Week12_Salge et al. (2015)_Xinyu

Investing in Information Systems: On the Behavioral and Institutional Search Mechanisms Underpinning Hospitals’ IS Investment Decisions

While most of the literature on IS investment is focusing on the adoption and the value of IS investments, little literature inquiries the determinants of those investments. To this end, this paper conceptualizes senior managers’ decisions on IS investments in hospitals as four search mechanisms that jointly determine IS investment intensity of an organization.

Based on the behavioral theory of the firm (for the first two mechanisms) and the institutional theory (for the last two mechanisms), the four search mechanisms proposed are problemistic search, slack search, institutionalized search, and mimetic search, as described below. Problemistic search occurs when senior managers realize that there are problems to be solved, and is measured by the difference between hospitals’ current performance and expected performance. Slack search is motivated by financial surplus, which arises excess capital resource that allows managers to make investments; this is captured by the liquidity of hospitals’ financial performance. Institutionalized search is routine-based, temporally stable investments which is measured by the one-year lagged IS investment intensity of the organization. Finally, mimetic search is the imitation of the investment done by peer organizations, and is captured by the IS investment intensity of a reference group.

The paper empirically proves that problemistic search, institutional search and mimetic search are three mechanisms that directly lead to IS investment. It also proposes a moderating role of regulative legitimacy, and shows that slack search, institutional search and mimetic search indirectly determine IS investment, through the moderation of regulative legitimacy.