Logics of pre‐merger decision‐making processes

Abstract

The purpose of this paper is to examine how and why a decision to merge two university hospitals in a public context might occur by using an in-depth case study of the pre-merger process of Karolinska University Hospital. Based on extensive document analysis and 35 key informant interviews the paper reconstructed the pre-merger process, searched for empirical patterns, and interpreted those by applying neo-institutional theory. Spanning nearly a decade, the pre-merger process goes from idea generation through transition to decision, and took place on two arenas, political, and scientific. Both research excellence and economic efficiency are stated merger motives. By applying a neo-institutional perspective, the paper finds that the two initial phases are driven by decision rationality, which is typical for political organizations and that the final phase demonstrated action rationality, which is typical for private firms. Critical factors behind this radical change of decision logic are means convergence, uniting key stakeholder groups, and an economic and political crisis, triggering critical incidents, which ultimately legitimized the formal decision. It is evident from the paper that merger decisions in the public sector might not necessarily result from stated and/or economic drivers only. This paper suggests that a change of decision logic from decision to action rationality might promote effective decision making on large and complex issues in a public context. This is the first systematic in-depth study of a university hospital merger employing a decision-making perspective.