Global Diffusion of Technological Innovations: A Coupled-Hazard Approach

By Marnik G. DekimpePhilip M. ParkerMiklos Sarvary
1998| Working Paper No. 1508

The paper proposes a new methodology called the “coupled-hazard approach” to study the global diffusion of technological innovations. This coupled approach addresses several methodological challenges arising from the global nature of the considered diffusion process and the intricacies of the type of innovations studied. First, a global diffusion process is typically composed of two conceptually different, yet interlinked processes: (1) diffusion across countries, and (2) diffusion within each country. Second, due to network externalities and/or the presence of central decision makers, technological innovations often exhibit diffusion patterns that cannot be captured by traditional models. In particular, within-country adoption often occurs in “blocks” or “packets” of various size (with sometimes the whole country adopting at once), which prevents the use of S-shapred (Bass-type) diffusion models. FInally„ technological innovations may complement or substitute existing ones, which raises the issue of hwo the size of the installed base of the old technology affects the new diffusion process. The “coupled-hazard approach” is the method explicitly recognizes the conceptual difference between the timing when a country tries or “pilot tests” the new technology, called “the implementation stage” by Rogers (1983) and the timing of when the innovation is adopted on a national or ubiquitous basis within the country (referred to by Rogers as “the confirmation stage”). In addition to testing the separate influence of exogenous and endogenous country characteristics on these two stages, it also allows us to assess their interrelationship. To illustrate the method, and in order to generate substantive insights, we apply the approach to the global diffusion of digital telecommunications networks across over 160 countries.