The Development Perspective

The development perspective starts from the assumption that potential adopters in a society have unequal access to the resources for adoption. Of central importance among such resources are money, and/or access to credit.36 Quite intuitive again for the reader is the question asked by one diffusion analyst:

Where the potential adopter does not have the cash for an innovation which needs financial expenditure, then how can he or she be enabled to acquire the innovation?37

The above question refers to diffusion in emerging markets, where it is perhaps most applicable given the wider disparities and irregular flows of disposable income. However, the theoretical point is broadly applicable: it instructs us to take account of the purchasing power of the potential adopter in relation to the costs of the innovation, as well as the facilities that are made available to overcome such purchasing constraints.

Because of its concern with affordability, the so-called 'divisibility' of a technology is important to the development perspective.38 By divisibility is meant the extent to which an innovation can be divided into small functional and affordable units. For example, many multinationals decided to introduce shampoos and detergents into rural areas of emerging markets by offering smaller, pocket-sized packets that were more affordable than a full box or bottle. But where it is not possible for a product to be broken down into more divisible units, customer credit becomes key to diffusion, especially in places where purchasing power is relatively low. For this reason, some say that in emerging markets 'the most important factor which facilitates access of poor people to new technology is the availability of credit.'39

However, this does not only apply to emerging markets. We might consider, for instance, how rapidly the automobile would have diffused throughout industrialized countries without the ability to acquire a loan or a lease on the vehicle. Certainly, it is the loan and the lease that will facilitate the uptake of innovations such as the hybrid electric vehicle, which has relatively high up-front costs but much lower running costs due to its lower consumption of fuel.

Indeed, this brings us to an interesting generalization made in a small article in the Financial Times back in 1996.40 The title of the article was 'The high price of a green machine', and it put forward the idea that the very essence of green innovations is that they tend to cost more up-front. Solar is a good example of this, as is the hybrid electric vehicle or electric wind turbine. The point is that when buying such resource-conserving innovations, the vast majority of the costs are paid at the point of purchase, with comparatively less during operation. This makes the availability of customer credit that much more important for green innovations, and doubly so when they are sold in areas of relatively low purchasing power, such as emerging markets.

The development perspective may seem similar to the other perspectives, but actually it has a significant contribution to make. In relation to the communication perspective, it cautions against grouping adopters as 'innovators' and 'laggards', and recommends instead grouping them as 'high-' and 'low-access' with respect to money and other resources.41 Rogers has responded to this by recognizing that it is of course much easier for someone to be innovative and try out new things if they have cash to burn.42 But in the end the communication perspective does not go far enough in examining how broad macro-economic factors, such as the cost of capital, and more micro-level factors, such as adopters' collateral and access to credit, can influence the diffusion process.

In relation to the economic history perspective, the development perspective instructs us to remember that even the most cost-competitive and effective technological innovation can diffuse slowly where the target customers do not have sufficient capital or credit to pay for it. For instance, analysts found that although the adoption of green revolution technologies was potentially profitable, diffusion was restricted in many emerging markets by farmers' limited access to customer credit.43 The flip-side of this finding is that the diffusion of similar agricultural innovations did not tend to pose the same problem for American farmers, who are 'a relatively prosperous and commercially oriented sample'.44

However, the development perspective tends to suffer from an overly static analysis, in which the propagator of an innovation is perceived to be uninterested in reacting to the purchasing power limitations through either radical redesign of the innovation or arranging for customer credit. Certainly this can be the case, for instance where a business decides that a given market simply is not rich enough to justify the effort. But there are also examples of NGOs and businesses responding in just this manner, as with the pocket-size amounts of detergent and shampoo, the $40 wind-up radio, or the $4 filter invented by a Bangladeshi professor to try to remove deadly arsenic from the water.45

The development perspective is right to focus on the adopters' access to money as a major constraint to diffusion even once potential adopters trust and/or value an innovation, and even after an innovation has improved in terms of both cost and performance. But in the end, it is overly static. It also needs to be able to take account of the role of entrepreneurs and other propagating organizations in emerging markets that effectively surmount purchasing power obstacles and explain what enables them to do so or not.

Was this article helpful?

0 0
Hybrid Cars The Whole Truth Revealed

Hybrid Cars The Whole Truth Revealed

Hybrid Cars! Man! Is that a HOT topic right now! There are some good reasons why hybrids are so hot. If you’ve pulled your present car or SUV or truck up next to a gas pumpand inserted the nozzle, you know exactly what I mean! I written this book to give you some basic information on some things<br />you may have been wondering about.

Get My Free Ebook


Post a comment