Directory UMM :Data Elmu:jurnal:J-a:Journal Of Business Research:Vol48.Issue2.2000:
Marketing of a Financial Innovation
Commercial Use of the Euro by European
Companies Prior to Mandatory Adoption
Yvonne M. van Everdingen
ERASMUS UNIVERSITY ROTTERDAM
Gary J. Bamossy
VRIJE UNIVERSITY AMSTERDAM AND UNIVERSITY OF UTAH
Based on the diffusion literature and an extensive pilot study among CFOs
of European firms and European banking experts, a conceptual adoption
model identifying the various sets of factors that influence the adoption
of the Euro for commercial purposes was developed and tested.1 These
factors fit into four broad categories: the perceived innovation characteristics, perceptions of the political and business environment, organizational
characteristics, and internal communication behavior. A series of logit
analysis on these factors was carried out based on survey data collected
from a sample of 214 firms across five European countries (The Netherlands, Italy, France, Germany, and the United Kingdom). This sample
includes 77 organizations that have already adopted the Euro and 137
nonadopter organizations. Survey results show that tangible advantages,
such as task simplification and degree of network externalities increased
the likelihood of Euro adoption prior to the mandatory 1999 date, as do
strong positive signals within a company from Chief Financial Officers
and top management. Concerns about the costs of switching over to the
Euro and negative perceptions regarding the political turmoil on the road
to European Monetary Union significantly reduced the likelihood of using
the Euro. Both the quantitative survey data and the qualitative interview
data suggest a degree of ambivalence on the part of European managers
regarding the use of the Euro prior to the upcoming mandatory adoption
date of 1999. J BUSN RES 2000. 48.123–133. 2000 Elsevier Science
Inc. All rights reserved.
S
ince as early as the 1960s, European countries have been
involved in a dialogue expressing the desirability for
political and monetary union. In the long process of
Address correspondence to G. J. Bamossy, Department of Marketing, University of Utah, Salt Lake City, UT 84112, USA.
1
The Euro is the official name of the currency. Throughout much of the
historical development of the European Monetary Union, the monetary unit
was referred to as the ECU (European Currency Unit). At the time of the
field study, the term “ECU” was also used.
Journal of Business Research 48, 123–133 (2000)
2000 Elsevier Science Inc. All rights reserved.
655 Avenue of the Americas, New York, NY 10010
moving towards these two goals, member states have struggled
over the past four decades with the political and economic
processes of realizing a European Monetary Union (EMU) with
a single European currency. The Maastricht Treaty, signed at
the end of 1991 and ratified in 1992 by all member states of
the European Union (EU), provided a clear political commitment to achieve a European Monetary Union (EMU) with
a single European currency before the end of this century.
European Monetary Union and the use of the Euro will become
a “practicing reality” for financial institutions, banks, and financial managers of European companies on January 1, 1999.
This first phase of adopting and using the Euro will be comprised of all EU countries except Greece, which has not as
yet qualified for membership based on economic performance
figures of 1997, while Sweden, Denmark, and the United
Kingdom, have opted to remain out until a future date.
The Euro, then known as the ECU, a basket of national
currencies of the EU member states, came into existence in
1979 as an integral part of the European Monetary System
for the purposes of stabilizing the exchange rates of the EU
currencies. Currently, the Euro is used by many companies
primarily as a financial instrument for purposes of borrowing,
investing, and the issuing of share capital. In contrast, the
commercial use of the Euro, such as internal and external
invoicing, settlements, pricing, and budgeting, is a rather new
phenomenon and can be considered an innovation that is
languishing in the introductory stage of adoption. At the start
of our study, the share of the Euro as an instrument for
settlements regarding international import and export activities was, on average, less than 1% of total trade volume (Committee of Governors of the Central Banks, 1992). “It is, however, the domain in which the Euro should increasingly be
used during the transition period in order to become Europe’s
common currency.” The Euro’s development is necessary to
ensure the neutrality of the monetary integration process and
ISSN 0148-2963/00/$–see front matter
PII S0148-2963(98)00100-3
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J Busn Res
2000:48:123–133
to familiarize the markets with the Euro and with its advantages
as a common currency (Commission of European Communities, 1991, pp. 137–141).
Given the importance of expanding the acceptance and
uses of the Euro during the transition stage towards full EMU,
the purpose of this study is to obtain insights into the broad
sets of factors that stimulate as well as inhibit the adoption
of the Euro for commercial purposes by European companies.
These insights can be used for the development of policies
and campaigns to foster the commercial use of the Euro in
the countries of the EU.
The following sections discuss variables that have been
identified in the marketing literature as having an influence
on the attitudes towards the subsequent adoption or nonadoption of innovations. Based on this overview, these factors are
hypothesized as having an influence on the adoption of the
Euro. Next, the data collection methods and the scales that
are used to measure the proposed relationships are explained.
The results of logit analyses carried out to test the strengths
of these relationships are then presented, followed by a discussion of a subsequent qualitative field study of financial managers from adopting and nonadopting firms. The article concludes with some marketing suggestions to reduce the
resistance to the commercial use of the Euro prior to mandatory adoption.
Theoretical Background
and the Development
of the Conceptual Model
Two approaches were taken in developing the conceptual
model of how European firms proceed in the adoption process
of the Euro. First, variables were identified based on a thorough
review of the marketing literature that theoretically and empirically examines the adoption process. Beginning in the 1960s,
the marketing literature on product acceptance typically paid
attention to the investigation of the factors that influence the
adoption and diffusion of innovations, a research perspective
that has resulted in useful conceptual frameworks, for both
consumer and industrial innovations (Webster, 1969). The
latter research stream is relevant for this study, since we focus
on the adoption of a financial innovation, the commercial use
of the Euro by European companies.
Four broad sets of variables influencing the rate of adoption
of innovations by companies were identified in the marketing
diffusion literature. First, “innovation characteristics” are considered to be important predictors of adoption. In many studies, the perceived relative advantage of an innovation has been
shown to be positively related to its rate of adoption (Rogers,
1995; Frambach, forthcoming). “Organization characteristics”
is a second group of variables that has generally been accepted
as having an influence on the adoption decision process. Considerable empirical evidence suggests that organization charac-
Y. M. van Everdingen and G. J. Bamossy
teristics, such as size and the degree of international orientation of a company positively influence the adoption decision of
organizations (Gatignon and Robertson, 1989; Rogers, 1995;
Frambach, forthcoming). Also, dimensions of the corporate
culture such as the resistance to change and the level of
conflict have been found to influence the adoption behavior
of organizations (Robertson and Wind, 1980).
The “external environment” in which a firm operates also
is critical to the functioning of organizations and has been
shown to have an influence on the organizations’ adoption
decision (Zaltman, Duncan, and Holbeck, 1984; Robertson
and Gatignon, 1989). Therefore, perceptions regarding the environment are included as a third set of variables in the conceptual adoption model. Rogers (1995) provides considerable
empirical evidence that an important aspect of facilitating the
adoption and diffusion process within an organization comes
from creating and sharing information about the innovation
among the potential adopters. Consequently, “communication
behavior” within the firm is included as the final set of variables
in the conceptual adoption model regarding the Euro.
Once the literature review was well under way, we began
our second approach to understanding the adoption process.
This involved a year-long pilot study that provided us with
multiple perspectives. Throughout the year, we attended several European conferences and seminars on EMU. We also
carried out a series of personal interviews with Chief Financial
Officers of eight Dutch companies, with five bankers and
financial experts from the Netherlands, Belgium, and the
United Kingdom and with the director of the Association for
the Monetary Union in Europe. The basic purpose of this
qualitative pilot study was to improve our understanding of
the above mentioned factors and processes involved in adopting the Euro. This systematic review of the marketing literature,
coupled with the extensive discussions with European financial experts led to the development of the conceptual adoption
model of the Euro, shown in Figure 1.
Perceived Innovation Characteristics
In forming an attitude toward the Euro, perceived advantages
regarding the financial innovation play an important role.
Based on the literature (Commission of the European Communities, 1990; Jozzo, 1989) and our pilot study, a number
of perceived advantages were identified. The first advantage
involves the simplification of currency management and its’
related cost reductions. Foreign exchange exposure of a company, when using the Euro, will be restricted to the receipts
and debts denominated in the currencies of countries outside
the EU. The use of the Euro for transactions within the EU
cuts the relatively high costs (bid and ask spreads, commission
fees) typically involved in dealing with different currencies.
Second, the central management’s task of control and evaluation will be simplified, as the more transparent Euro allows
for more direct comparisons of the performance evaluations
of individual managers and/or of foreign subsidiaries.
Commercial Use of the Euro by European Companies
J Busn Res
2000:48:123–133
125
Figure 1. The conceptual adoption model.
Finally, a somewhat more speculative advantage was often
mentioned by financial managers: since the Euro is anticipated
to become one of the world’s dominant currencies, along with
the dollar and yen, its use should give an organization a stronger
European image and ultimately result in some global competitive advantages. For example, carrying out multinational marketing activities in the Euro would mean fewer price list revisions and thus stable prices for customer groups, which may
contribute to more stable relationships and customer loyalty.
Taken together, the characteristics of the Euro offer some
innovative advantages that would suggest the following sets
of relationships in terms of company adoption: the stronger
the perceptions of the Euro as a currency that will simplify
treasury management tasks as well as performance and evaluation tasks of general managers, the greater the likelihood that
the Euro will be used. Furthermore, the more positive the
manager’s perceptions of the “nontangible” values of the Euro,
such as its ability to create a stronger “European image” and
competitive advantage also will positively influence the decision process of adopting the Euro for commercial purposes.
The proposed relationships above are consistent with marketing literature that suggests that the belief in the relative
advantages of the proposed innovation will induce adoption.
Despite these possible advantages, the commercial use of the
Euro has been quite limited. Consistent comments from the
pilot study suggest that a reason for the limited use might be
that managers have not as yet “experienced” these advantages
and tend to focus more on the potential disadvantages or
obstacles to the use of the Euro. Previous research by the
Association for the Monetary Union in Europe (1990) has
revealed a number of potential obstacles in the minds of
managers regarding the use of the Euro. A first obstacle is
the general limitations of the Euro financial market. Not all
financial transactions that are possible in EU currencies are
also possible in Euros. European countries just recently have
fixed their exchange rates, which will go into effect on January
1, 1999 (Bray, N. “The Euro Revolution: Changing How Europe Does Business.” Wall Street Journal, Europe, R1-R14, May
16, 1998.). Before this, the Euro (then the ECU) has been a
currency basket, based on the value of its underlying currencies. Independent country’s fiscal revisions were not ruled out
then, which may have caused a delay in the decision to adopt.
Another obstacle to the Euro’s commercial use is perceptions of the formidable switching costs of changing over to
the Euro. Considerable costs are anticipated in changing accounting and information systems, business and financial operations, and in staff training. From the personal interviews,
it seemed that financial managers were more willing and able
to quantify the switching costs of the Euro and less able to
quantify the potential savings that accrue from the Euro’s
potential advantages.
A final innovation characteristic that may negatively influence the adoption decision regarding the Euro is the perceived
risk or uncertainty associated with the proposed development
and timetable of EMU. Even though the Maastricht Treaty have
been ratified by all EU member states, the mind-set of European
managers three years prior to mandatory adoption still seemed
uncertain regarding the Euro’s ultimate role as the future Euro-
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pean currency. Here, the focus is on the perceived risk of
adopting the Euro within the framework of EMU. The following section reviews more specific environmental factors.
Perceptions of the Environment
Y. M. van Everdingen and G. J. Bamossy
company is the degree of the firm’s European orientation,
since the advantages of using the Euro would be most obvious
for organizations with many trading partners in multiple countries of the EU, relative to organizations with many trading
partners outside Europe. Two factors that are related closely
to a firm’s international orientation are the extent of foreign
exchange transactions and the foreign exchange rate risk. If
all foreign revenues are expressed in only a few currencies or
in relatively stable currencies, the level of perceived currency
risks will be lower and an organization will be less inclined
to use the Euro relative to firms that operate in many European
currencies or relatively unstable currencies.
A final organizational variable that might influence the
adoption of the Euro is “innovation conflict”, which is defined
by the extent and pattern of agreement or disagreement in
decision making about the use of an innovation among members
of the decision making group. The Euro is of importance for
all departments of the company, and conflict between the
departments about the decision to adopt the Euro for commercial purposes may cause a delay in the adoption decision.
One of the variables in the business environment hypothesized
to influence the adoption decision regarding the Euro is the
concept of network externalities, which refers to the condition
wherein the utility of using a product depends upon the number
of other users of the same product. Innovators and early
adopters are not only interested in “current” users but also
are concerned with the likelihood of “future” adopters of that
innovation (Katz and Shapiro, 1986). Thus, the incentive to
use the Euro is not only positively influenced by the proportion
of current users of the Euro but also by the expectation that
a large number of organizations will adopt the Euro for commercial purposes in the future. This leads to the following
proposed set of relationships: European firms that require a
higher percentage of established Euro users before it will consider adoption of the Euro will be less likely to adopt, relative
to firms who have a lower requirement of current users. Following this line of logic, firms with more positive expectations
of greater network externalities in the future are more likely
to adopt the Euro, relative to firms who are less optimistic
about the amount of future users.
The political environment also may positively stimulate the
adoption decision process of European organizations by taking
credible actions in order to create a catalyst for the introduction of the Euro. Example of such actions are the design and
ratification of the Maastricht Treaty, which included a clear
timetable for the introduction of the Euro as the single European currency and the more recent fixed bilateral exchange
rates between individual EU countries. Although the public
signals from EU member states (in particular, Germany) have
stressed that they keep striving for the establishment of a
monetary union and a common European currency, financial
turmoil within the EU in the past years may negatively influence managers’ attitudes towards the Euro and the intention
to adopt the Euro for commercial purposes.
Finally, the upcoming monetary integration and the implementation of one single European currency is widely touted
as generally improving functioning of the common European
market and the economic activities of organizations within
European countries (Briones, 1998). Managers who indeed
perceive the existence of a single currency to be positive for
the functioning of the common market and the economic
activities of their own organization will be more likely to adopt
the Euro for commercial purposes.
Treasury departments within a firm are concerned with currency and foreign exchange management and are seen as
possessing the technical knowledge, special skills, and experience necessary to evaluate the commercial use of the Euro. In
line with this, the treasury department has the most access
to information that is relevant to the decision to adopt the
Euro for commercial purposes and could be regarded as a
gatekeeper. Previous research (Jozzo, 1989) revealed that treasury departments indeed were the first to consider and to
suggest the use of the Euro for invoicing purposes. Taken
together, we would expect that more communication between
departments regarding the Euro would enhance the likelihood
of its adoption, and that the amount of information and advice
that specifically comes from the treasury department would
be positively related to adoption.
Finally, the transition from a multicurrency system to the
Euro in a Pan-European organization can be considered a
strategic decision, especially if the firm aggressively adopts
the Euro for commercial use prior to the establishment of
EMU. Within this context it might be expected that top managers, based on their hierarchical position, may strongly influence the adoption decision process regarding the commercial
use of the Euro. An active and positive dialogue regarding the
importance of the Euro, which comes from the top down, is
hypothesized to increase the likelihood that a firm would use
the Euro before mandatory adoption.
Organizational Characteristics
Data Collection
Previous research on the acceptance and use of the Euro (Jozzo,
1989) reveals that companies that regularly or occasionally
practiced Euro invoicing were on average the largest in the
sample in terms of sales and foreign trade volume. Perhaps
more relevant than the amount of foreign trade volume of the
Internal Communication Behavior
Development of the Questionnaire and
Sampling Frame
Given the European character of the innovation under consideration, the sample included companies from five European
Commercial Use of the Euro by European Companies
countries: The Netherlands, Italy, France, Germany, and the
United Kingdom. These five countries are most actively involved in trade both within the EU and with the rest of the
world and represent a total of 77.6% of the population of the
European Union (Europe’s Monetary Future: From Here to
EMU. The Economist, 1993, pp. 29–31; 1996 and All That. The
Economist, 1994, pp. 15–17). The questionnaire was pretested
with accountants and banking managers who have expertise
in administrating and managing the Euro as a financial instrument and with business people who have commercial experience with the Euro. Based on this pretest, the final version of
the questionnaire was developed.
At this point in time, the use of the Euro is likely more
relevant for large, multinational companies than for small
firms. Therefore, large companies were selected for this study.
The European Business Press Group in Brussels provided a
list of the top 150 companies in each country with respect to
turnover. Prior to the survey mailing, an introductory letter
in the respondent’s native language was sent which overviewed
the study’s objectives, assured the respondent’s anonymity,
and asked for their cooperation. A total of 668 questionnaires
were mailed to the directors of the treasury departments of
organizations across the five countries (119, 122, 140, 137,
and 150, respectively, to Dutch, Italian, French, German, and
British treasurers). Except for the Netherlands, all respondents
received the questionnaire in their own language. The final
English version was translated into the German, French, and
Italian language by native speakers and then back-translated
into English again. Discrepancies in the back translations were
all resolved in discussion with members of the research team.
A total of 214 usable questionnaires were returned, for a
response rate of 33.2% across the countries, which is a rather
high response rate for international survey research. Response
rates per country were: The Netherlands, 46.2%; Italy, 32.0%;
France, 25.0%; Germany, 35.0%; and the United Kingdom,
29.2%.
Measures
The proposed relationships shown in the model that were
thought to influence the adoption decision were developed
and operationalized based on previous research, as well as on
the results of the pilot study. In this study, the dependent
variable of interest is the outcome of the organization’s adoption decision regarding the commercial use of the Euro prior
to the mandatory adoption date of 1999. The treasurers were
asked to indicate for their own department as well as for the
purchasing and sales department of their company, if they
(1) already use the Euro, (2) have definitive plans to start
using the Euro, or (3) do not use the Euro. If one of these
departments uses the Euro for commercial purposes, then that
organization was considered to be an Euro user. Following
the proposed set of relationships shown in Figure 1, questions
regarding the Euro adoption process were formulated with
respect to (1) the perceived innovation characteristics; (2) the
perceptions of the political and business environment; (3)
J Busn Res
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127
organizational characteristics, and (4) the internal communication behavior. Table 1 provides a more detailed overview
of the measures used for this study.
Results
The response to the survey included 77 organizations that
already have adopted the Euro and 137 nonadopting organizations. A complete assessment of the nonresponse bias is difficult, since no information is available regarding Euro attitudes
and usage by nonrespondents. To gain some insights into the
possible nonresponse bias, two approaches were taken. The
first assessment examined to what extent a nonresponse bias
exists with respect to company turnover and industrial sector.
The companies selected for this study are all top 150 companies
in each of the five countries with respect to turnover. The
nonresponding companies normally are distributed throughout
this ordinal list, suggesting that the level of turnover does not
influence the likelihood of responding to the questionnaire.
Furthermore, the nonrespondents do not overrepresent any
particular sector but were found across all sectors. As a second
approach, groups of early and late respondents were developed and compared on a number of key characteristics, such
as the use of the Euro, perceived currency risks due to the
use of European currencies, their international orientation,
and attitudes towards the Euro and the EMU. Here again, no
significant differences were found.
In order to examine the proposed relationships in Figure
1, a series of four logit analyses, with adoption or nonadoption
as the dependent variable, was carried out. Examination of
the correlation matrix of the independent variables showed
that only two of the predictor variables were correlated above
0.50 (.54 and .51), suggesting that problems related to multicollinearity would be minimal.
Table 2 summarizes the results of the four logit analyses.
The classification accuracy of all models was higher than that
of the proportional chance criterion and ranged from 62.8%
to 71.2%. Interestingly, the models always performed best at
correctly classifying nonuser firms, while user firms were most
often misclassified as nonusers. Except for the model on organizational characteristics, all models produced significant
functions at the 0.01 level, suggesting that organizational characteristics have less explanatory power with respect to adoption relative to the other groups of variables.
In terms of the innovative characteristics of the Euro, the
perceptions of task simplification (and it’s subsequent cost
reductions) and perceived cost disadvantages significantly influence the likelihood of Euro adoption, with greater perceptions of task simplification having a positive influence and
perceived cost disadvantages having a negative influence.
None of the more “intangible” variables such as European
image, competitive advantage, or beliefs in EMU were significant in this model. Taken together, these results suggest that
rational advantages and disadvantages play a major role in
the adoption decision, relative to less tangible variables.
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Y. M. van Everdingen and G. J. Bamossy
Table 1. Measures
Variable
Perceived innovation characteristics:
Simplification (4 items, a 5 0.84)
Easier performance evaluation (2 items,
corr 5 0.63)
Psychological advantages
Competitive advantages
Limitations of the Euro market (3 items,
a 5 0.77)
Problems related to the current status of
the Euro (3 items, a 5 0.73)
Costs disadvantages (2 items, corr 5 0.61)
Uncertainty future Euro (2 items, corr 5 0.67)
Perceptions of the political and
business environment
Required % of other Euro users (network
externalities)
Expected increase in Euro use (network
externalities)
Influence of political actions (3 items,
a 5 0.67)
Turmoil in EMS
Perceptions about EMU (5 items, a 5 0.82)
Organizational characteristics
Size of the organization
European orientation
Level of currency risks
Measure
How likely/important are the following advantaages/disadvantages
(5-point scale: 1 5 very unlikely/unimportant; 5 5 very likely/important):
The use of the Euro will: reduce currency risks; reduce transition
costs; simplify treasury management; simplify intragroup accounting
procedures.
The business results of subsidiaries will be easier to compare.
The use of the Euro makes the evaluation of the performance of the
managers easier.
The use of the Euro gives our firm a European image.
We gain a competitive advantage if our company uses the Euro before
the establishment of the Monetary Union in Europe.
The inefficiency of the Euro clearing system.
The existence of restrictions on the size of Euro transactions.
A lack of suitable banking and support services.
A lack of end uses for the Euro.
The Euro does not have a legal tender status anywhere.
The Euro is still a basket and therefore revision are not ruled out.
The costs of changing over to the Euro are high.
The advantages of using the Euro are not quantifiable.
Please indicate to what extent you agree or disagree with the following
statements (5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
The Euro is the most appropriate currency to use as the single European
currency.
The Euro will become the future currency of Europe.
Would your company adopt the Euro for commercial purposes,
regardless of the percentage of other European companies that are willing
to adopt the Euro for commercial purposes? (Yes/No). If not, then
please indicate the minimum required % of other Euro users.
To what extent do you expect an increase in the number of European
companies that will use the Euro for commercial purposes within the
next two years? (5-point scale: 1 5 no increase; 5 5 strong increase).
Please indicate to what extent you agree or disagree with the following
statements: (5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
The establishment of the single market encourages our company to use
the Euro for commercial purposes.
A clear political will regarding the establishment of the Monetary Union
would encourage our company to use the Euro for commercial purposes.
Our department’s attitude toward the commercial use of the Euro has
been positively influenced by the Maastricht Treaty.
The recent turmoil in the EMS has negatively influenced our
department’s attitude toward the commercial use of the Euro.
Do you consider the existence of “a single currency” for Europe in the
near future to be positive or negative for (5-point scale: 1 5 very negative;
5 5 very positive):
The competitive position of Europe in the global market; the
functioning of the Single Market within Europe; the economic activity
of your country; your company’s businesses; your department’s
activities.
What was the amount of global sales in 1992? (open question).
In which European countries are your company’s trading partners
located? (0 5 no export within Europe; 12 5 trade with partners in all twelve
EU countries).
How would you assess the currency risk of your company due to the use
of European currencies? (5-point scale: 1 5 very high; 5 5 very low)
(continued)
Commercial Use of the Euro by European Companies
J Busn Res
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129
Table 1. continued
Variable
Measure
To what extent do you agree or disagree with the following statement
(5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
Level of agreement between departments
Internal communication behavior
Communication flow between departments
Information by treasurers at own initiative
Advice by treasurers
Information by top managers
(4 items, a 5 0.86)
Adoption behavior
Between different departments within our company, general agreement
exists about the decision to use the Euro for commercial purposes.
To what extent do you agree or disagree with the following statements
(5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
There is a good flow of communication between the department’s in our
company regarding the commercial use of the Euro.
The treasury/financial department disseminates information about
possible use of the Euro at their own initative.
The treasury/financial department gives advice about the Euro if other
departments ask for it.
Our top management sends signals about the importance of the Euro for our
company.
Is your department currently using the Euro?
Is your organization’s sales department currently using the Euro?
Is your organization’s purchasing department currently using the Euro?
(not used, definite plans to start using, already using).
The analyses regarding environmental factors suggest that
the probability to adopt the Euro is influenced strongly by
network externalities. Nonadopters require a significantly
higher percentage of other organizations that should have
adopted the Euro before they are willing to use the Euro,
relative to adopters. Nonadopting firms also reported being
much more unwilling to adopt the Euro until (on average)
40% of other European companies make use of the Euro. This
is a rather high requirement, given that currently less than
2% of all European companies use the Euro commercially. It
seems that companies are waiting for each other’s initiative
to start using the Euro. Adoption decisions also are positively
influenced by positive perceptions about European Monetary
Union. All firms appeared to hold generally positive perceptions about EMU, with user companies responding significantly more positive about the future European Monetary
Union.
Of particular interest is the fact that the results of this
field survey suggest that the probability of adopting is not
significantly influenced by the level of a firm’s perceived currency risks. This is a surprising result, since one of the most
frequently mentioned advantages of using the Euro is the
reduction of currency risks. However, a subsequent examination of the relation between the perceived level of currency
risks wherein firms were grouped based on their self-reported
currency risk (low/average/high levels of risk) revealed a significant influence of the perceived level of currency risks on the
need for using a single European currency (F 5 8.93; DF 5
2,294, p 5 0.00). It appears that a firm’s perceived level of
currency risks does influence the desire for using a single
European currency but does not explain the actual user/nonuser status for commercial use.
Three of the four communication variables tested are shown
to significantly influence the probability to adopt the Euro,
highlighting the importance of internal communication in the
adoption decision process. The probability of being an adopter
increases with: (1) the perceived amount of information that
treasurers disseminate within the company at their own initiative, (2) the perceived amount of advice about the possible
use of the Euro provided by the treasury department if other
departments ask for it, and (3) by the perceived level of
signals of top management about the importance of the Euro.
Although these results suggest the importance of communication variables in the adoption decision, survey data does not
allow for clear interpretation of the direction of the relationship. It may well be that the relationship is the other way
around, and that more communication takes place after the
Euro is adopted. Adoption may lead to more communication
about the Euro.
By estimating four independent logit models in order to
test the proposed relationships, the influence of a possible
correlation between the groups of independent variables on
the results of the analyses is ignored. In other words, these
partial models test only the individual influence of the groups
of predictor variables and not the joint influence of all predictor variables. Therefore, a logit model including all variables
that were found to significantly influence the adoption decision based on the separate logit analyses was estimated. The
results of this analysis are reported in Table 3 and show
that the adoption decision is significantly influenced by one
variable out of each of the three significant but independent
partial logit models. The significant variables from this final
full model are (1) perceptions of cost disadvantages, (2) perceptions about European Monetary Union, and (3) the amount
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Y. M. van Everdingen and G. J. Bamossy
Table 2. The Results of the Logit Analyses
Variable
Perceived innovation characteristics
Simplification of tasks/cost reduction
Easier performance evaluation
Creating a European image
Competitive advantages
Limitations of the Euro market
Current status of the Euro
Cost disadvantages
Belief in future Euro
Constant
Model chi-square 5 22.694 (DF 5 8); p 5 0.00
Classification accuracy 5 68.9%
Perceptions of the environment
Required % of other Euro users
Expected increase in Euro use
Influence of political environment
Turmoil in EMS
Perceptions about EMU
Constant
Model x2 5 28.579 (DF 5 5); p 5 0.00
Classification accuracy 5 71.2%
Organizational characteristics
Size of the organization
European orientation
Perceived currency risks
Agreement between departments
Constant
Model x2 5 6.477 (DF 5 4); p 5 0.16
Classification accuracy 5 62.8%
Internal communication behavior
Communication between departments
Information by treasurers
Amount of advice by treasurers
Signals from top management
Constant
Model x2 5 21.848 (DF 5 4); p 5 0.00
Classification accuracy 5 63.8%
b
SE
t-value
0.019
20.011
0.051
20.026
20.015
0.012
20.051
0.038
20.760
0.01
0.02
0.04
0.05
0.01
0.01
0.02
0.09
0.91
1.97a
20.53
1.43
20.54
21.25
0.94
22.64a
0.41
20.84
20.020
0.256
0.093
20.122
0.122
23.059
0.01
0.18
0.08
0.16
0.07
1.28
22.83a
1.41
1.21
20.79
1.68a
20.24
20.032
0.068
0.086
0.225
21.900
0.11
0.05
0.14
0.13
0.77
20.30
1.49
0.71
1.80a
22.87
0.103
0.197
0.308
0.318
23.378
0.16
0.12
0.13
0.15
0.73
0.65
1.61a
2.42a
2.14a
24.65
n 5 214.
a
One-tailed tests, significant at p , 0.05 level.
Table 3. The Results of the Logit Analyses on the Significant Variables
Variable
Simplification of tasks/cost reduction
Cost disadvantages
Required % of other Euro users
Perceptions about EMU
Agreement between departments
Information by treasurers
Amount of advice by treasurers
Signals from top management
Constant
Model x2 5 31.173 (DF 5 8); p 5 0.00
Classification accuracy 5 72.13%
n 5 214.
a
One-tailed tests, significant at p , 0.05 level.
b
SE
t-value
0.010
20.055
20.011
0.149
0.230
0.166
0.348
0.015
24.590
0.01
0.02
0.01
0.08
0.18
0.18
0.17
0.20
1.74
1.00
22.75a
21.10
1.86a
1.28
0.92
2.05a
0.08
2.64
Commercial Use of the Euro by European Companies
of advice about the uses of the Euro given by treasurers if other
departments ask for it. These results suggest that treasurers can
play a key role in communicating information regarding two
factors that the firm has some control over: cost perceptions
and the need for information on how to use the Euro.
Discussion
The results of the quantitative field study revealed that the
probability of adopting the Euro increases with (1) more positive perceptions of the simplification of tasks/cost reduction,
(2) more positive perceptions about European Monetary
Union, (3) greater perceptions of the level of intradepartmental
agreement regarding the adoption decision, (4) an increase
in the amount of advice given by treasurers at their own
initiative and, if asked for, by other departments, and (5) an
increase in the amount of signals from top management about
the Euro use. The likelihood of adopting decreases with (1)
greater negative perceptions of cost disadvantages, and (2)
greater expectations regarding the percentage of other companies that should use the Euro before potential adopters are
willing to adopt (network externalities).
Although a number of the suggested relationships were
supported, the results of the quantitative field study also suggested some ambivalence in respondent’s viewpoints regarding the European Monetary Union and the commercial use
of the Euro. European managers reported positive perceptions
about the future of the Euro, in spite of its limited use currently.
However, in spite of mandatory adoption in 1999, managers
hold no strong expectations of increased Euro usage. Furthermore, a number of the proposed factors that should predict
adoption and use of the Euro could not be confirmed from
the survey data. Taken together, these results led to the next
step in the data collection process. In order to get managers’
interpretations of the findings, a qualitative field study was
carried out among financial managers of both adopting and
nonadopting companies. These follow-up personal interviews
provide additional insights into the survey data results, and
the reflections of these respondents (all of whom are treasurers) are discussed below.
The most surprising result of the logit analyses was the
nonsignificant influence of the perceived level of currency
risks on the adoption decision. During the final round of
personal interviews, the treasurers unanimously supported
this result for a number of reasons. First, treasurers are of the
opinion that the currency risks within Europe are manageable,
and they claim to have enough financial instruments to hedge
fairly well against those risks. Second, they pointed out that
the use of the Euro would involve higher currency risks as
long as the Euro is seen primarily by companies as a 13th
currency, in addition to the other European Union currencies.
Nonetheless, the managers interviewed perceive the Euro to
be an effective instrument to reduce currency risks when it
becomes the single European currency. In line with this, the
J Busn Res
2000:48:123–133
131
treasury managers confirmed their positive opinions about
EMU, while simultaneously appearing to be rather negative
about the current use of the Euro, primarily because of its
perceived lack of clear and quantifiable financial advantages.
The treasurers interviewed admitted that the advantages of
cost reduction and simplification of tasks could be important
motives to use the Euro, but they anticipate these advantages
to be more apparent if a large number of their trading partners
are willing to use the Euro or when the Euro becomes the
single European currency. They did not expect a significant
increase in Euro use during the next few years leading up
to mandatory adoption, however. Even current user firms
perceived the Euro as not offering many advantages. These
managers mentioned the occasional demand of trading partners for using the Euro as the most important reason for their
current use of the Euro. Among the interviewed treasurers in
both user and nonuser firms, the concept of network externalities was cited as one of the most important factors in the final
adoption decision.
Of all other factors that were found to significantly influence the adoption decision, the treasurers mentioned the cost
disadvantages of changing over to the Euro as a particularly
important impediment to using the Euro, which supports the
results reported in Table 3. Implementing the Euro as the
single currency within a company will entail high switching
costs, mostly related to the practical implementation of new
administrative systems, and the conversion of commercial
contracts and debts into the Euro. This implementation process clearly is not anticipated with any sense of enthusiasm
and is viewed as an expensive, tedious task. The treasurers
indicated that they are not willing to bear those costs until
they are convinced that the EMU will be established before
the end of this century.
As the mandatory adoption date approaches, this “wait and
see” attitude continues to be the prevailing mood among EU
members, although the degree of optimism varies from one
country to another. Germany continues to show real anxiety
over the pending use of the Euro, in spite of being the key
player and architect of EMU and the Euro. Similar expressions
of reluctance come from the French, while Sweden, the United
Kingdom, and Denmark have elected to truly “wait and see”
by not participating until some later date of their own choosing. In stark contrast to the Germans, Italy is one of the
most enthusiastic boosters of the Euro, since the new money
represents stable politics, cheaper bank loans, and less risky
investments (Hudson, R., Lavin, D. Rohwedder, C. and Klein,
M. “Europe Launches New Currency, but Summit Fight Casts
Shadow” Wall Street Journal, Europe, p. 1, May 4, 1998.)
Conclusions and Recommendations
The use of the Euro for import and export activities has only
marginally increased since the beginning of the nineties. Moreover, treasurers responding to both the quantitative and the
132
J Busn Res
2000:48:123–133
qualitative field study anticipate only a small increase in Euro
use on the road to EMU and expressed skepticism and ambivalence over the timely establishment of EMU. In spite of this,
the results suggest that the advantages of using the Euro would
increase with an increasing number of Euro users.
Consequently, the use of the Euro should be actively promoted by the European Commission, the national governments and the banking industry, in order to generate a critical
mass of Euro users. The European Commission spent U.S.
$20 million in 1996 for a promotion campaign, and the expectation is that this amount will increase in future years. Taking
into account the results of this study, this campaign should
focus on a number of aspects. Since the positive perceptions
about EMU appeared to have a positive influence on the
probability to adopt the Euro, the campaign should emphasize
both the practical and financial consequences of EMU for the
European business community. In addition, the campaign
should offer credible examples of how the extensive use of
the Euro will lead to simplification of currency management as
well as quantifiable examples of cost reductions. This campaign
could be part of the European Monetary Institute’s development of the uniform payment system, called “Target”, that is
designed to facilitate fast and cheap Euro transactions.
Furthermore, the promotional campaign should continue
to clearly communicate to European companies how and when
EMU will materialize and when it is the most appropriate
time to start taking preparatory actions. Based in political
expediency, the political environment has not always sent
clear signals that EMU will indeed be established before the
end of this century. As a result, companies have been reluctant
to begin the process of changing over to the Euro (and taking
on the switching costs).
Finally, the European Commission should provide information that promotes the size, depth, and liquidity of the
Euro Capital Market and encourage central banks to adjust
their portfolio of reserves. To meet this end, they also could
develop strategies and offerings to make the current use of
the Euro financially more attractive. This seems imperative,
given that treasurers appear to be rather negative about the
Euro, due to a lack of clearly quantifiable financial advantages.
To increase the financial attractiveness banks could offer a
discount conversion rate, as was done by the Sao Paolo Bank
in Italy in 1992. Also, a premium interest rate for the Euro
vis-à-vis the national currencies could stimulate the Euro use.
Suggestions for Future Research
One of the limitations of this study is that it involves a crosssectional research design, even though data collection for this
study took place over a two-year period, and we continue to
monitor developments and interview experts. To gain insights
into the opportunities and obstacles of the Euro’s diffusion
process, follow-up studies will be necessary at different points
in time leading up to mandatory adoption. Given the occa-
Y. M. van Everdingen and G. J. Bamossy
sional but clear sense of ambivalence that came out of the
personal interviews as well as the survey data, we believe
that studies that use ethnographic approaches and prolonged
engagement in organizations will allow for a deeper understanding of the Euro adoption process.
This study described the adoption decision process regarding the Euro at the organizational level and did not take into
account differences in attitudes or adoption behavior that one
might expect from different functional departments. It might
be interesting to examine differences between companies with
a single Euro-using department versus those that use the Euro
in two or three departments. The results of such an analysis
might give an indication of the characteristics of heavy user
companies. Furthermore, additional research needs to consider how the Euro diffuses across the departments of an
organization. This research could focus on the key variables
influencing the adoption behavior of the separate departments,
as well as into the time-order in which the departments of an
organization adopt the Euro. These insights may provide a
basis for a differentiated promotion strategy, fitting the concerns and characteristics of the specific departments.
On the surface, the initial activities to launch the common
European currency in January 1999 will be a matter primarily
for bankers, finance ministers, and financial managers within
organizations. But if fact, the mandatory adoption of the Euro
is the opening shot in a financial and commercial revolution
regarding the ways in which Europe functions. How smoothly
these final stages progress towards full EMU and Euro use in
2002 will depend not only on the political will of the member
nations but also on developing understanding and insights
into the key forces within European companies that drive the
adoption and use of the Euro.
The authors thank Berend Wierenga, Srinivas Durvasula, Richard Semenik,
the anonymous reviewers, and the editor for their helpful advice and comments. We also acknowledge the financial support provided for the field
study by the Tinbergen Institute, Amsterdam.
References
Association for the Monetary Union of Europe, Ernst and Young,
and the National Institute of Economic and Social Research: A
Strategy for the Euro, Kogan Page, London, 1990.
Briones, Maricris, G.: The Euro Start Here: Single Currency Makes
Differentiating Difficult. Marketing Ne
Commercial Use of the Euro by European
Companies Prior to Mandatory Adoption
Yvonne M. van Everdingen
ERASMUS UNIVERSITY ROTTERDAM
Gary J. Bamossy
VRIJE UNIVERSITY AMSTERDAM AND UNIVERSITY OF UTAH
Based on the diffusion literature and an extensive pilot study among CFOs
of European firms and European banking experts, a conceptual adoption
model identifying the various sets of factors that influence the adoption
of the Euro for commercial purposes was developed and tested.1 These
factors fit into four broad categories: the perceived innovation characteristics, perceptions of the political and business environment, organizational
characteristics, and internal communication behavior. A series of logit
analysis on these factors was carried out based on survey data collected
from a sample of 214 firms across five European countries (The Netherlands, Italy, France, Germany, and the United Kingdom). This sample
includes 77 organizations that have already adopted the Euro and 137
nonadopter organizations. Survey results show that tangible advantages,
such as task simplification and degree of network externalities increased
the likelihood of Euro adoption prior to the mandatory 1999 date, as do
strong positive signals within a company from Chief Financial Officers
and top management. Concerns about the costs of switching over to the
Euro and negative perceptions regarding the political turmoil on the road
to European Monetary Union significantly reduced the likelihood of using
the Euro. Both the quantitative survey data and the qualitative interview
data suggest a degree of ambivalence on the part of European managers
regarding the use of the Euro prior to the upcoming mandatory adoption
date of 1999. J BUSN RES 2000. 48.123–133. 2000 Elsevier Science
Inc. All rights reserved.
S
ince as early as the 1960s, European countries have been
involved in a dialogue expressing the desirability for
political and monetary union. In the long process of
Address correspondence to G. J. Bamossy, Department of Marketing, University of Utah, Salt Lake City, UT 84112, USA.
1
The Euro is the official name of the currency. Throughout much of the
historical development of the European Monetary Union, the monetary unit
was referred to as the ECU (European Currency Unit). At the time of the
field study, the term “ECU” was also used.
Journal of Business Research 48, 123–133 (2000)
2000 Elsevier Science Inc. All rights reserved.
655 Avenue of the Americas, New York, NY 10010
moving towards these two goals, member states have struggled
over the past four decades with the political and economic
processes of realizing a European Monetary Union (EMU) with
a single European currency. The Maastricht Treaty, signed at
the end of 1991 and ratified in 1992 by all member states of
the European Union (EU), provided a clear political commitment to achieve a European Monetary Union (EMU) with
a single European currency before the end of this century.
European Monetary Union and the use of the Euro will become
a “practicing reality” for financial institutions, banks, and financial managers of European companies on January 1, 1999.
This first phase of adopting and using the Euro will be comprised of all EU countries except Greece, which has not as
yet qualified for membership based on economic performance
figures of 1997, while Sweden, Denmark, and the United
Kingdom, have opted to remain out until a future date.
The Euro, then known as the ECU, a basket of national
currencies of the EU member states, came into existence in
1979 as an integral part of the European Monetary System
for the purposes of stabilizing the exchange rates of the EU
currencies. Currently, the Euro is used by many companies
primarily as a financial instrument for purposes of borrowing,
investing, and the issuing of share capital. In contrast, the
commercial use of the Euro, such as internal and external
invoicing, settlements, pricing, and budgeting, is a rather new
phenomenon and can be considered an innovation that is
languishing in the introductory stage of adoption. At the start
of our study, the share of the Euro as an instrument for
settlements regarding international import and export activities was, on average, less than 1% of total trade volume (Committee of Governors of the Central Banks, 1992). “It is, however, the domain in which the Euro should increasingly be
used during the transition period in order to become Europe’s
common currency.” The Euro’s development is necessary to
ensure the neutrality of the monetary integration process and
ISSN 0148-2963/00/$–see front matter
PII S0148-2963(98)00100-3
124
J Busn Res
2000:48:123–133
to familiarize the markets with the Euro and with its advantages
as a common currency (Commission of European Communities, 1991, pp. 137–141).
Given the importance of expanding the acceptance and
uses of the Euro during the transition stage towards full EMU,
the purpose of this study is to obtain insights into the broad
sets of factors that stimulate as well as inhibit the adoption
of the Euro for commercial purposes by European companies.
These insights can be used for the development of policies
and campaigns to foster the commercial use of the Euro in
the countries of the EU.
The following sections discuss variables that have been
identified in the marketing literature as having an influence
on the attitudes towards the subsequent adoption or nonadoption of innovations. Based on this overview, these factors are
hypothesized as having an influence on the adoption of the
Euro. Next, the data collection methods and the scales that
are used to measure the proposed relationships are explained.
The results of logit analyses carried out to test the strengths
of these relationships are then presented, followed by a discussion of a subsequent qualitative field study of financial managers from adopting and nonadopting firms. The article concludes with some marketing suggestions to reduce the
resistance to the commercial use of the Euro prior to mandatory adoption.
Theoretical Background
and the Development
of the Conceptual Model
Two approaches were taken in developing the conceptual
model of how European firms proceed in the adoption process
of the Euro. First, variables were identified based on a thorough
review of the marketing literature that theoretically and empirically examines the adoption process. Beginning in the 1960s,
the marketing literature on product acceptance typically paid
attention to the investigation of the factors that influence the
adoption and diffusion of innovations, a research perspective
that has resulted in useful conceptual frameworks, for both
consumer and industrial innovations (Webster, 1969). The
latter research stream is relevant for this study, since we focus
on the adoption of a financial innovation, the commercial use
of the Euro by European companies.
Four broad sets of variables influencing the rate of adoption
of innovations by companies were identified in the marketing
diffusion literature. First, “innovation characteristics” are considered to be important predictors of adoption. In many studies, the perceived relative advantage of an innovation has been
shown to be positively related to its rate of adoption (Rogers,
1995; Frambach, forthcoming). “Organization characteristics”
is a second group of variables that has generally been accepted
as having an influence on the adoption decision process. Considerable empirical evidence suggests that organization charac-
Y. M. van Everdingen and G. J. Bamossy
teristics, such as size and the degree of international orientation of a company positively influence the adoption decision of
organizations (Gatignon and Robertson, 1989; Rogers, 1995;
Frambach, forthcoming). Also, dimensions of the corporate
culture such as the resistance to change and the level of
conflict have been found to influence the adoption behavior
of organizations (Robertson and Wind, 1980).
The “external environment” in which a firm operates also
is critical to the functioning of organizations and has been
shown to have an influence on the organizations’ adoption
decision (Zaltman, Duncan, and Holbeck, 1984; Robertson
and Gatignon, 1989). Therefore, perceptions regarding the environment are included as a third set of variables in the conceptual adoption model. Rogers (1995) provides considerable
empirical evidence that an important aspect of facilitating the
adoption and diffusion process within an organization comes
from creating and sharing information about the innovation
among the potential adopters. Consequently, “communication
behavior” within the firm is included as the final set of variables
in the conceptual adoption model regarding the Euro.
Once the literature review was well under way, we began
our second approach to understanding the adoption process.
This involved a year-long pilot study that provided us with
multiple perspectives. Throughout the year, we attended several European conferences and seminars on EMU. We also
carried out a series of personal interviews with Chief Financial
Officers of eight Dutch companies, with five bankers and
financial experts from the Netherlands, Belgium, and the
United Kingdom and with the director of the Association for
the Monetary Union in Europe. The basic purpose of this
qualitative pilot study was to improve our understanding of
the above mentioned factors and processes involved in adopting the Euro. This systematic review of the marketing literature,
coupled with the extensive discussions with European financial experts led to the development of the conceptual adoption
model of the Euro, shown in Figure 1.
Perceived Innovation Characteristics
In forming an attitude toward the Euro, perceived advantages
regarding the financial innovation play an important role.
Based on the literature (Commission of the European Communities, 1990; Jozzo, 1989) and our pilot study, a number
of perceived advantages were identified. The first advantage
involves the simplification of currency management and its’
related cost reductions. Foreign exchange exposure of a company, when using the Euro, will be restricted to the receipts
and debts denominated in the currencies of countries outside
the EU. The use of the Euro for transactions within the EU
cuts the relatively high costs (bid and ask spreads, commission
fees) typically involved in dealing with different currencies.
Second, the central management’s task of control and evaluation will be simplified, as the more transparent Euro allows
for more direct comparisons of the performance evaluations
of individual managers and/or of foreign subsidiaries.
Commercial Use of the Euro by European Companies
J Busn Res
2000:48:123–133
125
Figure 1. The conceptual adoption model.
Finally, a somewhat more speculative advantage was often
mentioned by financial managers: since the Euro is anticipated
to become one of the world’s dominant currencies, along with
the dollar and yen, its use should give an organization a stronger
European image and ultimately result in some global competitive advantages. For example, carrying out multinational marketing activities in the Euro would mean fewer price list revisions and thus stable prices for customer groups, which may
contribute to more stable relationships and customer loyalty.
Taken together, the characteristics of the Euro offer some
innovative advantages that would suggest the following sets
of relationships in terms of company adoption: the stronger
the perceptions of the Euro as a currency that will simplify
treasury management tasks as well as performance and evaluation tasks of general managers, the greater the likelihood that
the Euro will be used. Furthermore, the more positive the
manager’s perceptions of the “nontangible” values of the Euro,
such as its ability to create a stronger “European image” and
competitive advantage also will positively influence the decision process of adopting the Euro for commercial purposes.
The proposed relationships above are consistent with marketing literature that suggests that the belief in the relative
advantages of the proposed innovation will induce adoption.
Despite these possible advantages, the commercial use of the
Euro has been quite limited. Consistent comments from the
pilot study suggest that a reason for the limited use might be
that managers have not as yet “experienced” these advantages
and tend to focus more on the potential disadvantages or
obstacles to the use of the Euro. Previous research by the
Association for the Monetary Union in Europe (1990) has
revealed a number of potential obstacles in the minds of
managers regarding the use of the Euro. A first obstacle is
the general limitations of the Euro financial market. Not all
financial transactions that are possible in EU currencies are
also possible in Euros. European countries just recently have
fixed their exchange rates, which will go into effect on January
1, 1999 (Bray, N. “The Euro Revolution: Changing How Europe Does Business.” Wall Street Journal, Europe, R1-R14, May
16, 1998.). Before this, the Euro (then the ECU) has been a
currency basket, based on the value of its underlying currencies. Independent country’s fiscal revisions were not ruled out
then, which may have caused a delay in the decision to adopt.
Another obstacle to the Euro’s commercial use is perceptions of the formidable switching costs of changing over to
the Euro. Considerable costs are anticipated in changing accounting and information systems, business and financial operations, and in staff training. From the personal interviews,
it seemed that financial managers were more willing and able
to quantify the switching costs of the Euro and less able to
quantify the potential savings that accrue from the Euro’s
potential advantages.
A final innovation characteristic that may negatively influence the adoption decision regarding the Euro is the perceived
risk or uncertainty associated with the proposed development
and timetable of EMU. Even though the Maastricht Treaty have
been ratified by all EU member states, the mind-set of European
managers three years prior to mandatory adoption still seemed
uncertain regarding the Euro’s ultimate role as the future Euro-
126
J Busn Res
2000:48:123–133
pean currency. Here, the focus is on the perceived risk of
adopting the Euro within the framework of EMU. The following section reviews more specific environmental factors.
Perceptions of the Environment
Y. M. van Everdingen and G. J. Bamossy
company is the degree of the firm’s European orientation,
since the advantages of using the Euro would be most obvious
for organizations with many trading partners in multiple countries of the EU, relative to organizations with many trading
partners outside Europe. Two factors that are related closely
to a firm’s international orientation are the extent of foreign
exchange transactions and the foreign exchange rate risk. If
all foreign revenues are expressed in only a few currencies or
in relatively stable currencies, the level of perceived currency
risks will be lower and an organization will be less inclined
to use the Euro relative to firms that operate in many European
currencies or relatively unstable currencies.
A final organizational variable that might influence the
adoption of the Euro is “innovation conflict”, which is defined
by the extent and pattern of agreement or disagreement in
decision making about the use of an innovation among members
of the decision making group. The Euro is of importance for
all departments of the company, and conflict between the
departments about the decision to adopt the Euro for commercial purposes may cause a delay in the adoption decision.
One of the variables in the business environment hypothesized
to influence the adoption decision regarding the Euro is the
concept of network externalities, which refers to the condition
wherein the utility of using a product depends upon the number
of other users of the same product. Innovators and early
adopters are not only interested in “current” users but also
are concerned with the likelihood of “future” adopters of that
innovation (Katz and Shapiro, 1986). Thus, the incentive to
use the Euro is not only positively influenced by the proportion
of current users of the Euro but also by the expectation that
a large number of organizations will adopt the Euro for commercial purposes in the future. This leads to the following
proposed set of relationships: European firms that require a
higher percentage of established Euro users before it will consider adoption of the Euro will be less likely to adopt, relative
to firms who have a lower requirement of current users. Following this line of logic, firms with more positive expectations
of greater network externalities in the future are more likely
to adopt the Euro, relative to firms who are less optimistic
about the amount of future users.
The political environment also may positively stimulate the
adoption decision process of European organizations by taking
credible actions in order to create a catalyst for the introduction of the Euro. Example of such actions are the design and
ratification of the Maastricht Treaty, which included a clear
timetable for the introduction of the Euro as the single European currency and the more recent fixed bilateral exchange
rates between individual EU countries. Although the public
signals from EU member states (in particular, Germany) have
stressed that they keep striving for the establishment of a
monetary union and a common European currency, financial
turmoil within the EU in the past years may negatively influence managers’ attitudes towards the Euro and the intention
to adopt the Euro for commercial purposes.
Finally, the upcoming monetary integration and the implementation of one single European currency is widely touted
as generally improving functioning of the common European
market and the economic activities of organizations within
European countries (Briones, 1998). Managers who indeed
perceive the existence of a single currency to be positive for
the functioning of the common market and the economic
activities of their own organization will be more likely to adopt
the Euro for commercial purposes.
Treasury departments within a firm are concerned with currency and foreign exchange management and are seen as
possessing the technical knowledge, special skills, and experience necessary to evaluate the commercial use of the Euro. In
line with this, the treasury department has the most access
to information that is relevant to the decision to adopt the
Euro for commercial purposes and could be regarded as a
gatekeeper. Previous research (Jozzo, 1989) revealed that treasury departments indeed were the first to consider and to
suggest the use of the Euro for invoicing purposes. Taken
together, we would expect that more communication between
departments regarding the Euro would enhance the likelihood
of its adoption, and that the amount of information and advice
that specifically comes from the treasury department would
be positively related to adoption.
Finally, the transition from a multicurrency system to the
Euro in a Pan-European organization can be considered a
strategic decision, especially if the firm aggressively adopts
the Euro for commercial use prior to the establishment of
EMU. Within this context it might be expected that top managers, based on their hierarchical position, may strongly influence the adoption decision process regarding the commercial
use of the Euro. An active and positive dialogue regarding the
importance of the Euro, which comes from the top down, is
hypothesized to increase the likelihood that a firm would use
the Euro before mandatory adoption.
Organizational Characteristics
Data Collection
Previous research on the acceptance and use of the Euro (Jozzo,
1989) reveals that companies that regularly or occasionally
practiced Euro invoicing were on average the largest in the
sample in terms of sales and foreign trade volume. Perhaps
more relevant than the amount of foreign trade volume of the
Internal Communication Behavior
Development of the Questionnaire and
Sampling Frame
Given the European character of the innovation under consideration, the sample included companies from five European
Commercial Use of the Euro by European Companies
countries: The Netherlands, Italy, France, Germany, and the
United Kingdom. These five countries are most actively involved in trade both within the EU and with the rest of the
world and represent a total of 77.6% of the population of the
European Union (Europe’s Monetary Future: From Here to
EMU. The Economist, 1993, pp. 29–31; 1996 and All That. The
Economist, 1994, pp. 15–17). The questionnaire was pretested
with accountants and banking managers who have expertise
in administrating and managing the Euro as a financial instrument and with business people who have commercial experience with the Euro. Based on this pretest, the final version of
the questionnaire was developed.
At this point in time, the use of the Euro is likely more
relevant for large, multinational companies than for small
firms. Therefore, large companies were selected for this study.
The European Business Press Group in Brussels provided a
list of the top 150 companies in each country with respect to
turnover. Prior to the survey mailing, an introductory letter
in the respondent’s native language was sent which overviewed
the study’s objectives, assured the respondent’s anonymity,
and asked for their cooperation. A total of 668 questionnaires
were mailed to the directors of the treasury departments of
organizations across the five countries (119, 122, 140, 137,
and 150, respectively, to Dutch, Italian, French, German, and
British treasurers). Except for the Netherlands, all respondents
received the questionnaire in their own language. The final
English version was translated into the German, French, and
Italian language by native speakers and then back-translated
into English again. Discrepancies in the back translations were
all resolved in discussion with members of the research team.
A total of 214 usable questionnaires were returned, for a
response rate of 33.2% across the countries, which is a rather
high response rate for international survey research. Response
rates per country were: The Netherlands, 46.2%; Italy, 32.0%;
France, 25.0%; Germany, 35.0%; and the United Kingdom,
29.2%.
Measures
The proposed relationships shown in the model that were
thought to influence the adoption decision were developed
and operationalized based on previous research, as well as on
the results of the pilot study. In this study, the dependent
variable of interest is the outcome of the organization’s adoption decision regarding the commercial use of the Euro prior
to the mandatory adoption date of 1999. The treasurers were
asked to indicate for their own department as well as for the
purchasing and sales department of their company, if they
(1) already use the Euro, (2) have definitive plans to start
using the Euro, or (3) do not use the Euro. If one of these
departments uses the Euro for commercial purposes, then that
organization was considered to be an Euro user. Following
the proposed set of relationships shown in Figure 1, questions
regarding the Euro adoption process were formulated with
respect to (1) the perceived innovation characteristics; (2) the
perceptions of the political and business environment; (3)
J Busn Res
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127
organizational characteristics, and (4) the internal communication behavior. Table 1 provides a more detailed overview
of the measures used for this study.
Results
The response to the survey included 77 organizations that
already have adopted the Euro and 137 nonadopting organizations. A complete assessment of the nonresponse bias is difficult, since no information is available regarding Euro attitudes
and usage by nonrespondents. To gain some insights into the
possible nonresponse bias, two approaches were taken. The
first assessment examined to what extent a nonresponse bias
exists with respect to company turnover and industrial sector.
The companies selected for this study are all top 150 companies
in each of the five countries with respect to turnover. The
nonresponding companies normally are distributed throughout
this ordinal list, suggesting that the level of turnover does not
influence the likelihood of responding to the questionnaire.
Furthermore, the nonrespondents do not overrepresent any
particular sector but were found across all sectors. As a second
approach, groups of early and late respondents were developed and compared on a number of key characteristics, such
as the use of the Euro, perceived currency risks due to the
use of European currencies, their international orientation,
and attitudes towards the Euro and the EMU. Here again, no
significant differences were found.
In order to examine the proposed relationships in Figure
1, a series of four logit analyses, with adoption or nonadoption
as the dependent variable, was carried out. Examination of
the correlation matrix of the independent variables showed
that only two of the predictor variables were correlated above
0.50 (.54 and .51), suggesting that problems related to multicollinearity would be minimal.
Table 2 summarizes the results of the four logit analyses.
The classification accuracy of all models was higher than that
of the proportional chance criterion and ranged from 62.8%
to 71.2%. Interestingly, the models always performed best at
correctly classifying nonuser firms, while user firms were most
often misclassified as nonusers. Except for the model on organizational characteristics, all models produced significant
functions at the 0.01 level, suggesting that organizational characteristics have less explanatory power with respect to adoption relative to the other groups of variables.
In terms of the innovative characteristics of the Euro, the
perceptions of task simplification (and it’s subsequent cost
reductions) and perceived cost disadvantages significantly influence the likelihood of Euro adoption, with greater perceptions of task simplification having a positive influence and
perceived cost disadvantages having a negative influence.
None of the more “intangible” variables such as European
image, competitive advantage, or beliefs in EMU were significant in this model. Taken together, these results suggest that
rational advantages and disadvantages play a major role in
the adoption decision, relative to less tangible variables.
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Y. M. van Everdingen and G. J. Bamossy
Table 1. Measures
Variable
Perceived innovation characteristics:
Simplification (4 items, a 5 0.84)
Easier performance evaluation (2 items,
corr 5 0.63)
Psychological advantages
Competitive advantages
Limitations of the Euro market (3 items,
a 5 0.77)
Problems related to the current status of
the Euro (3 items, a 5 0.73)
Costs disadvantages (2 items, corr 5 0.61)
Uncertainty future Euro (2 items, corr 5 0.67)
Perceptions of the political and
business environment
Required % of other Euro users (network
externalities)
Expected increase in Euro use (network
externalities)
Influence of political actions (3 items,
a 5 0.67)
Turmoil in EMS
Perceptions about EMU (5 items, a 5 0.82)
Organizational characteristics
Size of the organization
European orientation
Level of currency risks
Measure
How likely/important are the following advantaages/disadvantages
(5-point scale: 1 5 very unlikely/unimportant; 5 5 very likely/important):
The use of the Euro will: reduce currency risks; reduce transition
costs; simplify treasury management; simplify intragroup accounting
procedures.
The business results of subsidiaries will be easier to compare.
The use of the Euro makes the evaluation of the performance of the
managers easier.
The use of the Euro gives our firm a European image.
We gain a competitive advantage if our company uses the Euro before
the establishment of the Monetary Union in Europe.
The inefficiency of the Euro clearing system.
The existence of restrictions on the size of Euro transactions.
A lack of suitable banking and support services.
A lack of end uses for the Euro.
The Euro does not have a legal tender status anywhere.
The Euro is still a basket and therefore revision are not ruled out.
The costs of changing over to the Euro are high.
The advantages of using the Euro are not quantifiable.
Please indicate to what extent you agree or disagree with the following
statements (5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
The Euro is the most appropriate currency to use as the single European
currency.
The Euro will become the future currency of Europe.
Would your company adopt the Euro for commercial purposes,
regardless of the percentage of other European companies that are willing
to adopt the Euro for commercial purposes? (Yes/No). If not, then
please indicate the minimum required % of other Euro users.
To what extent do you expect an increase in the number of European
companies that will use the Euro for commercial purposes within the
next two years? (5-point scale: 1 5 no increase; 5 5 strong increase).
Please indicate to what extent you agree or disagree with the following
statements: (5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
The establishment of the single market encourages our company to use
the Euro for commercial purposes.
A clear political will regarding the establishment of the Monetary Union
would encourage our company to use the Euro for commercial purposes.
Our department’s attitude toward the commercial use of the Euro has
been positively influenced by the Maastricht Treaty.
The recent turmoil in the EMS has negatively influenced our
department’s attitude toward the commercial use of the Euro.
Do you consider the existence of “a single currency” for Europe in the
near future to be positive or negative for (5-point scale: 1 5 very negative;
5 5 very positive):
The competitive position of Europe in the global market; the
functioning of the Single Market within Europe; the economic activity
of your country; your company’s businesses; your department’s
activities.
What was the amount of global sales in 1992? (open question).
In which European countries are your company’s trading partners
located? (0 5 no export within Europe; 12 5 trade with partners in all twelve
EU countries).
How would you assess the currency risk of your company due to the use
of European currencies? (5-point scale: 1 5 very high; 5 5 very low)
(continued)
Commercial Use of the Euro by European Companies
J Busn Res
2000:48:123–133
129
Table 1. continued
Variable
Measure
To what extent do you agree or disagree with the following statement
(5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
Level of agreement between departments
Internal communication behavior
Communication flow between departments
Information by treasurers at own initiative
Advice by treasurers
Information by top managers
(4 items, a 5 0.86)
Adoption behavior
Between different departments within our company, general agreement
exists about the decision to use the Euro for commercial purposes.
To what extent do you agree or disagree with the following statements
(5-point scale: 1 5 strongly disagree; 5 5 strongly agree):
There is a good flow of communication between the department’s in our
company regarding the commercial use of the Euro.
The treasury/financial department disseminates information about
possible use of the Euro at their own initative.
The treasury/financial department gives advice about the Euro if other
departments ask for it.
Our top management sends signals about the importance of the Euro for our
company.
Is your department currently using the Euro?
Is your organization’s sales department currently using the Euro?
Is your organization’s purchasing department currently using the Euro?
(not used, definite plans to start using, already using).
The analyses regarding environmental factors suggest that
the probability to adopt the Euro is influenced strongly by
network externalities. Nonadopters require a significantly
higher percentage of other organizations that should have
adopted the Euro before they are willing to use the Euro,
relative to adopters. Nonadopting firms also reported being
much more unwilling to adopt the Euro until (on average)
40% of other European companies make use of the Euro. This
is a rather high requirement, given that currently less than
2% of all European companies use the Euro commercially. It
seems that companies are waiting for each other’s initiative
to start using the Euro. Adoption decisions also are positively
influenced by positive perceptions about European Monetary
Union. All firms appeared to hold generally positive perceptions about EMU, with user companies responding significantly more positive about the future European Monetary
Union.
Of particular interest is the fact that the results of this
field survey suggest that the probability of adopting is not
significantly influenced by the level of a firm’s perceived currency risks. This is a surprising result, since one of the most
frequently mentioned advantages of using the Euro is the
reduction of currency risks. However, a subsequent examination of the relation between the perceived level of currency
risks wherein firms were grouped based on their self-reported
currency risk (low/average/high levels of risk) revealed a significant influence of the perceived level of currency risks on the
need for using a single European currency (F 5 8.93; DF 5
2,294, p 5 0.00). It appears that a firm’s perceived level of
currency risks does influence the desire for using a single
European currency but does not explain the actual user/nonuser status for commercial use.
Three of the four communication variables tested are shown
to significantly influence the probability to adopt the Euro,
highlighting the importance of internal communication in the
adoption decision process. The probability of being an adopter
increases with: (1) the perceived amount of information that
treasurers disseminate within the company at their own initiative, (2) the perceived amount of advice about the possible
use of the Euro provided by the treasury department if other
departments ask for it, and (3) by the perceived level of
signals of top management about the importance of the Euro.
Although these results suggest the importance of communication variables in the adoption decision, survey data does not
allow for clear interpretation of the direction of the relationship. It may well be that the relationship is the other way
around, and that more communication takes place after the
Euro is adopted. Adoption may lead to more communication
about the Euro.
By estimating four independent logit models in order to
test the proposed relationships, the influence of a possible
correlation between the groups of independent variables on
the results of the analyses is ignored. In other words, these
partial models test only the individual influence of the groups
of predictor variables and not the joint influence of all predictor variables. Therefore, a logit model including all variables
that were found to significantly influence the adoption decision based on the separate logit analyses was estimated. The
results of this analysis are reported in Table 3 and show
that the adoption decision is significantly influenced by one
variable out of each of the three significant but independent
partial logit models. The significant variables from this final
full model are (1) perceptions of cost disadvantages, (2) perceptions about European Monetary Union, and (3) the amount
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Y. M. van Everdingen and G. J. Bamossy
Table 2. The Results of the Logit Analyses
Variable
Perceived innovation characteristics
Simplification of tasks/cost reduction
Easier performance evaluation
Creating a European image
Competitive advantages
Limitations of the Euro market
Current status of the Euro
Cost disadvantages
Belief in future Euro
Constant
Model chi-square 5 22.694 (DF 5 8); p 5 0.00
Classification accuracy 5 68.9%
Perceptions of the environment
Required % of other Euro users
Expected increase in Euro use
Influence of political environment
Turmoil in EMS
Perceptions about EMU
Constant
Model x2 5 28.579 (DF 5 5); p 5 0.00
Classification accuracy 5 71.2%
Organizational characteristics
Size of the organization
European orientation
Perceived currency risks
Agreement between departments
Constant
Model x2 5 6.477 (DF 5 4); p 5 0.16
Classification accuracy 5 62.8%
Internal communication behavior
Communication between departments
Information by treasurers
Amount of advice by treasurers
Signals from top management
Constant
Model x2 5 21.848 (DF 5 4); p 5 0.00
Classification accuracy 5 63.8%
b
SE
t-value
0.019
20.011
0.051
20.026
20.015
0.012
20.051
0.038
20.760
0.01
0.02
0.04
0.05
0.01
0.01
0.02
0.09
0.91
1.97a
20.53
1.43
20.54
21.25
0.94
22.64a
0.41
20.84
20.020
0.256
0.093
20.122
0.122
23.059
0.01
0.18
0.08
0.16
0.07
1.28
22.83a
1.41
1.21
20.79
1.68a
20.24
20.032
0.068
0.086
0.225
21.900
0.11
0.05
0.14
0.13
0.77
20.30
1.49
0.71
1.80a
22.87
0.103
0.197
0.308
0.318
23.378
0.16
0.12
0.13
0.15
0.73
0.65
1.61a
2.42a
2.14a
24.65
n 5 214.
a
One-tailed tests, significant at p , 0.05 level.
Table 3. The Results of the Logit Analyses on the Significant Variables
Variable
Simplification of tasks/cost reduction
Cost disadvantages
Required % of other Euro users
Perceptions about EMU
Agreement between departments
Information by treasurers
Amount of advice by treasurers
Signals from top management
Constant
Model x2 5 31.173 (DF 5 8); p 5 0.00
Classification accuracy 5 72.13%
n 5 214.
a
One-tailed tests, significant at p , 0.05 level.
b
SE
t-value
0.010
20.055
20.011
0.149
0.230
0.166
0.348
0.015
24.590
0.01
0.02
0.01
0.08
0.18
0.18
0.17
0.20
1.74
1.00
22.75a
21.10
1.86a
1.28
0.92
2.05a
0.08
2.64
Commercial Use of the Euro by European Companies
of advice about the uses of the Euro given by treasurers if other
departments ask for it. These results suggest that treasurers can
play a key role in communicating information regarding two
factors that the firm has some control over: cost perceptions
and the need for information on how to use the Euro.
Discussion
The results of the quantitative field study revealed that the
probability of adopting the Euro increases with (1) more positive perceptions of the simplification of tasks/cost reduction,
(2) more positive perceptions about European Monetary
Union, (3) greater perceptions of the level of intradepartmental
agreement regarding the adoption decision, (4) an increase
in the amount of advice given by treasurers at their own
initiative and, if asked for, by other departments, and (5) an
increase in the amount of signals from top management about
the Euro use. The likelihood of adopting decreases with (1)
greater negative perceptions of cost disadvantages, and (2)
greater expectations regarding the percentage of other companies that should use the Euro before potential adopters are
willing to adopt (network externalities).
Although a number of the suggested relationships were
supported, the results of the quantitative field study also suggested some ambivalence in respondent’s viewpoints regarding the European Monetary Union and the commercial use
of the Euro. European managers reported positive perceptions
about the future of the Euro, in spite of its limited use currently.
However, in spite of mandatory adoption in 1999, managers
hold no strong expectations of increased Euro usage. Furthermore, a number of the proposed factors that should predict
adoption and use of the Euro could not be confirmed from
the survey data. Taken together, these results led to the next
step in the data collection process. In order to get managers’
interpretations of the findings, a qualitative field study was
carried out among financial managers of both adopting and
nonadopting companies. These follow-up personal interviews
provide additional insights into the survey data results, and
the reflections of these respondents (all of whom are treasurers) are discussed below.
The most surprising result of the logit analyses was the
nonsignificant influence of the perceived level of currency
risks on the adoption decision. During the final round of
personal interviews, the treasurers unanimously supported
this result for a number of reasons. First, treasurers are of the
opinion that the currency risks within Europe are manageable,
and they claim to have enough financial instruments to hedge
fairly well against those risks. Second, they pointed out that
the use of the Euro would involve higher currency risks as
long as the Euro is seen primarily by companies as a 13th
currency, in addition to the other European Union currencies.
Nonetheless, the managers interviewed perceive the Euro to
be an effective instrument to reduce currency risks when it
becomes the single European currency. In line with this, the
J Busn Res
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131
treasury managers confirmed their positive opinions about
EMU, while simultaneously appearing to be rather negative
about the current use of the Euro, primarily because of its
perceived lack of clear and quantifiable financial advantages.
The treasurers interviewed admitted that the advantages of
cost reduction and simplification of tasks could be important
motives to use the Euro, but they anticipate these advantages
to be more apparent if a large number of their trading partners
are willing to use the Euro or when the Euro becomes the
single European currency. They did not expect a significant
increase in Euro use during the next few years leading up
to mandatory adoption, however. Even current user firms
perceived the Euro as not offering many advantages. These
managers mentioned the occasional demand of trading partners for using the Euro as the most important reason for their
current use of the Euro. Among the interviewed treasurers in
both user and nonuser firms, the concept of network externalities was cited as one of the most important factors in the final
adoption decision.
Of all other factors that were found to significantly influence the adoption decision, the treasurers mentioned the cost
disadvantages of changing over to the Euro as a particularly
important impediment to using the Euro, which supports the
results reported in Table 3. Implementing the Euro as the
single currency within a company will entail high switching
costs, mostly related to the practical implementation of new
administrative systems, and the conversion of commercial
contracts and debts into the Euro. This implementation process clearly is not anticipated with any sense of enthusiasm
and is viewed as an expensive, tedious task. The treasurers
indicated that they are not willing to bear those costs until
they are convinced that the EMU will be established before
the end of this century.
As the mandatory adoption date approaches, this “wait and
see” attitude continues to be the prevailing mood among EU
members, although the degree of optimism varies from one
country to another. Germany continues to show real anxiety
over the pending use of the Euro, in spite of being the key
player and architect of EMU and the Euro. Similar expressions
of reluctance come from the French, while Sweden, the United
Kingdom, and Denmark have elected to truly “wait and see”
by not participating until some later date of their own choosing. In stark contrast to the Germans, Italy is one of the
most enthusiastic boosters of the Euro, since the new money
represents stable politics, cheaper bank loans, and less risky
investments (Hudson, R., Lavin, D. Rohwedder, C. and Klein,
M. “Europe Launches New Currency, but Summit Fight Casts
Shadow” Wall Street Journal, Europe, p. 1, May 4, 1998.)
Conclusions and Recommendations
The use of the Euro for import and export activities has only
marginally increased since the beginning of the nineties. Moreover, treasurers responding to both the quantitative and the
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J Busn Res
2000:48:123–133
qualitative field study anticipate only a small increase in Euro
use on the road to EMU and expressed skepticism and ambivalence over the timely establishment of EMU. In spite of this,
the results suggest that the advantages of using the Euro would
increase with an increasing number of Euro users.
Consequently, the use of the Euro should be actively promoted by the European Commission, the national governments and the banking industry, in order to generate a critical
mass of Euro users. The European Commission spent U.S.
$20 million in 1996 for a promotion campaign, and the expectation is that this amount will increase in future years. Taking
into account the results of this study, this campaign should
focus on a number of aspects. Since the positive perceptions
about EMU appeared to have a positive influence on the
probability to adopt the Euro, the campaign should emphasize
both the practical and financial consequences of EMU for the
European business community. In addition, the campaign
should offer credible examples of how the extensive use of
the Euro will lead to simplification of currency management as
well as quantifiable examples of cost reductions. This campaign
could be part of the European Monetary Institute’s development of the uniform payment system, called “Target”, that is
designed to facilitate fast and cheap Euro transactions.
Furthermore, the promotional campaign should continue
to clearly communicate to European companies how and when
EMU will materialize and when it is the most appropriate
time to start taking preparatory actions. Based in political
expediency, the political environment has not always sent
clear signals that EMU will indeed be established before the
end of this century. As a result, companies have been reluctant
to begin the process of changing over to the Euro (and taking
on the switching costs).
Finally, the European Commission should provide information that promotes the size, depth, and liquidity of the
Euro Capital Market and encourage central banks to adjust
their portfolio of reserves. To meet this end, they also could
develop strategies and offerings to make the current use of
the Euro financially more attractive. This seems imperative,
given that treasurers appear to be rather negative about the
Euro, due to a lack of clearly quantifiable financial advantages.
To increase the financial attractiveness banks could offer a
discount conversion rate, as was done by the Sao Paolo Bank
in Italy in 1992. Also, a premium interest rate for the Euro
vis-à-vis the national currencies could stimulate the Euro use.
Suggestions for Future Research
One of the limitations of this study is that it involves a crosssectional research design, even though data collection for this
study took place over a two-year period, and we continue to
monitor developments and interview experts. To gain insights
into the opportunities and obstacles of the Euro’s diffusion
process, follow-up studies will be necessary at different points
in time leading up to mandatory adoption. Given the occa-
Y. M. van Everdingen and G. J. Bamossy
sional but clear sense of ambivalence that came out of the
personal interviews as well as the survey data, we believe
that studies that use ethnographic approaches and prolonged
engagement in organizations will allow for a deeper understanding of the Euro adoption process.
This study described the adoption decision process regarding the Euro at the organizational level and did not take into
account differences in attitudes or adoption behavior that one
might expect from different functional departments. It might
be interesting to examine differences between companies with
a single Euro-using department versus those that use the Euro
in two or three departments. The results of such an analysis
might give an indication of the characteristics of heavy user
companies. Furthermore, additional research needs to consider how the Euro diffuses across the departments of an
organization. This research could focus on the key variables
influencing the adoption behavior of the separate departments,
as well as into the time-order in which the departments of an
organization adopt the Euro. These insights may provide a
basis for a differentiated promotion strategy, fitting the concerns and characteristics of the specific departments.
On the surface, the initial activities to launch the common
European currency in January 1999 will be a matter primarily
for bankers, finance ministers, and financial managers within
organizations. But if fact, the mandatory adoption of the Euro
is the opening shot in a financial and commercial revolution
regarding the ways in which Europe functions. How smoothly
these final stages progress towards full EMU and Euro use in
2002 will depend not only on the political will of the member
nations but also on developing understanding and insights
into the key forces within European companies that drive the
adoption and use of the Euro.
The authors thank Berend Wierenga, Srinivas Durvasula, Richard Semenik,
the anonymous reviewers, and the editor for their helpful advice and comments. We also acknowledge the financial support provided for the field
study by the Tinbergen Institute, Amsterdam.
References
Association for the Monetary Union of Europe, Ernst and Young,
and the National Institute of Economic and Social Research: A
Strategy for the Euro, Kogan Page, London, 1990.
Briones, Maricris, G.: The Euro Start Here: Single Currency Makes
Differentiating Difficult. Marketing Ne