Adopting Technological Innovations When New Introductions Are Expected: the Mediating Role of Anticipated Regret

EXTENDED ABSTRACT - When deciding to adopt high technology products, consumers are often faced with the dilemma of whether to adopt now or wait for new technology to be introduced. Literature regarding this area typically characterizes the market as an environment of rapid technological change without a dominant technological design. Such market conditions often impose a unique strain on the participants, particularly the consumer, by elevating the complexity of the decision making process in the adoption decision. These phenomena violate two long-standing assumptions in the innovation diffusion paradigm. First is the assumption that innovation is invariant during its diffusion process. Therefore, in the consumer decision-making process, they need only to answer questions such as, does the current best technology provide substantial relative advantage over the incumbent technology, and are the advantages observable etc. Therefore the decision process is doubly complicated by the anticipation and expectation of the potential of future technology to provide substantial, and observable advantage over the current best and incumbent technologies. Second, the diffusion literature assumes independence of innovation, that is, adopting one innovation is not affected by adopting another innovation. However, given the reality of budget constraints, consumers’ decision to adopt the current best necessarily influences the decision to adopt future technology. In essence, adopting current best technology is likely to take the consumer away from the market for future technology, if future technology is introduced before the usefulness of the adopted technology runs out.

Citation:

Chuan-Fong Shih and Hope Jensen Schau (2002) ,"Adopting Technological Innovations When New Introductions Are Expected: the Mediating Role of Anticipated Regret", in AP - Asia Pacific Advances in Consumer Research Volume 5, eds. Ramizwick and Tu Ping, Valdosta, GA : Association for Consumer Research, Pages: 40.

Asia Pacific Advances in Consumer Research Volume 5, 2002      Page 40

ADOPTING TECHNOLOGICAL INNOVATIONS WHEN NEW INTRODUCTIONS ARE EXPECTED: THE MEDIATING ROLE OF ANTICIPATED REGRET

Chuan-Fong Shih, Wake Forest University, USA

Hope Jensen Schau, Temple University, USA

EXTENDED ABSTRACT -

When deciding to adopt high technology products, consumers are often faced with the dilemma of whether to adopt now or wait for new technology to be introduced. Literature regarding this area typically characterizes the market as an environment of rapid technological change without a dominant technological design. Such market conditions often impose a unique strain on the participants, particularly the consumer, by elevating the complexity of the decision making process in the adoption decision. These phenomena violate two long-standing assumptions in the innovation diffusion paradigm. First is the assumption that innovation is invariant during its diffusion process. Therefore, in the consumer decision-making process, they need only to answer questions such as, does the current best technology provide substantial relative advantage over the incumbent technology, and are the advantages observable etc. Therefore the decision process is doubly complicated by the anticipation and expectation of the potential of future technology to provide substantial, and observable advantage over the current best and incumbent technologies. Second, the diffusion literature assumes independence of innovation, that is, adopting one innovation is not affected by adopting another innovation. However, given the reality of budget constraints, consumers’ decision to adopt the current best necessarily influences the decision to adopt future technology. In essence, adopting current best technology is likely to take the consumer away from the market for future technology, if future technology is introduced before the usefulness of the adopted technology runs out.

This paper examines the consumer adoption process through the perspective of consumer regret (Simonson 1992, Tsiros and Mittal 2000). In an experiment, we find that consumers’ decisions to adopt what is currently available now or wait for a better offering in the future is influenced by their perception of the pace of tecnological change, a term we refer to as innovation acceleration (IA). In particular, we find that when the perception of IA is high, consumers have a higher tendency to delay technology adoption in favor of leapfrogging to the future technology. Further, the decision process is mediated by the anticipated regret that consumers presume will occur if they adopt now and find that future technology is introduced shortly thereafter. That is, when faced with uncertain future introductions, consumers seek to minimize regret in their decision. We also find that the effect of IA on anticipated regret, and therefore the likelihood of adopting current and future technology, is moderated by the urgency to adopt. When urgency is high, the effect of IA is attenuated versus when urgency is low.

Our findings present some interesting insights for marketers of high technology durables. For firms planning on introducing future innovations, it may serve them well to strategically pre-announce product introductions and suggested features in which their offerings will provide dramatic changes to current technology. In doing so, firms may be able to impress upon consumers that the technology is undergoing rapid developments and they may regret their decision if they opt to adopt early and miss out on the latest advancements. Alternatively, for firms marketing the current best technology, they need to install a sense of urgency upon the consumer as to why they need to purchase the product now. Advertisements that emphasize the hardship of not adopting the technology now may create the sense of urgency that moderates the effect of perceived IA. Finally, reducing the adoption cost may also encourage adoption of the current best technology despite higher perceived IA. In this experiment, we manipulate the cost by providing a viable second-hand market (eBay) which effectively reduces the purchasing price and provides a means for consumers to recuperate some of the adoption cost should they decide to upgrade to a future technology when it becomes available. Besides encouraging the development of a viable second-hand market for consumer durables, other strategies such as trade-in allowances may also accomplish similar effects and thus lower the risk associated with adopting too early.

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