Diffusion theory in an international context

The diffusion of an innovation is a process of adoption of an innovation by the potential users. Since an innovation is not adopted immediately by all users who can benefit from the innovation, there is a time period of diffusion, starting with the market introduction and ending with all potential users having adopted the innovation. In order to understand the international diffusion of an innovation, the adoption process has to differentiate between the diffusion within a country and the diffusion across countries. Dekinq e et al. (1998b) label these two processes the depth and breadth of adoption, respectively. As I will show in Chapter 3, these two adoption processes are fundamentally different, evoked by different questions and require different models of diffusion. 

In model-building and estimation, the within-coimtry diffusion is concerned with the diffusion pattern, the diffusion curve. The cross-border diffusion analysis pursues the question of the international order of adoption of innovations and the time-lag between the first adoption of an innovation by a (lead) country and the following adoption by other (lag) countries. Traditionally, diffusion theory and empirical studies have considered the diffusion process within a country and neglected to explain the national order of adoption of an innovation (Audretsch 1996, p. 110, Dekimpe et al. 1998b, p. 5). Even marketing studies which took the order of countries adopting an innovation into consideration were mainly focussed on the effects of the time lag on the form of the diffusion curve, for instance 

For instance, Redmond (1994), Chen, Takada (1994) study inter-regional variance of the pattern of diffusion, Helsen, Jedidi, DeSarbo (1993) international differences of diffusion curve parameters. For studies that considered the national order of adoption see Gatingnon et al. (1989), Dekimpe et al. (1998a), Poznanski (1983), Takada, Jain (1991), Antonelli (1986) Ihde (1996), Ganesh et al. (1997). In some of these studies the effect of the lag on the diffusion rate is found positive in others negative (see section 3.2.1). 

The diffusion of innovation is the process of adoption of an innovation by users. The diffusion begins when the innovation is already introduced in the market. Diffusion studies therefore do not consider the innovation process explicitly. The fact that the adoption of innovations by users does not happen at the same time but instead requires a considerable amount of time is explained by three distinct phenomena first, the diffusion of information on innovations second, changes in the preferences of users after the adoption of the innovation by other users, and third, changes in the adoption stimuli such as post-invention improvements of the innovation when user needs are heterogeneous.  

There is another possible reason for the diffusion of innovations on the supply side that often retard the adoption process an innovation is not available for all potential users at the time of introduction. Normally, the production of a new good is started slowly until full capacity is reached. The larger the demand from the beginning, the larger the delivery period. Only seasonal goods such as Christmas gifts require that the supplier produces in stock to supply all potential adopters at one particular point of time. 

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