Topic 6: Adoption and diffusion of innovation

Overview

This topic examines theories of the adoption and diffusion of innovation.  It explores the issue of whether innovation diffusion is a social or economic process and the importance of initial customer selection.  Also discussed are the need to identify clear pathways to market, the barriers to market entry and substitution threats. The need for the formation of strategic alliances is also considered.

Innovation is driven by three paradigms, focusing respectively on: the individual creative genius, the technology-push of systematic scientific inquiry, and market-pull. While the creation of innovative new ideas and technologies is an important goal for business, there is no value in innovation without commercialisation which is frequently fraught with challenges.

The diffusion of innovation is a social process that involves inventors being imitated by adopters. Their decision to adopt or not is influenced by a combination of rational attitudes and subjective norms that can be shaped by peer group influence. Word of mouth can play a key role in the diffusion process as early adopters provide recommendations and role models for laggards.

Successful commercialisation requires the innovation to be adopted by customers and to diffuse into markets. Customers will not always accept new ideas, they usually need to be assured that the innovation: can be integrated with their existing systems, is able to produce genuine benefits, is easy to use, and is also being accepted by others. It can take many years for a new innovation to gain acceptance in markets. Good technology development must also be accompanied by good market and business development. 

Textbooks and readings

Textbooks:

Mazzarol, T., and Reboud, S. (2017) Entrepreneurship and Innovation 3rd edn, Melbourne, Tilde University Press, ISBN: 978-0-7346-1225-0. Chapter 6.

plus

Mazzarol, T., and Reboud, S. (2017) Entrepreneurship and Innovation Workbook, Melbourne, Tilde University Press, ISBN 978-0--7346-1227-4.

OR

Mazzarol, T. (2011) Entrepreneurship and Innovation: Readings and Cases 2nd Edition, Tilde University Press, Melbourne, chapter 6.

Recommended readings:

Baptista, R. (1999). "The diffusion of process innovations: A selective review." International Journal of the Economics of Business 6(1): 107-129.

Gallivan, M. J. (2001). "Organizational Adoption and Assimilation of Complex Technological Innovations: Development and Application of a New Framework." The Data Base for Advances in Information Systems 32(3): 51-85.

Gatignon, H., and Robertson, T.S. (1985). "A Propositional Inventory for New Diffusion Research." Journal of Consumer Research 11(4): 849-867.

Grubler, A. (2000). "Time for a Change: On the Patterns of Diffusion of Innovation." Journal of Regional Science Review 125(3): 19-42.

Legris, P., Ingham, J., and Collerette, P. (2003). "Why do people use information technology? A critical review of the technology acceptance model." Information & Management 40(2): 191-204.

Mahajan, V., Muller, E., and Bass, F.M. (1990). "New Product Diffusion Models in Marketing: A Review and Directions for Research " Journal of Marketing 54(1): 1-26.

Mazzarol, T. (2011). "The Role of Word of Mouth in the Diffusion of Innovation", in M. H. Hulsman, and Pfeffermann, N. (Eds). Strategies and Communications for Innovations: An Integrated Management view for Companies and Networks. Berlin, Springer-Verlag: pp. 117-132.

Mazzarol, T. (2014). "The role of social-capital, strategic networking and word of mouth communication in the commercialisation of innovation", in N. Pfeffermann, Minshall, T., and Mortara, L. (Eds). Strategy and Communication for Innovation (Second Edition)., Berlin, Springer: 173-193.

Lecture notes

Topic 6: Adoption and diffusion of innovation lecture slides.

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