What’s it: Technology diffusion is the process by which new technologies spread widely in society and are adopted in the economy. Adopters may be households where they start to utilize technology in their daily lives. Or, they are companies interested in making their operations superior by developing or adopting technology.
For example, technology companies often target specific audiences when selling new technology. They usually have yet to target the broad market. But, they only promote products to specific circles.
Consumers willing to take risks to try new products are open to new innovations. So, the above way – targeting them – is effective because they have high acceptance. Adoption then started to spread to the general population.
Apple’s iPhone is a good example. Only a few people have it because it’s expensive. The product was only available through AT&T when it first came out, and only a few people used it. But, now, its sales have spread to a wide market.
Why is technology diffusion critical?
New technologies make essential contributions to increasing output, improving quality, reducing costs, increasing productivity, and solving everyday problems. For example, a company can produce more output using more technologically advanced machines.
If the technology spreads widely, the increase in output will occur not only in early adopters but also in other companies. Finally, it contributes to an increase in output in the economy.
Then, new growth centers will be created if the technology spreads to different geographic areas. For example, widespread adoption across international boundaries can significantly impact economic growth, especially in developing countries.
The internet is another example. Its progress has given rise to online retail giants such as Amazon in the United States. And it has also spread to other countries, giving rise to other e-commerce giants such as Alibaba.
Economists highlight technology as total factor productivity in explaining the economy’s long-run output. Presence and innovation in technology make capital and labor more productive. For example, computers help us write articles faster and more than if we rely on typewriters.
Besides contributing to its output and quality, new technologies give rise to new business models. Their presence often disrupts the conventional model. For example, the internet facilitates e-commerce to replace the traditional “brick and mortar” retail model.
What is the difference between technology diffusion and technology infusion?
To explain, let’s take how technology is adopted within the company. Technology infusion measures the degree to which new technology seeps into the organization. Whereas diffusion measures the extent to which technology spreads throughout the organization.
Now, to see the difference between the two, let’s take accounting software technology as an example. We call this adoption by all finance department staff with the infusion.
Why infusion? The technology permeates the organization but does not spread because not all departments use it.
The example above contrasts with Microsoft Office software. The software permeates the organization because its use spreads across all departments, not just the finance department staff.
What is the difference between technology diffusion and technology transfer?
Technology transfer and technology diffusion have something in common. Both are about how innovation/technology is transmitted from donor to recipient.
However, technology transfer involves specific donors and recipients. In other words, the donor knows who the recipient is.
In contrast, technological diffusion is not. The donor does not need to know who the recipient is.
Another difference is motivation. Technology transfer is rooted in owners’ concern for return on innovation. What rewards can they expect by transferring their technology to donors? Meanwhile, diffusion is constrained by the willingness and ability of donors to adopt and deploy new technologies.
How does technology diffusion work and spread widely?
Through his book, “Diffusion of Innovations,” Everett Rogers explains how diffusion spreads widely. It starts with awareness, where few people decide to adopt it. Then, it spread wider through persuasion and communication.
Everett Rogers then classifies consumers into five groups based on their adoption level of new technologies. They are:
- Early adopters
- Early Majority
- Late majority
Innovator. They are most enthusiastic about new technologies and are willing to take risks. They tolerate risk because they have secure financial resources to absorb the risk.
Early adopters. They are generally opinion leaders and may not readily adopt new technologies. They are wise before contributing to spreading innovation. For example, they consider how innovation helps people solve people’s problems and what the consequences are.
Early majority. This group adopts new technologies after innovators and early adopters use them. They rarely act as opinion leaders and generally have average social status.
Late majority. This group will adopt a new technology only when many people have done it. They tend to be skeptical and see new technology as an experiment. They believe technology is helpful to them only when everyone is already using it.
Laggards. They are individuals who tend to be rigid to change. They adopted the new technology after almost everyone used it, and it has become a trend in society.
What factors affect the diffusion of technology
Everett Rogers outlines what critical elements influence deployment – and the speed at which new technologies spread and are widely adopted. First is the technology itself; how innovative is it?
How innovative a new technology is is difficult to measure, especially when it is a unique and unprecedented invention. For example, we don’t know exactly how innovative major high-tech inventions like lights, computers, and locomotives were when they were first introduced.
Long story short, if technology is very innovative, for example, because it helps solve significant problems in life, such as the internet, technology can quickly spread because people rapidly accept it.
Another element is related to adopters and their characteristics. For example, when adopters are enthusiastic about using and deploying new technology, it can be the key to its exponential growth.
Communication channels are also important because they affect the speed at which information can spread to the wider population. In the past, it was probably spread by word of mouth.
But, now, the internet has facilitated information about new technologies to spread more quickly. Thus, when there is innovation in a country, the information can quickly spread to various countries via the internet.
Time and social systems are other factors. New technologies take time to become widely adopted.
Meanwhile, the social system is related to the characteristics of human resources. This factor can be related to socio-demographic variables such as educational level or social system, such as the presence of opinion leaders.