OPPORTUNITY COSTS OF RISKS IN EVALUATION OF ADVANCED TECHNOLOGIES
SHARON M. ORDOOBADI
For most companies a key to survival in today's competitive market is to invest in new technologies. However, for many reasons such investments are difficult to justify by traditional economic analysis alone. One reason is the challenge of including the intangible and often hard to quantify costs and benefits associated with these investments. This is particularly true for new technologies due to the fact that there exits a lower level of corporate experience regarding the potential risks associated with a new technology compared to technologies that the company is familiar with. This situation points towards the need for an evaluation tool that complements classical economic analysis techniques with additional processes that consider these risks as well. The attempt here is to develop a process to help practitioners to consider the costs due to these risks through a systematic procedure based on their risk aversion traits.
Technology adoption, justification technique, risk of adoption of a new technology, opportunity costs
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