Economics Department

Case Western Reserve University

Friday, February 7,1997

3:30 pm - refreshments

4:00 pm - talk

Room 327, Yost Hall

Abstract

This talk is taken from a paper written with Susan Helper. In it we focus on the factors that affect the probability that a firm will adopt an innovation. We hypothesize that characteristics of the firm and its product line affect this probablity. We further hypothesize that the firm's information regarding the innovation also aftects the adoption probability.

We model information in two ways. The first is loosely based on the agglomeration economy literature. In this method, geographic space is assumed to be a barrier to information exchange, and therefore distance from prior adopters should be inversely related to adoption. The second method is based on the hypothesis that similar firms are more likely to communicate. Thus, the more similar a firm is to a prior adopter, the more likely it is to adopt.

Our findings indicate that geographic distance does not affect the probability of adoption, but that similarity to prior adopters positively affects the adoption probability.