Technological Diffusion and the Financial Environment

This paper considers reasons why financial factors may impact upon the diffusion of new technology and potential means of furthering research upon this topic. The main aim of this paper is to undertake some preliminary discussion of how and why financial factors may impinge upon the diffusion process. Given that there is a close relation between the analysis of diffusion and the analyses of investment and R&D we proceed by first exploring the arguments that have been presented as to why financial factors may play a role in the determination of these. We then discuss the parallels with diffusion. This leads to some conclusions as to how the financial environment within which firms operate may impact upon the diffusion process. In a final section we discuss how this issue may be further researched. This paper has been prepared under the Fifth EU Framework Programme, Key Action: Improving the Socio-economic Knowledge Base