Innovation diffusion uncertainty: incremental and radical innovations compared

Abstract

Much research on innovations assumes a dichotomy of disruptive radical innovations versus more incremental ones and focuses on the diffusion of radical ones. However, incremental innovations have their own complexities. Some innovations based on incremental technologies may require radical organizational changes to implement while others are more fully incremental, leading to different technological and organizational uncertainties. Because incremental innovations can be consequential for both industries and individual firms, we develop theory on how the resulting diffusion processes differ. We analyze how the airline industry adopted three strategically important innovations with different technical and organizational uncertainty configurations—one purely incremental, one technologically radical, and one requiring radical organizational changes. The findings show information from prior adopters impacts adoption, as commonly demonstrated in diffusion studies, but only for the two innovations that were radical. The purely incremental case had no such effect. This overall suggests that firms rely on information from peer actions and early experiences to reduce both technological and organizational uncertainty similarly.