Production technologies and financial performance: The effect of uneven diffusion among competitors
We explore the impact of a production technology on financial performance from the perspectives of technology diffusion and competitive strategy theory. We analyse how diffusion at firm and market levels influences the returns from the technology. We suggest that firm heterogeneity in the level of technology use leads to competitive advantages for relatively intensive adopters. We empirically test our propositions through the analysis of the diffusion of the Automated Teller Machine among Spanish savings banks between 1986 and 2004. Our results show that it is not the absolute but the relative level of use that drives the impact of the technology on profitability. Furthermore, as the technology is more intensively deployed in the market, the profitability of every firm decreases. Interestingly, in our empirical setting, this negative effect eventually leads to an aggregate negative impact on the profitability of the savings banks.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999.
"The consolidation of the financial services industry: Causes, consequences, and implications for the future,"
Journal of Banking & Finance,
Elsevier, vol. 23(2-4), pages 135-194, February.
- Allen N. Berger & Rebecca S. Demsetz & Philip E. Strahan, 1998. "The consolidation of the financial services industry: causes, consequences, and implications for the future," Finance and Economics Discussion Series 1998-46, Board of Governors of the Federal Reserve System (U.S.).
- Georg Götz, 1999.
"Monopolistic Competition and the Diffusion of New Technology,"
RAND Journal of Economics,
The RAND Corporation, vol. 30(4), pages 679-693, Winter.
- Georg GÖTZ, 1996. "Monopolistic Competition and the Diffusion of New Technology," Vienna Economics Papers vie9610, University of Vienna, Department of Economics.
- Hannan, Timothy H & McDowell, John M, 1990.
"The Impact of Technology Adoption on Market Structure,"
The Review of Economics and Statistics,
MIT Press, vol. 72(1), pages 164-68, February.
- Timothy H. Hannan & John M. McDowell, 1989. "The impact of technology adoption on market structure," Finance and Economics Discussion Series 73, Board of Governors of the Federal Reserve System (U.S.).
- Giuliana Battisti & Heinz Hollenstein & Paul Stoneman & Martin Woerter, 2005.
"Inter and Intra firm Diffusion of ICT in the United Kingdom (UK) and Switzerland (CH) : An Internationally Comparative Study Based on Firm-level Data,"
KOF Working papers
05-111, KOF Swiss Economic Institute, ETH Zurich.
- Giuliana Battisti & Heinz Hollenstein & Paul Stoneman & Martin Woerter, 2007. "Inter And Intra Firm Diffusion Of Ict In The United Kingdom (Uk) And Switzerland (Ch) An Internationally Comparative Study Based On Firm-Level Data," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(8), pages 669-687.
- Murali D. R. Chari & Sarv Devaraj & Parthiban David, 2008. "Research Note--The Impact of Information Technology Investments and Diversification Strategies on Firm Performance," Management Science, INFORMS, vol. 54(1), pages 224-234, January.
- Mookherjee, Dilip & Ray, Debraj, 1991. "On the competitive pressure created by the diffusion of innovations," Journal of Economic Theory, Elsevier, vol. 54(1), pages 124-147, June.
- Jovanovic, B. & MacDonald, G.M., 1992.
"The Life-Cycle of Competitive Industry,"
92-09, Rochester, Business - Financial Research and Policy Studies.
- Jovanovic, B. & MacDonald, G., 1993. "The Life Cycle of a Competitive Industry," Working Papers 93-34, C.V. Starr Center for Applied Economics, New York University.
- Boyan Jovanovic & Glenn MacDonald, 1993. "The Life-Cycle of a Competitive Industry," NBER Working Papers 4441, National Bureau of Economic Research, Inc.
- Dolata, Ulrich, 2009. "Technological innovations and sectoral change: Transformative capacity, adaptability, patterns of change: An analytical framework," Research Policy, Elsevier, vol. 38(6), pages 1066-1076, July.
- Stoneman, Paul & Kwon, Myung Joong, 1996. "Technology Adoption and Firm Profitability," Economic Journal, Royal Economic Society, vol. 106(437), pages 952-62, July.
- Hollenstein, Heinz & Woerter, Martin, 2008.
"Inter- and intra-firm diffusion of technology: The example of E-commerce: An analysis based on Swiss firm-level data,"
Elsevier, vol. 37(3), pages 545-564, April.
- Heinz Hollenstein & Martin Woerter, 2007. "Inter- and Intra-Firm Diffusion of Technology: the Example of E-commerce : An Analysis based on Swiss Firm-level Data," KOF Working papers 07-157, KOF Swiss Economic Institute, ETH Zurich.
- Chari, Murali D.R. & Devaraj, Sarv & David, Parthiban, 2007. "International diversification and firm performance: Role of information technology investments," Journal of World Business, Elsevier, vol. 42(2), pages 184-197, June.
- Hoppe, Heidrun C., 2000. "Second-mover advantages in the strategic adoption of new technology under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 18(2), pages 315-338, February.
- Battisti, Giuliana & Stoneman, Paul, 2005. "The intra-firm diffusion of new process technologies," International Journal of Industrial Organization, Elsevier, vol. 23(1-2), pages 1-22, February.
- Arora, Ashish & Fosfuri, Andrea & Gambardella, Alfonso, 2001. "Markets for Technology and Their Implications for Corporate Strategy," Industrial and Corporate Change, Oxford University Press, vol. 10(2), pages 419-51, June.
- Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, March.
- Katerina Simons & Joanna Stavins, 1998. "Has antitrust policy in banking become obsolete?," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 13-26.
- Teece, David J., 1993.
"Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy,"
Elsevier, vol. 22(2), pages 112-113, April.
- Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
- Sarv Devaraj & Rajiv Kohli, 2003. "Performance Impacts of Information Technology: Is Actual Usage the Missing Link?," Management Science, INFORMS, vol. 49(3), pages 273-289, March.
- Arnoud W. A. Boot & Matej Marinç, 2008. "The evolving landscape of banking," Industrial and Corporate Change, Oxford University Press, vol. 17(6), pages 1173-1203, December.
- Fuentelsaz, Lucio & Gómez, Jaime & Palomas, Sergio, 2009. "The effects of new technologies on productivity: An intrafirm diffusion-based assessment," Research Policy, Elsevier, vol. 38(7), pages 1172-1180, September.
- Myron L. Kwast & Martha Starr-McCluer & John D. Wolken, 1997. "Market definition and the analysis of antitrust in banking," Finance and Economics Discussion Series 1997-52, Board of Governors of the Federal Reserve System (U.S.).
- Sunil Sharma, 1992. "Behind the Diffusion Curve: An Analysis of ATM Adoption," UCLA Economics Working Papers 686, UCLA Department of Economics.
- Goddard, John & Molyneux, Philip & Wilson, John O.S. & Tavakoli, Manouche, 2007. "European banking: An overview," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 1911-1935, July.
- Harris, Christopher & Howitt, Peter & Vickers, John & Aghion, Philippe, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Scholarly Articles 12375013, Harvard University Department of Economics.
- Battisti, Giuliana & Iona, Alfonsina, 2009. "The intra-firm diffusion of complementary innovations: Evidence from the adoption of management practices by British establishments," Research Policy, Elsevier, vol. 38(8), pages 1326-1339, October.
- Fuentelsaz, Lucio & Gomez, Jaime & Polo, Yolanda, 2003. "Intrafirm diffusion of new technologies: an empirical application," Research Policy, Elsevier, vol. 32(4), pages 533-551, April.
- Lucio Fuentelsaz & Jaime Gómez, . "Multipoint Competition, Mutual Forbearance and Entry into Geographic Markets," Studies on the Spanish Economy 127, FEDEA.
- Hannan, Timothy H & McDowell, John M, 1987. "Rival Precedence and the Dynamics of Technology Adoption: An Empirical Analysis," Economica, London School of Economics and Political Science, vol. 54(214), pages 155-71, May.
- David B. Humphrey, 1994. "Delivering deposit services: ATMs versus branches," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 59-81.
- Battisti, Giuliana & Canepa, Alessandra & Stoneman, Paul, 2009. "e-Business usage across and within firms in the UK: profitability, externalities and policy," Research Policy, Elsevier, vol. 38(1), pages 133-143, February.
- Ricart, Joan E. & Adegbesan, Tunji, 2007. "Appropriating value from external technology: Absorptive capacity dimensions and innovation strategy," IESE Research Papers D/669, IESE Business School.
- Battisti, Giuliana & Stoneman, Paul, 2003. "Inter- and intra-firm effects in the diffusion of new process technology," Research Policy, Elsevier, vol. 32(9), pages 1641-1655, October.
- Aghion, Philippe, et al, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 467-92, July.
- Fariborz Damanpour & Richard M. Walker & Claudia N. Avellaneda, 2009. "Combinative Effects of Innovation Types and Organizational Performance: A Longitudinal Study of Service Organizations," Journal of Management Studies, Wiley Blackwell, vol. 46(4), pages 650-675, 06.
- Suarez, Fernando F., 2004. "Battles for technological dominance: an integrative framework," Research Policy, Elsevier, vol. 33(2), pages 271-286, March.
- Schilling, Melissa, 1999. "Winning the standards race: : Building installed base and the availability of complementary goods," European Management Journal, Elsevier, vol. 17(3), pages 265-274, June.
When requesting a correction, please mention this item's handle: RePEc:eee:respol:v:41:y:2012:i:2:p:401-413. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.