A qualitative approach to organisational strategic response in the context of regulatory change

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2023-07-14

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en

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Regulatory change has become more relevant in the financial and governmental sectors in recent years. That poses a challenge for companies to best respond to regulatory changes. Additionally, institutional pressure has also increased in recent years. Consequently, this catalyses regulatory change or forces companies to respond strategically. The combination of these two developments sees companies formulating a strategic response. This strategic response can be formulated through either strategic planning or dynamic capabilities. However, this research examined whether pursuing strategic planning or dynamic capabilities leads to different organisational practices. Doing so results in a different strategic response in light of regulatory changes. Previous studies found that strategic planning is the most beneficial tool for regulatory change because of its long-term orientation, complexity-solving attributes and accountability possibilities to regulators. Simultaneously, previous studies also showed that dynamic capabilities is best suited for sudden external changes because of its flexible and personnel-focused approach allowing for quick reconfiguring of company resources. Moreover, based on previous studies, a set of strategic responses were drawn in which a status quo response would best suit the longevity of regulatory changes and the strategic planning method. Lastly, based on previous studies' commonalities between strategic planning and dynamic capabilities, this research explored whether a hybrid approach is possible. This paper examined this by conducting interviews with key informants with knowledge about the concepts and propositions stated in the research paper. Results showed that companies' preferred management approach for regulatory change is strategic planning. At the same time, dynamic capabilities is the preferred management approach by companies for sudden changes in the external environment, such as institutional pressure. Furthermore, results showed that a hybrid option between strategic planning and dynamic capabilities is achievable. Lastly, the status quo was not the preferred strategic response to regulatory change. Companies rather influence regulatory change, institutions and/or regulators through lobbying.

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Faculteit der Managementwetenschappen

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