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Organizations' Strategic Responses to the New Pension System: An Analysis Integrating Resource Dependence Theory and New Institutionalism.

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    • Abstract:
      A significant change in the labor institution--a brand new pension system--came into existence in Taiwan starting July 1, 2005. The pension system changed from the old system (payment from the same employer) to a new system (individual retirement accounts). Enterprises have various strategic choices in response to the new system, and their responses are closely related to the new system's performance. Organizations' strategic choices have two fundamental dimensions: cost effectiveness and institutional legitimacy. The main questions raised here are: What factors affect organizations' perceptions of cost effectiveness and institutional legitimacy regarding a specific strategic response? How do organizations compare and choose among various strategic responses? This analysis of a nationwide sample of 206 enterprises found first, that when organizations perceive more constraints from institutional pressure on their decision-making autonomy, they are more likely to pursue a more cost-effective and less legitimate strategy. Second, the analysis indicated that the determinants of a strategy's cost effectiveness and institutional legitimacy are related to Resource Dependence Theory and New Institutionalism, respectively. Finally, this study found that by referring to the fundamental dimensions and combination of an organization's strategies and by associating the choices with their respective determinants, the organization's strategic choices can be predicted. The study concludes that only by integrating the theoretical framework of institutional isomorphism with a consideration of the actors' activeness and self-interest can organizations' responses to the new pension system be understood. [ABSTRACT FROM AUTHOR]
    • Abstract:
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