Institutional Factors in Information Technology Innovation John Leslie King Vijay Gurbaxani Kenneth L. Kraemer F. Warren McFarlan K. S. Raman C. S. Yap CRITO University of California. Irvine Irvine. California 92717-4650 University of California. Irvine Irvine. California 92717 University of California. Irvine Irvine. California 92717 Harvard Business School Soldiers Field Boston. Massachusetts 02163 National University of Singapore Singapore 0511 National University of Singapore Singapore 0511 Innovation in information technology is well established in developed na- tions; newly industrializing and developing nations have been creating gov- ernmental interventions to accelerate IT innovation within their borders. The lack of coherent policy advice for creating government policy for IT innova- tion signals a shortfall in research understanding of the role of government institutions, and institutions more broadly, in IT innovation. This paper makes three points. First, long-established intellectual perspectives on inno- vation from neoclassical economics and organization theory are inadequate to explain the dynamics of actual innovative change in the IT domain. A broader view adopted from economic history and the new institutionalism in sociology provides a stronger base for understanding the role of institutions in IT innovation. Second, institutional intervention in IT innovation can be constructed at the intersection of the influence and regulatory powers of institutions and the ideologies of supply-push and demand-pull models of innovation. Examples of such analysis are provided. Third, institutional pol- icy formation regarding IT innovation is facilitated by an understanding of the multifaceted role of institutions in the innovative process, and on the contingencies governing any given institution/innovation mix. Inslilutions—Information Technology—Innovation Introduction I nformation technologies have been among the fastest growing innovations in both production and use during the past four decades, and the prospects for future i 047-7047/94/0502/0139/$0i .25 Copyright © 1994, The institute of Management Sciences Itiformation Systems Research 5 : 2 139