DEFINITION of 'Diffusion Of Innovations Theory'

A hypothesis outlining how new technological and other advancements spread throughout societies and cultures, from introduction to wider-adoption. The diffusion of innovations theory seeks to explain how and why new ideas and practices are adopted, with timelines potentially spread out over long periods.


The way in which innovations are communicated to different parts of society and the subjective opinions associated with the innovations are important factors in how quickly diffusion - or spreading - occurs.

BREAKING DOWN 'Diffusion Of Innovations Theory'

Factors that affect the rate of innovation diffusion include the mix of rural to urban population within a society, the society's level of education and the extent of industrialization and development. Different societies are likely to have different adoption rates (the rate at which members of a society accept a new innovation) for different types of innovation. For example, a society may have adopted the internet faster than it adopted the automobile due to cost, accessibility and familiarity with technological change.

RELATED TERMS
  1. Rate Of Adoption

    The number of members of a society who start using a new technology ...
  2. Early Majority

    The first sizable segment of a population to adopt an innovative ...
  3. Adopter Categories

    Classification of individuals based on their willingness to try ...
  4. Late Majority

    The last sizable segment of a population to adopt an innovative ...
  5. Diffusion Index

    1. A measure of the percentage of stocks that have advanced in ...
  6. Building Society

    A type of financial institution that provides banking and other ...
Related Articles
  1. Trading

    Why America's Advantage Is Innovation (CHKP, GHDX)

    Learn about the reasons why America has an advantage in regards to innovation. Discover three key innovation themes that are likely to experience growth.
  2. Investing

    Why China is not a Threat to the U.S.

    Learn about China's competitive position with respect to four areas of innovation. Discover the challenges the country faces in competing in these areas.
  3. Insights

    Tankan Survey Provides Clues To Japanese Economy

    This quarterly survey is crucial for assessing Japan's economic health.
  4. Small Business

    The Most Innovative Entrepreneurs Of 2015

    Investopedia provides a list of the most innovative entrepreneurs with the potential to make it big in 2015.
  5. Investing

    Which Is Better: Dominance Or Innovation?

    Find out how to assess and evaluate both these values in the market and your portfolio.
  6. Insights

    Main Characteristics of Capitalist Economies

    Commerce is based on the principles of capitalism, but there are few, if any, examples of pure capitalism except in theory.
  7. Trading

    Trading Calendar Spreads In Grain Markets

    Futures investors flock to spreads because they hold true to fundamental market factors.
  8. Investing

    How To Calculate The Bid-Ask Spread

    It's very important for every investor to learn how to calculate the bid-ask spread and factor this figure when making investment decisions.
  9. Investing

    What is Spread?

    Spread has several slightly different meanings depending on the context. Generally, spread refers to the difference between two comparable measures.
  10. Financial Advisor

    Adoption: How to Plan Financially for One

    Here are some tips to address the financial implications of adopting a child.
RELATED FAQS
  1. In what types of societies does limited government work best?

    See what a society needs to function with a limited government, and how social cooperation can be achieved through voluntary ... Read Answer >>
  2. What is the relationship between research and development and innovation?

    Understand what research and development is and why a company or person would want to conduct it. Learn about how it can ... Read Answer >>
  3. What is the Mont Pelerin Society?

    The Mont Pelerin Society was formed in 1947 when economist Friedrich von Hayek invited 39 people to meet at Mont Pelerin ... Read Answer >>
  4. Why do most economists favor capitalism?

    Learn more about how capitalism works and why it is a popular system among economists throughout the world. Read Answer >>
  5. What types of stocks have a large difference between bid and ask prices?

    Find out which factors influence bid-ask spread width. Learn why some stocks have large spreads between bid and ask prices, ... Read Answer >>
  6. How do I set a strike price in an options spread?

    Find out more about option spread strategies, and how to set the strike prices for bull call spreads and bull put spreads ... Read Answer >>
Hot Definitions
  1. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  2. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  3. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  4. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  5. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  6. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
Trading Center