Peer Influence in the Diffusion of the iPhone 3G over a Large Social Network

Management Information Systems Quarterly, 2014, Volume 38, Issue 4, pages 1103-1133

80 Pages Posted: 7 May 2012 Last revised: 10 Feb 2016

Miguel Godinho de Matos

School of Business and Economics, Católica-Lisbon; Carnegie Mellon University

Pedro Ferreira

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management; Carnegie Mellon University - Department of Engineering and Public Policy

David Krackhardt

Carnegie Mellon University - David A. Tepper School of Business

Date Written: May 28, 2014

Abstract

We study the effect of peer influence in the diffusion of the iPhone 3G across a number of communities sampled from a large dataset from a major European Mobile carrier in one country. We identify tight communities of users in which peer influence may play a role and use instrumental variables to control for potential correlation between unobserved subscriber heterogeneity and friends’ adoption. We provide evidence that the propensity of a subscriber to adopt increases with the percentage of friends who have already adopted. During a period of 11 months, we estimate that 14% of the iPhones 3G sold by this carrier were due to peer influence. This result is obtained after controlling for social clustering, gender, previous adoption of mobile Internet data plans, ownership of technologically advanced handsets and heterogeneity in the regions where subscribers move during the day and spend most of their evenings. This result remains qualitatively unchanged when we control for changes over time in the structure of the social network. We provide results from several policy experiments showing that with this level of effect of peer influence the carrier would have hardly benefited from using traditional marketing strategies to seed the iPhone 3G to benefit from viral marketing.

Keywords: Social Networks, Peer Influence, Viral Marketing, Instrumental Variables, iPhone

Suggested Citation

Godinho de Matos, Miguel and Ferreira, Pedro and Krackhardt, David, Peer Influence in the Diffusion of the iPhone 3G over a Large Social Network (May 28, 2014). Management Information Systems Quarterly, 2014, Volume 38, Issue 4, pages 1103-1133. Available at SSRN: https://ssrn.com/abstract=2053420 or http://dx.doi.org/10.2139/ssrn.2053420

Miguel Godinho de Matos (Contact Author)

School of Business and Economics, Católica-Lisbon ( email )

Palma de Cima
Lisbon, Lisboa 1649-023
Portugal

Carnegie Mellon University ( email )

Pittsburgh, PA 15213
United States

Pedro Ferreira

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States

Carnegie Mellon University - Department of Engineering and Public Policy ( email )

Baker Hall 129
5000 Forbes Ave
Pittsburgh, PA 15213
United States

David Krackhardt

Carnegie Mellon University - David A. Tepper School of Business ( email )

5000 Forbes Avenue
Pittsburgh, PA 15213-3890
United States

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