A Two-Step Estimation of Consumer Adoption of Technology-Based Service Innovations

Firms initially offer new technology-based services to a limited number of customers to reduce risks and maximize their returns on the investments in the new technology. Consequently, consumers' adoption of new technology-based services is restricted by the limited access provided by the businesses. A model of consumer adoption was developed and estimated via a two-step procedure. A significant sample selection bias was found with regard to access when estimating consumer adoption of a relatively new innovation, computer banking, but no such bias was found for a mature innovation, ATMs. ********** Recent advances have introduced innovative ways of using electronic technologies to deliver services to consumers (Bitner, Brown, and Meuter 2000; White 1998). Consumers have increasing access to innovative financial services mediated by electronic banking technologies, ranging from automated teller machines (ATMs) to smart cards and computer banking. Using these innovative services, consumers can conduct fast and convenient financial transactions and obtain account information without visiting banks (Lee and Lee 2000; Lee, Lee, and Schumann 2002; White 1998). The theory of diffusion of innovations (Rogers 1995) is a well-established theoretical framework (Gatignon and Robertson 1985) that explains how technological innovations spread across individuals within a social system. Diffusion research is currently at a relatively mature stage (Sultan, Farley, and Lehmann 1990). However, most studies have focused on organizational, rather than consumer, adoption of technological innovations (Frambach et al. 1998; Gauvin and Sinha 1993). With an exception of the self-service context (Bitner, Brown, and Meuter 2000; Meuter et al. 2000; Parasuraman 2000), it is not well recognized that an individual consumer's decision to adopt technology-based innovative services is often constrained by access. For instance, a consumer may want to use computer banking, but if his or her bank does not offer such a service, the consumer cannot adopt it. In this case, the consumer's non-adoption of technological innovations stems from lack of access rather than from his or her reluctance to accept new technology. That is, adoption is observed only when consumers have access to the technology-based service. Therefore, it is necessary to use Heckman's (1979) two-step estimation approach, which adjusts for sample selection bias to estimate individuals' adoption correctly (Boyes, Hoffman, and Low 1989; Meng and Schmidt 1985). Past research on consumers' adoption of innovations has identified isolating communication factors that can predict individuals' adoption (Lee, Lee, and Schumann 2002). Researchers (Kennickell and Kwast 1997; Lee and Lee 2000) have found that adopters of technology-based financial service innovations have distinct demographic characteristics, such as youth, affluence, and higher education levels. Furthermore, the diffusion literature and previous studies of consumers' use of self-service technology suggest that consumers' perceptions of innovation characteristics, such as complexity, trialability, and observability (Rogers 1995; Strutton, Lumpkin, and Vitell 1994); perceived benefits of technology (Davis 1989; Lee, Lee, and Schumann 2002); reliability (Parasuraman, Zeithaml, and Berry 1988); and security (Swaminathan, Lepkowska-White, and Rat 1999) are potential determinants of consumers' willingness to adopt technology-based service innovations. The purpose of the current study is to investigate the factors affecting consumers' adoption of technology-based service innovations, while adjusting for sample selection bias associated with limited consumer accessibility to those innovations. The effects of perceived innovation characteristics and individual socioeconomic characteristics on consumers' adoption of technological innovations are estimated using a censored probit model that adjusts for sample selection bias. …