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An Option-Value Approach To Technology Adoption In U.S. Manufacturing: Evidence From Microdata

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Author Info
ADELA LUQUE
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.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 11 (2002)
Issue (Month): 6 (January)
Pages: 543-568
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Handle: RePEc:taf:ecinnt:v:11:y:2002:i:6:p:543-568

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Keywords: Technological Change And Innovation; Technology Adoption; Industries Studies: Manufacturing;

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