The advantage of the binary variabl

The advantage of the binary variable model is that, although it only predicts the investment decision, the model does not require data on the amounts of investment expenditure, cost and profit, etc. which companies are often unwilling to provide. It can be applied to survey data to predict companies’ investment/adoption decision, while the continuous variable model cannot use survey data on companies’ views to predict investment expenditure. The current study does not reject the continuous variable model. Rather, it proposes the discrete/binary variable model as an effective, alternative tool for behavioural research, i.e. to identify the factors/constructs that influence the investment decision. The rest of this section elaborates on this point.
where I is investment expense/cost, X(s) are exploratory variables, α, β and γ are coefficients, and ε is the error term for firm i. Then, without losing any information, one can always write the “binary” version of the above model with investment expense/cost now being an exploratory variable, as:
Pðϕ ¼ 1Þ ¼ f ðα′ þ β′X1i þ γ′X2i þ θIi þ ψiÞ; ð2Þ
where α′, β′, γ′ and θ are the coefficient, and ψ is the error term.