Understanding hospital performance: The role of network ties and patterns of competition Daniele Mascia Fausto Di Vincenzo Background: To improve efficiency and quality, a number of policies have recently been implemented to increase competition and cooperation within the health systems of many countries. We theorize how hospital performance, measured as productivity, is contingent upon network embeddedness, the extent to which a hospital is involved in a network of interconnected interorganizational relationships. Purpose: The aim of this study was to explore the effects on hospital productivity resulting from both collaborative network ties and competitive relationships between providers. Methodology: We used panel data collected between 2003 and 2007 from 35 hospitals in Abruzzo, one of the most populated regions of central Italy. We used secondary data of hospital activities regarding both clinical and administrative aspects. For each year, we examined the intensity of interhospital competition and the unique position each provider has within a larger network of relationships with other hospitals. Other idiosyncratic organizational characteristics were examined as well. Findings: Our results show that hospital productivity is negatively related to the degree of competition that a hospital faces and positively related to the degree with which hospitals establish collaborative relationships. We also found that the negative impact on hospital productivity due to competition was lessened when hospitals were more likely to create cooperative network ties. Practice Implications: Because interhospital collaboration and competition are related to hospital productivity, they should constitute a core element in the strategic planning of a hospital’s operation. Health administrators should implement policies that favor collaborative network ties at the regional level and mitigate interorganizational rivalries when establishing collaborative relationships with local competitors. T he current environment in which health care providers operate and perform is characterized by the simultaneous influences of cooperation and competition among themselves. In the early 1990s, many national governments took initial steps toward introducing market forces into the provision of health care services while simultaneously emphasizing the need for closer col- laboration between different health care providers (e.g., Cabiedes & Guille ´n, 2001; Light, 2001). Literature on health care management has widely in- vestigated the impact of hospital competition on cost, ac- cess, and quality of services (e.g., Dranove, Shanley, & Simon, 1992; Dranove & White, 1994) as well as a number of benefits that interhospital collaboration might produce (Bazzoli, Chan, Shortell, & D’Aunno, 2000; Chukmaitov et al, 2009). Despite this extensive prior research, a number of limitations are observed. First, few empirical studies analyzed how interhospital competition influences hospital performance in countries that practice universalistic health care. Most studies focused on the health care system of the Key words: competition, hospital productivity, network ties, organizational theory, relational view Daniele Mascia, PhD, is Assistant Professor of Health Care Manage- ment, Faculty of Medicine, Department of Public Health, Catholic Uni- versity of the Sacred Heart, Rome, Italy. E-mail: dmascia@rm.unicatt.it. Fausto Di Vincenzo, PhD, is Assistant Professor of Organizational Theory and Design, Faculty of Economics, Department of Economic Studies, G. d’Annunzio University, Pescara, Italy. The authors have disclosed that they have no significant relationships with, or financial interest in, any commercial companies pertaining to this article. DOI: 10.1097/HMR.0b013e31821fa519 Health Care Manage Rev, 2011, 36(4), 327Y337 Copyright B 2011 Wolters Kluwer Health | Lippincott Williams & Wilkins OctoberYDecember & 2011 327 Copyright @ 201 Lippincott Williams & Wilkins. Unauthorized reproduction of this article is prohibited. 1