Deregulation, strategic choice, risk and financial performance

Abstract

This study explores the effects of regulation and deregulation on strategic choice and performance in the U.S. banking industry. Drawing on literature from strategic management, industrial organization economics, and organization theory, we develop a framework which suggests that regulatory scope and regulatory incrementalism influence strategic choice and performance. A path analytic model is used to empirically examine these influences. The results suggest that deregulation has direct effcts on firms' strategic choices and both direct and indirect effects on risk and return.Strategic management, organization theory, and industrial organization economics researchers have hypothesized that government regulation will affect strategic choice and performance (e.g. Andrews, 1971;Scherer, 1980; Ungson, James, and Spicer, 1985;Cook, et al., 1983). Despite the pervasiveness of regulation and the critical role of strategic choice in determining firm performance, the intersection of strategic choice and regulation has been largely ignored.These issues are increasing in importance because of two major trends: globalization and deregulation. As industries globalize, firms that historically competed in a particular regulatory context begin to look beyond their borders and face new competitors. Competitors that developed strategies and strategic capabilities

A theory of change in turbulent environments: the sequencing of dynamic capabilities following industry deregulation

“…For example, the theory developed here treats deregulation as a uniform environmental shock even though deregulation across industries may differ in the magnitude, scope, and speed of changes. If deregulation happens gradually over time (Ingham and Thompson 1994), then firms can develop new capabilities more incrementally relative to deregulated firms in turbulent environments (Reger, Duhaime, and Stimpert 1992).…”

“…When the regulatory body no longer dictates industry conditions, dynamic capabilities through which firms "integrate, build, and reconfigure internal and external competencies to address rapidly changing environments" (Teece, Pisano and Shuen 1997: 516) become the new source of competitive advantage. Deregulation typically involves elimination of specific regulatory controls such as market entry-and exit-restrictions, and scale and scope constraints (Reger, Duhaime and Stimpert 1992). Elimination of these restrictions creates the need for developing dynamic capabilities to cope with the drastically changed competitive environment.…”

Literature Review of Strategic Transformation—Based on the Literature Supported by the National Natural Science Fund and the National Social Science Fund of China

“…In the sample literature selected in this paper, Li Ye, Guo Jihui [24] put forward that with the eco- that the external environment not only determines the strategic transformation of enterprises, but also determines the choices of the contents and modes of enterprises and strategic transformation. When the external environment is stable, the enterprises tend to choose a gradual approach to change, once the external environment changes dramatically, it will often choose a radical revolutionary transformation [27], which in turn can affect, alter or create an external environment.…”

Ανάλυση Της Αλυσίδας Μάρκετινγκ Των Αλιευτικών Προϊόντων Στην Ελλάδα Στα Πλαίσια Της Κοινής Αλιευτικής Πολιτικής

“…Τέλος, όσον αφορά στο τρίτο επίπεδο, διάφορα χαρακτηριστικά της αγοράς (π.χ. ανταγωνισμός, θεσμικοί περιορισμοί, πολιτικές παρέμβασης) διαδραματίζουν σημαντικό ρόλο στη διαμόρφωση της απόδοσης (Reger et al 1992, Chang & Singh 2000.…”

“…Τέλος, τα αποτελέσματα της έρευνας υποστηρίζουν την άποψη των Swamidass & Newell (1987), Reger et al (1992), Katsikeas et al (1996), Vlachvei & Oustapassidis (1998), Menon et al (1999), Wang et al (2006), Devaraj et al (2006), Jimenez & Sanz-Valle (2010), οι οποίοι υποστηρίζουν ότι η συμπεριφορά των επιχειρήσεων επηρεάζεται από τη δομή της αγοράς (υπόθεση: Υ2γ) και συνεπώς και οι δύο παράγοντες έχουν σημαντική επίδραση στην επιχειρησιακή απόδοση (υπόθεση: Υ1α και Υ1γ). Παράλληλα, προκύπτει ότι η δομή της αγοράς δύναται να επηρεάσει άμεσα (υπόθεση: Υ1β) και όχι μόνο έμμεσα την επιχειρησιακή απόδοση (Newfarmer & Marsh 1981, Swamidass & Newell 1987, Terziovski et al 2003, Forsman 2004, Lee 2009).…”