Identifying Formal and Informal Influence in Technology Adoption with Network Externalities

47 Pages Posted: 4 Feb 2008

See all articles by Catherine E. Tucker

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Date Written: January 23, 2008

Abstract

Firms introducing network technologies (whose benefits depend on who installs the technology) need to understand which user characteristics confer the greatest network benefits on other potential adopters. To examine which adopter characteristics matter, I use the introduction of a video-messaging technology in an investment bank. I use data on its 2,118 employees, their adoption decisions and their 2.4 million subsequent calls. The video-messaging technology can also be used to watch TV. Exogenous shocks to the benefits of watching TV are used to identify the causal (network) externality of one individual user's adoption on others' adoption decisions. I allow this network externality to vary in size with a variety of measures of informal and formal influence. I find that adoption by either managers or workers in boundary spanner positions has a large impact on the adoption decisions of employees who wish to communicate with them. Adoption by ordinary workers has a negligible impact. This suggests that firms should target those who derive their informal influence from occupying key boundary-spanning positions in communication networks, in addition to those with sources of formal influence, when launching a new network technology.

Keywords: Networks, Network Externalities, Technology Management

Suggested Citation

Tucker, Catherine E., Identifying Formal and Informal Influence in Technology Adoption with Network Externalities (January 23, 2008). MIT Sloan Research Paper No. 4687-08. Available at SSRN: https://ssrn.com/abstract=1089134 or http://dx.doi.org/10.2139/ssrn.1089134

Catherine E. Tucker (Contact Author)

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

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