Abstract
Facing uncertainty about whether to adopt a new technology, firms rely on both external and internal sources of information. Firms may learn vicariously about the desirability of adoption; a large body of research has demonstrated a tendency for firms to imitate rival adopters. Organizations with multiple units may also learn from their own experience once an initial unit of the firm has adopted. This article uses data on the establishment of websites by consumer magazines during the early internet era to test the hypothesis that multi-unit firms pay less attention to rivals after an initial unit of the firm has adopted. Consistent with this hypothesis, it is found that the influence of rivals drops sharply following the initial adoption. One explanation for the shift is that vicarious learning becomes less valuable once richer information becomes available from internal sources.
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