IT Fashion

Fashion Matters: Trendy Technologies Have Serious Impacts

Ping Wang

By analyzing the relationship innovation trajectories and organizational outcomes, we have found that media coverage of many information technologies often mimics the ebb and flow of fashions. Companies investing in trendy technologies have better reputation, higher CEO pay, and lower performance temporarily, and improved performance in the long run.

Understanding the consequences of fashions in science and technology can help direct public and private investments in popular innovations and assess and maximize returns on such investments.

Enthusiasm for many science and technology innovations tends to grow over time to reach sharp peaks in popularity that doesn't last long – in a manner reminiscent of the hype cycles of fashions. As the figure below shows, popularities of information technologies such as customer relationship management (CRM), data warehouse, and e-commerce, as measured by the numbers of articles on these topics in the trade press, have gone through such wave-like lifecycles.

While conventional wisdom dismisses fashions as trivial, the impacts of fashions in science and technology are actually not so trivial. This study has found significant effects of popular information technologies on the corporate reputation, executive compensation, and performance of Fortune 500 companies.  These findings imply that the returns on the investment in popular innovations include both economic gains and social approval. Fashion adeptly picks up cues from the broader social and economic environment. To fit into the environment, science and technology policy makers, investors, companies, and the general public can use fashion as a monitoring tool.

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