INSTITUTIONAL INITIATIVES FOR TECHNOLOGICAL-CHANGE - FROM ISSUE INTERPRETATION TO STRATEGIC CHOICE

To test a managerial cognition model of organizational adaptation to technological change, we examine strategic responses to the introduction of electronic filing of individual income-tax returns by the U.S. Internal Revenue Service. Based on data from over four hundred tax-return preparation businesses in the United States, we analyzed the effects of issue interpretation on two dimensions of response strategy - the target (intra-organizational versus inter-organizational) and the magnitude (level of commitment). Results of structural equation analyses support the usefulness of a managerial cognition approach for explaining different response patterns to institutional initiatives for technological change. Our findings indicate that three dimensions of issue interpretation - urgency, understandability and manageability - shape the level of commitment devoted to actions designed to resolve the issue. Our results also support the sequential nature of response consideration with respect to target, namely that intra-organizational strategies were considered before inter-organizational strategies.