This research argues that societal demands and expectations have created transformational change in the health care industry, thus providing the environment for entrepreneurship to thrive. As a result, new and innovative organizational forms have flourished, particularly when embedded in communities of entrepreneurial activity where networks of experience, access, and social/work relationships exist. Using a qualitative interview approach supplemented with secondary data, this paper seeks to integrate theoretical insights gained from previous models of entrepreneurship and the use of the punctuated equilibrium paradigm for explaining environmental change and response in the US health care industry. The region of interest is the area known as the "health care business capital" of the United States - Nashville, Tennessee. Implications concerning the unique aspects of the US health care industry and the associated entrepreneurial response to revolutionary change in Nashville are presented and discussed.
Research in entrepreneurship has often focused on the economic and technological consequences of entrepreneurial action and the related benefits to regional development (Bellandi 2001, Blundel 2002). However, the study of entrepreneurship should also capture those development activities that are more macro-related, to include societal impacts on entrepreneurial action within some regional or national domain. Societal impacts (be they cultural, governmental, or environmental in nature) can affect different industry groups in different ways, with a consequent impact on the entrepreneurial actions that individuals or organizations take in response to those impacts.
Accordingly, the purpose of this study is two-fold. First, this study seeks to describe the unique societal relationship between health care delivery as a societal institution in the US and the "business of health care" as a form of regional development. Because of the nature of the industry, health care policy is influenced significantly by the social issues of the day. In this study, we focus on the impact that changes in health care policy have had on the entrepreneurial activity and the evolution of new organizational forms or communities. Thus, it is a natural assumption that these changes would be reflected in the type and form of health care organizations that develop; that is, a co-evolution of organizations and environments occur (Baum & Singh, 1994).
secondly, using the punctuated equilibrium model of organizational evolution (Gersick, 1991; Tushman & Romanelli, 1985), this study seeks to describe how Nashville, Tennessee has responded to revolutionary change created by the societal and institutional forces that affect the US health care industry. The response has both economic and societal components, namely the creation of an entrepreneurial climate that has led to the Nashville region being named the "health care business capital of the US".
According to the Nashville Health Care Council (NHCC), Nashville today is home to over 220 health care companies and 130 professional service firms that support the health care industry (NHCC, 2003). Additionally, Nashville has attracted venture capital to support the entrepreneurial activity both locally and outside of the community. According to the NHCC website (2002), "[...] the $750 million in venture capital that was invested in Nashville health care companies between 1995 and 1997 accounts for 25% of all venture capital invested in health care service companies in the United States during that period". Nashville is home to companies in many segments of the for-profit health care industry, such as long-term care, home health, information technology, biotechnology, biomedicine, and clinical research.
Thus, this research seeks to explain how new organizations in a specific industry and in a specific region, namely the for-profit health care industry in the Nashville region, have resulted from societal 'shocks' that have occurred over the last several decades. …