The impact of competition on the importance of conforming to social norms

Abstract

This study focuses around the central question of whether or not the relative importance of conformity to institutional norms varies as markets become more competitive. Using data gathered for 187 managed health care plans in the U.S., this study uses hierarchical regression analysis involving blocked variables. This study finds that conformity to technical environmental requirements has a significant impact on performance at all levels of competition. However, the importance of conformity to institutional norms increases as markets becomes more competitive. From the perspective of MCOs, this means that managers need to carefully monitor the prevailing technical and institutional environmental forces and match their responses according to the competitiveness of their individual markets. From a societal perspective, this study suggests that improved health care delivery is likely to result from increased competition in the managed care market. Prior research has shown that conformity to social norms is important for MCO performance. However, this is the first study to examine the whether the importance of conformity to social norms varies as a function of market competition.