Network effects as drivers of individual technology adoption: Analyzing adoption and diffusion of mobile communication services

Adoption research has largely ignored the dynamic impact of network effects on technology adoption and diffusion. For example, some technologies become more attractive the more social peers use them as well. But adoption at the same time increases the value for the peers and thereby their adoption decisions as well. Unfortunately, interdependencies like these make adoption and diffusion patterns very complex. Drawing on network effect theory, we develop an adoption and diffusion model that explicitly considers the role of direct and indirect network effects for individual technology adoption, using mobile commerce adoption as application example. By applying a simulation approach we can exemplify and analyze the fundamental adoption dynamics given rise to by network effects. We thereby propose a way of how to incorporate network effects into adoption research and disclose the role of the technology diffusion lifecycle for individual adoption.