The effect of competence‐based trust between physicians and administrative executives in healthcare on decision outcomes

Purpose - Research on strategic decision making has over‐emphasized the importance of competence‐based trust among the team members. Literature on healthcare is silent on the impact of competence‐based trust between the physicians and administrators on decision outcomes. The purpose of this paper is to empirically investigate whether competence‐based trust between physician executives and administrators is beneficial to the healthcare organizations. Design/methodology/approach - Using a structured instrument, data are collected from top management teams of 109 US hospitals. The participants include both CEOs and administrators and physician executives. The data are analyzed using multiple regression technique to examine the role of competence‐based trust between the physicians and administrative executives in enhancing decision quality, commitment and understanding. Findings - Results show that competence‐based trust is the key to successful strategic decision making while lack of trust may hinder the effectiveness of decision implementation in healthcare organizations. Research limitations/implications - Only the healthcare industry is considered. Self‐report measures may have some common method bias and social desirability bias. Practical implications - This study contributes to both practicing managers as well as to strategic management literature. This study suggests that development and retention of competence‐based trust between the administrators and physicians is essential in making decision‐making process effective and successful. Originality/value - Though the study represents the US hospitals, to the extent the strategic decision process is similar across the world, the findings can be generalized to other healthcare organizations in the world.