Diffusion Of Innovations Theory

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. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  2. Game Changer

    1. A person who is a visionary. 2. A company that alters its ...
  3. Proprietary Technology

    A process, tool, system or similar item that is the property ...
  4. Price-To-Innovation-Adjusted Earnings

    A variation of the price-to-earnings ratio (P/E ratio) that takes ...
  5. Return On Innovation Investment

    A performance measure used to evaluate the effectiveness of a ...
  6. Sector

    1. An area of the economy in which businesses share the same ...
Related Articles
  1. Insurance

    A Checklist For Successful Medical Technology Investment

    Find an investment that will give your portfolio a shot in the arm.
  2. Investing

    R&D Spending And Profitability: What's The Link?

    Return on research capital (RORC), can help investors measure how much profit R&D spending actually generates.
  3. Investing

    The Ins and Outs Of In-Process R&D Expenses

    Are these charge-offs fair accounting or earnings manipulation? Learn more here.
  4. Active Trading

    Which Is Better: Dominance Or Innovation?

    Find out how to assess and evaluate both these values in the market and your portfolio.
  5. Fundamental Analysis

    3 Ways Drones Are Changing Amazon's Business (AMZN)

    Find out the ways Amazon's cutting-edge drone technology may be changing the way the e-commerce giant is thinking about its business.
  6. Markets

    8 Sectors That Drones Are Influencing in 2016

    Find out which sectors of the economy are expected to be heavily influenced by the growing commercial application of aerial drones in 2016.
  7. Stock Analysis

    Analyzing Microsoft's Return on Equity (ROE) (MSFT)

    Discover a detailed analysis of Microsoft's historical return on equity, and learn how its ROE stacks up to its competitors in the tech industry.
  8. Stock Analysis

    If You Had Purchased $100 of Apple in 2002 (AAPL)

    Learn about Apple's stock performance and how a $100 investment in Apple back in 2002 would have grown by thousands of dollars by 2016.
  9. Financial Advisor Technology

    Advisors: Skimp on Technology at Your Own Risk

    Technology is rapidly transforming the way that advisors do business. Here are the areas where smart advisors are investing to gain a competitive edge.
  10. Financial Advisor Technology

    Top Problems with Financial Data Aggregation

    A new front in personal finance technology—data aggregation—seeks to make our financial lives easier. But here's why it may be stalling.
RELATED FAQS
  1. Is Apple Pay safe and free?

    Apple Pay is a mobile payment system created by Apple to reduce the number of times shoppers and buyers have to pay for goods ... Read Full Answer >>
  2. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  3. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  4. How can I calculate funds from operation in Excel?

    In general, the terms "work in progress" and "work in process" are used interchangeably to refer to products midway through ... Read Full Answer >>
  5. When does Q4 start and finish?

    Most companies such as Facebook have financial years that end on December 31st. For these companies, the fourth quarter begins ... Read Full Answer >>
  6. When is it useful to look at a company's fixed asset turnover ratio?

    It is useful to look at a company's fixed asset turnover ratio when an outside observer, such as an investor, wants to know ... Read Full Answer >>
Hot Definitions
  1. Short Selling

    Short selling is the sale of a security that is not owned by the seller, or that the seller has borrowed. Short selling is ...
  2. Harry Potter Stock Index

    A collection of stocks from companies related to the "Harry Potter" series franchise. Created by StockPickr, this index seeks ...
  3. Liquidation Margin

    Liquidation margin refers to the value of all of the equity positions in a margin account. If an investor or trader holds ...
  4. Black Swan

    An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult ...
  5. Inverted Yield Curve

    An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the ...
  6. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
Trading Center