Climate change is one of the most relevant sources of uncertainty in present times, imposing high costs on different societal actors, including firms and organizations. Here, we analyze how manufacturing firms could adapt to climate-related stressors, specifically the risk associated with precipitation anomalies faced by firms. We are interested in the strategic adaptation responses related to the water source selection and the performance impacts of these responses. Additionally, we seek to investigate the extent to which the firms' size moderates these relationships. Unlike mainstream literature in business, we frame our research within the socio-ecological system (SES) framework, thus explicitly considering the relationship between nature and firms' strategic responses. We use the Structural equation model (SEM) to analyze two strategic responses: natural-resource-intensive adaptation (water withdrawal from its source) or market adaptation (water expenditure from external sources). Contrary to other studies on climate change adaptation, our findings show that firms shift from self-sourced critical water resources to market-based solutions in response to climate anomalies.
