Information Technology, Organizational Capabilities and Context: How do regional economies and institutions matter to the spread of innovation?

Resource dependency and institutional theories of organizational structure and economic geography are employed to explain the spread of information technology applications in manufacturing processes. We consider a number of avenues through which institutions affect the spread of three different information technology applications. We find that an ownership change is itself an institutional mechanism that disrupts routines in the acquired enterprise and serves to legitimate the adoption of new technologies. Institutional linkages employed by enterprises for purposive search and active learning promote the diffusion of knowledge about the kinds of adaptations in standard practices necessary to exploit new technologies. Only the influences from the local economy in spreading innovation - especially from regional specialization – indicate an institutionalizing process of change that reflects mimetic isomorphism whereby late adopters conform to the growing dominance of specific information technologies within more specialized regions.