How Do Adopters Transition Between New and Incumbent Channels?

Abstract

There is substantial knowledge about how individuals and organizations – which we refer to collectively as entities – adopt and use new channels. However, less is known about how this relates to their use of the incumbent channel that the new channel may replace, particularly how this relationship varies across entities and over time. We study this both theoretically and empirically. First, we develop and validate a new typology of how entities’ use of new and incumbent channels evolves over time. Second, we generate novel insights about the post-adoption use behaviors of entities that adopt the new channel at approximately the same time. Third, we analyze how entities’ use of new and incumbent channels varies based on time of entry, which is when an entity first becomes active with either channel. Fourth, we identify and validate other explanatory variables for why entities transition between states of new/incumbent channel use. Our results contribute to theory about the adoption/diffusion of new channels, and they contribute to practice by giving managers tools to understand and predict how entities’ use of new and incumbent channels evolves over time.

Keywords: New channel, incumbent channel, diffusion, adoption, heterogeneity, dynamics, automotive, pro-innovation bias.