Institutional Processes in the
Diffusion, Use and Impacts of Information Technology

pp. 347-356 in : Russell Belk, Nikhilesh Dohlakia, and Alladi Venkatesh (eds). (1996). Consumption and Marketing: Macro Dimensions. South-Western Publishing Co.

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The institutional analysis of the diffusion of information technologies by Dholakia, Bakke and Dholakia (IPITD, this volume) is a welcome relief from standard accounts. Unfortunately the conventional accounts of this topic ignore the roles of culture and social/political institutions in shaping the diffusion and use of information technologies (IT). There is much to applaud in this chapter. I will briefly amplify some their interesting ideas.

Ideologies and the Diffusion of Information Technologies:

IPITD emphasizes the role of ideology in influencing the diffusion and use of information technologies in a culture. It is ironic that information technologies are often portrayed as instruments to enhance the diffusion of knowledge, while they are often the subject of significant mystification (Kling and Iacono, 1991). Technological utopianism places the use of some specific technology, such as computers, nuclear energy, or low-energy low-impact technologies, as key enabling elements of a utopian social vision (Section I:Dunlop and Kling, 1991, Kling, 1992a). Technological utopianism refers to the structure of the narratives which link specific technologies to social progress. The technologies at the center of these narratives can be mundane, novel, or far-fetched. In the US, technological utopianism is a publicly acceptable and commonplace genre of analysis within which advocates frame the social roles of new technologies. It is not only a device for commercial advertising. Technological utopianism influences many of the news stories about new technologies as well as the writings of many serious non-fiction analysts.

The contrasting genre of analysis, technological anti-utopianism examines how certain broad families of technologies facilitates a social order which is relentlessly harsh, destructive and miserable. Technological anti-utopianism is a less common framework, and is often criticized as "anti-progress."

I have recently analyzed the analytical structures of these two genres, as well as three other empirically-oriented genres of writing about the adoption, use and impacts of information technology (Kling, 1992a). Both technological utopian and anti-utopian analyses make tacit and powerful claims about the context in which people use technology. Technological utopians generally assume that people have equipment in good working condition, that ancillary resources, such as electricity and supplies are all available, that people know how to use the technology skillfully, that its use clearly enhances people's purposive action in a civil manner, etc. The technologies under discussion gracefully fits people's preferences of the moment. The technological anti-utopian analyses are much more diverse in the ways they undermine the imagery of benign technology. Some authors portray a world in which there are significant social conflicts between the users of information technologies and others, such as their employers, political elites, etc. The technologies work effectively, but they are embedded in exploitive social relationships. Another line of argument examines what can happen when technologies don't work well: people are confused by complex systems, or important systems break down.

The institutional realism of IPITD shares the empirical orientation of the best common alternatives to technological utopianism and anti-utopianism (Kling, 1992a). IPIPD also moves beyond the concern of traditional marketing with purchase decisions to studying the patterns of consumption situated in credible social contexts. This is an important shift of attention. One of the misleading simplifications of both utopian and anti-utopian analyses is to assume that the adoption of a technology means that people will use it in ways that are direct and simple, or at least stereotypical. (For example, engineers will use workstations for imporving their system designs rather than playing computer games, writing love poems and manging their investments as well as carrying out engineering analyses). People's actual patterns of technology use is an empirical question (e.g., Bullen and Bennett, 1991; Kling, 1992b). As Dholakia, Bakke and Dholakia note, many individuals may not use key features of their technologies and perhaps feel guilty that they are underutilizing important potentialities. Alternatively, people can find novel uses for technologies that we not anticipated by designers (e.g., Bullen and Bennett, 1991).

Institutional Analysis

A focus on product characteristics tends to obscure the way in which relations of power and structured social relationships influence the diffusion and use of new technologies. Dholakia, Bakke and Dholakia make a key contribution in arguing that "A realistic view of how information technology spreads in a society has to draw upon the institutional matrix in which such technology is created, standardized, justified, deployed, modified, priced, and promoted." The force of this important claim rests on two pivotal terms whose meanings could be usefully amplified: "realistic" and "institutional." "Realistic" brings a moral force to this argument, and could be contrasted with "fanciful." Major debates could center on the value of convenient concepts like "markets," "innovation," and "consumer choice," and the empirical value of alternative theories.

The term "institutional" is the most central term in this key claim in IPITD, and helps Dholakia, Bakke and Dholakia embark on an important macro-level analysis. But it's important to keep in mind that economists, political scientists, macro-sociologists and organization theorists use the term "institutional" in overlapping but sometimes distinct ways (eg., Powell and DiMaggio, 1991). The principle conceptions of "institutional" refer to social arrangements and belief systems which have some kind of formidable presence or influence, and which are not easily changed. Highly institutionalized social arrangements and belief systems are often taken-for-granted by many participants, and narrow the possibilities of choices in practice in ways that are much less explicit than terms like "bounded rationality" suggest. Societal scale institutional analysis often examine interlocking and mutually supporting sets of market structures, regulatory arrangements, social practices, and deep beliefs as elements of an explanation. Institutional analysis leads to rich studies of the ways that information technologies which developed, deployed and used in complex multi-level social systems (cf. Kling and Iacono, 1989; Beuschel and Kling, 1992; Kling, Scherson and Allen, in press).

IPITD employs an interesting analytical strategy of examining technologies which diffused less rapidly than many knowledgeable observers expected. In cases of this kind the institutional factors should stand out very clearly. We can also conceive of other ways to select cases which should make institutional elements stand out. One complementary set of cases are those where the technology spreads much faster than many people anticipated (e.g., computers generally, and microcomputers in particular). Another kind of family of cases would contrast competing technologies with different diffusion and usage patterns, such as facsimile machines versus electronic mail.

In reading the case of debit cards in IPITD, missed some important elements that would make their argument more compelling. The authors suggest that US consumers are particularly resistant to debit cards while it would be in the interests of banks to provide them. The analysis in IPITD would be much stronger if the authors more carefully examined the economics of credit and debit cards as seen by key institutional players in the US and Scandinavia, including banks, retail chains, and smaller merchants.

They contrast the US case with case of debit cards in Scandinavia, where banks mailed debit cards to many customers and provided them free of charge. I suspect that US banks strongly encourage the use of credit cards and that their support plays a key role in the relative importance of credit cards over debit cards in the US. I receive well over a dozen tantalizing offers each year to sign up for new credit cards. I cannot remember ever receiving a solicitation to set up a debit card which was not part of a larger service bundle, such as an ATM network and a credit card. The reasons that banks and retail merchants market credit cards more aggressively than credit cards in the US is an important and still puzzling part of this story. After all, there is no strong consumer movement which criticizes debit cards in the way that consumer groups have been criticizing Caller ID telephone service (e.g., Lazzareschi, 1992).

In the US banks are able to charge substantial interest on credit cards, usually between 17-22% on outstanding balances. Credit cards have been a very profitable business for most US banks. Middle class consumers often receive numerous offers each year to obtain even more credit cards (often variants of Visa and Mastercard) from various banks and large retail firms. Some banks are willing to share their credit card profits with philanthropic organizations and professional associations, and further expand their credit card markets through joint marketing ventures. Further, banks aggressively market their credit cards by adding additional services such as insurance for the loss of credit cards, accident and auto insurance while traveling, cash advances, etc.

While consumers benefit from the float provided by credit cards, merchants may be better off if their balances were paid promptly. While some large department stores issue charge cards, these are usually credit cards. And relatively few small merchants discount services for payment with cash instead of credit cards. The U.S. runs on credit not only because consumers want it, but because businesses do not create an incentive structure for using cash (or debit cards) that competes with the incentives for using credit cards. Credit cards also offer consumers more control over payments, through provisions of stopping payments in cases of disputes and fewer financial risks when cards are lost or stolen (Kling, 1991). One could readily imagine US banks offering free debit cards with rich arrays of associated services if banks could profit from them. In this case, merchants would have to pay banks higher fees to pay for the debit cards system.

All too often, analysts try to imperialize by using only one theoretical approach, such as only transaction-cost economics or only institutional sociology. I believe that we will learn more by being catholic in using multiple theoretical approaches. In the case of the debit and credit card diffusion, An examination of the business economics of the cards in each country would help us understand the persistence of easily accessible consumer credit as a highly institutionalized market arrangement in the US.

New Information Technologies: The Case of Two-Way Television

It is worth extending institutional analysis to another case of information technologies whose social characteristics are still very indeterminate. This analysis extends IPITD's institutional matrix in which "technology is created, standardized, justified, deployed, modified, priced, and promoted" to include regulatory arrangements and the social organizations of communities which use the technology. Further, it helps us see how institutional analysis helps us understand the structuring of markets for some emerging information technologies.

In January 1992, the Federal Communications Commission (FCC) voted unanimously proposed opening up 220MHz of the radio spectrum for "emerging technologies," including two-way TV and mobile telephones (Moffat and Houston, 1992; Carnevale, 1992). Most of these frequencies, 1.85-2.2 GHz, are now a kind of public good and used for public services such as police, fire, ambulances, railroads and utilities. This is an interesting case in which it is useful to distinguish between the restructuring of the domains where the medium is used and specific transactions on the new media.

According to the FCC's proposal, the existing public services must move their communications to a band of higher frequencies, where communication is less reliable. The primary resource, communications frequencies, is similar to high quality land, and is being authoritatively allocated for private use. Both public agencies and private firms, such as utilities, are fighting this reallocation because of the costs of moving and the reduced communications capabilities in their new frequency range. In order to sweeten the deal, the FCC is proposing that the new private license holders (owners) of a given frequency will have to help pay a current license holder for the costs of their moving to another frequency.

This restructuring is akin to a forceful reallocation of public services like schools and hospitals from attractive waterview lands so that private shopping centers can be built in their place. However, new lands will be set aside for the schools, parks and hospitals near inland railroad tracks. But the public services can charge for their move to help offset their costs. Other market and public policy issues pertinent to the location and relocation of these facilities. And still other issues pertain to the social roles of these facilities, regardless of their locations and relocations.

This reallocation of frequencies for private communications cannot be understood in terms of existing consumer-driven level market forces, because the proposed services are new and in some cases, quite experimental. This authoritative allocation is driven by a combination of telecommunications firms which may have strong ties with the FCC and in alignment with a free market philosophy in which values privatizing public goods and services. The FCC is partly structuring several different markets. One market is organized around spectrum space; the buyers will be private firms and the sellers are organizations which provide key public services. It is not yet clear how the market structures and regulatory rules will differ for radio frequencies to support mobile telephones and two-way TV.

The concrete services supported by mobile telephones and two-way TV have very different social and institutional characteristics, although they each tie people into a larger communications network. Vendors anticipate that the sale and use of pocket telephones will extend the current surge of cellular phone use in the US. Technological utopianism characterizes the public comments of vendors of both kinds of services. For example, a Vice President of Cellular Service, a major "reseller" of cellular phone services is quoted in the Los Angeles Times as saying, "By the year 2000, everyone is going to carry some kind of wireless device. You'll be a much more efficient, happy person if you don't have to stand by your phone. (Moffat and Houston, 1992:D13)." Mobile phones will reach much larger markets if they are advertised with technologically utopian images of personal freedom of movement rather than with anti-utopian advertisements that portray people losing places where they previously escaped from intrusive phone calls or periodic monitoring.

It is likely that pocket telephones will act more as extensions of existing phones. But the social repercussions of two-way TV do not seem more far reaching than just minor elaborations of the social patterns facilitated by existing technologies. Two-way TV is being marketed in pilot from by a company named TV Answer, which pitches their digital TV services as simple extensions of existing home television. Certain of their services, such as cable TV are, in fact, identical with today's cable TV. However, the services which differentiate two-way TV from one way TV can open new markets, restructure markets and also restructure homes and towns in social space.

Some of the new core services for two-way TV include various kinds of home shopping, bill paying, fast food ordering, and information services. In a recent television show, Richard Miller, CEO of TV Answer Inc., demonstrated the home shopping with a viewers credit card information stored in a two-way TV's memory (Sunday Today, 1992). To order a pizza or a household item which was offered for sale, the viewer only had to aim a simple "gun" at several check boxes on the TV screen and confirm specific selections. Mr Miller enthusiastically portrayed two-way TV as a gateway to a cornucopia of mass merchandise and home-delivered fast foods, as well as a way to enhance citizen participation by responding to polls with a fixed number of responses. The kind of interaction which is demonstrated in today's prototypes is very limited; viewers respond to a fixed menu of choices. TV Answer is an apt name, since the service is not conceptualized as being a rich two-way communications medium like the interactive computer services (Prodigy, Compuserve, etc).

Home shopping via two-way TV amplifies several trends. It is more likely that large firms and chain stores rather than small locally owned businesses will have their wares sold on two-way TV. This pattern will help further integrate local consumer markets into regional and national markets, and reduce the role of local businesses. The use of debit cards for these purchases would further reduce consumer control, since people could be paying for items that they had not seen, touched, used, or felt.

In addition, these home shopping features amplify the trend of having the shopping mall penetrate the home. Mail order catalogs, telemarketing, and advertising on commercial television all facilitate the shopping mall penetrating into the home (Venkatesh, 1991). Certain activities of the home, such as sexuality, leisure lounging, dancing, arguing, and sleeping are generally excluded from shopping malls or restricted to very limited spaces and times. Thus the marketplace penetrates the home more and more. But home activities do not extend into the marketplace, and especially shopping malls, to a comparable degree. Two-way TV can further this trend, by bringing instant shopping commitments into the home. Simultaneously, it may integrate shopping for mass merchandise with ordinary homelife. It is possible to see these patterns as both further erosions of larger community life, or the integration of diverse activity in the home cocoon.

Two-way TV also makes it much easier for people to commit to a purchase at the moment a choice is presented. Some kinds of local services, such as pizza delivery by chains which can afford the fees, may be advantaged by such a service.

But the actual uses and impacts of two-way TV depends upon the cultural values which shape the actual ways that vendors structure the services and in which people use them, as the authors argue in IPITD. The case of credit cards in the US is an instructive analogy. Companies like TV Answer may follow the banks that bundle other services with credit cards, and provide anything from free pizzas to steeply discounted renter's insurance to help accelerate their sales. Further, as Dholakia, Bakke and Dholakia note, the context in which people use technologies like this is critical in shaping actual uses. For example, two-way TV shopping is more likely in suburbs which are already highly privatized and in which national chains have significant presence than in more traditional medium-sized towns where small local businesses are more dominant. In some contexts two-way TV can further undermine the economic viability of local meeting places, like pizza parlors, and increase people's social isolation in their home cocoons. In other contexts, it might be a minor adjunct to ordering by telephone and would not appreciably undermine local community life.

Two-way TV may also have a substantial influence on marketing practices. The system will expand the collection, sale and dissemination of information about consumer purchases which can be used for marketing, including telemarketing and direct mail. Since every purchase via two-way TV should leave an electronic trace, the service provider can create a rich database which can facilitate efficient micromarketing. Today, there are few restrictions on the collection and resale of marketing data of this kind. As an extreme example, some firms check the maternity records of hospitals to identify parents of new born children, because these lists are useful for identifying potential purchasers of children's goods. In a similar way, the family which buys diapers over their two-way TV has identified themselves as candidates for numerous related purchases of products for babies. By helping to provide more fine grained consumer data for precision-marketing, two-way TV can help amplify an important trend in using databases to help manage firms. (We examine this dynamic and important trend in more detail elsewhere, and call it "information captalism" (Kling, Olin, and Poster, 1991b; Kling Scherson and Allen, in press)).

How will people use two-way TV, if at all? It is likely that people will use it if it helps market attractive services and is priced in a way that they consider as fair. Further their perceptions of control may depend upon the extent to which they can use credit cards or debit cards, feel that personal privacy is being invaded through the collection of data for marketing other things to them, etc. In brief, two-way TV is not an isolated communications medium. It may be embedded in a social matrix which regulates payments, the sharing of marketing information, and commercial patterns in a community.

Two-way TV is an interesting technology whose actual usage is still undetermined. It is possible that the vendors' hopes for households to buy the digital TVs, subscribe to numerous services, and be energetic shop-at-home consumers will be widely exaggerated. But it is plausible that two-way TV will occupy a distinctive niche, somewhat like strip malls in new towns (Kling, Olin and Poster, 1991). It is a good example where any serious effort to understand the dynamics of its use requires understanding complex institutional arrangements and nuances of family cultures because these create the contexts in which people will "choose" to use these technologies. I can imagine empirical studies of consumer preference which examine people's willingness to buy fast food, durable goods, and services through two-way TV, direct mail ads, physical shopping, and other means. But these studies will likely ignore the way in which these options are not all mobilized by consumer preferences. Complex social and regulatory arrangements have to be restructured to make these choices plausible.

Two-way TV is a technology whose routine use has the potential to restructure numerous markets and even the practices of marketing and social relationships in towns. Yet, these powerful consequences are so dependent upon the ways that people integrate the medium into their lives, if at all, that it cannot be adequately understood without carefully examining its use in real homes.

Conclusions

Dholakia, Bakke, and Dholakia open up important lines of inquiry in IPITD. With highly suggestive examples, they examine why institutional patterns are critical for understanding the adoption and use of technologies which people have been less enthusiastic about than many observers expected. They also make a key point that studies of the contexts in which technologies are used, rather than simply the decisions to acquire them, are critical for understanding diverse consumption patterns. I have built upon their analyses to sketch out the case of an emerging technology - two-way TV - whose future is still uncertain. But the study of information technologies like this must rest on rich institutional analysis of the sort which Dholakia, Bakke and Dholakia identify.

Acknowledgements: Jonathan P. Allen and Nikhilesh Dholakia made some helpful comments on an early draft of this manuscript. Jon Grudin provided some helpful insights into the use of debit cards in Scandinavian countries.

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