The Impact of Product Failure on Innovation Diffusion: The Example of the Cargo Bike as Alternative Vehicle for Urban Transport
Extended Abstract Transport systems are marked by a strong path dependency due to habits, infrastructure, and market rigidities. This path dependency result is challenging for innovative solutions as they face unexpected barriers, but also abrupt acceleration once the barriers are overcome. In consequence, innovation diffusion needs special attention when transforming the transport system. From previous research, it is known that the success of innovation diffusion depends on factors, such as the early adopters or the spread of information within the social system under consideration of basic economic conditions. Research has shown the importance of information and information distribution in all phases of the innovation diffusion process. Therefore, current studies analyze the effect of information on innovation diffusion among private users as well as among industry actors in terms of buying and investment decisions. As a consequence, word of mouth is a decisive factor. Focusing on the transformation of urban transport networks, the European Commission decided to promote cycling and thus, to open the way for changes in mobility behavior and modal choice. Cycling is assumed to be a sustainable mode with high potentials for resources efficiency, minimization of the impact of the transport system on the environment and improving urban transport systems. E bikes shall additionally improve the attractiveness of cycling and thereby foster the usage among a larger customer group. Bikes, however, are not only a potential mode for mobility but also play an important role in the transformation of urban logistics. Therefore, cargo bikes are a promising vehicle for innovative urban logistics concepts in terms of sustainable urban transport an improvement of efficiency and reliability of last mile deliveries. The vehicles allow the use of alternative driveways beside main traffic routes and those restricted to motorized vehicles, as well as an easement of parking space search. Consequently, cargo bicycles facilitate time savings and improved accessibility to destination addresses in urban agglomeration areas. Positive effects besides improved efficiency are economic benefits in terms of fuel savings and image effects, the contribution to employees' health conditions and higher quality of life due to the reduction of harmful impacts on the environment caused by emissions, congestion, and noise. Especially for commercial use, cargo bicycles are equipped with electric power trains enabling the carriage of higher load volumes and the convenient passing of hilly areas. Nevertheless, in the field of passenger transport as well as for local small business, the main barriers are high initial costs which are for not expected to decrease due to high production costs for components such as capable battery systems. Cargo bikes lack acceptance among users as they are thought to be uncomfortable and cumbersome. Offering free trials and pointing out best practices, as well as positive user feedbacks is supposed to help overcoming these barriers and thus strengthening the demand for cargo bikes that in turn would have positive effects on the production costs. The technical and economic viability, ease of use and low complexity are decisive points for increasing the acceptance of the cargo bicycle as an alternative mode of transport for commercial use. The decision to substitute conventional motorized vehicles is based on the existence of a trustworthy, workable alternative. By now, the technology for electric cargo bicycles is still at the beginning and there is an urgent need for improving the performance of vehicles. Assuming the market potential manufacturers as well as component suppliers from across the transport industry are continuously developing new devices and applications to meet the demand. Technical failures in this context might result in high customer complaint rates and the spread of negative word of mouth and the likeliness to forfeit the customers' goodwill accordingly. To foster the acceptance for cargo bicycles as alternative transport mode for both, private and commercial use, it has to be questioned to which extend technology failure has an impact on the early market phase of the new cargo bike generations, where the level of product information is rather low and the adoption by potential users is likely to be based on the reliability of the product and technology. Hereby it has to be analyzed, if technical deficits only affect the corresponding technology provider or if the effects are transferred to all market actors in terms of competitiveness, market success and further innovative activities and technology developments. Therefore, the main question is to what extend technical deficits of new technologies have an effect on overall market potentials with regard to the adoption on consumer as well as on industry level. This study explores the technological perspective of product adoption by enhancing the process of innovation diffusion picking up the case of product failure of electronic cargo bicycles. Considering lately published studies on innovation and technology diffusion models, decisive impact parameters are applied on product failures in the cargo bike industry. The focus is set on the importance of early adopters regarding their role and influence on the innovation diffusion process. For assessing significant impacts, the representative case of the cargo bike project in Herne (Germany) with the objective to contribute to energy transition in urban agglomeration areas in terms of sustainable urban logistics, is consulted. Seven local businesses tested electric cargo bike prototypes over a period of seven month to identify the actual usage potential of cargo bicycles as alternative mode of transport for commercial use. Due to technical deficits, the predicted usage potential could not be realized. The empirical findings allows the identification of major impact factors on user acceptance and adoption rates for cargo bikes by examining the application performance for the intended field of usage and the test users reaction in terms of usage intensity, complaint intensity and final adoption decision. The evaluation of the usage potential for each user based on the general attitude, business structure and field of application (usage intention) compared to the actual usage intensity of the cargo bike prototype under technical deficit occurrence, allows predicting the adoption likelihood for each user based on the gap between the expected usefulness and the actual vehicle performance. Additionally considering the likelihood to resist the technology adoption, based on the assessment of resistance factors that have been pointed out within various publications on innovation diffusion, the intensity of the perceived adoption barriers due to technical deficits is identified. By furthermore evaluating the coherence of complaint and usage intensity after technical deficit occurrence, the findings allow to classify the early adopters considering the final adoption decision. The authors hereby identify the expected impact on the spread of the technology and limitations on further market developments by analyzing the influences of technical deficits on the user specific adoption process. Furthermore, the role of early adopter's as change agents and their importance for successful market deployment of new, premature technologies is pointed out. The Herne case has demonstrated that critical users play a crucial role. With high complaint intensity, the test users have revealed technical deficits that have a decisive impact on the user acceptance that otherwise would not have been recognized. With the identification of the decisive impact factors and the proven acceptance once the decisive barriers were overcome (potential vs. performance) the test pilots delivered valuable information not only for the industry in terms of technology adaption and development but also for later adopters to being aware of the vehicle dependent potentials and usage barriers. In this context, the early adopters can be seen as innovation drivers as the pressure on the industry to bring adequate cargo bike models to the market is increased and the technology failure likelihood hereby is lowered. Studying representative cases generates insights into the reason of failure and decisive adoption factors that allow creating a list of factors that may increase the opportunity for success due to the appropriate adoption of product innovation processes. The study points out the potential impacts of product and technology failure for gaining a better understanding of critical factors to prevent future failure. By using various knowledge from innovation diffusion, potentials for success and failure of market deployment, impacts on the industry and the transition towards sustainable urban transport are shown. The potential of efficient market deployment of cargo bicycles for contributing to the transformation of urban transport systems is critically discussed. Finally, the results build a basis for further discussions and research activities in the field of market deployment of transport alternatives such as electric vehicles that have not successfully established in markets yet but provide a high potential for contributing to sustainable development in the area of urban transport.