Abstract
Enterprises need to identify the optimal timing for technological change in order to increase competitiveness and increase the value of the company in an uncertain demanding environment. Investment decisions for adopting new technologies are costly and sometimes risky because technological investments are irreversible. To simulate the process, comprehensive technological adoption regarding investment timing was used in a management decision support model. The constructed model is structured as follows: 1) historical demand paths analysis; 2) application of statistical data validity tests; 3) the forecast of market parameters regarding data arrays using the geometric Brownian motion method, based on Monte Carlo simulation; 4) determination of technological life cycle using a Hodrick–Prescott filter; 5) technological adoption time-window determination; and 6) calculation of company net present values (NPV) based on change in free cash-flow. The model for mature 5G mobile markets, created and empirical tested, was performed in relation to 18 largest Europe mobile service providers, as potential decision makers operating across 33 countries. Results confirmed that selection of the technological investment time depends on companies’ strategic financial decisions and financial state. The performed simulations revealed the consequence of 5G technology investment for investor roles, clustered according to financial data within a 5-year period (2010–2014). The analyzed companies were assigned to roles of pioneers-innovators, pragmatics, followers, or laggards. Finally, it is assumed and argued that financial parameters indicate the willingness to adopt new technologies in a global technologically changing environment.
Highlights
Revolutionary changes in the market affect economic development and its growth rates
Kolmogorov-Smirnov test Geometric Brownian Motion process based on Monte Carlo simulation used to define forecasted parameters below3: 1. 40 iterations of market Revenues. 2. 40 iterations of Subscribers. 3. 40 values of MARPU rate
It was found that the earlier a company started to adopt new technologies, the higher the company share of its market capitalization will be generated, or in other words, TFc was highest for pioneers-innovators with an average ratio up to 84.2% and 58.2%
Summary
Revolutionary changes in the market affect economic development and its growth rates. In recent decades, academic research and literature have been focused on analyzing technological development, efficiency of usage, investment timing issues, and integration within business and economic environment This has resulted in technologies that are multidisciplinary and interrelated between different industries, supply chains, ecosystems, society, and other entities. A variety of technologic achievements in different economic sectors, such as information technologies, chemistry, energetics, medicine, electronics, and other industries, have features that rapidly change and this constrains the forecasting and predictions previously mentioned regarding the development and aggregation of paradigms. For these reasons, companies need to involve technological adoption, development, and upgrade issues into strategic decisions to keep and increase competitiveness. Due to a volatile environment, companies are following every innovation, and are forced to invest in risky projects in order to not miss a possible technological leap in the market as well as the opportunity to commercialize new technologies more rapidly than ever before
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