The When and Why of Abandonment: The Role of Organizational Differences In Medical Technology Life Cycles

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 missions and incentives of organizations. Examining coronary stents across three technological regime changes using a census of approximately two million patients admitted to Florida hospitals from 1995 to 2007, we show meaningful differences across three hospital types: for-profit, not-for-profit, and academic medical centers. 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 twofold. 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. This paper was accepted by David Hsu, entrepreneurship and innovation.