Addressing the endogeneity dilemma in operations management research: Theoretical, empirical, and pragmatic considerations

This ethnographic study of more than 90 surgeries (referred to as episodes of care) identifies the antecedents to operating room (OR) supply waste. The study specifically considers the role of planning instances and communication patterns among members of the surgery team on supply waste within the OR. We operationalize planning instances in terms of the number of changes to the physician preference card (PPC), the key document that is used to plan items needed for surgery. Communication patterns among members of the surgery team are captured by measuring the density of communication among the OR team members during an episode of care. The unplanned costs during an episode of care are used as a measure of OR supply waste. Hundreds of hours were spent observing episodes of care and tracking supplies. A combination of participant-observation, survey, and secondary data were analyzed to extract theoretical and practical insights. The results show that planning instances have a curvilinear relationship with unplanned costs. In particular, as the number of changes to the PPC increases, unplanned costs first increase and then decrease. Higher density of the OR team's communication network is associated with lower unplanned costs. This study has significant theoretical and managerial implications that we discuss and offer directions for future research. K E Y W O R D Seconometric analysis, ethnography, healthcare, operating room, physician preference card, planning, social network analysis, team communication, unplanned costs, waste

Section: Methodsmentioning

confidence: 99%

The impact of planning and communication on unplanned costs in surgical episodes of care: Implications for reducing waste in hospital operating rooms

Dreyfus

Nair

Rosales

2019

“…To our knowledge, our study is the first effort to provide OM researchers actionable remedies for endogeneity and weak instrument issues that are methodologically important but have not received much attention in the OM community. We believe our paper is a valuable complement to Ketokivi and McIntosh (2017) and Ho et al (2017). On one hand, OM researchers can benefit from seeing a broad overview of recent developments and common problems in addressing endogeneity.…”

Section: Introductionmentioning

confidence: 90%

“…First, some studies attempt to address endogeneity without justifying why the focal explanatory variables are subject to endogeneity concerns. While the literature cautions that all regression models may suffer from endogeneity (Rossi, 2014), researchers should first justify the existence of endogeneity theoretically (Ketokivi and McIntosh, 2017).…”

Section: Addressing Endogeneity: Om Literaturementioning

confidence: 99%

“…Endogeneity has become an editorial concern in premier business journals. “Most rigorous academic journals require, more or less as part of their editorial policy, that endogeneity must be addressed somehow” (Ketokivi and Mclntosh, 2017, p. 3). While addressing endogeneity has become a common practice in empirical research in many fields, this practice is relatively new to many Operations Management (OM) scholars.…”

Section: Introductionmentioning

confidence: 99%

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Addressing endogeneity in operations management research: Recent developments, common problems, and directions for future research

Ding

Peng

et al. 2018

195

166

Addressing endogeneity can be a challenging task given the different sources of endogeneity and their impacts on empirical results. While premier business journals typically expect authors to rigorously address endogeneity, this expectation is relatively new to many Operations Management (OM) scholars, as exemplified by a recent editorial in Journal of Operations Management that calls for more rigorous treatment for endogeneity. This study serves two purposes. First, we summarize recent OM literature with respect to the treatment for endogeneity by reviewing studies published in leading OM journals between 2012 and 2017. The review provides evidence that endogeneity problems have received increasing attention from OM scholars. However, we also find some common problems that may render the chosen techniques for addressing endogeneity less effective and potentially lead to biased analysis results. Second, since instrumental variable regression is the most prevalent technique for dealing with endogeneity in the OM literature according to our review, we provide an empirical illustration tailored to OM researchers for using instrumental variable regression in the post‐design (data analysis) phase. Using variables from a publicly available healthcare dataset, our analysis sheds light on the importance of examining instruments' quality and triangulating results based on more than one test/estimator.

“…We thus conducted Durbin-Wu-Hausman tests to confirm the existence of endogeneity in our models. However, it is relatively difficult to find reasonable instrumental variables that only affect operational levers/strategic decisions but not performance (Hamilton & Nickerson, 2003;Ketokivi & McIntosh, 2017). As suggested by Wooldridge (2002), instrumental variable regression is an effective method to address endogeneity by introducing external variables that are correlated with endogenous explanatory variables but not with the error term.…”

Section: Coefficientsmentioning

confidence: 99%

Service mix, market competition, and cost efficiency: A longitudinal study of U.S. hospitals

Ding

Peng

Heim

et al. 2019

We examine the longitudinal impact of service mix on cost efficiency in U.S. acute care general hospitals. We propose two different dimensions of service mix, with the first dimension capturing internal emphasis on specific service lines (i.e., specialization) and the second dimension reflecting the deviation of a hospital from the average level of specialization for hospitals in the same service area (i.e., differentiation). We hypothesize that as the level of a hospital's specialization increases, hospital cost efficiency should improve at a decreasing rate. We also hypothesize that differentiation helps improve cost efficiency in competitive markets. Lastly, we examine whether acute care general hospitals can use service mix as an operational lever to improve cost efficiency when specialty hospitals are present in the same local markets. We find strong empirical support for the hypothesized relationships.