Competitive balance implications for hospitals of innovations in networked electronic health records Scott David Williams Raj Soin College of Business, Wright State University, Dayton, Ohio, USA, and Nathan C. Whittier SKS Consulting Psychologists, Edina, Minnesota, USA Abstract Purpose – The purpose of this paper is to examine the implications of electronic health records (EHRs) for competitive balance among hospitals in the USA. Design/methodology/approach – To analyze the competitive balance implications of EHR networks on hospitals, the authors reviewed empirical, theoretical and practical literatures bearing on the problem. Findings – US hospitals are increasingly facing decisions regarding whether, when and how to participate in networks of EHRs. EHRs can replace paper-based medical records, improve the quality of patient care and decrease medical errors. EHRs also support product innovations such as e-visits and online prescribing. Such a significant innovation will alter the competitive standing of many hospitals, some favorably and others unfavorably. Hospitals with dynamic capabilities, absorptive capacity and organizational designs that facilitate innovation will fair best. Practical implications – Hospitals can also utilize several strategies to increase their odds of improving their competitive positions as the industry adopts EHR networks. Examples include strategies involving new products, early entry into an EHR network, promotion of organizational learning, and management of social impacts of workflow changes. Originality/value – The findings show which hospitals are most likely to embrace EHR networks, and how hospitals can best manage the adoption of EHR networks. Keywords United States of America, Hospitals, Innovation, Customer records Paper type Research paper Introduction Networks of electronic health records (EHRs) are an innovation that all US hospitals will need to consider adopting in the near future. EHRs are designed to replace the paper-based medical records that constitute the main source of patient information for health care providers (Anderson and Stenzel, 2001). This innovation has the potential to improve the quality of care for patients, while decreasing medical errors (Wang et al., 2003). EHRs also support product innovations such as e-visits and online prescribing. Networking EHRs among health care providers on a local, regional, or national basis will leverage a much larger amount of patient care data. This would allow networked providers’ to achieve levels of quality and efficiency greater than any single providers’ information system could support. Adoption and implementation of networked EHRs by hospitals has the potential to change the competitive positions of hospitals. CR 17,1/2 26 Competitive Review: An International Business Journal Vol. 17 Nos 1/2, 2007 pp. 26-36 q Emerald Group Publishing Limited 1059-5422 DOI 10.1108/10595420710816588