Understanding investors' decisions to purchase innovative products: Drivers of adoption timing and range

A.O.I. Hoffmann*, T.L.J. Broekhuizen

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

29 Citations (Scopus)

Abstract

This paper integrates findings from marketing and finance literature to increase our understanding of consumers' decisions to purchase innovative investment products. Two different surveys administered to individual investors examine the psychological and sociological drivers of dispositional innovativeness and its effects on adoption timing and range of adoption for five new investment products. Study 1 shows that consumer psychographics (e.g.. market mavenism, product-category involvement, and ambiguity intolerance) rather than socio-demographics (e.g., age, education, and risk profile) explain dispositional innovativeness and that dispositional innovativeness strongly impacts time of adoption and ownership of new investment products. Study 2 cross-validates the results of Study 1 and investigates the indirect effects of dispositional innovativeness on adoption timing through consumers' perceptions of new investment products' complexity, riskiness, and visibility (exposure to and engagement in word-of-mouth). Individuals who score high on dispositional innovativeness adopt new investment products quickly because they perceive lower complexity and greater visibility, not because they perceive lower risk. The combined results of Studies 1 and 2 show that individual investors' psychological and sociological roots systematically explain their innovative adoption behavior and indicate that - counter to standard finance predictions they incorporate more than just risk-return trade-offs in their investment choices. (C) 2010 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)342-355
Number of pages14
JournalInternational Journal of Research in Marketing
Volume27
Issue number4
DOIs
Publication statusPublished - Dec-2010

Keywords

  • Dispositional innovativeness
  • Consumer financial decision-making
  • Individual investor decision-making
  • Marketing finance interface
  • New product adoption
  • INNATE CONSUMER INNOVATIVENESS
  • STRUCTURAL EQUATION MODELS
  • OPTIMUM STIMULATION LEVEL
  • PERCEIVED-RISK
  • BEHAVIOR
  • GOALS
  • BIAS
  • INFORMATION
  • PERSONALITY
  • PERFORMANCE

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