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A culture-based approach to understanding the adoption and

diffusion of new products across countries

Article  in  International Marketing Review · April 2008

DOI: 10.1108/02651330810866281

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IMR
25,2 A culture-based approach
to understanding the adoption
and diffusion of new products
202
across countries
Goksel Yalcinkaya
Whittemore School of Business and Economics, University of New Hampshire,
Durham, New Hampshire, USA

Abstract
Purpose – For international product managers, one critical question is how fast a new product is
likely to be adopted and diffused in different nations. One possible way to answer this question is by
collecting data on the diffusion in a large number of countries and analyzing them. However, one of the
main problems associated with collecting data are the lack of sufficient early-period sales data to
ensure reliable estimations. The estimation process becomes even harder since word-of-mouth and
imitation play significant roles in the adoption of a new product given that the spread of information in
a social system is complex. The purpose of this paper is to assess the relationship among social
interactions, cultural differences, and the adoption of new products, and propose a new technique to
work with the complexity arising from social interactions, as well as the few data points.
Design/methodology/approach – A conceptual framework is presented and propositions are
constructed.
Findings – The study suggests that, while social interactions are an important element for adoption
of new products in every country, the strength of their impact on adoption varies across countries
based on culture.
Research limitations/implications – This study contributes by offering a deeper understanding
of the impact of social interactions on international innovation adoption and provides a new
foundation for the literature by combining individual heterogeneity, cultural differences, and
word-of-mouth communication in one study.
Practical implications – Understanding the effect of cultural variations on the adoption of new
products in a specific country will help management in the forecasting of demand by decreasing the
perceived uncertainty of foreign cultural environments.
Originality/value – Even though diffusion models often describe innovation diffusion patterns over
time fairly well, it is unclear how social interaction processes in different countries influence the
adoption and diffusion speed of new products. There seems to be a large gap in the international
marketing literature since it has long been accepted that personal interactions play a key role in
product adoption and dissemination and that individuals communicate differently in the different
parts of the world. An understanding of social interactions role on adoption of innovation will
contribute to the international marketing field.
Keywords International business, Marketing, Product management, Cross-cultural management,
New products
Paper type Conceptual paper

International Marketing Review Introduction

Vol. 25 No. 2, 2008
pp. 202-214 In today’s fast changing world, globalization is as much a fact of life in adoption
q Emerald Group Publishing Limited
0265-1335
and diffusion of new products as it is in other aspects of business. Many companies such
DOI 10.1108/02651330810866281 as Coca Cola, Sony, and Microsoft earn more than half of their profits outside their
own borders. It may be even more surprising know that companies like Toyota and The adoption
Honda’s nearly 70-80 percent of profits come from North American Market (Miller, 2002). and diffusion of
Because of today’s compelling globalization movement and tight competition, marketing
managers are forced to introduce new products not only into the domestic market, but new products
foreign markets as well. Accordingly, insight into the diffusion processes across countries
is becoming more and more important, which has recently led to a growing interest of
marketers to model these cross-national diffusion patterns (Takada and Jain, 1991; Helsen 203
et al., 1993; Putsis et al., 1997; Dekimpe et al., 1998; Talukdar et al., 2002; Kumar and
Krishnan, 2002; Stremersch and Tellis, 2004; Tellis et al., 2003; Yeniyurt and Townsend,
2003).
Undoubtedly, there are many success stories in international new product adoption
and diffusion. Yet many managers remain naive about key success factors in
international new product adoption and diffusion. In particular, companies repeatedly
overlook that consumers in different countries have different purchasing behaviors,
and that adjustments are required for products and business systems to make them
work in multiple countries. Although consumers across countries differ, there are ways
to determine how varied they are and how to adapt to those variations. This fact may
seem obvious. However, that this is where many companies go wrong. For some
reason, although inaccurate, the premise of globalization is that consumers around
the world will accept the same product or one that is similar, and that business people
operate in the same way. While it is certainly true that individuals all share a common
humanity, there are important cultural differences among them that must be
considered when operating internationally (Craig et al., 2005; Yalcinkaya et al., 2007).
Yet, even after long exposure to globalization, consumers from different cultures
have different attitudes, perceptions, preferences and values, and may remain hesitant
to buy foreign products (Dwyer et al., 2005; Suh and Kwon, 2002). Therefore, it has
been argued that consumers are not always rational in their purchasing behavior and,
they are not willing to change their consumption habits in favour of products that are
increasingly available in the market (Kotler, 1986). Because cultural values and norms
are strong drivers determining people’s attitudes and behaviors (Markus and
Kitayama, 1991; Triandis, 1989; Yeniyurt and Townsend, 2003), cultural differences
remain an important aspect of international innovation adoption and diffusion
research. Hence, cultural differences have an impact on adoption and diffusion of new
products (Calantone et al., 2006; Takada and Jain, 1991; Steenkamp et al., 1999; van den
Bulte and Stremersch, 2004; Yaveroglu and Donthu, 2002).
In order to capture how new products get adopted and diffuse through the market
across countries, one needs to understand how social interactions among individuals
contribute to adoption of new products in different countries. To date, diffusion of
innovation researchers have failed to fully incorporate social interactions. This is partly
due to the fact that the spread of information in a given social system is considered to be
complex since it involves a large number of individuals and their interactions, which
ultimately generates large-scale, collective behavior (Goldenberg et al., 2001).
Historically, it has been hard to predict the emergence of patterns when the system
is complex (Waldrop, 1992). Therefore, even though diffusion models often describe
innovation diffusion patterns over time fairly well, it is unclear how social interaction
processes in different countries influence the adoption and diffusion speed of new
products. There seems to be a large gap in the international marketing literature since
IMR it has long been accepted that personal interactions play a key role in product adoption
25,2 and dissemination (Goldenberg et al., 2001; Moldovan and Goldenberg, 2004). Given
that individuals communicate differently in the different parts of the world, a better
understanding of culture’s influence on social interactions, which in turn influences the
adoption of new products, enables firms to deliberate their market expansion
strategies. More specifically, culture is an important determinant of consumers’
204 decision making on adoption of new products because word-of-mouth referrals that
fuel adoption of new products in a given country would be expected to differ from
those of another country because of cultural variations. This study subsequently
discusses how culture plays a prominent role in social interactions, which in turn
influences the adoption and diffusion of new products in different countries. By
examining the role of local interactions in global innovation adoption and diffusion, the
study extends the international marketing literature and provides implications on how
to effectively manage diffusion of new products across countries.
The remainder of this study is organized into four major sections. In the first, a brief
summary on diffusion of innovation theory is provided. After the quick summary of
innovation diffusion theory, the theoretical background for international adoption and
diffusion is presented. Next, propositions are presented. Finally, the paper concludes
with a discussion, limitations and directions for future research.

Adoption and diffusion of new products

Substantial literature exists on the dynamics of new product innovations (Mahajan
et al., 1990; Sultan et al., 1990). These dynamics often refer to the rate of new product
acceptance into the market as well as its diffusion. Although no single diffusion
framework provides all the answers, Rogers (1995) was one of the earlier pioneers
describing new product adoption and diffusion as a five stage process: awareness,
interest, evaluation, trial, adoption. In general, Rogers saw adoption as the process by
which an innovation is communicated through certain channels over time among the
members of a social system. Rogers theorized that new product sales are initially slow,
and then sales grow at a rapid rate, then the rate of growth tapers off, and finally
declines with time. He argues that, the early adopters select a new product or
technology first, followed by the majority, until the technology or new product is
common. Some individuals are very innovative and are the first to adopt new products,
whereas others typically wait until uncertainty associated with new product adoption
decreases. The speed of adoption of a new product in Rogers’ framework has been
shown to be a function of several factors including relative advantage, compatibility,
complexity, observability, and trialability.
Another pioneer in this field, Bass (1969), describes the diffusion process as a result
of two independent drivers: mass media and word of mouth. The mass media influence
covers those consumers interested in the “latest and greatest” aspects of products and
services. This market segment’s purchase decision is theorized to be externally
derived, specifically from media advertisements that generate awareness. On the other
hand, the word-of-mouth influence is theorized to be much greater in reflecting the
internal communication dynamics among consumers. When placed in a mathematical
framework, the Bass theory provides one of several forecasting solutions for new
product diffusion.
Adoption and diffusion of new products internationally The adoption
Because several firms that were known for their marketing success struggled when and diffusion of
introducing new products to unknown foreign markets to compete effectively in the
global marketplace (Tellefsen and Takada, 1999), managerial interest in understanding new products
adoption processes across countries has grown. An effective international strategy is
needed to avoid such problems. Therefore, scholars have been conducting studies to
determine the underlying factors that are pertinent to adoption and diffusion of new 205
products in different countries (Ganesh et al., 1997; Gatignon et al., 1989; Helsen et al.,
1993; Mahajan and Muller, 1994; Takada and Jain, 1991; Talukdar et al., 2002). These
studies have indicated that new products are diffused at significantly different rates
across countries. For example, they have found that new products diffuse more slowly
in the USA than in Asia (Takada and Jain, 1991) or Europe (Farley and Lehmann,
1994). They have also found that new products diffuse at considerably different rates
in different European nations (Gatignon et al., 1989; Mahajan and Muller, 1994). In
contrast, Helsen et al. (1993) and Kumar et al. (1998) find almost no evidence to support
this relationship between culture and new product adoption. In their study, Helsen et al.
(1993) argue that cultural variations alone do not fully account for differences in
diffusion patterns of new product across countries. Table I summarizes the literature
on international adoption and diffusion of new products.
Several factors that may cause these variations have been identified. (e.g. a
country’s place in a multi-country roll-out (Ganesh et al., 1997; Kalish et al., 1995;
Takada and Jain, 1991), a country’s level of cultural context (Takada and Jain, 1991), a
country’s socioeconomic factors (Lindberg, 1982), and mobility (Gatignon et al., 1989).
Though these researchers have identified several factors, little is known on how
interpersonal communications contribute to adoption of innovations in different
countries. This limited attention is partly due to the fact that gathering data on
personal communications is not an easy task since the information is exchanged in
private conversation, making direct observation very hard. In addition, the personal
interaction process is complex in nature (Goldenberg et al., 2001; Waldrop, 1992). One
needs to develop theories and methods in order to work with complexity arising from
personal interactions. Here, the study offers a new theoretical foundation for linking
social interaction, culture, and adoption/diffusion of new products.

The role of national culture

National culture becomes critical here because social interaction referrals that create
marketing opportunities in a given country would be expected to be different from those of
another country because of cultural differences. Although several cultural frameworks
have been proposed in the literature (Clark, 1990; Kluckhohn and Strodtbeck, 1961;
Triandis, 1995; Trompenaars, 1994), Hofstede’s (2001) cultural dimensions are of
particular interest to this study for several reasons. They have been extensively used in
international business research, particularly in the area of international new product
adoption and diffusion. Several researchers (Kumar and Krishnan, 2002; Tellis et al., 2003;
van den Bulte and Stremersch, 2004; Yaveroglu and Donthu, 2002; Yeniyurt and
Townsend, 2003) have employed Hofstede’s dimensions to explain differences in new
product adoption and diffusion. For example, Kumar and Krishnan (2002) employ
Hofstede’s multi-dimensional framework to show that country-specific cultural factors
play a key role in the cross-country interaction effects in their diffusion study. Hofstede’s
 25,2
IMR

206

Table I.

overview
Global innovation
diffusion literature
Number of
Dependent variable Product countries Key results

Gatignon et al. (1989) p and q (Bass model) Consumer durables 14 countries Cosmopolitansim, mobility and sex roles
affect diffusion pattern
Takada and Jain (1991) q (Bass model) Consumer durables 4 countries q of the Bass model is positively related to
the time lag of product introduction
between countries
Helsen et al. (1993) p, q, and T * (Bass model) Consumer durables 12 countries Macro-level variables do not fully explain
differences in diffusion patterns across
countries
Kalish et al. (1995) Cumulative adopters Analytical model Analytical model Companies should follow a sprinkler
(profitability) strategy in new product introduction over
a waterfall strategy
Putsis et al. (1997) Cumulative adopters (sales) Consumer durables 10 countries The authors find evidence of significant
cross-country interaction effects
Dekimpe et al. (1998) Transition rate Digital telecommunication More than 160 The authors find strong inter-country
switches countries contagion effects
Kumar and Krishnan (2002) Cumulative adopters (sales) Consumer durables and 7 countries The authors found evidence of significant
high-tech lead lag, lag lead, and simultaneous
cross-country interaction effects
Talukdar et al. (2002) p, q, and a (Bass model) Consumer durables and 31 countries Developing countries have a slower
high-tech adoption rate, compared to that of
developed countries
Tellis et al. (2003) Time to takeoff Consumer durables and 16 countries The time to takeoff varies substantially
high-tech across countries
Yeniyurt and Townsend Penetration rate of new Consumer durables 56 countries Power distance and uncertainty
(2003) products avoidance hinder the adoption of new
products
van de Bulte and stremersch q/p ratio (Bass model) Consumer durables 28 countries The q/p ratio is positively associated with
(2004) income inequality of a country,
supporting the
heterogeneity-in-thresholds
interpretation
work has been also accepted as the most comprehensive (Kogut and Singh, 1988) and cited The adoption
(Chandy and Williams, 1994) national culture framework, for which validity, reliability, and diffusion of
stability and usefulness have been confirmed over time and in various settings. More
importantly, Hofstede’s cultural framework is applicable to the current study because the new products
norms and values underlying Hofstede’s framework is directly related to the behavioral
approach in the current study (Doney et al., 1998). In addition, Hofstede’s cultural
dimensions have been associated with innovativeness aspect of consumers (Steenkamp 207
et al., 1999), which is also directly related to the current study. For these reasons, Hofstede’s
cultural dimensions are employed in this study.
Hofstede (2001) defined national culture as the collective programming of the mind
which distinguishes the members of one human group from another. Hofstede has
identified five work-related cultural dimensions along which countries differ. Hofstede’s
five dimensions are: individualism, power distance, uncertainty avoidance, masculinity,
and long-term orientation. He argues that, a country can be positioned along these five
dimensions to provide overall summary of a country’s cultural type. For instance, in
general, Australia, Canada, Denmark, Ireland, Great Britain, The Netherlands, Sweden,
and the USA are smaller in power distance, more individualistic, more feminine, weaker
in uncertainty avoidance, and more short-term oriented whereas Argentina, Brazil,
Greece, Japan, Mexico, Portugal, Taiwan, Turkey, and Venezuela are larger in power
distance, more collectivist, more masculine, stronger in uncertainty avoidance, and more
long-term oriented.

Different cultures and adoption behavior

The potential implications of cultural differences on social interactions, consequently,
adoption and diffusion of new products are vast. Hofstede’s framework can indicate
how differences in cultures can affect social interactions that ultimately influence
individuals’ adoption behavior. There are potential impacts of the differences on each
of Hofstede’s five dimensions.

Power distance
Hofstede (2001) defines power distance as the extent to which a society accepts that
power in institutions is distributed unequally among individuals. In societies with a
high degree of power distance, status and authority are very important. In general,
people in high-power distance societies tend to be less innovative (Hofstede, 2001;
Yeniyurt and Townsend, 2003). In these societies, subordinates tend to be afraid of
their bosses, and bosses tend to be autocratic. In low-power distance cultures,
subordinates are more likely to challenge bosses and bosses tend to use a consultative
management style. Given that status, age and authority play an important role in
high-power distance cultures, consumers will follow the adoption behavior of their
leader and will adopt new products adopted by their superiors (Tarde and Parsons,
1903). In high-power distance cultures, low-status individuals have considerable
dependence on high-status individuals or opinion leaders have a strong influence on
adoption of new products (Hofstede, 2001).
In addition, a large power distance tends to be associated with centralization and
more dependent decision making on others, whereas a small power distance tends to be
associated with decentralization and greater independent decision making (Hofstede,
2001). As a result, in high-power distance cultures, individuals are likely to have
IMR limited authority to make purchasing decisions. In low-power distance cultures,
25,2 individuals are more independent and can develop and apply leadership qualities and
decision-making skills (Dwyer et al., 2005; van den Bulte and Stremersch, 2004).
Therefore, adoption of new products is more likely to be faster in these cultures.
Taking also into account that customers are less open to new ideas and products as
well as their interpersonal communications are limited in high-power distance cultural
208 environments, the diffusion rates of new products is likely to be lower:
P1. New product adoption is slower in high-power distance cultures than in
low-power distance cultures.

Individualism/collectivism
In individualistic cultures, independence is highly valued. Individualism is defined as
the extent to which people are expected to stand up for themselves as a member of the
group or organization (Hofstede, 2001). Individuals are expected to look out for
themselves and personal task accomplishment is put before group interest. By contrast,
in collectivist cultures, qualities such as loyalty, solidarity, interdependence, conflict
avoidance and identification with the group are strongly emphasized (Hofstede, 2001).
Because individualistic societies may tend to form a larger number of looser
relationships and because a high-individualism ranking indicates that individuality and
individual rights are paramount within the society, it is anticipated that the social
interactions among the members of the society will not be strong, which lessens the
importance of word-of-mouth effect in adoption of new products. On the other hand,
because individuals tend to act according to the best interest of the group in collectivistic
cultures and tend to form stronger relationships among themselves, the level of
communication among the members of these societies is likely to higher. As a result,
information exchange about the new product increases and uncertainty associated with
the new product decreases, which promotes the adoption of new products. This leads to
the following proposition:
P2. New product adoption is slower in individualistic cultures than in
collectivistics cultures.

Masculine/feminine
Hofstede (2001) defines masculinity as the value placed on traditionally male values. More
specifically, masculinity and femininity refer to the sex role pattern in society at large, to
the extent it is characterized by male or female characteristics (Tellis et al., 2003).
Masculine cultural values tend towards competition, ambition, career advancement, and
self-achievement (van Everdingen and Waarts, 2003). Because significant importance is
placed on individual achievements in masculine cultures, the acquisitions of products that
help to produce such achievements have a higher value. Further, achievement, heroism,
assertiveness, and material success are valued in a masculine culture, individuals in these
cultures tend to emphasize performance and growth and focus on excelling to be the best.
Therefore, opportunities for high earnings, recognition, and advancement are apt to be
effective motivators in masculine cultures (Hofstede, 2001; Stremersch and Tellis, 2004).
One symbolic means of demonstrating achievement is by having the latest and most
novel product, hoping that new products bring success and ultimately higher status
in the society. To ensure a higher status and recognition in their society, individuals in
masculine cultures therefore are more motivated to find innovations that create clear The adoption
distinction between them and the others (Stremersch and Tellis, 2004). Hence, these and diffusion of
individuals tend to gather information about innovations in every way, which requires
interacting with other members of the society. This higher degree of interpersonal new products
communication produces faster adaptation of new products.
On the other hand, feminine values foster care, sympathy, and intuition (Hofstede,
2001; Tellis et al., 2003). Because relationships, modesty, and caring for the weak are 209
important values in feminine cultures, recognition and advancement are apt to be less
effective motivators in these cultures. Therefore, individuals in feminine cultures adopt
new products slower rate than masculine cultures, since higher status and recognition
are not their highest priority. Therefore, we propose:
P3. New product adoption is slower in feminine cultures than in masculine
cultures.

Uncertainty avoidance
Uncertainty avoidance is defined as the extent to which a society feels threatened by
ambiguous situations and tries to avoid them by providing particular rules, regulations
and religions (Hofstede, 2001). Cultures with low-uncertainty avoidance scores have a
high tolerance for improbability and ambiguity and exhibit less willingness to take
risks (Hofstede, 2001; Yeniyurt and Townsend, 2003; Tellis et al., 2003). Societies that
are high in uncertainty avoidance continuously feel the inherent uncertainty in life
while societies low in uncertainty avoidance more easily accept uncertainty
(Stremersch and Tellis, 2004; Yaveroglu and Donthu, 2002). This means societies
that are low in uncertainty avoidance are more willing to take risks. Therefore, they
will more readily accept new products (Rogers, 1995).
When new products are first introduced to marketplace, their attributes are, to a
large extent, unknown compared with products that previously adopted by consumers.
Individuals, especially those in high-uncertainty avoidance cultures, are uncertain
about the relative advantages of a new product once it is adopted. As a result of
uncertainty, potential adopters may delay their purchase. In general, uncertainty
associated with new products increases in high-uncertainty avoidance cultures
whereas low-uncertainty avoidance cultures tend to tolerate more to uncertainty and
have a willingness to take risks (Hofstede, 2001). Therefore, it is logical to expect high
level of social interactions in high-uncertainty avoidance cultures since potential
adopters would like to reduce the amount of uncertainty, thus the risk associated with
innovations, by exchanging their experiences with the innovation (van den Bulte and
Stremersch, 2004). Therefore, we expect the following proposition to hold:
P4. New product adoption is slower in high-uncertainty avoidance cultures than
in low uncertainty avoidance cultures.

Long-term/short-term orientation
Long-term orientation is defined as the extent to which a society exhibits a pragmatic,
future-oriented perspective rather than a conventional historic or short-term perspective
(Hofstede, 2001). Because long-term oriented cultures value perseverance toward slow
results, thrift, and adaptations of traditions to new circumstances, individuals
are cautious to novel ideas and doubtful to sudden changes (Dwyer et al., 2005).
IMR By contrast, in short-term oriented cultures, the focus is on the past and the present.
25,2 Individuals in these cultures respect tradition and personal stability and value novelty.
Hence, short-term oriented cultures are expected to be more innovative than long-term
oriented cultures.
Individuals in short-term orientation cultures expect to see quick outcomes while
individuals in long-term orientation cultures prefer long-term goals. In order to achieve
210 these quick results, individuals in short-term orientation cultures experience
materialist consumption pressures (e.g. keeping up with trends). Because of these
pressures, individuals in these cultures are motivated to overspend and adopt new
products that rapidly enhance their status within their society. To gain a higher status
and recognition as well as lessen materialist consumption pressure, individuals in
short-term oriented cultures are willingness to gather information about new products
in every way. One important way to accomplish this is to interact with other members
of the society since a high level of interpersonal communication yield faster
adaptation of new products.
Furthermore, new products with little or no past history are likely to be viewed with
caution from individuals in long-term orientation since these cultures emphasize
saving and are more comfortable with a slow adaptation of novel concepts. Therefore,
it is anticipated that individuals in long-term oriented cultures are less likely to adopt
new products associated with some uncertainty. Therefore, we posit:
P5. New product adoption is slower in long-term oriented cultures than in
short-term oriented cultures.

Discussion
In an era of global business activity, understanding the cross-market applicability of
the adoption of new products becomes increasingly important, as even firms highly
successful in their domestic operations (e.g. launching products) often stumble when
they expand their operations to overseas. For example, Kellogg entered into India in
the late-1990s. Indian consumers did not pay much attention to breakfast cereals
because most consumers either prepared breakfast from scratch every morning or
grabbed some biscuits with tea. Thus, like many of its counterparts, Kellogg’s
expansion to India proved unsuccessful, and, after three years in the market, sales
stood at an unimpressive $10 million (Arnold, 2003).
The introduction of new products to multi-country or global markets raises new issues
for marketers regarding the accurate interpretation of consumer research. Cultural
differences in consumer responses from country to country do in fact exist, and are large
enough to have a significant impact on the reliability of forecasts and other conclusions
drawn from research. Companies planning to introduce new products in more than one
country must gather and understand consumer reactions to their new initiative in each
major market of interest, to avoid drawing erroneous conclusions. Understanding the
effect of cultural variations on social interactions, and consequently on the adoption of new
products in a specific country will help management in the forecasting of demand by
decreasing the perceived uncertainty of foreign cultural environments.
Forecasting models are frequently used to predict short-term and long-term sales of
a product. Accurate forecasts are critical in the “production, distribution, marketing,
and general planning efforts of these products” (Parker, 1994, p. 353). Macro
models such as the Bass model have traditionally been used for these purposes.
Given the number of factors that influence the adoption of a new product, these models The adoption
are occasionally unsuccessful at providing precise forecasts, which can sometimes lead and diffusion of
to disastrous consequences for a firm. Our theorized model combines individual
heterogeneity, cultural differences and word-of-mouth communication in one study new products
and follows the individual-level modeling approach but can still be aggregated to
obtain a macro perspective, may therefore be superior in their forecasting ability.
While the developed propositions provide new insights, it is important that their 211
validity is supported. Country-specific research designs that ensure the greatest accuracy
are often cost prohibitive, while those that rely solely on a lead country can be very
misleading. If budget constraints preclude the use of a full test design in every country of
interest, marketers may want to consider conducting a full test in the true lead countries
where a high degree of forecasting accuracy and diagnostic understanding is critical,
coupled with reduced-base testing in others. Utilizing such a research design can provide
significant cost savings without significant loss of accuracy.
A second possible way of validating the propositions would be using agent-based
modeling technique, which effectively works with complexity arising from social
interactions (Bonabeau, 2002). Although social interactions play a crucial role in the
adoption of new products, they add tremendous complexity to model, and the complexity is
even greater when researchers deal with international innovation diffusion since people
communicate differently in different countries. The strength of agent-based modeling
derives from its ability to bring micro- and macro-social phenomena together and capture
the underlying details of unexplained behavior (Garcia, 2005; Morel and Ramanujam, 1999).
Despite its merits, the use of agent-based modeling has its own limitations. Researchers
should be cautious when they use this methodology because social interactions cannot
always easily be modeled to emulate reality. Moreover, agent-based modeling methodology
involves describing the heterogeneous behavior of potentially many individual units.
Simulating the behavior of individual agents can be extremely computationally intensive
and therefore time consuming. The high-computational requirements of agent-based
modeling remain a problem when it comes to modeling large systems. Finally, the use of
agent-based modeling in international innovation diffusion field is still in its early stages.
Another way to validate the propositions would be constructing models bringing
macro-diffusion and micro-adoption approaches together, but restricting differences
between members of the population on a few salient dimensions. This essentially
segments the population into groups of collective individuals. Individuals within a
group are considered to be homogeneous, and will not differ in their adoption behavior.
Differences exist between groups which lead to various adoption patterns. A potential
practical application would be to use market research data about segments of the
population to fit the parameters of the model. Such models may be able to provide
improved forecasts for a firm.

Limitations and conclusions

Although this study provides us new opportunities to better understand innovation
adoption process, there are number of limitations. First, in this study, we employed
Hofstede’s cultural framework. However, Hofstede’s approach has received increasing
criticism in recent years (for a detailed critique of the Hofstede framework, see
McSweeney, 2002). Other approaches to culture and its measurement should be carried
out to validate this study’s propositions.
IMR Second, there are many factors that we have not included here that may affect
25,2 adoption of new products such as socioeconomic status, political variables, new
product characteristics, and so on. Agent-based modeling makes it easy to add such
factors quickly to see if and how they are relevant, but we believe that initial modeling
efforts for problems like these should remain simple to provide a bridge to what may
already be an extensive analytical effort.
212 Despite the study is not empirically validated, we hope that researchers and
academics will find value in this study. This study contributes to the international
marketing literature by offering a deeper understanding of how social interactions
influence individuals’ innovation adoption decisions and provides a new foundation for
the literature by bringing together the heterogeneity of individual, cultural differences,
and social interactions in one study.

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Corresponding author
Goksel Yalcinkaya can be contacted at: goksel.yalcinkaya@unh.edu

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