Transforming Healthcare through Entrepreneurial Innovations: An Institutional View

Transforming Healthcare through Entrepreneurial Innovations: An Institutional View

Arto Wallin (VTT Technical Research Centre of Finland, Oulu, Finland)
Copyright: © 2017 |Pages: 17
DOI: 10.4018/IJESMA.2017010101


Although digitalization has profoundly changed the business logic in many industries, the healthcare sector still operates in many areas as in the pre-digital era. During recent years, humans have witnessed the rise of new digital health ventures, many of which have revolutionary ideas of how to transform business logics in the organizational fields of healthcare. However, in many cases the institutional arrangements of the field are so strong that new ventures face major challenges in breaking the institutional elements that prevent the introduction and diffusion of service innovations. This paper studies the cases of five companies that aim to transform specific niche areas in healthcare and how these entrepreneurs perceive the influence of institutional elements on their actions.
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1. Introduction

During the past 20 years, information and communication technologies (ICT) have profoundly changed our everyday lives and transformed business logics in several industries. On the one hand, ICT has enabled massive digital transformation in several previously product-oriented industries. As a result information intensive goods such as software, music and movies have been relabelled as digital services and behave like services or “as-a-service” (Ng, Vargo, & Smith, 2013). On the other hand, digitalization is transforming other industries, such as banking, from physical service activities to standardized digital services that behave more like goods (Ng et al., 2013). Although digitalization in healthcare has progressed at a much slower pace, policy makers across the globe are now looking to digitalize healthcare systems in order to make them safer, more affordable and more accessible (Agarwal, Gao, DesRoches, & Jha, 2010).

Renewal in healthcare has long been understood as the adoption of new medical tools and drugs (Djellal & Gallouj, 2008). At the same time entrepreneurial innovations, which challenge the status quo-preserving industry incumbents by breaking established institutions and development paths (Autio, Kenney, Mustar, Siegel, & Wright, 2014; Garud, Gehman, & Giuliani, 2014; Schumpeter, 1934) seemed to be very rare. Despite considerable institutional barriers to entrepreneurial innovation, it finally seems that the major transformation of the healthcare industry is inevitable. The major pressure for change in the sociotechnical regimes (Geels & Schot, 2007) of healthcare comes from two directions. Firstly, major changes at the landscape level, for example, the age-dependency ratio and spiraling healthcare costs, have created an urgent need to rethink how the effectiveness of the health and social care service can be improved. Secondly, an increasing number of new ventures, referred to as digital health start-ups within the start-up scene, are building up momentum for major changes. These ventures, which are often located at the periphery of the field, contribute to major transformations by developing ICT-enabled service innovations to change some niche areas of healthcare. Thereby, they act as institutional entrepreneurs who, regardless of their initial intentions to change institutional arrangements, initiate and actively participate in the implementation of changes that diverge from existing institutions (Battilana, Leca, & Boxenbaum, 2009).

While healthcare transformation is ongoing in practice, different research streams have slowly begun to adopt institutional approaches to studying the transformation. In the service research, service-dominant logic (SDL) has been extended by an institutional approach, which highlights actor-generated institutions and institutional arrangements (i.e. an interdependent set of institutions) as the fifth axiom (Vargo & Lusch, 2016). Also, actors and actions aimed at initiating and implementing institutional change have received notable academic attention (e.g. Pacheco, York, Dean, & Sarasvathy, 2010), but there is surprisingly little research on institutional entrepreneurship in the healthcare domain. This paper aims to increase the understanding of how different institutional elements constrain entrepreneurial innovation in the context of healthcare, and provide new insights into ongoing digitalization in healthcare from the perspective of digital health ventures. Accordingly, the research question is:

How institutional constraints are experienced by new ventures that aim to introduce ICT-enabled service innovations to niche areas of healthcare?

The rest of the paper is outlined as follows: section two explores existing research that is relevant for the study; in section three, the research methodology and context is shortly introduced; and then the findings of the study are described in section four; section five starts with theoretical discussion, which is continued by presenting managerial implications; finally, the conclusions of the study are summarised.

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