Rivalry, Market Structure and Innovation: The Case
of Mobile Banking
Published online: 7 July 2015
Ó Springer Science+Business Media New York 2015
Abstract This paper focuses on a novel phenomenon—mobile banking diffusion—to
illuminate unresolved questions: whether and how rivalry adoption and market struc-
ture affect the diffusion of a new technology. Using a unique, hand-collected dataset
from the iTunes Store for 2008–2012, this study provides evidence that the adoptions of
mobile banking apps by local rivals spur future adoptions. This effect is particularly
strong in concentrated markets, where banks compete on non-price attributes. These
results are robust to the application of instrumental variables that address the possibility
that adoptions are merely simultaneous reactions to the same common forces.
Keywords Innovation Á Market structure Á Mobile banking Á Rivalry adoption Á
JEL Classiﬁcations D43 Á G21 Á O14 Á O33
The prominent role of product market competition in spurring innovation has been
the subject of a long line of research.
Yet, the theoretical literature on technology
adoption and competition is quite limited (Milliou and Petrakis 2011).
& Zhaozhao He
School of Business, University of Kansas, 1300 Sunnyside Ave, Lawrence, KS 66045, USA
See, e.g., Mansﬁeld (1968), Kamien and Schwartz (1975), Reinganum (1981), Hannan and McDowell
(1984a, b, 1987), Escuer et al. (1991), Aghion et al. (2005), Akhavein et al. (2005) and Herna
Murillo et al. (2010).
An extensive body of theoretical literature studies the relationship between ﬁrm investment in research
and development, the index of inventive activity, and industrial concentration (Kamien and Schwartz 1975).
Rev Ind Organ (2015) 47:219–242