Limits to Electronic Sourcing Adoption in Chinese Healthcare Sector: A Contextualist Perspective

The adoption of electronic sourcing promises to bring in free-market competition so as to achieve significant cost reduction. However, this promise has not been realized in the healthcare industry in China after years of e-sourcing adoption. Instead, adoption of e-sourcing has steadily increased the cost of pharmaceutical products that hospitals charged to patients. Our study indicates that this paradox was caused neither by the lack of market control mechanism nor the resistance to market process reengineering. Taking a contextualist perspective, this paper examines three embedded levels of context so as to appreciate the internalization problem underlying e-sourcing adoption in Chinese healthcare sector. The findings indicate that technology is unable to be internalized effectively if the alignment of context at three levels – societal (society), industrial (industry) and organizational (organization) – is not given due consideration during adoption and implementation.