Diffusion of innovations

From CEOpedia | Management online

Diffusion of innovation describes the phenomenon of the extent to which an innovation and new technology are accepted or non-accepted by people in society and the scale of their spread and adoption.

Theorie of diffusion

The sociologist E.M. Rogers was the first to establish the diffusion of innovations model, describing the spread of innovations in a social system through specific channels over a period of time (Roger 1962). He divides the process of decision-making and adaptation into 5 steps and distinguishes between different types of adopters. Depending on their personal characteristics, people adopt innovations at different rates. He also assigned various characteristics to innovations that ultimately determine when an innovation is accepted by society (Rogers, Singhal, Quinlan 2014, p. 207).

Process of the innovation-decision

The process by which an innovation is adopted by people is divided into 5 successive stages. Roger explains that adaptation is not a spontaneous action, but a deliberate process that is shaped by individual factors. The 5 stages of the process are (MacVaugh, Schiavone 2010):

  • Knowledge: People need to discover an innovation first.
  • Persuasion: People familiarize themselves with an innovation and form an individual opinion about it.
  • Decision: In this step, opinions are expressed. People accept or reject the innovation.
  • Implementation: Individuals begin to use the innovation and incorporate it into their lives.
  • Confirmation: Person seeks confirmation and decides whether to confirm or reverse the innovation decision.

Adopter categories

Diffusion theory assumes that individual conditions and characteristics of the innovation determine the process of adoption of an innovation. Individual circumstances determine the phase in which an innovation is adopted. A total of 5 different adopters are defined (Rogers 2003):

Fig. 1 Adopter Categorization on the Basis of Innovativeness (Source: Rogers 2003)
  1. Innovators - Innovators are the first people to adopt an innovation. They are risk takers and introduce innovations to society. They usually belong to the highest social class and are often already waiting for the next innovation to appear.
  2. Early Adopters - Early adopters are the opinion leaders. They follow shortly after the innovators and are generally interested in innovative products.
  3. Early Majority - The decision-making of the early majority is influenced by the previous two groups. This group is waiting a little longer before also adapting an innovation.
  4. Late Majority - This part of the consumer corresponds to the part of the majority that adopts an innovation later than the average user. This group of people is very skeptical, has a lower income and a lower social status in society.
  5. Laggards - Laggards are the last people to adopt an innovation. They are basically very traditional and have a negative view of change. They are very skeptical about innovations and represent the group with the lowest social status.

Characteristics of innovation

Roger also identified factors that characterize an innovation and determine whether it will be successfully adapted by a social group. Each person perceives these characteristics individually and makes the decision of adaptation for himself (Rogers, Singhal, Quinlan 2014):

  • Relative advantage: The degree to which the innovation has a greater benefit than the element, product or program currently in use.
  • Compatibility: The degree to which the innovation matches the desires, experiences, and values of the potential user.
  • Complexity: The degree to which an innovation can be easily understood and applied by the potential user.
  • Triability: The degree to which an innovation can be tried before a commitment is made.
  • Observability: The extent to which the innovation produces visible results.

Examples of Diffusion of innovations

  • Social media platforms: The development and launch of social media platforms such as Facebook, Instagram, Twitter and Snapchat have drastically changed how people communicate, share information and interact with each other. As these platforms have become more popular, they have spread to almost every corner of the world, and their use has become commonplace in many societies.
  • Smartphones: Smartphones have been around for almost two decades, and their use has become increasingly widespread. In many countries, almost everyone has a smartphone and uses it for communication, entertainment, and to access online services.
  • Online shopping: Online shopping has become a popular way to purchase goods and services, with many people using websites or apps to make purchases. This has drastically changed the way people shop, as they no longer have to visit physical stores or wait in line.
  • Autonomous vehicles: Autonomous vehicles, or self-driving cars, have been gaining traction in recent years, as they have the potential to revolutionize the automotive industry. Companies such as Tesla are leading the way in developing and testing these vehicles, and they could soon become a common sight on the roads.

Advantages of Diffusion of innovations

Diffusion of innovations offers a range of advantages for businesses, consumers, and society as a whole. These include:

  • Increased efficiency and productivity: The introduction of new technologies can help businesses become more efficient and productive, allowing them to produce more with fewer resources.
  • Improved customer service: By introducing new technologies, businesses can offer improved customer service and have a better understanding of customer needs.
  • Increased competition: Diffusion of innovations can also increase competition in markets, as new technologies can make it easier for businesses to enter a particular market.
  • Improved quality of products and services: By introducing new technologies, businesses can improve the quality of their products and services, as well as the customer experience.
  • Increased access to information: New technologies can also make it easier for people to access information, allowing them to make more informed decisions.
  • Increased innovation: Diffusion of innovations can also encourage the development of new innovative products and services, helping businesses stay ahead of the competition.

Limitations of Diffusion of innovations

The limitations of the diffusion of innovation are:

  • Time and resources constraints: Diffusion of innovation requires considerable time and resources, which may not be available to organizations and individuals.
  • Cultural and social barriers: Diffusion of innovations may be hindered by cultural and social values or beliefs, which may conflict with the introduction and adoption of the new technology.
  • Risk of failure: There is always a risk that the diffusion of innovation may fail, due to lack of market acceptance or technical problems.
  • Lack of knowledge: Without adequate knowledge, people may be reluctant to accept and adopt a new technology.
  • Cost: The cost of the new technology may be too high for some organizations, making it difficult to invest in the diffusion of innovation.

Other approaches related to Diffusion of innovations

The following are additional approaches to Diffusion of Innovations which seek to explain how new ideas and technologies spread and are adopted.

  • Social Networks: Social networks are used to explain how the diffusion of innovation takes place. It suggests that the adoption of a new technology or innovation is determined by the social networks and ties that individuals have with each other.
  • Innovation Decision Process: This approach looks at how individuals make decisions about whether to adopt or not adopt a new technology or innovation. It suggests that the decision to adopt or reject an innovation is based on a variety of factors, such as the perceived cost and benefit of the innovation, the risk associated with using it, and the social pressures from others.
  • Adopter Categories: This approach divides people into different categories of adopters, such as innovators, early adopters, late adopters, and laggards. It suggests that different categories of adopters adopt new technologies and innovations at different rates.
  • Diffusion of Benefits: This approach suggests that the diffusion of innovation is driven by the benefits that it brings to people. It suggests that people will be more likely to adopt an innovation if they perceive that they will be able to benefit from it.

In summary, there are a number of approaches to Diffusion of Innovations, including social networks, the innovation decision process, adopter categories, and the diffusion of benefits. These approaches help to explain why and how new technologies and innovations spread and are adopted.

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Author: Alexandra Schulze