Scale versus scope in the diffusion of new technology

de Daniel P. Gross, Harvard Business School

Using the farm tractor as a case study, I show that lags in technology diffusion arise along two distinct margins, which I term scale and scope. Though tractors are now used in nearly every agricultural field operation and in the production of nearly all crops, they first developed with much more limited application. Early diffusion was accordingly rapid in these narrower applications, but it was limited in scope until tractor technology generalized. The sequence of diffusion is consistent with a model of R&D in specific- versus general-purpose attributes and with other historical examples, suggesting that the key to understanding technology diffusion lies not only in explaining the number of different users, but also in explaining the number of different uses.