Technology Diffusion and Organizational Learning: The Case of Business Computing

Abstract

The dominant explanation for the spread of technological innovations emphasizes processes of influence and information flow. Firms which are closely connected to pre-existing users of an innovation learn about it and adopt it early on. Firms at the periphery of communication networks are slower to adopt. This paper develops an alternative model which emphasizes the role of know-how and organizational learning as potential barriers to adoption of innovations. Firms delay in-house adoption of complex technology until they obtain sufficient technical know-how to implement and operate it successfully. In response to knowledge barriers, new institutions come into existence which progressively lower those barriers, and make it easier for firms to adopt and use the technology without extensive in-house expertise. Service bureaus, consultants, and simplification of the technology are examples. As knowledge barriers are lowered, diffusion speeds up, and one observes a transition from an early pattern in which the new technology is typically obtained as a service to a later pattern of in-house provision of the technology. Thus the diffusion of technology is reconceptualized in terms of organizational learning, skill development, and knowledge barriers. The utility of this approach is shown through an empirical study of the diffusion of business computing in the United States, reporting survey and ethnographic data on the spread of business computing, on the learning processes and skills required, and on the changing institutional practices that facilitated diffusion.