Tiemen Ruit 10499393
University of Amsterdam
Executive Programme in Management Studies – Strategy Track Jeroen Kraaijenbrink
A Managerial Perspective on the
Integration of the Self-‐Employed
Medical Specialists in the Hospital
A qualitative study regarding the effect of factors on the integration of self-‐employed medical specialists in the hospitals with a collaboration model.
1
Monitor
integrale bekostiging
medisch specialistische zorg
verder de Nederlandse Zorgautoriteit (NZa) stelt tarieven vast
voor behandelingen en houdt toezicht op de zorg. Ook monitort ze ontwikkelingen in de zorgmarkten, bijvoorbeeld door middel van jaarlijkse marktscans. daarnaast monitort ze bepaalde marktonderdelen of de gevolgen van grote beleidswijzigingen. de invoering van de integrale bekostiging is een belangrijke wijziging in de bekostiging van de medisch specialistisch zorg.
Deze eerste monitor is een kwalitatieve beschrijving van waarnemingen van de NZa, gebaseerd op eigen analyses en interviews met ziekenhuisbesturen, medisch staven,
zorg-verzekeraars, banken, overheidsorganen en andere deskundigen uit de sector. Op 27 oktober heeft de NZa een brief met eerste indrukken gestuurd aan de Minister van VWS. Ook in de komende jaren zal de NZa de ontwikkelingen blijven monitoren.
Statement of Originality
This document is written by Student Tiemen Ruit who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Preface
Dear reader,After a period of two and a half years working and studying I am glad that I am able to finalize my thesis. Over the past six months I experienced how challenging, interesting and difficult it is to do academic research. Eventually, I am very glad with the results and the overall experience. Discipline and the willingness to succeed were needed to smoothen the process and to make all the deadlines. If I had the feeling that I needed to work on my thesis social drinks were often ignored and friends and family were disappointed. Nonetheless, I made it and I am finally done with studying.
Evidently, such work could not be done without the help and support of others. Firstly, I would like to thank Judith for her support and patience. Secondly, Jeroen Kraaijenbrink, my thesis supervisor, for his critical view on my work. Your questions, remarks or suggestions forced me to challenge my thinking in order to improve my work. Thirdly, I want to thank my employer a.s.r. for the possibility to do a masters program. Finally, a special thank you for the interviewees for their openness and trust in me as a researcher.
Kind regards, Tiemen Ruit
Rotterdam, June 2015
Abstract
The integration of self-‐employed medical specialists in the hospital is an important driver for a sustainable future of healthcare in the Netherlands. This study examined what the effect of different factors is on the integration of self-‐employed medical specialists in hospitals with a collaboration model. With integration is meant the creation of a positive attitude towards each other. The data is collected through thirteen semi-‐structured interviews with self-‐employed medical specialists, hospital managers and external representatives. The initial conceptual model is derived from agency theory, stewardship theory and stakeholder theory. Based on the findings one can conclude that the decision to use these three theories was valid. The data revealed that integration is influenced by the following factors: 1) monetary reward, 2) degree of autonomy, 3) trust, 4) bargaining power, 5) external pressures, 6) governance, 7) business-‐like healthcare and 8) shared goals. Additionally, the data showed that the degree of self-‐interest positively affects the importance of monetary reward, the degree of ability positively affects the level of trust and the formation of the Medical Specialists Company has a negative effect on the relationship between bargaining power and integration. The revised model enables decision makers in the Dutch healthcare industry to understand how to improve the overall level of integration.
Subjects: Integration, hospitals, self-‐employed medical specialists, agency theory, stewardship theory, stakeholder theory, monetary reward, autonomy, trust, bargaining power.
Table of Content
1. Introduction ... 5
2. Theoretical Background and Propositions ... 8
2.1 The theories in scope ... 9
2.1.1. Agency Theory ... 9 2.1.2. Stewardship Theory ... 11 2.1.3. Stakeholder Theory ... 14 2.1.4. Summary ... 17 2.2 Propositions ... 18 2.2.1. Monetary reward ... 18 2.2.2. Self-‐actualization ... 19 2.2.3. Trust ... 21 2.2.4. Bargaining power ... 23 2.2.5. Conceptual model ... 25 3. Research Method ... 26 3.1 Research setting ... 26 3.2 Sample ... 27 3.3 Data collection ... 28 3.4 Data analysis ... 29 4. Results ... 31 4.1 Case overview ... 31 4.1.1. Bianchi ... 31 4.1.2. Canyon ... 32 4.1.3. Trek ... 33
4.2 Cross case analysis ... 33
4.2.1. Monetary reward ... 33 4.2.2. Self-‐actualization ... 36 4.2.3. Trust ... 39 4.2.4. Bargaining power ... 41 4.3 Additional factors ... 45 4.3.1. External pressures ... 45 4.3.2. Governance ... 49 4.3.3. Business-‐like healthcare ... 51 4.3.4. Shared goals ... 53 5. Discussion ... 55 5.1 Main findings ... 55 5.2 Scientific implications ... 57 5.3 Practical implications ... 60 5.4 Limitations ... 62 5.5 Future research ... 64 Bibliography ... 66 Appendix ... 71
Overview of Figures and Tables
Table 1 – Summary of management theories……….………18
Table 2 – Overview of the three hospitals……….28
Table 3 – Overview informants………30
Table 4 – Limitations……….……….64
Table 5 – Suggestions for future research...66
Figure 1 – Proposition 1A and 1B………20
Figure 2 – Proposition 2A and 2B………22
Figure 3 – Proposition 3A and 3B………24
Figure 4 – Proposition 4A and 4B………26
Figure 5 – Conceptual model………..26
Figure 6 – Revised Conceptual model……….………..60
1. Introduction
In March 2013 the Dutch Bureau for Economic Policy Analysis argued that in 2013 13% of the Dutch national income is issued for care and that in 2040 this may grow to 22% or even 33% (CPB, 2013). The Dutch care industry stands, therefore, for an enormous challenge to reduce costs in order to make care sustainable for the future. The hospitals are accountable for most of the costs; estimations are about 80% of all expenditures on health care (Goes & Zhan, 1995). Through the adoption of competition and business-‐like healthcare principles governmental institutions and hospital managers give more weight to value creation, cost reduction and efficiency at the expense of the traditional medical specialist (Koelewijn et al., 2012). In relation to this challenge a central issue in the hospital industry is the growing need for alignment of the goals and the actions of hospital managers and medical specialists (Goes & Zhan, 1995; Mark et al., 1998; Scholten & van der Grinten, 2000; Eecklo et al., 2004; Witman et al., 2010; Koelewijn et al., 2012). Advocates of integration believe that the integration will lead to several benefits. It helps to align both interests (Mark et al., 1998), an improvement of goal alignment and loyalty (Smith et al., 1990), enables hospitals to exercise a greater control over costs (Goes & Zhan, 1990) thereby decreasing tensions and conflicts and an improvement of financial performance (Goes & Zhan, 1995). Consequently, the integration of the medical specialists in the hospital could be a very important step to make care sustainable for the future.
The two articles of the Dutch scholars Scholten and Van der Grinten (2002, 2005) about the integration of medical specialists in the hospital explain what happened over the past few years and how that had an effect on the governance. However, they did not address how factors like the amount of salary, trust, decision power or personal development influence this integration. The goal for this research is therefore to address this gap and to study what the effect of different factors is on the integration of the medical specialists in the hospital with a collaboration model. The focus on the collaboration comes through the fact that the right of the self-‐employed medical specialist to independently declare by the health insurer has been revoked since January 2015. Through this market reform medical specialists needed to choose if they would opt for employment or rather stay an entrepreneur. They chose the latter and went for
the collaboration model (Skipr, 2014; Olsthoorn, 2014) in which the medical specialist is a part of the Medical Specialists Company with whom the hospital has a contract.
Integration in this study is not about the integration of one company in the other company what happens after a take-‐over or a merger. With integration we mean that both parties understand each other’s needs, goals and expectations. Hence, in this study integration is related to human integration, meaning the creation of positive attitudes towards each other (Birkinshaw & Bresman, 2000). Integration is about being one group where there are no we-‐they orientations (Yu et al., 2005). It is about the pursuit and the achievement of the same goals. It is not necessarily about knowing what the other finds important, but about understanding why the other finds it important. If this is achieved both parties strive to accomplish the same goals and ultimately act as one.
In order to develop a valuable conceptual framework with right underlying propositions it is crucial to understand what key managerial theories argue about human motivation and managerial techniques. An obvious theory to use is agency theory. Agency theory gives tangible means to overcome conflicting goals between the principal and the agent. Another logical theory is stewardship theory, which emphasizes the importance of intrinsic motivation in order to influence the behavior of the employees. Additionally, in the collaboration model the self-‐employed medical specialists became gathered in one Medical Specialists Company (MSC). Hence, we might reason that they are more suppliers than employees. It is, therefore, valuable to study stakeholder theory in order to learn how hospitals should deal with their MSCs.
The combination of these three theories addresses a recommendation of Laplume et al. (2008). They recommend scholars to investigate the potential integration of stewardship theory and stakeholder theory. Underlying reason is that they believe that the contraposition of agency theory in relation to stakeholder theory is not productive due to the assumption of agency theory that people are self-‐interested. So, they argue that stakeholder theory could be more related to stewardship theory, because stewardship theory also assumes that the role of the manager is to balance the interests of all the stakeholders. The combination of these three theories in one study will, subsequently, also help to get a better understanding about the integration of these three theories.
In sum, this document contains a qualitative study on the effect of factors on the integration of self-‐employed medical specialists who are gathered in a Medical Specialists Company. The following chapter starts with an explanation about the three management theories. This chapter describes the eight propositions and displays my conceptual model. Thereafter, the next chapter gives a description of the research design. Chapter 4 discusses the findings of my research. The last chapter discusses the effect of factors on integrations, what it contributes to the three used theories, the limitations of this research and suggestions for future research.
2. Theoretical Background and Propositions
The goal of this research is to study what the effect of factors is on the integration of the self-‐employed medical specialists in hospitals with a collaboration model. The collaboration model is chosen, because most of the self-‐employed medical specialists are now, since their right to independently declare by the health insurer is revoked, gathered in this new structure (Skipr, 2014; Olsthoorn, 2014). Integration in this study has a human resource orientation. Therefore, integration in this study is not related to the integration of one firm into another what could happen after a take-‐over or a merger. In addition to this, the goal is to study how the two separate entities might act as one company in order to protect their own interests and not how the MSC should integrate into the hospital in order to be one legal company. In other words, it is about the creation of positive attitude towards each other (Birkinshaw & Bresman, 2000): the hospital towards the Medical Specialists Company (MSC) and vice versa. Even more specific, it is about being one-‐group instead two separate groups, also known as we-‐they orientation (Yu et al., 2005).
The factors that could have an influence on the integration of self-‐employed medical specialists in the hospital are derived from three management theories: 1) agency theory, 2) stewardship theory and 3) stakeholder theory. Agency theory is an obvious theory to answer the research question, because this theory is primarily concerned with the relationship between a principal and an agent. Agency theory proposes a theory on how to align the agent with the principal. It could thus be useful to study what the effect of this theory is on integration. Another obvious theory to use is stewardship theory, which emphasizes that managers should trigger the true intrinsic motivations of people in order to do things for principal. In this case the question is how the directors of hospitals can trigger those intrinsic needs of self-‐employed medical specialists in order to let them integrate more into the hospital. In addition, one could also say that in the collaboration model the medical specialists are more stakeholders (suppliers) then employees and that stakeholder theory is an obvious theory to use. The question than is how management should deal with the MSC and whether the potential strength or role has changed through the recent market reform.
The next paragraphs explain the three theories that are in scope. Firstly, a short overview of the theory is discussed, secondly the primary assumptions of the theories and eventually the main theoretical contribution. The second part of this chapter discusses the key factors that are derived from the three management theories, the eight propositions and eventually the theoretical model.
2.1 The theories in scope
2.1.1. Agency TheoryOverview
Over the last forty year’s agency theory delivered a valuable contribution in the academic research field of management theories. Jensen and Meckling (1976) derived agency theory from the work of Alchian and Demsetz (1972). They argued that through specialization and teamwork firms face costs. These costs arise through metering problems and the fact that managers are needed to coordinate the workforce to accomplish the goals. Even more specific, they reason that monitoring is especially needed when people occur in teamwork activities due to the fact that people tend to shirk, i.e. do less when they have the opportunity to do so. Consequently, Jensen and Meckling (1976) argue that managers are needed to align the goals of the principals with the goals of the agents. Jensen and Meckling (1976) defined an agency relationship as follows: “a contract under which one or more persons (the principal(s)) engage another person (the agent) to perform some service on their behalf which involves delegating some decision making authority to the agent”.
The most important measure in agency theory to align the interest of both parties to overcome this principal-‐agent problem is the contract (Jensen & Meckling, 1976; Eisenhardt, 1989; Jones, 1995). In the contract the principal can describe its control systems. Meaning a description of how the performance of the agent will be measured. Agency theory distinguishes two important types of control systems: outcome-‐based and behavior-‐based controls (Eisenhardt, 1985; Eisenhardt, 1989; Jones, 1995). Outcome controls are focused on the performance of employees (Ouchi, 1979; Eisenhardt, 1985). This strategy is applicable when the outcome measurability is high
and the task programmability is low. Behavior controls are focused on the behavior of the agent linked with the rules and procedures (Ouchi, 1979; Eisenhardt, 1985). Ouchi (1979) argues that this control strategy is useful when the outcome measurability is low and performance measurability is perfect. Eventually, the goal of the principal is to seek for the most efficient contract and that is the contract with the lowest cost of monitoring and lowest compensation for the transferring of risk to the agent.
Primary assumptions
Agency theory has several central assumptions. First, agency theory assumes that both parties are utility maximizers and that there is, consequently, a good reason to believe that the agent will not always act in the best interest of the principal (Jensen & Meckling, 1976; Noreen, 1988; Eisenhardt, 1989; Hill & Jones, 1992; Jones, 1995). In other words, both parties are self-‐interested and strive to accomplish their goals as much as possible. A second assumption is that people are bounded rational and that as a result, contracts tend to be incomplete (Jensen & Meckling, 1976; Eisenhardt, 1989). This bounded or limited rationality comes through the fact that people tend to search for a course of action that is good enough and that people tend to leave out information that do not seem relevant (Simon, 1979). Through these incomplete contracts employees have room for opportunistic behavior and can shirk (Jensen & Meckling, 1976; Eisenhardt, 1989). Opportunistic behavior is defined as self-‐interest seeking behavior with guile (Jones, 1995; Leiblein, 2003). Meaning that when people have the opportunity to fulfill their own goals they will do so. The third assumption is that people are risk averse. The principal and the agent may have a different attitude towards risk (Eisenhardt, 1989). The principal may prefer more risky behavior through the fact that the principal can spread its’ risk. Hence, based on the risk appetite of the principal the agent needs to be compensated for the risks that he or she needs to take. The fourth assumption has to do with information. One underlying assumptions in relation to information is that there is information asymmetry between the principal and the agent (Eisenhardt, 1989; Hill & Jones, 1992). Meaning that the agent has some information that the principal has not and consequently it can be difficult for principals to identify whether the agent is acting in their interests (Hill & Jones, 1992; Jones, 1995). Likewise, agency theory assumes that information can be bought to overcome information asymmetry; the principal can invest
in information systems, managerial supervision or formal reporting structures to the board e.g. (Eisenhardt, 1989; Hill & Jones, 1992).
Eventually, agency theory assumes that through these underlying conditions a principal faces agency costs (Jensen & Meckling, 1976). Agency costs are the sum of: 1) moral hazard, 2) adverse selection, 3) monitoring costs and 4) risk attitudes (Jensen & Meckling, 1976). Moral hazard costs arise through the fact that agents shirk, because they are self-‐interested (Eisenhardt, 1989; Jones, 1995). Adverse selection is about the possibility that an agent is not able to deliver he has promised (Eisenhardt, 1989). Monitoring costs are costs that are made to overcome the information asymmetry between the agent and the principal. Ultimately, agency costs that are created through different risk attitudes have to do with the assumption that the principal needs to compensate its’ agent for the risk that it takes. The assumption is that when the compensation is high enough the agent will do his upmost to accomplish the goals of the principal (Jensen & Meckling, 1976; Eisenhardt, 1989; Bebchuk & Fried, 2003).
Main theoretical contributions
Agency theory reminds us that, whether we like it or not, people are self-‐interested. Hence, if people have the opportunity to fulfill their own pleasures they might do so. Based on this assumption agency theory argues that the principal could overcome this obstacle through the formulation of a complete contract. Unfortunately, through bounded rationality contracts tend to be incomplete. So, self-‐interested behavior can never be avoided. Conclusively, agency theory reasons that principals should pay agents well enough (e.g. commissions, stock options, salaries, etc.) in order to get them aligned and to overcome these problems (Jensen & Meckling, 1976; Eisenhardt, 1989; Bebchuk & Fried, 2003). When the self-‐interested needs of the agent can be fulfilled through a well enough compensation they will be motivated, they will not fall in to opportunistic behavior and they oblige to the goals set by the principal.
2.1.2. Stewardship Theory Overview
Ghoshal (2005) argued in his article about bad management theories that stewardship theory is an alternative view on the “bad management theories” as agency theory or
transaction cost economics. He claimed that these theories taught us that people are self-‐interested, managers cannot be trusted and people fall in to opportunistic behavior when they are able to do so. Leading to a legitimization of numerous practices to overcome this behavior. Conversely, these practices that tend to reduce opportunistic behavior are also likely to actually create and stimulate such behaviors (Ghoshal & Moran, 1996). Ghoshal (2005) proclaims that these bad management theories are derived from what he called “ideology-‐based gloomy vision”, also known as negative assumptions about people and institutions. Plus, that this in combination with casual determinism and denial of any role of human choices and intentions leads to an excessive truth-‐claims based on partial analysis and unbalanced assumptions. Hence, he recommends rethinking management theories based on theories that pay attention to the interests of people or the idea that people are other-‐regarding.
Stewardship theory is such a theory that has a more sociological and psychological approach towards governance structures and human motivation (Davis et al., 1997). Davis et al. (1997) defined stewardship theory as follows “situations in which managers are not motivated by individual goals, but rather are stewards whose motives are aligned with the objectives of their principals”. Hence, people are motived to act conform the interest of the managers. Underlying reason is that people tend to perceive greater utility from cooperative behavior and does that rationally in order to meet their own personal needs. Meaning, that the overall personal needs are met by working towards the organizational (collective) goals (Sundaramurthy & Lewis, 2003). Stewardship theory can therefore be seen as an alternative theory of management with different assumptions and prescriptions (van Puyvelde et al., 2012).
Primary assumptions
In agency theory the man is considered to be a rational homo-‐economicus that is self-‐ interested (Eisenhardt, 1989). However, stewardship theory sees the man is a self-‐ actualizing individual. Meaning that people are not only driven by self-‐interest, but also through their own intrinsic motivations. Stewardship theory therefore does not only focus on monetary reward, but also on own personal incentives as growth, achievement, affiliation, and eventually self-‐actualization (Davis et al., 1997). Hence, stewardship is focused on higher order needs of Maslow’s hierarchy of needs.
Likewise, stewardship theory assumes that people are willing to act in accordance with the collective needs (Davis et al., 1997). Meaning, that people are willing to act in harmony with the goals of the organization. This assumption is in line with the outcome of several public good games. Several researchers concluded that players tend to contribute, on average, about half their resources to the public good (Fehr & Gächter, 2000). Hence, people are willing to cooperate in order to create collective value. Social psychologists even argue that most of the individuals are self-‐regarding or other regarding, also known as reciprocators (Bridoux et al., 2011). Self-‐regarding individuals are people who have a necessity to maximize their own payoffs and take others’ choices and payoffs only into account if they affect themselves (Fehr & Gintis, 2007), reciprocators are more concerned about the fairness of joint payoffs (Ostrom, 2000; De Cremer & Van Lange, 2001). Even more specific, Bridoux et al. (2011) assumed that based on the percentage of self-‐regarding or strong reciprocators among employees, motivational systems need to change to maximize the amount of collective value creation. An underlying reason is that Bridoux et al. (2011) argue that individuals respond differently towards sanctions or rewards. Reciprocators, for example, may reduce their efforts if the management uses financial rewards to increase the collective value creation because such rewards emphasis extrinsic motivations and replaces the intrinsic motivations (Gneezy & Rustichini, 2000). Hence, an important assumption of stewardship theory is that not everybody is self-‐interested, some are also other-‐ regarding and those tend to be more stewards then those who are self-‐interested (Davis et al., 1997).
Another assumption of stewardship theory is related to social comparison. Stewardship theory assumes that people are vulnerable for fairness (Davis et al., 1997). In a more recent study of Larkin et al. (2012) is argued that this lead to psychological costs. Meaning that people tend to value fairness as an important factor for their compensation and that money is not the only thing that matters. Hence, they argue that the prediction of the agency theory often fails because, performance based pay is less effective than it assumes.
Another important assumption of stewardship theory is related to trust and long-‐term orientation. Stewardship theory assumes that a feeling of distrust could lead to opportunistic behavior (Davis et al., 1997). In stewardship theory trust is related to
vulnerability. This definition of trust is exactly the antithesis of agency theory, which is more related to the unwillingness to be vulnerable (Davis et al., 1997). Stewardship theory assumes, therefore, that managers should empower their agents and facilitate them in their needs of self-‐actualization, also known as an involvement-‐oriented management style. This assumption is to some extent researched in a more recent study. Bowles (2008) argued that self-‐interested monetary incentives can have unintended effects, because they undermine moral values. Via various experiments he found that people are more fair-‐minded, made more generous offers to others and often choose to receive nothing or accept an unfair offer. Therefore, Bowles (2008) suggests that the focus on monetary rewards signals the individual that selfishness is an appropriate response and this may lead to an overtime adoption of self-‐interested motivations. Leading to a decrease of the intrinsic motivations and a feeling of distrust of the agent in relation with the principal. Hence, he argues that principals should also emphasize the importance of social values in order to affect and motivate the agent in another way. Main theoretical contributions
The most important contribution is of stewardship theory is that it gives weight to personal social values and the importance of relationships between the agents. Meaning that not everybody is motivated by their own needs, but also through the needs of others. In addition, stewardship theory argues that people may have intrinsic motivations and when managers are able to trigger those they may be motivated as well. Furthermore, too much focus on the monetary reward may harm the relationship between the principal and the agent. Conclusively, the main theoretical contribution of stewardship theory is that agents can be stewards (act in accordance with the goals of the firm) if the managers are able to empower the agent to develop its’ own needs (self-‐ actualization) and help to fulfill the needs of others (other-‐regarding).
2.1.3. Stakeholder Theory Overview
Stakeholder theory is involved with the alignment of groups of people who have a legitimate claim on the firm that is founded through a relationship (Hill & Jones, 1992). Donaldson and Preston (1995) argued that “stakeholders are identified through the actual or potential harms and benefits that they experience or anticipate experiencing as
a result of the firm's actions or inactions”. The weight of the legitimate claim on the firm differs due to the stake that each stakeholder has on the firm. An important condition for this weight is the ability of the firm to redeploy the assets without a loss of value (Hill & Jones, 1992). In other words, stakeholder theory explains the nature of contractual relations between the stakeholders within a firm. Moreover, stakeholder theory argues that all the stakeholders need to benefit and that there is no prima facie priority (Donaldson & Preston, 1995). The potential dividend of shareholders is, for example, not more important than the needs of the suppliers. Stakeholder theory is focused on the moral intent of theory and therefore claims that managers need to understand the needs of all the affected parties and how those are affected through the appointments with the shareholders (Donaldson & Preston, 1995; Freeman et al., 2004; Parmar et al., 2010). In the stakeholder model managers are the center through their contracts with all the stakeholders (Hill & Jones, 1992; Donaldson & Preston, 1995; Jones, 1995). A central theme in stakeholder theory is, therefore, also the contract. In this case the contact is a measure to align the interests of stakeholders. Again the goal is to have an efficient contract, but the underlying assumption to get that contract differs from agency theory. Primary assumptions
Stakeholder theory is not primarily involved with the relation between the agent and the principal. It has a much broader perspective on the firm. The starting assumption of stakeholder theory is that the firm is characterized by its relationships (contracts) with many groups and individuals (Jones, 1995; Parmar et al., 2010). Besides, stakeholder theory assumes that stakeholder differ in terms of their power to affect the performance of the organization or its stake in the organization (Hill & Jones, 1992; Frooman, 1999). Hill and Jones (1992), for example, maintain that employees within a firm could possess specific powers due to their unique skills and that when they leave the board has a problem, because it could be difficult through the imperfect market to find replacements. Besides, stakeholders might even influence the strategy of the firm due to the unique resources they may posses (Frooman, 1999).
Another assumption has to do with ethics. Stakeholder theory is to some extent a reaction against shareholder theory that claims that it is only important to satisfy the shareholders, for example through dividend (Laplume et al.; 2008; Parmar et al., 2010).
Stakeholder theory has a much broader perspective on the firm. Stakeholder theory argues that firms do not only need to satisfy the needs of the shareholders, but also of other parties as suppliers or customers (Freeman, 1994; Freeman et al., 2004; Laplume et al., 2008; Parmar et al., 2010;) Not because that will deliver extra profits, but because it is their moral obligation to do so.
The third assumption is that managers play a vital role in the alignment of all these different stakeholders (Hill & Jones, 1992; Donaldson & Preston, 1995; Jones, 1995). Managers know what is happening and what is at stake for the stakeholders and are therefore able to figure out how to make tradeoffs (Parmar et al., 2010). Moreover, they are the only group of stakeholder who has a direct control over the decision making process of the firm (Hill & Jones, 1992). Another assumption is about the functioning of the market. Stakeholder theory assumes that firms are active in markets that are subject to external forces that have an influence on the internal behavior of the firm, but that inefficient contracts do not directly penalize the firm (Jones, 1995).
The fifth assumption is about the nature of contracting. A valuable aspect of efficient contracting in stakeholder theory is trustworthiness (Jones, 1995). Stakeholder theory assumes several conditions for which trust is important. For example, in contracts with the employees, the amount of salary that top managers earn in relation with their stakeholders or monitoring techniques. Even more specific, stakeholder theory values the importance of mutual trust. A simple definition of such mutual trust is that having trusts means that one has confidence that one’s expectations will be realized (Luhmann, 1979; cf. Langfield-‐Smith & Smith, 2003). Eventually, stakeholder theory argues that having trust in each other may lead to a reduction of opportunistic behavior and a reduction of costs and that this trust is build over time through a process of learning and adaption and shared ethics (Jones, 1995).
Main theoretical contribution
Eventually, one might argue whether stakeholder theory is a true theory, because it does not offer a potential set of testable propositions. Parmar et al. (2010) contend that the term stakeholder theory is a set of ideas from which one could derive a number of theories. The main theoretical contribution of stakeholder theory is that firms need to take the interests of their stakeholders in to consideration. The managers play a vital
role in this dynamic field of interests and powers. They need to be able to understand what is happening, what all the interests are and how they can manage all those interests. Additionally, they need to understand what the powers of the stakeholders are and how the stakeholders are able to use them in order to defend their interests. Finally, stakeholder theory has another vision on the nature of contracts. Stakeholder theory argues that trust is the route to alignment and a reduction of opportunistic behavior. 2.1.4. Summary
Based on the discussion of the three management theories one can conclude that the three theories have different assumptions about the integration of medical specialists in the hospitals. Hence, in order to understand the essence of the three theories table 1 briefly summarizes the three theories. This table shows that the three theories have different assumptions and different key factors that may influence the integration of medical specialists and the MSC in the hospital. In line with these different key factors several propositions are described in the following paragraphs.
Table 1 -‐ Summary of management theories
Characteristics /
Theories Agency theory Stewardship theory Stakeholder theory Key idea Relationship between
agent and principal conflict due to personal interests
People have self-‐ actualization needs and are willing to act in the interests of principal.
All the stakeholders need to benefit and there is no prima facie priority
Assumptions -‐ People are self-‐ interested
-‐ Through bounded rationality contracts are incomplete -‐ Agents are risk-‐ averse
-‐ There is information asymmetry
-‐ Reward appropriately
-‐ Self-‐actualization is important
-‐ People are other-‐ regarding as well -‐ Trust is a vital condition for right behavior
-‐ People are sensitive for social comparison
-‐ Firms have a moral obligation
-‐ Firms have
contracts with many groups and
individuals
-‐ Stakeholders differ in power
-‐ Managers play a central role -‐ Trust is key in alignment
Key factor(s) for integration
Monetary reward Self-‐actualization &
trust Bargaining power & trust
Problem domain Conflicting goals between principal and agent
Empowerment of the agent and facilitation for self-‐actualization
Balance of powers and the role of trust between the firm and stakeholders
2.2 Propositions
2.2.1. Monetary rewardAgency theory reasons that individuals are primarily self-‐interested and that when an agent is rewarded appropriately he or she will act according to the goal of the principal (Jensen & Meckling, 1976; Noreen, 1988; Eisenhardt, 1989; Hill & Jones, 1992; Jones, 1995). Agency theory makes no difference about what kind of individual someone is. Hence, in order to overcome conflicting goals between the agent and the principal the principal should reward the agent appropriately.
As already argued in the section concerning stewardship theory not every individual is self-‐interested. Several psychological and sociological researchers elaborated on this assumption. Gneezy and Rustichini (2000) for example concluded that financial compensation might lead to the replacement of intrinsic motivation that may lead to a reduction of overall performance. Even more specific, they concluded that a small incentive even leads to a lower performance than no incentive. As a result, they argue that managers should pay enough or should not pay at all. In addition, other social researchers reason that people are willing to contribute at the expense of their own benefit to the public good (Fehr & Gächter, 2000; Bowles, 2008). Fehr and Gintis (2007) even argue that experimental evidence rejects the selfishness assumption made in agency theory and also suggest an alternative view about humans, namely strong reciprocity. They defined strong reciprocity as follows “the behavioral predisposition to cooperate conditionally on others’ cooperation and to punish violations of cooperative norms even at a net cost to the punisher”. In line with this reasoning Bridoux et al. (2011) argue that organizations need to adapt their motivational systems based on the distribution of self-‐interested people or strong reciprocators. If the amount of self-‐ interested people is high, the organization should implement the motivational system of individual monetary incentives. But, when the amount of strong reciprocators rises they should shift towards the model of disciplined cooperation or even the model of benevolent cooperation. A final note in this discussion about monetary rewards is related to the research of Bowles (2008). He contended that too much focus on
monetary rewards may lead to decrease of intrinsic motivations and even might convey a feeling of distrust.
In sum, based on all these different studies one might argue that the monetary reward is important for integration and that it has a positive influence on integration. If the hospital is able to positively influence the salary of the medical specialists they will be more willing to integrate in the hospital. A decrease of the monetary reward may lead to conflict. Moreover, the importance of this factor could be influenced by the degree of self-‐interest. If one has a high degree of self-‐interest he or she will give more weight to this factor than somebody who is a strong reciprocator. Hence, the degree of self-‐ interest might have a positive effect on the relationship between monetary reward and integration. This leads to the following propositions:
Proposition 1a: Monetary reward has a direct positive effect on the integration of medical specialist in the hospital.
Proposition 1b: The degree of self-‐interest has a positive effect on the relationship between monetary reward and the integration of medical specialists in the hospital.
Figure 1 – Proposition 1a and 1b
2.2.2. Self-‐actualization
On the contrary to agency theory, stewardship theory proclaims that people are primarily driven by intrinsic motivations (Davis et al., 1997). For example, the internal norms or values where people stand for or goals they want to accomplish in their personal life. As already argued stewardship theory is therefore more related to the higher order needs in Maslow’s hierarchy of needs.
The highest order in Maslow’s hierarchy of needs is the order of self-‐actualization. The essential meaning of self-‐actualization regards the discovery of the real self in combination with the ability to express and to develop the real self (Cofer & Appley, 1964; cf. Jones & Crandall, 1986). Hence, the self-‐actualizing person is able to achieve his
or her full potential (Jones & Crandall, 1986). Maslow argues that organizations should strive to redesign their structure in order to make this become a reality. However, Argyris (1973) argues that such a strategy violates the heart of the concept. The idea is that people are able to do it themselves. He reasons that the intention is to create more opportunity for self-‐actualization through the redesign of structures or revising policies and practices.
An important condition for self-‐actualization is the ability of people to be autonomous (Davis et al., 1997). Oldham and Hackman (1976; 2010) defined autonomy as follows: “the degree to which the job provides substantial freedom, independence, and discretion to the individual in scheduling the work and in determining the procedures to be used in carrying it out”. An organization should attempt to enable professionals to be autonomous. In addition, Hackman and Oldham (1976) claim that the experience of autonomy leads to the psychological state of ‘experienced responsibility’. Furthermore, stewardship theory argues that employees whose needs are based on achievement, self-‐ actualization, autonomy, responsibility and who have intrinsic motivations may gain a greater utility to accomplish the goals of the organization rather than their own personal goals (Davis et al., 1997). This reasoning is in line with the finding of several Dutch researchers whom reasoned that the managerial dominance of hospital managers lead to medical specialists pursuing strategies to increase their bargaining power in order to protect their entrepreneurial and autonomous status (Scholten & van der Grinten, 2002; Scholten & van der Grinten, 2005; Koelewijn et al., 2012; Koelewijn et al., 2014).
In general, one might argue that hospitals which are able to develop a work environment in which the medical specialists are able to express and develop the real self will have medical specialists that are more willing to integrate. An important condition for this is the ability to be autonomous. Meaning that the medical specialists are able to determine their procedures, work hours or specialisms. These arguments lead to the following propositions:
Proposition 2a: Self-‐actualization of medical specialists has a positive effect on the integration of medical specialists in the hospital.
Proposition 2b: The degree of autonomy has a positive effect on the relationship between self-‐actualization and the integration of medical specialists in the hospital.
