The Two Sides of E-Commerce, Selling and Buying: An Empirical Analysis at Firm-Level

Background

Diffusion is generally defined as the process by which innovations spread over the economy (OECD & Eurostat, 2005). Understanding the reasons that lead firms to adopt innovations (either new technologies, products or processes) has become one of the major issues for economists since the seminal work of Griliches (1957).

The basic approach to analyze diffusion are epidemic models which state that diffusion is the result of the spread of information from the users of the new technology to the non-users over time (Geroski, 2000). These models rely on two key ideas: firms learn about the new technology from those which are already users and do not get that information at the same time. Such assumptions lead to a path of diffusion similar to an S-curve: at first adoption, takes place slowly; then, as more and more firms use the new technology and share their experiences, the spread of information accelerates and the diffusion speeds up; finally, the market reaches its saturation point and the diffusion rate decreases (Baptista, 1999; Geroski, 2000; Karshenas & Stoneman, 1995).