Contagion and Heterogeneity in New Product Diffusion: An Emperical Test
53 Pages Posted: 29 Jan 2004
Date Written: November 4, 2003
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: Suggested Citation