Race to E-Commerce: The Role of Firm Owners in Technology Adoption

Siwen Chen, Management, The Wharton School

Abstract: This study aims to understand how firm ownership and governance influence the adoption of disruptive technologies in the early stages of the technology cycle. There is a growing recognition that owners have different goals and motivations that in turn, shape the strategic direction of the firms they control. Few studies have shown that owners’ preferences, especially with respect to their investment horizons, influence firms’ innovation output and quality. However, it is still an open question whether these preferences could also influence when firms decide to adopt “radical” innovations – a question that is relevant even beyond R&D intensive sectors. To address this question, I examine how firm ownership affects the speed of e-commerce adoption by traditional retail companies in Europe. I implement a Cox hazard model to estimate the rate of e-commerce adoption by founder/family-owned firms that transferred controlling ownership to Private Equity firms before the wide-spread adoption of e-commerce, relative to a matched sample of firms that remained solely under founder/family ownership during this time. The findings of this study could enhance our theoretical understanding of how owners shape their firms’ strategic direction as well as provide practical insights for founder and family-owned firms that are considering a sale to a financial owner.