Technology Upgrading and Economic Catch-Up

This chapter begins with a brief overview of the current literature on economic growth and innovation, and the process of technology upgrading. It defines the key concepts that will be used throughout the book and sets the stage for the challenges and issues around economic growth that will be addressed in later chapters. It then outlines the contribution of each chapter and the Schumpeterian or neo-Schumpeterian perspective in which they’re framed, and the four major themes that run throughout the book: the relationship between technology capability and economic growth from new methodological angles, including the middle-income trap; technology capability upgrading from structural, sectoral, and micro-level perspectives; the emerging paradigm of technology capability upgrading which is about sustainability, green growth, inclusiveness, and socio-economic and political determinants of technology capability building; and the several dimensions of innovation policy which reflect a state of transition or changing policy philosophies.

Exchange characteristics, capability upgrading and innovation performance: evidence from Latin America

Purpose This paper aims to attempt to examine the effect of firm-customer exchange characteristics, frequency and specificity, on the likelihood of the firm to generate customer-driven innovation. The authors draw from social capital theory and argue that repetitive and customer-specific exchange improves the trusts between firm and customers, which in turn ease the flows of tacit knowledge from customers to the firm. From the perspective of customer knowledge management, the authors contribute by examining the mechanism by which a firm can acquire knowledge from and about customers. The authors further argue that a firm’s ability to absorb knowledge from customers and turn them into innovation also depends on its internal capability. A firm that consistently upgrades its capacity is more likely to generate customer-driven innovation than those that do not. Also, the authors argue that the joint effect of exchange characteristics and internal capability upgrading can further increase the likelihood of customer-driven innovation. Such a joint force implies the positive moderating effect of internal capability upgrading to the relationship between exchange characteristics and customer-driven innovation. Design/methodology/approach The authors test the hypotheses on 3,000 firms from six countries in Latin America. They take advantage of the 2017 World Bank Enterprises Survey. This most recent of the survey asks questions on various types of innovation and firm-customers exchange characteristics and other firm-level variables. Findings The authors find support for our hypotheses that repeated exchange and exchanges tailored to specific customers have a positive effect on customer-driven innovation. Also, they find the support that internal capability upgrading, in the form of investment in product design, marketing and organizational development has a positive effect on customer-driven innovation. The authors also find that investment in product design positively moderates the impact of exchange characteristics on the likelihood of customer-driven innovation. Originality/value While past studies focus on strategies to acquire and manage customers’ knowledge, little has been said about how exchange attributes can encourage or discourage innovation? This question is important because various theoretical perspectives may have a different prediction on the effect of firm-customer relationship and innovation. This study attempts to bridge such theoretical tension.

Technological Capability Upgrading and Entrepreneurship: Case Study of Selected Indonesian Fish Processing Companies

<p>This study analyzes the technological capability upgrading and entrepreneurship in the Indonesian fish processing industry. The analysis viewed from the Sectoral Innovation System (SIS) focuses on two aspects: the enabling factors for innovation, and the role of entrepreneur in technological capability upgrading. The study finds that Indonesian fish processing companies: (i) are less interactive with local universities or other STI (science, technology and innovation) centers, and innovation was mostly done through learning by DUI (doing, using and interacting); (ii) are characterized as low-tech industries with a high standard for food safety and product differentiation; (iii) apply adaptive innovation, modified from existing technology or knowledge, except for the leading companies who apply innovation for new products in the market; (iv) actors, technology, market trends, and networks are the main enabling factors for innovation; and (v) the role of entrepreneurs – especially in building entrepreneurial networks – were dominant in the leading companies. The entrepreneurial networks exist and work in global distribution chains that are widely adopted by companies to export their products through buyer–producer relationships. The pathways toward export markets are: global born directly, fastly learned global, and delay learned global companies. These categories have enriched the Mets category (2012). The policy implications of the findings for government should: (i) facilitate companies’ interaction with local universities or other STI centers; and (ii) encourage domestic companies to improve their competitiveness by shifting to higher added value products through various innovations and trading policy schemes.</p>