Impact of speed of innovation arrival on innovation adoption timing : Case of two generations of future innovations
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    Abstract:

    This paper realizes the concept of treating the adoption of technology innovations as a sequence of real op2 tions more completely by introducing the second generation of future innovations. The solutions to the values of the real options and the triggers to adopt the current innovation , to leapfrog or upgrade to the future innovation are dis2 cussed in detail . By assuming the first as well as the current innovation emerges over the sales recording period , the relevant probability model regarding adoption timing is given analytically. Our numerical illustrations show that while there is a significant turning point in the impact of the speed of technology progress when only one generation of fu2 ture innovation is expected and it emerges over the recording period , the impact becomes much less non-monotonic or even monotonic when a further generation of improvements is expected. This confirms the intuitive and our previ2 ous empirical results.

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