Regulatory change impact on technology and associated mitigation capabilities

Abstract

Technology is a driver of survival and profit for firms. For technology to create value, it should be implemented in products, processes and infrastructure. The impact of regulatory change on technology can be significant, but this topic has been less thoroughly explored than the impact of research and development and customer demands. Hence, researchers have struggled to explain why some firms are more successful than others in responding to regulatory change. The present study examines three major regulatory changes that occurred over a 25-year period in the Swedish life insurance industry, and how each change impacted technology. From these data, a picture of mitigation capabilities relative to regulatory change emerges. The complementary mitigation capabilities stand in contrast to the previous dyadic division between ordinary (or administrative) and dynamic (entrepreneurial) capabilities. Practical advice is offered on how to achieve business benefits from regulatory changes.