Electronic Communication Innovations: Overcoming Adoption Resistance

Customers often resist the adoption of electronic communication innovations offered by suppliers because of customer adoption costs. In addition to tangible adoption costs, for example the purchase of new technology, there are intangible costs, often related to organizational inertia and behavioral resistance. We study electronic communication innovations that aid transactions of a marketed good between suppliers and customers, and show how suppliers can encourage innovation adoption. This encouragement includes not only the price of the marketed good but also the design of the innovation and innovation support given to customers. We argue that, first, innovation support given to customers by suppliers to facilitate adoption compensates for customers' adoption costs. Second, because customers tradeoff adoption benefits with the price of the marketed good, the impact of innovation design on adoption benefits counterbalances changes in the price of the marketed good.