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CASE STUDY

Exploring the role of innovativeness and opinion leadership in diffusion

Xiaohui Shi, City University, London; and Kiran Fernandes, Durham University Business School.

In the marketplace, innovation (the introduction of new products or technology) is widely regarded as the key to development and profitability. But innovation itself is useless without diffusion, the process by which a commercial product spreads through its market. Diffusion has been widely studied by academics because of its key role in market growth, but has previously been considered in terms of either innovativeness or another key feature, the influence of key customers (a feature known as opinion leadership).

There has been much academic debate over the relationship between diffusion, innovation and opinion leadership and although models have been developed for each, the three have rarely been studied together. Professor Kiran Fernandes, of Durham University Business School, and City University’s Xiaohui Shi set out to rectify this omission by modelling the three together, proposing that using innovativeness in diffusion models allows a greater understanding of the potential for opinion leadership.

Modelling innovativeness

The researchers approached the study by using an actual case study — that of the release of a new 3G mobile phone service in Japan. This real life process used monthly subscription data from October 2001 to November 2011 to trace the take-up and diffusion of the technology through a trial period (when it was available only to key customers) and a period of general release.

They measured this data set against the results from a model which they had constructed to incorporate the influence of innovativeness and the role of business leaders, on the basis that opinion leadership increases with innovativeness during the diffusion process. The actual data were also compared with two other established existing models to see which produced the ‘best fit’ to the real thing.

Theory versus reality: the results

Setting the results from the real data set against those from Shi and Fernandes’ new model and the two standard models showed that the newly-developed approach, with its incorporation of both opinion leadership and innovativeness, provided a clear best fit. The researchers note, however, that at present the results are of academic interest rather than producing any direct pointers for managers.

Economic models have many limitations and require generalisations. In reality, for example, innovativeness varies according to market strategy and opinion leadership is often case-specific, so that a customer who leads on one product may not do so on another. But in an area where there is no academic consensus on the role of innovativeness, the researchers argue that their new model links two key influencers and increases accuracy.

Despite certain limitations and the need for further testing, the researchers believe that their work may prove to be an important step forward in diffusion modelling by filling in some of the existing gaps in the literature and removing what they describe as ‘some of the key limits for the further exploration of the diffusion phenomena’.