Interdependences in the intrafirm diffusion of technological innovations: Confronting the rational and social accounts of diffusion

Abstract

This article investigates the intrafirm diffusion of technological innovations, and the interdependences that exist among rival firms in this process. Previous research has offered two potential explanations for these interdependences: social accounts, in which they result from institutional pressures, and rational accounts, in which firms are interdependent as a result of how adoption by rivals affects expectations about the profitability of the technology. The article offers two contributions. First, we propose a competitive interaction mechanism that is consistent with the fundamentals of rational accounts of diffusion. Second, the empirical analysis shows the dominance of the proposed rational mechanism over social accounts of innovation diffusion in the generation of interdependences in the process of intrafirm diffusion.