Diffusion of innovations within the online environment – investigating the Internet’s effect on diffusion of innovations.

Abstract: Background Today’s diffusion of innovation theories are primarily based on the studies conducted up until 1991, which means that they have not taken the new Internet economies into consideration. When considering the enormous impact the Internet has had since its introduction, it stands to reason that there has also been an impact on how innovations diffuse in the marketplace. Problem definition As the leading theories about innovation diffusion were developed based on old-fashioned industries, are its key concepts transferable to the Internet economy or should they be rejected within this environment? Delimitations This study aims to draw conclusions about an entire marketplace, but due to limitations in resources the research will be focused on one company and one product. The product is deemed fitting for this purpose, as it is market leading within its industry. The company itself is also deemed fitting, as it is a typical company for the industry being studied. Purpose The objective in this research is to be exploratory by examining the validity of traditional diffusion theories within the Internet economies. The deliverables desired is an indication on if key concepts within diffusion theory can be applied in the online environment. Method This thesis will use a cross-sectional design, as the purpose is to draw conclusions about the validity of traditional diffusion theory on a large population. The primary method used in this survey will need to be a self-completion questionnaire. However, in the design part of this questionnaire some interviews will be held Literature studies will also be done to form the academic foundation of this thesis. Thesis conclusions Customer satisfaction and Net Promoter Score (NPS) are two correlating measures; it is fair to assume that customer satisfaction generates a high NPS. The main concept within diffusion theory – perceived attributes – where in general still valid within the online environment. Markets with high diffusion showed a higher result on this measure. There were some attributes that were seen as disqualifiers and some were seen as differentiators. The innovation-decision process was also in large parts confirmed to be accurate. However, awareness was generated differently than expected. It’s hard to say if this is evidence of a different process in the online environment or if the studied case has had an ineffective awareness generation. The online environment allowed for more in detail monitoring of the innovation-decision process, this should be a requirement for any change agent looking to optimize diffusion. Prior conditions also showed of great importance where the same innovation-decision process was applied in several markets but with significant different prior conditions. This reaffirmed the value of first mover’s advantage. Innovativeness of the individual did not give a clear reading due to the fact that more successful markets have progressed further in the adoption process. This means they consist of individuals from later adoption stages, compared to unsuccessful markets which still consists of innovators and early adopters. Measuring the innovativeness of the typical individual in a system does not give a good reading on how successful diffusion has been. Unauthorized use seemed to affect prior conditions, especially perceived prosecution risk. This metric was higher in successful markets, whereas attitude and usage did not show much of a difference.