ExxonMobil and Shell) have so far worked together in an effort to institutionalize the controversial shale gas. Most pro-shale lobby groups and business associations consist of these MNEs (e.g. BusinessEurope, Shale gas Europe, The European Energy Forum, The international association of oil and gas producers and AmCham EU). These corporations work together with their competitors to keep the EU from making environmental legislation against shale gas and so far they have successfully fended off even stricter environmental legislation and regulation (Buisset et al., 2012).

The MNEs witness significant resistance from NGOs, the social environment and other environmental supporters who are well-funded and legitimate (Buisset et al., 2012). Together, these MNEs have bundled their resources (financial and social) in order to develop the shale gas industry and institutionalize shale gas in the EU (“Shale gas Explained”,2014; Tansey, 2014).

Proposition 1: MNEs as institutional entrepreneurs tend to engage in collective action with their competitors with the goal to institutionalize new and controversial practices at the supranational organizational field level as it strengthens their position against their anticipated opponents who themselves hold significant social resources.

Furthermore, in the past few years, these MNEs have been targeting government officials in Europe. Their efforts are backed by cooperation with energy-intensive industries that put pressure on the EU in order to secure cheap energy (Harvey, 2011). It is important for energy-intensive industries to have lower energy prices as a result of shale gas production as it improves their competitiveness. High reliance on energy imports and low diversification in energy sources have led to increasing prices for the EU in relation to some of their main

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competitors such as the US and Japan. Indeed, the fact that natural gas prices are three times higher than in the US has put pressure on EU energy-intensive industries using gas. These in turn have put pressure on the regulatory institutions to facilitate the institutionalization of new energy sources in order to ensure their competitiveness. This increase in competitiveness will be equally beneficial to the supranational institutions (“Commission recommendation”, 2014).

Proposition 2: MNEs as institutional entrepreneurs tend to engage in collective action with industries within the supranational organizational field that benefit from the institutionalization of new and controversial practices as these industries help put pressure on the targeted formal institutions in the supranational organizational field by emphasizing their common goals with these formal institutions.

4.2 Multiple framing and theorization

In order to gain significance in the European market, the shale gas MNEs have engaged in

multiple framing and theorization in an attempt to change current legislation and regulation

and prevent a ban on shale gas to gain support for its operations. These concepts are described in the theory and consist in creating a new view as to why the new practices should be accepted and how they are superior to the existing practices (Greenwood et al., 2002; Battilana et al., 2009).

Shale gas Europe, one of the many lobby groups representing mainly the big shale gas MNEs (Total SA, Shell, Chevron and ExxonMobil) has stated that existing energy resources do not guarantee Europe to be resource independent. Europe is too energy dependent on countries such as Russia which is a problem with the increased political instability in the country and its surroundings (Harvey, 2014; “Shale gas Explained”,2014).

“We think that we have to balance climate policy, but also cost competitiveness and security of supply. And of course, recently, the issue of security of supply has been added an extra element of external dependence” – Markus Beyrer Secretary General of BusinessEurope (Milevska, 2014).

Furthermore, there are a number of other arguments used by the shale gas MNEs to promote the introduction of shale gas in Europe. Firstly, the potential for finding and extracting shale gas is vast; secondly, the environmental risks associated with shale gas extraction and production are negligible; thirdly, CO2 emissions from the burning of natural gas are only half of those from burning coal. The fourth argument emphasizes energy

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independence, mainly from Russia, which is important for the EU’s development of its own energy sources and lastly, the new industry would create many jobs (Buisset et al.,2012; “Shale gas Explained”,2014). These arguments combine economic and environmental aspects to appeal to the EU institutions, identifying with their interests, as the EU is struggling with the issues of energy dependency and economic growth (Harvey, 2014).

"Shell sees renewables as a major part of the future energy mix but this analysis has shown that

increased reliance on gas in the near term saves money and jobs, delivers on climate targets and allows new technologies to be improved before large scale deployment."- David Rimmer, Shell

general manager for global gas (Harvey, 2011).

The shale gas MNEs further claim that, in comparison to other energy sources, such as coal, shale gas is less carbon intensive. Burning gas in power stations, according to a study conducted by Imperial college London, is said to release approximately half the carbon emissions of coal, allowing gas MNEs to claim it to be a "green" source of fuel (Harvey, 2011; Hirst et al,2013). Moreover, it allows MNEs to brand shale gas as the main green energy with respect to other sources of energy. In the past problems such as that of the Fukushima plant in Japan have made certain governments and the general public skeptical about nuclear power (Harvey, 2011). Additionally, shale gas was framed as superior to renewables as the latter are seen as good energy sources but they are intermittent as they depend heavily on the presence of wind and sun. This renders renewable energy unreliable as its sources are unpredictable. Shale gas is framed to be the better optionas shale gas reserves are estimated to go for 120 to 150 years (‘Shale gas: Definition’,n.d.). The MNEs have promoted shale gas as superior to the existing energy sources by de-legitimating these supported practices (Creed et al, 2002; Suddaby and Greenwood, 2005).

“ Shale gas Reserves are estimated to represent between 120 and 150 years’ worth of natural gas supply at the current rate of consumption.”- Total S.A. (‘Shale gas: definition’,n.d.)

The findings suggest that theorization and framing are even more salient at the supranational organizational field level with respect to the home and host institutional environment as it is shown in the case of shale gas institutionalization in the EU. The challenge these institutional entrepreneurs have faced was dealing with twenty eight different member states, each of which used different sources of energy. This entails that MNEs in the supranational organizational field have framed and theorized a new practice with regards to