How do public hospitals respond to environmental change? Evidence from Thailand

Abstract

Population ecology or resource dependence theories predict that successful organisations will respond to changes in their environment with changed strategies that fit the environmental changes. In contrast, managerial choice theory predicts that organisational responses to environmental changes are a function of how managers in organisations perceive the environmental change and what managers perceive to be constraints on decision making. Our study of a large public hospital, based on interviews and questionnaire responses covering a 10 year period, in Thailand finds support for managerial choice theory. The nature of the environmental change, publicness of the organisation and the influence of professional values inhibit managerial choices in professional public organisations. As a result, even though this public hospital was faced with environmental changes resulting from radical healthcare reforms, managers in the hospital did not alter its strategies. Instead they followed a gradual and incremental approach to change by responding to specific demands of regulators.