Interconnectivity in Diffusion of Innovations and Market Competition

Competition among firms frequently involves product innovation and subsequent promotional activity. When these innovations involve new communication technologies, their adoption enhances the overall communications infrastructure which, in turn, facilitates information flow about innovations throughout society. In this way, market competition has the unintended effect of accelerating the diffusion of innovations, particularly of new communication technologies. Interconnectivity occurs because marketers employ new communications technology for promotional purposes and because consumers use the new communication technologies to learn about yet other innovations. Factors associated with the Interconnectivity phenomenon involve social comparison, the network structure of interpersonal communications, and prestige seeking. The broad-scale impacts of this interaction include a shift in the social evaluation of newness and a shortening of product life cycles. Implications for firms and society are discussed.