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Expectations, Network Effects and Timing of Technology Adoption: Some Empirical Evidence from a Sample of SMEs in Italy

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Author Info
Nicoletta Corrocher () (CESPRI, Bocconi University)
Roberto Fontana () (University of Pavia and CESPRI)

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Abstract

We provide evidence on the influence of expectations and network effects on the timing of technological adoption. By considering a sample of SMEs operating in Italy we focus on the determinants of their decision to adopt Fast Ethernet, a communication standard for Local Area Networks (LANs). We find that both expectations and network effects significantly affect the timing of adoption. In particular, price expectations generally tend to delay adoption and (indirect) network effects in the form of backward compatibility as well as informational spillovers tend to foster adoption. Firm size also matters.

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Publisher Info
Paper provided by University of Sussex, SPRU - Science and Technology Policy Research in its series SPRU Electronic Working Paper Series with number 150.

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Length: 36 pages
Date of creation: 19 Apr 2006
Date of revision:
Handle: RePEc:sru:ssewps:150

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Related research
Keywords: diffusion; network effects; expectations; LAN equipment; SMEs;

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Find related papers by JEL classification:
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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    Other versions:
  2. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law & Economics, University of Chicago Press, vol. 45(2), pages 317-43, October.
    Other versions:
  3. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  4. Windrum,Paul & Berranger,Pascale,de, 2003. "Factors affecting the adoption of intranets and extranets by SMEs: a UK study," Research Memoranda 026, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
  5. Timothy H. Hannan & John M. McDowell, 1984. "The Determinants of Technology Adoption: The Case of the Banking Firm," RAND Journal of Economics, The RAND Corporation, vol. 15(3), pages 328-335, Autumn. [Downloadable!] (restricted)
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  8. Gautam Gowrisankaran & Joanna Stavins, 2004. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 260-276, Summer.
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  11. Neil Gandal, 1994. "Hedonic Price Indexes for Spreadsheets and an Empirical Test for Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 160-170, Spring. [Downloadable!] (restricted)
  12. Neil Gandal & Michael Kende & Rafael Rob, 2000. "The Dynamics of Technological Adoption in Hardware/Software Systems: The Case of Compact Disc Players," RAND Journal of Economics, The RAND Corporation, vol. 31(1), pages 43-61, Spring.
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  14. Stewart, Mark B, 1983. "On Least Squares Estimation When the Dependent Variable Is Grouped," Review of Economic Studies, Blackwell Publishing, vol. 50(4), pages 737-53, October. [Downloadable!] (restricted)
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  15. Rosenberg, Nathan, 1976. "On Technological Expectations," Economic Journal, Royal Economic Society, vol. 86(343), pages 523-35, September. [Downloadable!] (restricted)
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