An option-value approach to technology adoption in U.S. manufacturing: Evidence from microdata

Adela Luque

Economics of Innovation and New Technology, 2002, vol. 11, issue 6, 543-568

Abstract: Numerous empirical studies have examined the role of firm and industry heterogeneity in the decision to adopt new technologies using a Net Present Value framework. However, as suggested by the recently developed option-value theory, these studies may have overlooked the role of investment reversibility and uncertainty as important determinants of technology adoption. Using the option-value investment model as my underlying theoretical framework, I examine how these two factors affect the decision to adopt three advanced manufacturing technologies. My results are consistent with the option-value model's prediction that plants operating in industries facing higher investment reversibility and lower degrees of demand and technological uncertainty are more likely to adopt advanced manufacturing technologies.

Keywords: Technological Change And Innovation; Technology Adoption; Industries Studies: Manufacturing (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (8)

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DOI: 10.1080/10438590214337

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