Stakeholder Risk and Trust Perceptions in the Diffusion of Green Manufacturing Technologies: Evidence From China

• Published date: 01 March 2018
• Date: 01 March 2018
• DOI: 10.1177/1070496517733497
• Subject Matter: Articles

Article

Stakeholder Risk and

Trust Perceptions

in the Diffusion of

Green Manufacturing

Technologies: Evidence

From China

Yuan Zhou

1

, Meijuan Pan

1

, Dillon K. Zhou

1

,

and Lan Xue

1

Abstract

The Chinese government attempts to use market-oriented measures, such as energy

performance contracts (EPCs) rather than mere policy mandates, to encourage

manufacturers to voluntarily adopt green technologies. However, the low use rate

of EPCs in existing diffusion projects calls for an in-depth examination. This article,

therefore, aims to investigate the adoption risks that thwart key stakeholders, as well

as the stakeholders’ trust that may mitigate the aforementioned risks, through a

case study of the national-level diffusion project. Using network analysis, this study

identifies four critical risks that are associated to key stakeholders, that is, informa-

tion asymmetry, funding support, payback period savings potential, and technical

competences. Furthermore, it dis closes the linkages between stakeholders’ trust

perceptions and the aforementioned risks. This outcome gives us new insights

about what can be improved to better promote EPCs in diffusion projects on a

national scale.

Keywords

energy efficiency, green manufacturing technology, social network analysis,

stakeholder theory, technology diffusion, China

Journal of Environment & Development

2018, Vol. 27(1) 46–73

!The Author(s) 2017

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DOI: 10.1177/1070496517733497

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1

School of Public Policy and Management, Tsinghua University, Beijing, China

Corresponding Authors:

Dillon K. Zhou and Meijuan Pan, School of Public Policy and Management, Tsinghua University, Beijing,

China.

Emails: dillon.zhou@foxmail.com; pmj16@mails.tsinghua.edu.cn

In the newly launched ‘‘Made in China 2025’’ campaign, green manufacturing has

become one of the key national strategic agendas, as the manufacturing accounts

for 42.64% of gross domestic product and 68% of total energy consumption in

2013 (Kong,Feng, Zhou, & Xue, 2016)—this modeis viewed as the key initiative to

help China to mitigate the side-ef‌fects of high volume production (Ministry

of Industry and Information Technology, 2013), which ultimately contribute to

capping emission levels by 2030 at the latest (The White House Of‌f‌ice of the

Press Secretary, 2014). In addition, green manufacturing technologies would also

give China’s economy a comparative advantage over the many developing coun-

tries that have not picked the low-hanging fruit of energy ef‌f‌iciency for themselves

(Alcorta, Bazilian, De Simone, & Pedersen, 2014; Kong et al., 2016).

The dif‌fusion of energy-ef‌f‌icient technologies among manufacturers is the

critical element of China’s current national ef‌forts on green manufacturing

(Ministry of Industry and Information Technology, 2013). However, a set of

barriers that thwart the large-scale dif‌fusion of green technologies does exist,

especially to those small- and medium-sized f‌irms; for example, in many cases,

energy ef‌f‌iciency is usually not considered a high priority for management

in China and most developing countries (Trianni, Cagno, & Farne

´, 2016).

Adding to that, there may be other social–technical barriers such as technology

uncertainty, a lack of capital, high transaction cost, a lack of skills, and weak

auditing (Zhou, Xu, Minshall, & Liu, 2015). Kostka, Moslener, and Andreas’s

(2013) survey in Zhejiang province revealed that 21% of surveyed enterprises

have successfully f‌itted their factories with energy-ef‌f‌icient equipment; on the

other hand, the same also shows that there is an immense room to grow,

as China commits to upgrading the majority of their manufacturing f‌irms,

especially small- and medium-sized f‌irms.

Chinese government is striving to resolve the dif‌fusion barriers and is thus

actively involved in bringing about green transformations while trying to resolve

potential trade-of‌fs (Lederer, Wallbott, & Bauer, 2018). Before 2010, the

‘‘command-and-control’’ was the primary mode of carrying out major energy-

ef‌f‌iciency policies in China, such as the mandatory Target Accountability

System, Obsolete Capacity Retirement Program, and Top-1000 Enterprise

Program (Zhao, Li, Wu, & Qi, 2014). During its 12th Five-Year Plan

(2010–2015), the government has realized the necessity of using more bottom-

up approaches that are capable of mobilizing stronger market forces to achieve

the policy goals (Zhou et al., 2015), given the increasing complexity of green

transactions with rampant private and decentralized stakeholders who are

involved (Kong et al., 2016). Energy performance contracts (EPCs) f‌it the cri-

teria for what Chinese government wants in a market-based solution to its green

technology dif‌fusion campaign, while EPCs seem able to address the needs of

underf‌inanced manufacturers (Liu, Zhou, Zhou, & Xue, 2017). However, the

rate of use for EPC models is still low in China despite the pressure from the pol-

icy makers. Most EPC transactions involve a variety of networked stakeholders

Zhou et al. 47