Innovation diffusion in a borderless global market: Will the 1992 unification of the European Community accelerate diffusion of new ideas, products, and technologies?

Abstract

One of the more challenging aspects of the economic unification of the 12 nations of the European Community, initiated on January 1, 1993, is its effects on the diffusion of new ideas, technologies, and products. By becoming “borderless” the European Community should expect to create a global market in which innovation diffusion is faster than if its member countries were not united. Will unification lead to faster diffusion of new ideas, products, and technologies? To fully answer this question, a diffusion study that compares preunification and postunification diffusion rates is required. Since the unification process is still in progress, the challenge is whether or not we can shed some light on this question based on what we know about the diffusion processes in the European Community countries prior to their unification. Using a diffusion modeling approach, this article, derives conditions under which unification leads to faster market penetration. In particular, we show that if the innovation diffusion processes in the member nations of the European Community prior to unification were similar to one another, no apparent change will be observed in the diffusion of new ideas, technologies, and products in the unified European Community. We evaluate the above conditions among the member and nonmember nations of the European Community by examining the data on the diffusion of videocassette recorders. The empirical evidence suggests that the diffusion processes to differ among the member and nonmember nations of the European Community and thus the unification should result in faster diffusion of new ideas, technologies, and products.