How do aspiration shortfalls interact with regulatory incentives and controls to drive innovation in U.S. Hospitals?

Strategic choices about innovation are becoming increasingly relevant in the healthcare industry to meet the changing needs of the marketplace. We draw on the Behavioral Theory of the Firm and Institutional Theory to (1) identify the influence of aspiration shortfalls of Patient Quality and Cost of Care on IT-enabled Clinical Process Innovation and Services Innovation, and (2) identify how the nature of these relationships change based on regulation at the federal (American Recovery and Reinvestment Act of 2009) and state (Certificate of Need programs) level. Our empirical study is situated in the U.S. healthcare industry. We draw on multiple sources of data, such as the American Hospital Association Annual Survey and IT Supplement as well as the Centers of Medicare and Medicaid, to construct a panel dataset of 3,500 hospitals from 2008-2013. We identify measures for our constructs and propose analysis methods to test our model and hypotheses.