The adoption decision: a human capital approach

Abstract

The decision to adopt technological innovations was analyzed. A rate of adoption (adjustment) model was transposed into a single period model of the adoption decision. The decision to adopt was specified as an adjustment to a disequilibrium in the optimal set of inputs. The probability of adoption was determined by the level of innovative ability and the scale of production. Education, experience, and the availability of information were hypothesized to be measurable dimensions of innovative ability;The empirical results show that increases in education and information enhance innovative ability, and thereby raise the probability of adoption. Operators with more education and those who acquire more information about the use of new products and procedures are more aware of innovative factors of production, are more efficient evaluating the productive characteristics and costs of those innovations, and are more likely to adjust their utilized set of inputs through adoption. The estimated effect of increases in experience, however, did not support the hypothesis of the innovative ability model of adoption. The results also showed that operators are more cognizant of innovative factors when they can be applied in the larger scale activities of the operation. Also, scale economies in the usage of information exist, but the benefits realized by the average operator were small in relation to the potential benefits provided by larger scales of production. The results, however, did not indicate, either because of limitations of the data or the model, that the economic variables which are measurable dimensions of innnovative ability substitute for or complement each other's contribution to innovative efficiency. The results also suggest that if an innovation can be employed along with current inputs it is more likely to be adopted than if it displaces currently utilized inputs.