Sectoral System of Innovation and Exploring Technological Upgrading Strategies in Late-Industrializing Countries

TUNCEL, Cem Okan (2012): Sectoral System of Innovation and Exploring Technological Upgrading Strategies in Late-Industrializing Countries.

Abstract

Latecomer sectors in late-industrializing economies follow different patterns in their development and growth processes, which largely determine the share acquired from the global value chain. The development and growth process of the sectors is generally argued to be the result of the interaction of macro level specific institutional context and micro level firm strategic choices. In this study I argue that meso-level sectoral systems also play a critical role in the development and growth process of latecomer sectors. Accordingly, I aim to integrate these three theoretical perspectives -resource-based view (RBV) of the firm, sectoral system of innovation (SSI) perspective, and technological capability perspective for late industrializing economies- to explain the relative developmental failure of Turkish automotive industry compared to other successful latecomer industries such as South Korean automotive industry In the light of theoretical framework, I will try to investigate sectoral technological upgrading trajectory and compare between Korean and Turkish automotive industry development path by using case study method. I will end by discussing how a multilevel framework that takes into account the systemic factors can guide research on sectoral development in late-industrializing countries. In the light of a comparative historical analysis of development of Turkish and Korean automotive industries it is argued that a pace of industrial transformation can be accelerated by multilevel proactive state intervention.

• Item Type: MPRA Paper
• Language: English
• Keywords: Sectoral System of Innovation, Upgrading Strategies, Late-Industrializing Countries, Korean and Turkish Automotive Industry
• Subjects: L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L92 - Railroads and Other Surface Transportation

References

Akarsoy A,T (2009) “Vehicle Technologies in Turkey” (In Turkish) www.inovasyon.org

Amsden, A., (1989) Asia’s Next Giant: South Korea and Late Industrialization. Oxford Univ. Press, Oxford.

Ansal, H. (1990) “Technical Change and Industrial Policy: The Case of Truck Manufacturing in Turkey”, World Development, 18(11) pp: 1513-1528,

Arslanhan S. Kurtsal Y. (2010) “To what South Korea Owes Success in Innovations? Implications for Turkey” TEPAV Policy Note, September 2010

Arthur, B.(1990) “Positive Feedbacks in the Economy” Scientific American, 262, pp :92-99,

Arthur,. B. (2007). “The structure of invention” Research Policy, 36; 274–287.

Atalay, M., Turan, M. (2003), “Globalization ,Developing Economies and Turkish Manufacturing Industry”, Planlama (Special Issue) pp:77-110, (In Turkish)

Audretsch D. B (1997) “Technological Regimes, Industrial Demography and the Evolution of Industrial Structures” Industrial and Corporate Change, 6(1), 49-82

Automotive Manufacturers Association (2011) General And Statistical Information Bulletin

Azcanlı A.(1995), Historical Development of the Turkish automotive industry, Panel Mat. İstanbul (In Turkish)

Bair, J. (2005) “Global Capitalism and Commodity Chains: Looking Back, Going Forward” Competition & Change, 9(2),pp:153-80

Barney, J. B. (1986) “Strategic factor markets: expectations, luck, and business strategy”, Management Science, 32, pp. 1512–1514.

Barney, J. B. (1991) “Firm resources and sustained competitive advantage”, Journal of Management, 17(1), pp. 99–120.

Barney, J. B. (1995) “Looking inside for competitive advantage”, The Academy of Management Executive, 9, pp. 49–61.

Bedir, A. (2002) Development Perspective of Automotive Industry in Turkey, State Planning Organization (SPO) , Ankara (In Turkish)

Bell, M. K. Pavitt (1995). "The Development of Technological Capabilities." Trade,Technology and International Competitiveness pp: 69-101

Breschi, S Malerba, F (1997), 'Sectoral Innovation Systems: Technological Regimes, Schumpeterian Dynamics, and Spatial Boundaries', in C Edquist (ed.), Systems of Innovation: Technologies, Institutions, and Organizations, Pinter, London, pp. 130-56.

Breschi, S Malerba, F Orsenigo L. (2000), “Technological Regimes And Schumpeterian Patterns Of Innovation” The Economic Journal, 110 (April ), 388-410.

Chalmers J. (1982). MITI and the Japanese Miracle. Stanford, CA: Stanford University Press.

Cesaroni, F. A.Gambardella, W. Garcia-Fontes M.Mariani (2004) “The chemical sectoral system: firms, markets, institutions and the process of knowledge creation and diffusion” Malerba Franco (Ed) Sectoral system of Innovation :Concepts Issues and Analyses Six Major Sector in Europe , Cambridge Unv. Press ,UK

Chang, H-J. (2002) Kicking Away the Ladder – Development Strategy in Historical Perspective, Anthem Press, London.

Chang, Y. Chen M. (2004). “Comparing Approaches to Systems of Innovations: The Knowledge Perspective”, Technology in Society, 26, pp. 17-37.

Cho, D. S. (1994). “A dynamic approach to international competitiveness: The case of Korea” Journal of Far Eastern Business,1(1): 17–36.

Cho, D.S., Kim, D.J., and Rhee, D.K., “Latecomer strategies: Evidence from the Semiconductor Industry in Japan and Korea”, Organization Science, 9 (July-August):

Chung, S. (2010), “Innovation, Competitiveness and Growth: Korean Experiences”, Annual Word Bank Conference on Development Economics 2010, Global.

Cohen, W. M. D. A. Levinthal (1990) “Absorptive Capacity: A New Perspective on Learning and Innovation”. Administrative Science Quarterly, 35, 128-152

Coriat B Weinstein O (2004) “National Institutional Frameworks, Institutional Complementarities and Sectoral Systems Of Innovation” in Malerba F. (Ed) ( Sectoral system of Innovation: Concepts Issues and Analyses Six Major Sector in Europe , Cambridge Unv. Press ,UK

Çakar A. E.(2007) “Global Competition in Auto Industry from Perspective of 9th Development Plan” Mühendis ve Makina ,48(568) pp:38-46 . (In Turkish)

Çetiner, Y. (1996) The Tale of Automobile: How Established Automotive Industry, Milliyet Yay. İstanbul. (In Turkish)

David, P. (1985) "Clio and the Economics of QWERTY," American Economic Review, 75(2), pp:332-37,

Demirer, A. ,Aydoğan Ö. (2006) Anadol: The Story of First and Unique Mass Production Turkish Design Car Güncel yay. İstanbul. (In Turkish)

Duruiz L. (1999) “Globalization Efforts Of Turkish Car Industry” Actes du GERPISA n°29 pp:42-54

Enos, J.L. (1991). The Creation of Technological Capability in Developing Countries. London: Pinter Publishers.

Erdoğdu, M. (1999), “The Turkish And South Korean Automobile Industries And The Role Of The State in Their Development”, METU Studies in Development, 26(1- 2), pp.25-73.

Fagerberg, J. (2006), “Innovation: A Guide to the Literature.” in Oxford Handbook of Innovation, of Innovation, der. J. Fagerberg, D. C. Mowery, and R. R. Nelson, editors. Oxford

Freeman, C. (1987) Technology Policy And Economic Performance : Lessons From Japan, Pinter London

Freeman, C. (1989) “New technology and catching up” The European Journal of Development Research, 1(1) pp:85-99

Frobel F. J Heinrichs, O Kreye. (1981) The New International Division Of Labour: Structural Unemployment In Industrialized Countries And Industrialization In Developing Countries, Cambridge University Press

Fukuyama, F. (1995) Trust: The Social Virtues and the Creation of Prosperity. New York: Free Press.

Fuller, D.A., Akinwande, A.B. and Sodini, C. 2003. “Leading, Following or Cooked Goose? Innovation Successes and Failures in Taiwan's Electronics Industry”, Industry & Innovation, 10(2),179-196

Gao, X.D, Liu, J.X., Chai, K.H., Li, J.Z. 2007. “Overcoming 'latecomer disadvantages' in small and medium-sized firms evidence from China”, Int. J. Technology and Globalisation, 3(4), 364-383.

Gereffi, G. (1994). “Capitalism, Development and Global Commodity Chains” in L. Sklair (ed.) Capitalism and Development, London.

Gereffi, G. (1999) ‘International Trade and Industrial Upgrading in the Apparel Commodity Chain’,Journal of International Economics 48: 37–70

Gereffi, G. (2003). “A Commodity Chains Framework for Analyzing Global Industries” Duke University (mimeo).

Gereffi, G. Korzeniewicz, M. (1994) Commodity Chains and Global Capitalism, Westport, CT: Praeger

Gereffi, G., Humphrey, J ,Sturgeon, T. (2005). “The Governance of Global Value Chains”. Review of International Political Economy, 12(1), 78-104.

Green, A. E. (1992) ”South Korea’s Automobile Industry”. Asian Survey. 37, 411-428.

Gershenkron, A. (1962), “Economic Backwardness in Historical Perspective”, in; Economic Backwardness in Historical Perspective: A Book of Essays, Harvard Ünv. Pres.

Hahm, J.H. (2003), “The Government, the Chaebol and Financial Institutions before the Economic Crisis”, in: Haggard, S. Lim, W. and Kim, E., Economic Crisis and Corporate Restructuring in Korea: Reforming the Chaebol, Cambridge University Press, Cambridge

Helfat, C. E. and Peteraf, M. A. (2003) “The dynamic resource-based view: capability lifecycles”, Strategic Management Journal, 24,pp. 997–1010.

Henderson, J., P. Dicken, M. Hess, N. Coe, H. Wai-Chung Yeung (2002) “Global Production Networks and The Analysis of Economic Development” Review of International Political Economy 9(3) August: pp:436-464

Hobday, M. (1995), 'East Asian latecomer firms: learning the technology of electronics', World Development, 23,(7), pp.1171-93.

Hobday, M. (2003) “Innovation in Asian Industrialisation: A Gerschenkronian Perspective Oxford Development Studies,” 31 (3). pp. 293-314

Hobday, M. Rush, Howard R. Bessant, J. (2004) “Approaching the Innovation Frontier in Korea: The transition phase to leadership” Research Policy, 33 (10). pp. 1433-1457.

Humphrey, J Schmitz, H. (2000) “Governance and Upgrading: Linking Industrial Cluster and Global Value Chain Research”, IDS Working Paper 120, Brighton: IDS

Juma C. Clark N. (2002) “Technological Catch-Up: Opportunities and Challenges for Developing Countries” SUPRA Occasional Paper, Research Centre for the Social,Sciences, University of Edinburgh

KAMA (2011) 2011 Korea's Automotive Industry

Keyder, Ç. (1978), “Rostow, Gerschenkron, Capitalism, Proto-Industrialization”, METU in Development , 20, pp:66-89.

Kırım, A. (1990), Technological Change in Turkish manufacturing Industry, TOBB Yay., Ankara.

Kim, L. (1993). “Korea’s National System in Transition ” in (eds), L Kim and R Nelson Technology, Learning, & Innovation - Experiences of Newly Industrializing Economies, Cambridge University Press, Cambridge, pp. 335-360

Kim, L (1998) “Crisis Construction and Organizational Learning: Capability Building in Catching-up at Hyundai Motor” Organization Science, 9 (4) pp. 506-521

Kim, L. (1999) “Building, Technological Capability For Industrialization: Analytical Frameworks And Korea's Experience'” Industrial And Corporate Change, 8(1) pp:111-36

KPMG (2012) “KPMG’s Global Automotive Executive Survey 2012” http://www.kpmg.com/automotive

Kor Y. Mahoney J. T. (2004) “Edith Penrose’s (1959) Contributions to the Resource-based View of Strategic Management” Journal of Management Studies 41(1) January , pp:183-191

KOTRA (2006) “Korea’s Auto Industry - Today and Tomorrow” http://english.kotra.or.kr

Lall, S. (1992) “Technological capabilities and industrialization”, World Development, vol. 20, no. 2, : 165-86.

Lall S. (2000) “Technological Change And Industrialization In The Asian Newly Industrializing Economies : Achievements And challenges” (eds), L Kim and R Nelson Technology, Learning, & Innovation - Experiences of Newly Industrializing Economies, Cambridge University Press, Cambridge, pp. 13-68.

Lall, S. M. Teubal (1998) “Market Stimulating Technogy Policies in Developing Contries: A Framework With Examples From East Asia” World Development, 26(8) pp: 1369-1385

Lee K. C.Lim (2001) “Technological Regimes, Catching-Up and Leapfrogging: Findings From The Korean Industries” Research Policy 30. pp: 459–483

Malerba, F. (2002). “Sectoral Systems of Innovation and Production” Research Policy, 31, 247–264.

Malerba, F. (2003). “Sectoral System and Innovation and Technology Policy”, Revista Brasileirce de Inovucao, 2, . 329-374.

Malerba, F. (2006), “Sectoral SystemsHow and Why Innovation Differs across Sectors.” in Oxford Handbook of Innovation, of Innovation, der. J. Fagerberg, D. C. Mowery, and R. R. Nelson, editors. Oxford,pp:380-406

Malerba, F. (2004). “Sectoral System of Innovation Basic Concepts” in Malerba Franco (Ed.) Sectoral System of Innovation: Concepts Issues and Analyses Six Major Sector in Europe, Cambridge Unv. Press ,UK

Malerba F., Orsenigo L. (1995), “Schumpeterian Patterns of Innovation”. Cambridge Journal of Economics, 19, pp 47-65

Malerba, F. and Orsenigo, L. (1996) “The dynamics and evolution of industries”, Industrial and Corporate Change, 5(1), pp. 51–87

Mathews, J. A. (1996). “High technology industrialization in East Asia”. Journal of Industry Studies, 3(2): 1–77.

Mathews, J.A. 1999 “National systems of economic learning in East Asia”, International Journal of Technology Management,

Mathews , J.A (2002) “Competitive Advantages of the Latecomer Firm: A Resource-Based Account of Industrial Catch-Up Strategies” Asia Pacific Journal of Management 19(4),467-488

Mathews, J.A. and Cho, D.S. 1999. “Combinative Capabilities and Organizational Learning by Latecomer Firms: The Case of the Korean Semiconductor Industry”, Journal of World Business, 34(2), 139-156.

Mckınsey Global Institute (2003) Turkey: Making the Productivity and Growth Breakthrough ,Washington, D.C.

Nelson, R S. Winter (1982) An Evolutionary Theory of Economic Change, Harvard Unv. Press, USA:

North, D. (1991). “Institutions”, Journal of Economic Perspectives,5(1), pp. 97–112

North, D. (1994), “Economic Performance Through Time”, American Economic Review,, Vol: 84, No:13, pp. 359-368.

OICA (2011) 2011 Production Statistics http://oica.net/category/production-statistics/

Öniş, Z. (1991), “The Logic of the Developmental State”. Comparative Politics, 24(1)

Öniş, Z. (1992), “The, East Asian model of development and the Turkish case: A comparative analysis”, METU Studies in Development, 19(4), 495-528.

Öniş, Z. (1998), “International context, income distribution and state power in late industrialization: Turkey and South Korea in comparative perspective”, in Öniş Z. (1998), State and Market; The Political Economy of Turkey in Comparative Perspective, İstanbul: Boğaziçi University Press, pp.477-494.

Pavitt, K. (1984) ” Patterns of Technical Change: Towards a Taxonomy and a Theory,” Research Policy,13, 343–74.

Penrose, E. T. (1959) The Theory of the Growth of the Firm (Oxford: Basil Blackwell).

Peteraf, M. A. (1993) The cornerstones of competitive advantage: a resource-based view, Strategic Management Journal, 14,pp. 179–191.

Porter, M.E. (1990) The Competitive Advantage of Nations, New York: Free Pres

Potts, J. (2001) The New Evolutionary Microeconomis :Complexity, Compentence, And Adaptive Behaviour ,E.E , UK

Republic Of Turkey Ministry Of Industry and Trade (2010) Turkish Industrial Strategy Document 2011-2014 (Towards EU Membership)

Rodrik D. (2007) One Economics, Many Recipes: Globalization, Institutions, and Economic Growth. Princeton University Press, Princeton, NJ.

Shin J. (1996) The Economics Of The Latecomers: Catching-Up, Technology Transfer, And Institutions In Germany, Japan, And South Korea Routledge, USA

Schumpeter J (1928). “The instability of capitalism”, Economic Journal pp:361-386

Schumpeter J . (1912) The Theory of Economic Development, (1978 ed.), Oxford Unv. Pres. New York,

Schumpeter, J 1942, Capitalism, Socialism and Democracy,George (1976 ed.), George Allen & Unwin, London

Soyak, A (2005) “The Main Objective Of Turkey’s Industrial Policy Towards EU Membership” TMMOB Ölçü Dergisi, Aralık, pp:61–69 (In Turkish)

Steinmueller W. E (2004) “The European software sectoral system of innovation;” Malerba Franco (Ed) Sectoral system of Innovation :Concepts Issues and Analyses Six Major Sector in Europe , Cambridge Unv. Press ,UK

Sturgeon, Timothy, Johannes Van Biesebroeck and Gary Gereffi. (2008) “Value Chains, Networks, and Clusters: Reframing the Global Automotive Industry,” Journal of Economic Geography, 8(3), May, pp.297-321.

Sturgeon, Timothy J. Van Biesebroeck, Johannes, 2010. "Effects of the crisis on the automotive industry in developing countries : a global value chain perspective," Policy Research Working Paper Series 5330, The World Bank.

Sturgeon, T. (2006) “The Governance of Global Value Chains; Implications for Industrial Upgrading” Global Value Chains Workshop “Industrial Upgrading, Offshore Production, and Labor” November 9-10, 2006 Social Science Research Institute, Duke University

Şenses F. (1989) Industrialization in Turkey from Post 1980 Period Policy Perspective, Verso Yay., Ankara. (In Turkish)

Teece, D. J., Pisano, G. and Shuen, A. (1997) “Dynamic capabilities and strategic fit”, Strategic Management Journal, 18, pp. 510–533.

Tether B S. Metcalfe; (2004) “Services and systems of innovation “Malerba F.(Ed) (2004) Sectoral system of Innovation :Concepts Issues and Analyses Six Major Sector in Europe , Cambridge Unv. Press ,UK

Teubal, M.(2002) "Special Issue: What Is The Systems Perspective To Innovation And Technology Policy(ITP) And How Can We Apply It To Developing And Newly Industrialized Economies," Journal of Evolutionary Economics, 12(1), pp:233-257

Tezer, E. (2006) “Turkish Automotive Industry is the Most Competitive Production and an Advanced R&D Center in the European Union”, Taysad Magazine, 6(31) August-September

Tuncel, C. O Taskın Ç. (2007) “Innovation Networks and Learning Dynamics in Economic Development: An Assessment on Turkish Automotive Industry from Sectoral Innovation System Perspective” Paper to be presented at the 2nd International Conference on the Dynamics of Science and Technology Policies” 25–26 May 2007, Izmir, TURKEY

Tuncel C. O Ölmezoğulları N. (2010) “Technological Capabilities and Innovation Networks in Turkish Automotive Industry: A Proposed Technology Policy from Sectoral Innovation System Perspective” (mimeograph), Faculty of Economics and Administrative Science, Uludag University, Turkey

Tuncel C. O Ölmezoğulları N. (2011) “Exploring Firm-Level Technological Capabilities in the Turkish Automotive Industry and Policy Recommendations for Prospects” Paper to be presented at the EconAnadolu 2011, 2th Anadolu International Conference in Economics, 15-17 June,2011,Eskişehir, TURKEY

Wengel J. P. Shapira; (2004) “Machine tools: the remaking of a traditional sectoral innovation system” Malerba F.(Ed) (2004) Sectoral system of Innovation :Concepts Issues and Analyses Six Major Sector in Europe , Cambridge Unv. Press ,UK

Won-Young L. (2000) “The Role of Science and Technology Policy in Korea’s Industrial Develeopment” in (eds), L Kim and R Nelson Technology, Learning, & Innovation - Experiences of Newly Industrializing Economies, Cambridge University Press, Cambridge, pp. 269-290

Wong P. (1999) “National Innovation Systems for Rapid Technological Catch-up: An analytical framework and a comparative analysis of Korea, Taiwan and Singapore” DRUID Summer Conference on National Innovation Systems, Industrial Dynamics and Innovation Policy, Rebild, Denmark, June 9–12,1999

World Bank (1993). The East Asian miracle. New York: Oxford University Press.

Vernon R. (1966) “International investment and international trade in the product cycle”. Quarterly Journal of Economics 80, pp. 190-207.