Diffusion of Innovations (DOI) Theory

1.0 Introduction
The purpose of this assignment is to list down the critics of proposed theory relates to
organizational performance in using advanced technology called blockchain or known as
Distributed Ledger Technology (DLT) as business solution. Blockchain or DLT is changing
the way companies work and its widespread impact is changing the world rhythm. Definitely
blockchain makes everything impossible to be possible but the magnitude of this adoption and
radical transformation are still underappreciated. It is proposed to use Diffusion of Innovations
(DOI) Theory in order to see how blockchain is shaping our financial technology (fintech)
industry that is started to grow in Malaysia.

1.1 DOI Theory Definition

Diffusion on innovation (DOI) (Figure 1) is a theory of how, why, and at what rate new ideas
and technology spread through cultures, operating at the individual and firm level. DOI theory
sees innovations as being communicated through certain channels over time and within a
particular social system. Individuals are seen as possessing different degrees of willingness to
adopt innovations, and thus it is generally observed that the portion of the population adopting
an innovation is approximately normally distributed over time (Rogers, 1995).

Figure 1: Diffusion of Innovation Theory (Roger, 1995)

1.2 DOI Theory Critics

Several basic premises of the DOI theory therefore need a careful reconsideration in the context
of the networked and complex technologies. In particular, DOI theory does not offer adequate
constructs to deal with collective adoption behaviors (including the critical role of standards,
critical mass, network externalities, sunk costs, path dependence etc.). The DOI researchers
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should be careful in analyzing the impact of the nature and meaning of the technology, the role
of institutional policies and regimes, the impact of the industrial policies and strategies, and the
importance of the installed base and learning inertia (Lyytinen K., 2001).
Moreover, according to Lyytinen K. (2001), due to the inattention to these features DOI
models could not explain the research regarding Electronic Data Interchange (EDI) adoptions.
The diffusion “factors” had to be changed radically due to the complex and networked nature
of the technology, i.e. by expanding the scope and time scale of the diffusion study.
Study by Al-Zoubi (2013) said that one common criticism about DOI theory is that it
does not take into consideration the environmental factors where the organization conducts
business, such as competition, which could work as a barrier or a motivation to technology
acceptance and adoption.
Based on that researchers continue to search other contexts influencing organizational
innovativeness and combine them with Rogers's theory to explain the models (Al-Zoubi, 2013).
Study by Ilin, Ivetić, and Simić (2017) regarding e-business adoption also stress the
same critic and as a solution they used DOI theory combined with technology-organization-
environment (TOE) framework. Again, as cited by Ilin et al. (2017), the DOI theory does not
consider the impact of environmental aspects, which is in contrast to the TOE framework. The
value of incorporating the TOE contexts to strengthen the DOI theory is well-recognized in the
previous studies on e-business adoption (Hsu et al., 2006; Wang and Cheung, 2004; Zhu et al.,
2006a).

References
Al-Zoubi, M. I. (2013). Predicting E- Business Adoption through Integrating the Constructs
of the Rogers’s Diffusion of Innovation Theory Combined with Technology
Organization - Environment Model. International Journal of Advanced Computer
Research, 3(13 Deecember 2013).
Ilin, V., Ivetić, J., & Simić, D. (2017). Understanding the determinants of e-business adoption
in ERP-enabled firms and non-ERP-enabled firms: A case study of the Western
Balkan Peninsula. Technological Forecasting and Social Change, 125, 206-223.
doi:10.1016/j.techfore.2017.07.025
Lyytinen K., D. J. (2001). What's Wrong with the diffusion of innovation theory? The case of
a complex and networked technology. 173-190. doi:10.1007/978-0-387-35404-0_19
Rogers, E. M. (1995). Diffusion of Innovation. In. Retrieved from
https://www.d.umn.edu/~lrochfor/ireland/dif-of-in-ch06.pdf

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