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THE ROLE OF DEFAULTS IN PREVENTING INNOVATION REJECTION

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International Journal of Innovation Management
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Abstract

Innovation rejection remains a serious problem for companies introducing new products, as customers may overvalue products they already own and underestimate the innovation's advantage. Choice data from two experiments demonstrate that innovation rejection is determined by (dis)satisfaction with the status quo and that defaults are powerful instruments to overcome the status quo effect in innovation decision making. Innovation rejection decreases significantly if the innovation is implemented as a default, an option customers select unless they actively opt out. Furthermore, it is observed that implementing the innovation as the default significantly increases the perceived value and decreases the perceived risk of the innovation. Taking into account customer expertise, the authors detect that defaults are more effective in reducing innovation rejection for novices. The study derives managerial implications for new product launch management that aims at preventing innovation rejection.
THE ROLE OF DEFAULTS IN PREVENTING
INNOVATION REJECTION
SABINE KUESTER
*
University of Mannheim, Department of Marketing
Castle, D-68131 Mannheim, Germany
kuester@bwl.uni-mannheim.de
SILKE C. HESS
Deutsche Telekom AG, Products & Innovation
T-Online-Allee 1, D-64295 Darmstadt, Germany
silke.hess@telekom.de
ANDREAS HERRMANN
University of St. Gallen (HSG), Center for Customer Insight
Bahnhofstrasse 8, CH-9000 St. Gallen
andreas.herrmann@unisg.ch
Published 26 March 2015
Innovation rejection remains a serious problem for companies introducing new products,
as customers may overvalue products they already own and underestimate the innovations
advantage. Choice data from two experiments demonstrate that innovation rejection is
determined by (dis)satisfaction with the status quo and that defaults are powerful instru-
ments to overcome the status quo effect in innovation decision making. Innovation
rejection decreases signicantly if the innovation is implemented as a default, an option
customers select unless they actively opt out. Furthermore, it is observed that imple-
menting the innovation as the default signicantly increases the perceived value and
decreases the perceived risk of the innovation. Taking into account customer expertise, the
authors detect that defaults are more effective in reducing innovation rejection for novices.
The study derives managerial implications for new product launch management that aims
at preventing innovation rejection.
Keywords: Innovation rejection; status quo bias; defaults; customer expertise.
Corresponding author.
International Journal of Innovation Management
Vol. 19, No. 2 (April 2015) 1550023 (23 pages)
© Imperial College Press
DOI: 10.1142/S1363919615500231
1550023-1
... However, only a few studies have been focusing on designing the decision processes behind resistance behavior such that adoption is more likely (Kuester et al., 2015;Hess, 2009;Constantiou, 2009). This thesis addresses several areas concerning innovation resistance and individual differences in judgment and decision making. ...
... In addition, this work aims to shed light into to the effect of demographical variables on the occurrence of cognitive biases, especially in innovation decisions. Early works on marketing strategies to overcome barriers in innovation decisions provide promising results which serve as foundation for research on (digital) nudging as method to promote innovation adoption Kuester et al., 2015;Hess, 2009). Since these studies only partly consider the personality as causer of innovation resistance, this work explores the existence of personality-induced resistance as causer of negative innovation adoption behavior. ...
... Nudging elements have also been applied in the innovation decision context in an experimental study by Kuester et al. (2015). The publication emerged from the findings of the dissertation of Hess (2009) (2004) Hess ( Heidenreich and Kraemer (2016) This work not covered partially covered covered from an experimental study provide evidence that mental simulation reduces cognitive passive resistance while it has no effect on situational passive resistance (i.e. ...
Thesis
Each year a countless number of new products and services is launched to the market. Whether an innovation becomes a market success is deter- mined by numerous factors, one of them being the decision making behav- ior of consumers when it comes to adopting the innovation (Buder et al., 2016). Human decision making often deviates from normative standards of the rational homo oeconomicus. So far, an extensive body of research has in- vestigated heuristics and biases in judgment and decision making that help us to deal with the tremendous amount of information in daily life (Shah and Oppenheimer, 2008; Kahneman, 2003). However, by using heuristic thinking processes individuals are likely to fall victim to unconscious bi- ases in their decision making resulting in inferior choices (Kahneman et al., 1991). Innovation decisions are one of such cases where individuals are prone to biased decision making. Consumers irrationally overrate the prod- ucts and services they already use three times over those that are new to them and also resist innovations which are evidently superior to incum- bent products or services (Gourville, 2006; Woodside, 1996). Understand- ing and overcoming such biases in innovation decisions is therefor of high relevance for companies to stay sustainably innovative and successful. The scope of this thesis was to obtain an understanding of cognitive processes and decision making mechanisms behind consumer innovation resistance behavior and to explore how the design of innovation choice settings can reduce the effect of negative cognitive biases in innovation decision making (cognitive innovation resistance). In the course of the thesis, the concept of cognitive innovation resistance as form of irrational and negatively biased judgment of innovations has been introduced and its effect on innovation decision making investigated in three experimental studies in the product and service context. With a particular focus on the application case of e-car rental services, the work at hand tested the effect of three digital nudging mechanisms on cognitive biases in innovation decisions. Specifically, it was explored how designing the choice environment by setting the innovation on default, providing feedback on choice consequences and priming the de- cision maker for the innovation reduces the effect of cognitive innovation resistance such that pro-innovation choice is more probable.
... Making the new action option the default choice may reduce the negative perception of potential regret, since the option is perceived as the recommendation (Baron & Ritov, 1994;Nicolle et al., 2011). Also, Kuester, Hess, and Herrmann (2015) and Hess (2009) provided empirical evidence for the effectiveness of defaults to prevent innovation rejection. We investigate digital defaults' effects on innovation adoption and on cognitive resistance. ...
... We then integrated the feedback into the experiment's design. We sought to avoid testing the hypotheses in the context of electronic consumer products, as done by Heidenreich, Kraemer, and Handrich (2016), , Kuester et al. (2015), Heidenreich and Handrich (2015), Heidenreich and Spieth (2013), and Hess (2009), since we seek to add value by providing insights into established theories' applicability to different innovative products or services. As suggested by Claudy, Garcia, and O'Driscoll (2014), we focused on the application case of service innovations on the one hand and on electric vehicles (e-cars) as sustainable innovation on the other hand, since innovation research has provided little insight to these areas. ...
... In the default treatment, the likelihood of adoption could be increased by a factor of 3.7, while in the feedback treatment, the factor was even higher (4.6). Thus, our research extended Kuester et al.'s (2015) work by testing the default tool in a different innovation choice setting. It also contributed to the research of Heidenreich and Kraemer (2015) and into passive resistance to innovation by providing insights into the cognitive nature of resistance to innovation and how to address it with various nudging tools. ...
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Consumers often resist adopting innovations, even in cases where they acknowledge that these would be beneficial for them. Cognitive biases in consumers’ decision-making may trigger resistance to innovation. We explore cognitive biases’ effects in innovation adoption decisions. Further, we investigate how digital nudging can be used to mitigate this in order to increase the adoption likelihood for an innovation. We build a set of hypotheses and test them in a quasi-field experiment with 821 participants. We first show that the occurrence of cognitive biases correlates with an up to 44% lower likelihood of adopting an innovation. Second, we find that digital nudging can partially overcome resistance to innovation and can increase the innovation adoption likelihood. Our findings contribute to theory by explaining how resistance to innovation is built from a cognitive perspective and how nudging can be used to increase innovation adoption.
... Dabei lassen sich bisher zwei Richtungen ausmachen. Einerseits entwickeln sich Studien, die versuchen zu erklären, wie Nudging-Prinzipen genutzt werden können, um das (Kunden-)Adoptionsverhalten von Innovationen positiv zu beeinflussen (Stryja und Satzger 2019;Kuester et al. 2015;Goldstein et al. 2008). Andererseits entwickeln sich Studien, die versuchen zu erklären, wie Nudging-Prinzipien genutzt werden können, um interne Innovationsbarrieren zu überwinden (Stieler und Henike 2022;Garud et al. 2011 Zugleich ließ sich durch das Hinzufügen einer strategischen, langfristigen Komponente die Lücke zum zuvor eingeführten Ideenmanagement schließen. ...
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... As already noted by Meuter et al. (2005), companies are increasingly aware that the most prominent obstacle is to get consumers to try the innovation by overcoming adoption barriers (e.g., Heidenreich et al., 2022;Talke and Hultnik, 2010). Hence, knowledge on potential barriers in the adoption process that trigger each type of rejection is needed to design appropriate countermeasures for temporary and continuous rejection behaviours (Heidenreich et al., 2022a;Killmer and Heidenreich, 2022;Kuester et al., 2015b;Bauer et al., 2021;Roper and Bourke, 2022). Based on this knowledge, strategies can be developed to reduce corresponding barriers of both temporary and continuous rejections, thereby minimising the risk of innovation failures and misallocating resources. ...
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... So far, research in business and management has only started to investigate nudging (Rauscher & Zielke, 2019). Such studies have focused on the use of nudging for steering customers' innovation adoption decisions (e.g., Baron & Ritov, 1994;Goldstein et al., 2008;Kuester et al., 2015;Stryja & Satzger, 2019). To the best of our knowledge, research investigating nudging in the corporate context, particularly innovation management, has only touched the nudging concept slightly (see for an example Garud et al., 2011) and is rather an emerging topic at scientific conferences (Rigtering & Weitzel, 2017;Ruehle, 2019). ...
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... Besides these limitations of our study the results contribute to theory by extending the understanding of the working mechanisms of the relatively new concept of digital nudging by applying it to the case of online innovation trial decision-making. Results indicate the power of defaults also in such decision scenarios and thus contribute to innovation resistance theory in particular by complementing the work of Kuester et al. (2015) in a digital choice setting and with a sustainable and more complex innovation. By combining the disciplines of innovation resistance theory and choice architecture, further insight on the effect of choice design as alleviating instrument for personality traits like dispositional resistance to change is provided. ...
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