Dynamics of Social Factors in Technological Substitutions

Abstract

Diffusion models of technological innovations are often based on an epidemic structure which has a good fit to historical data but whose communication assumptions lack explanatory power. They assume a simplified decision process, uniform decision criteria across adopter categories, and a fully interconnected social structure. The objective of this paper is to show that the dynamics of social factors during technological substitutions have significant effects on substitution patterns. The success of a paradigmatic shift is not only a function of technological characteristics but also depends on change agents and many social dynamics. Such complexity requires analysis at several levels of granularity. We start with cognitive processes at the individual level using concepts from cognitive psychology and decision making under uncertainty and then move to interpersonal communications at the aggregate social level. We show that population heterogeneity generates different decision criteria and a social topology which greatly affect perceptions and the formation of expectations. The structure of interpersonal networks also explains how the relevance and credibility of information impacts the critical mass dynamics of technology adoption. A more complete model accounting for social interactions provides a useful framework for understanding complex substitution patterns and reducing the risk of misreading the market. Brice Dattee's research is funded by the National Institute of Technology Management in Ireland.