Does Intra-Firm Diffusion of Innovation Lead to Inter-firm Relationship Benefits? The Cases of Innovation-Providers and Adopters

• Published in: The Journal of business & industrial marketing Vol. 29; no. 6; pp. 514 - 524
• Main Authors: Kim, Namwoon, Pae, Jae H.
• Format: Journal Article
• Language: English
• Published: Santa Barbara Journal of Business and Industrial Marketing 30.06.2014; Emerald Group Publishing Limited
• Subjects: Brand loyalty; Decision making; Diffusion; Employees; Hypotheses; Innovations; Participation; Purchasing; Studies; Technological change; User groups
• ISSN: 0885-8624; 0885-8624; 2052-1189
• DOI: 10.1108/JBIM-03-2012-0053

Purpose Our study aims to fill in this void of previous research in organizational innovation. We advance the understanding of the factors that affect intra-firm diffusion of innovations, which include the proactive management support and participation comprehensiveness from the adopting firm as well as the provider’s support of innovation utilization. We further explore the extent to which the consequent intra-firm diffusion affects both the adopter’s and provider’s benefits based on their relationship. Design/methodology/approach A mail questionnaire on the organizational purchase and utilization of CRM-type database systems was developed for collecting data. We obtained a random sample of 480 firms from the Hong Kong Chambers of Commerce Directory. From the initial phone call, 343 firms currently using a CRM-type database system were identified, and the questionnaires were mailed to the managers of these firms. 163 were finally returned with usable data, for a response rate of 47.5 percent. Findings The current study focuses on the causes and the effects associated with successful diffusion and utilization of innovation within a firm. Using data from business-to-business markets, the results find that the two parties involved benefit when both proactively participate in the intra-firm diffusion process: that is, benefits are created (1) for the adopter via improvement in efficiency; and (2) for the provider via establishment of a long-term relationship and switching costs. Research limitations/implications First, it did not analyze any moderating impact of the adopting firm’s technological capabilities. Second, our research results were obtained from a sample of software product innovations (especially database management system). Even though we assumed that these results could also be applicable to other types of innovations (e.g., process innovations), empirical tests of our framework based on different innovation typologies are still warranted. Practical implications First, for an innovation-adopting firm, we have shown that a wide use of purchased innovations among the organizational members is at least as important as the adoption of new innovations. Secondly, we have included the participation comprehensiveness of adoption decision, arguing that the organizational decision-making process is also crucial to stimulating intra-firm diffusion. Finally and more importantly, our study calls attention to the provider’s role in expediting intra-firm diffusion. Originality/value First, We have suggested an analytic framework for intra-firm diffusion of an innovation and also provided its empirical support. Particularly, the current study has focused on the subsequent effects of intra-firm diffusion on both the adopter’s and the provider’s benefits. Second, we have examined further impact of the comprehensive participation of adoption decision on spreading innovation information, which subsequently stimulates the innovation’s intra-firm diffusion.