with countries with comparable or s

with countries with comparable or smaller health spending (Sriratanaban, 2001). MOPH is thus concerned about the efficiency of public hospitals, and this provides the impetus for this study.
1 These hospitals provide services exclusively to outpatients.
B. Watcharasriroj, J.C.S. Tang / Journal of High Technology Management Research 15 (2004) 1–162
3. Effects of size and IT on hospital efficiency
3.1. Size effect on hospital efficiency
Size effect on hospital efficiency has been addressed using different approaches. One approach to explain size effect is contingency theory (Zinn & Mor, 1998). According to this theory, organizational outcomes are determined by the fit between its choice of mechanisms for communication, coordination, and integration of effort across the organization and its operating context. These three elements can be described in terms of formalization, specialization, standardization, complexity, and centralization. Formalization is the amount of written documentation in the organization, including procedures, job descriptions, regulations, and policy manuals. Specialization refers to the degree to which tasks are subdivided into jobs, while standardization is the extent to which similar work is performed in a uniform manner. Complexity is the number of discrete units and their arrangement in the organization. Organizations that array units in a descending hierarchy are vertically complex, while organizations with many units operating at the same level are horizontally complex. Further, centralization refers to the hierarchical level with the authority to make decisions. An organization in which all decisions are made by top management is highly centralized. As a hospital increases in size, its organizational structure becomes more complex. Consequently, as the number of employees increases, there is a tendency to formalize and standardize work processes as well as increase the levels of management control (Mills, 1986). The larger hospital also tends to have more specialized staff and units that develop their specialized managerial roles to make communication and coordination between staff and units more effective and efficient (Munson & Zuckerman, 1983). These effects can cause changes in the mechanism of communication, coordination, and integration, thus affecting the hospital’s efficiency. When the increase in size can both support the unique nature of the hospital’s production process and complement its operating environment, such increase can positively contribute to hospital efficiency. Another explanation of size effect is addressed by economies of scale (Feldstein, 1983). With economies of scale, the larger the firm (or those firms that increase their output), the lower its average cost will be. Beyond the cost dimension, economies of scale can also be applied to resource utilization to explain size effect on efficiency improvements (Conway, 1988). From this perspective, larger organizations can afford greater specialization of labor, equipment, and facilities and delegate these operational capacities to their fullest extent. In addition to the advantages from an increase in size, Feldstein (1983) points out that as an organization grows in size, it will experience not only the advantages from economies of scale but also the increasing management challenges due to a more complex organizational structure. Taking into consideration these two points of view, for a hospital, efficiency tends to increase with size if the advantages accruing from economies of scale are greater than the proportion of time and effort required to coordinate and control work in the larger hospital. In addition to contingency theory and economies of scale, size effect on organizational efficiency can be explained through its influence on the management’s role, which can be summarized into three areas: (1) involvement in technical and policy directing functions, (2) involvement in relations with the external environment, and (3) emphasis on building an effective human organization (Munson & Zuckerman, 1983). According to this perspective, large organizations tend to involve the manager with less activities at technical or detailed level compared with small organizations. The involvement of the management of
B. Watcharasriroj, J.C.S. Tang / Journal of High Technology Management Research 15 (2004) 1–16 3
a large organization is at the policy level while the manager of a small organization is likely to be the unit’s long-term planner, personnel officer, controller, chief accountant, emergency room supervisor, and general maintenance person. This theoretical concept is consistent with findings of differences in the management’s role between large and small organizations in several studies. For example, Morita, Hodapp, and Slater (1976), in their study of the degree of personal involvement of the chief administrator in discrete tasks, found that the administrator in large organizations has less direct and personal