Development of Technological Capability in South African Industry: An Industrial Network Approach

The paper deals with the first phase in a project on South Africa’s need to develop technological capability, especially in the private industry, as a means for achieving economic and social goals. For six decades, the South African industry has developed in a highly protective environment. The opening up of the market after the first democratic elections in 1994 and the current trade liberalization policy revealed a lack of international competitiveness in many branches of the industry. In order to increase the competitiveness and reintegrate South Africa in the world economy, there is a need, inter alia, to raise the technological capability both within surviving firms from “the old economy” and the new black empowered companies, which are now being established with support of the government. The study focuses on capability development through learning processes taking place in inter-firm relationships, in particular between foreign firms operating in South Africa and their local business partners (suppliers, customers, etc.). It is known from research carried out in industrialized countries that interactive learning is crucial for competence development. The purpose in the project is thus to examine how interactive learning can contribute to technological development in South African industry. Four specific research questions have been formulated: (1) What are the preconditions for inter-firm learning? (2) How can inter-firm learning, in a South African context, be used to develop technological capability in different types of firms and industries? (3) What implications can be drawn for business management? (4) What implications can be drawn for policy makers? The theoretical point of departure consists of two schools of thought, viz. the technological capability literature and the industrial network approach. The methodological approach is qualitative in nature and based primarily on in-depth interviews with foreign as well as local firms. To be able to draw valid policy and management implications, three sectors have tentatively been selected: mechanical and electrical engineering, telecom, and information technology. This first phase of the project – being presented in the present paper – focuses on the first research question that concerns the overall preconditions for inter-firm learning in South African industry.