Innovation Diffusion Theory

Humboldt-Universität Berlin, Wirtschaftswissenschaftliche Fakultät
Institut für Entrepreneurship/Innovationsmanagement
SS 2004

Innovation Diffusion Theory
Rogers & Bass Model Discussion

by

Kai Lehmann

I. Introduction

One of the most important things in the development of a new product or innovation is to find out the quantitative demand in the future market or focussed social system. How many people will adopt my innovation and how fast is this process? An answer to this question allows to calculate the costs of the innovation forecast and to optimize its specific characteristics. Not at least the knowledge about the innovation diffusion process leads to a better marketing strategy and more sales.
Therefore this assignment tries to take a closer look into the basics of the innovation diffusion theory based on research results by E. M. Rogers (II). The main elements will be specified and its affects on the speed of innovation diffusion will be extracted. Furthermore this work includes a critical description of the mathematical model of innovation diffusion processes developed by F. M. Bass in 1969 (III). Special focus in this part will be the interpretation of the coefficients p an q. At least there is a short summary about the effectiveness of innovation diffusion theory according to Rogers and Bass in face of reality (IV).

II. Innovation Diffusion Process

“Previously we defined diffusion as the process by which an innovation is communicated through certain channels over time among the members of a social system. The four main elements are the innovation, communication channels, time, and the social system…”.[see Rogers (1995, p.10)] Rogers’ definition of the innovation diffusion process is still common used and his general results are mostly accepted. As a sociology scientist he had a very detailed view on diffusion impact and recognized a lot of determining variables on the process over time. His important research questions were the difference between early and late adopters of an innovation, the effects of the perceived attributes of an innovation on its rate of adoption and the so called critical mass in the diffusion process represented in a S-shaped diffusion curve. He did not make a difference between a planned or a spontaneous spread of a new idea because he was only interested in the main influence factors both of them have . Before going to analyze the main elements he found out it is important to notice that Rogers always added some critical views on innovation itself, especially if there are mostly desirable outcomes and undesirable effects both together. This means that an innovation is not always an advantage for everyone in a social system.
When the word “innovation” is used in actual present, there is a wide variety of meanings. To be innovative is an important characteristic for entrepreneurs and managers, nearly every new product in the market is sold as an innovation and not at least innovation has become a mystic power to progress of a whole society itself, as political speeches emphasize. Rogers used a very technological perspective for innovation descriptions. Although “…we often use the word ‘innovation’ and ‘technology’ as synonyms…” [see Rogers, (1995, p.12)] the basic idea in this perspective is information expressed by an innovation, which includes always a hardware and a software component. This information expressed in a special technological design or even a political philosophy like marxism can be generally described as a reduction of uncertainty in the cause-effect relationships on which the innovation bases. This means innovation in Rogers terms is a opportunity of a simplified new information expressed in a certain technology.
On the other hand an innovation also creates a kind of uncertainty which is important to explain the reason why only a few people buy an innovation when it starts. This is the uncertainty about the expected consequences in the mind of a potential adopter which means he or she has no clear ideas about the personal advantages of the new innovation. This creation of uncertainty slow down the innovation process in opposite to the general reduction of uncertainty through the given new informations, which accelerate the process. The innovation decision of a potential adopter to adopt or reject the innovation is linked with a complex psychological process including information seeking and – processing to reduce uncertainty about the new software details (Can I work with the new innovation?) and the individual value (Is the innovation useful for me?). The speed of the innovation diffusion is closely related to the period of time the potential adopters need to make such an innovation decision.

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