THE DIFFUSION OF INNOVATION IN-HOME BUILDING

Studies of housing demand and finance have dominated recent empirical research related to the housing industry. Housing supply has received considerably less attention, and empirical studies exploring the deter minants of technological progress in the housing industry are quite li mited. This paper investigates the factors that influence the propensi ty to adopt ten innovative methods and materials for a sample of 417 i ndividual home building concerns obtained from the 1987 NAHB Builders' Profile Survey. A diffusion index reflecting the number of innovation s used serves as the dependent variable in an ordered probit framework . Explanatory factors include economic conditions, characteristics of the firm and its operating head, the type of construction, and institu tional and regional variables. Alternative specifications accurately p redict the number of innovations adopted for about 32 to 34% of the sa mple. The estimation results suggest that firm size, type of construct ion, and regional effects are the key determinants of the propensity t o adopt the innovations examined in this study. We find some evidence that demographic characteristics of a firm's operating head influence diffusion. Our results do not support the hypotheses that fragmentatio n reduces the likelihood of adopting innovations or that unionization of its employees affects a builder's propensity to adopt innovative me thods and materials. (C) 1996 Academic Press, Inc.