As climate change awareness and regulatory measures intensify, firms increasingly prioritize environmental sustainability by focusing on reducing carbon emissions and energy consumption. This study examines how California firms strategically respond to emissions trading system (ETS) regulations by using cloud computing for outsourcing energy-intensive operations, particularly avoiding costs associated with data infrastructure, processing, and maintenance. Leveraging 2007 to 2018 Aberdeen software installation data, a difference-in-differences (DID) methodology is used with propensity score matching (PSM) to examine the impact of environmental regulation on cloud adoption. Findings indicate that California firms are more likely than firms in other states to adopt cloud computing after ETS is implemented. Further tests show that rising electricity prices and heightened regulatory pressures drive the strategic adaptation. The results reveal that environmental policies broadly affect technological and operational decisions.
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Abstract Introduction Literature Reviews Research Question Methods Results Conclusion References