Firms and innovatioin diffusion: examples from banking
The diffusion of innovations used by firms themselves and those marketed to consumers are considered within a single framework based on the firm. This framework is represented by a general model which balances innovative and aggressive behavior, common to small firms, against the ability to bear the cost and risk of innovation adoption more common to large firms. A similar model for city-size patterns, based on the fact that large cities are risk-minimizing locations, contrasts with traditional hierarchical models which assume that large cities are usually the sites of first adoption. Examples of two innovations in the American banking industry were analyzed to test the models. The results suggest that traditional strict size-ordered models for firms and urban systems are not always appropriate, especially for innovations by firms.
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