The production and use of information technology (IT) in developed countries is wcll established and growing at a rapid pace. Newly industrializing countries are adopting both IT production and use as national goals. Developing countries are beginning to formulate plans to do the same. The institutional role in the international diffusion of IT is not well understood, but it is clear from the literature on innovation that the institutional role is critical. The paper makes four points. First, a traditional and fairly rigorous way of thinking about innovations - the economic perspective deriving from Schumpeter and Hicks - has been shown by studies from economic history and sociology/communications of innovation to be inadequate for explaining the dynamics of innovative change. The missing element is understanding of differential roles played by institutions. Second, among those promoting the need for institutional intervention there has been a debate about whether innovation is primarily supply-pushed or demand-pulled. The answer to the question has important institutional implications. The evidence, again mostly from economic history, shows it to be both, in iterative fashion. Thus institutions can intervene meaningfully on both sides. Third, there are two major forms of institutional intervention: influence and regulation. The possible intervention actions of institutions can be encompassed by a 2 x 2 matrix with supply-push and demand-pull on one dimension and influence and regulation on the other. Finally, if government wants to intervene, there are six classes of roles that might be pursued to affect innovation.