Technological change: An analysis of the diffusion and implications of e-business technologies

This is a monograph that presents both a comprehensive literature review and original research results on the diffusion and the implications of e-business technologies. The diffusion of e-business technologies among firms is regarded as part of the ongoing process of technological change and economic development. It is shown that increasing returns to adoption can arise if the technologies do not substitute each other in their functionalities, leading to an endogenous acceleration mechanism of technological development. Hence, the probability to adopt any e- business technology is hypothesized to be an increasing function of previously adopted, related technologies. Early mover advantages can exist until the early mover has exhausted all possibilities of the new technological paradigm that promise positive returns on investment. Thus, history matters for the technological development of a firm and adoption decision today affect the expected value of any other related technology in the future. The existence of the endogenous acceleration mechanism has important implications for the management of new technologies, the performance of enterprises, the development of market structures and entire economies. The theory is empirically tested and supported in four independent inquiries, using two different exceptionally large datasets and different econometric methods. The existence of a growing digital divide among companies is demonstrated for the period between 1994 and 2002. In addition, the adoption of new e-business technologies by firms creates opportunities to conduct innovation, either to reduce the costs for a given output, to create a new product or service, or to deliver products to customers in a way that is new to the enterprise. Hence, it is argued that the adoption of new technologies does have strategic relevance for firms. Empirical evidence is presented showing that e-business technologies are currently an important enabler of innovations. It is found that innovative firms are more likely to grow. Also, e-business related innovations are at the very least not inferior to traditional kinds of innovations in terms of simultaneous occurrence with superior financial performance of enterprises. The study takes an interdisciplinary approach by relating both to the economics and the management literature, with the objective to show complementarities between both research fields and to draw conclusions for both kinds of audiences.