The Diffusion of Disruptive Technology: The Role of Business Application vs. Technology Learning for Consumer Mobile Payment Adoption

Abstract

Disruptive technologies bring radical changes to businesses and societies. Yet, their diffusion and assimilation rarely unfold in a smooth and linear fashion. In this paper, taking mobile payment as a prominent example, we study the distinct roles of business application context (i.e., mobile shopping) and technology itself (i.e., online payment) in its diffusion. Leveraging a rich dataset from a leading e-commerce company, we propose a Bayesian learning structural model to characterize how users resolve the uncertainties surrounding the benefits of these two critical components of mobile payment. Our results reveal that users indeed engage in both learning processes. While learning mobile shopping could be more promotion-focused on its benefits, learning online payment could be more prevention-focused on its risks. Consequently, people resolve uncertainties on mobile shopping much faster than online payment. In addition, inertia plays an important role, i.e., users with high (vs. low) membership are less likely to migrate from shopping on PC to mobile, and from offline to online payment. Finally, counterfactual simulations show that companies can promote mobile payment more efficiently with a combination of high frequency and low financial amounts. Although technology itself is the foundation, our results shed light on the importance of business context in the diffusion of mobile payment, a typical example of disruptive technologies. We also discuss relevant managerial implications.

Keywords: Disruptive technology, FinTech, mobile payment, mobile shopping, Bayesian learning

JEL Classification: M15, M31, L86