Identifying technological capabilities with different degrees of coherence: The challenge to achieve high technological sophistication in latecomer software companies (based on the Bulgarian case)

Abstract The paper introduces the notion of coherence of technological capabilities. It argues that in analysing technological capabilities (TC) the analysis needs to go beyond investigation of constituent capabilities and should take into account the level of coherence among the constituent capabilities. The phenomenon of different degree of coherence of TC is detected while exploring the TC in Bulgarian software companies. Significant differences emerge between the TC of domestic-oriented vs. export-driven companies in the accumulation of constituent capabilities. But it is the analysis of the coherence of TC, which proved capable to capture the real differences in capability accumulation: strong coherence occurs only in ‘export’ TC. This analysis revives the debate about possibilities for leapfrogging by latecomers by developing software industries. Based on the results the study revises the ‘walking on two legs’ hypothesis and also points that the optimistic forecasts about the possibilities for leapfrogging by the latecomer countries by developing indigenous software industries might have been overestimated.