Household sector innovation, diffusion failure, and business ownership: evidence from South Africa

Abstract

Individuals in the household sector (HHS) often develop generally valuable innovations but rarely diffuse these. We explored if this diffusion problem generalizes to HHS innovations in developing countries and zoomed in on the role of business ownership to delineate how entrepreneurship stimulates diffusion. In South Africa, we find higher diffusion efforts by citizens than in developed countries: also by freely revealing innovations deemed generally useful. Next, we identified three ways in which HHS innovation is related to business ownership: innovation (1) leads to new businesses (user entrepreneurship), (2) contributes to existing businesses, and (3) can be unrelated to existing businesses, but freely revealed to everyone’s benefit—in that case, business owners leverage their entrepreneurial expertise. In all, the diffusion problem seems more applicable to developed countries, and the role of business ownership in diffusion is more refined than what studies have shown to date.