Innovation, Diffusion, and Institutional Change

Abstract

It is generally accepted that technological development is a stimulus of institutional change. Institutional or ceremonial impediments to change are overcome by specific instances of technological progress which hold the promise of improvements in the life processes of the community. Concerns and interest surrounding the processes by which institutions are changed are thus given weight because of their connection with the progressive evolution of society. The attention of institutional analysts was initially drawn to the sources of innovation (Hodgson 1988, 1994). That is, attention was first focused on the inventors rather than the users of the innovations. Thorstein Veblen proposed that idle curiosity was the source of creativity in technological innovation, while the instinct of workmanship and the parental bent were responsible for the implementation and spread of new technologies (Walker 1977). In this tradition technological change is examined from a supply-side perspective. Consequently change is seen to proceed from technological possibilities, via the creativity and initiative of inventors. We do not discount this perspective but rather seek to complement it with a demand-side perspective of institutional change. Such a perspective draws attention to the who or why of acceptance rather than the who or why of invention. Questions of acceptance are the subject matter of diffusion theory. Diffusion processes have previously been used to provide a framework for understanding institutional change (e.g., Witt 1989; Bush 1987). Certain elements of diffusion theory, such as rationality assumptions, are not compatible with an institutional perspective; however, much is compatible. The present paper seeks to examine the connection between diffusion and institutionalism in a more detailed fashion.