1 Diffusion of Innovations Kathy Gill 21 October 2003

2 Overview Rogers Model Bass Model Stages

3 Rogers (1995) Identified four main elements of an innovation-diffusion process Innovation Social system Time Communications channels

4 Linear innovation-diffusion theory The process by which an innovation is communicated through certain channels over time among the members of a social system. (Rogers, 1995, P.5).

5 Innovation An idea, practice, or object that is perceived as new by an individual or other unit of adoption

6 Communication A process in which participants create and share information with one another in order to reach mutual understanding (Rogers, 1995).

7 Time The adoption model follows an “s” shape curve over time

8 Innovation-Decision process The mental process through which an individual passes from first knowledge to forming an attitude toward the innovation (adopt, reject)

9 Five steps Knowledge Persuasion Decision (adopt or reject) Implementation Confirmation

10 Social System A set of interrelated units that are engaged in joint problem-solving to accomplish a common goal. Members or units of a social system may be individuals, informal groups, organizations, and/or subsystems.

11 Critical mass Rogers (1995) : "the critical mass occurs at the point at which enough individuals have adopted an innovation so that the innovation's further rate of adoption becomes self-sustaining.” The critical mass is a social system perspective, while the dominant design is a technology perspective. The irreversible phase may take place when not only the critical mass point is overcome but also the dominant design is brought about at least in terms of the technological innovation.

12 Adopter categories Innovators Early adopters Early majority Late majority Laggards

13 Technological Innovations Hardware - the tool that embodies the technology as a material or physical object. Software - the knowledge base for the tool

14 The first Japanese word processor (Toshiba 1978 ）

15 Japanese Word Processor Shipments

16 Number of firms selling Japanese word processors

17 Unit prices of WP and PC (MITI)

18 Bass model (1969) dx/dt=a*x*(1-x/K)+b*(K-x) x: cumulative number of adopters at time t, K: population of potential adopters in the social system, a: internal influence factors, and, b: external influence factors.

19 External influences (Bass 1969) Vertical channel(s) of communication Centralized channel(s) of communication A structured channel(s) of communication A formal channel(s) of communication

20 Internal influences (Bass 1969) Horizontal channels of communication Decentralized channels of communication Unstructured, informal channels of communication

21 Stages of Technological Development Innovation Imitation Competition Standardization

22 Innovation Characterized by high uncertainty, trial-and-error problem solving, make-shift production Bioengineering Nanotechnology ??

23 Imitation Characterized by decreasing uncertainty as new firms enter sector and develop variants on basic innovation Solor-collector technology ??

24 Competition R&D leads to process improvements, smaller firms find it harder to enter industry, competition weeds out those who do not make improvements Semi-conductors RAM Hard drives?

25 Standardization “Ideal” product has been found/created, R&D focuses on preserving lifecycle; shift to price competition Pocket calculators ?