The Benefit of Being Second: An Event Stuidy of Social Media Adoption

New technologies are continually being introduced and changing how firms interact with their customers. Because of this rapid rate of change, one of the most fundamental questions a firm faces is deciding whether, and when, to adopt a new technology. This is even more challenging for public social media technologies (e.g., Facebook) that can be adopted by all competitors in a marketplace. Our study uses event study analysis to investigate the impact on firm value of adopting two social media technologies: Facebook and Twitter. We find increased value following the adoption of both Facebook and Twitter, but not all firms experienced an increase in value. Interestingly, it was the second wave of adopters (i.e., those that quickly followed the initial adopters) that benefited more than first movers or later adopters. This study sheds light on strategies for companies considering if (and when) they should invest in new social media technologies and other technologies of the same form -direct-to-consumer technologies and apps offered by a third party that are open to all competitors.


Publication Date:
May 25 2018
Date Submitted:
Feb 22 2019
Citation:
Database




 Record created 2019-02-22, last modified 2019-04-03

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