An Exploratory Econometric Analysis of Shared Electronic Banking Network Adoption

What are the determinants of early interorganizational system (IOS) adoption?This paper focuses on a specific kind of IOS -- shared electronic banking networks -- andemploys an economic approach that views adoption and diffusion in terms of cost andbenefit. We attempt to identify firm characteristics that are likely to influence theperceived business value of network membership and develop specific hypotheses that canbe tested empirically using historical data in a realistic setting. We undertake anexploratory econometric analysis of the adoption of Yankee 24, a large shared electronicbanking network in the northeastern United States. Using Bass' analytical diffusionmodel, we categorize Yankee 24 network members into earlier and later adopters.Probit models are estimated to assess the impact of explanatory variables on sharedelectronic banking network adoption. The number of branch offices operated by a bank,its total demand deposits, and the proportion of its total deposits accounted for bydemand deposits are found to be important predictors of earlier adoption. We find thatthe number of branch offices operated by a bank, a proxy for the size of its proprietarynetwork, has a negative impact on early adoption, which contradicts the common wisdomthat a large firm size is a prerequisite for adoption of technological innovations