Sources Of Technological Dynamics For Firms

SOURCES OF TECHNOLOGICAL DYNAMICS FOR FIRMS A company's technological change can arise internally or externally. As Porter suggests, to sustain leadership in industries with key external technology sources, firms must capture the best sources uniquely or have superior adaptation capabilities. Factors determining technological dynamism: a firm's Innovative Drive Many firms prioritize technology for competitiveness and growth, with strong R&D focus. For instance, Ranbaxy positions itself as researchbased, with substantial R&D investments. Some firms target a certain percentage of revenue from new products annually. Customer Needs Customer requirements and expectations also shape technology orientation and R&D. Collaborative relationships between customers and suppliers are common in developing tailored solutions and products. Highly demanding customers compel innovation. large-scale technology and more R&D. Situation differs in declining industries. Suppliers' Offerings Suppliers like capital goods suppliers often spur technological changes. In process industries, key technology sources are construction engineering firms designing production processes and building plants. The competitiveness of the Italian tile industry owes greatly to its dynamic, innovative technology suppliers. Competition Competition compels adopting the best technologies and constant innovation. Japanese firms are known for strong technology focus - competition makes consumers king and expands product choice there. Lack of competition earlier caused India's corporate sector technological backwardness. After liberalization, many industries saw technology upgrading due to competition. Substitutes New or improved substitutes altering competitive advantage also drive technology change. Technology influences the relative value, price and switching costs of substitutes. Battles center on relative value/price between substitute industries. Demand Conditions Social Forces Beyond customer needs, demand characteristics influence technology choices too. The size of demand affects the choice of production technology scale. Expected demand trends matter - fast growth encourages Social forces like environmental concerns or needs to address social issues can shape technology development directions. Cultures also play a role. The Japanese eagerly absorb and blend foreign technologies into suitable systems. Research Organizations Research bodies developing new technologies and providing technical inputs enrich the technological environment. Testing facilities also help. For instance, research by India's CFTRI and commercialization by Amul was a breakthrough. Government Policy Technology policy significantly molds the environment. Governments may favor or disfavor certain technologies based on priorities and ideologies. Weak intellectual property rights long hindered progress in India's pharmaceutical industry. Foreign technology restrictions harmed domestic firms earlier. Excessive indigenous technology focus led to cost escalations too. Policy must balance technological self-reliance with leveraging global technologies for competitiveness. Industry-Academia Interface Collaboration between industry and research institutions is growing in importance with the complexity of technology, high R&D risks and need for value addition. The initial emphasis is on synergies for competitive advantage in global markets. Government intervention to facilitate such cooperation is visible in sectors like pharmaceuticals. Providing R&D institutions flexibility and industry involvement in decision-making will foster such linkages. Time Lags There are often inter-country time lags in technology introduction and absorption, not fully explained by the developed-developing difference. For instance, television arrived late in India, affecting business prospects. Firms must track global technology trends to avoid lags.