Does Analytics Help Resolve Equivocality in the Healthcare Context? Contrasting the Effects of Analyzability and Differentiation

Abstract

Organizations are increasingly using data analytics to help make decisions and drive positive outcomes. But organizational scholarship has warned us that the sort of information processing associated with analytic capabilities, while effective for uncertainty reduction, may be less effective in equivocal contexts. Equivocality is evident when tasks are not easily analyzable (task analyzability) or when organizational departments are highly differentiated (differentiation). We hypothesize that analytics will be less effective in driving positive outcomes when equivocality is high because of low task analyzability. However, when an organization is more differentiated, resulting in high equivocality, we anticipate that analytics will be more effective in driving positive outcomes. To test this theory, we studied how clinical healthcare analytics influenced experiential quality (akin to patient satisfaction) in over 3,000 hospitals across nine years. Our results show that analytics capabilities, on average, do improve outcomes in terms of patient experiential quality, suggesting that analytics can reduce uncertainty, but we also found evidence for the moderating role of equivocality. Specifically, as task analyzability decreases (i.e., increasing equivocality), clinical healthcare analytics becomes less effective in improving experiential quality. However, when equivocality is high because of differentiation, there is a positive relationship between clinical healthcare analytics and experiential quality but only in larger hospitals. From a managerial perspective, this study has implications for boundary conditions of data analytics in organizations.