Technology Adoption and Firm Profitability

Paul Stoneman and Myung Joong Kwon

Economic Journal, 1996, vol. 106, issue 437, 952-62

Abstract: In this paper, an encompassing model of the diffusion of new process technologies is used to predict the relationship between firm profitability and the adoption of technology. The model is tested on data relating to a sample of firms in the U.K. engineering industry over the period 1983-86. The results indicate that nonadopters experience reduced profits as other firms adopt new technologies and that the gross profit gains to adopters of new technology are related to firm and industry characteristics, the number of other users of new technologies, and the cost of acquisition. Copyright 1996 by Royal Economic Society.

Date: 1996
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