On the Modelling of the Adoption of Process Innovations

An alternative view on the modelling of diffusion processesof process innovations has been introduced by Nooteboom (1989). Thebasic idea in that paper is to model the process of adoption ofprocess innovations as a gambling model with odds in favourdepending on expected returns and odds against depending on risk.In this paper it is investigated under which theoretical conditions posed on the expected return function the usual adopted assumptions Nooteboom (1989) with respect to the parameters of the gambling model are in fact reasonable. It is shown that only under certainconditions the assumptions made on the gambling model are true ontheoretical grounds. In all other cases a nonexample shows that theresults as mentioned in literature are in general not true.