Competitor and vendor influence on the adoption of innovative applications in electronic commerce

Abstract

The rapid growth of the Internet over the past 5 years has greatly increased interest in its potential use of the Internet for electronic commerce (EC), particularly as a vehicle for transactions between customers and suppliers. Today, Internet-based EC applications are in their infancy and investments in innovative information technology (IT) applications are risky and expensive. The managerial decision, to adopt these EC applications early or wait for the technology to become more established, is not trivial. Early adoption poses significant demand and technological risks, but the rewards could be great. We report on an empirical investigation of the influences on the adoption decision for one of the earliest EC applications, the automated teller machine (ATM) system, to determine whether marketing efforts by hardware and software vendors, imitation of competitors or a mixture of influences affected these decisions among bank managers. We develop a time series of cumulative ATM adoption estimates for 1971–1992 and use these data to fit three models from the diffusion of innovation literature, the external, internal and mixed influence models. The results suggest that imitation and communication among industry competitors was most important, but marketing efforts by the technology vendors were also important in the first few years after the introduction of the technology.