Strategic Competition in Healthcare Information Services: An Economic Analysis

We investigate the investment practices and competitive strategies of a number of providers in the market for healthcare information services that have survived a volatile inception period to achieve some degree of revenue sustainability. We find that these firms continuously broaden and enhance their product lines by leveraging highly mobile and fungible digital resources and capabilities. In particular, we show that investments of a focal firm in organisational networks create higher switching costs relative to those in public networks, therefore, making revenue generation more sustainable. Our findings suggest that healthcare information providers pursue two key strategies to expand their economies of scope and scale. They first rely on complementarities among their internal resources in order to find new uses for existing products. M&A investments in external resources are primarily used when these firms intend to create new product offerings outside of their current capabilities.