Using System Dynamics to Model Mobile Commerce Diffusion

Mobile commerce is increasingly perceived as a powerful lever to foster growth of local economy and an opportunity to generate revenue. However, both the literature and empirical evidence have revealed that there exist perils hidden in decision-making by mobile commerce advocates. A system dynamics (SD) approach is used in this article to analyze how factors will influence the process of mobile commerce diffusion. In this paper, mobile commerce market formation is studied as a social economic system, which is dynamic and whose states change continuously. The model-building process incorporates a wide variety of sources of knowledge ranging from system thinking, through international marketing and management science, to system dynamics. The resulting simulation models are developed upon the mental models of a group of experts and available information from written documents, web forum, and online workshops. A simulation model is empirically established and simulated for the Chinese market. The model development and related analysis provides a typical example in using system dynamics to understand the process of mobile commerce diffusion and decision-making.