Thursday, July 06, 2006

Stages of Innovation Diffusion

Innovation can mean a new product or service, or a change in organization or process, and it is necessarily connected with usefulness, either for external or internal parties. For example, innovation can be a new product/service that satisfies customers’ needs better. Innovation, as Damanpour (1987) suggests, can also be an idea that gets implemented and it preserves or improves organizational performance. However, both new products and new ways of working need to be adopted by customers, business partners, or employees.

In the area of new products, several diffusion models have been proposed that explain how, why and when customers choose to adopt an innovation. Everett Rogers (Rogers, 1962) recognized that there were 5 distinct groups of adopters, from innovators and early adopters through early and late majority to laggards. Combining these findings with understanding the product life cycle, marketers are able to develop appropriate marketing mix strategies (price, promotion, product, placement, process…) which help in accelerating innovation diffusion.

Innovating in firms is accompanied by a need to change. In order to adopt a new process, firm has to successfully utilize technological and process capabilities. This “assimilation” of process innovation (Armstrong & Sambamurthy, 1999) presents an organizational change and is thus natural subject to inertia. As noted by Sherif & Menon (2004), accelerating and succeeding in innovation assimilation in firms, requires actors at different organizational levels to implement strategy, process and culture changes. As innovation moves through assimilation stages of initiation, adoption, adaptation, acceptance, routinization and infusion (Cooper & Zmud, 1990), all organizational actors (senior managers, middle / project managers, operational staff) are involved in the change process.

It is however organization’s and their innovation absorptive capacity which defines organization’s readiness for learning (Cohen & Levinthal, 1990; Zahra & George, 2002), meaning in the innovation assimilation case, how long will it take and if it will be successful or not (Sherif & Menon, 2004).

In the initiation and adoption phases, acquisition of facts and learning skills are is especially relevant. In adoption and adaptation phases, imbibing knowledge and skill of understanding is important. Using knowledge is crucial in adaptation, acceptance and routinization phases. Lastly, exploitation of knowledge and new knowledge creation relate to the routinization and infusion phases of innovation assimilation (Sherif & Menon, 2004; Zahra & George, 2002).

For improving innovation absorptive capacity, Sherif & Menon (2004) argue that all organizational actors must be engaged, though, it is crucial that appropriate interventions are taken in each of the innovation assimilation stages.

Senior managers need to provide strategy change: develop administrative guidelines, allocate resources, define the scope of change, appoint the change agent who fosters the adoption of the innovation through the organization, and develop education and training programmes, if innovation is to move quickly through assimilation stages. Senior managers need to focus on the acquisition dimension of absorptive capacity (i.e learning in terms of environmental scanning). Middle and project managers are the ones that need to enact in process change: develop the methods for implementing new processes, creating scales for progress measurement. They are the ones that understand, convert and internalize innovation. Operational staff needs to be able to exploit existing and create new knowledge. For innovation to be routinized and infused in every day working practices, a culture change must occur. New attitude and behavioural stances are to be adopted, employees must be ready to change (Leonard-Barton & Deschamps, 1988).

To summarize, changes in strategy, process and culture must accompany innovation assimilation. Actors on various organizational levels are responsible for making these changes happen, resulting in faster and in more successful innovation assimilation in a firm.


Armstrong, C. P., & Sambamurthy, V. (1999). Information technology assimilation in firms: The influence of senior leadership and IT infrastructures. Information Systems Research, 10(4), 304-327.

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective On Learning And Innovation. Administrative Science Quarterly, 35(1), 128-153.

Cooper, R. B., & Zmud, R. W. (1990). Information Technology Implementation Research: A Technological Diffusion Approach. Management Science, 36(2), 123-140.

Damanpour, F. (1987). The Adoption Of Technological, Administrative, And Ancillary Innovations: Impact of Organizational Factors. Journal of Management, 13(4), 675-688.

Leonard-Barton, D., & Deschamps, I. (1988). Managerial Influence in the Implementation of New Technology. Management Science, 34(10), 1252-1266.

Rogers, E. M. (1962). Diffusion of innovations. New York: Free Press of Glencoe ; London : Macmillan.

Sherif, K., & Menon, N. M. (2004). Managing Technology and Administration Innovations: Four Case Studies on Software Reuse. Journal of the Association for Information Systems, 5(7), 247-281.

Slevin, D. (1971). The Innovation Boundary: A Specific Model and Some Empirical Results. Administrative Science Quarterly, 16, 515-531.

Zahra, S. A., & George, G. (2002). Absorptive Capacity: A Review, Reconceptualization, and Extension. Academy Of Management Review, 27(2), 185-203.

[Summary Prepared by: Pete]

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