Management Science

2006, Vol.52, No.10, pp.1557-1576.


The Process of Innovation Assimilation by Firms in Different Countries:

A Technology Diffusion Perspective


Kevin Zhu*, Ken Kraemer, and Sean Xu




This paper studies the assimilation of Internet-based e-business innovations by firms in an international setting. Drawing upon theories on the stages and contexts of technology diffusion, we developed an integrated model to examine the influence of contextual factors on three stages of e-business assimilation: initiationadoptionroutinization. We propose that assimilation is a function of technical, organizational and environmental contexts, which are captured by technology readiness, technology integration, firm size, global scope, managerial obstacles, competition intensity, and regulatory environment. A large dataset of 1,857 firms from ten countries is used to test the conceptual model and hypotheses. To probe deeper into the influence of the environmental context, we compare two subsamples from developed and developing countries. Our empirical analyses lead to several key findings: (1) competition positively affects initiation and adoption, but negatively impacts routinization, suggesting that too much competition is not necessarily a good thing for technology assimilation as it drives firms to chase the latest technologies without learning how to use existing ones effectively; (2) large firms tend to enjoy resource advantages at the initiation stage, but have to overcome structural inertia in later stages; (3) while technology readiness is the strongest factor in developing countries, technology integration is the strongest facilitator in developed countries, suggesting that as e-business evolves, the key determinant of its assimilation shifts from accumulation to integration of technologies; (4) the negative effect of global scope on routinization is mitigated by technology integration, suggesting that technological capability and firm structure interact and jointly affect innovation assimilation; and (5) economic environments shape innovation assimilation, and regulatory environment plays a more important role in developing countries than in developed countries. Together, these findings offer insights into how innovation assimilation is influenced by contextual factors, and how the effects may vary across different stages and in different environments.



Technology Diffusion, Innovation Assimilation, E-Business, Competition, Firm Size, Technology Integration, International Perspective


* Contacting author: