This research examines the diffusion of information technology innovation in the newly emerging video text industry. Existing theories of innovation and of industry organizations have not been very useful for explaining the widespread collaborative relationship which this kind of innovation appears to trigger. This research focuses on why firms do not develop innovations in house, imitate it or buy it from those who license it, but rather team up with other firms who have related but distinct technological expertise? Conventional economic approaches such as industrial organization theory and transaction costs theory do not provide a satisfactory description as to when and why firms would band together to exploit a new technology and how the innovations in products and services come about. This research promises to break new ground by detailing the interplay between the attributes of the technologies, the strategic technological competence and distinctive skills of each firm and the new forms of collaborative institutional arrangements and organization designs.
