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- W2017698812 abstract "Studies of the role of small vs. large firms in innovation go back to Schumpeter. In studies of product innovation, recent literature points to a ‘dynamic complementarity’ between small and large firms. In studies of the adoption of (process) innovations (diffusion), the effect of firm size has been studied much less. David (1975) and Davies (1979) proposed models which hinge on some ‘critical firm size’ beyond which adoption takes place. In these models, risk is not treated explicitly. In the theory of capital investment decisions, adoption is generally treated as a determinate decision based on a trade-off between expected returns and risk. The present paper presents an alternative model, inspired by the ‘behavioral theory’ school of economic theory. The decision to adopt is treated as a gamble with odds in favour depending on expected returns and odds against depending on risk. Under reasonable side-assumptions, expected returns are proportional to size and risk is independent of size. This yields a probability of adoption which depends on firm size without any ‘critical firm size’. The model is tested and estimated on data concerning the diffusion of general purpose computers in the Netherlands. The paper closes with a discussion of further research and implications for industrial marketing and for technology policy." @default.
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- W2017698812 date "1989-12-01" @default.
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- W2017698812 title "Diffusion, uncertainty and firm size" @default.
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- W2017698812 doi "https://doi.org/10.1016/0167-8116(89)90005-0" @default.
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