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The Diffusion of Innovation in the Residential Building Industry

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January 2004, 95 pages

The successful diffusion of innovations in the residential home building industry can have substantial social, economic, and environmental benefits to American homeowners, and to members of the housing industry as well. By incorporating new technologies, techniques, and materials into construction practices, it is possible to:

  • Create more affordable housing;
  • Improve energy efficiency and conserve energy resources;
  • Improve the quality of U.S. housing stock by reducing the need for frequent repair and maintenance;
  • Increase the longevity of the housing stock;
  • Reduce the flow of scrap materials into the waste stream; and
  • Conserve scarce natural resources.

The U.S. Department of Housing and Urban Development (HUD) and the Partnership for Advancing Technology in Housing (PATH) present this report in direct support of ongoing efforts to understand the home building industry's means and methods. "The Diffusion of Innovation in the Residential Building Industry" looks at how and why innovations diffuse within the residential design and construction industry. Such knowledge can potentially accelerate the adoption and integration of new building technologies through more effectively designed programs, demonstration projects, channels of distribution, marketing strategies, and policy incentives.

The authors first conducted a literature review to summarize established theory and research on the diffusion of innovative products and practices in the construction industry. Then, using information collected through a survey of U.S. homebuilders and longitudinal data collected through the National Association of Home Builders Annual Builder Practices Survey, the authors examined how and under what circumstances residential housing innovations become standard industry practices.

The research is focused on "early adopters" -homebuilders who adopt particular products and materials at an early stage of market penetration. While early adopters represent only a small percentage of all builders, they are critically important in demonstrating the benefits of these products and materials to other builders. The authors also note, however, that middle-stage adopters deserve greater research attention, as they are the lynchpin to significant market penetration. They additionally note that late-stage adopters are heavily influenced by the 'bandwagon' effect, when the pressure is on to adopt products, materials, and practices that are rapidly becoming industry standards.

The research indicates that at the early stage of diffusion, national and regional firms, multifamily and modular builders, and custom builders are more likely to adopt innovations than are smaller volume single-family production builders. And while building product supplier representatives, subcontractors, and trade shows are important sources of information about new products and materials for all builders, early-stage adopters rely on technology transfer programs and universities more than middle or late-stage adopters do.

The research suggests that the perception among homebuilders that homebuyers want the "tried and true" construction materials plays an important role in the diffusion of residential construction technology. Further, the presence of "technology advocates" within the firm is also an important indicator in the diffusion of residential building technologies. More innovative firms are likely to stress the importance of being creative and innovative, and so are often among the first to use new products. Later adopters are more likely to be local firms and single-family production builders who emphasize marketability and profit, as well as those who associate the firm's success with land development.

Content updated on 2/27/2004

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