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

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 comp...

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Bibliographic Details
Published in:The Rand journal of economics 2002, Vol.33 (4), p.672-688
Main Author: Astebro, Thomas
Format: Article
Language:English
Subjects:
Business structures
CAD
Capital investments
Computer aided design
Corporate size
Design
Digital control systems
Economic costs
Factor analysis
Industrial economics
Industrial plants
Innovation
Innovation adoption
Investments
Machine tools
Machinery
Metal products industry
Metals industries
Metalworking industry
Numerical controls
Plant size
Research and development
Risk aversion
Size of enterprise
Studies
Technological change
Technology
Technology application
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Summary: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.
ISSN:0741-6261
1756-2171
DOI:10.2307/3087480