STS 481

“Special Topics: Innovation Management”

DIFFUSION of Innovation
What is “Diffusion” of Innovations?
Diffusion of Innovations

Diffusion: Spread of particules from

regions of higher concentration to regions

of lower concentration.

Diffusion of Innovations: Spread of

innovations from producers / sellers to the

market and users. Increasing usage and

commercialization of innovations in the

market in time.
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Why Diffusion is important for
Firms and Their Managers?
Why Diffusion Important for Managers?
 Innovations do not diffuse in the market
autonomously,

 Not all innovations can successfully

diffuse in the market. Some of them
fail, and they disappear.

 It requires time, experience, strategy,

knowledge and managerial skills,

 Managers should know how to make their

innovations diffuse in the market.

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How “diffusion process” works?
How Diffusion Process Occurs?
 5 stages:

 Knowledge,

 Persuasion,

 Decision,

 Implementation,

 Confirmation

 Innovations are rarely evaluated by

users from a scientific standpoint, Everett Rogers
Professor of rural sociology
 Subjective perceptions about the Diffusion of Innovation (1962
innovation influence diffusion process
1) The individual 2) The individual 3) The individual 4) The individual 5) The
is first exposed to is interested in compares the makes use of individual
an innovation, but innovation and advantages/disadva the innovation finalizes
lacks information actively seeks ntages of using the and tests the the his/her
about the more details innovation, and usefulness of decision to
innovation about innovation decides whether to the innovation continue
adopt or reject using the
innovation
Rate of Adoption and Diffusion in Time
Everett Rogers
Professor of rural sociology
Diffusion of Innovation (1962)

In the book, he made a research

about 508 diffusion studies, and
produced a theory for the adoption of
innovations among individuals and
organizations

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Adopter Categories
 Innovators: Willing to take risks, usually the highest social class, have greater
financial power and the luxury to take risk.

 Early Adopters: Usually have the highest degree of opinion leadership and
convincing power among the other adopter categories

 Early Majority: Slower in the adoption process, have above average social status,
and close contact with early adopters

 Late Majority: Mostly skeptical about an innovation, have below average social
status, very little financial power to take risk.

 Laggards: Usually tend to focus on “traditions”, mostly have lowest social status,
lowest financial power, oldest of all other adopters, and only in contact with family

and close friends,

What are the factors that affect the
diffusion process of an innovation?
What are the factors that affect the
diffusion process of an innovation?

 Product related factors,

 Producer / seller related factors,

 Buyer / user related factors,

 Competitor related factors,

 Market related factors,

 Macro social, cultural, economic environment related factors

What should managers do to diffuse
their innovations in the market?