Hospitals as interpretation systems

In this study of 162 hospitals, it was found that the chief executive officer's (CEO's) interpretation of strategic issues is related to the existing hospital strategy and the hospital's information processing structure. Strategy was related to interpretation in terms of the extent to which a given strategic issue was perceived as controllable or uncontrollable. Structure was related to the extent to which an issue was defined as positive or negative, was labeled as controllable or uncontrollable, and was perceived as leading to a gain or a loss. Together, strategy and structure accounted for a significant part of the variance in CEO interpretations of strategic events. The theoretical and managerial implications of these findings are discussed.