BACKGROUND: Previous studies identified individual or practice factors that influence practice-based physicians' electronic medical record (EMR) adoption. Less is known about the market factors that influence physicians' EMR adoption. PURPOSE: The aim of this study was to explore the relationship between environmental market characteristics and physicians' EMR adoption. METHODS: The Health Tracking Physician Survey 2008 and Area Resource File (2008) were combined and analyzed. Binary logistic regression was used to examine the relationship between three dimensions of the market environment (munificence, dynamism, and complexity) and EMR adoption controlling for several physician and practice characteristics. RESULTS: In a nationally representative sample of 4,720 physicians, measures of market dynamism including increases in unemployment, odds ratio (OR) = 0.95, 95% confidence interval (CI) [0.91, 0.99], or poverty rates, OR = 0.93, 95% CI [0.89, 0.96], were negatively associated with EMR adoption. Health maintenance organization penetration, OR = 3.01, 95% CI [1.49, 6.05], another measure of dynamism, was positively associated with EMR adoption. Physicians practicing in areas with a malpractice crisis, OR = 0.82, 95% CI [0.71, 0.94], representing environmental complexity, had lower EMR adoption rates. PRACTICE IMPLICATIONS: Understanding how market factors relate to practice-based physicians' EMR adoption can assist policymakers to better target limited resources as they work to realize the national goal of universal EMR adoption and meaningful use. Copyright © 2012 Wolters Kluwer Health | Lippincott Williams & Wilkins.