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The Diffusion of Innovation in the Residential Building Industry

January 2004, 95 pages

* Full Report (*.PDF 1MB)

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Diffusion of Innovation

How does technology penetrate the homebuilding industry? What factors influence the adoption of innovation among builders and consumers? This research report provides insight into this complex process.

Who goes first?

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. Early adopters represent only a small percentage of all builders, but they are critically important in demonstrating the benefits of these products and materials to other builders.

Where do they find info?

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.

What's the tipping point?

Middle-stage adopters are the lynchpin to significant market penetration. 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.

By manufacturing industry standards, residential building has a low level of concentration.

What influences innovation?

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 11/22/2006

Characteristics of Innovative Production Home Builders
Commercialization of Innovation: Lessons Learned
Integrating Panels into the Production Homebuilding Process
Overcoming Barriers to Innovation in the Homebuilding Industry
U.S. Housing Market Conditions
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