Institutional Determinants of International Technological Diffusion: the Case of Electronic Ticketing Among Airlines

Galang Roberto N. (IESE Business School)

Abstract: This paper investigates the institutional factors that affect the international diffusion of beneficial technological innovations across firms. The absence of clear contract enforcement processes and well-defined property rights discourages investments in technology, due to the difficulty in allocating the residual surplus gained from productive assets. Uncertainty increases the challenge of avoiding contractual hazards, requiring greater learning when undertaking investment decisions. State ownership encourages competing firm goals that diminish the incentive to promote technological improvements. Electronic ticketing is a critical tool for cutting costs in the airline industry; yet despite the myriad gains provided to individual firms, the pace at which this technology was adopted occurred unevenly across the world. Using a unique dataset consisting of more than 180 airlines operating in 120 different countries, my analyses indicate that controlling for firm-specific factors, state governance characteristics have a significant impact on the pace at which individual airlines adapt the e-ticketing technology. However, I find that state ownership of firms does not significantly affect the pace of technological diffusion. Moreover, my results suggest that the diffusion of technology operates not on a global scale but along regional lines, alluding to the need to also focus supra-national institutions to properly understand global processes.

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