Investigation of the effect of secondary market on the diffusion of innovation

In the high-tech product market, the number of hungry adopters, a new type of early adopters who buy new products and sell them soon in the on- or off-line secondary market to seek for the other new products, has been increasing due to the short product life cycle of high-tech products and the low transaction cost on the Internet. This new phenomenon means that it is inappropriate to consider customers only in the primary market as total adopters in innovation diffusion modeling, since purchasers in the secondary market also have a word-of-mouth effect on the remaining non-adopters. To explain this new phenomenon, we modify the basic Bass diffusion model by incorporating the effect of the secondary market and conduct an empirical analysis. As a result, we conclude that the basic Bass model is likely to overestimate sales volume and tends to forecast lagged peak time when there is an effect from the secondary market. This means that applying a diffusion model to high-tech products without considering the secondary market effect would provide an inaccurate market forecast.     

Identification of effective opinion leaders in the diffusion of technological innovation: A social network approach

Opinion leaders are the people in a social network who have the greatest influence on other people's acknowledgment or adoption of products/services in the diffusion process of technological innovation. In this research, we investigate which opinion leader is the best marketing choice in terms of diffusion speed and maximum cumulative number of adopters, using a social network approach and threshold model. On the basis of the simulation result, we find that opinion leaders with high sociality are the best ones for fast diffusion, whereas those with high distance centrality are the best ones for the maximum cumulative number of adopters. Moreover, we conclude that the characteristics of effective opinion leaders selected as initial adopters could vary depending on the characteristics of the social network and type of innovation. Finally, we find that opinion leaders affect the diffusion process only when the percentage of initial adopters reaches a critical mass.     

Modelling a dynamic market potential: A class of automata networks for diffusion of innovations

Innovation diffusion processes are generally described at aggregate level with models like the Bass Model (BM) and the Generalized Bass Model (GBM). However, the recognized importance of communication channels between agents has recently suggested the use of agent-based models, like Cellular Automata. We argue that an adoption or purchase process is nested in a communication network that evolves dynamically and indirectly generates a latent non-constant market potential affecting the adoption phase.Using Cellular Automata we propose a two-stage model of an innovation diffusion process. First we describe a communication network, an Automata Network, necessary for the “awareness” of an innovation. Then, we model a nested process depicting the proper purchase dynamics. Through a mean field approximation we propose a continuous representation of the discrete time equations derived by our nested two-stage model. This constitutes a special non-autonomous Riccati equation, not yet described in well-known international catalogues. The main results refer to the closed form solution that includes a general dynamic market potential and to the corresponding statistical analysis for identification and inference. We discuss an application to the diffusion of a new pharmaceutical drug.     

企业技术多样性、实质性社会责任信息披露与创新扩散

技术多样性是企业创新能力的重要表征，但现有研究对于技术多样性与创新扩散的关系存在争议。对此，区分相关和不相关技术多样性对创新扩散的异质性影响，并检验实质性社会责任信息披露作为一种信号传递机制对上述关系的调节作用。基于2008—2017年中国研发密集型上市企业数据进行实证分析，结果发现：相关技术多样性能够积极影响创新扩散；不相关技术多样性对创新扩散的影响存在滞后效应；实质性社会责任信息披露正向调节不相关技术多样性与创新扩散的关系。结论丰富了创新扩散理论与实证研究，可为企业创新实践提供决策依据。     

Strategic experimentation and disruptive technological change

This paper studies the diffusion of a new technology that is brought to market while its potential is still uncertain. We consider a dynamic game in which an incumbent and a startup firm improve both a new and a rival old technology while learning about the relative potential of both technologies. The main findings are that (i) risk considerations make incumbents with higher market shares more likely to adopt the new technology and (ii) changes in market power are often preceded by a subpar performance of the new technology. We also show that introducing a better new technology or confronting a worse old technology may hurt the startup firm as its new technology is then adopted earlier by incumbents.     

The late take-off phenomenon in the diffusion of telecommunication services: network effect and the critical mass

Telecommunication services are distinctive in that their adoptions are influenced by network effect resulting in the late take-off phenomenon and the critical mass problem. In this paper we examined the late take-off phenomenon in the diffusion process of telecommunication services. We first compared the parameters of the diffusion process of consumer durables with those of fax services in the US and Korea. By analyzing the parameters of a new diffusion model based on the threshold model proposed by Markus, we found that the late take-off phenomenon resulted from the low heterogeneity of the threshold distribution for the potential adopters. A simulation approach was proposed for the theoretical implication of the critical mass problem in the start-up telecommunications services.     

Bioenergy Innovations: The Case of Wood Pellet Systems in Sweden

In the context of global warming and strong dependence on fossil fuels, modern wood pellet heating systems for space heating of detached houses have emerged as a new technological option in many parts of the world. In Sweden, in recent years, such systems have advantages over oil-fired and electric boiler systems in terms of the expected total lifecycle heating costs to consumers. However, market diffusion of this technology has hitherto been rather slow. By combining an extended configuration cycle model with a dynamic multi-level perspective on system innovation, we study the factors involved in the diffusion of such systems in Sweden. The results indicate that energy policy, abundance of raw material and a wide dissemination of district heating systems have fostered the emergence and growth of the Swedish pellet market. However, other factors, such as a lack of co-ordination between the pellet and equipment suppliers in the early phase of market development, annual operating cost, lack of information, dissatisfaction among earlier adopters and technology lock-in might have contributed to the relatively slow growth of the market for small-scale systems.     

REGULATORY DEALING: TECHNOLOGY ADOPTION VERSUS ENFORCEMENT STRINGENCY OF EMISSION TAXES

We analyze the role of targeted enforcement of emissions taxes when the regulator wants to minimize aggregate emissions via the adoption of new more environmentally friendly technology. The regulator wants to speed up the path of technology adoption generated by a policy of uniform enforcement (that monitors adopters and nonadopters with the same probability) by engaging in a regulatory deal where a reduced monitoring probability is granted in “exchange” for adoption of the new technology. We set up a theoretical model, characterize the circumstances in which such dealing minimizes aggregate emissions, and test our hypothesis using economic laboratory experiments. Our analytical and experimental results suggest that even though such a deal might imply an increased level of violation by adopters, such tolerance is rather an integral part of an overall enforcement strategy that minimizes aggregate emissions when the rate of adoption is endogenous. (JEL L51, Q53, Q55, Q58)     

Management fads, pedagogies, and other soft technologies

We present a model for the diffusion of management fads and other technologies which lack clear objective evidence about their merits. The choices made by non-Bayesian adopters reflect both their own evaluations and the social influence of their peers. We show, both analytically and computationally, that the dynamics lead to outcomes that appear to be deterministic in spite of being governed by a stochastic process. In other words, when the objective evidence about a technology is weak, the evolution of this process quickly settles down to a fraction of adopters that is not predetermined. When the objective evidence is strong, the proportion of adopters is determined by the quality of the evidence and the adopters’ competence.     

The Diffusion of Biological Waste-Water Treatment Plants in the Dutch Food and Beverage Industry

This article develops an economic model of environmental technology adoption decisions. The model is applied econometrically to the diffusion of biological waste-water treatment plants in the Dutch food and beverage industry. It shows that it is possible to explain the overall diffusion pattern of biological waste-water treatment plants in terms of a rational choice model in which prospective adopters trade off the costs of effluent treatment against the savings on effluent tax payments. Effluent charges are shown to be a significant positive factor in the timing of adoption of biological effluent treatment plants. This result is brought out by both the rational choice and the epidemic models. None of the models however can explain year-to-year changes in the ownership of biological waste-water treatment plants during the 1974–91 period, which suggests that there are other factors, not included in the model, that affect the timing of adoption.     

A stochastic cellular automata model of innovation diffusion

A stochastic cellular automata model of new product diffusion is proposed. It is found that the growth for a given market potential can be determined by a parameter that quantifies chance preferences of individuals for the product and can be estimated from field surveys. It is also found that the “takeover time” in a given seed region is almost independent of the number of innovators. The results suggest possible strategies for the successful introduction of a new product.     

THE PATH OF TECHNOLOGY DIFFUSION: WHICH NEIGHBORS TO LEARN FROM?

This study uses a panel data set of 25 years over 280 districts in rural India and applies a geographic information systems (GIS) program to investigate the regional neighborhood effect on the rate of diffusion of new technologies. The results show that in the technology diffusion process, the early successful adopters have a larger effect on neighboring adopters than do the early unsuccessful adopters. Hence, use of the aggregate or the simple average of adoption rate among neighborhoods as a proxy for the neighborhood effect, a common practice in the learning literature, may be inappropriate. We also find that education and irrigation play important roles in facilitating technology diffusion.     

An analysis of the effect of the economic situation on modeling and forecasting the diffusion of wireless communications in Finland

In this paper, the diffusion of wireless communications in Finland is studied. The objectives are to find factors which have affected the diffusion process and to forecast the diffusion of wireless communications in Finland. The diffusion process is based on the epidemic diffusion theory. The data consists of annual wireless subscribers of networks based on Nordic Mobile Telephone (NMT) and Global System for Mobile Communications (GSM) standards in 1981-1998. The data is fitted into the logistic model by means of nonlinear least squares after writing two parameters of the logistic model as functions of certain variables. The results show that the economic situation has affected the relative growth rate, and that the wireless network coverage has affected the number of potential adopters. By extrapolating the logistic model, a forecast with a confidence interval of wireless communications subscriber rates in Finland is made. The forecast shows that the final penetration rate will be some 91.7% in 2009. The model predicts the actual figures of year 1999 very accurately. Finally, the time derivatives of the diffusion process are analyzed; they clarify the effect of economic situation on the diffusion.     

The diffusion of Internet telephony among consumers and firms: Current issues and future prospects

This paper analyses the current demand and market potential for Internet telephony—the transmission of voice over the public Internet or over a private Intranet—a technology that has attracted considerable attention as an appealing alternative to traditional telephony but that is likely to develop as a component within an integrated system of video, data and voice applications. The paper investigates technical, economic and social factors supporting and hindering the adoption of Internet telephony. In doing so, it relies upon the idea that the diffusion of Internet telephony is determined both by the attributes of the technological applications as perceived by the potential adopters, and by the characteristics of different users. According to this view, the research points out that relevant uncertainties reside on the demand side, particularly among residential users, and that in the future, businesses are more likely to adopt these applications than consumers. The assumptions concerning the future diffusion of Internet telephony are supported by the results of a survey carried out among a sample of Internet telephony service providers in Europe and North America.     

When does the majority become a majority? Empirical analysis of the time at which main market adopters purchase the bulk of our sales

The idea of a dual-market structure in the early stages of a product's life cycle has become one of the most widely accepted ideas among new product marketing practitioners in the past decade. Concepts such as “Early Market/Main Market” and “Visionaries/Pragmatists” have entered the lexicon of high-tech executives to express the notion that the market for new products is composed of early and main markets with a discontinuity in the diffusion process in between them. Moreover, these concepts have been at least partially tested and verified in the marketing academic literature in the past few years.We extend this branch of research by investigating the timing issues in dual-market cases. We define Change-of-Dominance Time (CD-Time) as the number of years it takes main market adopters to outnumber early market adopters. We empirically investigate this timing issue on a comprehensive data set of new product sales in the consumer electronics industry. We find that regarding explanatory determinants of CD-Time, external influence, such as advertising, to the early market is the most important explanatory variable.We examine the relationship between CD-Time and other early product life cycle phenomena: Takeoff, Saddle, and Rogers' size of adopter categories. We found relatively high correlations between these phenomena and CD-Time.The answer to the question “When does the majority become a majority?” is indeed “at 16%”! In a dual-market setting, the average time at which the main market outnumbers the early market is when 16% of the market has already adopted the product. In terms of time, in 75% of the cases the majority becomes a majority in 5 to 10 years.     

A dynamic diffusion model for managing customer's expectation and satisfaction

The paper aims at answering the generic question on how suppliers make the suitable and well-timed decisions in diffusing new technology effectively to adopters. Three major attempts are made for the study: First, investigating the entire process of the adoption and diffusion of technology innovation with reasonably well-accepted models in each areas. Second, proposing an integrated model by concatenating in structured manner the three prominent models for the management of technology innovation such as diffusion model, adoption model, and customer satisfaction model. Third, exploring the dynamic mechanism underlying outward behaviors of the integrated model proposed in the study which depicts the causal relationships that influence technology adoption and diffusion behaviors. An exploration of the dynamic mechanism underlying outward behaviors of the integrated model is presented in the study by introducing the system dynamics simulation technique. These attempts made for the study and the results perhaps allow both researchers and practitioners to gain insight into the causal factors influencing customers' adoption decision making processes and thereby into the potential diffusion patterns resulting from those adoption processes.     

Innovation and coordination: A schutzian perspective

This paper discusses the nature of innovation, the innovation process and its associated coordination problems in the subjectivist perspective. It argues that innovation, when viewed in the first person perspective, is not a homogeneous concept. Instead, the degree of newness of an innovation is determined subjectively by adopters. The stages of the innovation process described in the management literature are re-interpreted in light of Schutz' phenomenology. Innovation creates coordination problems. Schumpeterian innovation disrupts plans of market participants and threatens people's sense of reality. The stocks of knowledge of market participants are no longer able to solve new problems brought about by pioneering entrepreneurs. Knowledge taken for granted becomes problematic. As a result, coordination fails. In attempting to remove uncertainty arising from radical innovation, human agents create knowledge surrogates and project acts in the future perfect tense. Through a process of typification, successful actions are crystallised into firm routines and institutions that once again help to serve for coordination. The arguments developed in this paper throw new light on three aspects of business strategies, namely, management of innovation, vertical integration and advertising.     

The Installed Base Effect: Some Empirical Evidence From The Microcomputer Market

The penetration rate US network technologies is not only determined by the indigenous qualities of these technologies, but also by the adoption behaviour of other actors using the same network technology. This paper provides empirical evidence for the importance of network externalities and suggests that the econonmic consequences of network externalities - as they affect the diffusion speed of network technologies at an aggregate level - may be considerable.When the market offers incompatible network technologies, the relative share of previous adopters of the technologies plays a critical role in determining the diffusion speed of network technologies. This paper provides empirical evidence from the European microcomputer market between 1985 and 1994 which supports this hypothesis. Our analysis suggests that the diffusion speed of microcomputers at an aggregate level has varied with the relative order of magnitude of the network size of the two incompatible operating systems: a higher variation between the number of users of different microcomputers sold is positively relaled to a higher diffusion speed of microcomputers in general.     

Awareness,diffusion of information and reasons for adoption of vasectomy: a study of family planning in Bihar

A survey carried out to study problems related to Indian vasectomy camps organized at Patna and Jamue towns had the following major purposes: 1) to determine to what extent vasectomy adopters were aware of the family planning program; 2) to determine advantages perceived of adopting vasectomy; 3) to determine how the adopters became aware of the vasectomy camps; and 4) to determine why adopters chose permanent conception control. 200 adopters from Patna and an equal number from Jamue were selected, based on an accidental sampling technique whereby each adopter was contacted and persuaded to be interviewed. It was found that a majority of the adopters were illiterates. Among advantages listed by adopters, the importance of family planning seemed to be subdued by propensity to better their economic condition. It was seen that the literate adopters have a much higher proportion of awareness of the need for family planning and population control. Concerning diffusion of information, the informal and interpersonal sources were equally effective and conducive for the adopters. More than l/2 of the adopters relied upon information provided by friends. In general, higher levels of education correlate with less influence of friends as communicators. The official sources turned out to be effective for the more highly educated adopters. The following advantages were called out as reasons for vasectomy adoption by adopter : 1) permanence; 2) economical reasons; 3) no reason; or 4) many reasons. Whatever the reasons, it is obvious that vasectomy is gaining momentum gradually and people are becoming aware of the underlying advantages of permanent conception control.     

Localized innovation, localized diffusion and the environment: an analysis of reductions of CO2 emissions by passenger cars

We investigate technological change with regard to CO₂ emissions by passenger cars, using a Free Disposal Hull methodology to estimate technological frontiers. We have a sample of cars available in the UK market in the period 2000–2007. Our results show that the rates of technological change (frontier movement) and diffusion (distance to frontier at the car brand level) differ substantially between segments of the car market. We conclude that successful policies should be aimed at the diffusion of best-practice technology, and take account of the different potential for further progress between different segments of the market (e.g. diesel vs. gasoline engines and small vs. large engines).