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The Adoption of Business to Business E-Commerce: Heterogeneity and Network Externality Effects

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  • Andrea Bonaccorsi
  • Cristina Rossi
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    Abstract

    The decision to adopt e-commerce technology depends on a variety of variables. This paper explores the relative importance of structural firm-specific variables, the intrinsic value of the technology, expectations concerning the evolution of the technology, and the adoption behaviour of other agents. Almost all variables pertaining to the conventional structure of firms, including size, and the value of technology, are found to have no importance in the adoption decision, whereas the expected number of other adopters are found to have a positive effect. Moreover, the smaller the percentage of adopters considered to be the threshold beyond which the firm will adopt (critical mass), the higher the probability of adoption.

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    Bibliographic Info

    Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2002/12.

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    Date of creation: 16 Dec 2002
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    Handle: RePEc:ssa:lemwps:2002/12

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    Related research

    Keywords: E-commerce; Adoption of new technology; Network Externality; Internet; Logit Regression Models.;

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    1. Norman J. IRELAND & Paul L. STONEMAN, 1985. "Order Effects, Perfect Foresight and Intertemporal Price Discrimination," Discussion Papers (REL - Recherches Economiques de Louvain) 1985012, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. S. J. Liebowitz & Stephen E. Margolis, 1994. "Network Externality: An Uncommon Tragedy," Journal of Economic Perspectives, American Economic Association, vol. 8(2), pages 133-150, Spring.
    3. Nicholas Economides, 1997. "The Economics of Networks," Brazilian Electronic Journal of Economics, Department of Economics, Universidade Federal de Pernambuco, vol. 1(0), December.
    4. Huberman, Bernardo A & Glance, Natalie S, 1995. "The Dynamics of Collective Action," Computational Economics, Society for Computational Economics, vol. 8(1), pages 27-46.
    5. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
    6. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
    7. Nicholas Economides & Lawrence J. White, 1993. "One-Way Networks, Two-Way Networks, Compatibility, and Antitrust," Working Papers 93-14, New York University, Leonard N. Stern School of Business, Department of Economics.
    8. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
    9. Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
    10. Witt, Ulrich, 1997. ""Lock-in" vs. "critical masses" -- Industrial change under network externalities," International Journal of Industrial Organization, Elsevier, vol. 15(6), pages 753-773, October.
    11. Nicholas Economides & Charles Himmelberg, 1995. "Critical Mass and Network Size with Application to the US Fax Market," Working Papers 95-11, New York University, Leonard N. Stern School of Business, Department of Economics.
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