Abstract

Although investments in innovative IT applications have been shown to add value to the firm (Dos Santos, Peffers and Mauer, 1993), these investments are expensive and risky (Dos Santos, 1991). Consequently, the decision to adopt innovative applications early or to wait until they have proven successful is a difficult and consequential decision for the firm. What determines the adoption timing by firms? Although adoption of IT and related phenomenon have received attention in the IS literature (Gurbaxani, 1990; Loh and Venkatraman, 1992), this is an important question that has not been considered to date. We study the adoption of automated teller machine (ATM) technology by US banks. The ATM is one of the most visible and influential of IT innovations in the banking industry. As early as 1970, ATMs were widely expected to be an important emerging technology (ABA, 1972). Yet, nine years after the first ATMs appeared in 1971 less than 20% of all banks had installed ATMs and seven more years passed before a majority of U.S. banks installed any ATMs (Dos Santos and Peffers, 1995). This paper presents the results of a study of ATM adoption between 1971 and 1992. We attempt to determine whether ATM adoption was influenced by internal factors, external factors or a combination of internal and external factors. Out analysis indicates that ATM adoption was influenced by internal and external factors; both adoption by competitors and efforts by vendors influenced adoption. The results have implications for potential users of new technology and manufacturers of new technologies.

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