If it isn’t broke(n), then don’t try to fix it
Dynamics in a mature institution - A single case study of the Dutch Pension System
Master Thesis
Name: Inge Nijhuis
Student Number: 6336701 Date of Submission: 15 August 2014 Qualification: MSc Business Studies
Specialisation: Strategic Management, Institutional theory
Institution: Amsterdam Business School, University of Amsterdam Supervisor 1: Dr. Johan Lindeque
ABSTRACT
This thesis addresses the dynamics in the institutional environment of the Dutch pension system. The pension industry is changing fast and necessarily, while mature institutions like this should theoretically change incrementally.
This research challenges institutional theory by assessing the issues the Dutch pension industry is currently facing and the way the system copes with these issues. This study is performed from a sociological point of view, fitting for the social background of the Dutch pension system. The study adopts a phenomenological qualitative single case study design. Data was primarily collected through nine interviews with consultants and experts in the field of interest in order to gather rich data and meaningful insights into this particular institution. Working propositions are partially supported. Outcomes show that the structure of the Dutch pension system mainly hinders itself in changing structurally or incrementally and that the solidarity principle is both a noble cause and institutional pitfall.
ACKNOWLEDGEMENTS
I sincerely thank my supervisor, Dr. Johan Lindeque. First and foremost for his patience, his suggestions, his tips and tricks and help in general. I have learned a lot about both institutional theory and planning, thank you. I also thank my second supervisor for taking the time to review this thesis.
I would like to thank my former employer for giving me the opportunity to start and complete this study. And I thank my interviewees, who took the time to spend an hour or two with me, talking about pensions.
Last but not least, I thank my family and friends, for their everlasting support, mental coaching and putting up with my sighs and complaints. I especially thank my father, for spending so many hours reading and reviewing my work until the very last minute before the deadline.
TABLE OF CONTENTS
ABSTRACT ... 2 ACKNOWLEDGEMENTS ... 3 TABLE OF CONTENTS ... 4 INTRODUCTION ... 6 LITERATURE REVIEW ... 9 Institutional Theory ... 9 Institutional Behaviour ... 11 Institutional Environment ... 13 Institutional Change ... 14 CONCEPTUAL MODEL... 18 Institutional Theory ... 18 Institutional Behaviour ... 19 Institutional Environment ... 20 Institutional Change ... 20 RESEARCH DESIGN ... 23 Research Philosophy ... 23Single Case Study Design ... 24
Qualitative Quality Criteria ... 25
The Case ... 26 RESEARCH METHOD ... 30 Semi-Structured Interviews ... 30 Secondary data ... 33 Interviewees ... 33 Analytical Strategy ... 35 FINDINGS ... 36 Institutional Theory ... 36
Institutional Behaviour ... 37
Institutional Environment ... 39
Institutional Change ... 40
Institutions and Institutional Behaviour ... 42
Institutions and Institutional Change ... 43
DISCUSSION... 44 Institutional Theory ... 44 Institutional Behaviour ... 45 Institutional Environment ... 46 Institutional Change ... 47 CONCLUSION ... 48 LIMITATIONS ... 50
IMPLICATIONS AND FUTURE RESEARCH ... 50
REFERENCES ... 51
INTRODUCTION
This study concentrates on the Dutch pension industry as a mature institution. The industry was founded over 50 years ago with set rules and regulations based upon the perspectives and ideals of the Dutch welfare state. The organizational field incorporates many field players, which is a result of the socio-economic nature of the institution and socio-political nature of the Netherlands. The Mercer and the Melbourne Centre for Financial Studies has praised the elaborate Dutch pension system to be the best in the world (2011, p.18). It was announced to be the best in the world for the third year in a row in 2011; however it dropped to the second place in 2012 and, though it maintains its second position in 2013, the grades keep going downwards1. This trend has resulted in sudden reforms and ongoing propositions by the government, in order to restore the once stable pension system.
This research focuses on seeking to understand what caused a mature institution like the Dutch pension industry to find itself in a downwards spiral and subject to forced financial measures, while the environmental changes it faces appear to be gradual and well known. The statistical facts indicate a necessity for constant gradual change in order to keep the institution stable and intact. Conceptually a mature institution like this should be a school example of gradual institutional change, but the reality is now the exact opposite.
Even though the economic perspective on this subject is clear, something may also be said for a more sociological than economic approach to the issues at hand. Neoclassical institutionalists like Beckert (2010) and Scott (2008) emphasize the social aspects of institutional and organizational phenomena. Beckert’s (2010, p.605) literature review of former research shows that “three types of social forces have been identified as being relevant in explaining economic outcomes: social networks, institutions, and cognitive frames (Dobbin 2004; Fligstein and Dauter 2007; Fourcade 2007; Beckert
1
Source: Melbourne Mercer Global Pension Index 2011, 2012 and 2013. Comparison of 16 to 20 national pension systems, covering more than half of the world population. The index is based on more than 40 desired characteristics divided into three (weighed) groups: adequacy, sustainability and integrity.
2009)”. The Dutch pension industry leans heavily on social constructs and comprehends an impressive network of relevant field players. Furthermore, organizations in institutional environments seek support by adapting to the socially constructed rules (Pfeffer and Salancik, 1978; Orru, Biggart and Hamilton, 1991). Therefore it makes sense to adopt a sociological approach like Scott’s (2008) and Beckert’s (2010) in this study.
Institutional change seems to be a tricky subject to tackle. Neo-institutional theory has not yet succeeded in addressing institutional change properly (DiMaggio, 1988; Brint and Karabel, 1991; Hirsch, 1997; Hirsch and Lounsbury, 1997). Even though institutional change is a fairly hot topic in recent theorizing (e.g. Lee, Peng & Barney, 2007; Luo, 2005; Gordon and Urwin, 2009), empirical studies remain are needed (Dacin, Goodstein & Scott; 2002). This study aims to add new insights to the literature about the dynamics of institutional change in mature institutional environments that are subject to a need for change, specifically the Dutch pension industry. It seeks to understand why the need for change was not acted upon at an earlier stage. This gap in current empirical research is addressed by generating findings through semi-structured interviews with consultants and experts in this field. The results add to the key players’ understanding as to why change is necessary and how change may be implemented in an earlier stage in order to minimize risks and to avoid heavy reforms.
This thesis is consequently built up using four themes: institutional theory, institutional behavior, institutional environment and institutional change. The Literature Review of institutional theory is reviewed in order to examine appropriate literature and to define a possible gap. The Conceptual Model applies the literature to the business case, by forming working propositions. The Research Design reveals the researchers philosophy and case description. The design is followed by the Research Method, in which the interviews and selection of interviewees are accounted for. After the research section, the Findings from the interviews are worked out and presented after careful analysis of the transcripts. The working propositions are tested against the findings in the Discussion
chapter. After the discussion a concise Conclusion of this research follows. Finally, Implications, Limitations and Recommendations are discussed.
LITERATURE REVIEW
Institutional Theory
Institutions are commonly known as the “rules of the game”. More formally however, institutions are defined as “the humanly devised constraints that structure political, economic and social interaction” by economist North (1991, p.97) or “regulative, normative, and cognitive structures and activities that provide stability and meaning to social behaviour” by Scott (2008, p.48.).
Institutions are considered to be stable systems and by definition resistant to change (Zucker, 1977; DiMaggio and Powell, 1983; Jepperson, 1991; Scott, 2008). Theoretically, institutions change either incrementally or radically, following gradual changes or disruptive changes in the environment respectively (Scott, 2003). A changing environment implies a necessity to adapt accordingly, in order to keep up with the market. The ability to adjust to change is essential for surviving in a dynamic environment; however the set rules and assumptions may lead to inertia and the impossibility to change for institutions (Hannan and Freeman, 1984).
Traditionally, institutions are described as a system of formal rules and set regulations in which individual players act (North, 1991). Organizations are considered ‘rationalized’ systems, or collections of roles and activities intended to reach specified goals and such highly standardized environments of rationalized norms and rules are argued to inevitably lead to bureaucratization of civilization (Weber, 1968), referred to as “the iron cage” by DiMaggio and Powell (1983). This purely economic perspective views the marketplace as a system in which individual field players act in their quest to generate individual success, with solely formal rules to make up the boundaries of what is acceptable and when punishment should be enacted.
From the late ‘60s onwards however, researchers started to realize that models of rationality are systems (Scott, 1987). DiMaggio and Powell (1983) for example argued that the bureaucratization of organizations is a result of the need for support and legitimacy, resulting in their conformity to the institution around their organizational field by playing by or adapting to the socially constructed and
accepted rules respectively. Even though North (1990) emphasizes the economic nature of (formal) institutions, he also acknowledges the informal rules or “unwritten codes of conduct”. North (1990, p.91) proposes that “the major role of institutions in a society is to reduce uncertainty by establishing a stable (but not necessarily efficient) structure to human interaction” (p.6). Oliver (1997) agrees and takes the informal perspective a bit further by stating arguing that the formal and informal restrictions of a given framework affect any strategic choice that organisations make. Institutional frameworks therefore are important to and interact with organizations as they legitimize and support choices made by decision makers of organizations, thus reducing uncertainty. In short: “Broadly speaking, institutions reduce uncertainty for different actors by conditioning the ruling norms of behaviours and defining the boundaries of what is legitimate. Actors, in turn, rationally pursue their interests and make choices within a given institutional framework” (Peng et al., p.66). The social environment (that defines the set of informal rules) is of great influence on the functioning of institutions and the reprimanding of violations, especially in organizations that operationalize the institution, like pension systems that lean heavily on social norms and values. Early sociologists (Weber, 1924; Selznick, 1949) used this view on organizations to conclude that institutions then must be seen as “normative structures providing a moral framework for the conduct of social life” (Scott 2003, p. 136). Behaviour is therefore believed to be constructed from what is morally or socially acceptable, which is socially constructed by common values within a population. Scott (2001) argues that institutional frameworks create stability and give meaning to social life through cultural-cognitive, normative and regulative elements. In accordance with Scott (1993), this research is based on the belief that social life is only possible thanks to a collectively built framework, in order to support the same goals. The process by which actions are repeated and given similar meaning by self and others is defined as institutionalization. It is the process by which social reality is constructed. This view takes the micro level organizational view towards a new level by claiming that institutionalization is in fact a framework or system of collective shared beliefs and meanings, instead
of just referring to individual mental constructs. This angle was adopted by several authors; Meyer (1977) additionally concludes that such behaviours are more socially constructed instead of socially influenced. Meyer and Rowan (1977.) interpreted that the sociological perception means that institutions cause everything to take on a rule like status. What these statements have in common is that they interpret institutionalization as a social process that people commonly then accept and interpret as the social reality. In short, Scott put it simply as “the way things are (to be done)”, i.e. ‘everything is taken for granted’ (1987, p.496). When we apply this theory to the Dutch pension system, we see clear references to the sociological perspective on institutions. The rules and regulations on which the Dutch pension system functions are set and derived from the social ideals of the welfare state, which implies a direct connection between many field players like unions, government and pension administrators. The (Dutch) pension system is a researched topic, but even from a strategic point of view it focuses on the content matter, e.g. (the diversification of) pension schemes or plans and retirement age. From a socio-economic point of view it usually focuses on the quality of life and the equality of pension distribution. A conceptual point of view seems to be missing or understudied, while the concept of institutionalization appears to be of major influence on how the pension system acts.
Institutional Behaviour
After the focus from institutionalization processes was diverted, researchers started to define multiple institutional environments (DiMaggio and Powell, 1983; Meyer and Scott, 1983) as more recent theory suggested that institutional sources and belief systems were in fact multiple and diverse. Organizational field is defined as the collection of “those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and product consumers, regulatory agencies, and other organizations that produce similar services or products” (DiMaggio 1982, p. 148). DiMaggio goes on by introducing the trend of ‘isomorphism’ by explaining that “once a field becomes well established […] there is an inexorable push towards homogenization”. The reason why organizations adjust their structures to conform to an institutional
pattern (isomorphism) has been said to be competition in the market place and the need for efficiency (or bureaucratization) by early institutional theorists like Weber (1968). Hawley (1969) claimed that isomorphism was not so much of a choice, as actors are forced to behave like other actors because they ‘face the same set of environmental conditions’. A logical conclusion might then also be that organizations do not really have a choice in how to behave, as not conforming to the isomorphic pattern in the institution will lead to the loss of social support and justification for their behaviour. DiMaggio and Powell (1983) let go of the idea that institutionalization is a process in itself and that the model that organizations conform to is ‘taken for granted’ by defining coercive, mimetic (where organizations model themselves on other organizations), and normative processes that lead organizations to conformity instead of institutionalization in itself. DiMaggio and Powell (1983, p.150) conclude that “coercive isomorphism results from both formal and informal pressures exerted on organizations by other organizations upon which they are dependent and by cultural expectations in the society within which organizations function”. This means that organizational behaviour is a direct response to for example government mandates. In the case of a pension industry not so strange as, from a sociological point of view, the government and organizations operate together and influence each other as they serve the same cause. The key remains to explain in what way they influence each other in a changing environment, leading to economic output. DiMaggio and Powell (1983, p.150) discuss interdependent organizations that “seek to use the greater power of the larger social system and its government to eliminate difficulties or provide for needs” according to Pfeffer and Salancik (1978). They argue that “politically constructed environments” have two characteristic features: “political decision makers often do not experience directly the consequences of their actions” and “political decisions are applied across the board to entire classes of organizations, thus making such decisions less adaptive and less flexible". These assumptions might explain partly why the institutional environment is such a hard place to implement change. With the results of this study an attempt will be made to try and understand if the field players have no other option than to
conform to the institution and whether that might be a reason for a less adaptive and less flexible mechanism.
Institutional Environment
Dill (1958, p. 410) already argued that “no organization is self-sufficient: all must enter into exchanges with the environment”. Major issues were considered to be the dependency and uncertainty of the environment. Many studies (e.g. Pfeffer and Salancik, 1978; Meyer and Rowan, 1977) have been done to explain the complexity of the environment in order to define the degree of problems organizations face, in order to find out what strategies organizations should use coping with these problems. The differentiated nature of organizations in the same environment makes it harder to make comparisons and assess the environment.
In order to understand the ‘environment’ as a concept in this context, Scott’s (2003) analysis helps to explain how organizations are affected by and affect their environment. According to Scott (2003), the analysis of an organization’s environment may be divided in three levels: organizational sets, organizational populations, and interorganizational communities and organizational fields. As the interest of this study lies in the interconnectedness of organizations and the influence of the changing environment, the more individual approaches of the organizational set and populations are less relevant.
Interorganizational Communities and Organizational Fields focus on “collections of diverse types of organizations engaged in competitive and cooperative relations” or the “interorganizational community”. Where previous researchers focus mainly on a literal definition of environment, focusing on functional ties (functional interdependence) or shared locality (geographically), DiMaggio and Powell (1983, p.148) defined the organizational field as “those organizations that, in the aggregate, constitute a recognized area of institutional life: key suppliers, resource and produce consumers, regulatory agencies, and other organizations that produce similar services and products”. In this level of analysis, organizations are considered part of a bigger picture or overarching system in
which the field players have ‘something’ in common, while they may be exhibiting completely different structures. This level of analysis provides researchers with the opportunity to analyze the relations and coevolution between both similar and different types of organizations. “In this sense, it provides a basis for integrating previous approaches and supports efforts to examine not only the effects of wider structures and processes on populations, sets, and organizations but also the ways in which individual organizations and their participants can influence their environment” (Scott, 2003, p.131). Through exploring the interorganizational community and its underlying organizational fields, “a system of organizations operating in the same realm as defined by both relational linkages and shared cultural rules and meaning systems” is isolated for analysis (Scott 2003, p.130). The outcome of this analysis may then lay bare the reasons for the issues troubling the Dutch pension system, as this system maps the complex web of relational linkages. By revealing these connections and their individual roles in this system, it may also shed light on the possible influence organizations have on their environment.
Beckert´s (2010) quest for defining how organizational fields change builds on Scott´s perspective, arguing that interrelations are a key source of market dynamics. Networks, institutions and cognitive frames should be considered together, and their interrelations may be seen as sources of field dynamics. It is therefore key to find out if this theory is applicable to the Dutch pension system, in order to determine whether the field dynamics influence this environment and whether this might have an effect on the ability to change.
Institutional Change
Institutions are by definition durable social constructs (Scott, 2008) that are maintained and reproduced (Zucker, 1977) and relatively resistant to change (Jepperson, 1991; Berger and Luckmann, 1967). Scott (2008) reasons that the institution’s fundamental regulative and normative elements naturally cause resistance to change. The urge for legitimacy has increasingly focused on increasing homogeneity or isomorphism (Kraatz and Zajac, 1996), which has fed the idea that stability and inertia are key when defining institutions (DiMaggio, 1995; Greenwood and Hinings,
1996), indicating that even though institutions functionally provide order and stability, they undergo change.
As stated in the introduction, the lack of addressing the concept of change is a persistent criticism of neo-institutional theory and, as current affairs have shown, there is a crucial necessity to explore the subject further. Scott (2003) argues that the organizational field should not be seen as a ‘static’ entity, but as an evolving and dynamic environment where particular organizations or populations enter and exit. Alteration of the interaction patterns and power balances among them (Brint and Karabel, 1991; Greenwood and Hinings, 1996) are also causes of dynamics. Dynamism would seem a healthy asset for a rigid and ‘isomorphic prone’ environment, in order to prevent inertia. Greenwood, Suddaby and Hinings (2002, p.58) state that “although institutionalists recognize and seek to understand change (e,g., Creenwood and Hinings, 1993; Hoffman, 1999), most existing studies are of the processes of institutionalization, not of deinstitutionalization and reinstitutionalization”. Furthermore, they express their wish to explore the role of professional associations (Greenwood, Suddaby and Hinings (2002), because although these are usually represented as important regulatory mechanisms, by for example DiMaggio and Powell (1983) and Ruef and Scott (1998), empirically they have been relatively neglected according to Maijor and Van Witteloovuijn (1996) and Van Hoy (1993).
Many authors do acknowledge two kinds of institutional change: radical and incremental. Radical change has been well described, by for example Romanelli and Tushman (1994), who state that organizations are typically transformed through short bursts of change, following a longer period of stability. Hannigan (1999, p.64) defines more detailed types of disruptive events that can cause change: "milestones (e.g., Earth Day, the Rio Summit); catastrophes (e.g., oil spills, nuclear accidents, toxic fires); and legal/administrative happenings (e.g., parliamentary hearings, trials, release of environmental white papers)". Hoffman (1999, p.366) takes on an economic perspective by arguing that “change can emerge suddenly and unpredictably, thrusting institutional players into periods of
revolution. At these moments, institutional entrepreneurs can be both strategic and opportunistic; taking advantage of the uncertainty in the institutional order they seek to change. These entrepreneurs cannot construct the institutional order, but they can influence its ultimate design through participation in the institutional negotiation process that occurs during periods of revolution". Economist North (1990, p.89) also explains a radical or discontinuous change as a "radical change in the formal rules, usually as a result of conquest or revolution". He does also acknowledge incremental change; however his focus is on contract theory, stating that "the parties to exchange recontract to capture some of the potential gains from trade" (p.89) where "the key to continuous incremental changes is institutional contexts that make possible new bargains and compromises between the players. Political institutions (both formal and informal) can provide a hospitable framework for evolutionary change" (p.89/90).
The problem with the described theory is that they either focus on de- or reinstitutionalization or on ecological and political changes as major trigger. This might be true from an economic perspective, where organizations and their individual goals are key players, but neglects an institution that was set up as a social network opposed to an economic entity.
Scott (2003, p.220) defines the difference between incremental and radical change from a sociological perspective and translates it to the need for institutions to change. He states that change is deemed inevitable for an organization within any organizational field, and to study change at any level one needs to consider “the relative importance of two types of change mechanisms: adaptation and selection”. “Adaptation refers to incremental change in a given system, often assuming conscious, rational choice and learning from one’s own or other’s experiences” Scott (2003, p.220). On the other hand, “selection refers to change processes by which a given system is replaced by a different one” Scott (2003, p.220). From this, one may conclude that adaptation focuses on the (improvement of) internal processes and selection emphasizes the importance of context (or environment), resulting in a focus on unexpected of unconscious processes (or changes).
“Probably the single best indicator of an organization’s ability to adapt successfully to its environment is its continued existence – its survival.” (Scott 2003, p.222)
An interpretation of Scott’s theory could suggest that the need for change is inevitable for organizations that cope with any environment, whether it changes incrementally, radically or both.
CONCEPTUAL MODEL
This research focuses on the question why the Dutch pension system failed to anticipate actions for incremental and predictable change in a mature institutional environment. The literature review provides this research with four main areas of interest concerning institutions: (general) institutional theory, institutional behaviour, institutional environment and institutional change. These four themes will be represented in both the conceptual model and the analysis in order to answer the main research question. To aid in structuring this research, working propositions are introduced per theme.
Institutional Theory
In a way, people or organizations create their own institutions in which they apply rules, norms and behaviour that they constructed and enact on themselves. Institutions are viewed as socially constructed systems, where different (key-) players have different roles within the respective interorganizational community or organizational field.
Theoretically, the Dutch pension system in itself should be considered a stable and mature institution. The current three-tier system was designed to provide an income for people that were no longer deemed to be able to contribute to the production process after a certain age and to prevent poverty amongst the elderly. The system has existed for over 60 years and may be considered as the accepted ‘social reality’. Dutch citizens count on and feel entitled to receiving a retirement income when they turn 65, because that is the way pension ‘works’ in the Netherlands and that is what they have grown accustomed to and expect. More than 90% of the working population builds up additional retirement income through the second tier retirement income. This additional employee benefit, where employers make (partial) contributions in favour of their future retirement income, is not necessarily taken for granted, but is nowadays assumed to be part of an employment contract. The third tier is the least popular pillar, perhaps due to the individual aspect or the confidence that the first two tiers will suffice.
To protect (the stability of) the system, rules and regulations that organisations have to meet have been developed. Regulatory authorities make sure that organisations act in the best interest of the public, keeping in mind that the system was designed to benefit society. When rules are violated, these authorities will reprimand the responsible organisation. This application of general institutional theory leads to the following working propositions:
WP 1a. The Dutch pension system is expected to be a stable and mature institution
WP 1b. The social environment is expected to be of great influence on the functioning of the Dutch pension system
Institutional Behaviour
Homogenization amongst organizations in the same institutional field is the result of the need of organizations to find legitimacy and social support. Through conforming to the set rules of the game, organizations start to ‘look alike’. This phenomenon, isomorphism, is believed to be inevitable as organizations in the same field are faced with the same set of conditions.
Organizations in the Dutch pension system are forced to behave alike due to the law. The hang for isomorphism is clear, as all organizations serve the same cause and abide under the same regulations. This ‘coercive’ isomorphism could be seen as inherent to a politically constructed environment, where bureaucratization is an inevitable result of the complexity of the system, the involvement of the many field players and the strict rules and regulations.
The level of analysis of most interest to this study is the interorganizational community with its organizational fields. This level is suited to study the collaboration of organizations that together survive in a shared, regulated and socially constructed environment (Astley and Van de Ven, 1983). These players are linked through direct and indirect linkages, operating (together) under the same conditions and rules of the game, exhibiting a high degree of isomorphism. The institution reduces uncertainty for field players and justifies their actions when coping with the uncertainty and volatility of the environment they operate in.
WP 2a. Due to the politically constructed Dutch pension system, coercive isomorphism is expected
WP 2b. The organizations that operationalize the Dutch pension system are expected to influence each other or the system
WP 2c. Due to the political environment, decision-making in organizations operating the Dutch pension system is expected to be inflexible
Institutional Environment
The struggle of organizations to cope with their dependency of and the uncertainty of environment is well documented. The highly regulated environment of the pension system in the Netherlands leaves organizations no choice but to operate in a certain way by law. Any organization that does not comply with the laws the environment entails therefore loses legitimacy literally, resulting in disciplinary measures. The complexity of the system proposes a challenge in power distributions and decision-making.
Even though (mature) institutions are considered to be stable and robust, they too are affected by changes in their environment. Pension systems are vulnerable to changes in the financial environment, due to their dependence on a stable economy. Also, the system is heavily dependent demographically on the national life expectancy and changes in the work force.
Mature institutions provide stability and meaning to social life. Any disturbance in this stable environment would therefore theoretically lead to a changed status quo and might then lead to panic or a crisis, because ‘life as we know it’ is disrupted.
WP 3a. The interorganizational communities are expected to be of influence of the environment
WP 3b. A crisis in the Dutch pension system is expected to cause a panic in the social environment
Institutional Change
Changes in the environment trigger changes within an institution, or in other words; changing circumstances may force organizations to change. Change has been the topic of more recent work of
institutional theorists. The focus is more on the processes that form or change an institution, than the structure and origin itself. Different authors conclude there are two kinds of change; incremental and radical change. Incremental change occurs slowly or gradually, following for example demographic trends, while radical change is the result of a disruptive event like a natural disaster or an innovation that changes an entire market. The subject of change is an interesting one, as (mature) institutions are assumed to be resistant to change by definition, while a changing environment is inevitable. In the pension world, the change characteristics differ per tier. The first tier is dependent on demographic and socio-economic changes that would lead to theoretically incremental and expected changes. The main issues that the first tier is concerned with are the longevity of the population and the capability of the work force to cover the costs of the PAYG system. The second tier is also confronted with demographic changes, but also heavily affected by changes in the financial world due to their dependency on investments. These changes seem much more radical than demographic changes for example. The individual schemes in the third tier fight the same issues as the second tier.
Coping with and responding strategically to change is tricky business. As Scott (1993) said, survival is probably the best indicator of an organization’s ability to adapt to a changing environment. The pension system is robust, but is now starting to show cracks due to demographic, socio-economic and financial changes. The ability to adapt to the changing environment would seem crucial, while the ability to change in itself is a challenge at the same time. Having said all this; breaking the pattern of inertia and incapability or resistance to change, which is the undeniable result of this particular institutional environment, seems to be the first step in surviving a changing environment.
Although there has been more and more research about how institutions change and what implications that brings for organizations, empirical research findings are still rare. Linkages to institutional theory or socio-economic perspectives in order to discover the process that forms and changes national institutions seem to be missing or scarce. Atchley (1982, p.264) describes
retirement as a social institution, arguing, “Retirement policies reflect prevalent beliefs and social ideologies and result from an interplay among various interest groups-management, labour, government, and organizations of retired persons”. This implies that the corresponding institution would have to be seen as a socially interconnected system. He argues that, when we view retirement as an institution, the subject “is general enough to illustrate social processes at work at the societal level yet specific enough that the researcher need not get lost in a maze of interconnected detail”. With that argument, he focuses on the development of the concept of retirement and attributes it, like many historical institutionalists to path-dependence, consciously leaving out the interconnected detail that is of such crucial essence to understanding how an institution changes.
This study focuses on the interorganizational community of the Dutch pension system as a mature social institution. The focus is on the effect of the interconnectedness between organizations within this institution on the ability to change and the nature of the changes itself. The main question, which needs to be answered, is how a mature institution is unable to adjust to gradual and expected changes in its environment, turning incremental change into radical change. By answering this question, important findings may add to the current understanding of change processes in complex institutional environments.
WP 4a: The Dutch pension system is expected to be resistant to change and to show no dynamism
WP 4b. The sociological background of the Dutch pension system is expected to negatively influence the ability to change
RESEARCH DESIGN
The goal of this research is to find out how the Dutch pension industry responds to a changing environment and to help explain why these changes were not anticipated. The results of this research aim to answer crucial questions about the current issues that the Dutch pension system struggles with and how these issues may be prevented from happening again in the future. Gaps between theory and reality have been identified, as the answers to the questions are not found in the existing literature and empirical data seems to be missing. Even though many studies on pension systems and reports2 varying from national to European to global scale are available, this documentation focuses on consequences and probable solutions. These are of course important topics to research and helpful to ‘fixing’ the system, but do not address the processes that led to the situation the system is in now. Answering the ‘how’ and ‘why’ should lead to a better understanding of the processes that shape and influence institutions coping with dynamic environments, reducing the risk of these events from happening again (in this order of size). This quest to answer those issues mainly results in an inductive approach. The research is focused on a phenomenon, change in an institutional field. Current institutional theory is assessed to understand and test the basic principles of the subject matter.
Research Philosophy
Any kind of research is done to find out what ‘reality’ and answer questions about the world around us (Remenyi, 2002). Ontology and epistemology refer to the researcher’s view on truth, knowledge and reality (Saunders et al, 2009). It reflects the way the researcher sees the world or what is reality. Epistemology is concerned with the nature of knowledge; i.e. is the ‘truth’ objective or subjective? ‘Objective truth’ may be investigated directly or measured, while ‘subjective truth’ leads to
2
See for example Melbourne Mercer Global Pension Index, Australian Centre for Financial Studies, October 2012; Netspar (Network for Studies on Pensions, Aging and Retirement), Annual Report 2012 Europe; Global Financial Stability Report, World Economic and Financial Surveys International Monetary Fund, April 2012; Houdbaarheidseffect sociaal akkoord AOW, witteveenkader envitaliteitspakket, Centraal Plan Bureau, December 2011.
qualitative investigation or interpretations of people’s perceptions (Greener, 2008). Ontology reflects the ‘way the world works’ (Saunders et al, 2009) in the eyes of the researchers, and is again divided in two main streams. On the one hand, the objective perspective states that ‘social entities exist independent of social actors’, e.g. ‘teams’ as an entity exist irrespective of team members (Greener, 2008). On the other hand, the subjective stream is engrafted on the idea that reality is socially constructed; through the meaning that people give to entities (Saunders et al, 2009). E.g. teams only exist when team members interact and then have a concept of ‘team’ (Greener, 2008).
The researcher’s philosophy determines the research strategy. The subjective ground on which this work is based leads to an ‘interpretivistic’ perspective. Saunders et al. (2009, p.106) describe interpretivism as an “understanding of the differences of humans in our role as social actors”. The subjective grounds make it necessary to understand organizations through perceptions of people about those organizations (Burrell and Morgan 1977) as these people have socially constructed the pension system as their ‘reality’, in which actors all fulfill their specific role and each have their own stakes. An interpretive paradigm uses a qualitative research method in order to “investigate perceptions and constructions of reality by ‘actors’ in organizations” (Greener, 2008). Opinions lay the foundation of the research results and analysis of these opinions will reveal how ‘reality’ is constructed. Common research methods for this kind of qualitative research are discourse analysis and (semi) unstructured interviews.
Single Case Study Design
Case studies are most prone to answer ‘how’ and ‘why’ questions (Yin, 1994). Qualitative research is aimed at generating new hypotheses and theories as opposed to testing hypotheses and evaluating theories in quantitative research. Single or multiple case studies are an often used method or strategy in qualitative research in unknown territories. As current theory lacks in explaining the phenomenon that is topic of this research, theory can possibly be built by studying this ‘case’ in an attempt to explain the state of affairs and a thorough exploration of the topic. According to Eisenhardt (1989), case studies’ strength is to generate novel theory. A rich understanding of the
subject is necessary to create an insight in to how and why institutions change, specifically applied to the situation the Dutch pension system is in today. This phenomenon cannot be studied theoretically or statistically, leading to a qualitative research in order to answer the crucial ‘how’ and ‘why’ questions. Qualitative data’s ability to reveal the workings of complex social processes (Eisenhardt and Graebner, 2007) cannot be matched by statistical outcomes of quantitative data due to the nature of this research. This methodology is fit to reach a thorough understanding of one or multiple cases (Hagan, 2006) and is inductive by character (Woodside and Wilson, 2003). According to Yin (2003, p.13), “a case study is an empirical enquiry that investigates a contemporary phenomenon within its real-life context”.
This research is a single case study where the (changing) Dutch pension system is the ‘case’. The Dutch pension system is pretty much unique, while the challenges it faces are threatening other (European) systems as well3. But in order to draw conclusions and realize sufficient depth for this specific phenomenon, it is relevant to focus only on the Dutch system.
Qualitative Quality Criteria
The discussion about the actual quality of qualitative research seems endless. The main criticism concerning case studies is that there might not be enough ground for generalization (Yin, 2003). Tracy (2010) argues that generalizability in the ‘formal’ or quantitative sense of the word is not applicable or helpful to qualitative research, as in-depth findings gathered from qualitative research methods contrasts with random samples resulting in data that is isolated from any context. Bryman (1988) also concludes that isolation from any kind of context results in less rigorous case studies. Yin (2003) argues that a difference must be made between different kinds of generalization, as the goal of case studies is to “generalize theories (analytical generalization) and not to enumerate frequencies (statistical generalization)" (p.10).
3
See Global Financial Stability Report, World Economic and Financial Surveys International Monetary Fund, April 2012 Table 4.2. Longevity Risk and Fiscal Challenges in Selected Countries
Qualitative research does not lend itself for quantitative standards like validity and reliability (Remenyi, 2002). In order to legitimize results of qualitative research, many propositions have been made by many authors (e.g. Bochner, 2000; Creswell, 2007; Denzin and Lincoln, 2005). Marshall and Rossman (1999) argue that reliability in the quantitative sense of the word in not applicable to qualitative research, as the focus is not on whether another researcher would produce the same results, but intends to explore complex and dynamic settings which essentially conflicts with standardized data gathering. In essence, the reliability of data gathered from interviews all comes down to the possibility of bias (Saunders et al., 2009). All preparation, selection and execution should done in a way to rule out bias as much as possible, in this case on both interviewer and interviewee side.
The Case
After its 50 years of stable existence, the Dutch system is now facing heavy and apparently unanticipated reforms. Pensions are being cut4, the age of eligibility5 is increased and contributions are raised in order to keep up with the (demographic and economic) changes that the system is facing. The measures are broadcast widely across media and most news-websites or pension related websites, like FD.nl and pensioenfederatie.nl respectively, maintain a file on current events concerning the situation. The pay-as-you-go system is expected to become too expensive because of the increasing number of retired people that live longer and thus have to be supported longer by the diminishing working population. Together with the financial crisis, this results into the inability of the majority of pension funds to comply with the legally required solvency rate of 105% (Figure 1).
4
Actual coverage rates and pension cuts can be found on: http://www.pensioenfederatie.nl/services/kerncijfers/pages/default.aspx. See References for full reference.
5
See for example: http://www.rijksoverheid.nl/onderwerpen/pensioen/nieuws/2009/05/11/donner-over-verhoging-aow-leeftijd-de-verzorgingsstaat-drijvend-houden.html. See References for full reference.
Figure 1. Development of the average solvency rate in percentage throughout 2007 – 2013.6
Having said this, the demographic change of ageing and a higher life expectancy is assumed to be expected, forecasted and anticipated. The statistics of the Dutch Central Bureau of Statistics show that life expectancy has grown from 14,4 years to 18 years for 65 year old men and 14,9 to 21,2 years for 65 year old women over the last 60 years, while the growth of the workforce is declining from 15% to 3% (Figure 2).
Figure 2. Development of the workforce7 and longevity Dutch population aged 65 (1980 – 2010) 8
6
Source: http://www.nu.nl/economie/2861128/vijf-vragen-dekkingsgraad-pensioenfondsen.html. See References for full reference. 0% 2% 4% 6% 8% 10% 12% 14% 16% 1980 1990 2000 2010 2020
Growth life expectancy Growth Male and Female Labour Force
The graph clearly shows the decline in growth rates of the work force and the reasonably steady growth of average life expectancy9 over the past four decades.
Using Scott’s interorganizational community analysis (2000, p.34), the Dutch pension system can be presented as an environment in which many organizations operate and influence each other.
Pension Administrator Government Pension Fund Employers Participants Pensioners SVB Tax Authority AFM AFM DNB DNB Social Partners Social Partners
Figure 3 The interorganizational community
Figure 3 displays the interorganizational community that the pension system encompasses. Each organization has its own function, relating to one or more tiers. The AOW premiums (first tier) are collected by the national tax authority and are paid for by income taxes, based on the PAYG system. 7Labour force as defined by the CBS: All persons (15 to 65 years old) who work at least twelve hours a week or have accepted a twelve hour workweek or declare to be available for work at least twelve hours a week and are actively trying to find work for at least for at least twelve hours per week.
8
Averaged statistics from CBS, publicly available via www.cbs.nl. [accessed May 19th, 2013]
9 Closer analysis of these statistics shows a difference between male and female participation, work force and
The Sociale Verzekeringsbank (SVB) administrates the basic pension income of those who are retired. The government dictates rules and regulations to both pension funds and pension administrators, who service the second tier. The pension administrator manages (future) supplementary retirement incomes by investing contributions of participants and pensioners according to the pension schemes that funds offer. These pension schemes are agreements between the funds and their clients, the employers. The employer then offers this scheme to its employee. The laws and regulations to which funds and administrators must comply are not conceptualized by the government only, but are the result of the democratic processes that are prescribed by the Dutch constitution. This means that employee and employer unions (social partners) may influence laws and bylaws by representing their followers’ stakes in social agreements. Employers and employees also manage pension funds, which’s board is occupied by employers and employees or representatives of unions.
The government entrusts the Autoriteit Financiële Markten (AFM10; Authority Financial Markets) and the Dutch Central Bank (DNB; ‘De Nederlandsche Bank’) to supervise whether pension administrators treat their clients with integrity and act transparent and supervise whether administrators conform to their duty to work on a stable financial system and act correctly on their (financial) obligations respectively. The rules of the game are thus set by the government, pension funds, employers and participants (through unions) and administrators. As may be concluded, the organizational field of the Dutch pension system is a complicated (social) network of many actors with different stakes.
Figure 3 also displays that this particular interorganizational community is a complex collection of diverse types of organizations engaged in competitive, cooperative and coercive relations. All
10
“The information provided by financial undertakings and pension administrators has to be factually correct, understandable and not misleading.” Source: http://www.afm.nl/en/over-afm.aspx. See references for full reference.
organizations are in some way dependent on or connected to each other and deal with their individual organizational fields and sets.
RESEARCH METHOD
Phenomenological research surpasses the sometimes too theoretic take on events that could neglects interesting details about the (yet undescribed) phenomenon at hand (Hambrick, 2007). Case studies allow for more ‘creative’ research designs to enter the academic world. Case studies are sometimes defined as a research strategy as opposed to a research method (e.g. Hartley 2004, p.323; Titscher et al. 2000, p.43), because many different methods may be used within a case study (Rowley, 2002; Yin, 2003). This type of research does however require a systematic approach in order to conduct research that enables researchers to “distinguish aspects of the phenomenon, propose and select theories” (Von Krogh 2012, p.292).
Semi-Structured Interviews
According to Rowley (2002), data collection for exploratory case study research strategies is typically done by investigating documents, interviews and observation. Even though the sample is usually much smaller than with for example surveys, the extent of detail in the information gathered is much higher, due to the research method. Semi-structured interviews or qualitative research interviews (King, 2004), are based on a set of themes and certain questions to be answered, varying per interview (Saunders et al., 2009). Semi-structured interviews therefore offer the opportunity for the researcher to collect a substantial amount of data that zooms in on the subject matter.
This research is done by interviewing in a semi-structured way, allowing the interviewees to discuss their take on ‘reality’ freely with the researcher. The interviews are sound recorded, after permission is granted by the interviewee. The interviewees are made aware of the possibility that their contribution may be done anonymously. The sound recordings are afterwards transcribed by the researcher, coded and analyzed in order to draw conclusions appropriate for this research.
The four main recurring themes will be addressed and linked to the working propositions. The researcher asks all interviewees one question to start their conversation, but keeps the other questions from the conceptual model (see below) in the back of her mind in order to make sure all themes are covered. This way the researcher is able to be flexible during the interviews. As the expectation is that answers will overlap themes, it is nog necessary to strictly follow the model. The themes are based on the literature study, performed by the researcher and deemed valuable to contribute to exploring and analyzing the subject matter. The Conceptual Model is presented schematically on the next page (Table 1). The first row shows the working propositions, while the first column shows questions. Working propositions and questions are cross-referenced into the respective themes.
Even though not every question starts with ‘how’ or ‘why’, the expectation is that these questions naturally follow in response to the primary question.
Secondary data
Secondary data is used to gather more information on current developments, even though this data was not necessarily generated for this particular purpose. Archival data plays an important role in sketching the context and consequences of the issues and understanding the situation at hand. A note must be made; while writing this thesis, this phenomenon is in development, causing rules and regulations to change and new material becomes available as we speak. This might cause contextual information to be outdated by the time this phenomenon is done developing (if it ever will).
Interviewees
Dill (1958) already argued that the environment should be analyzed through the perceptions of the participant. The ideal and most thorough way to conduct this research would be to interview a group of representatives of every field player. The opinions of for example just one representative per organization would not suffice and cast a serious doubt on the reliability and validity of the results. However, this interorganizational community is a complex network of (many) organizations, including very ‘challenging to reach’ organizations (e.g. governmental offices). Considering there might also be unwillingness to share opinions on a hot and controversial topic that has brought about massive (negative) publicity for organizations (e.g. pension funds), this research would be very difficult to execute. Given the limited stretch of time in which this thesis is conceptualized, it is simply infeasible to execute a truly representative research when all field players are involved.
This research pleas for the value of consultants and ‘secondary’ field representatives knowledge. The advantage of this group of experts, is that they view the pension system as a whole, considering every player’s stake and perhaps enabling them to judge the processes in this system in a more ‘objective’ way. However, as they too have created their personal ‘reality’ and interpret, it is still a subjective take on research. This group is easier to reach, more accessible and maybe more willing or able to share their (honest) opinions on current affairs. A selection of nine participants was made. The group is made up of pension consultants, experts in the subject matter and one pension communication advisor. All of whom are either not directly subject to one specific field player of the
institutional field or are subject to one specific field player but are concerned with the entire field in their work.
The interviewees for this research are self-selected, but the researcher also uses ‘snowball sampling’ to get easy access to more candidates. Five interviewees are initially selected beforehand, by publicizing the need for candidates on professional network medium LinkedIn. These five interviewees are asked to identify new candidates in their network. Although snowballing may result in problems with bias (Saunders et al., 2009) and a homogeneous sample (Lee, 1993) this is minimized by using five initial self-selected sources and a critical secondary selection of recommended candidates by the researcher. The language in which the interviews are conducted is Dutch, the ethnicity and mother language of both researcher and respondents. The results are translated to English by the researcher. In order to enhance the validity of the results, the mother language is maintained as long as possible during the research; the interviews are first transcribed in Dutch, after which all relevant sections are translated to English, as recommended by Van Nes et al. (2010). Even though research has shown that differences in quality of data have been found (Cortazzi et al., 2011), it is arguable that this is the case in this particular study as those results were measured with Chinese participants versus an English speaking researcher and also focused on (the difference in) ethnicity. An overview of the selected interviewees, including the date and length of the interviews, is shown in Table 2. The codes correspond with the codes in the analysis of the results, as shown in Appendix 1.
Analytical Strategy
Analysis of case study findings is not generally considered to be a simple thing to do (Rowley, 2002). Many propositions for basic principles that should be followed while performing qualitative content analysis have been made (Rowley, 2002; Bryman, 2004). This exploratory research is based on working propositions. Following Mayring (2002), this analysis is based on a system of categories (themes) automatically as the working propositions ‘belong’ to a certain theme. The Dutch transcriptions are analyzed step by step, during which relevant sections are coded. These coded ‘units’ refer to the categories to which they belong. To organize the data, the relevant sections are incorporated into the coding matrix. The blue cells are seen as direct answers to the question, or directly applicable to the corresponding theme. The analysis is done in phases. Firstly, the blue cells per theme are translated and analyzed; secondly the unmarked cells are translated and analyzed. Finally a cross-reference between themes is made, as overlap is expected.
The analysis is executed with the help of MS Excel. In order for the researcher to do a thorough analysis, the interviews are transcribed and translated by the researcher herself.
As the tables are very large, because of the amount of data, the researcher has chosen to show the results schematically in Appendix 1.
FINDINGS
This chapter outlines the findings that are a result of the semi structured interviews. The four main themes with their working propositions are addressed and a supplementary cross-analysis between themes is set out separately. As a schematic overview of the relevant sections from the interview hinders readability, these are presented in Appendix 1.
Institutional Theory
WP 1a. The Dutch pension system is expected to be a stable and mature institution
The pension system’s stability is questioned, as recent developments in the financial world have proven that the financial stability of the pension system is not guaranteed. The financial crisis that started in 2008 has triggered the necessity for (temporary) measures to bring back financial stability and even distribution of costs over the generations. These (financial) measures were not embedded in the system itself, nor were they anticipated by the organisations operationalizing the institution. The lack of anticipation in strategy, adaptive instruments and the dependency on the financial market is considered a reason to label the system as unstable. On the other hand, the system is deemed stable in the sense of its long existence, its size and due the embedment of deemed rights in Dutch society. Stability of the pension system is seen as a stabilizing factor for a stable national economy, not necessarily as a stand-alone system. At the same time, expressions and focus of the media affect the public opinion about the pension system. The common opinion is that there are strict rules and regulations to maintain stability, but the bureaucratization and the complexity that are direct results cause a sluggish system that it is too rigid to change. The political structure that governs both the institution and the socio-political organisations that manage and operationalize it are seen as a reason that the system is so stable, because this structure makes it hard to implement change due to all the stakes that are at play.
The general idea is that the system is mature thanks to its long existence and the general notion that it is a solid base that is rated to be one of the best in the world. At the same time it is seen as too mature or even outdated, or as immature, because it lacks instruments for innovation and
adaptation. The sentiment is that it has not kept up with time and has not adjusted itself to the changing environment. Therefore it is seen as an elderly system that is past its due date that does not fit the current settings of the Dutch society anymore.
WP 1b. The social environment is expected to be of great influence on the functioning of the Dutch pension system
The general consensus that the system is necessary to fulfil its social goals still holds. The Dutch ‘poldermodel11’ which is based on social ideals and goals, fits the background of the system perfectly but influences the way it is operationalized at the same time. The biggest influence is found in the way that the system is set up democratically, giving any stakeholder a voice in the form of representatives. This social setup causes the system to be heavily affected by politics and relations within the institutional field, which is discussed in more detail in the Institutional Behaviour section.
Institutional Behaviour
WP 2a. Due to the politically constructed Dutch pension system, coercive isomorphism is expected
The entire pension system is subject to the Pensions Act, which embodies strict legislation concerning Dutch pension (second and third pillar). At the same time it is a fiscal issue, as pensions are intertwined with wages and (state) pension benefits. Pensions are therefore also legally manageable through the Wages Tax Act. Organisations are to be compliant with these acts at all times; any organisation that does not comply is reprimanded or fined by the authorities.
WP 2b. The organizations that operationalize the Dutch pension system are expected to influence each other or the system
Influential behaviour in the pension system is translated into the dependence on other players in the field and lobbying and continuous negotiation of the government, the economic establishment and the labour force. The general idea is that the field is a stronghold of stakeholders that influence each
11
The ‘poldermodel’ is deemed a typically Dutch political structure in which consensus is always pursued through dialogue.
other by trying to defend their stakes as best as possible, through their representatives, which is reasoned back to the ‘poldermodel’. The organisations feed each other and especially the government with their lobby activities. Another observation is the fact that the function of the supervising authorities has shifted from a supervising to a more directive role, as an extended instrument of the government. Furthermore unions are thought to have a (too) mighty position. WP 2c. Due to the political environment, decision-making in organizations operating the Dutch pension system is expected to be inflexible
Even though, generally speaking, the ‘poldermodel’ is seen as a good thing, the politics that are a result of this structure is also seen as an obstacle in the pension system. Politics tend to defending (personal) stakes and to short term policies that are inherent to both the four year reigning period of a government and the short term vision of the public. Historically, the discussion about (changing) the pension system was seen as an unpopular topic that was passed down to the next government. It was a message that political parties were not willing to discuss, as it was thought of as political suicide because it would mean that the public would not vote for them. Even though (some) people foresaw issues with the system, it was ignored by everybody because the Dutch economy was flourishing and pension funds were yielding extremely high results. As this was the case for a very long time, nobody in the system felt the need to address an unpopular topic and therefore passed it down to the next generation. Besides that, measures would affect the reigning generation directly, which would mean they would possibly shoot themselves in the foot. It was in everybody’s best interest to leave things exactly as they were, as long as there were no (financial) issues. It meant that the structure of the system was held onto, in the state as it was, for a very long time until the need for change was inevitable. The effect that this behaviour has on the ability of the institution to change is further discussed in the Institutional Change section.
Institutional Environment
WP 3a. The interorganizational communities are expected to be of influence on the environment
The only influence on the environment that was mentioned is a possible say in world- or European legislation, like global accounting rules. Other than that, there is consensus that the system and the communities in it are mainly dependent of the environmental changes that our outside their control. A major influence that was mentioned frequently, mostly while discussing other themes, is the financial crisis. Other than that, demographic changes like population growth and the developments in the medical health sector are factors that cannot be influenced by the system, but should be anticipated to cope with. So it is basically the other way around, the pension system as it is currently structured is heavily dependent on (changes in) its environment.
WP 3b. A crisis in the Dutch pension system is expected to cause a panic in the social environment
A crisis or disruptive event, like the transition from pension based on the final salary to pension based on the average salary or the abolition of the Voluntary Retirement Scheme did cause a ripple in the social environment, but first and foremost created awareness. As the solid pension system lingered on over the years and incomes were high and personal capital was growing, nobody was interested in pensions. When these measures were taken, the media started to cover the subject of pensions and it started the debate on viability of the system. This development created the opportunity to discuss adjusting the pension system, without the risk for politicians to lose voters simply because the awareness slowly rose that it was necessary to change. As people were personally affected by this development, they started to show interest. The people that were affected or confronted with these measures though, were the older generations, so the younger generations still did not show much interest as they don’t to this day. The financial crisis was seen as a wakeup call for the public and organisations that had been pacified by good financial results in the past.
