Inter- and intra-firm effects in the diffusion of new process technology

Using primarily the example of Computerised Numerically Controlled Machine Tools (CNC) in the UK metalworking and engineering industry, it is shown that, even many years after the date of first use of a new technology, although the larger proportion of firms may be using that technology, because the extent of intra-firm diffusion is limited, the proportion of total industry output produced on that technology may be quite small. Using backward projection techniques it is further shown that intra-firm diffusion tends to lag behind inter-firm diffusion over the whole of the diffusion process and inter-firm diffusion patterns and extent may thus be poor indicators of overall diffusion. Although intra-firm diffusion is therefore crucial to the understanding of overall diffusion patterns the existing literature relating to it has severe limitations and there are no associated policy results. It is argued that much greater emphasis should be placed on intra-firm issues in future diffusion research. It is also suggested that discussions of intra-firm policy could usefully proceed within the context of already established general diffusion policy principles.