First adoption of consumer innovations: Exploring market failure and alleviating factors

Abstract

Consumers innovate usually for non-commercial motives. They generally lack incentives to diffuse, and this is expected to hamper first adoption – even if consumer innovations are valuable to many other people. We confirm this market failure with survey data of 164 German consumer innovators. First adoption by others is unrelated with general use value, unless the innovator is highly willing to commercialize. Next, as classical diffusion theory does not explain when consumer innovations become available to others, we propose an individual-object-process (I-O-P) framework to study factors alleviating the market failure. The viability of the framework is explored by studying the moderating role of entrepreneurial experience (I), product newness (O) and community engagement during the innovation process (P). First adoption of generally valuable consumer innovations is enhanced when a community was involved. We also find tentative evidence for a moderating role of entrepreneurial experience and product newness.