Understanding Investors’ Decisions to Purchase Innovative Products : Drivers of Adoption Timing and Range

This paper integrates findings from marketing and finance literature to increase our understanding of consumers' decisions to purchase innovative investment products. Two surveys of individual investors examine the psychological and sociological drivers of dispositional innovativeness and its effects on adoption timing and range for five new investment products. Study 1 shows that consumer psychographics (e.g., market mavenism, product-category involvement, ambiguity intolerance) rather than socio-demographics (e.g., age, education, 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 more quickly because they perceive lower complexity and greater visibility, not because they perceive lower risk. The combined results of Study 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