Financial Factors and the Inter Firm Diffusion of New Technology: A Real Options Model
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Paul Stoneman, December 2001.

Abstract
In this paper it is argued that although relatively ignored in the literature, on theoretical grounds, financial factors, in terms of the national financial environment and the cost and availability of external finance, will impact significantly upon the diffusion of new technologies in uncertain worlds. An inter firm model of diffusion built upon a real options approach to a decision making under uncertainty is developed and it is shown how the model predicts that the hazard of technology adoption can differ across firms, industries and countries. The model is then extended to reflect a role for financial factors. Some indication is provided as to how that model may be applied to pre existing data sets upon diffusion in order to test the embodied hypotheses.