IDEAS home Printed from https://ideas.repec.org/a/wly/soecon/v70y2004i3p661-671.html
   My bibliography  Save this article

Multiplant Firms and Innovation Adoption and Diffusion

Author

Listed:
  • Richard A. Jensen

Abstract

A new theoretical explanation is provided for the empirical observation that large firms usually adopt sooner, although there are notable exceptions. The analysis focuses on the adoption of an innovation of uncertain profitability by a large firm with two plants and a small firm with one. Marginal production costs are increasing in each plant, and economies of multiplant operation are possible. These have conflicting effects on the incentive to adopt. The large firm benefits more from adopting a success. However, if an adopter must shut down a plant to learn about the innovation, the loss of multiplant economies reduces the large firm's incentive to adopt. Absent multiplant economies, the large firm is more likely to lead a diffusion because its greater return from a success dominates. However, the small firm is more likely to lead a diffusion if there are multiplant economies and the large firm's learning cost disadvantage dominates.

Suggested Citation

  • Richard A. Jensen, 2004. "Multiplant Firms and Innovation Adoption and Diffusion," Southern Economic Journal, John Wiley & Sons, vol. 70(3), pages 661-671, January.
    • Handle: RePEc:wly:soecon:v:70:y:2004:i:3:p:661-671
    DOI: 10.1002/j.2325-8012.2004.tb00595.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/j.2325-8012.2004.tb00595.x
    Download Restriction: no
    File URL: https://libkey.io/10.1002/j.2325-8012.2004.tb00595.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jensen, Richard, 1993. "Sharing Cost Information: A Counterexample," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 3(3), pages 589-592, July.
    2. Ghemawat, Pankaj, 1995. "Competitive Advantage and Internal Organization: Nucor Revisited," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(4), pages 685-717, Winter.
    3. Pankaj Ghemawat, 1997. "Games Businesses Play: Cases and Models," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262071827, December.
    4. Ghemawat, Pankaj, 1993. "Commitment to a Process Innovation: Nucor, USX, and Thin-Slab Casting," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(1), pages 135-161, Spring.
    5. Stenbacka, Rune & Tombak, Mihkel M., 1994. "Strategic timing of adoption of new technologies under uncertainty," International Journal of Industrial Organization, Elsevier, vol. 12(3), pages 387-411, September.
    6. Jensen, Richard, 1988. "Information capacity and innovation adoption," International Journal of Industrial Organization, Elsevier, vol. 6(3), pages 335-350.
    7. Jensen, Richard, 1983. "Innovation adoption and diffusion when there are competing innovations," Journal of Economic Theory, Elsevier, vol. 29(1), pages 161-171, February.
    8. Bhattacharya, Sudipto & Chatterjee, Kalyan & Samuelson, Larry, 1986. "Sequential Research and the Adoption of Innovations," Oxford Economic Papers, Oxford University Press, vol. 38(0), pages 219-243, Suppl. No.
    9. Pankaj Ghemawat, 1993. "Commitment to a Process Innovation: Nucor, USX, and Thin‐Slab Casting," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 2(1), pages 135-161, March.
    10. Michael D. Whinston, 1988. "Exit with Multiplant Firms," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 568-588, Winter.
    11. Davies, Stephen W., 1979. "Inter-firm diffusion of process innovations," European Economic Review, Elsevier, vol. 12(4), pages 299-317, October.
    12. William Fellner, 1951. "The Influence of Market Structure on Technological Progress," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 65(4), pages 556-577.
    13. Jensen, Richard, 1982. "Adoption and diffusion of an innovation of uncertain profitability," Journal of Economic Theory, Elsevier, vol. 27(1), pages 182-193, June.
    14. Richard K. Lester & Mark J. McCabe, 1993. "The Effect of Industrial Structure on Learning by Doing in Nuclear Power Plant Operation," RAND Journal of Economics, The RAND Corporation, vol. 24(3), pages 418-438, Autumn.
    15. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. JiWen Chai & LiHao Wang, 2023. "Evolutionary game analysis of big data discriminatory pricing diffusion based on the supervision of relevant interest parties," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(4), pages 2094-2101, June.
    2. Sierdjan Koster, 2007. "The Entrepreneurial And Replication Function Of New Firm Formation," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 98(5), pages 667-674, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard A. Jensen, 2001. "Strategic Intrafirm Innovation Adoption and Diffusion," Southern Economic Journal, John Wiley & Sons, vol. 68(1), pages 120-132, July.
    2. Alberto Galasso & Mihkel Tombak, 2014. "Switching to Green: The Timing of Socially Responsible Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(3), pages 669-691, September.
    3. Farzin, Y. H. & Huisman, K. J. M. & Kort, P. M., 1998. "Optimal timing of technology adoption," Journal of Economic Dynamics and Control, Elsevier, vol. 22(5), pages 779-799, May.
    4. Geroski, P. A., 2000. "Models of technology diffusion," Research Policy, Elsevier, vol. 29(4-5), pages 603-625, April.
    5. Luís Cabral & Cristian Dezső, 2008. "Technology Adoption with Multiple Alternative Designs and the Option to Wait," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 17(2), pages 413-441, June.
    6. Rui Baptista, 1999. "The Diffusion of Process Innovations: A Selective Review," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 107-129.
    7. Burton, Michael P. & Rigby, Dan & Young, Trevor, 2003. "Modelling the adoption of organic horticultural technology in the UK using Duration Analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), pages 1-26, March.
    8. Iritié, B. G. Jean Jacques, 2017. "Innovation clusters effects on adoption of a general purpose technology under uncertainty," EconStor Preprints 180668, ZBW - Leibniz Information Centre for Economics.
    9. Baldwin, John R. & Raffiquzzaman, Mohammed, 1998. "The Determinants of the Adoption Lag for Advanced Manufacturing Technologies," Analytical Studies Branch Research Paper Series 1998117e, Statistics Canada, Analytical Studies Branch.
    10. repec:ebl:ecbull:v:15:y:2005:i:15:p:1-10 is not listed on IDEAS
    11. Levin, Mark (Левин, Марк) & Matrosova, K. (Матросова, К.), 2016. "Research, Modeling and Process Management Dissemination of Innovations in Socio-Economic Systems [Исследование, Моделирование И Управление Процессами Распространения Инноваций В Социально-Экономиче," Working Papers 1443, Russian Presidential Academy of National Economy and Public Administration.
    12. Ahsanuzzaman, Ahsanuzzaman, 2015. "Duration Analysis of Technology Adoption in Bangladeshi Agriculture," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 200406, Agricultural and Applied Economics Association.
    13. Baldwin, John R. & Raffiquzzaman, Mohammed, 1998. "Les facteurs determinants des retards en matiere d'adoption des technologies de fabrication de pointe," Direction des études analytiques : documents de recherche 1998117f, Statistics Canada, Direction des études analytiques.
    14. Doraszelski, Ulrich, 2004. "Innovations, improvements, and the optimal adoption of new technologies," Journal of Economic Dynamics and Control, Elsevier, vol. 28(7), pages 1461-1480, April.
    15. Kim, Tae-Kyun, 1989. "The factor bias of technical change and technology adoption under uncertainty," ISU General Staff Papers 1989010108000010138, Iowa State University, Department of Economics.
    16. Byong‐Duk Rhee & Seth W. Norton, 2001. "Strategic Quality Decisions under Heterogeneous Resource Endowments," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(2), pages 235-264, June.
    17. Elisabetta Ottoz, 2005. "Technological spillover and the time distribution of licenses," Economics Bulletin, AccessEcon, vol. 15(15), pages 1-10.
    18. Thijssen, J.J.J., 2003. "Investment under uncertainty, market evolution and coalition spillovers in a game theoretic perspective," Other publications TiSEM 672073a6-492e-4621-8d4a-0, Tilburg University, School of Economics and Management.
    19. Jacco Thijssen & Kuno Huisman & Peter Kort, 2006. "The effects of information on strategic investment and welfare," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(2), pages 399-424, June.
    20. Tetsuya Kasahara, 2015. "Strategic Technology Adoption Under Dispersed Information and Information Learning," International Journal of Innovation and Technology Management (IJITM), World Scientific Publishing Co. Pte. Ltd., vol. 12(06), pages 1-18, December.
    21. Holwegler, Bernhard, 2000. "Implikationen der Technologiediffusion für technologische Arbeitslosigkeit," Violette Reihe: Schriftenreihe des Promotionsschwerpunkts "Globalisierung und Beschäftigung" 13/2000, University of Hohenheim, Carl von Ossietzky University Oldenburg, Evangelisches Studienwerk.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:soecon:v:70:y:2004:i:3:p:661-671. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)2325-8012 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.