Interindustry and Interfirm Differences in the Rate of Diffusion of an Innovation

Abstract

ONE of the most important stages of the process of technological change is diffusion. Since the rate of diffusion is the rate at which a new technique is actually put into use, it is a critical determinant of the rate of growth of productivity. If certain types of firms and industries are quicker to diffuse a new, more efficient technique, they are quicker to attain the resulting increases in productivity. It would certainly seem useful, particularly from the point of view of public policy, to develop convincing empirical evidence concerning the characteristics of such firms and industries. Previous studies have provided a sound foundation for studying diffusion.' This article attempts to build on this foundation by observing the diffusion of one of the twentieth century's most important manufacturing innovations numerically controlled machine tools in ten industries. One purpose of this study is to provide a further test of the usefulness of the model of the imitation process developed by Mansfield (1961, 1968). In particular, we are interested in seeing how well his model can explain the increase over time in the percentage of new machine tools purchased that have numerical controls. This involves a different measure of the rate of diffusion than the measures investigated to date by other researchers. Also, we look at the effects on the rate of diffusion of an industry's market structure and the extent of its investment in R&D. Although previous studies have touched on these factors, this study goes further in measuring their effects than any previous work. Further, we investigate how the characteristics of the early users of numerical control (NC) differed from those that were slower to use it, and we study the determinants of the intrafirm rate of diffusion.