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Noncapital Investment Costs and the Adoption of CAD and CNC in U.S. Metalworking Industries


  • Thomas Åstebro


Many studies have shown that firm size is the strongest and most consistent predictor of the adoption of technological innovations, but the causes for this relationship are debated. I investigate the relationships between various size measures and the adoption of computer-aided design (CAD) and computer numerically controlled (CNC) machine tools. Plant size is the dominant factor in predicting CAD and CNC adoption. Other measures such as firm size or multiplant operations have independent effects that are not present after controlling for plant size. I test four potential explanations for the results: noncapital cost spreading, equipment replacement, risk aversion, and learning. There is support only for the first explanation.

Suggested Citation

  • Thomas Åstebro, 2002. "Noncapital Investment Costs and the Adoption of CAD and CNC in U.S. Metalworking Industries," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 672-688, Winter.
  • Handle: RePEc:rje:randje:v:33:y:2002:i:winter:p:672-688

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    Cited by:

    1. Arthur Grimes & Cleo Ren & Philip Stevens, 2012. "The need for speed: impacts of internet connectivity on firm productivity," Journal of Productivity Analysis, Springer, vol. 37(2), pages 187-201, April.
    2. Carlos J. Serrano, 2011. "Estimating the Gains from Trade in the Market for Innovation: Evidence from the Transfer of Patents," NBER Working Papers 17304, National Bureau of Economic Research, Inc.
    3. López, Alberto, 2012. "Productivity effects of ICTs and organizational change: A test of the complementarity hypothesis in Spain," MPRA Paper 40400, University Library of Munich, Germany.
    4. Carlos J. Serrano, 2010. "The dynamics of the transfer and renewal of patents," RAND Journal of Economics, RAND Corporation, vol. 41(4), pages 686-708.
    5. Alipranti, Maria & Milliou, Chrysovalantou & Petrakis, Emmanuel, 2015. "On vertical relations and the timing of technology adoption," Journal of Economic Behavior & Organization, Elsevier, vol. 120(C), pages 117-129.
    6. Jae Young Choi & Yeonbae Kim & Yungman Jun & Yunhee Kim, 2009. "A Multivariate Probit Analysis of Korean Firms Information System Adoption: An Empirical Analysis on the Determinants of the Adoption and Complementarity Among the Information Systems," TEMEP Discussion Papers 200926, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
    7. Anthony Creane & Hideo Konishi, 2009. "Goldilocks and the Licensing Firm: Choosing a Partner when Rivals are Heterogeneous," Boston College Working Papers in Economics 720, Boston College Department of Economics.
    8. Gomez, Jaime & Vargas, Pilar, 2009. "The effect of financial constraints, absorptive capacity and complementarities on the adoption of multiple process technologies," Research Policy, Elsevier, vol. 38(1), pages 106-119, February.
    9. Pilar Beneito & María E. Rochina-Barrachina & Amparo Sanchis, 2013. "Ownership and cyclicality of firms’ R&D investment," Working Papers 1306, Department of Applied Economics II, Universidad de Valencia.
    10. Greenstein, Shane, 2010. "Innovative Conduct in Computing and Internet Markets," Handbook of the Economics of Innovation, Elsevier.

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