Journal of Strategy and Management

Scanning the macro-environment for liquid biofuels: A comparative analysis from public
policies in Brazil, United States and Germany
Edson Talamini Emiel F.M. Wubben Antônio Domingos Padula Homero Dewes
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JSMA
6,1
Scanning the macro-environment
for liquid biofuels
A comparative analysis from public policies
40 in Brazil, United States and Germany
Edson Talamini
Department of Economics, Federal University of Rio Grande do Sul – UFRGS,
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Porto Alegre, Brazil

Emiel F.M. Wubben
Department of Business Administration, Wageningen University, Wageningen,
The Netherlands
Antônio Domingos Padula
Management School and Centre for Agribusiness Studies,
Federal University of Rio Grande do Sul – UFRGS, Porto Alegre, Brazil, and
Homero Dewes
Department of Biophysics, Biosciences Institute,
Federal University of Rio Grande do Sul – UFRGS, Porto Alegre,
Brazil and Centre for Agribusiness Studies,
Federal University of Rio Grande do Sul – UFRGS, Porto Alegre, Brazil

Abstract
Purpose – Macro-environmental scanning is a first step in strategic planning, which is essential
in an emerging industry such as liquid biofuels. The purpose of this paper is to identify the dimensions
within which the governments of Brazil, the USA and Germany have constructed the macro-environment
for liquid biofuels over time and to test for similarities between the governments’ constructs.
Design/methodology/approach – Documentary research was carried out on official public policies
and program documents on the topic of liquid biofuels, covering a ten-year period from 1997 to 2006.
The database consisted of 624 documents from the Brazilian government, 854 from the American
government and 168 documents from the German government. Text mining was used to extract
information from the texts by applying a specific analysis structure that was built on macro-environmental
dimensions as expressed by their respective dimensional words “d-words”. The “d-words” were selected
based on their usage frequency in the knowledge fields related to each dimension.
Findings – The results indicate that the macro-environments for liquid biofuels, as configured
by the governments under analysis, differ systematically and over time in their emphasis of specific
macro-environmental dimensions.
Originality/value – There are two primary aspects of this study which are original and valuable: the
application of text-mining techniques as a tool for strategic planning and the development of a
particular tool to extract knowledge from text documents and to categorize them according to their
macro-environmental dimensions.
Keywords Brazil, United States of America, Germany, Government policy, Liquid fuels,
Macro-environmental scanning, Text mining, Strategic planning, Liquid biofuels,
Public policies, Government
Journal of Strategy and Management Paper type Research paper
Vol. 6 No. 1, 2013
pp. 40-60
r Emerald Group Publishing Limited
1755-425X The authors would like to thank CNPq and Wageningen University for the financial support
DOI 10.1108/17554251311296558 received for this research project.
 1. Introduction Scanning for
The influence of environmental factors in determining which organizations are liquid biofuels
involved in the processes of organizational decisions has been the subject of ongoing
research by scholars of organizational behavior. In the 1960s, Lawrence and Lorsch
(1969) launched a debate on the relevance of the interactions between organizations
and their environment. Studying the different schools of strategic thinking, Porter
(1980, 1985) and Mintzberg et al. (2009) proposed the so-called “design school,” 41
“positioning school” and “environmental school” which claim for interactions between
organization and its environment when defining its strategies.
For Peng et al. (2009), organizations make their strategic choices based on their
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dynamic interactions with institutions. These authors propose an approach termed the
“institution-based view” to account for the influences of formal and informal
institutional rules in the formulation of organizational strategies. What this debate
demonstrates is that the organization and its environment are nearly inseparable.
Hiatt et al. (2009) studied the process of building the institutional environment
and creating opportunities for new ventures. Through the normative (organizational
practices, social understanding), cognitive (assumptions, beliefs) and regulatory
dimensions (rule setting, monitoring, sanctioning) of the institutional environment, the
agents are able to create or restrict opportunities for new ventures. Governments, with
their regulatory power, can explore the dimensions of the institutional environment to
implement industrial policies and even create business opportunities that allow for the
emergence of new industries (Hiatt et al., 2009). This seems to be what has occurred
among governments introducing bioenergy into their energy matrices. As stated by
Sorda et al. (2010, p. 6986), “in the last decade biofuels production has been driven
by governmental policies.” From the creation of a regulatory framework and the
implementation of public policies, governments are seeking to create an institutional
environment conducive to the emergence of this new industry. César and Batalha
(2010a) and Puerto Rico et al. (2010) present the example of Brazilian government
intervention in the liquid biofuels industry, while Jumbe et al. (2009) claim for
governmental support for biofuels in the Sub-Saharan countries.
According to the International Energy Agency (IEA, 2004), the growth in the liquid
biofuels production differs significantly between countries and regions. Divergent
growth rates in liquid biofuels may be attributed not only to governmental rules and
incentives, but also to the framing of societal perceptions and rhetoric regarding
biofuels by the respective governments. Public policies are critical in agenda setting
and knowledge creation and diffusion, ultimately steering companies’ strategic
planning. Idiosyncratic public opinions and policies regarding liquid biofuels shunt
companies and thus their sectors into a specific growth trajectory.
In 2008 the primary liquid biofuel producers were the USA (30,580 million tons),
Brazil (18,087 million tons) and Germany (6,150 million tons) (IEA, 2011). Although
liquid biofuel production has increased globally, biofuel growth rates seem to be
influenced by various broad dimensions, hereafter called macro-environmental
dimensions. For example, at face value, Brazilian public policies seem to have moved
away from the political dimension, as with the PROÁLCOOL (Decree, 1975), toward the
social dimension, as evidenced by the strategic priorities of the Agroenergy Program
(Ministry of Agriculture, Livestock and Supply, 2005). In the development of liquid
biofuels in the USA, the environmental dimension seems to be dominated by
geopolitical issues (Bush, 2003). In Germany, one finds liquid biofuels associated with
environmental and cultural dimensions, such as environmentally sensitive products
 JSMA (Reusswig et al., 2003) and political and economic dimensions, as indicated by
6,1 Germany’s 2004 tax incentive for the production of liquid biofuels (Frondel and
Peters, 2007). These three illustrations make clear that, even though the expansion in
the production and use of liquid biofuels has emerged under the environmental banner
in the global macro-environment, other macro-environmental dimensions may explain
the incremental increase in various countries’ production levels, depending on the
42 specific characteristics of each geopolitical space.
This paper is based on the following three assumptions: first, companies make
decisions regarding their investments by means of a strategic plan; second, strategic
plans oriented toward the growth of liquid biofuel production are directly related to
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the companies’ macro-environmental analysis; and third, the government, as an

important institution, participates in and strongly influences the macro-environmental
configuration. Given these assumptions, the paper answers the following question:
under which macro-environmental dimensions have the governments of Brazil, the
USA and Germany configured the macro-environment for liquid biofuels over time?
Are there similarities in the macro-environments constructed by the governments of
these countries? This study proposes, first, to identify the dimensions under which the
governments of Brazil, the USA and Germany have configured the macro-environment
for liquid biofuels over time; and second, to test for similarities between these
governments’ constructions of the macro-environment.
Following this introduction section, Section 2 presents a literature review on
macro-environmental scanning as the prime stage of strategic planning process.
A review of public policies related to biofuels in Brazil, the USA and Germany
is presented in Section 3. Section 4 describes the study’s methods and procedures.
In Sections 5 and 6, the results are presented and analyzed. Finally, Section 7 presents
the main conclusions.

2. Strategic planning and macro-environmental scanning

Most accounts of strategic planning processes begin by establishing the strategic
position of the particular organization. For example, in their widely used book on
strategic management, Johnson et al. (2008) argue that the establishment of the
strategic position consists of the evaluation of: the external business environment;
the internal resources and competences of firms; and the expectation and stakes of
interest groups in the strategy to be adopted. The analysis of the business environment
is the first step of strategic planning for all reputed writers of strategy handbooks, such
as Grant (2008), Wheelen and Hunger (2008), Thompson et al. (2009) and David (2009).
Having established the business environment as the starting point of planning
processes, it is necessary to learn what comprises the environment. A widely accepted
definition was proposed by Hall (2004), for whom the environment represents all those
elements existing beyond the limits of the organization that may influence the
organization directly or indirectly.
As for the variables that comprise a certain environment, it is necessary to identify
which environmental level is being analyzed. The literature proposes three different
environmental levels: the general or macro-environment, the operational environment
and the internal environment. In other words, the environment of a firm is composed of
layers ranging from generic to company specific (Wheelen and Hunger, 2008;
Thompson et al., 2009).
With the purpose of utilizing information from the macro-environment for strategic
planning, the variables found at that level are typically grouped into factors or
 dimensions. A summary of the macro-environmental dimensions used by some writers Scanning for
is presented in Table I. liquid biofuels
It could be concluded that a single set of dimensions comprising a given
macro-environment does not exist. The variety and number of dimensions appear to
depend on the industry’s business. However, the PESTEL acronym represents the
set of dimensions that is found to be recurring in most classifications of a
macro-environment among the consulted writers (see Table I) (Walsh, 2005; Johnson 43
et al., 2008). Our study conforms to this standard.
Once the concept and dimensions that comprise the macro-environment of firms are
determined, it should next be understood how the macro-environment investigation
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process for the preparation of the strategic planning is carried out. Bates (1985), Ginter
and Duncan (1990) and Ginter et al. (1992) state that the macro-environmental analysis
process is composed of four interrelated activities: scanning, monitoring, forecasting
and assessment. The scanning process includes the activities of investigating the
threats and opportunities that may affect the business.
The scanning process is the first step and thus one of the main elements of strategic
planning. This paper focusses on this scanning of the macro-environment to locate the
items prevalent in the different macro-environmental dimensions in government
policies. Therefore, it is important to understand how firms carry out this scanning:
what characterizes these scanning practices? What are the sources of information
used? And, how is this information processed?
Ginter et al. (1992) illustrate clearly how the macro-environmental scanning process
collects and treats information. Figure 1 shows that, before scanning, the various
pieces of information about the general macro-environment and the specific sector/
industry environment are dispersed. Although the information may be available, the
identification of any pattern is a daunting task. The scanning process should result in a
set of categorized, organized, accumulated and assessed information. The illustration
demonstrates that scanning is a sorting filter for the pieces of information accessed by
the firms or industry so that, after its application, the macro-environmental patterns
may be identified and assessed.
Although personal and impersonal, inside and outside of the organizations, are
primary sources of information, recent studies in the scanning field have drawn
attention to the importance of the world wide web as a source of information. The
internet has generated significant growth in the amount of information available to

Writers Macro-environment dimensions

Fahey and King (1977) Economic, political, regulatory, social, cultural, technological,
energy, marketing/industrial and financial
Preble et al. (1998) Legal, economic, political, competitive, technological and
cultural
Ginter et al. (1991) Economic, political, social, technological and regional
Costa (1995) Political, economic, social and technological – PEST
Leonidou (1997) Physical, demographic, socio-cultural, economic, political/legal
and technological
Fleisher and Bensoussan (2002) Social, technological, economic, ecological and political or Table I.
legal – STEEP Writers’
Walsh (2005), Johnson et al. (2008) Political, economic, socio-cultural, technological, macro-environmental
environmental and legal – PESTEL dimensions
 JSMA General
environment
Liquid biofuels
environment
6,1 n n
n io io
io at
Before the scanning at m at
m r m n
function information is: f or fo f or at
io
In In In
• Diverse/varied o rm
• Unorganized Inf
• Sporadic
44 • Unevaluated
• Uncategorized
Agronomic Environmental Cultural
at
io
n
m
for
In
Economic Geopolitical Legal
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Political Social Technological

Scanning

ion
on

n
tio

on
at
n
ati

ta atio process
a

rm

i
at
orm

rm

n
n

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en m

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or
at

at
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ic

fo at
So ical

f rm
i
om

in
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l in r m fo
in
al
t

ra nfo
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ron

En liti

al After the scanning

on

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ltu al i gic
op
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Cu Leg
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process information is:

olo
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ch • Categorized
Te • Organized
• Accumulated
Monitoring • Evaluated
Figure 1. process
Treatment of information
through the “scanning”
process
Source: Adapted from Ginter et al. (1992)

decision makers. Auster and Choo (1994), Choo (1999), Liu (1998) and Decker et al.
(2005) are just some of the studies that emphasize the importance of electronic
information sources for business executives.
If on the one hand access to information has been facilitated, on the other, it is
increasingly difficult to analyze such a vast volume of data and information to extract
those elements essential for organizational strategic planning. The solution to this
problem is the combination of, first, the theory and concept of scanning the
macro-environment; and second, new information technologies developed for electronic
data treatment to extract a reduced and structured set of information. The studies of
Liu (1998), Myers (1999), Wei and Lee (2004), Decker et al. (2005), Aasheim and Koehler
(2006) indicate that the electronic “scanning” of macro-environmental dimensions tends
to be a powerful tool to understand the current global environment. This study is the
first systematic application of these tools to the area of liquid biofuels to date,
combining text-mining techniques with macro-environmental scanning practices.

3. Public policies for liquid biofuels in Brazil, the USA and Germany
3.1 Public policies in Brazil
Since 1910s the government has used numerous economic and political instruments
and programs to stimulate ethanol production and consumption (Puerto Rico et al.,
2010). In 1970s, with the oil crises, the PROÁLCOOL was launched. As stated by Hira
and Oliveira (2009) the PROÁLCOOL presented goals related to economic and political
aspects. During two decades the government regulated the ethanol market. The
“Petroleum Law” (Law 9478/1997) changed the institutional arrangement and initiated
the process of market liberalization. According to Puerto Rico et al. (2010, p. 1881) and
 Hira and Oliveira (2009, p. 2453), the Brazilian government used seven main Scanning for
instruments to incentivize the ethanol market: a mandatory blend, sustained stocks, liquid biofuels
tax exemptions, cost equalization subsidies, payment and guarantee of purchase to
ethanol producers, financing and economic policy measures. Since 2004, there is
not any excise tax and there are no direct subsidies for ethanol production in Brazil
(Sorda et al., 2010, p. 6982).
The challenge of technological development for production and consumption was 45
continuously overcome by public and private investments in R&D. The innovation
along the production chain was initially driven by a learning-by-doing process.
Recently, the innovations are being developed by R&D networks reversing products
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and processes patents (Furtado et al., 2011). Petrobrás has played a key role in
technological development as well as in the biofuels market organization (Puerto
Rico et al., 2010). Innovations related to the consumption of ethanol arose from
governmental incentives and automakers initiatives with flex-fuel vehicles
development (Furtado et al., 2011).
Biodiesel is the second most important liquid biofuel in Brazil. According to
Pousa et al. (2007), there were at least three main governmental programs to stimulate
the usage of oils and fats as engine fuel: Pro-Óleo (1980), Probiodiesel (2002)
and National Program for Production and Use of Biodiesel (PNPB, in Portuguese)
launched in 2005. Through the PNPB, the Brazilian government aims to stimulate
the production of oleaginous plants by encouraging small family farmers to support
their social and economical insertion into the market. The Social Fuel Seal entails
certain advantages for both small farmers producer and biorefineries companies
(César and Batalha, 2010a, b).
The importance of political, economic and technological issues related to Brazil’s
liquid biofuels can be observed through the review of public policies and the conclusions
proposed by Sorda et al. (2010, p. 6986). Thus, the following proposition is presented:

H1. The macro-environment for liquid biofuels derived from Brazilian public policies
remained focussed on the political, economic and technological dimensions.

3.2 Public policies in the USA

The new surge in liquid biofuel production can be seen as result of environmental
issues (Klass, 1995; Farrell et al., 2006; Hill et al., 2006). However, according to Tyner
(2008) and Sorda et al. (2010), liquid biofuel production in the USA has increased in
accordance with a set of economic and political phenomena, such as the rise in oil
prices, subsidies, corn supplies, corn prices and ethanol prices. Geopolitical issues,
such as the dependency on foreign oil, as stated by Klass (1995, p. 1041), Bush (2003)
and the Renewable Fuel Association (RFA) (2009), along with import tariffs protecting
the national industries (Sorda et al., 2010), are other driving forces.
Ethanol can also be seen as product of political processes and that the US public
policies have increased ethanol production. According to Tyner (2008), the last 30 years
of ethanol legislation in the USA were marked by a subsidy-based policy between the
US government and the ethanol sector. Although there are arguments contrary to
subsidies (Tyner and Taheripour, 2007), the production presents some advantages
(Khanna et al., 2008; RFA, 2009). In fact, the data from RFA (2009) demonstrate that US
public policies from 2004 ( Jobs Creation Act), 2005 (Energy Policy Act) and 2007
(Energy Independence and Security Act) were efficient in promoting the ethanol sector
and makes other interesting contributions to the US economy.
 JSMA Charles et al. (2007) indicate four driving forces behind biofuel promotion policies:
6,1 climate change and reducing greenhouse gas (GHG) emissions, employment in the
agricultural sector, peak oil and energy security and use of resource potential and
policy instruments. However, as described by Klass (1995), the goals of US public
policy are changing from an economic/market and geopolitical focus to an
environmental one. Still, the instruments used by the US government over time to
46 achieve its goals are nearly unchanged. According to Klass (1995) and Sorda et al.
(2010), the primary instruments in wide use have been mandatory blending targets, tax
exemptions and subsidies, along with interventions in the production chain by
supporting intermediate inputs (feedstock crops), subsidizing value-adding factors
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(labor, capital and land) and offering incentives that target end-products. Thus, the
following proposition is made:

H2. The macro-environment for liquid biofuels derived from US public policies
remained primarily focussed on economic/regulatory, geopolitical and
environmental dimensions.

3.3 Public policies in Germany

Germany is a leading producer and consumer of liquid biofuels, primarily biodiesel,
among the EU-27 members (Bomb et al., 2007). The most significant German public
policies for biofuels have emerged from the EU directives. The German policy goals
associated with biofuel usage were also in line with the EU directives: internalizing
external environmental costs; improving the security of the energy supply; and
supporting agricultural and economically vulnerable areas, such as eastern Germany,
by promoting rural development (Bomb et al., 2007; Van Thuijl and Deurwaarder,
2006). Although Germany is a member of the EU, the German government has been an
important motivating force in introducing and increasing the biofuels production and
consumption in the country. According to Sorda et al. (2010), Germany was the first
country in the EU to propose quotas based on GHG emissions savings.
The introduction of biodiesel in Germany occurred in 1990 with the Union for
Support of Oilseed and Protein Plants (UFOP) and the first tests of biodiesel-
compatible car fleets. Commercial production began in 1995. In 1997, a fuel standard
for biodiesel was created. An eco-tax for fossil diesel was introduced by the German
government in 1999, while B100 received full tax exemption. In line with EU Directive
2003/30/EC, Germany set a target of 2 percent of biofuels in 2005 and 5.75 percent in
2010. Beginning in 2004, the German tax policy changed, allowing full tax exemption
for biofuels blended with mineral fuels. Such change in policy streamlined the market
offering B5 and other types of biofuels and has also triggered a wave of investment
in the biodiesel industry (Van Thuijl and Deurwaarder, 2006). However, on January 1,
2007, Germany eliminated fuel excise tax exemptions and replaced them with quota
obligations and tax rebates. Currently, there is difference in the amount of taxes levied
on biodiesel (0.186 h/l) and diesel (0.47 h/l) (Sorda et al., 2010, p. 6984).
Based on the Germany’s political motivations and economic measures to
achieve their goals related to biofuels in the transportation sector, the following
proposition is given:

H3. The macro-environment for liquid biofuels derived from German public policies
remained focussed on environmental, geopolitical, social and economic dimensions.
 4. Methodological procedures Scanning for
To reach the study’s goals a documentary analysis was made of pertinent government liquid biofuels
documents. Karanikas and Theodoulidis (2002) and Hale (2005) have confirmed that
the information contained in several types of written documents is representative of
the documented phenomena. To convert such information into manageable knowledge,
“knowledge discovery in text” and text-mining techniques were used (Halliman, 2001).
The text-mining procedures were based on the studies by Liddy (2000), Karanikas and 47
Theodoulidis (2002) and Hippner and Rentzmann (2006). As stated, Brazil, the USA
and Germany were selected as the geopolitical spaces for our macro-environmental
analysis because they are the primary producers of liquid biofuels (IEA, 2011).
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First, the selection of governmental documents from each country was conducted
with an extensive list of “keywords” (see Figure 2) related to “liquid biofuels.” We focussed
on the frequency of their occurrence in the literature related to bioenergy, biobased
economy and biofuels. The listed keywords, in addition to several related keywords, were
used in the document collection step. In the cases of Brazil and Germany, the equivalent
keywords were utilized in the Portuguese and German languages, respectively.
The listed keywords were used to search and trace relevant official documents in
various branches of the Brazilian, American and German governments available on
the world wide web. Homepages from most ministries, federal secretariats and
self-governing entities were scanned, in addition to the search engines available on the
related homepages themselves. All documents in which one or more keywords were
present in the content of any part of the document were collected and saved in a
database for each country. Not all of the documents were primarily related to liquid
biofuels. Some of them discussed other sources of renewable energy, such as solar or
wind energy. It is important to note that any information available in the “press room”
sections of the web sites was excluded from consideration. This is because we
wanted to minimize the impact of ordinary political and electoral discourse and
focus our search on documents that were representative of the official policies and
programs of the governments.
A ten-year period was scrutinized: 1997-2006. The documents were stored and
catalogued. By the end of this process, we had collected 673 documents for Brazil,
865 documents for the USA and 170 documents for Germany, totaling 1,708
government documents. Because the official documents were gathered from among
different government sources, there was the possibility of duplication among the
documents. As documents were saved using their titles as the file name, duplicate
entries were identified and discarded.
Second, the electronic contents of the documents were transferred to a specific
database, which was built with the aid of the QDA Miners software, which prepared
the documents for the text-mining process. As QDA Miners uses rich text formats
(*.RTF) to build the database, while most documents collected were in a PDF format,
two documents of the German government, 49 documents of the Brazilian government
and 11 from the American government needed to be discarded, as their contents
were unreadable. These documents totaled 62, or 3.6 percent of the total. The final
composition of the database was 624 documents of the Brazilian government,

Figure 2.
Keywords related to
Biofuel, Biofuels, Bio-fuel, Bio-fuels, Biodiesel, Bio-diesel, liquid biofuels
Ethanol, Bio-ethanol, Bioethanol, Bio-oil, Alcohol
 JSMA 854 documents of the American government and 168 documents of the German
6,1 government, totaling 1,646 documents. The 168 documents of the German government
were obtained for the years of 2001-2006. No relevant documents were located in the
German government’s web sites for the previous years.
Third, to categorize the information contained in the files, it was necessary to build
an analytical structure capable of extracting the relevant data, as there is no specific
48 method applicable to this analysis. A common approach is to use a list of words, as
observed in Crawley (2007) and Singh et al. (2007). Here, as indicated earlier, the list
must be associated with the macro-environmental dimensions of the PESTEL
acronym, i.e. political, economic, socio-cultural, technological, environmental and legal
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(Walsh, 2005; Johnson et al., 2008). In fact, the number of dimensions and their labels
vary somewhat from one study to another, depending on the specific area of interest,
the environment and/or the activity under analysis. Considering the characteristics
of our research subject, we added the agronomical and geopolitical dimensions
and divided the socio-cultural dimension into its social and cultural components. We
thus arrived at nine macro-environmental dimensions to be analyzed: agronomical,
environmental, cultural, economic, geopolitical, legal, political, social and technological.
Fourth, once the macro-environmental dimensions were established, the following
step was to identify the set of words representative of each dimension, which will
be treated here as “dimension-words” or so-called “d-words.” The set of “d-words” is
composed of relevant terms that best describe a certain macro-environmental
dimension. Therefore, nine macro-environmental dimensions necessitate nine different
lists of “d-words.” At this point, the core issue was how to identify the set and number
of “d-words” for each dimension. For example, which and how many “d-words”
satisfactorily characterize the economic dimension?
To determine the nine sets of “d-words,” we identified the words that occurred most
frequently in academic journals in each of the knowledge fields that are associated
with a macro-environmental dimension. For each dimension, a series of academic
journals with high impact scores were selected. For instance, the following journals
were selected for the economic dimension: Quarterly Journal of Economics (impact
score: 3.938), Review of Economic Studies (2.000), Oxford Economic Papers (1.132),
Journal of Economic Theory (1.046) and Cambridge Journal of Economics (0.571).
From each journal, one issue was randomly selected from the volume of the following
years: 1998, 2000, 2002, 2004 and 2006. This covers a period equivalent to the stated
research period (1997-2006). The same criteria and procedures were used for all nine
macro-environmental dimensions.
Titles, summaries and article-specific keywords were collected from all published
scientific articles in the selected issues and transferred to a database using QDA
Miners software. Next, a word count was obtained with the WordStat module of
SIMStats. We also calculated each word’s frequency and TF*IDF rate, which means
the more often a term occurs in a document, the more representative it is of the
document’s contents (Provalis, 2005). The resulting list ranging from 37 to 65,000
words was displayed in descending order according to the TF*IDF rate. This list
thus indicates the decreasing relevance of the words in the scientific documents
published in academic journals of the knowledge fields related to the respective
macro-environmental dimensions (Aizawa, 2003). Second, the number of “d-words”
under each dimension was determined by applying the percentile measures to the list
of all words, selecting the number of “d-words” that best described each dimension.
An average of 14.2 “d-words” was used for each dimension. For “d-words” that were
 common to two or more dimensions, rules were added to the information analysis and Scanning for
extraction structure. Jaccard’s coefficient was used to determine these rules (Chung liquid biofuels
and Lee, 2001). The rules took into consideration the joint occurrence of terms within
the same document. Figure 3 shows the “d-words” for the economic dimension.
Fifth, text mining was carried out using the electronic databases and the
information analysis and extraction structure built for the nine macro-environmental
dimensions and their respective “d-words.” WordStat in SIMStats enabled the 49
frequency count with which each “d-words” occurred in each set of governmental
documents. This step established the frequency with which each of the nine
macro-environmental dimensions were used, indicating the construction of liquid
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biofuels’ macro-environment by the governments of Brazil, the USA and Germany.

Sixth, the absolute and relative frequencies of the occurrence of the “d-words” under
each of the macro-environmental dimensions were used to analyze the results. Based
on the frequencies, so-called dendrograms were built to analyze the joint occurrence of
the dimensions in the government documents, grouping the dimensions with greater
Jaccard similarity coefficients (Provalis, 2005). Homogeneity tests were also conducted
to verify the similarities or differences between the governments in terms of their
frequency of use of the nine dimensions (Field, 2005). The following section lists
the results of the data-mining exercise to locate the differences and similarities in the
public policies of these three leading liquid biofuel countries.

5. Results
In this section, the results of our study will be presented, which compare the nine
macro-environmental dimensions under each of the three countries’ governments
have been framed the liquid biofuels. We will present descriptive statistics of the
aggregated relative frequencies that different macro-environmental dimensions receive
in publications per period and government, followed by a comparison of their total
frequencies. The first set of results identifies the relative frequencies with which the

Dimension: Economic
List of “d-words”:
• @ECONOMIC_ECON [ECONOMIC AND MODELS | ECONOMIC AND SOCIAL /C] (1)
• @MARKET_ECON [MARKET AND LABOUR | MARKET AND MARKETS /C] (1)
• @POLICY_ECON [POLICY AND MONETARY | POLICY AND FISCAL /C] (1)
• @SOCIAL_ECON [SOCIAL AND ECONOMIC | SOCIAL AND BEHAVIOR /C] (1)
• ECONOMY (1)
• EQUILIBRIUM (1)
• GAME (1)
• GAMES (1)
• INCOME (1)
• INFORMATION (1)
• LABOR (1)
• LABOUR (1)
• MARKETS (1)
• PRICE (1)
• PRICES (1)
• RISK (1) Figure 3.
• TAX (1)
“d-words” for the
• WAGE (1)
• WAGES (1)
economic dimension
 JSMA liquid biofuels were categorized for each of the macro-environmental dimensions
6,1 during the analyzed period (Figure 4).
Figure 4 presents systematic differences and similarities in the emphasis placed
on each dimension by each government for each analyzed period. The Brazilian
government consistently emphasized the technological dimension. The German and
US governments stress the environmental and technological dimensions, although
50 they alternate over time in terms of relative frequency. Brazil’s emphasis on the
technological dimension may be related to the prominence of Petrobrás in the public
arena, as Puerto Rico et al. (2010) proposed. Petrobrás is a large public firm in the
Brazilian petroleum industry and it is nationally responsible for acquiring and
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distributing liquid biofuels. Interestingly, in the US context, public rhetoric implies that
the US government demonstrates little concern for environmental issues. However,
environmental issues are at the core of the government’s programs and policies
related to liquid biofuels. Publicly, America may have acted independently against
environmental issues as the only industrialized country that refused to sign the Kyoto
Protocol. In direct contrast, our results show that the environmental dimension
predominates within US governmental documents. In German government documents,

(a) (b)
40% 40%
36% 36%
32% 32%
Relative frequency

28% 28%
Relative frequency

24% 24%
20% 20%
16% 16%
12% 12%
8% 8%
4% 4%
0% 0%
97

98

99

00

01

02

03

04

05

06
97
98
99
00
01
02
03
04
05

06

19

19

19

20

20

20

20

20

20

20
19
19
19
20
20
20
20
20
20

20

Year Year

(c)
70%
60%
Relative frequency

50%
40%
30%
Figure 4.
Relative frequency of the 20%
macro-environmental 10%
dimensions under which
0%
the liquid biofuels were
1

categorized by the
0

0
20

20

20

20

20

20

governments of each
Time
country during the
ten-year period of analysis
 the environmental dimension was only dominant in 2002, albeit strongly. Finally, the Scanning for
US government pays substantial attention to the agronomical dimension, especially liquid biofuels
in the early and later periods of analysis. The agronomical dimension emerged as the
third most-utilized dimension in several of the analyzed periods.
Dependents of public policies should take into account the historical trends of
macro-environmental dimensions, some of which differ significantly between countries.
First, all three governments placed descending emphasis on the technological and 51
environmental dimensions. Other macro-environmental dimensions have risen in
importance among governmental publications on liquid biofuels. Second, the
geopolitical dimension has gained prominence, especially in recent years. The increase
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is greatest among German government documents. Third, attention should be paid to

the relatively low relative emphasis on the cultural and social dimensions for all three
countries. In the case of Brazil, there is an almost imperceptible change in the relative
importance of the social dimension, even after the inauguration of President Luiz Inácio
Lula da Silva in 2003 and after the launch of the National Plan of Agroenergy and the
PNPB in 2005. Given that these programs were launched in 2005 and that this study covers
a period from 1997 to 2006, the social goals for those programs may be not fully captured
in the 2006 documents.
Following the analysis of the macro-environmental dimensions, we now turn to a
descriptive presentation of the country comparison aggregated over the periods
of analysis (Figure 5). The historically aggregated results confirm the presence of
both similarities and differences in the content of public policies among the three
governments. We have described the technological dimension as the primary
macro-environmental dimension utilized by the Brazilian government to categorize
liquid biofuels, with a frequency of 26.9 percent. The second macro-environmental
dimension most frequently found in the Brazilian government’s documents is the
geopolitical dimension, reflecting the impact of the growing importance of this
dimension over the period of analysis. In contrast, the dimension with the lowest
attention in Brazilian government publications on biofuels was the social dimension.
The results indicate that the German government has categorized liquid biofuels

15.1
Agronomical 10.6
10.5
1.9
Cultural 3.7
Macroenvironmental dimensions

4.7
10.6
Economical 10.2
11.6
23.1
Environmental 18.5
11.5
13.0
Geopolitical 19.4
14.6
5.5
Legal 6.2
7.0
8.5 Figure 5.
Political 9.0 Relative frequency of the
9.9
2.7 macro-environmental
Social 3.0
3.3 dimensions within which
19.8 the liquid biofuels were
Technological 19.5
26.9 categorized by the
0.0 5.0 10.0 15.0 20.0 25.0 30.0 governments of each
Relative frequency (%) country during the
ten-year period of analysis
Brazil Germany USA
 JSMA within the following three dimensions: technological, geopolitical and environmental,
6,1 with similar relative frequencies of approximately 19 percent. These results reflect the
importance of the geopolitical dimension for the German government. The agronomical,
economical and political dimensions appear with lower intermediate frequencies.
Finally, the US government documents emphasize the environmental dimension
in the macro-environmental configuration for liquid biofuels. Its relative frequency is
52 23.1 percent out of the total number of occurrences. Apart from this dimension,
technological and agronomical issues hold the second and third positions, respectively.
In contrast, the dimensions with the lowest occurrence among US public policies
include the legal, social and cultural dimensions. In comparison to Germany and Brazil,
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only the US government emphasized the social dimension more than the cultural
dimension. Generally, three conclusions can be drawn from the data presented
so far. First, the Brazilian and German governments feature similar dimensions in
their macro-environmental configuration for liquid biofuels. Although the relative
frequencies differ, for both governments the technological and geopolitical dimensions
are the two most significant. Second, the US government’s divergence relates primarily
to the environmental dimension. The third conclusion may be that the social and
cultural dimensions rarely receive attention in the three governments’ publications.
As stated in the research hypothesis, in the case of Brazil, the macro-environment
for liquid biofuels remained focussed more on the political, economic and technological
dimensions. This assertion was partially observed within the Brazilian public policy
documents, as the technological and economic dimensions are among the dimensions
with higher frequency of occurrence. The political dimension, ranked sixth in
accumulated frequency, shows an increasing frequency after 2002. In general, the
findings are in line with the public policy approach observed in the scientific literature
regarding Brazil’s biofuels.
For the USA, it was expected that the macro-environment for liquid biofuels would
remain focussed more on economic/regulatory, geopolitical and environmental
dimensions. The findings revealed that only the environmental dimension was
mentioned frequently. Agronomical and technological issues were more prominent
than economic and geopolitical ones. Nevertheless, the geopolitical and political
dimensions are gaining prominence within US public policy over time.
Finally, in the German case, it was expected that findings would reveal a macro-
environment for liquid biofuels focussed more on environmental, geopolitical, social
and economic dimensions. The hypothesis derived from our EU and German public
policy review is partially in line with the research findings. The environmental and
geopolitical dimensions were captured within the documents of German government.
Thus, the policy goals of internalizing external environmental costs and improving
the security of the energy supply appear to be fulfilled in the public policies documents.
On the contrary, the social dimension, which we expected to find based on the
government’s goals of agriculture/rural development, was not significant.

6. Analysis
In the previous set of results, the relative frequencies of each individual dimension were
used for the comparative analysis of the three different governments. This section
presents the joint use and similarity of the dimensions in the macro-environmental
configuration for liquid biofuels. The joint use of dimensions entails an analysis of the
government documents’ text based on the co-occurrence of the “d-words” of two or
more macro-environmental dimensions. To observe such occurrences, the Jaccard’s
 coefficient of similarity was used (see methodology section), the results of which Scanning for
are shown in Figure 6. liquid biofuels
Figure 6 demonstrates the differences in the composition of the government
documents of the three countries with respect to liquid biofuels. In the case of the
German government, the text composition of the documents is based on four major
macro-environmental dimensions grouped into two subgroups with high Jaccard’s
coefficients. The first subgroup comprises the cultural and geopolitical dimensions and 53
the second subgroup comprises the political and social dimensions. These two
subgroups represent the four significant dimensions that often occur together within
the German government documents. This means that, even though the social and
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cultural dimensions have relatively low frequencies in the total volume of documents
(see Section 5), these dimensions are often present and associated with political
and geopolitical issues.
The content analysis of the Brazilian government documents brings systematically
different results than the German case. For Brazil, the Jaccard’s coefficient of similarity
values reveal a discourse based on the following three nested dimensions:
{[economic þ political] þ geopolitical}. This grouping indicates a strong association
between economic and policy issues, which subsequently are associated with
geopolitical issues. Finally, the results of the US government documents are more
similar to the Brazilian government documents than to the German government
documents. The basic difference is that the US government documents begin with an
association between legislative issues and political aspects (political þ legal), which are
subsequently associated with the geopolitical dimension.
Further analysis of the dendrograms in Figure 6 reveals that the values of Jaccard’s
coefficient of similarity had less amplitude in the case of the Brazilian and US
governments compared to the German government. These findings indicate that
German public policies regarding liquid biofuels are more specific to particular
discussions related to each of the dimensions. In the cases of Brazil and the USA,
there is a more holistic approach to the documents, as they include various macro-
environmental dimensions.
Apart from the joint use of dimensions in governmental documents, one may
measure the similarity in the usage of macro-environmental dimensions between the
governments of the different countries. The similarity has been measured by means of
the homogeneity test. The homogeneity test determines whether different populations
feature the same proportion of a particular trait. In this case, the homogeneity test
analyzed whether the macro-environmental dimensions appear in the same proportion
in the three governments’ documents. From the absolute frequencies observed for each
of the dimensions in each of the analyzed periods and the total accumulated frequency

Agronomical Agronomical Agronomical

Cultural Technological Technological
Economical Environmental Legal
Political Cultural Cultural
Geopolitical Economical Geopolitical Figure 6.
Technological Geopolitical Political Dendrogram of macro-
Social Legal Social environmental dimensions
Legal Political Economical
Environmental Social Environmental in Brazilian, US and
German government
1.0 0.8 1.0 0.8 1.0 0.8 documents according to
Brazil USA Germany Jaccard’s coefficient of
similarity
Source: Research data
 JSMA over the ten-year period, different homogeneity tests were conducted. The results of the
6,1 homogeneity tests are presented in Tables II-IV.
Table II shows the values of the w2 statistic measures from the accumulated
frequencies of each macro-environmental dimension over the ten-year period. Three
different homogeneity tests were conducted to compare the performance between
the pairs of governments. The results show the absence of statistically significant
54 w2 values, indicating the absence of homogeneity between the different governments’
frequency of use of each macro-environmental dimension for the categorization
of the liquid biofuels.
Likewise, Table III shows the results of the homogeneity tests between the
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governments of the three countries regarding the frequencies of each macro-

environmental dimension for each of the analyzed periods. The values obtained for the
w2-test statistics reveal the absence of statistically significant homogeneity across the
ten years. There was relatively more homogeneity between the documents in 2001,
2003 and 2005. The w2 statistical values were significantly lower in these three
years compared to the other periods. The absence of German government documents
for the years 1997-2000 made it impossible to conduct comparative tests for this
government in the respective periods. We may conclude that the dimensions
emphasized by the three governments are not similar; the public policy documents in
the three countries diverge significantly.
Another set of homogeneity tests sought to identify similarities between the three
countries in using each macro-environmental dimension. For this reason, homogeneity

Governments w2 value*

Germany vs Brazil 4,824.3

Table II. Germany vs USA 5,049.4
Homogeneity test between Brazil vs USA 20,522.2
the governments of the
three countries – Notes: df ¼ 8; a ¼ 0.01; w2 critical ¼ 20.09; *po0.01
total dimensions Source: Results obtained from the research data

w2 value*
Years Brazil vs Germany Germany vs USA Brazil vs USA

1997 na na 347.2
1998 na na 1,610.1
1999 na na 3,658.4
2000 na na 3,234.1
2001 264.0 251.3 797.3
2002 4,110.3 3,558.7 1,864.7
2003 160.1 505.3 1,056.4
2004 2,466.4 1,194.9 3,801.6
2005 1,052.8 733.4 1,831.6
Table III. 2006 1,536.5 3,143.5 4,705.5
Homogeneity test
between the governments Notes: df ¼ 8; a ¼ 0.01; w2 critical ¼ 20.09; na, not applicable as the homogeneity calculation is not
of the three countries – applicable as the expected frequency for a certain period was o1; *po0.01
for each period Source: Results obtained from the research data
 w2 value*
Scanning for
Macro-environmental dimensions a
Brazil vs Germany b
Germany vs USAa Brazil vs USA c
liquid biofuels
Agronomical 1,229.9 2,458.8 5,268.8
Environmental 941.6 5,545.3 9,212.4
Cultural 769.6 1,317.1 2,499.2
Economic 2,564.8 5,548.7 6,239.8 55
Geopolitical 3,216.0 6,036.5 8,267.4
Legal 1,799.4 2,341.6 4,944.9
Political 1,553.7 3,394.2 6,385.5
Social 914.7 1,783.0 2,354.6
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Technological 4,226.0 5,784.0 12,634.4 Table IV.

Homogeneity test between
Notes: adf ¼ 5; a ¼ 0.01; w2 critical ¼ 15.08; *po0.01; bbetween the years 2001 and 2006. In periods the governments of the
prior to 2001, the frequencies are below the necessary requirements for the homogeneity calculation; three countries – by
c
df ¼ 9; a ¼ 0.01; w2 critical ¼ 20.09; *po0.01 macro-environmental
Source: Results obtained from the research data dimension

tests were conducted with the frequencies of each dimension per analyzed year. The
obtained w2 statistical values are presented in Table IV. Again, the results show the
absence of statistically significant values for the w2-test, indicating the absence of
similarity between the governments usage of macro-environmental dimensions.
The different homogeneity tests provide strong evidence for the dissimilarity
of usage of the different macro-environmental dimensions between the governments
of Brazil, the USA and Germany. Additional tests of the accumulated frequencies
over the ten-year period indicate some similarity between the German and
US governments (m ¼ 29.1). The greatest divide was between the Brazilian and US
governments (m ¼ 48.4).

7. Conclusions
The purpose of this study was to identify the dimensions within which the Brazilian,
USA and German governments have framed the macro-environment for liquid biofuels
over time. This study also tests for similarities among the governments of these
countries. For those dependent upon public policies to develop their businesses, it is
important to know whether the government’s efforts reflect critical issues. To analyze
this problem, a documentary study was conducted using a database of official
documents of the Brazilian, USA and German governments.
This study’s primary conclusion is that the three governments have configured
the macro-environment for liquid biofuels under significantly different dimensions.
The differences may result from a particular context, such as natural and economic
conditions. Alternatively, institutional support and social structures may affect
the public policy direction of each country, as argued by Jumbe et al. (2009) and Laird
and Stefes (2009).
For the German government, the predominant dimensions are the technological,
geopolitical and environmental, in descending order. The Brazilian government
used the technological dimension more frequently across the entire period of analysis.
The US government, in turn, has prioritized the environmental dimension, followed
by the technological dimension, in their categorization of liquid biofuels.
Second, the composition of the contents of the governmental documents, using
Jaccard’s coefficient of similarity, revealed the existence of different approaches
 JSMA between the three governments. In the contents of the Brazilian governments’
6,1 documents, the discourse construction was based more on market aspects and
regulations. Such facts corresponded to the characteristics of the market for liquid
biofuels in Brazil, which has developed out of the 1975 PROÁLCOOL program. The US
government’s documents demonstrate a strong presence of political and geopolitical
aspects in the discourse construction. In the German case, the results indicate that
56 the discourse construction reinforces the consumer culture, which is in turn supported
by public policies that emphasize social aspects.
The results of the similarity analysis between governments using homogeneity
tests provide strong evidence for the dissimilarity of usage between the three
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governments. The results are in line with Auster and Choo (1994) regarding the
importance of the technological dimension. It has been demonstrated here that the
technological dimension is one of the main dimensions employed by governments
for the categorization of liquid biofuels, especially by the Brazilian government.
Other dimensions differ more among the countries. Therefore, we conclude that
the governments diverge in the macro-environment configuration for liquid biofuels.
In short, what emerges from the findings is that, although liquid biofuels have been a
global topic, different governments may adopt different policies and configure different
macro-environments that emphasize different dimensions.
An important theoretical contribution of this study is that all three countries have
adopted deliberate public policies and strategies to create an institutional environment
that attracts entrepreneurs and that allowed the emergence of a new industry. These
results are in line with the various recent studies that identify the relevance of the
institutional environment as an indicator of opportunities or constraints for entrepreneurial
action and the emergence of new industries (Hiatt et al., 2009; Peng et al., 2009).
Several managerial implications can also be drawn from our findings. First, the fact
that the governments of different countries stress different macro-environmental
dimensions implies that investment decisions and the expansion in the production
and use of liquid biofuels may be more or less affected by changes in the prevalent
configuration of that country’s macro-environment. For example, changes in the
economic dimension may have a greater impact on the Brazilian government’s policies
regarding biofuels than on other countries’. This country-by-country analysis of
government policies may assist in safeguarding private biofuel activities in different
countries by deploying country-specific strategies.
Second, the fact that the categorization of liquid biofuels changes from one
dimension to the other over time, e.g. the increasing relative importance of the
geopolitical dimension among the three countries analyzed, reinforces the importance
of making the environment “scanning” step a structured and continuous process. New
information can be continuously extracted from the environment and placed in the
service of the strategic plans of companies and other stakeholders.
Finally, this study demonstrated the utility of environmental “scanning” to extract
useful quantitative data from the liquid biofuel macro-environment. Research on media
coverage and private company agenda-setting practices is addressed in related study
(Talamini and Dewes, 2009). The same approach may be applied to other areas of
economic activity and may give similar insights in future studies.
This study presents certain limitations that authors may overcome in future studies.
First, the “d-words” structures can be improved to better extract the contents of
documents, especially regarding the equivalence of terms and rules in different
languages. Second, the content analysis of public policies based on the co-occurrence of
 macro-environmental dimensions used “document” as the unit of analysis. The use Scanning for
of paragraphs or sentences as units of analysis may lead to more accurate results. liquid biofuels
Third, the investigation of how biofuel production correlates to the presence
of different dimensions within public policies may reinforce the importance of the
macro-environmental scanning process.
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About the authors

Edson Talamini teaches Economics and Agribusiness Economics and Management at the
Department of Economics, Federal University of Rio Grande do Sul – UFRGS. As an Associate
Professor in the Master Program in Agribusiness of the Federal University of Grande Dourados –
UFGD, Brazil, he teaches courses in Agribusiness Analysis. He worked as a middle-manager in
an agribusiness company for a long time. His research interests include agribusiness economics
and management, social netchains studies, economic sociology, food production and marketing,
bioeconomics, biofuels and bioenergy, public policies, and text mining techniques. Edson
Talamini is the corresponding author and can be contacted at: [email protected]
Emiel F.M. Wubben has been working as an Associate Professor in Strategic Management
with the Management Studies Group, Wageningen University since October 2000. He is
responsible for the research, education and consultancy in the area of Strategic Management.
He is chairman of the research committee of the Group. For the regular programs he teaches the core
courses Advanced Management, and Case Studies Management. For the Wageningen School of
Management he taught Approaches in Strategic Management, and Management and Organization.
Antônio Domingos Padula is an Associate Professor in the Management School and Center
for Research and Studies in Agribusiness at Federal University of Rio Grande do Sul, Brazil.
He teaches courses and leads advisory activity in both undergraduate and graduate programs of
Business Administration and Agribusiness. His fields of interest in research are aligned to
production management, entrepreneurship and innovation, production strategies and industrial
competitiveness, knowledge management and innovation, agro-industrial chains, and bioenergy.
Homero Dewes is an Associate Professor in the Biophysics Department and the Center
for Research and Studies in Agribusiness, Federal University of Rio Grande do Sul, Brazil.
His research interests are related to structural analysis of proteins, biochemistry and molecular
parasitology, genesis and function of mitochondrial RNA, management and development in
biotechnology, management of international cooperation, prospective analysis and future scenarios
design, innovation and intellectual property in agribusiness, bioenergy and environmental biophysics.

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