Information Systems Resource Contribution in Strategic Alliance by Small Healthcare Centers

Alliance is defined as the “collaborative efforts between two or more firms in which the firms pool their resources in an effort to achieve mutually compatible goals that they could not achieve easily alone” (Lambe, Spekman & Hunt, 2002, p. 141). Cooperative alliances allow firms to explore new information technology, enhance a firm’s knowledge foundation, lower development costs, and reduce the capital requirements and risks involved in development of new products and services (Das & Teng, 2000; Scotten, Shirin & Absher, 2006). This approach is often adopted by small and mediumsized enterprises (SMEs) as a competitive strategy to obtain necessary information systems resources in the rapidly changing and high-pressure healthcare industry (Nelson, Galvin, Essien & Levine, 1999; Scotten et al., 2006). However, according to Das and Teng (2000), around 60% of alliances between partners resulted in failure. Hence, the choice of partners and resource fit of alliance partners are of great importance for SMEs (Grant, Preece & Baetz, 1999). For those SMEs without much information systems (IS) resources, the formation process of alliance can be viewed partly as a process to increase both their tangible and intangible IS resources. Value generated from alliances is enhanced when partners have different IS resource profiles and contribute these IS resources to the alliance. These partner characteristics are important since they help in the evaluation of optimum allocations of IS resources for potential alliances to achieve suitable alliance resource alignments. Thus, the objective of this chapter is to examine how different types of IS resource alignments affect the performance of alliances via the contribution of dissimilar and similar IS resources. The focus of this study is small healthcare centers in Taiwan. These small healthcare centers have formed alliances to confront the fierce competition as well as to absorb the regulatory pressure from the government. Most of these small healthcare centers in recent years have realized that they can only compete with major healthcare service providers through cooperative alliances, as most of the patients prefer to go to big service providers for longterm treatments. The literature on interorganizational collaborations has been criticized for its relatively narrow concentration on large firms and for ignoring SMEs’ alliances where large firms do not operate in similar ways (Prater & Ghosh, 2005). These cost pressures, together with the general dynamic nature of the healthcare industry, require a significant change in approaches to utilize IS resources by these small healthcare centers. Therefore, these small healthcare centers must form alliances to obtain scarce IS resources. Unlike large firms that own a lot of IS resources to be able to form alliances with many partners, these small healthcare centers tend to form alliances with only a small number of partners, and therefore, their dependence on these partners is higher than large firms (Mambula, 2002). In this regard, these small Taiwanese healthcare centers offer an appropriate context for research.