The bass diffusion model as a basis for investment decisions

Abstract

This study explores previous research studies in the area of the diffusion theory and under this issue, the importance for any investment decision. Moreover, it is shown how a decision-maker on the basis of the product life cycle of an innovation, and the diffusion curve can make a decision based on investment NPV. It will be explained w hich particular significance the diffusion process on an investment NPV has. To involve investment risks, the Real Option theory was used for the NPV. The paper firstly defines the central the ories of issues. Furthermore, the studies are analysed on set criteria on the background of the influence of factors. For the analysis, the literature of the different areas of expertise was systematically examined and evaluated according to the set criteria. The factors identified in this paper show that the innovation and imitation coefficient, initial purchases, investment amount, and time of investment have the greatest effect on an investment. Furthermore, the shown decision path enables a reduction of investment risk and a higher planning flexibility.