The Doctor will See You Elsewhere: Enterprise Information Systems and the Changing Control of Firm Activities

Abstract

In this work, we examine how the adoption of enterprise information systems affects the ability of high agency organizational actors to control the activities performed by firms, including both what those activities are and where they are done. While extant research highlights the ability of managers to more carefully manipulate the activities performed by the firm when enterprise IT is adopted, work has yet to examine whether high agency subordinates will use such technology to appropriate rents. Empirically, we investigate whether surgeons reallocate patients to ambulatory care settings for treatment after the adoption of electronic health records (EHR). Findings suggest that while the adoption of basic EHR technology has limited effect, the adoption of advanced EHRs dramatically increases the number of patients treated in an ambulatory care setting. Interestingly, these relationships are strongly moderated by both the financial incentives of the physician and the profit motives of the hospital. Practical and theoretical implications are discussed within.