Service innovations breaking institutionalized rules of health care

Purpose Although the digital era has given rise to major transformations in many industries, health care has been remarkably resistant to radical innovations coming outside the field. The purpose of this paper is to explore and explain how new ventures aim to break institutional arrangements (i.e. regulations, normative rules, and cultural-cognitive beliefs) protecting the field by introducing digitally enabled service innovations into health care markets. Design/methodology/approach The study is qualitative and interpretative in nature and utilizes case study as a research strategy. The paper is based on data that were collected through narrative interviews and document analysis from seven new ventures participating in a start-up accelerator program. Findings Results indicate that service innovations that require a change in the institutional structures of the health care system are enacted through three highly iterative key processes: institutional sensemaking that creates an understanding of prevailing institutional arrangements and that constructs meaning for institutional change efforts, theorization of change through linguistic device, and modifications of institutions by building legitimacy and mobilizing external constituencies. Practical implications The findings provide practical insights into how new ventures struggle, navigate, and negotiate on specific alternatives related to institutional change while pursuing the introduction of innovations to market. Originality/value This research extends the institutional perspective on service innovation by zooming into micro-level processes of institutional change driven by new ventures. The study develops the theory of institutional entrepreneurship by highlighting cognitive processes of change, and suggests incorporating “institutional thinking” more tightly into the study and management of service innovation.