Examining the Impact of Governance Structure and Health Information Technology Enabled Capabilities

Absorptive capacity reflects an organization’s ability to identify, assimilate, and exploit valuable knowledge from the environment to improve business performance. The IS literature has provided important insights into how an organization’s internal and external IT-enabled capabilities influence its absorptive capacity. However, the current literature has not considered how the assimilation of new knowledge may be hampered if the organizational partners have divergent interests that limit strategic cooperation and operational coordination. Drawing on a large dataset from the American Hospital Association, we empirically examine the impact of specific governance structures (multihospital system members and individual hospitals)—that can shape divergent interests among the constituent members—may influence a hospital’s absorptive capacity. We also examine the role of internal and external IT-enabled capabilities on absorptive capacity of hospitals. We found that a multihospital system membership has a positive association with absorptive capacity of the member hospitals. We also found that a multihospital system membership positively moderates the relationship between IT-enabled capability and absorptive capacity. Thus, this study extends the IS literature on absorptive capacity by theoretically and empirically establishing links between governance structure, IT-enabled capability, and absorptive capacity.