Capturing Structural Complexity of Innovation Diffusion through System Dynamics: A Discussion on Model Development, Calibration, and Simulation Results

Capturing Structural Complexity of Innovation Diffusion through System Dynamics: A Discussion on Model Development, Calibration, and Simulation Results

Sanjay Bhushan
Copyright: © 2012 |Pages: 38
DOI: 10.4018/ijsda.2012100102
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Several shortcomings of traditional innovation diffusion research create major impediments to the ‘holistic’ understanding of diffusion of innovations as well as to the development of effective strategies of policy intervention to facilitate diffusion process. Among the major criticisms of diffusion research are the ‘selection biases’ of many diffusion studies and the futility of curve fitting as an adequate test of theoretical relevance. These limitations can be avoided by substantive and methodological changes in diffusion research; incorporating and integrating into selective critical structural variables to map their interaction, and explaining the inherent dynamism. There are several research articles that discuss different approaches to modeling innovation diffusion over time. Conventionally, the approaches in explaining the innovation diffusion process assume that the process takes place in a stable and homogeneous system in which the innovation diffuses or spreads without being affected by the system’s structural variables even under external influences. Many studies have established that the presence of symmetry is not the general rule in innovation diffusion process. Also examined are these models, and the need to further modify in order to improve the holistic understanding of the dynamic structural complexities and forces driving the processes of innovation and diffusion is recognized.
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1. Introduction

Innovation is an important topic of high intellectual and research visibility in the study of economics, business, entrepreneurship, design, technology and engineering. Colloquially, the word “innovation” is often referred synonymous with the output of the process. However, business practitioners and economists tend to focus on the process of innovation itself, from the origination of an idea to its transformation into something meaningful, to its implementation; and on the system within which the process of innovation unfolds.

Joseph Schumpeter defined economic innovation in “Theorie der Wirtschaftlichen Entwicklung”-The Theory of Economic Development (Schumpeter, 1934). Traditionally, innovation management deals with all stages of the innovation process (Schumpeter, 1961):

  • Invention, i.e., the phase where new products are developed;

  • Innovation, i.e., the phase of introducing new products in the market;

  • Imitation or diffusion, i.e., the spread of new products in the market.

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