The Impact of Organizational and Business Strategy on Performance and Risk in the Insurance Industry

Gene C. Lai, Lin-Yhi Chou, Lih Ru Chen

Abstract


This paper examines the impact of organizational structure and business strategy on company efficiency, profitability, and risk-taking behavior in the Taiwanese life insurance industry. The insurance industry in Taiwan provides an interesting environment for studying this issue because different organizational forms coexist in the insurance industry. We examine four different types of companies by organizational structure and two different business strategies. We use two frontier methodologies (stochastic frontier approach and data envelopment analysis approach) to measure the efficiency performance of insurance firms. The results show that organizational structures and business strategies have significant impact on efficiency, profitability, and risk-taking behavior. In addition, we also find size, lines of business, leverage ratio, and market share have significant impact on efficiency, profitability, and risk-taking behavior. Our overall evidence suggests that a more competitive environment should be encouraged in the Taiwanese insurance industry to improve the insurer efficiency.


Full Text:

PDF


DOI: https://doi.org/10.11114/afa.v1i2.911

Refbacks

  • There are currently no refbacks.


Paper Submission E-mail: afa@redfame.com

Applied Finance and Accounting (AFA)        

ISSN 2374-2410(Print)           ISSN 2374-2429(Online)

Copyright © Redfame Publishing Inc.

To make sure that you can receive messages from us, please add the 'redfame.com' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.

-------------------------------------------------------------------------------------------------------------------------------------------------------------