IDEAS home Printed from https://ideas.repec.org/a/inm/orisre/v22y2011i1p118-133.html
   My bibliography  Save this article

A Finite Mixture Logit Model to Segment and Predict Electronic Payments System Adoption

Author

Listed:
  • Ravi Bapna

    (Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455)

  • Paulo Goes

    (Eller College of Management, University of Arizona, Tucson, Arizona 85721)

  • Kwok Kee Wei

    (College of Business, City University of Hong Kong, Kowloon, Hong Kong)

  • Zhongju Zhang

    (School of Business, University of Connecticut, Storrs, Connecticut 06269)

Abstract

Despite much hype about electronic payments systems (EPSs), a 2004 survey establishes that close to 80% of between-business payments are still made using paper-based formats. We present a finite mixture logit model to predict likelihood of EPS adoption in business-to-business (B2B) settings. Our model simultaneously classifies firms into homogeneous segments based on firm-specific characteristics and estimates the model's coefficients relating predictor variables to EPS adoption decisions for each respective segment. While such models are increasingly making their presence felt in the marketing literature, we demonstrate their applicability to traditional information systems (IS) problems such as technology adoption. Using the finite mixture approach, we predict the likelihood of EPS adoption using a unique data set from a Fortune 100 company. We compare the finite mixture model with a variety of traditional approaches. We find that the finite mixture model fits the data better, controlling for the number of parameters estimated; that our explicit model-based segmentation leads to a better delineation of segments; and that it significantly improves the predictive accuracy in holdout samples. Practically, the proposed methodology can help business managers develop actionable segment-specific strategies for increasing EPS adoption by their business partners. We discuss how the methodology is potentially applicable to a wide variety of IS research.

Suggested Citation

  • Ravi Bapna & Paulo Goes & Kwok Kee Wei & Zhongju Zhang, 2011. "A Finite Mixture Logit Model to Segment and Predict Electronic Payments System Adoption," Information Systems Research, INFORMS, vol. 22(1), pages 118-133, March.
    • Handle: RePEc:inm:orisre:v:22:y:2011:i:1:p:118-133
    DOI: 10.1287/isre.1090.0277
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/isre.1090.0277
    Download Restriction: no
    File URL: https://libkey.io/10.1287/isre.1090.0277?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Viswanath Venkatesh, 2000. "Determinants of Perceived Ease of Use: Integrating Control, Intrinsic Motivation, and Emotion into the Technology Acceptance Model," Information Systems Research, INFORMS, vol. 11(4), pages 342-365, December.
    2. Paul Hart & Carol Saunders, 1997. "Power and Trust: Critical Factors in the Adoption and Use of Electronic Data Interchange," Organization Science, INFORMS, vol. 8(1), pages 23-42, February.
    3. Hayashi Fumiko & Klee Elizabeth, 2003. "Technology Adoption and Consumer Payments: Evidence from Survey Data," Review of Network Economics, De Gruyter, vol. 2(2), pages 1-16, June.
    4. Blaize Horner Reich & Izak Benbasat, 1990. "An Empirical Investigation of Factors Influencing the Success of Customer-Oriented Strategic Systems," Information Systems Research, INFORMS, vol. 1(3), pages 325-347, September.
    5. Fred D. Davis & Richard P. Bagozzi & Paul R. Warshaw, 1989. "User Acceptance of Computer Technology: A Comparison of Two Theoretical Models," Management Science, INFORMS, vol. 35(8), pages 982-1003, August.
    6. Gautam Gowrisankaran & Joanna Stavins, 2004. "Network Externalities and Technology Adoption: Lessons from Electronic Payments," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 260-276, Summer.
    7. Eric Abrahamson & Lori Rosenkopf, 1997. "Social Network Effects on the Extent of Innovation Diffusion: A Computer Simulation," Organization Science, INFORMS, vol. 8(3), pages 289-309, June.
    8. Wagner A. Kamakura & Byung-Do Kim & Jonathan Lee, 1996. "Modeling Preference and Structural Heterogeneity in Consumer Choice," Marketing Science, INFORMS, vol. 15(2), pages 152-172.
    9. Sujit Chakravorti & Erin Davis, 2004. "An electronic supply chain: will payments follow?," Chicago Fed Letter, Federal Reserve Bank of Chicago, issue Sep.
    10. Yap, Cs & Soh, Cpp & Raman, Ks, 1992. "Information systems success factors in small business," Omega, Elsevier, vol. 20(5-6), pages 597-609.
    11. Christopher R. Plouffe & John S. Hulland & Mark Vandenbosch, 2001. "Research Report: Richness Versus Parsimony in Modeling Technology Adoption Decisions—Understanding Merchant Adoption of a Smart Card-Based Payment System," Information Systems Research, INFORMS, vol. 12(2), pages 208-222, June.
    12. James C. Brancheau & James C. Wetherbe, 1990. "The Adoption of Spreadsheet Software: Testing Innovation Diffusion Theory in the Context of End-User Computing," Information Systems Research, INFORMS, vol. 1(2), pages 115-143, June.
    13. Joanna Stavins, 2003. "Perspective on payments," Regional Review, Federal Reserve Bank of Boston, issue Q 1, pages 6-9.
    14. Hamparsum Bozdogan & Donald Ramirez, 1988. "FACAIC: Model selection algorithm for the orthogonal factor model using AIC and CAIC," Psychometrika, Springer;The Psychometric Society, vol. 53(3), pages 407-415, September.
    15. Paul Chwelos & Izak Benbasat & Albert S. Dexter, 2001. "Research Report: Empirical Test of an EDI Adoption Model," Information Systems Research, INFORMS, vol. 12(3), pages 304-321, September.
    16. Ritu Agarwal & V. Sambamurthy & Ralph M. Stair, 2000. "Research Report: The Evolving Relationship Between General and Specific Computer Self-Efficacy—An Empirical Assessment," Information Systems Research, INFORMS, vol. 11(4), pages 418-430, December.
    17. Wynne W. Chin & Barbara L. Marcolin & Peter R. Newsted, 2003. "A Partial Least Squares Latent Variable Modeling Approach for Measuring Interaction Effects: Results from a Monte Carlo Simulation Study and an Electronic-Mail Emotion/Adoption Study," Information Systems Research, INFORMS, vol. 14(2), pages 189-217, June.
    18. Soon Ang & Sandra Slaughter & Kok Yee Ng, 2002. "Human Capital and Institutional Determinants of Information Technology Compensation: Modeling Multilevel and Cross-Level Interactions," Management Science, INFORMS, vol. 48(11), pages 1427-1445, November.
    19. Shirley Taylor & Peter A. Todd, 1995. "Understanding Information Technology Usage: A Test of Competing Models," Information Systems Research, INFORMS, vol. 6(2), pages 144-176, June.
    20. Carol Stoak Saunders & Sharon Clark, 1992. "EDI Adoption and Implementation: A Focus on Interorganizational Linkages," Information Resources Management Journal (IRMJ), IGI Global, vol. 5(1), pages 9-20, January.
    21. Chris Forman, 2005. "The Corporate Digital Divide: Determinants of Internet Adoption," Management Science, INFORMS, vol. 51(4), pages 641-654, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stanislav Kreuzer, 2017. "Explaining organizational susceptibility to coercive pressure: results from a field experiment on e-invoicing IOIS adoption," Information Systems and e-Business Management, Springer, vol. 15(1), pages 159-195, February.
    2. Chen Liang & Yili Hong & Pei-Yu Chen & Benjamin B. M. Shao, 2022. "The Screening Role of Design Parameters for Service Procurement Auctions in Online Service Outsourcing Platforms," Information Systems Research, INFORMS, vol. 33(4), pages 1324-1343, December.
    3. Paulo B. Goes & Noyan Ilk & Mingfeng Lin & J. Leon Zhao, 2018. "When More Is Less: Field Evidence on Unintended Consequences of Multitasking," Management Science, INFORMS, vol. 64(7), pages 3033-3054, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Weiyin Hong & Frank K. Y. Chan & James Y. L. Thong & Lewis C. Chasalow & Gurpreet Dhillon, 2014. "A Framework and Guidelines for Context-Specific Theorizing in Information Systems Research," Information Systems Research, INFORMS, vol. 25(1), pages 111-136, March.
    2. Jeeyeon Jeong & Yaeri Kim & Taewoo Roh, 2021. "Do Consumers Care About Aesthetics and Compatibility? The Intention to Use Wearable Devices in Health Care," SAGE Open, , vol. 11(3), pages 21582440211, August.
    3. Nripendra P. Rana & Yogesh K. Dwivedi & Banita Lal & Michael D. Williams & Marc Clement, 2017. "Citizens’ adoption of an electronic government system: towards a unified view," Information Systems Frontiers, Springer, vol. 19(3), pages 549-568, June.
    4. Naresh K. Malhotra & Sung S. Kim & Ashutosh Patil, 2006. "Common Method Variance in IS Research: A Comparison of Alternative Approaches and a Reanalysis of Past Research," Management Science, INFORMS, vol. 52(12), pages 1865-1883, December.
    5. Wajeeha Aslam & Marija Ham & Imtiaz Arif, 2017. "Consumer Behavioral Intentions towards Mobile Payment Services: An Empirical Analysis in Pakistan," Tržište/Market, Faculty of Economics and Business, University of Zagreb, vol. 29(2), pages 161-176.
    6. Cansu TÜRKER & Abdullah OKUMUŞ, 2019. "Mobil Ödeme Kullanımına Yönelik Niyet ve Algıların SosyoDemografik Özelliklere Göre Farklılıklarının İncelenmesi," Istanbul Management Journal, Istanbul University Business School, vol. 0(87), pages 111-139, December.
    7. Hsiao, Chun Hua & Yang, Chyan, 2011. "The intellectual development of the technology acceptance model: A co-citation analysis," International Journal of Information Management, Elsevier, vol. 31(2), pages 128-136.
    8. Peng, Zeyu & Sun, Yongqiang & Guo, Xitong, 2018. "Antecedents of employees’ extended use of enterprise systems: An integrative view of person, environment, and technology," International Journal of Information Management, Elsevier, vol. 39(C), pages 104-120.
    9. Agarwal, Reeti & Rastogi, Sanjay & Mehrotra, Ankit, 2009. "Customers’ perspectives regarding e-banking in an emerging economy," Journal of Retailing and Consumer Services, Elsevier, vol. 16(5), pages 340-351.
    10. Nan Zhang & Xunhua Guo & Guoqing Chen, 2011. "Why adoption and use behavior of IT/IS cannot last?—two studies in China," Information Systems Frontiers, Springer, vol. 13(3), pages 381-395, July.
    11. Nripendra P. Rana & Yogesh K. Dwivedi & Banita Lal & Michael D. Williams & Marc Clement, 0. "Citizens’ adoption of an electronic government system: towards a unified view," Information Systems Frontiers, Springer, vol. 0, pages 1-20.
    12. Lee, Kyootai & Yan, Aihua & Joshi, Kailash, 2011. "Understanding the dynamics of users’ belief in software application adoption," International Journal of Information Management, Elsevier, vol. 31(2), pages 160-170.
    13. Hasan, Rajibul & Lowe, Ben & Petrovici, Dan, 2020. "Consumer adoption of pro-poor service innovations in subsistence marketplaces," Journal of Business Research, Elsevier, vol. 121(C), pages 461-475.
    14. Mäntymäki, Matti & Salo, Jari, 2013. "Purchasing behavior in social virtual worlds: An examination of Habbo Hotel," International Journal of Information Management, Elsevier, vol. 33(2), pages 282-290.
    15. Nistor, Cristian, 2013. "A conceptual model for the use of social media in companies," MPRA Paper 44224, University Library of Munich, Germany.
    16. Nagy, A., 2009. "Adoption of interorganizational information systems : The adoption position model," Other publications TiSEM af471297-bf03-43bf-88c1-4, Tilburg University, School of Economics and Management.
    17. Al-Qeisi, Kholoud & Dennis, Charles & Alamanos, Eleftherios & Jayawardhena, Chanaka, 2014. "Website design quality and usage behavior: Unified Theory of Acceptance and Use of Technology," Journal of Business Research, Elsevier, vol. 67(11), pages 2282-2290.
    18. Chua Chang Jin & Lim Chee Seong & Aye Aye Khin, 2019. "Factors Affecting the Consumer Acceptance towards Fintech Products and Services in Malaysia," International Journal of Asian Social Science, Asian Economic and Social Society, vol. 9(1), pages 59-65, January.
    19. Oghuma, Apollos Patricks & Chang, Younghoon & Libaque-Saenz, Christian Fernando & Park, Myeong-Cheol & Rho, Jae Jeung, 2015. "Benefit-confirmation model for post-adoption behavior of mobile instant messaging applications: A comparative analysis of KakaoTalk and Joyn in Korea," Telecommunications Policy, Elsevier, vol. 39(8), pages 658-677.
    20. Juan F. Tavera Mesías & Juan C. Sánchez Giraldo & Bernardo Ballesteros Díaz, 2011. "Aceptación del E-Commerce en Colombia: un estudio para la ciudad de Medellín," Revista Facultad de Ciencias Económicas, Universidad Militar Nueva Granada, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orisre:v:22:y:2011:i:1:p:118-133. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.