The Impact of the Invite- Only Strategy on Initial User Adoption An Exploratory Investigation of Social Networking Mobile Applications MASTER DEGREE PROJECT THESIS WITHIN: Business Administration NUMBER OF CREDITS: 30 PROGRAMME OF STUDY: Digital Business AUTHORs: Ronja Schoenberger & Stefanie Seeburger JÖNKÖPING May 2021 Master Thesis in Business Administration Title: The Impact of Invite-Only on the Initial User Adoption – An Exploratory Investigation of Social Networking Mobile Applications. Authors: Ronja Schoenberger & Stefanie Seeburger Tutor: Henry Nelson Lopez Vega Date: 2021-05-24 Key terms: Invite-Only, App Adoption, Closed Social Networks, Artificial Scarcity, Technology Adoption, User Motivation, Initial App Adoption, Social Networking Mobile Applications Abstract Background: Social networking mobile applications are designed to socially connect users among each other to consume but also to produce content. Especially because these apps represent a high potential to acquire revenue streams through advertisements, but also to gain customer insights, companies are interested in entering this market by creating new social networking apps. However, switching costs for users are high due to the varied user base of established social networking apps. Accordingly, marketing strategies need to be created to enter the market to target users’ interests. One concept to do so is distributing invitations for the social networking app that can be shared among users. The invite-only strategy has been successfully used to establish themselves in the market by for example Facebook, but also recently with the social networking app Clubhouse. To apply it effectively the motivators of the users to initially adopt invite- only social networking apps are important to understand. Purpose: The purpose of this study is to generate an in-depth understanding of the motivators that foster the initial user adoption of social networking mobile apps based on the invite-only strategy. To investigate the motivators, it is crucial for this study to gain knowledge from the user perspective. In that case, we will contribute our derived knowledge to the theory of technology acceptance, scarcity in digital marketing, and virtual social networking apps. Research Question: Why do users initially adopt social networking mobile applications using an invite-only strategy? Method: Ontology – Relativism; Epistemology – Social Constructionism; Approach – Inductive; Data Collection – 14 Semi-Structured In-Depth Interviews; Sampling – Purposive, Convenience, Snowball; Data Analysis – Grounded Analysis Conclusion: As a result, a framework was derived depicting the main motivators for users to initially adopt invite-only social networking apps. Through our empirical data, we found out that Artificial Scarcity, Closed Network, and Social Influence motivate users to initially adopt invite-only social networking apps. Additionally, Contributing Factors were identified to influence the initial adoption, although they are not directly influenced by the invite-only strategy. The framework further describes the interrelations between the identified sub-categories affecting the initial adoption. We conclude that the main motivators are desire- and fear-driven. The framework can be used by marketers to design invite-only strategies more effectively and consistently to attract a large group of initial users and establish themselves in the market. I Table of Contents 1 Introduction .......................................................................... 1 1.1 Background ............................................................................................ 1 1.2 Problem Statement ................................................................................. 3 1.3 Research Purpose and Research Question ........................................... 4 1.4 Outline .................................................................................................... 5 2 Literature Review ................................................................. 6 2.1 Literature Review Procedure .................................................................. 6 2.2 Technology Acceptance ......................................................................... 7 2.2.1 Technology Adoption Models ................................................................. 7 2.2.2 Technology Adoption Phase ................................................................... 8 2.2.3 Initial Phase of Adoption ......................................................................... 9 2.3 Scarcity in Digital Marketing ................................................................. 11 2.3.1 Product Scarcity in Marketing ............................................................... 11 2.3.2 Artificial Scarcity of Digital Resources .................................................. 12 2.3.3 Artificial Scarcity Through Invite-only.................................................... 14 2.4 Virtual Social Networking Apps ............................................................ 16 2.4.1 Social Networking Background ............................................................. 16 2.4.2 Social Networking Mobile Applications ................................................. 17 2.4.3 Fear of Missing Out (FoMO) ................................................................. 19 2.4.4 Closed Social Networks ........................................................................ 20 2.5 Connection of the Literature Topics ...................................................... 22 3 Methodology ...................................................................... 24 3.1 Research Philosophy ............................................................................ 24 3.2 Research Approach .............................................................................. 25 3.3 Research Design .................................................................................. 26 3.4 Data Collection ..................................................................................... 27 3.4.1 Sample Composition ............................................................................ 27 3.4.2 Interview Design ................................................................................... 29 3.5 Data Analysis ....................................................................................... 31 3.5.1 Grounded Analysis ............................................................................... 31 3.5.2 Grounded Analysis Procedure .............................................................. 32 3.6 Research Quality .................................................................................. 35 3.7 Ethical Implication................................................................................. 38 4 Empirical Findings and Analysis ...................................... 41 4.1 Artificial Scarcity ................................................................................... 44 4.1.1 Desire for the Invitation ......................................................................... 44 4.1.2 Limitation of Invitation ........................................................................... 46 4.2 Closed Networks .................................................................................. 49 4.2.1 Perceived Exclusivity ............................................................................ 49 4.2.2 Community Perception ......................................................................... 51 4.3 Social Influence .................................................................................... 53 4.3.1 Impact by Others .................................................................................. 53 4.3.2 Fear of Missing Out .............................................................................. 56 4.4 Contributing Factors ............................................................................. 57 4.4.1 App Purpose ......................................................................................... 58 II 4.4.2 Sources of Attention ............................................................................. 58 4.4.3 Perception of Companies ..................................................................... 59 4.4.4 Covid-19 Pandemic .............................................................................. 59 4.5 Invite-Only Social Networking App Initial Adoption Framework ............ 60 5 Conclusion ......................................................................... 65 6 Discussion.......................................................................... 66 6.1 Technology Acceptance ....................................................................... 67 6.2 Virtual Social Networking Apps ............................................................ 68 6.3 Scarcity in Digital Marketing ................................................................. 70 6.4 Practical Implications ............................................................................ 71 6.5 Social Implications ................................................................................ 72 6.6 Limitations ............................................................................................ 74 7 Future Research Directions .............................................. 76 8 References ......................................................................... 78 9 Appendix ............................................................................ 87