Competitive balance implications for hospitals of innovations in networked electronic health records

Purpose – The purpose of this paper is to examine the implications of electronic health records (EHRs) for competitive balance among hospitals in the USA. Design/methodology/approach – To analyze the competitive balance implications of EHR networks on hospitals, the authors reviewed empirical, theoretical and practical literatures bearing on the problem. Findings – US hospitals are increasingly facing decisions regarding whether, when and how to participate in networks of EHRs. EHRs can replace paper‐based medical records, improve the quality of patient care and decrease medical errors. EHRs also support product innovations such as e‐visits and online prescribing. Such a significant innovation will alter the competitive standing of many hospitals, some favorably and others unfavorably. Hospitals with dynamic capabilities, absorptive capacity and organizational designs that facilitate innovation will fair best. Practical implications – Hospitals can also utilize several strategies to increase their odds of improving their competitive positions as the industry adopts EHR networks. Examples include strategies involving new products, early entry into an EHR network, promotion of organizational learning, and management of social impacts of workflow changes. Originality/value – The findings show which hospitals are most likely to embrace EHR networks, and how hospitals can best manage the adoption of EHR networks.