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

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This dissertation primarily deals with two questions: First, what determines the process by which new technologies spread among enterprises over time? Second, what are the consequences of the spread of new technologies? Both questions concern the dynamics of technological change. They are analyzed considering the diffusion and implications of e-business technologies as a concrete example. Particular attention is given to technological interdependencies. It is shown that increasing returns to adoption can arise if related technologies do not substitute each other in their functionalities. This can lead to an endogenous acceleration of technological development. Hence, the probability to adopt any technology is an increasing function of previously adopted, related technologies. 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, it is argued that the adoption of new e-business technologies by firms has strategic relevance because this creates opportunities to conduct innovation, either to reduce production 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. 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 not found to be inferior to traditional kinds of innovations in terms of simultaneous occurrence with superior financial performance of enterprises. Implications of these findings are discussed both for economists and management researchers.