Contagion and Heterogeneity in New Product Diffusion: An Emperical Test

53 Pages Posted: 29 Jan 2004

See all articles by Christophe Van den Bulte

Christophe Van den Bulte

University of Pennsylvania - Marketing Department

S. Stremersch

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: November 4, 2003

Abstract

Marketing researchers often assume that innovation diffusion is affected by social contagion. However, there is increasing skepticism about the importance of contagion and, as has long been known, S-shaped diffusion curves can also result from heterogeneity in the propensity to adopt. To gain insight into the role of these two different—though not mutually exclusive—mechanisms, we present substantive conjectures about conditions under which contagion and heterogeneity are more pronounced, and test these conjectures using a meta-analysis of the q/p ratio in applications of the Bass diffusion model. We find that the q/p ratio is positively associated with the Gini index of income inequality in a country, supporting the heterogeneity-in-thresholds interpretation. We also find evidence that q/p varies as predicted by the G/SG diffusion model, but the evidence vanishes once we control for national culture. As to contagion, we find that the q/p ratio varies systematically with the four Hofstede dimensions of national culture, and for three of them in a pattern theoretically consistent with the social contagion interpretation. Furthermore, we find that products with competing standards have a higher q/p ratio, which is again consistent with the social contagion interpretation. Finally, we find effects of national culture only for products without competing standards, suggesting that technological effects and culturally mediated social contagion effects may not operate independently from each other.

Keywords: income heterogeneity, innovation diffusion, meta-analysis, national culture, social contagion

JEL Classification: O31, M, C44, M31

Suggested Citation

Van den Bulte, Christophe and Stremersch, Stefan, Contagion and Heterogeneity in New Product Diffusion: An Emperical Test (November 4, 2003). ERIM Report Series Reference No. ERS-2003-077-MKT, Available at SSRN: https://ssrn.com/abstract=474421

Christophe Van den Bulte (Contact Author)

University of Pennsylvania - Marketing Department ( email )

700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

Stefan Stremersch

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands
+31 10 408 8719 (Phone)
+31 10 408 9160 (Fax)

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