Bandwagon Influences And Installed-Base Conversion In U.S. Telecommunications

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Abstract
The idea that firms are subject to bandwagon or imitation influences occupies a key position as an explanatory variable in the literature on technology adoption and diffusion. This study examines whether bandwagon influences help to explain differences in the patterns of conversion to a new technology, electronic switching, across firms in the U.S. telecommunications industry. The sample analyzed consists of 40 of the largest firms in the local operating sector of the industry, and firm-level data collected for the years 1973, 1978, 1981, 1984, and 1987 are used to undertake the analysis. The results strongly support the bandwagon hypothesis as a key influence on firm's technology adoption or conversion decisions.

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