Incorporating network externalities into the technology acceptance model

Michael Song, Mark E. Parry, Tomoko Kawakami

Research output: Contribution to journalArticle

52 Citations (Scopus)

Abstract

Research on network externalities has identified a number of product categories in which the market performance of an innovation (e.g., unit sales and revenues) is an increasing function of that innovation's installed base and the availability of complementary products. Innovation scholars have attributed these findings to the positive impact of network externality variables on consumer perceptions of innovation attributes. This paper provides the first empirical examination of these perceptual linkages by extending the Technology Acceptance Model to include consumer perceptions of network externality variables. The authors hypothesize that, when direct and indirect network externalities exist, consumer purchase intentions and consumer perceptions of an innovation's usefulness and ease of use will positively reflect perceptions of installed base size and the availability of complementary products. To test this reasoning, the authors developed new measures of consumer perceptions of network externality variables. These measures were incorporated into a survey that explored the attitudes in Japan of potential adopters toward digital music (DM) players at an early stage in the product life cycle. Findings reveal a direct positive relationship between ease of use and the perceived availability of digital music. The authors also find positive and significant relationships between both purchase intention and perceived usefulness and (1) the perceived size of the DM player installed base and (2) the perceived availability of digital music. An application of the Baron-Kenny test for mediating variables reveals that (1) ease of use partially mediates the relationship between the perceived availability of digital music and perceived usefulness and (2) perceived usefulness partially mediates the relationship between the perceived availability of digital music and purchase intention. The research has important implications for future research on new product adoption and for the management of innovations that involve network externalities. The conceptual model provides a framework for testing alternative explanations of observed variations in the impact of network externalities within and across product categories. The empirical analysis provides guidance for managers who wish to manage the impact of network externalities on adoption. In addition to stimulating the size of the installed base and the variety of complementary products, executives must also manage consumer awareness of network externality variables and consumer understanding of the relationship between those variables and innovation attributes. Finally, traditional adoption models link consumer adoption decisions to perceptions of innovation attributes. The findings provided here imply that predictive accuracy of these models can be improved by including consumer perceptions of network externality variables.

Original languageEnglish
Pages (from-to)291-307
Number of pages17
JournalJournal of Product Innovation Management
Volume26
Issue number3
DOIs
Publication statusPublished - 2009 May
Externally publishedYes

Fingerprint

Innovation
Availability
Technology acceptance model
Network externalities
Life cycle
Sales
Managers
Digital music
Consumer perceptions
Testing
Purchase intention
Ease of use
Perceived usefulness
Complementary products

ASJC Scopus subject areas

  • Management of Technology and Innovation
  • Strategy and Management
  • Engineering(all)

Cite this

Incorporating network externalities into the technology acceptance model. / Song, Michael; Parry, Mark E.; Kawakami, Tomoko.

In: Journal of Product Innovation Management, Vol. 26, No. 3, 05.2009, p. 291-307.

Research output: Contribution to journalArticle

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