The intra-firm diffusion of new technologies
The intra firm diffusion, that is the process leading a firm to extensively use new (or superior) technologies, is a key step to promote the growth and the competitiveness of a nation. However, even when advanced technologies are readily available within the market, the process leading a firm to replace the old with those new technologies can take several years, quite often decades. In existing economic literature this aspect of technological change has been almost completely neglected. In fact, despite its relevance, there exist only two relevant pieces of work in the area (Stoneman, 1981 and Mansfield, 1968). This thesis has pointed out the weaknesses of this literature on both theoretical and empirical grounds and has explored alternative theoretical approaches to modelling the intra-firm diffusion process. This has lead to the derivation of a new theoretical model, solidly grounded within economic theory. This model determines how changes in costs, price expectations (economic constraint), production organisation at plant level, existing and previous technologies (technological constraints), consumer demand and market structure (market constraint) and uncertainty can influence the degree of technology adoption by a firm. The impact of uncertainty, price expectations and market structure play upon the firm's investment decision in a new technology, have never been studied before. Moreover, using sophisticated statistical and econometric tools, this study also tests the validity of this theoretical approach, across a cross section of firms in the UK engineering and metalworking sector. The theoretical model presented in this thesis is based upon neo-classical investment literature and provides a rationale explaining the potential unprofitability of a rapid transfer of all firm's production to a new technology. This can be seen as a unique contribution to the understanding of the determinants of the adoption of a new technology, while the empirical analysis provides considerable insight into a area where to date, little research has previously been completed.