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

  • Adela Luque
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    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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    File URL: http://www.tandfonline.com/doi/abs/10.1080/10438590214337
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    Article provided by Taylor & Francis Journals in its journal Economics of Innovation and New Technology.

    Volume (Year): 11 (2002)
    Issue (Month): 6 ()
    Pages: 543-568

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    Handle: RePEc:taf:ecinnt:v:11:y:2002:i:6:p:543-568
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