Does intra-firm diffusion of innovation lead to inter-firm relationship benefits? The cases of innovation providers and adopters
Authors: Kim Namwoon , H. Pae Jae 
Published: September 2014

Purpose

– This study aims to fill the void of previous research in organizational innovation. 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 has been advanced. In addition, the extent to which the consequent intra-firm diffusion affects both the adopter’s and provider’s benefits has been explored based on their relationship.

Design/methodology/approach

– A mail questionnaire on the organizational purchase and utilization of customer relationship management (CRM)-type database systems was developed for collecting data. A random sample of 480 firms from the Hong Kong Chambers of Commerce Directory was obtained. From the initial phone calls, 343 firms currently using a CRM-type database system were identified, and the questionnaires were mailed to the managers of these firms. In total, 163 responses were finally returned with usable data, for a response rate of 47.5 per cent.

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 for the adopter via improvement in efficiency; and for the provider via establishment of a long-term relationship and switching costs.

Research limitations/implications

– First, any moderating impact of the adopting firm’s technological capabilities was not analyzed. Second, the research results were obtained from a sample of software product innovations (especially database management system). Even though it could be assumed that these results can 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. Second, 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.