Received: 24 December 2022 Revised: 7 March 2023 Accepted: 31 July 2023

DOI: 10.1002/bse.3538

RESEARCH ARTICLE

Why do (some) German car manufacturers go electric? The role

of dynamic capabilities and cognitive frames

Julia Loder 1 | Adrian Rinscheid 1,2 | Rolf Wüstenhagen 1

1
Institute for Economy and the Environment,
University of St. Gallen, St. Gallen, Switzerland
2
Institute for Management Research, Radboud
University, Nijmegen, Netherlands
Correspondence
Julia Loder, Institute for Economy and the
Environment, Müller-Friedberg-Strasse 6/8,
9000 St. Gallen, St. Gallen, Switzerland.
Email: julia.loder@unisg.ch
Funding information
Basic Research Fund (GFF), University of
St. Gallen, Switzerland, Grant/Award Number:
Grant No. 1031563
Abstract
After the internal combustion engine was the dominant technology in the automotive
industry for more than a century, a transition to electric cars is now under way. How-
ever, not all car manufacturers seem equally determined to move away from fossil
fuels. Based on a comparative case study of German automakers, we discuss some
underlying factors associated with variation in electrification strategies. Conceptually,
we focus on firms' dynamic capabilities—in particular, their ability to sense low-
carbon risks and opportunities in a changing business environment. Building on
qualitative interviews, we gauge sensing capabilities through industry executives'
cognitive frames. Our analysis reveals striking differences in the way executives per-
ceive the opportunities and risks associated with electric mobility. In particular, firms'
dynamic capabilities to shape the low-carbon transition are tied to their conceptions
of consumer preferences and the economics of the transition, their perception of
network embeddedness, prior experiences with technological innovation, and
leadership.

KEYWORDS
automotive industry, climate change, cognitive frames, corporate strategy, dynamic capabilities,
electric vehicles

1 | I N T RO DU CT I O N
The transportation sector accounts for 24% of CO2 emissions world-
wide (US EPA, 2021), with fossil-fueled road transport representing
the largest share (EEA, 2019). Notably, emissions from transport
still increase (IPCC, 2022). Consequently, the car industry has
come under significant pressure to reduce emissions (Damert &
Baumgartner, 2018).
One of the most significant opportunities to decarbonize the
automotive sector is the transition to electric vehicles (EVs) (Axsen
et al., 2020; IPCC, 2022). Requiring a technological shift from one pro-
pulsion system to another one, this transition makes car manufac-
turers key players in the decarbonization of transport. Starting as a
small market segment mostly occupied by entrepreneurial niche
players (Wesseling et al., 2015), EVs increasingly meet consumer pref-
erences (Schulze Darup et al., 2018) and are now facing exponential
growth in consumer demand in key markets. And yet, incumbent car
manufacturers differ strongly in their strategies to electrify (Bohnsack
et al., 2020). While some embrace clear targets for the phase-out of
internal combustion engine vehicles (ICEVs) and appear to readily

List of Abbreviations: BMW, Bayerische Motoren Werke; CEO, chief executive officer; COP, Conference of the Parties; EEA, European Environment Agency; EIA, Energy Information
Administration; EPA, Environmental Protection Agency; EU, European Union; EVs, electric vehicles; ICEs, internal combustion engines; ICEVs, internal combustion engine vehicles; IE, industry
expert; IPCC, Intergovernmental Panel on Climate Change; MB, Mercedes‐Benz; VW, Volkswagen.

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium,
provided the original work is properly cited.
© 2023 The Authors. Business Strategy and The Environment published by ERP Environment and John Wiley & Sons Ltd.

Bus Strat Env. 2024;33:1129–1143. wileyonlinelibrary.com/journal/bse 1129


1130
embrace the technological shift, others are more hesitant and still see
a future for ICEVs. This raises the question how to explain this
variation.
We conduct a cross-case study analysis of German automotive
companies to approach this question. Based on qualitative interviews
with executives of the country's three largest automakers and indus-
try experts, we illustrate how the firms differ in their dynamic capabili-
ties to phase out ICEVs. More specifically, we investigate firms'
sensing capabilities (Teece, 2007; Teece & Leih, 2016), defined as the
cognitive processes through which executives perceive (“sense”) a
changing business environment. To empirically gauge sensing capabili-
ties, we conduct an analysis of cognitive frames at the level of
decision-makers within the major German car manufacturers.
Conceptually, our study builds on earlier research, which has
highlighted the relative lack of knowledge on the cognitive base of
dynamic capabilities (Eggers & Kaplan, 2013; Helfat & Peteraf, 2015).
Leemann and Kanbach (2022) have called for empirical research on
specific dynamic capabilities to gain more precise insights into their
antecedents, processes, and outcomes. Furthermore, Mousavi et al.
(2019) emphasize that “more research is still needed on firms'
dynamic capabilities for environmentally sustainable innovations”
(p. 367). We respond to these calls by focusing on the sensing of
opportunities and risks in the context of the transition to electric
mobility.
Going beyond previous work, we apply the concept of dynamic
capabilities to car manufacturers' strategies in the context of climate
change mitigation. Decarbonization has become a key concern for
businesses in all parts of the economy, including the transportation
sector. As the transformation toward a low-carbon economy requires
firms to phase out activities and technologies associated with fossil
fuels and instead embrace “green” innovations, strategic realignment
is required. However, not all firms have the same set of capabilities to
sense and seize opportunities for transformation. Through our empiri-
cal exploration, we highlight how dynamic capabilities can be
approached in the context of business strategy in light of climate
change, hoping to inspire further studies.
The remainder of this paper is structured as follows. After review-
ing pertinent literature on dynamic capabilities and cognitive frames,
we present the research context and introduce the case studies. Then
we present and discuss our empirical analysis, before offering conclu-
sions and reflecting upon limitations and opportunities for further
research.
2 | LITERATURE REVIEW
Automotive incumbents are facing mounting pressure to decarbonize.
This pressure originates from public policy, civil society, stakeholders,
and competitors. Regarding policy, the main focus for a long time was
to increase fuel efficiency based on the regulatory instrument of fuel
economy standards (US EIA, 2015; Yang & Bandivadekar, 2017). As
further fuel efficiency gains are about to push the limits (Creutzig
et al., 2015) and given the target of the Paris Climate Agreement to
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LODER ET AL.
limit average global temperature increase to 2 C (United Nations
Framework Convention on Climate Change, 2015), emerging policies
are now focusing mostly on fuel shift rather than efficiency gains. Such
policies include hybrid global governance arrangements such as the
COP26 declaration on accelerating the transition to 100% zero emis-
sion cars and vans (2021), and a growing number of national and sub-
national policies to phase out ICEVs (Meckling & Nahm, 2019). In
2023, the European Union agreed to ban the sale of new conventional
ICEVs from 2035 onwards.1 In terms of public pressure, the global cli-
mate movement led to intensifying discourses about alternatives to
car-centric systems (Haas, 2020), and a growing number of lawsuits
against car makers (van Elten & Rehder, 2022). With respect to com-
petition, incumbents face new entrants such as EV manufacturers
Tesla and BYD.
Rather than assuming a uniform strategic response such as resis-
tance to change or political opposition, incumbents' reactions to these
pressures are manifold (Turnheim & Sovacool, 2020). While some
incumbents tend to stick to established technologies and business
models, others actively nurture technological niches in response to
demands for more environmentally friendly vehicles (Berggren
et al., 2015). Sometimes, incumbents are able to integrate novel tech-
nologies and skills into their existing business strategy, a process
described as ‘creative accumulation’ by Bergek et al. (2013). How-
ever, limited knowledge has been accrued so far on the reasons that
may explain divergent responses toward multiple pressures among
incumbents within the same industry.
In such changing business environments with evolving and dying
markets, the strategic management literature has emphasized the
important role of dynamic capabilities (Eisenhardt & Martin, 2000).
Dynamic capabilities are different from operational, “ordinary or
‘zero-level’ capabilities” (Winter, 2003, p. 991), and both are required
to successfully stay in business. Ordinary capabilities are needed in
daily business to earn revenues by selling the same products or ser-
vices over time. As soon as change occurs, for example in the product,
scale, or markets served, dynamic capabilities come into play. Dynamic
capabilities equip a firm with the ability “to integrate, build, and recon-
figure internal and external resources to address and shape rapidly
changing business environments” (Teece & Leih, 2016, p. 7). They
enable a business to steer its activities toward products and services
(predicted to be) in high demand and are therefore essential in turning
environmental change into promising business opportunities (Dixon
et al., 2014). As the literature shows, strong dynamic capabilities are
associated with higher flexibility. Ultimately, dynamic capabilities are
associated with a firms' success (Sunder et al., 2019; Teece, 2014).
According to Teece (2007), dynamic capabilities consist of
(see also Figure 1)
1. Sensing opportunities and threats
2. Seizing opportunities
3. Transforming (managing threats)
1
https://www.consilium.europa.eu/en/press/press-releases/2023/03/28/fit-for-
55-council-adopts-regulation-on-co2-emissions-for-new-cars-and-vans/

LODER ET AL.
F I G U R E 1 Aggregate capacities of dynamic capabilities based on
Teece (2007).
These capabilities logically build upon each other. Thus, the extent to
which a firm reacts to a changing business environment first of all
depends on sensing capabilities. These entail interpretive processes
during which executives analyze changes and their implications for
the firm. Ultimately, this leads to changes being perceived either as
opportunities or threats (Durán & Aguado, 2022). When a firm recog-
nizes an opportunity and commands seizing capabilities, it may inno-
vate and capture value from it (Teece, 2007). Finally, transforming
consists of a deeper strategic (re-)alignment of a firm's tangible and
intangible resources (Santa-Maria et al., 2022). Hence, transforming
entails the reconfiguration of internal and external resources to
address identified opportunities (Leemann & Kanbach, 2022).
Importantly, a “firm's potential to change” (Fainshmidt &
Frazier, 2017, p. 551) strongly depends on its sensing capability. A
firm needs to be able to perceive change as an opportunity in the
first place–seizing and transformation may subsequently bring an
opportunity to fruition (Baden-Fuller & Teece, 2020).2 The transi-
tion from ICEVs to EVs is still at a relatively early stage considering
the percentage of EVs in the total vehicle fleet in most major car
markets, with many incumbent automakers now being in the pro-
cess of “making sense” of the multiple changes that are impinging
on the industry. Therefore, our analysis focuses on sensing
capabilities.
As has been discussed in the literature, the Dynamic Capabili-
ties framework is based on a cognitive micro-foundation (Baden-
Fuller & Teece, 2020). Sensing, in particular, entails cognitive
processes at the level of individuals because it “is very much a scan-
ning, creation, learning, and interpretive activity” (Teece, 2007,
p. 1322). Sensing activities require at least two cognitive capabili-
ties, namely attention and perception. As these differ between indi-
viduals, the extent to which new opportunities and threats are
recognized varies strongly (Helfat & Peteraf, 2015). Deriving from
cognitive processes at the level of individual decision-makers,
a collectively shared perspective on the dynamics of the business
environment and their implications can emerge within a firm
(Kliesch-Eberl & Schreyögg, 2007).
2
Whether a firm implements change and succeeds in securing a competitive advantage is not
defined by its sensing though (Fainshmidt & Frazier, 2017; Teece, 2007). Rather, it depends
on its subsequent seizing and transforming activities. While sensing is different from seizing
and transforming, the conceptual distinction between seizing and transforming is subject to
ongoing scholarly debate (Fainshmidt & Frazier, 2017; Li et al., 2015).
10990836, 2024, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3538 by Cochrane Romania, Wiley Online Library on [12/07/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1131
Sensing activities are intimately related to cognitive frames–filters
of perception or information (Andersén et al., 2020; Gilbert, 2006;
Tang et al., 2018) that guide individuals' information processing and
interpretation (Cornelissen & Werner, 2014, p. 184). In organizations,
such cognitive frames are often the result of learning processes
(Magnusson & Werner, 2022, p. 7). Developed based on past experi-
ences, cognitive frames influence future developments (Magnusson &
Werner, 2022), for instance by narrowing down the spectrum of
options perceived as feasible in light of well-functioning, established
practices. Thus, cognitive frames can contribute to the lock-in of
practices or technologies through a “blinding effect” (Trencher
et al., 2020). At the same time, cognitive frames not only result from
learning, but also lay the possibility space for future learning in an
organization, which does not happen unconditionally (Kliesch-Eberl &
Schreyögg, 2007).
Cognitive frames shape managers' attention and interpretations
(Zameer et al., 2021). Dominant interpretations are shared more
broadly among organization members, which tends to result in
collectively shared ways of problem-solving (Kliesch-Eberl &
Schreyögg, 2007, p. 915). In a changing business environment, shared
cognitive frames hence indicate a firm's perception of innovations
and associated pressures. Based on the cognitive underpinnings of
dynamic capabilities acknowledged in the literature, we propose that
studying cognitive frames at the level of individual decision-makers
allows gauging an organization's sensing capabilities. Cognitive
frames therefore provide an entry point for understanding how firms
make sense of changing business environments—for instance,
whether they interpret a trend as an opportunity or threat (see
Figure 2). This, in turn, may affect their seizing and transforming
capabilities.
3 | RE S E A R C H C O N T E X T
We focus on the three largest companies in the German automotive
industry: Volkswagen, Mercedes-Benz and BMW.3 Germany is
Europe's largest car market, and German brands have a strong pres-
ence in overseas markets as well. The country's 19th century inven-
tors, including Nikolaus August Otto and Rudolf Diesel, have basically
shaped the dominant design of the car for more than a hundred years.
Together with the iconic Autobahn, the world's only road system with-
out a speed limit, fossil-fueled mobility has long been deeply
entrenched in German economic history (Richter & Smith
Stegen, 2022).
With rising concerns about climate change, though, policymakers
have increasingly started looking for lower-emission alternatives in
the early 2000s. In the US, Tesla was founded in 2003 as an electric
car pure play. Mercedes-Benz (then trading as Daimler) initially bought
a nearly 10% stake in Tesla in 2010.4 In 2013, the first serial-produced
German electric car hit the road with the pioneering BMW i3 model
3
https://de.statista.com/statistik/daten/studie/235380/umfrage/monatliche-marktanteile-
der-automarken-in-deutschland/
4
https://www.tesla.com/blog/strategic-partnership-daimler-acquires-stake-tesla

1132
FIGURE 2 Proposed framework to gauge sensing capabilities through cognitive frames.
(Sovacool et al., 2019).5 Apart from climate policy, the scandal about
manipulated engines, commonly referred to as “Dieselgate,” was a
key driver for an accelerated diffusion of electric mobility in Germany.
The emissions scandal emerged in September 2015, when the US
Environmental Protection Agency published evidence for Volkswagen
having deployed manipulation software in 11 million cars worldwide,
which led to violations of the Clean Air Act and similar regulations
elsewhere. While Volkswagen remained the focus of the public and
legal debate about “Dieselgate,” irregularities were also identified in
other manufacturers' engines, leading to increased pressure to pro-
duce cleaner vehicles. Volkswagen and Mercedes-Benz started
manufacturing their fully electric ID.3 and EQC models in 2019,6
followed by further models being introduced in subsequent years.
BMW, as the early adopter among the three companies, saw its i3
sales remain below expectations, and took the decision to discontinue
manufacturing the model in 20227—albeit manufacturing other EV
models.
While the Volkswagen brand is part of a larger conglomerate
that includes the Audi, Porsche, Seat and Skoda brands, Mercedes-
Benz and BMW are comparatively smaller companies, both primarily
focusing on the luxury car segment. All three companies have
announced climate targets, but with different levels of ambition.8
While Volkswagen and Mercedes-Benz have issued specific timelines
for phasing out ICEVs, BMW has not articulated such a target (yet).
Table 1 and Figure 3 summarize the profiles of the three case study
companies.
5
https://www.bmw.com/en/magazine/innovation/goodbye-bmw-i3.html
6
https://www.volkswagen-newsroom.com/en/the-id3-a-new-era-begins-5327/the-
highlights-of-the-new-id3-overview-5328; https://www.mercedes-benz.com/en/vehicles/
mercedes-eq/eqc/
7
https://www.bmw.com/en/magazine/innovation/goodbye-bmw-i3.html
8
https://www.volkswagenag.com/en/news/2021/04/way-to-zero--volkswagen-presents-
roadmap-for-climate-neutral-mob.html; https://www.press.bmwgroup.com/global/article/
detail/T0341522EN/bmw-group-accelerates-co2-reduction-and-focuses-consistently-on-a-
circular-economy-with-the-neue-klasse; https://group.mercedes-benz.com/sustainability/
climate/ambition-2039-our-path-to-co2-neutrality.html
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LODER ET AL.
4 | DA T A A N D M E T H O D S
Against the background provided in chapter 3, we are interested in
explaining the variation in the companies' electrification strategies. To
investigate this, we collected data through semi-structured interviews
in a videoconference setting between May and July 2022. All of them
were recorded with the consent of the interviewees, fully transcribed,
and analyzed. The consent to the interview recordings was conditional
to them remaining confidential. Consequently, we anonymize inter-
view findings so that no individual person can be identified. We con-
ducted the interviews in German and translated direct quotes to
English.
All major car manufacturers headquartered in Germany were
considered for the interviews. We contacted executives spanning
domains such as strategy, innovation, sustainability, and corporate
political activity to gain insights from different perspectives. Some
initial contacts had already been established in 2021. These served
as a baseline and were complemented with LinkedIn searches.
When a contacted person did not feel competent enough in the
topics of our study, we asked for referrals to other executives in
the company with the desired expertise. At the end of each inter-
view, we asked whom else the interviewee recommends us to
talk to.
In addition, for triangulation and as a plausibility check, we inter-
viewed persons working in an NGO, an industry association, a pri-
vate sector alliance, a government agency, and in policymaking with
functions related to the automotive industry. These expert inter-
views provided further context and were used to critically evaluate
and validate the data obtained in the interviews with firm executives.
Overall, this amounted to 17 semi-structured interviews of 30 to
70 min.9
9
An anonymized overview over all the interviews conducted for this study can be found in
the appendix.
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LODER ET AL. 1133

TABLE 1 Introduction to the three cases, Volkswagen, Mercedes-Benz, and BMW († data as of October 21, 2022a; ‡ data as of August 17,
2022b).

Volkswagen Mercedes-Benz BMW

Number of employees (2021) 667,647 172,425 118,626
Sales (2021) € 250.2 billion € 168.0 billion € 111.2 billion
†
Market capitalization € 76.18 billion € 60.32 billion € 50.30 billion
Biggest shareholders‡ 31.4% Porsche Automobil 10.0% BAIC Group 20.7% Susanne Klatten Beteiligungs
Holding SE 9.7% Tenaciou3 Prospect GmbH
11.8% Land Niedersachsen Investment Limited 16.6% AQTON GmbH & Co. KG für
10.5% Qatar Holding LLC 6.8% Kuwait Investment Automobilwerte
Authority 9% AQTON SE
CEO Dr. Herbert Diess (May 2018 to Ola Källenius (since May 2019) Oliver Zipse (since August 2019)
August 2022)c
Major scandals 2015: Dieselgate (Dieselgate) (Dieselgate)
Battery EV share of total product/ 6/21 = 28.57% 7/39 = 17.95% 17/97 = 17.53%
fleet portfolio‡
ICE phase-out target‡ In Europe until 2035 Largely by 2030 -
Climate target‡ Balance sheet CO2 neutrality by Climate neutrality by 2039 Net zero by 2050
2050
a
Market capitalization retrieved from Yahoo! Finance.
b
Data retrieved from company websites and annual reports.
c
Since September 2022 Oliver Blume is the CEO of Volkswagen. The data for this study have been collected before his tenure. Consequently, the analysis
focuses on Diess' tenure.

F I G U R E 3 Car sales by markets (data in thousands as of September 21, 20221; † no sales data for North America available for BMW, only for
the USA). 1Sales data retrieved from https://www.best-selling-cars.com/brands/2021-full-year-global-volkswagen-brand-worldwide-car-sales-by-
model-and-country/; https://www.best-selling-cars.com/brands/2021-full-year-global-mercedes-benz-and-smart-sales-worldwide-by-region-
and-model/; and BMW Group—Report 2021.

The interviews were analyzed regarding the research objective of chose the inductive approach because we did not have prior assump-
this study, explaining the variation in the ICEV phase-out and parallel tions as to which cognitive frames would be raised by interviewees.
electrification strategies. For this, the recorded and transcribed inter- Hence, we identified cognitive frames based on the data themselves.
views were analyzed qualitatively using the inductive approach to the- The analysis involved six steps: familiarizing oneself with the data
matic analysis (Braun & Clarke, 2006). Thematic analysis allows to (transcribing, reading, etc.), generating preliminary codes, searching
identify and report patterns within data, so-called themes, which cor- for themes, reviewing them, defining the themes and giving them
respond to cognitive frames in our conceptual framework. names, and reporting results. In our study, the themes we identified
Researchers can generate themes inductively or theoretically. We are different thematic categories of cognitive frames and the codes
 10990836, 2024, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3538 by Cochrane Romania, Wiley Online Library on [12/07/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1134 LODER ET AL.

TABLE 2 Overview of the key cognitive frames.

Volkswagen Mercedes-Benz BMW

Past experiences with EVs and
the environmental
performance of ICEVs
View on economics of the
transition and consumers
Social embeddedness
Leadership
View on technology and risk
Negative experiences with
Dieselgate
Smooth transition from ICEVs to
EVs in sales, financing the
transition to EVs through
profitable ICEV sales
Limited patience with suppliers
arguing for technology
openness, trade unions embrace
the transition
Visionary, strong, confrontational
EV as the future technology,
promising success
Learnings from holding tesla shares
early
Economic logic of phase-out: It is
important to exit the ICEV
business on time because
eventually you will not make
money with it anymore.
Pressuring suppliers to adhere to
decarbonization goals, trade
unions focus on job security by
maintaining a competitive
corporate market position
through EVs
Charismatic, risk-taking
EV as the better car and engineers'
pride, technological
performance, ambitious and
sharp goals for big change
Negative experiences with the
electric i3 model
If EVs do not become dominant,
does BMW watch other firms as
they make profits? If a consumer
wants an ICEV from BMW,
he/she gets it. The customer
decides.
Responsibility for suppliers in a
complex network, trade unions
tend to perceive EVs as a threat
to job security
Invisible, consensus-oriented
Technology openness, ICE as
culmination of history for
mechanical engineers, risk
aversion, realistic goals

are the specific contents of the cognitive frames reverted to in the
interviews.
5 | EMPIRICAL ANALYSIS
In all three cases investigated, the emerging cognitive frames are very
homogenous within a firm. However, the specific cognitive frames
within a thematic category differ between the companies. We identi-
fied five main categories of cognitive frames in our interviews in
which the three car manufacturers differ to various degrees: Past
experiences with EVs and the environmental performance of ICEVs,
views on economics of the transition and consumers, social embedd-
edness, leadership, and views on technology and risk. Table 2 gives an
overview of our findings. The subsequent chapters 5.1 to 5.5 focus on
one category each.
5.1 | Past experiences with EVs and the
environmental performance of ICEVs
One category of cognitive frames in which the analyzed firms differ
are their past experiences with EVs and the environmental perfor-
mance of ICEVs. In the interviews, BMW's model i3, “Dieselgate,” and
Mercedes-Benz's former Tesla investment featured prominently in
this category.
In 2013, BMW had introduced the i3 as the firm's first mass-
produced EV. Being perceived as an ambitious innovation with a
unique design unlike previous BMW models, the i3 sales did not
match expectations. Some industry voices described the car as a stra-
tegic mistake: It would have come too early due to the lack of
charging stations which BMW, unlike Tesla, did not provide itself. The
experience with the i3 appears to have left some scars in corporate
memory. This might be a reason why BMW is the last of the major
German automotive manufacturers to advocate for “technology
openness”10 rather than focusing on EVs, as Volkswagen and
Mercedes-Benz publicly do.
At BMW itself, the i3 is described in milder terms:
“We didn't burn our fingers, we didn't destroy any money
with it, but the car, of course, I'll say, didn't fulfill the
hopes we had in 2012.”
(interview BM.3)
As a result of lower-than-expected sales figures, the company
shifted toward more of an evolutionary approach:
“And that's why we're now focusing on products that, let's
say, can do the same thing. And also look like the cars
that you know from us. And also the flexibility between
the types of drive, at least in the current phase of a transi-
tion that can't really be predicted in terms of its duration.
And not the radical leap into a completely different tech-
nology, with a completely different manufacturing tech-
nology. With a stand-alone architecture that has nothing
in common with the rest of the portfolio.”
(interview BM.3)
10
“Technology openness,” the idea of a decision area being undistorted or unbiased
regarding the choice of technology (Agora Verkehrswende, 2020), is a term used by industry
proponents who resist the focus on one particular new technology (in this case, EVs). Yet,
technology openness in road transport is limited for various reasons, including path
dependencies arising from past investment decisions.

LODER ET AL.
For BMW, clearly, the experience with its i3 is an important factor
in explaining why the company does not publicly embrace the shift to
EVs as much as Volkswagen and Mercedes-Benz do:
“But, as I said, a few engineers then turned the whole
thing around again. They thought, ‘Nobody wants the i3,
that car.’ It was just standing around at the beginning.
No one wanted the car. There was also little charging
infrastructure. And then, of course, Tesla came along
with its Model S, which had a completely different
direction. Then they thought, we're totally barking up the
wrong tree, we'd better continue with the old one. Made
a lot of money with that. You have to admit it's
like that.”
(interview BM.4)
Particularly, if a firm has been successful with its products
and business model in the past, deciding for change is difficult
(interview IE.4).
A different example of past experiences shaping a firm's decarbo-
nization strategy is Dieselgate. The scandal around illegal software to
circumvent clean air policies created a strong case for a radical shift in
the company strategy. Volkswagen appears to have managed to turn
its image from a fraudster into a “green” car company seeing the
future in electric mobility.
In the interviews, Dieselgate was described as “an extremely
expensive and loud wake-up call” (interview VW.3) leading
Volkswagen to shift to electric mobility faster and more radically
than other companies (interviews VW.3, IE.1, IE.2, IE.4, IE.5). In the
aftermath of the scandal, nothing at the company was left
untouched (interview VW.1). A board meeting led to the conclusion
that Volkswagen needs to exit the ICE business and significantly
invest in new technologies (interview VW.1). While EVs had initially
been seen as complementing the ICE business, this changed with
Dieselgate:
“The big leap, and the diesel scandal certainly made it
easier to implement, was then: we have to, we have to
consider electromobility not just as … complementary, …,
but in perspective as the solution for the future.”
(interview VW.4)
Additionally, while most directly affecting Volkswagen, Dieselgate
also had repercussions on the automotive industry at large. It
increased the pressure to turn to electric mobility for other manufac-
turers, too (interviews MB.3, IE.5).
Thus, while the limited success of the i3 gave BMW the impres-
sion that switching to electric mobility and phasing out ICEVs is a risky
move, Volkswagen saw an all-in EV strategy as the most promising
opportunity out of its Diesel crisis.
A third point regarding past experiences—though less prominent
in the interviews—is Mercedes-Benz's investment in Tesla. Becoming
a shareholder in the start-up as early as 2009, they sold their
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1135
minority stake in Tesla 5 years later, at a $780 m profit.11 As a
consequence,
“the money that was earned with Tesla (was) reinvested
… in battery development, among other things. And that's
going to pay off now. I firmly believe that.”
(interview MB.3)
The early Tesla investment shows that Mercedes-Benz has been
open to experimenting with new low-carbon technology for many
years–an asset that is now shaping the sensing of a business environ-
ment characterized by stronger consumer demand for EVs, more
ambitious climate policies, and increasing pressure from stakeholders
to decarbonize.
5.2 | View on economics of the transition and
consumers
A second category of cognitive frames in which the three car manu-
facturers differ is their views on economics of the transition and con-
sumers. Clearly, future profitability is important to stay in business.
What will generate profits from the perspective of the analyzed com-
panies differed from firm to firm, though.
BMW seemed to see important customer demand for ICEVs:
“[O]f course we don't sell things that are banned or that
customers no longer want. That's not an end in itself here,
but before we accept that a customer then goes to the
competition, or even worse, just keeps driving a used car
… Let's just keep building these things as long as it's
profitable.”
(interview BM.3)
“The moment our customers say: ‘I only want electric cars
from you.’ Then that's totally okay for us, too.”
(interview BM.3)
In comparison, Mercedes-Benz, seemed to see the end of
customer demand for ICEVs coming:
“Who do we want to sell our combustion engines to if
every customer is smart enough to know by now that
they are causing environmental damage with their
personal driving?”
(interview MB.2)
This then also raised the question for how long building ICEs will
still be profitable:
11
https://www.reuters.com/article/us-daimler-tesla-motors-stake-
idUKKCN0IA2KR20141022

1136
“[T]he question will be what happens if we sell more than
one million electric cars in a year and sell less than one
million combustion engines. Then someone will have to
cry out and say, man, the combustion engine business is
becoming uneconomical.”
(interview MB.1)
Volkswagen already appeared to see great customer demand
for EVs:
“People are snatching the e-cars out of our hands.”
(interview VW.1)
At the same time, currently ICEVs still constitute the majority of
their sales. The profits generated through these sales may serve to
finance the transition to electric mobility (interview VW.3).
Corresponding to their perspectives on economics of the
transition, the car manufacturers presented different ideas about
the right pace of the transformation and the credibility of
ambitious climate targets. BMW favored a somewhat slower
transformation:
“BMW is trying to find a solution using a slower but sensi-
ble strategy. And not a radical solution that could hit the
wall at full throttle.”
(interview BM.2)
A fast phase-out of ICEVs due to climate change without com-
pensation would be problematic considering assumed trade-offs
between climate change mitigation and economic considerations
(interview BM.2). Economic feasibility of climate targets is a top
priority for BMW, so they emphasized targets that are “realistic”
(interviews BM.1, BM.2). BMW was critical about setting goals with-
out integrating them into targets that managers get measured on and
without defining a clear path how to reach them:
“Well, you can always set lofty goals for someday, just as
was very often the case in electric mobility—yes, that you
keep announcing things and announcing things and no
one delivers anything. And that's how it starts with the
delays.”
(interview BM.1)
“[W]e don't think it's a good idea to just blurt out a
platitude like that and then cancel the announcement five
years later—we don't do that. We never promise too
much, but we always deliver. We usually deliver more
than we promise.”
(interview BM.1)
“And we are all prone to voluntarism and to: We're going
to show the way. And here is the goal. I recently sat on a
podium with a colleague from another car company who
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LODER ET AL.
said: ‘We have a clear goal: we will be CO2 neutral by
2030. We don't know how we'll get there, but we want
to.’ What can I buy for something like that?”
(interview BM.3)
In contrast, Mercedes-Benz favored ambitious goals, and insisted
that it has a plan to reach them.
“We have set ourselves massive goals, and these are not
just declarations, but our vision, which is broken down
and operationalized.”
(interview MB.2)
The credibility of these targets and their implementation was
supported by an independent industry expert (interview IE.2). Goals
in the more distant future after 2030 and paths to achieve them
appear to be less detailed but still providing guidance (interview
MB.4). However, interviewees from Mercedes-Benz also voiced
some concerns:
“[W]hen I think about how difficult it is to carry out
such a transformation with a sense of proportion, even
in the company. Yes. We always have to weigh up
ambitious goals against feasibility, money to spend, and
the like”
(interview MB.2)
Volkswagen saw itself in the progressive camp and would also be
fine with a ban of the combustion engine in Europe (interview VW.3).
The company seconded that what happens until 2030 …
“(…) is no longer arbitrary. You actually have to work for
it every day in order to achieve it. By 2040, it will be a
bit more difficult to say in concrete terms: What will
have to be done then? Even then, you have to have a
certain flexibility and adaptability, especially in 2050.
Nevertheless, I believe that it is absolutely sensible and
helpful for such a mutual reinforcing effect if not only
politics sets such goals, but if in many areas of society,
and especially in the economy, these goals are under-
pinned in the same way, so that there is also a clear
social signal that there can actually no longer be an
optional discussion about this, but that this is an existen-
tial question.”
(interview VW.4)
5.3 | Social embeddedness
We further identified differences in cognitive frames regarding social
embeddedness. Our interviewees' perspectives on different stake-
holders varied. In the following, we focus on suppliers and trade
unions as two of the most important stakeholder groups.

LODER ET AL.
Regarding suppliers, BMW emphasized that the company is part
of a complex network that needs to be accounted for (interview
BM.2). This would entail that change needs time, but first the neces-
sity for change needs to be recognized:
“Unfortunately, … especially the suppliers [did not listen
to us] because they believed that this would pass them
by, until they realized quite firmly that there would be a
phase-out of the internal combustion engine.”
(interview BM.4)
Mercedes-Benz also emphasized that change needs time:
“And we also pass on these goals to our suppliers, so we
are working step by step to ensure that we are
completely CO2 neutral for our products, that is the goal.
And we can't do that from one day to the next. We have
to replace a whole set of suppliers or work with the
suppliers and keep finding new ways to get down there
ourselves.”
(interview MB.2)
For Mercedes-Benz, reaching its climate targets seemed to be
more important than maintaining the current supplier network. In con-
trast to BMW's view, Mercedes-Benz also saw the option to turn to
new suppliers if the existing ones do not work toward CO2 neutrality.
Hence, they stated:
“We also put pressure on our suppliers.”
(interview MB.3)
Volkswagen is on the opposite side of the spectrum compared
to BMW. A Volkswagen voice rather seemed annoyed by suppliers
advocating for “technology openness” (interview VW.2). For
Volkswagen, the complexity of the supplier network did not appear
to be a reason to take more time in transitioning to electric
mobility.
Furthermore, trade unions are an important stakeholder in the
transition to electric mobility. Given the far-reaching implications of
the transition, they may find themselves torn between the short-term
objective to defend existing jobs and the longer-term objective to
enable the emergence of future-proof jobs (interviews IE.2, IE.5). As
one interviewee put it:
“[U]nions, if they are late, always have the concern, of
course, of how they can preserve jobs, secure employ-
ment. And then, of course, you find yourself in the
dilemma of not being able to do both at the same time.
You can't completely reorganize, you can't open up new
business areas that first of all cost money, that first of all
mean a reduction in employment, and at the same time
secure the people who come out.”
(interview BM.4)
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1137
Thus, trade unions' focus on job security may complicate a dedi-
cated shift to electric mobility. From their perspective, EVs can repre-
sent a threat regarding job security and necessitate retraining and
hiring new personnel with a different skill set, particularly for software
development (interviews BM.3, MB.2, VW.2).
In a more long-term perspective, the job security goal could also
support the shift to EVs though, especially under competitive pressure
(interview MB.4).
Similarly, at Volkswagen, unions used to be skeptical about the
shift to EVs and were attached to the combustion engine. However,
one interviewee pointed out that it has become clear to employees
that the company can only be successful with a clear focus on
e-mobility, implying a complete portfolio transformation (interview
VW.3). Thus, over time, unions can become a supporting force for the
transition to EVs. Another interviewee linked this to a business ratio-
nale, saying that now that it is evident how large a sum Volkswagen
invests in electric mobility, the company's employees do not want to
see this endeavor fail (interview VW.2).
5.4 | Leadership
Cognitive frames surrounding the role of leadership appeared as a
dividing line between the three car manufacturers in our interviews.
In general, leadership was seen to play a very important role in setting
ambitious decarbonization targets (interviews IE.2, IE.3, IE.4, IE.5).
Remarkably, however, interviewees from Volkswagen and Mercedes-
Benz mentioned their CEOs (see Table 1) numerous times in connec-
tion with the transition to electric mobility while interviewees from
BMW never mentioned the company's CEO without being prompted.
This indicates a different, more hands-off leadership style at BMW.
For Mercedes-Benz, CEO Ola Källenius strongly pushes electric
mobility. When taking up his role as CEO, his mantra was “EV is the
name of the game” (interview MB.2). He is perceived as a “front
runner” (interview MB.2), also regarding climate policy commitments.
At COP26, Mercedes-Benz was the only German car manufacturer
that signed the declaration on accelerating the transition to 100%
zero emission cars and vans (GOV.UK, 2022). In the decision
to commit to this declaration, Mercedes-Benz's CEO played a
central role:
“In the end, it was also the decision of our CEO, Ola
Källenius, to say that he stands for this, that he is also
very happy to do this and that he is also committed to
it. So, he is not shy about standing up for it, yes. If we had
a different boss, things might look different.”
(interview MB.2)
The leadership style of Ola Källenius was described as weighing
economic and ecological factors and how much risk can be taken
(interview MB.2).
When it comes to Volkswagen, the clear vision and
outspoken communication of then-CEO Herbert Diess are said to

1138
have been very important in aligning the firm with its EV focus
(interviews VW.1, VW.3):
“He has a strong visionary power, and as far as that is
concerned, also a strong strategic creative power. That
really helped us, because this radical focus on the new
would otherwise have been talked out of all proportion
within the company, in the coordination processes,
approval processes, committees and the way everything
sometimes works in such groups.”
(interview VW.1)
Diess was described as someone who can provoke at times and
who drives the firm forward (interviews VW.1, VW.3). He acted as
“an absolute change agent” (interview VW.3) and “as an innovator, as
a driver, as the face of transformation” (interview VW.4).
5.5 | View on technology and risk
Finally, a clear difference exists in the firms' views on technology and
risk. BMW strongly advocated for a technology agnostic approach:
“[S]et us a goal, but please leave the technology choice to
the market and to us.”
(interview BM.1)
Another interviewee from the same company offered a different
perspective and pointed out that they may not be so agnostic when it
comes to the incumbent technology:
“All executives in the automotive industry, are all
mechanical engineers. The crowning glory of creation for
a mechanical engineer is an internal combustion engine. If
this king is knocked off the throne, then these people have
a psychological problem. Yes, that's… They have a psy-
chological problem. Because an electric motor is worth
nothing in comparison. It's a boring thing, isn't it? Which
is actually absolutely uninteresting from a mechanical
point of view.”
(interview BM.4)
Interviewees from Mercedes-Benz did not mention the idea of
“technology openness,” but instead showed a strong conviction that
the future car market is electric, in line with their company's decision
to fully shift to e-mobility. One interviewee stated that if they would
not do this, they soon would not exist anymore (interview MB.2). It
was also pointed out that setting ambitious goals and a clear sense of
direction are needed, whereas being technology agnostic would not
do this to change a large organization (interview MB.4). The firm
praised itself for being early in recognizing trends and in being good at
finding technical solutions for present problems (interview MB.2). The
interviewed company representatives showed pride in the firm's
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LODER ET AL.
engineering capabilities and expressed the view that the EV is simply
the better car in comparison with an ICEV.
Contrasting BMW's view on “technology openness,” interviewees
at Volkswagen insisted that being agnostic to different technological
alternatives for powertrains would imply a lack of focus (interview
VW.2). For example, when it comes to the competition between
battery-electric vehicles and hydrogen fuel cell vehicles, they pointed
out issues around cost and efficiency. One interviewee felt that the
agnostic view of a competitor might in fact be driven by a different
motive:
“So, anyone who says, ‘I want to have technology open-
ness for hydrogen in the passenger car sector’, is trying to
delay the change by lighting smoke candles.”
(interview VW.3)12
In line with the favorable view on “technology openness,” risk
and uncertainty concerning electric mobility were emphasized in many
BMW interviewees' statements.
“Now we're all saying, we're all driving in Europe in 2035,
all electric only or whatever, you also have to be prepared
for the possibility that things come out differently than
we thought.”
(interview BM.3)
“Because we looked at that very carefully, whether we
join this pledge or not. Then we said, no, we can't do that
at all. Because we don't know whether it will really hap-
pen. And what do we do when we have said that in 2021
and in 2030 we will be a very long way from 100 percent
electric mobility in Germany? Will we stop selling cars
then? Difficult.”
(interview BM.1)
One interviewee specifically alluded to potential litigation risk
resulting from unmet promises:
“So, I would say that the discussion we're seeing in the
U.S. also boils down to the fact that, in the foreseeable
future, you as a company will be measured differently by
statements like these than you have been in the past.
And that shareholders may at some point rightly demand
that what someone once announced actually happens.
So, when I look at what we said in 2002 about what the
year 2022 would look like or what we said in 2012 about
what the year 2022 would look like, that should teach us
humility. And make you wary of, let's say, these sus-
penders snapping, ‘we will be completely CO2-neutral’.”
(interview BM.3)
12
The quest for “technology openness” from this perspective may be seen as falling into the
category of pushing non-transformative solutions in the typology of climate delay discourses
according to Lamb et al. (2020).
 10990836, 2024, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3538 by Cochrane Romania, Wiley Online Library on [12/07/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
LODER ET AL. 1139

Considering BMW's past experiences with the i3 model not fulfill-
ing initial success expectations, this careful, risk-minimizing attitude
may have been reinforced. In contrast, interviewees from Mercedes-
Benz and Volkswagen barely touched upon uncertainties and risks
related to electric mobility.
Corresponding to the different perspectives on technology open-
ness, the view on EVs varied between the car manufacturers. As
Table 3 shows, at BMW the view on EVs and their uptake was less
positive than at Mercedes-Benz and Volkswagen.
To summarize, Volkswagen and Mercedes-Benz viewed EVs as
an opportunity, but from distinct rationales. At Volkswagen, the tran-
sition to electric mobility was seen as an opportunity to leave the cri-
sis of the Diesel scandal behind and has been strongly pushed by
Herbert Diess during his tenure as CEO. Mercedes-Benz emphasized
the fit with its positioning as a premium brand and used EVs as an
opportunity to stretch the imagination of its capable engineers. In
contrast, BMW, with the scars of the mixed experience with its pio-
neering i3 model still fresh in corporate memory, rather emphasized
the transition risks and appeared unsure about the future success
of EVs.
6 | DI SCU SSION
Our literature review on dynamic capabilities suggested that when
firms perceive a changing business environment as an opportunity,
they can try to seize the opportunity and transform accordingly.
Transferred to our comparative case study, when firms perceive EVs
as an opportunity rather than a risk, they are likely to adjust their busi-
ness strategy accordingly, which may lead to a clear commitment
toward phasing out ICEVs. Based on our interview data, Volkswagen
and Mercedes-Benz tend to view EVs as an opportunity, while BMW
appears to emphasize the risks associated with the shift from ICEVs
to EVs much more.
The perception of EVs as an opportunity versus risk appears to
be contingent on the other cognitive frames identified in the the-
matic analysis (see Figure 4). Together, the cognitive frames on past
experiences with EVs and the environmental performance of ICEVs,
the view on economics of the transition and consumers, social
embeddedness, and views on leadership form frame clusters that
crystallize in the more general opportunity/risk perception. In partic-
ular, cognitive frames capturing past experiences and a firms' view

TABLE 3 Views on EVs based on interview data.

Volkswagen Mercedes-Benz BMW

“[T]here were relatively valid forecasts and also
relatively valid studies that simply showed what
an electric car means, … and the electric car was
far, far ahead in terms of efficiency”
(interview VW.1)
“Electromobility (is) the technology of the future
that will hopefully lead us to an emission-free
mobile world” (interview VW.1)
“EV is the name of the game” (interview MB.2)
“[W]e're not going to invest more in engine
technology and the like now, but we've said we're
going to make the next sixty billion in
electromobility and all in, right?”
(interview MB.2)
“BMW also believes it is too great an
entrepreneurial risk to back only one horse,
namely electric cars.” (interview BM.2)
“[W]hat the taxonomy represents as the only
true and good and truth, namely building
electric cars, this does not help us”
(interview BM.1)

FIGURE 4 Proposed framework adapted to the empirical cases studied.


1140
on the economics of the transition and consumers—a company's best
guess about the costs and benefits of the transition and whether its
customers (will) accept EVs—not only seem to mutually depend on
each other, but also strongly determine today's broader perspective
on EVs. Furthermore, cognitive frames capturing a firms' embedded-
ness in networks and executives' views on top level leadership are
both strongly related to perceptions of EVs as an opportunity or
threat.
In the following, we contextualize our findings based on the perti-
nent literature. Similar to Hockerts (2015), who found that inter-
viewees from firms with a strong perceived sustainability
performance use more complex mental models linking corporate sus-
tainability and competitiveness, our data shows that carmakers per-
ceiving decarbonization through EVs as an opportunity rather than a
threat also tend to embrace economic rationales for transitioning to
EVs. In addition, Hockerts (2015) found that firms characterized by a
weaker perceived corporate sustainability performance tend to focus
on risk and efficiency in their less integrated and less differentiated
cognitive frameworks. Our findings regarding BMW point in a similar
direction, as BMW executives reiterated the risks of the transition
toward EVs.
The connection between leadership and the
opportunity-versus-threat perspective in order to advance corporate
decarbonization has been established by other scholars, too: If man-
agers in leading positions view environmental issues as opportunities,
they tend to pay attention to them and give them priority (Andersén
et al., 2020). Our interview data revealed that the CEOs of
Volkswagen and Mercedes-Benz attributed high importance to cli-
mate issues and saw electrification as a crucial means for decarboniza-
tion that entails opportunities for their firms. Additionally, charismatic
leadership as displayed by Ola Källenius (Mercedes-Benz) may foster
innovation (Alblooshi et al., 2021). Similarly, Herbert Diess'
(Volkswagen) leadership style, described as visionary and strategic,
may directly impact the firm's innovation potential (Alblooshi
et al., 2021). At BMW, by contrast, Oliver Zipse's leadership was less
visible. Hence, it was difficult to determine how important decarboni-
zation was for the firm's CEO, a signal that is likely to influence
employees' and other stakeholders' perceptions about BMW's role in
decarbonizing transport.
Executives can be(come) agents of change or forces of inertia in
the climate transition (IPCC, 2022). Even if executives in leading posi-
tions recognize an opportunity and aim to seize it accordingly, resis-
tance to change can occur due to rigid cognitive frames anchored in
the organization (Helfat & Peteraf, 2015). Thus, dealing with resis-
tance to change is an important building block that complements
sensing capabilities (Sunder et al., 2019). Leadership can play a signifi-
cant role in breaking up rigid cognitive frames, for example by clearly
embracing new opportunities (Teece, 2007). For this, the communica-
tion style of top managers is important to inspire and align disparate
parts of a firm (Helfat & Peteraf, 2015). In this regard, Volkswagen's
CEO has been described as a strong change agent who does not shy
away from confrontations. Similarly, Mercedes-Benz's CEO has been
referred to as a frontrunner.
10990836, 2024, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3538 by Cochrane Romania, Wiley Online Library on [12/07/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
LODER ET AL.
Existing literature also reflects on the other cognitive frames iden-
tified in our analysis. Social embeddedness has been recognized as a
factor shaping companies' market and non-market behavior (Walker &
Rea, 2014). Our results suggest that stronger embeddedness in net-
works and lower willingness to reshape existing relationships, such as
in the case of BMW, may stand in the way of sensing new
opportunities.
Our finding that views on technology and risk are contingent
on past experiences and their reflection in cognitive frames empha-
sizes the role of path dependence in innovation processes
(List, 2004). To some extent, learning from unsuccessful experiences
can shield against repeated failure (Christensen, 2013). However, in
the context of a changing business environment, if such learning
equates to a reluctance to innovate, this may lead to a loss of
competitiveness.
What happens if we assess the firms' role in decarbonizing trans-
port in a broader way than focusing on the propulsion system? Broad-
ening the analytical scope adds some nuance to our results but does
not appear to fundamentally shift the emerging picture that
Volkswagen and Mercedes-Benz are more determined in embracing
the low-carbon transition than BMW. Interestingly, however, BMW
interviewees much more than executives from Volkswagen or
Mercedes-Benz emphasized the importance of looking beyond the
propulsion system by including emissions from the value chain to
achieve the goals of the Paris Agreement (United Nations Framework
Convention on Climate Change, 2015). Moreover, BMW interviewees
reiterated the need for moving toward a circular economy (interviews
BM.1, BM.3, BM.4). In line with these observations from our inter-
views, BMW has more ambitious scope 3 targets than the other two
firms.13
According to MSCI, the companies are aligned with global climate
goals to different degrees, with BMW being more Paris-aligned than
Mercedes-Benz and Volkswagen.14 This is consistent with BMW
emphasizing the importance of a ‘holistic’ approach to decarboniza-
tion and sustainability. Yet, BMW's strong focus on tackling upstream
emissions appears to be strategically misaligned with the lack of an
ICEV phase-out target, which would assume an important signaling
function toward decarbonization, and the firm is portrayed as having
fallen behind Volkswagen and Daimler regarding electrification.15
Even more so, according to InfluenceMap's 2022 Corporate Climate
Policy Footprint Report, BMW is the only firm from our sample that
features among the 25 most negative and influential corporations
regarding their climate policy footprint. Thus, even if BMW is making
serious attempts at decarbonizing value chains along all three
13
Sustainability Report Mercedes-Benz (2021), Group Report BMW (2021), Nonfinancial
Report Volkswagen (2021)
14
https://www.msci.com/our-solutions/esg-investing/esg-ratings-climate-search-tool/
issuer/volkswagen-aktiengesellschaft/IID000000002140440; https://www.msci.com/our-
solutions/esg-investing/esg-ratings-climate-search-tool/issuer/mercedes-benz-group-ag/
IID000000002163566; https://www.msci.com/our-solutions/esg-investing/esg-ratings-
climate-search-tool/issuer/bayerische-motoren-werke-aktiengesellschaft/
IID000000002148933. The MSCI index includes scope 3 targets.
15
https://www.cleanenergywire.org/factsheets/early-e-car-starter-bmw-plans-new-mobility-
sprint

LODER ET AL.
emission scopes, it actively obstructs more ambitious climate policy,
and our analysis of sensing capabilities indicates a reluctance to
endorse the transition from ICEVs to EVs, which would lead to the
largest and quickest emission cuts in road transport (Bieker, 2021;
Miotti et al., 2016).
7 | C O N CL U S I O N
7.1 | Summary of findings
Given rising CO2 emissions in the transport sector, there is increasing
political and public pressure to decarbonize the transport sector.
Technically and economically, EVs have now become a viable
zero-emission technology. Why, then, do automobile manufacturers
in Europe's largest car market differ so strongly in their electrification
strategies? We suspected that part of the answer can be found in
firms' sensing capabilities, i.e., the cognitive processes based on which
they recognize new opportunities and threats. To empirically investi-
gate sensing capabilities, we conducted a qualitative comparative case
study based on interview data and analyzed cognitive frames at the
level of executives. Our results show that various cognitive frames
affect the perception of changing business environments more as an
opportunity or as a threat.
In our case study, we unveiled that firms' views on technology
and risk depend on past experiences with EVs and the environmental
performance of ICEVs, the view on economics of the transition and
consumers, social embeddedness, and leadership. Cognitive frames
emphasizing the uncertainty of the new strategic direction and the
benefits of the status quo reflect that low-carbon opportunities are
not perceived as such, leading to less strategic reorientation. Con-
versely, cognitive frames emphasizing new market opportunities and
questioning the economic viability of sticking to the status quo reflect
an opportunity perception. As long as key stakeholders can be taken
along, these facilitate adjustment of business practices toward trans-
formative change.
7.2 | Managerial implications
Our case studies illustrate that the different paths that companies
pursue on the way toward decarbonization imply specific opportuni-
ties and challenges. If electric mobility continues to take off, the two
companies in the sample that express a clearer focus on this technol-
ogy are likely to have a competitive advantage. If in contrast, the cur-
rent trend would be reversed, the more hesitant of the three
companies might feel confirmed in their quest for “technology open-
ness.” Due to the uncertainty that is inherent to technological transi-
tions, it will take time before it can be known whose approach will
have been more promising. This implies that we are likely to also see
continued disagreement within organizations on the best way for-
ward; Volkswagen's recent CEO change may be an indication of such
turbulence.
10990836, 2024, 2, Downloaded from https://onlinelibrary.wiley.com/doi/10.1002/bse.3538 by Cochrane Romania, Wiley Online Library on [12/07/2024]. See the Terms and Conditions (https://onlinelibrary.wiley.com/terms-and-conditions) on Wiley Online Library for rules of use; OA articles are governed by the applicable Creative Commons License
1141
Top managers need to be aware of a firm's past experiences, its
social embeddedness, and the view on economics of the transition
and consumers so that they can attempt to steer the firm's perception
of the changing business environment into a favorable opportunity
direction. With strong leadership and good communication skills they
can work toward increasing the firm's sensing, and consequently
dynamic, capabilities (Helfat & Peteraf, 2015).
What is the role for policymakers in all of this? For governments
that have a clear vision of a future of the mobility sector that is elec-
tric, giving clear and credible signals, such as the EU's ban on ICEV
sales, may be a welcome support for executives embarking on their
organization's low-carbon transition. For others, they will have to
reflect carefully whether there is an alternative way of giving markets
a sense of direction that will allow for rapid decarbonization.
7.3 | Limitations and further research
Previous research has suggested that firms with stronger dynamic
capabilities tend to be more successful. While our empirical investiga-
tion contributes to a more fine-grained understanding of sensing
capabilities in the automotive industry, further work is needed to
examine to what extent the analyzed case study firms manage to seize
the opportunities they recognize, transform accordingly, and thereby
create a competitive advantage.
With the 17 interviews we conducted within the realms of the
German automotive industry, the generalizability of our results may
be limited. Further research in other sectors and countries would be
beneficial to advance knowledge on the level of corporate decarboni-
zation ambitions. We tried to mitigate the risk of social desirability
bias in the interview data through data triangulation, interviewing fur-
ther industry experts in addition to executives from the three automo-
tive companies. Other data collection methods such as structured
observation or anonymized surveys could be used in future research
to validate our findings.
Other internal and external factors than analyzed in this article
may influence the ICEV phase-out and electrification targets as well.
One factor could be the specific hierarchical structure of a firm includ-
ing different political coalitions inside a firm, the role and influence of
a company's board, the rigidity of an organizational identity, or a firm's
financial resources (Helfat & Peteraf, 2015). Emotions would be a fur-
ther internal factor besides cognition (Helfat & Peteraf, 2015). Dong
et al. (2016) connect emotions to leadership by stating that “[e]xecu-
tives who explicitly recognize emotional mechanisms will develop
superior sensing opportunities compared to executives who neglect
the role of emotions” (p. 101). Thus, analyzing emotions in companies,
with a focus on leadership, could shed additional light on firms'
dynamic capabilities.
ACKNOWLEDG MENTS
Adrian Rinscheid acknowledges funding from the Basic Research Fund
(GFF), University of St. Gallen, Switzerland (Grant No. 1031563).
Open access funding provided by Universitat St Gallen.

1142
ORCID
Julia Loder https://orcid.org/0000-0001-6935-1675
Adrian Rinscheid https://orcid.org/0000-0003-3160-538X
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