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We have recently observed herd behavior in many instances of information technology (IT) adoption. This study examines the basis for IT adoption herding generated by corporate decisionmakers' investment decisions. We propose rational herding theory as a new perspective from which some of the dynamics of IT adoption can be systematically analyzed and understood. We also investigate the roles of payoff externalities, asymmetric information, conversational learning and managerial incentives in IT adoption herding. By constructing a synthesis of the critical drivers influencing managers' IT investment decisions, this study will help business researchers and practitioners to critically address the issues of information asymmetries and incentive-compatibility in firm-and market-level IT adoption.