Who's on and who's not? Technology diffusion and corporate social media adoption patterns

We explore the economic factors that motivate firms to adopt Twitter, a popular social media platform. Applying duration analysis models to a sample of all publicly listed US firms between 2006 and 2017, comprising 202,799 firm-quarters, we find that, in contrast to typical technological diffusion, firms were initially reluctant to follow the early adoption leaders but joined their predecessors in later years. More visible firms and consumer-facing firms have a higher propensity to adopt Twitter. We interpret this evidence as suggesting that firms actively followed by the press and investors have a greater need to control the information environment through social media. Interestingly, we find that different factors affect the propensity to adopt Twitter for S&P 1500 and non-S&P 1500 firms. Furthermore, the results suggest that firms have lower information asymmetry following Twitter adoption. We show the moderating role of firm visibility, where information asymmetry is primarily concentrated among low-visibility, non-S&P 1500, and less visible late-adopting firms. In contrast, high-visibility firms benefited more in the early years.