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Journal of Operations Management 31 (2013) 432–449

Contents lists available at ScienceDirect

Journal of Operations Management

jo ur nal ho me pa ge: www.elsev ier .com/ locate / jom

he iron cage exposed: Institutional pressures and heterogeneitycross the healthcare supply chain

ikram Bhakooa, Thomas Choib,∗

Department of Management & Marketing, Faculty of Business and Economics, The University of Melbourne, Victoria 3010, AustraliaArizona State University, W. P. Carey School of Business, Department of Supply Chain Management, United States

r t i c l e i n f o

rticle history:vailable online 14 August 2013

eywords:nter-organizational systemsase studies

nstitutional theoryupply chainealthcare

a b s t r a c t

The healthcare industry has been known to operate in a strong institutional environment (i.e. governmentregulations), and the implementation of inter-organizational systems (IOS) has followed an institutionalprocess. Extending this perspective across different tiers in the healthcare supply chain, we investigatehow organizations in different tiers in the supply chain (i.e. hospitals, distributors and manufacturers)respond to institutional pressures when implementing IOS. How institutional dynamics unfold acrossmultiple tiers of a supply chain is an uncharted area of research, and we take the theory-building casestudy approach using data collected from ten organizations. Because organizations are embedded in theirrespective tiers, our within-tier analyses are equivalent to cross-organization analyses. In this regard, thecross-case analyses occur at two different levels: at each tier level (i.e. across multiple hospitals, mul-tiple distributors and multiple manufacturers) and across the supply chain (i.e. across all three tiers).The study shows how different institutional pressures such as coercive, mimetic, and normative manifest

across the tiers. It also demonstrates how a differential mix of endogenous and institutional pressureslead to mixed organizational responses across the tiers. The propositions developed from the studyenrich institutional theory arguments within the information systems and supply chain managementdisciplines. They highlight how the IOS implementation dynamics within and across different tiers in asupply chain result in heterogeneous rather than isomorphic consequences, thereby exposing the “ironcage” of institutionalization.

. Introduction

Information systems (IS) scholars have recognized that institu-ional mechanisms play a key role in influencing the adoption andubsequent implementation of technology (Bala and Venkatesh,007; Son and Benbasat, 2007; Teo et al., 2003). They havepened the doors for investigating how organizations respond tonstitutional pressures and whether these pressures continue toerpetuate “isomorphism” (DiMaggio and Powell, 1983) therebyreating iron cages. In response, some scholars have started touestion the purported ubiquity of isomorphism by pointing outow the intensity of institutional pressures varies and individ-al organizations have an internal technical environment thatould respond differently (Greenwood et al., 2008; Souitaris et al.,

012). Consequently, the conversations among institutional the-

rists and IS scholars have converged toward acknowledgingeterogeneity—organizations adopt heterogeneous structures andractices in response to the presence of competing institutional

∗ Corresponding author. Tel.: +1 480 965 6135.E-mail address: thomas.choi@asu.edu (T. Choi).

272-6963/$ – see front matter. Published by Elsevier B.V.ttp://dx.doi.org/10.1016/j.jom.2013.07.016

Published by Elsevier B.V.

logics within their field (Bala and Venkatesh, 2007; Bunduchi et al.,2008; Dacin et al., 2002).

We intend to extend this line of reasoning by empiricallyexamining the implementation of inter-organization systems (IOS)across three tiers of the healthcare supply chain. The goal is toprovide a better understanding of heterogeneity. IOS provides thetechnology-based infrastructure that acts as a conduit for facil-itating transactions, sharing information with trading partners,co-ordinating activities and establishing governance structuresbetween firms. Because IOS requires commitment from tradingpartners to share resources and align processes, the issues ofrelational exchanges and co-ordination have gained currency inthe IS literature (Grover and Saeed, 2007; Saeed et al., 2011).In our study, we focus on IOS that facilitate exchange of infor-mation with trading partners such as suppliers, customers, anddistributors using the internet or other digital technologies. Exam-ples of such systems include enterprise resource planning (ERP)systems, bar-coding, electronic data interchange and other sim-

ilar technologies (Choudhury, 1997; Saeed et al., 2011). It isthrough this information exchange mechanism that organizationsare no longer saddled in “iron cages” (DiMaggio and Powell,1983).

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We collect data from organizations that operate in the health-are industry that face a strong institutional environment througharious regulatory agencies (Ruef and Scott, 1998). The IOS imple-entations in this industry have occurred largely in response to

overnment mandates and pressures from trading partners. Theseandates have met with varying degrees of successes and fail-

res (Bhakoo and Chan, 2011; Blumenthal, 2011; Ford et al., 2008;ore and McGrath, 2002). Given the different types of services

rovided across the supply chain and severity of consequencesssociated with failures, the healthcare industry provides a uniquend challenging service operations context, particularly whenmplementing IOS and investigating heterogeneous organizationalonsequences (Shah, 2004; Venkatesh et al., 2011). Naturally, scho-ars have called for technology adoption issues to be thoroughlynvestigated within the healthcare supply chain (Chopra et al.,004; Jarrett, 2006; Venkatesh, 2006).

We respond to this call and investigate how organizations across healthcare supply chain respond heterogeneously to institutionalressures and identify organizational conditions under which IOS

mplementations can be successful. Further, studying across thehree tiers in the supply chain will provide a theoretically richernderstanding of heterogeneity and the underlying reasons for it.cholars who subscribe to the institutional school propose thatrganizations respond to demands of their external stakeholdersi.e. government and trading partners) that promote IOS imple-

entations in order to acquire legitimacy and goodwill within theirnstitutional environment (Barratt and Choi, 2007; Lai et al., 2006;eo et al., 2003).

To take this body of literature to the next level, we need toddress several unresolved issues that provoke a deeper under-tanding of institutional theory within an IOS context. First, annstitutional rationale would argue that when the catalyst for tech-ological implementations is purely in response to the regulatorylimate and pressure from external constituents, then the organi-ation is most likely to implement IOS largely in a “ceremonial”ay (Kostova and Roth, 2002; Meyer and Rowan, 1977). How-

ver, some other scholars within the institutional school argue thatnstitutional legitimization of practices may promote a culture offficiency within organizations (Kennedy and Fiss, 2009; North,990). Therefore, we ask, if technology is implemented due to insti-utional pressures, then under what conditions is the organizationble to translate such changes and make a real impact on opera-ions? Such operations are what some institutional theorists (i.e.

eyer and Rowan, 1977) have called “technical core” where actualalue-adding activities occur such as actual patient care.

Second, we must note that organizations in different indus-ries would respond differently to the institutional pressures tomplement IOS. This is largely because they have their own, uniqueet of norms, business practices and administrative complexi-ies (DiMaggio, 1991; Hoffman, 1999; Scott, 2008). Therefore, byxtension, organizations at different tiers in a supply chain may per-eive institutional pressures differently. The crucial question thenecomes how an organization’s internal responses to implement

OS may vary across the supply chain. This would have implicationsor the managers in organizations across the supply chain and pol-cy makers at the government or professional organizations that setperational standards (Ruef and Scott, 1998; Scott, 2008).

Third, IS scholars are cognizant of the fact that the decisiono implement IOS occurs in response to both, the broader insti-utional environment where an organization confronts externalressures (Gosain, 2004; Teo et al., 2003) and the internal orga-izational environment (Bharadwaj, 2000). For instance, Teo et al.

2003) employed institutional theory to study the influence ofiMaggio and Powell’s (1983) three institutional pressures (coer-ive, mimetic, and normative) on IOS adoption. Their study focusedn intentions to adopt and left open (for future research) the

Management 31 (2013) 432–449 433

subsequent organizational dynamics once the adoption activitiestake place inside the organization. Bala and Venkatesh (2007) havepushed this stream of research further and identified the role ofinternal contingencies and institutional mechanisms in the imple-mentation of business standards for dominant and non-dominantfirms. Our intention is to extend our understanding of these com-plex mechanisms (institutional dynamics and factors endogenousto organizations) that are at play within the health informaticsdomain.

We will investigate how institutional pressures and endogenouspressures co-exist for organizations and how organizations acrossdifferent tiers of the supply chain would cope with these variedpressures. Further, if an organization implements IOS due to insti-tutional pressures, under what conditions would those pressurestranslate into making the “real changes” at the technical core? Thisis critical as highlighted by Devaraj and Kohli (2003) who havestrongly argued that it is the actual “usage” of technology thatresults in an organization’s performance.

In our study, we focus our attention on these unresolved theo-retical issues in the literature and propose the following researchquestion:

How do organizations embedded within different tiers in thesupply chain respond to the presence of institutional andendogenous pressures when implementing IOS?

In this study we conceptualize IOS implementation as the pro-cess that unfolds in the organization after the decision to adopt thetechnology has been made. In this process, the organization devel-ops new procedures, installs the technology and incites the usersto engage with the technology so as to realize the intended benefits(if any) from the technology (Cooper and Zmud, 1990; Munkvold,1999). The responses that we seek to examine are whether organi-zations are responding in a purely ceremonial fashion or makingreal changes thereby affecting the technical core of the organi-zation. An examination of these responses across the tiers willfacilitate building our understanding on how heterogeneity mani-fests across the healthcare supply chain.

2. Literature review

We use existing literature on neo-institutional theory to helpus develop our theoretical arguments (DiMaggio and Powell,1983; Meyer and Rowan, 1977; Zucker, 1987). We focus onhow organizations respond to the presence of organization-levelendogenous and field-level institutional pressures within the con-text of IOS implementation. The isomorphism school of thought ledby DiMaggio and Powell (1983) informs us about the type of insti-tutional pressures that impinge on organizations. Contrarily, theinstitutional decoupling arguments led by Meyer and Rowan (1977)discuss what happens inside an organization once it succumbs toan institutional pressure and decides to respond to it. In discussingthe endogenous drivers for implementing IOS we also draw heavilyon arguments put forth by scholars in the IS discipline with a spe-cific focus on the health informatics domain (Agarwal et al., 2010;Chaudhry et al., 2006; Goh et al., 2011; Menachemi et al., 2007).

2.1. Institutional pressures

One of the widely accepted tenets of neo-institutional theory isthe concept of institutional isomorphism (DiMaggio and Powell,1983; Heugens and Lander, 2009). According to DiMaggio and

Powell (1983), organizations perceive three types of institutionalpressures—coercive, mimetic, and normative. These pressures areresponsible for organizations conforming to institutional pre-scriptions, thereby leading to isomorphism. For instance, many

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ompanies implemented safety programs for institutional reasons,o gain legitimacy with the Occupational Safety and Health Admin-stration, and their conformance eventually led them to resembleach other (Choi and Wasti, 1995).

Coercive pressures by definition are formal or informalressures that originate from regulatory agencies, dominant trad-

ng partners or parent corporations on which the focal firm isependent (DiMaggio and Powell, 1983; Teo et al., 2003). Empiri-al evidence suggests that such pressures could be the result of aovernment mandate. For example, within the context of technol-gy adoption, the mandate issued by the Department of Defensen the US to adopt radio frequency identification technology (RFID)s an illustration of a coercive force (Barratt and Choi, 2007), ashe aftermath of the 9/11 attacks led the US government to man-ate specific supply chain security measures (Williams et al., 2009).oercive pressures are also in play when a corporate headquar-er mandates its subsidiaries to adopt a specific practice (Kostovand Roth, 2002) or when a buying company demands total qualityanagement (TQM) practices from its suppliers (Choi and Eboch,

998).Mimetic pressures result from uncertainty, when organizations

model” themselves after other organizations within their insti-utional field that they consider more progressive, legitimate oruccessful (DiMaggio and Powell, 1983; Haunschild and Miner,997). When organizations are faced with an uncertain environ-ent they may benchmark their behavior against that of successful

rganizations within their industry. This would enable them toedge against perceived risks and thereby acquire legitimacy (Johnt al., 2001; Zsidisin et al., 2005). Within the context of technologymplementation, an organization confronts a complex and uncer-ain environment which encourages organizations to mimic andenchmark themselves against their competitors (John et al., 2001).

Normative pressures are derived from professionalization.rganizations confronted with these pressures behave in a manner

o be perceived as legitimate among their peers within their pro-essional network (Deephouse, 1996; DiMaggio and Powell, 1983).he sources of these pressures are typically trade associations,ccreditation agencies and professional associations, for technol-gy adoption purposes. There is empirical evidence that theseressures may originate through suppliers and customers in theupply chain (Khalifa and Davison, 2006; Teo et al., 2003). Further,hen these pressures stem from trading partners in the supply

hain, they encourage organizations to conform to specific stan-ards and within the context of IOS implementation this ensureshat information sharing is facilitated in the supply chain (Liu et al.,010). These pressures are diffused through hiring people withinhe same industry with the requisite qualifications (DiMaggio andowell, 1983), using similar technology (Khalifa and Davison, 2006)r adopting socially accepted practices such as sustainability (Zhund Sarkis, 2007).

The response of the literature toward these institutionalressures within the context of IOS adoption has been mixed. Stud-

es have largely examined these pressures from the perspective ofhe intention of technology adoption. For example, Teo et al. (2003)ave demonstrated that normative pressures have the strongest

nfluence on the adoption of financial electronic data interchangeFEDI), followed by coercive and mimetic pressures. They have fur-her illustrated that normative pressures are also the most powerfulhen being generated downstream in the supply chain (i.e. from

he customers). Son and Benbasat (2007) and Liang et al. (2007)ave found coercive pressures less effective compared to normat-

ve pressures. Recently, Liu et al. (2010) argue that coercive and

ormative pressures are the most effective in increasing a firm’s

ntention to adopt electronic-supply chain management (e-SCM)ystems, with mimetic pressures being the least effective. Baland Venkatesh (2007) find that all three mechanisms (coercive,

Management 31 (2013) 432–449

normative and mimetic) play a key role for non-dominant firms,whereas normative pressures are most influential for dominantfirms. Other than a few studies (i.e. Liang et al., 2007; Balaand Venkatesh, 2007), the underlying dynamics involving thesepressures in the implementation of IOS, especially in the contextof a supply chain, have not been investigated fully in the literature.From a theoretical perspective, more clarity is required whetherthese pressures perpetuate heterogeneity or isomorphism acrossthe three tiers of the supply chain.

2.2. Endogenous pressures for IOS implementations

In order to develop a thorough understanding of the endoge-nous drivers in organizations we examine the IS discipline at adeeper level. Given the focus on healthcare, we have sought guid-ance from scholars in the health informatics domain (Aron et al.,2011; Bhattacherjee et al., 2007; Chaudhry et al., 2006).

Organizations typically seek to achieve operational efficiencyand strategic benefits by investing in IOS (Mukhopadhyay andKekre, 2002). This includes factors such as better inventory man-agement and reducing billing and other operational errors (Aronet al., 2011; Bakos and Treacy, 1986; Iacovou et al., 1995; Kuanand Chau, 2001; Mukhopadhyay et al., 1995). Inter-organizationalrelationships improve through better information exchange andco-ordination among trading partners in the supply chain (Bakosand Treacy, 1986; Frohlich and Westbrook, 2002; Zhang andDhaliwal, 2009). IOS facilitates organizations to develop capabil-ities in managing information flows, integrating complementarytechnologies such as ERP systems and customer relationship man-agement (CRM) systems (Patyakuni et al., 2006; Rai et al., 2006;Rai and Tang, 2010). These capabilities enable internal processalignment and leverage resources from trading partners and otherconstituents so that the competitive advantage of the firm can beenhanced (Bharadwaj et al., 2007). There is empirical evidencethat investments that facilitate information sharing also lead toimproved performance (Klein and Rai, 2009).

However, Pavlou and Sawy (2010) bring to the fore theimportance of fit with the environment when considering IOSimplementation. If an organization is operating in a highly tur-bulent environment, it requires improvisational capabilities thatempower it to encounter “storms” in the environment and to dealwith unplanned and urgent contingencies for the organization tore-configure existing resources. These capabilities are pivotal incultivating an ambidextrous organization. In contrast, dynamiccapabilities would be a good fit for organizations operating inmoderately turbulent environments by facilitating planned spon-taneity. It therefore becomes important for organizations operatingwithin the healthcare field to access their environment so that theycan develop the capabilities accordingly.

In order for these capabilities to hit the technical core of theorganization and bring associated benefits to the trading partners, itis imperative that organizations have senior management support,are technically and culturally ready and have effective standards inplace so that these IOS are suitably implemented (Liang et al., 2007;Rai et al., 2009; Venkatesh and Bala, 2012). Implementing IOS alsorequire significant investment in hardware, software and associ-ated human capital. Therefore, the inability of an organization tochange the prescribed investment patterns and the inflexibility ofprocesses therein may result in resource and routine rigidities andhave adverse impact on implementation of IOS in organizations(Bala and Venkatesh, 2007; Gilbert, 2005).

Finally, scholars within the healthcare informatics domain have

highlighted safety as a significant concern (Venkatesh et al., 2011).IOS can help in this endeavor by improving the quality of careadministered to the patients and reducing the chances of admin-istering the wrong medication to end patients (Khoumbati et al.,

V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449 435

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008; Ludwick and Doucette, 2009; Vogus et al., 2010; Yasnoff et al.,004).

.3. Decoupling as organizational response to institutionalressures

In one of the early contributions to neo-institutional theory,eyer and Rowan (1977) argue that when organizations adopt for-al programs, policies and procedures to conform to institutional

emands, they may “decouple” these formal prescriptive structuresrom actual practices. This decoupling occurs because, on one hand,n organization is attempting to acquire legitimacy to meet theemands of its institutional stakeholders but, on the other, it isonstrained by the local circumstances, access to resources and theequisite expertise at the technical core (Boxenbaum and Jonsson,008). Therefore, there is a disconnection between what happens

nside the technical core of the organization and the changes thatre made, often cosmetically, at the administrative level in responseo these institutional pressures.

Scholars from different disciplines such as organization studiesOS), operations management (OM) and IS have all addressed thesessues. The OS scholars have provided illustrations where organi-ations may introduce stock buyback plans or long-term incentivelans due to institutional pressures but implement them in a

imited fashion or not at all (Westphal and Zajac, 2001). Meyer andowan (1978) illustrate how schools adopt standards in response toovernment regulation but decouple them from class room instruc-ion. Similarly, Delucchi (2000) discusses the disconnect betweenhe claims of the mission statement and the actual baccalaureateegrees in liberal arts colleges.

Within the OM context, examples of decoupling have beenocumented across topics such as implementation of quality initia-ives (Boiral, 2003; Choi and Eboch, 1998), supplier developmentrograms (Choi and Wasti, 1995; Rogers et al., 2007) and imple-

entation of RFID technology (Barratt and Choi, 2007). When a

upplier implements TQM practices in response to a buyer man-ate it may develop extensive documentation manuals which areften overlooked (Boiral, 2003). Similarly, an organization adopts

utional and endogenous pressures.

RFID technology under a directive from the Department of Defenseand therefore purchases the tag but still manually applies it withminimal integration with the internal systems (Barratt and Choi,2007). Manual application of the tag and developing documenta-tion represent changes at the administrative level, while the factthat the documentation manuals are rarely consulted representsthe state of decoupling in the organization.

The IS scholars also have highlighted how users may deployworkarounds or shadow systems which would allow them todeviate from the prescribed “rules of engagement”. Therefore,a mismatch occurs between the expectations of the technologyand its actual operationalization (Ferneley and Sobreperez, 2006;Kobayashi et al., 2005). For example, organizations may be coercedinto adopting an ERP system that is quite inflexible in their con-figuration. Therefore, users may then avoid using it altogetheror devise inefficient processes to circumvent the inflexibility inusing the system (Boudreau and Robey, 2005; Gosain, 2004). Theseworkarounds could take a variety of forms ranging from an essen-tial workaround required to complete the task to a hindranceworkaround undertaken to circumvent system procedures, formalwork flow processes and strong bureaucratic structures (Ferneleyand Sobreperez, 2006; Halbesleben et al., 2008).

Fig. 1 graphically illustrates the organizational responses toinstitutional and endogenous pressures.

We have reviewed the literature on the institutional andendogenous pressures and have explicated on the state of decou-pling to reconcile the two types of pressures in organizations.Therefore, to theoretically advance our understanding of some ofthe key tenets of neo-institutional theory such as isomorphism anddecoupling, we have to ask how organizations make sense of thepresence of the institutional pressures from outside and endoge-nous pressures from within. Do any cosmetic changes actuallyresult in changes in the technical core, thereby short-circuiting thedecoupled state? Do these changes across the three tiers in the

supply chain result in heterogeneity? To address these questions,we employ a case study approach to understand how the insti-tutional and endogenous pressures impact the technical core andadministrative layer of the organization.

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36 V. Bhakoo, T. Choi / Journal of Oper

. Methodology

By investigating how organizations in each tier in the sup-ly chain respond to institutional and endogenous pressures, we

ntend to develop an in-depth understanding of how heterogene-ty unfolds across the different tiers of the supply chain. Sincehe nature of the research question is exploratory and involvesnvestigating a contextually-rich phenomenon, we use an inductivease study approach (Eisenhardt and Graebner, 2007; Meredith,998; Yin, 2003). Conducting case studies for theory buildingurposes through an inductive analysis of the data has beenndorsed by scholars within the OM and IS disciplines (Barrattt al., 2011; Benbasat et al., 1987; Meredith, 1998). Typically, annductive case study involves several within-case analyses andhen cross-case analysis (Miles and Huberman, 1994; Yin, 2003).

e use the same approach but with a minor variation. As orga-izations are nested within each tier and three tiers togetheronstitute a supply chain, our within-tier analyses would be whats commonly called a cross-case analysis with organization ashe unit of analysis. We call our approach a “nested case studyesign” and will discuss it in more detail below (see data analysisection).

.1. Sampling

As we investigate the effects across the supply chain and nothe effects across different supply chains, we focus on one industryn order to minimize the extraneous effects. We chose health-are because it is known to have a strong institutional field (Scott,008). The healthcare sector is subject to strong regulation and it

s likely to have different pressures for technology implementa-ion from inside and outside the organization (Greenhalgh et al.,004). We picked a three-tier supply chain. We wanted more than

two-tier supply chain that would simply constitute a buyer and supplier, but did not want a very long and complex supply chain.

well-known three-tier supply chain in healthcare would be aanufacturer–distributor–hospital supply chain. We also wanted

o control for product variance and therefore chose to focus onharmaceutical products as these products face a strong regulatorynvironment and are sensitive to the adoption of IOS. For instance,hese products are mandated to have bar-coding for sale, both overhe counter and in retail outlets so they can be used to track prod-cts throughout the supply chain.

A variety of IOS were implemented in the case study sites but weocused on Type 3c according to Swanson’s (1994) Tri Core Model ofS innovations. These innovations are inter-organizational systemshat enable the provision of products and services by facilitatinghe interface between the host organizations and trading partnersuch as suppliers, distributors or customers (Grover et al., 1997;wanson, 1994). The data collected pertained to the IOS that havehe ability to interface with trading partners in the supply chainuch as EDI, bar-coding and ERP systems.

.2. Data collection

The data were collected from organizations in Australia, wherehe manufacturer–distributor–hospital supply chain has a strongresence. For instance, in the US this supply chain is beinghallenged by many hospitals starting their own distribution cen-ers (Scheller and Smeltzer, 2006). Data collection occurred fromebruary 2007 to July 2008. An initial focus group was held withxperts within the healthcare domain to provide input into the

nterview protocol and identify potential organizations that coulde included for this study. The focus group helped identify organi-ations where a decision to adopt an IOS had been taken and thesers were in the process of developing new procedures, processes

Management 31 (2013) 432–449

and undertaking other modifications, if any, to the new system.After a series of communications, three manufacturers, two distrib-utors and five hospitals agreed to participate in this study. Table 1provides the details of the organizations participating in the study.

The ethics clearance received stipulated that the names of theorganizations and the interviewees should remain anonymousthroughout the process. The cases were selected based on theoret-ical replication and to maximize learning (Eisenhardt, 1989; Stake,1995). For example, of the five hospitals that participated in thisstudy, three were based in metropolitan Melbourne and were oflarger size. The other two were smaller hospitals, one of which spe-cialized in eye and ear ailments and the other serviced a regionalcommunity. Among the manufacturers, two were of a similar sizewith headquarters in the USA, and one was based in Australia. Asthere are only a handful of distributors operating in the Australianmarket, we chose the two most prominent distributors. One dealtonly with hospitals and the other supplied to hospitals as well asretail pharmacies.

We used a semi-structured interview protocol which was tiedto institutional theory constructs and we were guided by previousstudies in the OM discipline which had used institutional theorywithin their studies (Barratt and Choi, 2007). The detailed interviewprotocol is available in Appendix A. Each interview lasted betweenone and two hours and repeated visits were made to sites so thatall the relevant informants could be interviewed. In some cases thesame informants were interviewed multiple times. The interviewprotocol was modified when interviewing personnel from differenttiers in the supply chain. Interviews were conducted with person-nel that held similar designations across the tiers. For example, weinterviewed IT Managers, Directors and Deputy Directors of Phar-macy and Materials Management Departments in hospitals, ChiefInformation Officers (CIOs), Customer Relationship Managers andLogistics or Supply Chain Managers who worked with distributorsand Supply Chain Managers, Operations Managers, IT Managersand Strategy Managers who worked with manufacturers. This pro-cess enabled us to strengthen the external validity of our findings(Yin, 2003). We continued the interview process and added moreinterviews until no new themes were emerging (Eisenhardt, 1989;Glaser and Strauss, 1967).

In addition to interview data, tours of the facilities were con-ducted during the visits to the case study sites. For example,in case of hospitals one of the researchers visited the pharmacyand materials management departments and observed how infor-mation systems that interfaced with their trading partners werebeing used. Both pharmacy and material management depart-ments were included in this study because of the overlap ofthe pharmaceutical product lines between these departments.For instance, in the case of Hospitals A and D, the researcherobserved how the staff in the pharmacy department was usingthe Merlin system for procurement purposes. In the case of themanufacturers and distributors, a visit to their facilities was under-taken. These visits were very insightful as they provided tangibleillustrations of the use of IOS. The IT Manager and Warehouse Man-ager typically accompanied the researcher on these visits. Fieldnotes were made throughout this process to triangulate obser-vations with the interviews. We also collected documentationsthrough the course of our study, including internal memos andstrategy documents from manufacturers and distributors. In gen-eral, the hospitals were more reluctant to provide access to theirdocuments.

In order to ensure reliability of our data the drafts of the casestudy reports were reviewed by the interviewees. In order to fur-

ther triangulate the findings, we also conducted interviews withsix experts who had over 15 years of experience in the indus-try. These included technology providers, government regulatoryagencies and third party logistics providers.

V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449 437

Table 1Overview of organization profiles.

Organization type Head quarters Annual turnover(world wide)

Employees(world wide)

Types of products Context of IOS implementation Number ofinformants

Manufacturer A Australia A$687 million 1600 Oncology Implementation of ERP System forinternal integration and interface withupstream suppliers.

3

Manufacturer B USA US$20.9 billion 44,000 IntravenousSolutions IV Fluids

Implemented ERP System thatinterfaced with upstream suppliersand hospitals downstream in thesupply chain. It had also recentlyimplemented RFID technology.

3

Manufacturer C USA US$9.8 billion 47,000 CardiovascularOncologyNeuroscience

Ongoing implementation of an ERPsystem to integrate with upstreamsuppliers. Also participated in the“Monash Project” launched by HospitalA and engaged in electronic messaging.

4

Distributor A Australia A$3.4 billion 6000 Pharmacy and NonPharmacy Products

Implemented an electronic EDI systemthat interfaced with hospitals.

3

Distributor B Australia A$1.3 billion 300 Medical Equipmentand PharmacyProducts

Process of consolidating legacysystems and implementing an EDIsystem and an ERP system to transactwith hospitals.

4

Hospital A Australia A$1.1 billion 13,000 PharmaceuticalProducts

Initiator of “Monash Project” toimplement bar-coding and electronicmessaging standards with tradingpartners in the supply chain.

6

Hospital B Australia A$700 million 8000 PharmaceuticalProducts

The first hospital to implement an ERPsystem in response to a stategovernment deadline. This ERP systemwas responsible for automating theprocurement function.

4

Hospital C Australia A$700 million 7000 PharmaceuticalProducts

This hospital had an existing electronicEDI system that had been runningsince the last five years.

5

Hospital D Australia A$55 million 900 PharmaceuticalProducts

This hospital had implemented the‘Med Station’ system that hadautomated the drug dispensing to theclinical staff in the hospital with afunctionality that could be used forprocurement purposes. Commencedinitiating a project on the similar linesas the “Monash Project”.

4

Hospital E Australia A$110 million 600 PharmaceuticalProducts

This hospital had received a grant fromthe state government to modernize itsIOS. This IOS automated the

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.3. Data analysis

All the interviews conducted were transcribed verbatim and thisrocess yielded 1100 pages of transcripts. The interview data wereoded by the first author based on how the constructs had beenperationalized in the literature. The key constructs of efficiency,afety, resources and internalization were derived inductivelyhrough the data. Table 2 provides insight into how the differentoding categories were developed.

Further Tables 3b, 4b and 5b also provide representative quotesor strong versus weak pressures for each organization in the sup-ly chain. Both researchers worked together in interpreting theualitative reasoning and to reach a consensus. In some instances,etailed discussions took place and ambiguities were resolved. Weere guided by Miles and Huberman (1994) and OM scholars whoave conducted a within and cross-case analysis for theory building

nductive studies (Mahapatra et al., 2010; Wu and Choi, 2005).However, because we were looking across the supply chain

mong multiple organizations in each tier of the supply chain,

e had to deviate from the traditional case-based theory building

pproach. A typical theory-building inductive case study would for-ulate propositions based on cross-case analysis (e.g. Barratt and

hoi, 2007; Mahapatra et al., 2010). Because this study involves

procurement function with thedistributors and linked it internally forinventory management purposes.

cross-case analyses at two levels, we offer propositions in each tierof the supply chain and then across all three tiers of the supplychain. The cross-case analysis in the first phase of data analysisinvolves the multiple organizations in each tier of the supply chain.The cross-case analysis in the second phase takes the cross-caseanalysis of the first phase as the within-case analysis and conductsthe cross-case analysis across the three levels of the supply chain.

Consequently, the within-case analysis and cross-case analy-sis were conducted across two phases. In the first phase, the unitof analysis is the organization. The within-organization analyseswere written up for each organization across the three tiers, andthe cross-organization analyses were conducted as the within-tieranalyses. Cross-organizational comparisons were made as within-tier analyses with respect to which tier they are located in thesupply chain. This is necessary to first identify the similaritieswithin the tier and further to investigate if indeed institutionalpressures to implement IOS vary across the supply chain and thento characterize the varied responses. In doing so the unit of anal-ysis becomes the tier. During this phase of the analysis we also

looked for patterns for institutional and endogenous pressuresand organizational responses across the tiers. The propositions wedeveloped through this process highlighted the “zones” in the sup-ply chain that were dominated by a specific pressure. We also

438 V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449

Table 2Description of coding categories.

Description Coding category

Instances where interviewees discussed regulatory, compliance or mandating issues as drivers for technology implementation CoercivepressuresInstances where interviewees discussed the drivers for implementing technology in response to compliance pressures from

the parent corporationInstances where interviewees discussed the drive for technology implementation being generated through pressure from

suppliers, customers, government etc.Normative pressures

Instances where interviewees discussed the role of professional bodies, trade and industry forums as drivers for technologyimplementation. This was perpetuated by adoption of these standards becoming an industry norm

Instances where interviewees mentioned copying/imitating their peers or competitors in the industry as drivers fortechnology implementation

Mimetic pressures

Instances where interviewees mentioned issues such as reducing manual errors, improve inventory management and otheroperational efficiencies as drivers for implementing technology

Efficiency

Instances where interviewees mentioned improving finances, cash flow and improving the quality of time spent by thephysicians on their clinical tasks as drivers for implementing technology

Resources

Instances where interviewees mentioned implementing technology for quality of care and patient safety purposes SafetyInstances where interviewees mentioned how purely ceremonial changes made due to institutional pressures had taken root

and led to real changes in the technical core of the organizationInternalization

Instances where interviewees reported real changes taking place in their organization such as improvement in processes,th trad

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regarding how implementing IOS would help them in streamlin-ing reporting requirements to enable staff reductions and therebylead to financial savings within the departments. They also stated

Table 3aInstitutional, endogenous pressures and organizational responses by hospitals.

Institutionalpressure

Endogenouspressure

Organizationresponse

Hospital A n, M S, E, I THospital B C, n, m s, e, r, i AHospital C n, m s, e, r a, tHospital D n, M S, E, r, I a, THospital E n, m s, E, i a, T

a, weak administrative response; A, strong administrative response; c, weak coer-cive pressure; C, strong coercive pressure; i, weak internalization pressure; e, weak

performance measures and strategic approaches for improving relationship wiInstances where interviewees reported making cosmetic changes in response to t

new role in the organization, forming a committee, documenting procedures b

dentified a special condition for the short-circuiting of decoupledtates.

. Results

As mentioned above, we first conduct within-tier analysesased on three cross-organization analyses, involving hospitals,istributors, and manufacturers. In each within-tier analysis,e address institutional pressures, endogenous pressures, and

rganization responses. This is followed by cross-tier anal-ses where we compare patterns across the three tiers inhe supply chain. As discussed in the literature review, insti-utional pressures are categorized into three types—coercive,ormative, and mimetic. Organization response occurs at two

evels—administrative level and technical-core level. The type ofactors that would function as endogenous pressures emergedrom the data. As will be discussed below, they are efficiencyssues, concern for resources, patient safety and degree ofnternalization.

.1. Within tier analysis of hospitals

Hospital A is the largest among the five based on the num-er of beds and satellite sites. It is the first to initiate a project to

mplement IOS. Hospital B is medium-sized and is the first hospitalo be tapped by the state government to implement IOS. Hospi-al C is stable financially, and much of its operation is in a steadytate. This hospital has taken a passive, wait-and-see approach toOS implementation. Hospital D is a comparatively smaller hospi-al specializing in eye and ear treatments. This hospital has beenuite progressive in that it had already implemented a localized

OS that had the ability to interface with the distributors. Hospital is a regional hospital in a rural setting. This hospital had received

grant from the government to modernize its IOS (Details of thearious IOS systems implemented is provided in Table 1).

For institutional pressure, we observed one strong coerciveressure, two strong mimetic pressures, and weak normativeressures across all hospitals (Tables 3a and 3b). The strong coer-ive pressure on Hospital B came from the State Government tomplement IOS (i.e. an ERP system). A hard deadline from the gov-

rnment loomed large on this hospital. All five hospitals show aeak normative pressure. They were all aware that the governmentas promoting better communication in the healthcare supply

hain and they were moving toward implementing an IOS. The

ing partnerstitutional pressures such as creating a

following themAdministrative level

knowledge of where the government stood was becoming anaccepted norm across all hospitals. Hospital A and Hospital D showa strong mimetic pressure. Working through a prominent consult-ant, Hospital A was copying the IOS implementations from the retailsector (i.e. IT for inventory management and procurement at ColesMyer—a large retail chain in Australia). Interestingly, all the otherhospitals were watching Hospital A and tried to mimic it. In theend, only one hospital, Hospital D, became very enthusiastic aboutadopting the system that Hospital A had implemented.

The data collected on endogenous pressures highlighted fourkey pressures within the hospitals—safety, efficiency, resources andinternalization. Hospital A and Hospital D were showing strongendogenous pressures on both safety and efficiency. When inter-views were being conducted at these two hospitals with topmanagement (i.e. Directors and Deputy Directors) and with Pro-curement Officers, the theme of patient safety was overwhelming.They were extremely concerned about dispensing the right drugsand at the correct doses. This is not to say the other hospitals (Hos-pitals B, C, and E) were not concerned about patient safety; theirexpressed concerns were just not as pronounced. Hospitals A andD were strongly concerned about efficiency issues such as reduc-ing errors and inventory record accuracy. Hospital E was anotherhospital with a strong internal pressure on efficiency. This hospi-tal, in particular, had a strong focus on inventory management andprocurement. Finally, Hospitals B, C and D also made comments

efficiency pressure; E, strong efficiency pressure; n, weak normative pressure; N,strong normative pressure; m, weak mimetic pressure; M, strong mimetic pressure;I, strong internalization pressure; r, weak resource pressure; R, strong resource pres-sure; s, weak safety pressure; S, strong safety pressure; t, weak response at technicalcore; and T, strong response at technical core.

V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449 439

Table 3bIllustration of coded data for hospitals.

Hospital A

Institutional n We are now becoming more conscious that the industry around us have embraced e-commerce systems particularlythe wholesalers and we have to keep up

M . . .it was actually following a visit to the Coles Myer (a large Australian grocery chain) warehouse where they have anextensive e-commerce system, that it fired up our imagination to look at developing similar systems within the healthsector and we employed a consultant to have a look at our procurement and distribution systems

Endogenous S Our main concern with implementing technology is patient safety as we have to make sure that we have adequatesupply of the drugs and then distribute them to the wards accordingly as not having the “right” drug can prove fatal inour line of business

E . . .that’s why e-commerce has been excellent from the point of view of monitoring our usage patterns, how much weare purchasing and reducing manual errors. This issue is of prime importance for us

I We monitor the stock that is three months from expiry, one month from expiry, and actually I’ll show you somedocuments. So that’s our KPI internally within the pharmacy department. We have also implemented these KPIsamongst our other satellite hospitals. And similarly we maintain that within the wards. This is significantly more thanwhat is expected of us by the director of finance (actual documents as evidence were provided to the researcher)

Organization Response T . . .and I suppose the main thing that came out of the Phase 1 of the “Monash Project” was actually to do the electronicordering but we would also get information such as the shipping notification and by scanning the bar code on thecarton and sending the acknowledgment receipt reduced manual checking and improved our service levels in somecases even up to 50%

Hospital B

Institutional C We were the first hospital chosen by the state government to implement the Oracle based ERP system and given aninflexible deadline of the 2nd of May so we had to go live in order to comply and since we are publicly funded we hadno choice. . .

n The key drivers, as I think you would have mentioned it, the industries around us, the supermarkets and the like andhiring people from these industries particularly in the IT domain is also catching up

m If someone came to one of our meetings tomorrow and said, this new system is up and running and we implementedit, and by doing so has saved us a million bucks, so the very next day we would all be ringing up trying to get itimplemented, but no one has actually done that yet. . .

Endogenous s More or less every single product that we have is bar-coded, predominantly for patient safety, although it works verywell for procurement

e And also if I have a good way of procuring drugs and if I can have the assurance that when I order a drug, it’s going tocome in a timely fashion, it means that I don’t have to carry as much inventory

r I am interested in the productivity of my staff and also ensuring that clinical staff are not wasting their time inentering data

i Of course we have KPIs (Key Performance Indicators) that we require for the auditors but I like them to beautomatically derived, and then you can use them effectively. If your measurement system is based entirely onreporting requirements then it’s not a good measurement system. We’ve spent quite a lot of time over the past year intrying to build up a suite of indicators that allows us to only measure stuff that we find useful. We are refining oursystem so that we are able to collect that automatically. We’re not there yet, but we’ve made significant steps forward

Organization Response A Last year, we brought on a clinical products advisor and he evaluated all the products and then the whole processwent through a product evaluation committee and they made recommendations. However, that was a waste of timeas we are not using the (ERP) system; although we have met the government deadline. . .It has actually made us gobackwards. We are still running the department but everything is being done manually as there are lives at stakehere. . .

Hospital C

Institutional n Setting up of state tendering bodies require us to use electronic trading platforms and that is becoming more of anaccepted norm

m We are waiting and watching what is going on in Hospital A and if they are able to demonstrate a saving then we willjump on the band wagon

Endogenous s So I think there’s a lot of reluctance in people to perhaps launch into these products until they can be showndefinitively that these products are workable, reliable, and robust and don’t leave us at risk, and by us, I mean ourpatients at risk

e Our system continues to evolve, such that the tracking is better, the data capture is better, the analysis is better. Therange of products that we can barcode and capture now is wider. The ability for hospitals and distributors to use thecommerce as part of this arrangement is much better

r I actually think a lot of it is financial (driver for technology) as we have limited budgetsOrganization Response a We have established two teams as a part of our response to the reporting requirements. The first team was the

purchasing and IT team and the second team was managing the change management process. This group wascommunicating to hospital managers, to divisional and clinical staff, doctors and ward staff and ward clerks aboutwhat was going on

t I guess the main thing that has come out of the EDI system has been training our inventory management staff andtechnical people on how to use the system properly and how to manage the inventory system properly. They canconfirm orders, make sure that the bar coding is done accurately, and picking slips and so forth are done correctly.This has led to small savings

Hospital D

Institutional n Society for Hospital Pharmacists of Australia (SHPA) is a professional society and they have special interest groups ofother specialties putting up guidelines for performance in specialist hospitals such as ours

M We have moved over to Merlin (software system) that Hospital A was using as we believe it is an efficient way totransact with the distributors

440 V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449

Table 3b (continued )

Hospital D

Endogenous S . . .but of course there’s always the risk that you’re not going to have the right product when you’ve got the patient onthe operating table and that’s, you know, that’s a major risk

E To reduce the errors involved in the former manual and paper based ordering process, and these orders that in turn tieback into our inventory controls, because through the barcode scanning of the product or the dispensing labels tiesback into the movement of stock out of our inventory

r The original push for the computerization of the inventory system was a finance one, and that was driven by theauditors. I did read the auditor’s report, but they felt it was a financial control point of view and was driven byreducing the pilferage in medicines

I We have introduced a series of changes beyond what the auditors want us to do—so have linked the med station toMerlin, which is effectively linking dispensing activities to procurement and we have also entered into a vendormanaged inventory for some product lines with a distributor which has helped reducing inventory further

Organization response a The finance people are always demanding “paper” and therefore we have employed extra people who can generatemanual documents particularly for this purpose

T We have actually reduced the physical stock in the hospital by $70,000, and we’re working on reducing that down. Sowe used to be $350,000–$380,000, and we’re working on this year reducing it by another $30,000–$40,000. Now, thathas occurred because of implementation of technology

Hospital E

Institutional n We have to use electronic systems as the government wants us to purchase from specific suppliers who have won thecontracts

m We are also looking at the option of getting in consultants who have worked in the retail sectorEndogenous S You have to remember that you are working with patient and you don’t want to put expired stock into people,

especially prosthetics or wrong drugs or you run the risk of getting sued!E Waste elimination, error elimination. I could go on forever. Back orders and reverse logistics coming out of the system

are critical benefits of using IS systems with distributors. The other thing is that it enables us to get the units of themeasure right so that you do not end up with container full of goods and you actually only want the boxes full andvice versa

r We have also been able to increase the productivity of the clinical staff that makes the senior management very happyi Of course we have to meet the requirements, but the primary reason we are doing it (using e-business systems)

particularly with functional items, to speed up the delivery time, because we need that rapid response which is reallycritical in a regional community

Organization response a There is a lot of duplication happening when we maintain records for the government agencies and also to conform toreporting requirements in the hospital and this is increasing with new guidelines being set by National e-healthtransition authority (NEHTA)

T Since we have utilized the system, they (staff in the pharmacy department) now get a printed sheet which tells thems well

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hat implementing IOS had enabled using clinical staff time (a veryxpensive resource) more effectively in the hospital. These issuesere raised by the interviewees in response to senior management

eeking more transparency in budget spends across the differentepartments. Finally, since this study was conducted within theealthcare domain each organization had to comply with its inter-al regulatory regime along with the pressures at the field level. We

dentified a very interesting internal driver called “internalization”,hich essentially implied the extent to which organizations were

ble to channel the regulatory pressures both externally and inter-ally to implement technology beyond ceremonial conformity.ospitals A and D demonstrated strong internalization, as each of

hese hospitals were monitoring their key performance measuresn a rolling basis and beyond what the internal benchmarks wereet by the senior management in the hospital. The Director of Phar-acy at Hospital A made a comment that highlighted this intrinsic

river “even though we have preferred suppliers that are endorsedy the state contracting body we like to compare prices through on

ine catalogs and develop relationships with specific manufacturerso supply directly in order to save the hospital money”. Hospital Bnd E reported weak internalization as they made a fairly restrainedffort to go beyond the regulatory regime of the hospital. Hospital

admitted that they were modifying their KPIs (Key Performancendicators) but there was considerable room for improvement. Sim-larly Hospital E also illustrated that even though they had staff

anually keying in orders, they had changed some roles to train

ther staff and increase their productivity.

Organization responses occur at the administrative level andechnical core. As discussed in the literature review, institutionalressures lead to a response at the administrative level, whereas the

as where to get it and what to pick and the correct units of measure. Thereforete people keying in data and we have decreased the inventory holding by 20%

internal pressures lead to a response at the technical core. HospitalB implemented IOS (i.e. the ERP system) but in a superficial way,which in turn had no impact on the technical core. This hospitaldid enough to broadcast that they had implemented the ERP sys-tem, but the system had so many bugs, according to one manager,it “actually gone backwards. . .(and) could not use the system”. Asthe users were not given adequate training and the system wasnot ready, this response by the hospital exemplified an “essen-tial workaround” where it is imperative for the users to bypassthe system to adequately complete the required task (Ferneley andSobreperez, 2006). Hospitals C, D and E reported a weak adminis-trative response. Hospital D actually created a brand new positioncalled the Strategic IT Manager. This manager then obtained therequired funding from top management and successfully imple-mented an IOS system (i.e. med station) that controls access anddispensing of drugs and links the system for procurement purposes.Hospital C had constituted a series of committees in response to theinstitutional pressures, and Hospital E reported a change in rolesand responsibilities of staff in the pharmacy department to complywith the government regulations.

One strong coercive pressure stands out in the case of HospitalB. It is associated with a strong response at the administrative level.This hospital also had weak normative and mimetic pressures. It isinteresting that two hospitals (Hospitals A and D) experience strongmimetic pressures and at the same time show strong responses atthe technical core. As discussed above, Hospital A took the initia-

tive to implement an IOS project and Hospital D followed closely.The two cases where there is a strong mimetic pressure (Hospi-tals A and D) also exhibited a strong response at the technicalcore.

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V. Bhakoo, T. Choi / Journal of Oper

Hospitals A and D experienced strong endogenous pressureshereby reporting a strong response across safety, efficiency andnternalization. In fact, people driving internal pressures trans-ated that pressure to look outwardly, searching for opportunitieso benchmark and learn. Both these hospitals also exhibited atrong internalization pressure, as they were able to channelizehe institutional pressures to make “real” changes rather than sim-le cosmetic adjustments. The fortuitous meeting of the mimetic

nstitutional pressures and strong endogenous pressures helpedreate a strong response at the technical core. Hospital E showsixed endogenous pressures (i.e. weak safety and internalization

ut strong efficiency pressures), and it leads to a strong responset the technical core. Then, the pattern across these three hospitalshows that strong efficiency pressures are associated with a strongesponse at the technical core. In Hospitals B and C, there were weakndogenous pressures. There was no response at the technical coren Hospital B and a weak response in Hospital C.

roposition 1. Strong coercive pressure coupled with weak endoge-ous pressures generates strong response at the administrative level,hereas strong mimetic pressures coupled with strong endogenousressures generates strong response at the technical core.

.2. Within tier analysis of distributors

Both Distributors A and B are significant players for pharma-eutical products within the healthcare industry. Distributor Aistributes medical equipment and pharmacy products to hospi-als, retail pharmacies, and defence organizations. This distributorad an IOS that interfaced with hospitals across all states inustralia. Distributor B is Australia’s largest distributor of phar-aceutical and consumable medical products and specializes

upplying only to hospitals. This distributor had a legacy IOS thatas experiencing problems interfacing with the software systems

f some hospitals. It was also implementing an ERP system totreamline internal operations and transact with hospitals.

In terms of institutional pressures for the distributors, bothxperienced coercive and normative pressures (Tables 4a and 4b).he mild coercive pressures that were experienced by both dis-ributors stemmed from the government initiative to ensure thatroducts used in the healthcare sector take on a unique identifier.oth distributors were being slowly nudged to populate a nationalroduct catalog for pharmaceutical products. Further, both werexperiencing normative pressures from their customers, the hos-itals. Whereas for Distributor B these pressures came primarilyrom the hospitals, there were additional pressures from the retailharmacies and from defence industries for Distributor A.

There were three types of endogenous pressures—improvingfficiency, resource allocation and internalization. As they consid-red it to be their source of competitive advantage, Distributor Aas particularly interested in improving efficiency issues involv-

ng customer service level and meeting their performance metricselating to inventory management practices. In contrast, Distribu-or B was concerned with maximization of resource allocation inerms of human resources, finances, and the necessary capabilityor IOS implementation. In terms of internalization, Distributor Aas able to seek senior management support to channel the purely

egulatory changes initiated in the organization as a platform tombark on several key initiatives in the organization. This resultedn a broader portfolio of responsibilities for the IT personnel whoad typically operated in silos with minimal interaction with the

ther departments. However, the recent changes resulted in theirnclusion in strategic business planning decisions and developingelationships with trading partners and these changes were imple-ented on a very limited basis in the organization.

Management 31 (2013) 432–449 441

At Distributor A, a significant change was taking place at thetechnical core. This distributor implemented an EDI system in sucha way that it interfaced with hospitals across all states and its capa-bility was being expanded so that it could eventually interfacewith the manufacturers. This distributor had also taken over themanagement of the materials management department of a largehospital for a contract fee, thereby diversifying its business model.At Distributor B, there was a strong administrative response, bythe hiring of a new CIO. This person was given the responsibility ofeffective IOS implementation and to reduce staff redundancy.

At first glance, the results of our analysis for the distributorsappear puzzling. First, we make a note that there is variation inorganizational responses at the administrative level. Examinationof the coercive pressures shows that they are weak at both dis-tributors. Equally weak coercive pressures are not contributing tothe variation in the organizational response. This leads to a ratherpuzzling aspect of the findings. A strong institutional pressure isexpected to lead to a strong administrative response. However,for these distributors, a strong normative pressure is associatedwith a weak administrative response, while a weak normative pres-sure is associated with a strong administrative response. Therefore,the only way the data make sense is if we correlate the normat-ive pressures with what happened at the technical core. Then, thedirections of magnitude between variables line up.

A strong normative pressure on Distributor A appears to haveimpacted on how it was implementing IOS that interfaced with itssupply chain partners. Distributor B responded to the normativepressures by making changes at the administrative level by cre-ating a new CIO position. This distributor, however, had a weaknormative pressure. Then, we note that Distributor A had a strongefficiency focus. The strong normative pressure was responsible forthe Customer Services Manager making a compelling case to theCEO of the organization to get involved with the IOS project initi-ated by Hospital A. This participation was not purely ceremonial,since Distributor A made significant changes in their distributionprocesses as a result of their participation in this project. This was,however, also coupled with a minor administrative response suchas setting up a committee to respond to regulatory changes in thesector.

Proposition 2. A strong normative institutional pressure, coupledwith a strong endogenous efficiency pressure, leads to a strong responseat the technical core.

4.3. Within tier analysis of manufacturers

Manufacturer A is an Australian-based pharmaceutical com-pany that focuses on drugs used by oncologists. At the time ofthis study, it was implementing an ERP system for internal dataintegration and electronic transaction with its suppliers. Manufac-turer B is a US-based pharmaceutical company and is the marketleader in blood, renal, and intravenous therapy. This companywas the most progressive when it came to IOS implementation.It had implemented an ERP system that interfaced with its sup-pliers upstream and hospitals downstream. It was also the firstto use RFID technology with the scope for exchanging data withhospitals. Among the three manufacturers, this company was mostactive in delivering products directly to the hospitals without usinga distributor or a third party logistics provider. Manufacturer Cis another US-based pharmaceutical company ranked among theten largest pharmaceutical manufacturers in the world. It manu-factures cardiovascular, neuroscience and oncology drugs and was

in the process of implementing an ERP system.

In terms of institutional pressures, all the manufacturers expe-rienced weak coercive pressures, with Manufacturers A and Cexperiencing weak and strong normative pressures respectively

442 V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449

Table 4aInstitutional, endogenous pressures and organizational responses by distributors.

Institutional pressure Endogenous pressure Organizational response

Distributor A c, N E, r, i a, TDistributor B c, n e, R A, t

a, weak administrative response; A, strong administrative response; c, weak coercive pressure; i, weak Internalization pressure; e, weak efficiency pressure; E, strong efficiencypressure; n, weak normative pressure; N, strong normative pressure; r, weak resource pressure; R, strong resource pressure; t, weak response at technical core; and T, strongresponse at technical core.

Table 4bIllustration of coded data for distributors.

Distributor A

Institutional c The setting up of this new regulatory agency is having an impact as the government is saying go and populate thenational product catalogue and this voice is getting stronger

N All off a sudden, we are not pushing, we are the ones being pushed by our trading partners and organizations such asthe Australian Defense Force and now we’re being pushed into what they want rather than what we have, so there isthis sudden turnaround. . .

Endogenous E One of the biggest drivers for us was that we don’t want people sitting there taking orders over the phone, we wantthem (our customers) to navigate our system electronically, when it comes down to it, that is the single and biggestdriver. Add on to that the fact that there is an inherent error rate that comes with a team of customer service peopletaking orders over the phone. You embrace electronic EDI and the problem is sorted

r Smoothing our payment flows have been a big advantagei You are getting more of the business involved in IT folk rather than just IT involved with IT the personnel. So I think

that it is significant in what is changing throughout the businessOrganization response a We have established a committee to monitor the progress on the NEHTA health care projects

T We were actually doing that vendor supply management with two hospitals, one in Victoria and other in Tasmaniawith the objective of expanding and generating significant revenue from this exercise. . .

Distributor B

Institutional c The NEHTA initiative by the central government is certainly putting pressure on us and this will intensity as they set adate for compliance

n Having electronic procurement systems are becoming standard practices in our industry and if we do not have themin place we stand to lose customers. . .

Endogenous e We are looking at options to increase our order accuracyR Everyone is trying to reduce cost and make things more accurate. . . We are attempting to reduce the man hours spent

chasing products so whatever we can do to improve the supply chain and this improves our cash flow which is reallyimportant to us

Organization response A My role (CIO) is a new one that the organization has created so that we can comply with the government pressuresand also to reduce staff. . . Besides there are a number of committees that have been instituted throughout theorganization looking at IT issues

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Tables 5a and 5b). The coercive pressures were the result of annitiative at the national level wherein the manufacturers were

andated to populate the national product catalog of medicines,lthough a date for this implementation had not been finalized.here were normative pressures for Manufacturers A and C. Theressures came largely from the hospitals and the government.ospitals were pressuring the manufacturers to transact electroni-ally with the distributors and allocate bar codes at different levelsf product packaging. The hospitals were aware that such IOS

mplementations by the manufacturers would build on their impro-isational capabilities and handle other unforseen events such asroduct recalls (Pavlou and Sawy, 2010). The government waslso working with professional associations to develop electronic

able 5anstitutional, endogenous pressures and organizational responses by manufacturers.

Institutionalpressure

Endogenouspressure

Organizationalresponse

Manufacturer A c, n e, R, s, i tManufacturer B c E, r, i a, TManufacturer C c, N e, R A, t

, weak administrative response; A, strong administrative response; c, weak coer-ive pressure; e, weak efficiency pressure; E, strong efficiency pressure; n, weakormative pressure; N, strong normative pressure; r, weak resource pressure; R,trong resource pressure; s, weak safety pressure; t, weak response at technicalore; T, strong response at technical core; and i, weak internalization pressure.

ystem to the hospitals with the new scanning technology that we have

commerce standards for this industry. In particular, ManufacturerC perceived a much stronger normative pressure and exhibitedurgency in its view regarding the pressure from hospitals. One man-ager quipped, “If the health care provider wasn’t asking for it, wewouldn’t even be looking at it. . .absolutely the push is 100 per centdriven by the health care provider.” Interestingly, there was noevidence for normative pressures from the hospitals in the caseof Manufacturer B, even though its interaction with the hospitalsoccurred at a much higher level when compared with the other twomanufacturers.

The manufacturers identified four types of endogenouspressures—improving operational efficiency, resource allocation,patient safety and internalization. In the case of Manufacturer A,the main operational driver was improving techniques in inventorymanagement, although they were more concerned about resourceissues such as improving the cash flow to free up capital for researchand development. Manufacturer A also exhibited a weak internal-ization driver, which was categorically stated by the supply chainmanager in outlining their strategy for the future “So a part of thisproject (populating the national product catalog) would be to takeour learnings in the UK and US implementation as these regionswill go down this route at some stage”.

Manufacturer B focused on improving operational efficiencysuch as providing excellent customer service, streamlining mate-rial and information flows, and reducing errors. Resource issuesdid not come across as being as central. In terms of internalization,

V. Bhakoo, T. Choi / Journal of Operations Management 31 (2013) 432–449 443

Table 5bIllustration of coded data for manufacturers.

Manufacturer A

Institutional c This is a turning point for the industry as the government is mandating that we populate the national productcatalogue

n We are being pressurized by our customers i.e. hospitals to adopt e-commerce systemsEndogenous e For us, it is manufacturing efficiency, customer service and inventory is the basic step in that principle and we are

looking at getting that down. . .R The biggest benefit that an organization gets out of it is the benefit of faster cash flow and working capital and that is

the biggest opportunities for the pharmaceutical sector overalls Incorrect bar coding in the grocery industry would make a customer angry whereas in our industry there is no other

recourse and it could prove fatal so you cannot let it go out into the market placei Our KPIs are rolling as far as we put something in place till it is working and then drop it and go on to the next one.

This is reviewed every quarter and if not valid as technology changes then we get rid of themOrganization response t When we talk about our supplier’s relationships we have halved our lead times for some global products and got the

inventories down

Manfucturer B

Institutional c We have to gain compliance in the marketplace with the ongoing regulatory changes in the technology domainEndogenous E Error reduction is a significant driver if we can get the correct order with the correct prices for the correct item with

the correct unit measure and get that aligned with the system then right throughout the supply chain we are going toget benefits from that. This means we are not going to be picking the wrong stock and therefore not get a pile ofcustomer returns

r Access to finances is an issue within our organization as our customers are reluctant to contribute to the building orinvesting in a system so we have to completely rely on our deep pockets for funding any project

i We are required to have a bar code on a product as we are selling our product over the counter; however we arescanning the EAN 128 (bar code standard) on the carton even though the customers are not asking us to do that at themoment

Organization response a With all the scrutiny with anything that touches the finances we have to be extra careful so in some processes wehave added extra steps so some things that used to take two minutes now take two hours! This is particularly withour ERP system

T We are one of the only manufacturer’s that has implemented RFID technology internally for warehouse managementpurposes and discussing how it can be applied across the broader supply chain particularly with the hospitals sincewe distribute directly to them. I can also show you how we improved our KPIs (actual documents were handed to theresearcher)

Manfucturer C

Institutional c Our organization (here in Australia) is under pressure from its head quarters to implement a supply chain planningsystem and also the drive with the current NEHTA initiative

N As more and more government puts pressure from top and customers from underneath we are having to re-think ourIT strategy but without our customers asking us for this we would have taken an even longer time. . .

Endogenous e In the event of a stock recall, if all of our distributors have scanned what comes in, they’ve got an electronic record ofwhat’s in and where it is, and so they can go straight to it without opening any boxes

R . . .but there is also significant costs incurred in changing over to that electronic inventory management, and at themoment for us, from what I understand, our senior management is not really concerned about switching over andspending the money to change the inventory management system

Organization response A There is a lot of re-structuring going on and my role was created just 18 months ago because of all these regulatorychanges . . .none of our current flow of products imported or manufactured here is followed electronically. Althoughwe have created the documentation for some systems but we don’t really follow it

em th

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t We have implemented one systproject initiated by Hospital A

his organization had implemented bar codes on cartons to improveracking of the products through the supply chain even thoughhe customer (hospital) had not asked for it. Finally, Manufac-urer C experienced a strong endogenous pressure to improveesource issues by reducing cost through implementation of IOS.he management at Manufacturer C was particularly concernedbout several products coming off patents. This would spell dis-ontinuation of the super normal profits that this company hadeen accustomed to making. The windfall profits, while the drug

s patent protected, would typically mask the inefficiencies in theompany. This was categorically stated by the supply chain man-ger “Right now the key impediment in the implementation of anyew form of electronic trading system is that it will cost to changever from the existing system and nobody wants to spend moneyt this stage.”

For Manufacturer A, there was a weak response at the techni-

al core and none at the administrative level. It was implementingn ERP system that interfaced with its suppliers to reduce leadime. Manufacturer B showed a minor administrative response.his was exemplified in the implementation of the ERP system as

at interfaces between our key supplier and us and that has happened due to the

“extra processes” were added in order to appease the regulatoryauthorities. This act represented a harmless workaround as thisworkaround did not sabotage the accuracy of the captured data,although it made the process more time consuming (Lapointe andRivard, 2005). Since this company was a large multinational cor-poration, it had to make the necessary changes in its ERP systemto comply with the Sarbanes-Oxley Act. However, a more seriousresponse occurred at the technical core. This company made sig-nificant changes by implementing RFID technology and the ERPsystem to control inventory across the supply chain. Finally, Man-ufacturer C had a strong administrative response. This companyceremoniously installed a form of electronic trading and only for afew product lines. It also created a role of a supply chain managerto appease the customers.

Overall, institutional pressures were causing a response at theadministrative level (see Manufacturers B and C). Manufacturer C

with strong institutional pressures was under considerable pres-sure to implement technology from the healthcare providers butwas ceremoniously making changes at the administrative level bycreating a new role and using technology standards for select lines

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nly. There was limited evidence in the cases of administrativeesponses to low and medium institutional pressures.

Manufacturer B in this study was motivated by the strong oper-tional efficiency factors such as error reduction and improvingustomer satisfaction. This led to a strong technological response inerms of strategic approaches to managing inventory in hospitals,mplementation of RFID technology and streamlining informationows with upstream and downstream trading partners. However,

or Manufacturers A and C, a strong endogenous resource pres-ure was leading to a weak response at the technical core whichas predominantly due to the paucity of financial resources in the

rganization.

roposition 3. Strong efficiency pressures coupled with weak insti-utional pressures lead to a strong response at the technical core,hereas strong normative pressures coupled with strong resourceressures lead to a strong response at the administrative level.

. Cross-tier analysis

The within-tier analysis discussed in the section above lookscross various organizations within each tier of the healthcare sup-ly chain. We now conduct our analysis across the three tiers inhe healthcare supply chain. Our goal is to capture the institutionalynamics at the supply chain level so that we can provide a betternderstanding of heterogeneity.

We first look for patterns for institutional pressures across theupply chain. Then we do the same for the endogenous pressures.fter that, we look at the organizational responses across the supplyhain. We address how organizations responded to the institu-ional pressures at the administrative level and to the endogenousressures at the technical core.

.1. Institutional pressures

It is striking how prevalent the normative pressures are whenooking across the three tables under institutional pressuresTables 3a, 3b, 4a, 4b, 5a and 5b). The strength may vary but its present all across the three tiers. The mimetic pressures wereresent only at the downstream of the supply chain among theospitals. Upstream to the hospitals, the mimetic pressures did notccur at the distributors or the manufacturers’ level. In contrast, theoercive pressures occurred mostly at the upstream to hospitals athe distributor and manufacturers levels.

roposition 4. The normative pressures are ubiquitous across theupply chain, whereas the salience of the mimetic and coerciveressures is isolated, respectively, to the downstream (hospitals) ando the upstream (distributors and manufacturers).

.2. Endogenous pressures

Four types of endogenous pressures have been identified inur within-tier analysis—efficiency improvement, patient safety,esource allocations and internalization. Among them, efficiency,esources pressures and internalization are most ubiquitous acrosshe supply chain. Although only the strong concern for resourcess confined to the upstream side of the supply chain, the strongnternalization is dominant at the downstream in the supply chain.imilarly, not surprisingly the safety concerns occur largely at theownstream hospital level. There is one case of a weak safety con-ern at Manufacturer A, but this internal pressure turned out to be

nconsequential.

roposition 5. The efficiency, internalization and resourcesressures are present across all tiers of the supply chain but theesource pressure is more prevalent at the upstream whereas strong

Management 31 (2013) 432–449

internalization and safety concerns are more prevalent at the down-stream.

5.3. Organizational responses

Scanning through the organizational responses across the tiers,we observe that in general a strong institutional pressure (e.g.Hospital B and Manufacturer C) is associated with a strong admin-istrative response. At the same time, weak institutional pressures(e.g. Hospital C, Hospital E, Manufacturer A and Manufacturer B)are associated with weak responses at the administrative level. Interms of endogenous pressures, we observed that in all the caseswhere there is a strong efficiency driver as an endogenous pressure,a strong response at the technical core occurs (e.g. Hospital A, Hos-pital D, Hospital E, Distributor A, and Manufacturer B). Thereforeour data support the conditions for organizational decoupling.

However, there were cases where there was a strong institu-tional pressure and a strong internal efficiency pressure occurringat the same time (e.g. Hospital A, Hospital D, and Distributor A).In these cases, the internal stakeholders seemed to use the insti-tutional pressures, particularly normative and mimetic, to theiradvantage and try to drive home the changes at the technical core.In all these cases, when a strong efficiency pressure was present,it resulted in strong changes at the technical core such as initia-tion of new projects with trading partners (e.g. “Monash Project”),developing a more robust set of performance measures and demon-strating a tangible savings in inventory and using technology fordeveloping collaborative relationship with trading partners. Thechanges by these organizations were so comprehensive that theycompletely circumvent the strong institutional pressures. We labelthis condition as the “short circuiting of the decoupled state”.

Proposition 6. Strong institutional pressures (normative andmimetic) when coupled with a strong efficiency pressure, generatean internalization pressure that tends to penetrate the administrativelayer and lead to a strong response at the technical core.

6. Discussion, implications and future research

Implementation of IOS is a complex phenomenon, and the depthof response to institutional pressures varies across different tiers inthe healthcare supply chain. The propositions developed providea comprehensive understanding of two intriguing issues. First,they highlight how the combination of institutional pressures andendogenous factors lead to differential outcomes at each tier inthe supply chain (Propositions 1–3). Second, the propositions alsoprovide a better understanding of heterogeneity in terms of whichinstitutional and endogenous pressures dominate a specific tier ofthe supply chain and also highlight how the confluence of insti-tutional and endogenous factors leads to differential outcomes(Propositions 4–6).

Our findings extend the work of IS scholars who have beengrappling with this complex and intriguing research problemof understanding the interplay of endogenous and institutionalpressures when an organization implements IOS (Bala andVenkatesh, 2007; Liang et al., 2007). We also extend the workof scholars who have identified the key institutional factors asantecedents of adoption (Liu et al., 2010; Teo et al., 2003) by illus-trating how the contingent role of institutional pressures changesduring implementation and, specifically, how the endogenous envi-ronment of the organization gains currency during the process (Balaand Venkatesh, 2007; Rai et al., 2009).

We now provide a more comprehensive explanation of whyinstitutional heterogeneity has unfolded across the three tiers ofthe supply chain. Our research highlights that not all three typesof institutional pressures operate the same way across the supply

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hain. Some are ubiquitous and some appear more isolated. Thebiquity of normative pressures could be attributed to two reasons.irst, professional and government bodies are being proactive innstilling norms across the supply chain in the context of IOS imple-

entation (Bala and Venkatesh, 2007). Further, the strong networkies that exist within this industry are accelerating the diffusionf these norms among the players operating within the industry.econd, the quest for acquiring legitimacy is a rather compellingoncern within the healthcare domain specifically among the dis-ributors and manufacturers that are being driven by the hospitals.s hospitals were the bulk buyers for pharmaceutical products theyere able to exercise stronger normative pressures for the imple-entation of IOS projects.This is consistent with Bala and Venkatesh (2007) who have

lso identified normative pressures exerted by dominant tradingartners as playing a key role in accelerating implementation of

OS. Resource investments by the hospital’s trading partners inuch projects would indirectly enhance their process alignmentnd develop capabilities regarding information sharing therebymproving their efficiency and lead to tighter relationship with theuying firm (Rai et al., 2006; Klein and Rai, 2009; Rai and Tang,010).

The coercive pressures more prevalent in the upstream of theupply chain could be due to the government’s perception of thepstream players as a bottleneck for supply chain integration. Sincehe full benefits of IOS can be realized through investments in suchystems beginning with the manufacturers in the upstream of theupply chain, it is likely that governments are building regulatoryressures for favorable implementations of IOS applications therePatyakuni et al., 2006; Rai and Tang, 2010).

In terms of mimetic pressures, our study found that mimickingas more visible downstream, with public hospitals mimick-

ng each other. This finding may appear puzzling to institutionalheorists, as institutional theory has become synonymous with

imetic isomorphism, specifically, among competing organiza-ions (Mizruchi and Fein, 1999; Tingling and Parent, 2002). Whate found is that these hospitals tend to be non-competitive and are

pen to sharing information regarding the efficiencies achieved bymplementing IOS. The practice of benchmarking was quite preva-ent, and this observation provides a plausible reason for mimeticehavior among public hospitals. They benchmark or mimic the

eading players in the field so that they could reach out to otherprogressive hospitals” that operate within the same environmentVenkatesh and Bala, 2012). Because hospitals have limited experi-nce in implementing IOS, they wanted to reach out to their peerso that they could receive adequate training and advice to imple-ent these systems (Fichman et al., 2011). A plausible reason why

pstream pharmaceutical manufacturers did not exhibit mimeticehavior might be due to the secrecy and patents surrounding theharmaceutical industry (Shah, 2004).

Among the endogenous organizational drivers, three key fac-ors warrant discussion so that we are able to develop cogentnderstanding of heterogeneity. First, issues of resource rigid-

ty seemed to be playing a key role in the implementation ofOS with the upstream section of the supply chain (Bala andenkatesh, 2007; Gilbert, 2005). The dominance of the resourceoncerns can be explained largely due to shortening of patent livesor the pharmaceutical manufacturers (Shah, 2004) and by thentense competition among the distributors for very slim margins.esource concerns, however, did not dominate the public hospitalst the downstream end of the supply chain. The second issue thatas rather alarming was the absence of patient safety concerns

pstream in the supply chain. On the one hand, it is not surpris-

ng that our study has echoed what other IS researchers have beenuggesting as reducing medical errors is a key priority in health-are as they are expensive, increase the length of stay of patients

Management 31 (2013) 432–449 445

and lead to detrimental consequences such as loss of human lives(Aron et al., 2011; Leape and Berwick, 2005). On the other hand, itis disconcerting that the upstream players such as manufacturersand distributors would see this differently. One possible explana-tion might be that they are removed from the actual interactionwith patients and are overcome by profit maximization motives.Finally, we found internalization to be relatively strong among thehospitals. It was rather intriguing to observe as the hospitals wereattempting to channel the changes made at the administrative levelinto a more comprehensive overhaul of IT practices in their depart-ments. More specifically, the internal pressure was most potentwhen there was strong senior management support which high-lights how organizations were able to go beyond decoupling if theyhad a strong drive for achieving efficiency. This finding supportsthe work of other IS scholars who have mentioned top manage-ment support as a key ingredient to successful implementation ofIOS (Rai et al., 2009; Liang et al., 2007).

The other striking issue that came out of the endogenousdrivers was how each one of them had a different impact on thetechnical core and administrative level. For example, strong effi-ciency pressures led to responses at the technical core where asresource issues led to responses at the administrative level. Thiscan be explained by the fact that efficiency drivers were effectivein overcoming the organizational tendency to make purely cos-metic changes, whereas resource rigidity could work as the perfectalibi for developing cosmetic responses at the administrative level.These factors help explain institutional heterogeneity in our study.

Consistent with past literature, we have verified the presenceof institutional decoupling in organizations (Choi and Eboch, 1998)and advanced the literature by identifying the more specific con-ditions in which decoupling becomes short-circuited. Decouplingwas present when strong institutional pressures lead to ceremo-nial changes in an organization (Barratt and Choi, 2007; Choi andEboch, 1998). We found that coercive pressures were particularlypotent when applied in conjunction with a normative pressure.This was exemplified by the workarounds that were undertakenby two organizations in our study. The workarounds highlight theimportance of organizational readiness when implementing IOS(Rai et al., 2009).

6.1. Implications for theory

Our study responds to the call by scholars in the IS and OM dis-ciplines to extend institutional theory arguments (Choi and Eboch,1998; Gosain, 2004; Liu et al., 2010; Orlikowski and Barley, 2001;Rogers et al., 2007). The results extend arguments within the iso-morphism/heterogeneity and decoupling schools of thought withinneo-institutional theory. Our study is the first of its kind thatsystematically demonstrates the impact of institutional pressuresacross the different tiers in the supply chain. In particular, itpropels the current conversations surrounding neo-institutionaltheory around heterogeneity (Greenwood et al., 2008; Bunduchiet al., 2008). We highlight that, even though organizations maybe embedded within the same institutional field, the presence ofdifferent pressures, both endogenous and institutional, leads orga-nizations to respond heterogeneously and with varied intensity.Our study therefore has taken a step toward addressing the con-fusion that exists within the OM context on the simultaneouspresence of institutional and endogenous pressures within a tierand across different tiers of a supply chain. This complex inter-play of institutional pressures may not lead to isomorphism, asillustrated by the responses across the three tiers of the supply

chain.

We have also responded to calls by scholars to study institu-tional decoupling in complex OM contexts (Rogers et al., 2007).Institutional decoupling is inherently a multi- level phenomenon

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hat requires an understanding of both the macro-institutionalressures as well as account for an organization’s individual cir-umstances (Tilcsik, 2010). We advance our understanding onnstitutional decoupling for the implementation of IOS across theupply chain. Understanding decoupling practices within the orga-izations is a challenging endeavor in itself (Westphal and Zajac,001), but assessing it across a supply chain adds an additional

ayer of complexity. The findings take us beyond decoupling toighlight how mimetic and efficiency pressures work in conjunc-ion to produce strong responses at the technical core which wouldertainly have intriguing implications for institutional theorists.hese pressures enabled us to identify a special condition whenhe decoupled state gets short circuited. Finally, we were able toevelop a better understanding of the mechanisms of how insti-utional pressures work across the three tiers of the supply chain.or instance, we indentify that strong coercive pressure if exertedn an organization tends to generate a cosmetic response at thedministrative level.

This study also contributes to the IS scholarly community.y diving deeper into institutional theory arguments, we have

llustrated how the underlying characteristics of IOS facilitate orga-izations to no longer be trapped in “iron cages.” We were ableo develop a better understanding of heterogeneity as an institu-ional outcome by studying the rationale behind implementationf IOS across different organizations. Thus, we extend the work ofS scholars who have employed institutional theory arguments totudy post-adoption behavior in the implementation of IOS (Baland Venkatesh, 2007; Liang et al., 2007).

We also extend the work of health informatics scholars by high-ighting how the institutional climate and the different endogenousactors become important when implementing IOS (Bhattacherjeet al., 2007; Goh et al., 2011). These dynamics also vary dependingn which tier in the supply chain the organization is located. Fur-her, we have identified efficiency as a critical endogenous driveror implementing IOS at the technical core of the organization.his pressure is really crucial as it fuels internalization which actsn antidote to organizational tendency to implement technologyuperficially. When the adoption of IOS is internalized beyond thenstitutional rationale, organizations are able to develop capabil-ties that facilitate process alignment, leverage investment withrading partners and address other inertial mechanisms (Patyakunit al., 2006; Rai and Tang, 2010). Thus, we extend the work ofealth informatics scholars who have identified error reductionnd achieving operational efficiency as a key endogenous drivern health care (Aron et al., 2011). In addition, we identify thentecedent regulatory environment under which the workaroundsxist; for example, a strong coercive pressure would typically leado a workaround. By doing so we extend the work of (Ferneley andobreperez, 2006; Kobayashi et al., 2005) and highlight the impor-ance of organizational readiness (Rai et al., 2009; Venkatesh andala, 2012).

Finally, we also contribute methodologically, by employing aested supply chain design for an inductive case study and demon-trate how the traditional approach of conducting within and crossase analysis needs to be modified when applied in a supply chainontext.

.2. Implications for practice

Our study also makes several practical contributions. First, ashe healthcare sector in most developed countries is undergoingignificant reforms and experiencing strong normative and coer-

ive pressures, the results of our study offer some parametersor governments to consider about the wisdom of imposing theseressures in the supply chain. For instance, a coercive pressurey the government may be counterproductive and may result in

Management 31 (2013) 432–449

hospitals implementing workarounds that may have detrimentaleffects on the overall quality of care offered to the patients. Thisgenerally happens when regulations are enforced without provid-ing adequate technical support, skills and training to the hospitals.These pressures are ineffective if the organization is not ready ordoes not have adequate infrastructure or supportive leadership.Therefore, the government should provide adequate training sup-port, workshops and seminars and instill confidence amongst theusers before the implementation of IOS. Second, despite the strongrhetoric on building and sustaining a safety culture in public health,we found that upstream organizations in the supply chain (i.e. man-ufacturers and distributors) did not seem overly concerned aboutsafety issues. This finding is rather alarming, as promoting a cul-ture of safety needs to be driven from upstream in the supplychain. Therefore, the upstream section of the supply chain needs topay more attention to safety, which can then diffuse downstreamthroughout the supply chain. As investments in IOS require coop-eration with trading partners (Rai and Tang, 2010), it is importantthat joint initiatives be launched within this domain. This is par-ticularly important for a fragmented industry such as healthcare.Such initiatives will ensure that all trading partners make an ade-quate financial and technical investment and will be lead to fruitfuloutcomes. In addition, such collaborative projects will ensure thattrading partners are willing to develop an understanding of thedrivers and bottlenecks for each organization, which will maximizethe investment returns in the long term (Patyakuni et al., 2006).

Finally, our study has implications for IT vendors. These ven-dors in the healthcare industry need to target and develop IOSsystems appropriately for different players across the supply chain.For example resource issues dominated the upstream segment ofthe supply chain; therefore, they need to highlight the cost sav-ing and return on investment benefits when marketing solutionsto the manufacturers and distributors, whereas safety features willbe really critical for the hospitals. In addition, the hospitals in ourstudy exhibited mimetic pressures. Therefore, it would be prudentfor IT vendors to provide reference of the hospitals that are usingthe system and possibly include it in their marketing material as itmay alleviate the fear among the potential adopters of IOS.

6.3. Limitations of the study

There are limitations to this study. As is true of qualitativestudies that suffer from lack of external validity our study is notan exception. The propositions developed are based on limitednumber of case data. Therefore, we cannot draw overarching gen-eralizations from the results. However, we did take some stepsto overcome this limitation by selecting a variety of organizationswithin each tier in the supply chain and interviewing people withsimilar designations at each tier in the supply chain. We also usedindustry experts to review the data as they were being collectedand analyzed. Another limitation may come from the fact that thekey constructs (i.e. normative, coercive and mimetic pressures)came from the literature rather than from the data. A purist wouldcriticize this approach as violating the spirit of grounded-theorybuilding approach (Chamaz, 2006; Glaser and Strauss, 1967). How-ever, the constructs from the institutional theory were extremelywell-established and we delineated our research as one that stud-ies these constructs in the supply chain and IS settings. And welearned more about how these key constructs behave differently atdifferent tiers of a supply chain.

6.4. Implications for future research

This study intersects IS and OM disciplines and employs insti-tutional theory arguments. There are several ways scholars fromIS and OM can take this study further. First, institutional theorists

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ave been debating the constitution of an institutional field andhe impact of disruptions in institutional fields due to regulatoryhanges (DiMaggio and Powell, 1983; Hardy and Maguire, 2010).he government in Australia is setting up a number of regulatorygencies to accelerate the adoption of supply chain standards. Inur study, we observed tensions that were straining not only thentra organizational dynamics but that these pressures were alsoaving an impact across organizations nestled in different tiers ofhe supply chain. These regulations were changing the power struc-ures of technology providers and professional associations. Thevolving nature of this institutional field would be of interest tonstitutional theorists and OM academics. A longitudinal case studyesign would be appropriate for addressing this empirical problem.

Second, decoupling of IOS implementations has implications onhe internal perceptions of the organization as well as the imagehat it is attempting to cast within its broader institutional field. Forxample, if decoupling occurs how does it affect the morale of themployees? How do different stakeholders in the supply chain viewn organization when it ceremonially implements IOS? Perhapshese questions can be investigated further using social identityheory (Dutton and Dukerich, 1991; Tajfel and Turner, 1986) inonjunction with institutional theory.

Third, IS scholars would be interested in conducting a deepernalysis of the impact of intrinsic factors such as occupa-ional issues, traditions and the broader organizational culture asnternal drivers that impact the implementation of technology.ense-making theory (Weick, 1995) would be complementary tonstitutional theory. This theoretical perspective argues that cogni-ive understandings, norms and routines are constructed over timehrough a process of interpersonal interaction. Employing sense

aking theory in conjunction with institutional theory would offer balance can be maintained between an organization’s individualircumstances and the broader institutional environment. Finally,nother promising avenue for future research for the IS scholarsould be to tease out the issue of IT heterogeneity employing Swan-

on’s Tri Core model (Swanson, 1994) and conceptualize how itsmplementation effects different institutional environments (otherhan health care).

To conclude, our study has extensively engaged with institu-ional theory arguments to tackle several prickly issues related toOS implementations across different tiers of the healthcare sup-ly chain. By employing an inductive qualitative research design,e have demonstrated that even though organizations may be

mbedded within the same institutional field, the interaction ofoth endogenous and institutional pressures results in heteroge-eous rather than isomorphic consequences. Thus, we seriouslyuestion the ‘iron cage’ analogy in the digital era where organiza-ions experience different endogenous and institutional pressureso implement a multitude of IOS systems at their disposal. We hopehat our avenues for future research will provide IS and OM scholars

fertile incubation ground to design studies that can build, extendnd test these ideas.

ppendix A. Interview protocol

.1. General questions

What is your role in the organization and what responsibilitiesdoes it include?What is the management structure of your organization?

Where does your organization fit within the Hospital SupplyChain? Manufacturer ------- Distributor ------------ HospitalWhat products/services are offered by your organization? Howmany stock keeping units (SKUs) do you have?

Management 31 (2013) 432–449 447

• What is the size of your organization (employees and annualturnover)? How many suppliers do you have?

A.2. Perceived institutional and endogenous pressures

• What IOS systems has your organization implemented in the lasttwo to three years?

• What were the external drivers for the implementation of thesesystems?

• What role did the government play in these initiatives? Were youcoerced into implementing IOS within your organization?

• What roles were trading partners (suppliers and customers) andcompetitors playing in the adoption of IOS?

• What were the principle internal drivers for implanting tech-nology within your organization? Was it efficiency concerns,financial aspects, senior management or issues to do with patientsafety?

A.3. Organizational responses to institutional and endogenouspressures

• What changes has your organization made in response to thesepressures?

• Has your organization changed existing processes (procure-ment, distribution and inventory management) or embarked ona benchmarking exercise as a result of these pressures?

• How have roles and responsibilities of existing employeeschanged or have new organizational structures been created as aresponse to these pressures?

• What kind of pressure internal/external has created a real changein your organization?

• What are the impediments in implementing these initiatives?What additional support was required in implementing IOSwithin your organization?

• What were the associated risks in the implementation of IOS?• What training was provided to users in the implementation of

these technologies?• What suggestions do you have for the successful implementation

of IOS across the supply chain?

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