This paper extends our previous studies on the assimilation of Internet-based e-business innovations by firms in an international setting. Drawing upon theories on the process and contexts of technology diffusion, we develop an integrative model to examine three assimilation stages: initiation → adoption → routinization. The model features technological, organizational, and environmental contexts as prominent antecedents of this three-stage assimilation process. Based on this model, we hypothesize how technology readiness, technology integration, firm size, global scope, managerial obstacles, competition intensity, and regulatory environment influence e-business assimilation at the firm level. A unique data set of 1,857 firms from 10 countries is used to test the conceptual model and hypotheses. To probe deeper into the influence of the environmental context, we compare two subsamples from developed and developing countries. Our empirical analysis leads to several key findings: (1) Competition positively affects initiation and adoption, but negatively impacts routinization, suggesting that too much competition is not necessarily good for technology assimilation because it drives firms to chase the latest technologies without learning how to use existing ones effectively. (2) Large firms tend to enjoy resource advantages at the initiation stage, but have to overcome structural inertia in later stages. (3) We also find that economic environments shape innovation assimilation: Regulatory environment plays a more important role in developing countries than in developed countries. Moreover, while technology readiness is the strongest factor facilitating assimilation in developing countries, technology integration turns out to be the strongest in developed countries, implying that as e-business evolves, the key determinant of its assimilation shifts from accumulation to integration of technologies. Together, these findings offer insights into how innovation assimilation is influenced by contextual factors, and how the effects may vary across different stages and in different environments. © 2006 INFORMS.

Grounded in the diffusion of innovation theory and the technology- organization-environment framework, we develop an integrative model to study the determinants of post-adoption stages of innovation diffusion, using enterprise digital transformation as an example of technology-enabled innovations. We specify four innovation characteristics (relative advantage, compatibility, costs and security concern) and four contextual factors (technology competence, organization size, competitive pressure and partner readiness) as determinants of post-adoption usage, and postulate usage as an intermediate link to impact on firm performance. We test the proposed model using a dataset of 1415 companies from six European countries. We find that the innovation needs to be used extensively in value-chain activities before its impact can be realized. Among the innovation characteristics, we find that compatibility is the strongest driver, and security concern outweighs cost as a usage inhibitor. Among the contextual variables, technology competence, partner readiness and competitive pressure significantly drive e-business usage, and the structural inertia of large firms tends to slow down its penetration. Collectively, these results indicate that innovation diffusion can be better understood by including both innovation characteristics and contextual factors, whereas earlier literature has traditionally treated the two separately. Finally, we evaluate an international dimension among European countries and tease out important boundary conditions that would not have been evident in a single-country dataset. Our results show that careful attention must be paid to the economic and regulatory factors that may result in uneven innovation diffusion even among developed European countries. © 2006 Operational Research Society Ltd. All right reserved.