Determinants of Adoption of a Radical Innovation: a Firm-Level Analysis of Voice Over IP in Small and Medium Enterprises

Abstract

The study of the adoption and diffusion of innovations is one of the most popular streams of academic research in the last fifty years. As a discipline, Marketing’s contributions range from the macro-level Bass diffusion model to the study of the predictors of new product success. Few studies have examined the determinants of adoption of a radical innovation from the potential adopters' point of view. The objective of this research was to empirically determine which factors best explain a small to medium-sized enterprise’s adoption of a radical, high-tech innovation. Product attributes, firm-internal traits and influencers, and external influencers were analysed as potential determinants of adoption. Data was collected early in the lifecycle of the innovation of interest, Voice over Internet Protocol (VoIP), and thus provided insights about the differences in determinants of adoption at different times in the product diffusion process. The research included two phases: a quantitative analysis of survey-based data and a qualitative analysis based on follow-up interviews with a small number of survey respondents. The results indicate that differences do exist between the determinants of early adoption, intent to adopt later, and unawareness of the innovation. The influence of a champion, the ability to sense and respond to new technology and the depth of technology knowledge within the adopting firm are significant across multiple stages of diffusion, showing that firm-internal traits are particularly important influencers of adoption. Laggard firms are missing the critical firm traits that lead to information gathering and understanding of an innovation. The potential adopter's perception of the “radicalness” of the innovation was shown to be a significant moderator of other influencing factors. Another key finding was that the size of the firm does not have a direct significant impact on adoption or the intent to adopt. This research has implications for innovation-marketing and innovation-adopting firms, as well as academic researchers.