Article

The role of defaults in preventing innovation rejection

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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.

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... 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.
... Nudging elements have also been applied in the innovation decision context in an experimental study in [69]. Innovation rejection was decreased when the innovation was set as default. ...
... So-called "innovation novices" in particular relied on default settings. One limitation of the study, however, is the incremental type of innovation used (USB cell for recharging mobile devices), which led the authors to call for a replication of their results in more complex innovation contexts [69]. In addition, only status quo satisfaction was considered as determinant for innovation resistance. ...
... Existing studies on innovation resistance are often limited to the fact that they test consumer resistance with simple and small innovations such as a USB cells [69] or mobile phones with an innovative battery technology [28]. Complex innovations usually require higher consumer commitment in terms of financial involvement or changes in habits and routines. ...
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When innovative products and services are launched to the market, many consumers initially resist adopting them, even if the innovation is likely to enhance their life quality. Explanations for this behavior can also be found in specific personality traits and in general pitfalls of human decision-making. We believe that decision support systems (DSS) can help alleviate such innovation resistance. We propose a DSS design that addresses innovation resistance to complex innovations on an individual’s cognitive level. An experimental study will be conducted to test the influence of different DSS modifications on the perception and selection of complex innovations. We aim to identify levers for reducing innovation resistance and to derive DSS design implications.
... 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., 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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Little research effort has been dedicated to investigate the nature and determinants of and the differences between temporary and continuous consumer rejections of innovations. To shed light on both types of consumer rejection behaviours and their underlying psychological processes, this paper applies a mixed-method approach. First, we conducted a qualitative study to investigate whether known determinants comprehensively cover reasons for both types of consumer rejections. Based on the qualitative study’s evidence, we introduce a new type of innovation resistance (transactional innovation resistance) to complement the well-known concepts of active and passive innovation resistance as drivers of rejection behaviour. Second, we validated the derived framework using a large-scale quantitative study to empirically determine each determinant’s relative importance for temporary and continuous consumer rejection of innovations. Our results demonstrate that consumers who continuously reject an innovation are primarily driven by a combinatory effect of passive and active innovation resistance. In contrast, consumers who only temporarily reject are largely motivated by a combinatory effect of transactional and active innovation resistance.
... 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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... A significant diffusion barrier is customers' rejection of the innovation, which may occur even when the new product outperforms its existing competitors (Gourville, 2006). Firms can overcome this barrier by launching the new product as the default option, with an opt-out alternative that customers can actively select (Kuester et al., 2015). Given these findings, we hypothesize that: ...
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... Research Potential 3 -"Early Stages": The majority of articles that, to some extent, utilize innovation adoption theory examine individuals' intentions (Lee, Park, Chung, & Blakeney, 2012;Parry, Kawakami, & Kishiya, 2012;Schreier, Fuchs, & Dahl, 2012;Talke & Snelders, 2013) and behaviors (Kuester, Hess, & Herrmann, 2015;Labrecque, Wood, Neal, & Harrington, 2016;Müller-Stewens, Schlager, Häubl, & Herrmann, 2017;Stock & Schulz, 2015). Following Rogers' (2003) initial processual proposal, intentional and behavioral outcomes are, regardless of the general nature (positive or negative), associated with the mid-(e.g., decision stage) and later-stages (implementation and confirmation stage) of the innovation decision process. ...
... 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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Technological innovation is seen as the key to survival and success for many firms. Whether intended for internal use or for customers, adoption decisions must consider the response of the final user to such technological alternatives. This paper argues for greater attention to the factors which cause individual resistance to technological innovations. The results of two studies are reported which examined the effects of self-efficacy (Bandura 1977) and performance sat isfaction on consumers' response to technological changes. Results indicate that a person's perceived ability to use a product successfully affects their evaluative and behavioral response to the product. In addition, the level of satisfaction experienced with an existing behavior increases resistance to and reduces likelihood of adopting an alternative.
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A simplified cognitive model is proposed to assess the dynamic aspect of consumer satisfaction/dissatisfaction in consecutive purchase behavior. Satisfaction is found to have a significant role in mediating intentions and actual behavior for five product classes that were analyzed in the context of a three-stage longitudinal field study. The asymmetric effect found demonstrates that repurchase of a given brand is affected by lagged intention whereas switching behavior is more sensitive to dissatisfaction with brand consumption. An attempt to predict repurchase behavior on the basis of the investigated cognitive variables yielded weak results. However, repurchase predictions were improved when the model was extended to a multipurchase setting in which prior experience with the brand was taken into account.
Article
An important challenge for firms commercializing technology-based new products is to reduce consumers' perceptions of performance uncertainty. We build on prior research in consumer decision making and acceptance of high-technology products and focus on the role of information in influencing perceptions of performance uncertainty of new product interfaces. In contrast to prior literature, we show here that more information is not always better in reducing performance uncertainty. We argue that the effects of more (vs. less) information on the performance uncertainty of a new interface and consumer adoption intentions of the new product are moderated by the degree of newness of the particular functionality (i.e., set of potential benefits) that is delivered by the new product. We report two experiments that investigate this problem and show that more information helps to reduce performance uncertainty only when the product provides a preexisting functionality. However, high levels of information about the new interface actually intensify performance uncertainty when the product delivers a new functionality. We conclude with a discussion of the theoretical and managerial implications of the findings.
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The authors investigate whether it is necessary to include disconfirmation as an intervening variable affecting satisfaction as is commonly argued, or whether the effect of disconfirmation is adequately captured by expectation and perceived performance. Further, they model the process for two types of products, a durable and a nondurable good, using experimental procedures in which three levels of expectations and three levels of performance are manipulated for each product in a factorial design. Each subject's perceived expectations, performance evaluations, disconfirmation, and satisfaction are subsequently measured by using multiple measures for each construct. The results suggest the effects are different for the two products. For the nondurable good, the relationships are as typically hypothesized. The results for the durable good are different in important respects. First, neither the disconfirmation experience nor subjects' initial expectations affected subjects' satisfaction with it. Rather, their satisfaction was determined solely by the performance of the durable good. Expectations did combine with performance to affect disconfirmation, though the magnitude of the disconfirmation experience did not translate into an impact on satisfaction. Finally, the direct performance-satisfaction link accounts for most of the variation in satisfaction.
Article
Whereas most academic and industry studies of consumer preferences and decision making involve forced choice (i.e., participants are told to choose one of the presented product or service alternatives), buyers usually also have the option not to select any alternative. An implicit assumption in the experimental practice of forcing choice is that the no-choice option draws proportionately from the various available alternatives, such that the qualitative conclusions are unaffected. However, the authors propose that the no-choice option competes most directly with alternatives that buyers tend to select when they are uncertain about their preferences. Building on this general proposition, the authors show that the introduction of the no-choice option strengthens the attraction effect, weakens the compromise effect, and decreases the relative share of an option that is "average" on all dimensions. They also examine the mechanisms underlying the impact of having the option not to choose and the conditions under which the no-choice option is likely to affect relative option shares. The results are consistent with the notion that the no-choice option provides an alternative way of resolving difficult choices that is not available when subjects are forced to choose. The authors discuss the theoretical and practical implications of this research.
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A default option is the choice alternative a consumer receives if he/she does not explicitly specify otherwise. In this article we argue that defaults can invoke a consumer's "marketplace metacognition," his/her social intelligence about marketplace behavior. This metacognitive account of defaults leads to different predictions than accounts based on cognitive limitations or endowment: in particular, it predicts the possibility of negative or "backfire" default effects. In two experiments, we demonstrate that the size and direction of the default effect depend on whether this social intelligence is invoked and how it changes the interpretation of the default.
Article
An important challenge for firms commercializing technology-based new products is to reduce consumers' perceptions of performance uncertainty. We build on prior research in consumer decision making and acceptance of high-technology products and focus on the role of information in influencing perceptions of performance uncertainty of new product interfaces. In contrast to prior literature, we show here that more information is not always better in reducing performance uncertainty. We argue that the effects of more (vs. less) information on the performance uncertainty of a new interface and consumer adoption intentions of the new product are moderated by the degree of newness of the particular functionality (i.e., set of potential benefits) that is delivered by the new product. We report two experiments that investigate this problem and show that more information helps to reduce performance uncertainty only when the product provides a preexisting functionality. However, high levels of information about the new interface actually intensify performance uncertainty when the product delivers a new functionality. We conclude with a discussion of the theoretical and managerial implications of the findings.
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Discusses several propositions on the causes and realized strategies that are likely to be found in different industrial marketing-purchasing situations involving rejecting versus accepting superior technological innovations - innovations independently verified to provide superior operating characteristics and lower total costs compared to currently used products and manufacturing processes. Develops a theory of customer rejection of superior manufacturing technologies and product-service innovations as a vehicle for summarizing a set of related propositions explaining such behavior. Reviews suggestions for empirical research to test the theory.
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The authors extend consumer satisfaction literature by theoretically and empirically (1) examining the effect of perceived performance using a model first proposed by Churchill and Surprenant, (2) investigating how alternative conceptualizations of comparison standards and disconfirmation capture the satisfaction formation process, and (3) exploring possible multiple comparison processes in satisfaction formation. Results of a laboratory experiment suggest that perceived performance exerts direct significant influence on satisfaction in addition to those influences from expected performance and subjective disconfirmation. Expectation and subjective disconfirmation seem to be the best conceptualizations in capturing satisfaction formation. The results suggest multiple comparison processes in satisfaction formation.
Article
A simplified cognitive model is proposed to assess the dynamic aspect of consumer satisfaction/dissatisfaction in consecutive purchase behavior. Satisfaction is found to have a significant role in mediating intentions and actual behavior for five product classes that were analyzed in the context of a three-stage longitudinal field study. The asymmetric effect found demonstrates that repurchase of a given brand is affected by lagged intention whereas switching behavior is more sensitive to dissatisfaction with brand consumption. An attempt to predict repurchase behavior on the basis of the investigated cognitive variables yielded weak results. However, repurchase predictions were improved when the model was extended to a multipurchase setting in which prior experience with the brand was taken into account.
Article
Examines the construct of perceived risk, as used in consumer and marketing research. In the light of the shortcomings of past research, develops and tests three hypotheses. Findings show that the risk dimensions proposed in the literature (i.e. financial, psychological, social, performance, physical and time-related risk) capture a very high fraction of perceived overall risk, and that a parsimonious structure of the risk concept exists as the other risk dimensions are mediated through individual psychological risk. Implications are highlighted.
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In the last decade, there has been an increasing interest in the link between new product launch strategy and market performance. So far, new product launch research has focused on this performance relationship without giving much attention to background factors that can facilitate or inhibit successful launch strategies. However, investigating such antecedents that set the framework in which different strategic launch decisions enable or prevent the market performance of new products is useful for enhancing the current state of knowledge. Drawing on the concept of a firm's orientation, the present study discusses the influence of the corporate mind-set on new product launch strategy and market performance. It is hypothesized that the capability to successfully launch new products is based on the interplay between a firm's mind-set (i.e., an analytical, risk-taking, and aggressive posture) and its strategic launch decisions on setting launch objectives, selecting target markets, and positioning the new product. A research model with mediating effects is proposed, where the corporate mind-set determines the launch strategy decisions, which in turn impact market performance. The model is tested with data on 113 industrial new products launched in business-to-business markets in Germany using a multiple informant approach. The results support the mediated model as the dimensions of the corporate mind-set have a significant impact on most strategic launch decisions, which in turn significantly contribute to market performance. It is found that while an analytical posture relates to all three strategic launch decisions, risk taking and an aggressive posture have a significant impact on two, respectively one, launch strategy elements. These findings confirm the importance of investigating antecedents for a successful new product launch, as the corporate mind-set serves as a background resource that sets the framework for successful new product launch decisions. In the final section implications for research and managerial practice as well as limitations of this research are provided.
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Academic literature is filled with debate on whether product innovativeness positively impacts new product performance (NPP) because of increasing competitive advantage or negatively impacts performance due to consumers' fears of novel technology and resultant resistance to adopt. This study investigates this issue by modeling product innovativeness as a moderator that influences the relationship between communication strategy and new product performance. The authors emphasize that the impact of innovativeness to producers is different from that to consumers and that the differences have strategic impact when commercializing highly innovative products. Product innovativeness is conceptualized as multidimensional, and each dimension is tested separately. Four dimensions of innovativeness are explored—product newness to the firm, market newness to the firm, product superiority to the customer, and adoption difficulty for the customer. In this study, communication strategy is comprised of preannouncement strategy and advertising strategy. First, the relationship between whether or not a preannouncement is offered and NPP is explored. Then three types of preannouncement messages (customer education, anticipation creation, and market preemption) are investigated. Advertising strategy is characterized by whether the advertisement campaign at the time of launch was based primarily on emotional or functional appeals. Using empirical results from 284 surveys of product managers, the authors find that the relationship between communication strategy and NPP is moderated by innovativeness, and that the relationships differ not only by degree but also by type of innovativeness. Implications for research and practice are discussed.
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The subjects in this study conducted relatively little formal customer research during the early stages of the NPD projects. The methods used for obtaining customer input during the concept generation and exploration stages were primarily qualitative. Although the companies in the study still did not focus consistently on customer issues during the technical development and design stage, the less discontinuous projects did use such traditional quantitative techniques as concept tests, clinics, and experiments during this phase of NPD. Throughout the projects in this study, the real opportunities for obtaining customer input came during the prototype testing and commercialization phases of the NPD projects.
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This paper examines the reasons for corporate customers' resistance to adopt industrial service innovations provided by their supplier companies. It is based on work with nine Finnish suppliers of industrial services and their potential customers. We view organizations as networks of individual adopters. We find that organizational sentiment towards adopting an innovation is often ambivalent and that resisting views reveal important drawbacks of an innovation that need to be addressed. The results clarify the effects of utility, cost, emotion and risk aversion in organizational service decisions emphasizing the fit of the service for the customer.
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Anand (Anand, P. 1985. Testing regret. Management Sci. 31 114--116.) has suggested that measuring the sacrifice a person is prepared to make to avoid regret may be more difficult than I suggest in Bell (Bell, D. E. 1983. Risk premiums for decision regret. Management Sci. 29 1156--1166.). Though he believes regret is probably widespread, he is concerned that regret may be confounded with other of the psychological phenomena that I have discussed, especially disappointment (Bell [Bell, D. E. 1985. Disappointment in decision making under uncertainty. Harvard Business School Working Paper 83-18, 1982. Oper. Res. (January--February).]). I will use this opportunity for response to set my work in perspective.
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Prior research has demonstrated that consumers who take an opportunity and are satisfied (satisfied takers) are likely to avail of a future opportunity when it is presented again but those who forsake an opportunity and experience regret (regretful forsakers) are less likely to do so, exhibiting inaction inertia. In this research we demonstrate when and why regret for inaction may result in the intent to avail of a future opportunity and compare this intent with that of satisfied consumers. Specifically, we demonstrate in two studies that (1) when consumers forgo an opportunity and experience regret, they are motivated to avail of a similar opportunity when it is presented in the future, and (2) this intent by regretful forsakers may be more intense than that experienced by satisfied customers due to the elicitation of mental imagery regarding the anticipated consumption episode.
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This article examines some of the effects of product expertise on consumer evaluations of new-product concepts. Consumers with expertise regarding a particular product are expected to be capable of extensive processing of the information on new concepts of that product. Consumers with much product expertise appear to supply more articulated evaluations that are more internally consistent and stable over time than consumers with little product expertise. It is suggested that only those consumers who at least have a moderate level of product expertise should be invited to new-product concept tests.
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While many of the factors which help explain the rate and scale of innovative technology adoption have been identified, one important variable (the influence of insider, practitioner-developed versus commercial, externally-developed technology) has been under-explored. Focusing on healthcare in particular, the purpose of this paper is to focus on the insider-innovator/user dynamic. Relevant literature is used to draw-out and examine the prima facie reasons why insider innovator status might enhance, or conversely impede, widespread adoption. From the literature, a model depicting adoption activity pathways and adoption processes is developed. The paper concludes with a research agenda for future empirical study
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This article addresses how consumers resolve decisions involving conflict between attributes linked to highly valued goals, such as an automobile purchase decision requiring determination of how much safety one is willing to sacrifice in order to obtain other benefits.,One salient goal for these decisions may be coping with or minimizing the negative emotion generated during decision making. The conceptual framework developed in this article predicts that choosing avoidant options (e.g., the option to maintain the status quo) can satisfy coping goals by minimizing explicit confrontation of negative potential decision consequences and difficult trade-offs. Two experiments demonstrate that reported emotion can be altered by manipulating decision attributes, that the opportunity to choose an avoidant option mitigates levels of reported emotion, and that increasingly emotion-laden decision environments are associated with more choice of avoidant options. Mediation analyses indicate that actual choice of an avoidant option results in less retrospective negative emotion (in experiment I)and that increased initial negative emotion results in increased choice of avoidant options (in experiment 2). Mediation analyses for experiment 2 also indicate that increased response times mediate avoidant choice, in contrast to explanations of the status quo bias and similar choice phenomena that appeal to decision makers' desires to minimize cognitive effort.
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This article develops and tests alternative models of market-level expectations, perceived product performance, and customer satisfaction. Market performance expectations are argued to be largely rational in nature yet adaptive to changing market conditions. Customer satisfaction is conceptualized as a cumulative construct that is effected by market expectations and performance perceptions in any given period and is affected by past satisfaction from period to period. An empirical study that supports adaptive market expectations and stable market satisfaction using data from the Swedish Customer Satisfaction Barometer is reported. Copyright 1995 by the University of Chicago.
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Two studies are reported that apply diffusion theory to two new consumer products. The research objective in both studies was to discriminate buyers from nonbuyers using the personal characteristics of respondents and their perceptions of each new product and thereby also to assess the relative importance of the predictor variables. In both studies perceptual variables are found far more successful as predictors of the purchase outcome than respondent personal characteristics.
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Much experimental evidence indicates that choice depends on the status quo or reference level: changes of reference point often lead to reversals of preference. The authors present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point. The central assumption of the theory is that losses and disadvantages have greater impact on preferences than gains and advantages. Implications of loss aversion for economic behavior are considered. Copyright 1991, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.