The When and Why of Abandonment: The Role of Organizational Differences in Medical Technology Lifecycles

36 Pages Posted: 8 Jan 2016 Last revised: 16 Dec 2016

See all articles by Brad N. Greenwood

Brad N. Greenwood

George Mason University - Department of Information Systems and Operations Management

Ritu Agarwal

University of Maryland - Robert H. Smith School of Business

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business

Anandasivam Gopal

Nanyang Business School

Date Written: January 6, 2016

Abstract

Although the adoption of new technology has received significant attention in management research, investigations of abandonment have lagged. In this study, we examine differences in the rates of abandonment of medical technologies based on whether abandonment occurs in response to the emergence of a superior technology, or in light of new information questioning its efficacy. We link differences in responses to underlying differences in the mission and incentives of organizations. Examining coronary stents across three technological regime changes using a census of approximately 2 million patients admitted to Florida hospitals from 1995-2007, we show meaningful differences across three hospital types: for-profit, not-for-profit, and academic medical centers (AMCs), Results show that for-profit hospitals abandon the earlier generation in favor of a superior technology faster than not-for-profit hospitals, but this is not the case if the efficacy of the technology is questioned. Academic medical centers, however, have the highest rates of abandonment under both triggers. Importantly, we find that organizational factors dominate physician differences as explanatory factors for abandonment. Implications of these findings are two-fold. First, we identify the factors likely at play, i.e. the salience of norms of science and the corresponding trade-offs with economic benefits, when organizations make abandonment decisions. Second, our work underscores the importance of organizational mission, which dominates individual preferences in determining rates of abandonment.

Keywords: technology abandonment, organizational incentives, norms of science, financial incentives, healthcare, medical devices, medical guidelines, econometric analysis

Suggested Citation

Greenwood, Brad and Agarwal, Ritu and Agarwal, Rajshree and Gopal, Anandasivam, The When and Why of Abandonment: The Role of Organizational Differences in Medical Technology Lifecycles (January 6, 2016). Fox School of Business Research Paper No. 16-003, Robert H. Smith School Research Paper No. RHS 2711924, Available at SSRN: https://ssrn.com/abstract=2711924 or http://dx.doi.org/10.2139/ssrn.2711924

Brad Greenwood (Contact Author)

George Mason University - Department of Information Systems and Operations Management ( email )

4400 University Drive
Fairfax, VA 22030
United States

Ritu Agarwal

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Rajshree Agarwal

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Anandasivam Gopal

Nanyang Business School ( email )

S3 B2-A28 Nanyang Avenue
Singapore, 639798
Singapore

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