Marketing of a Financial Innovation Commercial Use of the Euro by European Companies Prior to Mandatory Adoption

Abstract

Based on the diffusion literature and an extensive pilot study among CFOs of European firms and European banking experts, a conceptual adoption model identifying the various sets of factors that influence the adoption of the Euro for commercial purposes was developed and tested. 1 1 The Euro is the official name of the currency. Throughout much of the historical development of the European Monetary Union, the monetary unit was referred to as the ECU (European Currency Unit). At the time of the field study, the term “ECU” was also used. These factors fit into four broad categories: the perceived innovation characteristics, perceptions of the political and business environment, organizational characteristics, and internal communication behavior. A series of logit analysis on these factors was carried out based on survey data collected from a sample of 214 firms across five European countries (The Netherlands, Italy, France, Germany, and the United Kingdom). This sample includes 77 organizations that have already adopted the Euro and 137 nonadopter organizations. Survey results show that tangible advantages, such as task simplification and degree of network externalities increased the likelihood of Euro adoption prior to the mandatory 1999 date, as do strong positive signals within a company from Chief Financial Officers and top management. Concerns about the costs of switching over to the Euro and negative perceptions regarding the political turmoil on the road to European Monetary Union significantly reduced the likelihood of using the Euro. Both the quantitative survey data and the qualitative interview data suggest a degree of ambivalence on the part of European managers regarding the use of the Euro prior to the upcoming mandatory adoption date of 1999.