Unit 7
Innovation and technological competitiveness
I.
Objectives
1.
Distinguish between invention and innovation and understand the
meaning of ‘product’ and ‘process’ innovation
2.
Discuss the key issues in innovation management and explain why
these are important for effective technological upgrading
3.
Analyze the principle influences on selection of a technology or
innovation strategy
4.
Explain how innovation is used as a source of competitive advantage
for Japanese firms and SMEs
5.
Differentiate the technological trajectories taken by the NIEs
6.
Link the roles played by government and MNEs to technological change
in the region
II. Innovation
(A)
Concepts of innovation
1.
Technological innovation or the development of technical and
commercial products and/ or services
a)
Technology refers to the theoretical and practical knowledge, skills
and artifacts that can be used to develop products and services
b)
In many different forms
i.
Human capital
ii.
Physical capital such as machinery, processes and materials
c)
In a physical or tangible form
i.
New products, or an embedded
ii.
Intangible form, such as knowledge of a team of researchers
d)
Invention involves the creation or discovery of something new and
unique, such ass an idea, a concept or a certain technology
e)
Invention such as the steam engine, the transistor and the
microprocessor have provided a platform for the development of associated
technologies and products
f)
Technological innovation
i.
Thought of as transforming a technical invention into a commercial
product
ii.
A service based on a technology or a technological production or
administrative process within the firm
g)
Actual invention process which develop and adapt an on-going stream
of ‘new’ products and product modifications
h)
Provided the firm with unique internal processes in production and Provide
an edge over those of competing companies
2.
Distinguish invention from innovation
a)
Invention is concerned with the creation and discovery of new ideas
or things
b)
Innovation is the process of putting these ideas into practical and,
form the firm’s perspective, profitable use
i.
Innovation involves the development and exploitation of new ideas
(1)
Such as Thomas Edison used electricity and lit the world’s first
light bulb
(2)
Commercial innovation until wires were put down, power plugs
installed and electricity generation plants constructed
c)
The process of innovation can be a more time-and resource-consuming
activity but makes an invention profitable
d)
Not common for larger corporations to commercialize the inventions
of small, black-yard inventors or companies without the resources to fully
develop, product and market a product
e)
Technological entrepreneurship combined with the administrative
capabilities within the firm
f)
Inventions, discoveries and technologies are the result of 3 types
of activity:
i.
Tinkering and experimenting
ii.
Research activities
iii.
Development activities performed within the firm
g)
Innovation is the outcome of R&D as well as product and process
development and market development activities
(B)
Product versus process innovation
1.
Product innovation
a)
Changes to a product (s) and/ or service (s) offered by the company
while process innovation
i.
Involves changes to the way the products are created or the services
are delivered, distributed, market and sold
ii.
Focus on new product development as well as modification and
refinement of existing products for survival
b)
Rapid rate of innovation driven by competitive pressure and changing
consumer demands, which obsolete as new generations of innovations are
introduced
c)
Computers, televisions, cars, stereos and photographic have very short
life-cycles and may be superseded by newer models in as little as three or four
months
2.
Process innovation
a)
Allows the firm to make its product or deliver its service in a way
that no other competitor can
b)
Japanese vehicles manufacturers
i.
Production techniques, just-in-time and quality circles
ii.
Allowed for cost reductions and improved quality
c)
Improvements and new requirement, production procedures and
materials all constitute types of process innovation
d)
Being able to deliver a better, faster, cheaper or higher quality
service offering through the use of technology
i.
Computers and telephone transacting in the banking industry
ii.
Book purchases, book flights, pay our bills and communicate with
others
iii.
Use of the Internet, credit cards, online booking systems and email
to cite
3.
Incremental innovation
a)
The gradual and often piecemeal refinement and improvement of
existing products, such as upgrading of the capabilities of the personal
computer with each new version
b)
Japanese firms are well known for incremental innovation through
‘continuous improvement’ in both products and processes
c)
Extend the life cycle of a product, to improve its quality or to
lower the costs of its production, SMEs of Taiwan
4.
Radical innovation
a)
Involves the creation of totally new products or services
b)
Responsible for the obsolescence of a whole range of products or
even an entire industry
c)
Stems from invention and is then developed further to make many
different new products and/ or processes
d)
Change the nature of the competitive game and developed and marketed
successfully
e)
For example of motorcar and airplane, transformed the transportation
industry, superseding existing forms of travel
5.
Architectural innovation
a)
Re-configuration of the components that makes up the product
b)
Made up of a number of different components and innovation could
center on one of these components or any combination of components within an
integrated system
c)
For example, the miniaturization of key radio components
d)
Computing, telecommunications and robotics in production systems and
high-technology products, is becoming an increasingly common form of
architectural innovation
III. Managing the innovation process
(A)
Managing the innovation process
1.
Technological development and the pressure from competitors
a)
Coming up something new become the strategy for survival
b)
Competitive advantage for many firms
c)
On-going technological innovation, involve incremental or radical
changes to products, services or processes that to create sustainable
competitive advantage
2.
Innovation management
a)
Learning to find the most appropriate solution to the problem of
consistently managing this process
b)
Best suited to the particular circumstances in which the
organization finds itself
c)
Depending on the type of industry
d)
The level of technological capability, size or the extent of resources
(B)
Environment scan
1.
The initial step in identifying potential opportunities for
innovation
2.
This step is continuous that innovative companies should constantly
be on the look-out for new ideas, future trends and ways of improving existing
products and processes
3.
Including:
a)
The actions of competitors or potential partners
b)
Consumer behavior including their changing needs and desires
c)
Changes to the technological environment such as the development of
new areas of research
d)
Government initiated changes such as those in legislation, funding
or industry policy
4.
Able to process the signals given by these various stimuli into
information
a)
Respond to the signals that are relevant to its business and
‘tune-out’ those that are not
(C)
Selection and strategy
1.
The second principal stage in the innovation process is to select
single areas for development from multiple areas of potential innovation
2.
Given the external and internal stimuli identified in the
environmental scan and fit best with corporate strategy
3.
Integrated with existing corporate culture and capabilities
4.
Innovation follows the latest fad or competitor is unlikely to bring
any sustainable form of advantage to the firm
a)
Reduce labour costs and improve quality and output
b)
Full automation was the way of the future and initial investment
would pay off
c)
Take Fujifilm, for example, which involves silver-halide
photographic film, yet they are actively pursuing the new digital camera market
5.
Concerned about types of innovative activity that contribute to
competitive advantage and build upon existing areas of competence
6.
Employ knowledge and skills that into a system of competencies that
existing product offerings
7.
Costs and benefits of each option can be assessed at this stage and
priority innovation chosen
(D)
Resourcing
1.
Company matches its existing capabilities to the task of developing
specific innovations
2.
Accomplished through R&D, or by drawing on the knowledge of
skilled staff in the engineering, production or administrative departments
3.
Performed solely using existing or augmented internal resources or
seek additional resources externally
4.
Suitable capabilities are lacking within the firm then external
sourcing of technology in the form of equipment, knowledge and skills is
appropriate
5.
External sources are an opportunity for accessing new ideas and
jointly exploiting ‘fresh’ technology developed by others
6.
Make 2 important decisions at this stage:
a)
Connect with external sources to provide the required inputs
b)
Successfully transferred to and incorporated into the firm’s
existing system
7.
The external technology including:
a)
Buying ready-made solutions where these are available
b)
R&D contracts
c)
Licensing technology
d)
Collaboration with other firms or research institutions
e)
Links with customers and suppliers
(E)
Implementation
1.
The most crucial stage of the innovation management process
2.
Transforming ideas into commercial products for the marketplace, or
new processes and techniques for internal use in the area of production or
service delivery
3.
Concepts and ideas are translated into exact specifications through
applied development efforts and focused problem-solving
4.
Cooperation between contributing departments within the organization
a)
The technical research team and the designers need work closely with
the production team and the marketing/sales department, who support from upper
management to carry the venture through to the launching stage
b)
Required between the designers, producers and users of the new
system, technology or technique
c)
Greater attention to the coordination of technology and information
flow
d)
Need to recognize what their individual contributions are and how
they are integrated into the project as a whole
e)
Gain advantage at this stage through speed and flexibility, because
less complex and close interaction between fewer employees and management, it
helps speed up the process of implementation
5.
The product require an assessment of both current and future trends
in demand, consumer tastes and external environment that influence product
design, its marketing and its profitability
6.
The consumer require ‘education’ about the features and benefits of
a new product or a specific technology embodied in the product
7.
Manage the introduction of change in the organization to ensure
acceptance and effective use of the new innovation
(F)
Review and re-innovation
1.
The final stage involves a review of the process and the way the
innovation was managed
2.
Provides opportunities for a firm to learn from its mistakes and re-apply
the aspects of the management process that were successful
3.
Re-innovation as a natural progression of the innovation management
process
4.
Develop certain products and processes for re-release in the market
or to raise quality levels, function or performance, or to lower costs
5.
Used strategy in the majority of consumer goods markets
6.
Take Internet access as example that embodied in computer and
telecommunications technologies
a)
Continuously on line without the inconvenience of having to carry
and plug in a portable computer
7.
In practice, he innovation process is very likely to follow these
five stages, but will involve false starts, backtracking and promising products
that never make it to final markets
8.
Contribution to more through information search, pre-planning of the
process and allowances for future contingencies
9.
The innovation process is specific to each individual firm which
involve:
a)
Continuous environmental scan for opportunities and changes
b)
Selection of potential areas for innovation in conjunction with
existing
c)
Future corporate strategy, resourcing, implementation and review
10.
Re-innovation is important function for companies that wish to
extend the life of their products and the potential income stream from specific
technologies
IV. Innovation and competitive advantage
(A)
Concept of core competencies
1.
Put forward by a growing number of academics involved in the area of
strategic management
2.
Explain the sources of a firm’s competitive advantage and the
competitive interplay between firms
3.
Represent the ‘dynamic capabilities’ of the firms that dynamic means
that they are changing and are subject to renewal, improvement and refinement
as the firm tries to remain competitive
4.
Defined as ‘an ability to sustain the coordinated deployment of
assets in a way that helps a firm achieve its goals
5.
Through intentional use and organization of its own assets, or able
to gain access to
6.
Core competences are characterized by 4 key elements:
a)
Broad scope
i.
Spread across different businesses and products within a company,
creating synergy and supporting product and business development
ii.
Focusing on a portfolio of product or businesses and allocating
resources to each, the firm attempts to ‘leverage’ its competencies across many
areas
iii.
Applied new market or product opportunities, new production
processes or new businesses
iv.
Achieves greater ‘mileage’ or use fro its existing knowledge
b)
Temporal dominance
i.
Created over time and evolve more slowly than the products or
processes they support or form an integral part of
ii.
Become more sophisticated as the concepts are fully developed
c)
Collective learning
i.
Within firm through coordination of skills and multiple streams of
technology
ii.
Embodies knowledge within the people who work for the firm
(1)
This knowledge cannot be easily separated from the firm
(2)
Difficult to imitate or to copy because it is within a team of
skilled people who work together
iii.
Knowledge contained within the firm can be supplemented by knowledge
from other sources, such as outside technology,
d)
Competitive locus
i.
Merely a reflection of competition between firms for competencies
that provide a leading edge the firm both presently and in the future
ii.
Compete on the basis of their own specific competencies rather than
on products, prices etc
iii.
Collaborate on the basis of unique, thus mutually strengthening
their own ability to compete
7.
Innovative company needs to:
a)
Be continually researching
b)
Developing and launching new products to stay competitive in a
dynamic environment
c)
Maintaining core competencies requires continual adaptation to the
deployment and organization of assets
8.
Existing assets may be developed further through the adoption of new
capabilities, or new types of complementary assets may be acquired
(B)
Japanese system of innovation
1.
Japan
2.
3 main players in the Japanese innovation system:
a)
The Japanese firms themselves
b)
The state, in the form of government ministries
c)
The universities and research institutes
3.
Each player has the important role in the purist of technological
upgrading and competitiveness
a)
Understand by these high R&D figures are not much of the
incremental innovation that takes place
4.
Innovation in Japanese companies
a)
Need to catch up to and surpass established companies in the West
b)
Become a way of life and entrenched in corporate culture
c)
Taken place in the internationally competitive sectors:
i.
Consumer electronics
ii.
Automobiles
iii.
Semiconductors
iv.
Machine tools
v.
Chemicals and pharmaceuticals
d)
Compete on this ability to upgrade processes, improve on technology
and existing products and lower costs without compromising quality
e)
Ability to adapt to changes and trends in the business environment
and the marketplace
5.
Japanese management techniques
a)
Kaizan and zero-defects quality control foster a system of
innovation and ‘continuous improvement’ within the firm
b)
Job rotation of permanent workers improves information flow within
the firm
c)
Enables employees to see how various functional areas are integrated
and how their separate tasks contribution to the operation of the whole
business
d)
Make suggestion for improvement and change with that in mind
e)
Makes employee more skilled and more flexible, and able to be
deployed in any area where his or her skills are required
6.
Lifetime employment
a)
Commitment between employer and employee have encouraged high levels
of investment in the training of workers
b)
Skilled employees are expected to remain with the firm all their
working lives and typically very devoted to their company
c)
Employees can be trusted with company secrets and given increasingly
greater responsibility and freedom to pursue ideas for development
7.
The low level of merger and acquisition (M&A) activity
a)
Efforts on exploiting existing strengths and developing new areas of
competence
b)
Shifted their resources to new areas of business, where they have
little or on previous experience
8.
Improvement and new products attributed to several features of the
business environment
a)
Competitive pressure
i.
Remain competitive encourages further improvements
ii.
Innovation both at the small supplier/sub-contractor level and for
MNE
b)
Sophisticated domestic consumers
i.
Demanded high levels of quality and innovativeness, leading edge
technology, sophisticated product features and variety in the range of products
available
ii.
Multiple suppliers ensured the consumer remains ‘king’ and products
meet their standards
c)
Long-term commitment by shareholders
i.
Maintain their investment in the company
ii.
The development of new products, is often the outcome of many years
of trail and gradual evolution of an innovation
iii.
More scope to pursue these longer-term projects, without risks and expected
to generate regular dividends for shareholders
9.
R&D spending in Japan
a)
A larger proportion is devoted to the ‘development’ side rather than
the research side
b)
Direct funds towards applied research, product innovation and process
innovations intended to fulfill commercial objectives
c)
Government-funded research, is directed towards improving the
competitiveness of industry rather than advancing science and technology in a
more pure of fundamental form
10.
Japanese Government concentrate on establishing the foundations for
innovation, through as follows:
a)
Education and training
i.
Depending on the student’s strengths and aptitude, have provided the
commercial world with a capable, skilled workforce
b)
Government ministries
i.
Responsible for directing and supporting certain ‘targeted’
industries
ii.
Allocation of resources to industry through its control over foreign
exchange and credit
iii.
Criss-crossing network spans other government ministries, academic
institutions, individual companies and industry associations in Japan
iv.
Ministry of International Trade and Industry as example
(1)
Manage this costly process of data collection, analysis and
dissemination, along with its very close connections with Japanese businesses
(2)
Also fostered the development of innovation in strategic technology
areas
(3)
Encouraged companies to actively develop these technologies and
innovations, the biotechnology and new materials
c)
Funding for areas of more basic or fundamental research
i.
Focus has been on areas of research that are less financially
profitable in the short-term
ii.
Reduces the uncertainly and risk faced by the firms themselves
d)
Japanese universities
i.
Through the education of their graduates and through undertaking
basic and applied research
ii.
Complementary to the specific, vocational training provided by the
company they join upon graduation
iii.
Using personal connections with the business world to get students
positions in Japanese companies
iv.
However, more directly contributes to the innovativeness and
competitiveness of the economy
v.
Tend to be directed to areas that potentially commercial or have
some application in industry
vi.
Become most important sources of new knowledge for Japanese
companies
(C)
Innovation in SMEs
1.
Use innovation as a source of competitive advantage
2.
Japan’s complex networks of supplier and small manufacturers have
been the foundation of the development of the Keiretsu
3.
The SMEs in Korea
4.
The small businesses are less well known companies in Asia , most do not have large production capacities,
R&D departments or internationally recognized brand names
5.
Remained competitive on the basis of their ability to learn and
absorb technology, their ability to make incremental innovations to both
product and process technology and their speed and flexibility on bringing
these products to the market
6.
Allowed them to become competent suppliers of OEM goods, subcontractors
for components and services and innovators in product design themselves
7.
Small to medium-sized firms are characterized by:
a)
Ability to integrate certain technologies with firm competencies in
order to meet the needs of specific customer segments
b)
Efficient communication channels, speed of decision-making and
employee commitment
c)
A specialized and limited, range of competencies
d)
Limited financial resources and inability to fund overly risky or
complex projects
8.
SMEs rely on external sources of technology, basic licensing or OEM
arrangements
a)
Too small to undertake independent innovation of any significant
degree and frequently do not regard firm-specific technology as a competitive
advantage
b)
Small firm tend to engage in innovation through less formal channels
rather than through R&D
c)
Ability to integrate technology into their own systems and produce a
low-cost, reliable product or service
9.
Firms are able to compete on the basis of:
a)
High degree of adaptability, flexible production facilities and
rapid technology absorption and application
b)
Strong teamwork spirit
c)
Ability to effectively reduce risks and respond rapidly to market opportunities
10.
SMEs in Japan
a)
Overcome some limitations of their size, by drawing on technological
expertise of the larger, more experienced firms
b)
Government support and qualified personnel, who are often either educated
overseas or former MNE employees
c)
Adept at design, development and construction of specialized inputs
into the production process
11.
Firms are niche players
a)
Cater to specialized consumer segments that small but generate high
margins
b)
Usually involved in product and process innovation
c)
Goldtron Ltd of Singapore, produces specialized telecommunications
equipment, such as papers are able to communicate in Thai
12.
SME innovators are usually involved in:
a)
Product, rather than process innovation
b)
The production of specialized products rather than mass-produced
ones
c)
External linkages with other firms, larger buyers, government and
educational institutes
13.
Government support for SME development
a)
Shift to innovation as a source of competitive advantage
i.
Producing low-end consumer goods under license for large
corporations are rapidly being eroded
b)
Shifting their manufacturing operations towards high-technology
outputs that are able to command higher premiums in world markets
c)
Some firms are operating independently of foreign MNEs
i.
Launching independent brand names internationally but all are
involved in incremental innovation activity
d)
Below is a brief description of the specific objectives pursed
through industrial and technological polices in each economy
14.
Key Government agencies:
a)
China
i.
Facilitate both the internationalization of local firms and
cooperation with foreign partners
b)
HK retained neutral policies that endeavor to create a level playing
field for all firms, maximum support and minimum intervention in specific
industries or the market as a whole
c)
In Japan Enterprise
i.
Promote the growth and development of SMEs
ii.
Enhance the economic and social well-being of entrepreneurs and
employees of SMEs
d)
Emphasis on the improvement of technology and equipment, structural
upgrading of SMEs, prevention of excessive competition, stimulation of demand,
encouraging equitable and beneficial relations between suppliers and buyers and
employees and management
e)
SMEs in the Republic
of Korea
i.
Emphasis self-reliance through developing resources, access to
finance and access to domestic and international markets
f)
Singapore
g)
Taiwan
i.
Help in finance, management, production technology and R&D,
quality control, marketing and regulations affecting business
15.
APEC introduced initiatives to help SMEs through an integrated plan
of action for SME development (SPAN)
a)
Constrained by their lack of financial resources and skills and information
about the availability of technologies
b)
Overcome these restraints to technology absorption
c)
SPAN proposes to make a ‘package’ of assistance available, including
facilitating the flow of information and emphasis on human resource development
16.
Key objectives of plan are:
a)
Create awareness of technological developments through a database of
technologies
i.
Encourage exchange and sharing of information via interaction
between firms and industry/government linkages
b)
Support innovation and encourage an R&D culture in SMEs
V.
Technological capability building
(NIEs)
(A)
Imitation to innovation
1.
Taken a path of technological imitation to innovation
2.
Overcome this handicap through the adoption and adaptation of
existing technology
3.
Worked extremely well for these economics, enabling them to fuel
economic growth through low-cost exports
4.
Chaebol for example
a)
Heavily into capital equipment to produce large quantities of
consumer
b)
Industrial goods for international markets
5.
Tangible technology, embodied in production machinery, products and
components
6.
Intangible technology that the form of organizational knowledge,
learning and capability has been vital to continuous innovation
7.
Those technology is
present in sophisticated processes technology, organizational practices and
skilled workers
8.
Technological capability
building in electronics
a)
Explore the process of
technological capability building in the NIE in ore details
b)
Not illustrative of all industries in East Asian and providing a
clear picture of the process technological upgrading
c)
Evolving competitive
advantages of “Four dragon”
i.
From technological
imitation
ii.
Mass production and
low-cost to original innovation
iii.
Design and marketing in
their own right
9.
Standard
mass-manufacturing techniques were used to product numbers of products for
export, including computer
disk drives, TV, videos and semiconductors
a)
3 principal types of firm
involved in this process:
i.
Local subsidiaries set up
by Japanese, US or European MNEs as a local production arm of a larger company
(1)
Singapore
ii.
Local firms that acted as
suppliers, sub-contractors, licensees or joint venture partners to the foreign
buyer or MNE
(1)
Specifications of the
buyer
(2)
Later designed and
developed products more independently
iii.
Local, more independent
firm that developed its own products for export or sale to foreign buyers
(1)
Chinese-owned businesses,
Acer
(2)
Korean chaebol, Samsung
and Goldstar
10.
Division of the value
chain of production
a)
Separated from the
original development and design of the product
b)
Undertaken where the
resources are available at the right price
c)
Engineers and design
specialists combine their talents with expatriate marketers
i.
Match customer needs to
product specifications in Singapore
ii.
Skilled workers can
assemble the product components at very low cost in China
11.
Foreign firms, which had capital, technological
and human resources
12.
Local firm, which had educated workers and
business acumen and support by
government were the prerequisites for technological learning and development in
the region
13.
Technological capability
building was accumulation of skills and competences over time and continues in
region today
14.
Uses a diagram to
represent the sequence of technological learning taking place in the
electronics industries of the NIEs
15.
The progression of the
NIEs from simple OEM and assembly activities to applied research and
development
a)
Left axis show the growth in exports over
the period, rising from
virtually nothing initially, to rapid expansion in the 1980s and nearing peak in the 1990s
b)
In product technology,
selection and assessment of existing technologies
i.
1950s led to reverse
engineering by in the 1970s, followed by product modification and improvement through prototype development
and design
ii.
1990s firm were designing
new types of products and starting to develop research and development
functions
c)
In process technology,
the pattern is similar that process adaptation and improvement follow assembly
d)
The development of
marketing skills that extended
through ODM and OBM
16.
Technological learning process
a)
Initial phases of
development
i.
Undertook simple assembly
activities to produce goods for export
ii.
Typically labour-intensive
and required only basic technology
iii.
Companies from Japan, the US and Europe set up subsidiaries, joint ventures or sub-contracting agreements to exploit the low-cost
labour available in East Asia
b)
As the foreign firms are
expected by demanding customers in developed countries
i.
Brought investment
capital from abroad and the production technologies, training for operators, advice on manufacturing processes and product styling that reach and maintain the quality level
ii.
Knowledge and experience
of managers and engineers passed in through training and demonstration effects
to local employees
c)
By the 1960s and into
1970s
i.
Firms progressed that
manufacture simple consumer electronics
ii.
New and existing firms
entered the industry and set up by local which had been former employees of multinational
enterprises (MNEs) and were able to use their newly acquired skills to act as suppliers
iii.
Taken example of Taiwan and Korea
d)
In the electronics
industry, OEM (Original equipment manufacture) arrangement
i.
Central to the transfer
and understanding of product and process technology
ii.
Products were
manufactured by the latecomer firms using standardized production techniques
and equipment form the MNEs
iii.
The supplier firms
benefits from access to foreign technology, capital and markets for their
manufactures goods that did not need to invest in marketing and distribution infrastructure
iv.
Use of established market
channels and marketing infrastructure and expertise of the foreign firm that these areas were left
underdeveloped by local firms in the ‘dragon’ economies
e)
During 1980s
i.
Making shift from
assembly and simple manufacturing to more complex activities
ii.
Strict export requirements prompted firms to upgrade their existing technology, skills and knowledge to provide
higher quality output
iii.
Oversea buyers were far
more demanding than any buyers in home that match international standards
iv.
Provided the impetus for
learning and building technological capability
v.
More complex activities
were being transferred from parent to subsidiary company
vi.
Couple with rising labour
and exchange rates in the investing countries meant high-value-added production
f)
Throughout the 1980s and
even into the 1990s
i.
Supply under OEM
arrangement and rely on MNEs for market access, capital and key components
ii.
First visible signs of a
shift from merely imitation to innovation became apparent
iii.
Design products
independently of or in collaboration with foreign buyers
iv.
Latecomer firms
tentatively faced their larger, foreign rivals
(1)
Compete on the basis of
their ability to respond quickly to the requirements of larger foreign firms
(2)
Flexibility in production
and their skill in design
v.
Government policies and
the technological upgrading that had already occurred
vi.
Local firms and foreign
subsidiaries continued to make incremental improvement.
Industrial electronic goods are included computers, semiconductors,
disk drives and peripherals
vii.
East Asian firms eased
the transition form low-level consumer goods to higher-value-added goods
(1)
From East
Asia and foreign investors from Japan US
(2)
Assembly of consumer
goods and other labour intensive processes to the ASEAN countries and to China
viii.
East Asian economies to
focus on the higher-order activities
(1)
Key component
manufacture, product design, local and regional modification through R&D
and service-related functions
g)
Early 1990s
i.
OEM system had matured
after years of refinement and incremental improvements to both product and
process technology by local firms, involved local East Asian firms in product design and specification
ii.
Supplier add value to the
products they manufactured and receive a greater share of the returns
iii.
ODM system encouraged the
firms
(1)
Apply their knowledge
about what consumers were buying or looking for in international markets to
produce that using
existing and emerging technological innovations
(2)
MNEs took responsibility
for branding and selling the products, suppliers avoid the heavy investment costs needed to establish
making infrastructure
(3)
Singapore
iv.
Firms from smaller
economies
(1)
Trying to make the
transition to higher-value-added products to supplement their service
industries
(2)
Compensate for the volumes of
production being re-directed to lower-cost economies
(3)
Develop their own brands
and market channels in international markets in future
(4)
Need to focus on product
design and innovation
through their own research and development activities
(B)
Technology acquisition
1.
Combination of technology
transfer from an MNE or foreign partner/supplier and ability of the receiving firm to apply that technology effectively
2.
Technological
trajectories of the NIEs are their approaches to technology acquisition
3.
Some firm relied heavily
on external sources through OEM arrangements or suppliers, while others focused on developing
in-house capabilities early in process industrialization
4.
different types of policy towards development and foreign investment
contributed to the way in which technology was acquired and them employed
5.
Acquiring technology: From license agreements,
collaborative agreements, importation of foreign goods and equipment and
less-direct methods
6.
Foreign direct investment
(FDI)
a)
MNEs also one of more
common forms of technology acquisition in the NIEs
b)
Most significant
contributor to export-led development in Singapore
c)
Foreign subsidiaries were the major source
of technology and training in
most high-technology export industries
d)
MNEs have been
responsible for training local production workers, engineers, managers and
local suppliers
e)
Introduced fairly
labour-intensive processes and technology that required
additional training for production
and engineering staff and more advanced technology in production
f)
Technological and human
capability grew, the gap between the technology used in the parent and the subsidiary
narrowed
g)
Singapore
i.
MNEs firm played a
dominant role in the manufacturing and export and sectors
h)
HK as example
i.
Local entrepreneurship
combined with venture capital and support from larger trading companies
ii.
Provided an ideal
environment for MNEs
i)
In Taiwan
i.
Existing levels of
education and business experience facilitated integration into MNE networks by
semi-independent manufacturers
ii.
Acted as suppliers and
subsidiary-contractors for goods and services
j)
In Korea
i.
Largely in the form of
joint ventures that important
role of initial establishment of many industries
ii.
Advantage the imports of
technology and human capital and reverse engineering of foreign technology
iii.
Learned how to assemble and mass-produce consumer
goods to international standards
iv.
More emphasis on
licensing, importing and in-house development as a means of technology
acquisition
7.
Licensing and importing
a)
Used in conjunction with
other forms of technology acquisition
b)
Korea
i.
From MNEs to produce
patented products under established brand names
ii.
Gained access to technology
while Japanese firms gained capable, large-scale production capacity and
markets for their products
c)
CFB in Taiwan
i.
Turned to external
sources of capital and product technology, usually from
the US
ii.
The licensee expected to
purchase the necessary capital equipment and components for production
iii.
MNEs relied more heavily
on imports from the parent firms rather than local
sources of supply
8.
OEM and subcontracting
arrangement
a)
Effective and means of
technology acquisition by local firms in the NIEs
b)
Involves the local firm
producing a finished product to specifications of larger and foreign buyers,
who market and distribution it to customers
c)
Important in both South Korea Taiwan
d)
For small firm
i.
Avoided the costs of
own-brand manufacture (OBM) and encouraged firms to nurture their skills in product and process absorption and product
design, development and innovation
ii.
Singapore by local firm,
for example
(1)
Strict quality control
measures were imposed suppliers
(2)
Training in modern
manufacturing techniques and business practices
(3)
Improve the quality of
their components or semi-finished products and enabled them to respond quickly to changes in demand
(4)
Provide an avenue access
foreign product technology and integrate it with their existing competencies
e)
For the larger indigenous
firms and chaebols decreased
their dependence on external sources of parts, components, semi-finished goods
and developmental activities
f)
For MNE subsidiaries and
local entrepreneurial firms
i.
In HK, apply in the
electronics industry
(1)
Responsible for supplying
the necessary inputs for production, such as tools, plastic casings and metal parts
(2)
Employment in this
‘support network’ of local firms was estimated at one third of the total
employment
(3)
In Singapore
g)
For larger firms assisted
their sub-contractors and suppliers
i.
Providing technical
assistance in production or quality control, advice in managerial and organizational practices and better access
to inputs, equipment
and products manufactured
ii.
The productivity of the
plants as well as technological capacity of supplying firms
iii.
Often increased their
knowledge base through hiring personal that worked for MNEs, or high-technology firms
in the region, such as
Samsung and Daewoo
iv.
Frequently imitated the
technology and products that launched by the larger, foreign companies
v.
In HK, the transistor radio assembly
by local entrepreneurs began were established by Japanese MNEs
h)
Local ventures overtook
the MNEs as the main source of output and exports
i.
Consumer goods for export which included radios, calculators,
watches, TV games, computers and telephone
ii.
Involved in OEM
arrangements with US or Janapanese MNEs, they also developed on the strength of their own entrepreneurial skills, the experience gleaned from
MNEs through previous employment and imitation and import of foreign technology
iii.
Local firms in HKhave progressed well into the ODM and even the OBM stages. Control production and work independently on product design. Also have established their own brand names in
international markets
9.
Joint ventures and
alliances
a)
Involved a sharing of
resources
b)
Distinguished from an
alliance as it the exchange of equity capital the creation of a legally
separate company
c)
Often of a shorter
duration and neither transfer of equity nor a new company being established
d)
Set up for specific
projects, such as the development
of new technology and dissolved
once the desired objective is achieved
e)
Earlier joint ventures
between Korean and Japanese firms enabled the transfer of basic technology embodied in products and equipment, Hitachi Japan Korea
f)
Alliances able to take
place on more equal footing
i.
Offer their technology,
experience and knowledge to the partnership for mutual upgrading of technology
ii.
Existing competence in
electronics, telecommunications and semiconductors has
enabled to negotiate the terms of
these agreements on equal basis with these leading firms
g)
Developing new technology
i.
Combined efforts of the
two typically result in more rapid new technology development, at lower cost to both partners
ii.
Daewoo-SGS-Thomson
alliance as example that developing the digital integrated circuits (ICs) that used in
leading-edge products
10.
Acquisition
a)
Acquire existing
high-technology companies, or those actively ivolved in
complementary research
b)
Conjunction with outward
investment to regions where clusters of firms are at the leading edge of
technological development
c)
Firms from the NIEs need
contact with the users of the products and producing the innovations to help the design, manufacture, marketing
and re-design stages
d)
The investments are helping to narrow the
distance of the NIEs from established centers of innovation and from consumer
markets, by keeping the
suppliers up to date with new products, processes and market trends
e)
Take the Wearnes
Hollingsworth Group in Singapore
i.
Existing competencies in
electromechanically equipment but moved into chip design through acquisition
ii.
Hired competent staff
formerly from MNEs and drew on the
technological experience of its OEM partners
f)
Advantages for Asian
businesses are that they are building bridges to leading-edge innovators who initiate new
technology trends
g)
Create opportunities for
technology transfer to Asia in the future and helping local, Asian
companies better understand the highly competitive US
(C)
R&D efforts
1.
Systematic creative
activity undertaken to increase the stock of knowledge
2.
Consist of fundamental
research result in a radical innovation or advance of existing technology
3.
Research may be carried out for a specific
practical purpose or objective, or linked to a specific area, such as medicine
or chemistry
4.
The majority of R&D activity traditionally undertaken in the NIEs has been of this third variety, for the purpose of adopting and developing
existing technology
5.
1990s and now are
increasingly turning to independent R&D efforts for technology advances
a)
Surpassing the
technologies coming from developed country firms
b)
Like mobile telephones or
computers, customer
loyalty and sales are highly dependent on continuing innovation and speed to
the market
6.
Emphasis on researching
new, leading edge technology, rather than developing existing technology
a)
Conjunction with
government institutes or with government support
b)
Launching their own
brands, moving independently into international markets
c)
Supplying leading edge
products under ODM arrangements
d)
The role of government and private firms and the types of technology
emerging from the ‘latecomer’ firms
7.
Technological trajectory
a)
Applied research, product
development, small-batch manufacture and testing in domestic markets and mass manufacture of a
standardized product suitable for international markets
b)
Product innovation is radical in
nature and R&D
activities uncover radical new technologies or ideas
c)
Emerging the crude or
unrefined un the early stages, the products are made in small batches, because
the innovation is changing rapidly
through incremental improvements as the technology and
the market are better understood
d)
Over time, technology
become more standardized
i.
Shift form developmental
research to production
ii.
Standardized products can
be mass-produced
iii.
Economies of scale and
mass marketing generate returns on the original investment made to research the
new technology
iv.
Increase firms exploiting
the technology and competing
against one another offering similar versions of the product, hence the shift of production to
countries offer low-cost labour
e)
Korean firms, for example, went through a process of
acquisition of technology, then assimilation or absorption through reverse engineering and rapid
learning, adaptation of the technology to suit local conditions
f)
Applied to specific
products and included a ‘package’ of product and process technologies including assembly processes, product
specifications, production know-how, technical personnel, components and parts
g)
Local firms understood
the technology they could start making differentiated products of their own
i.
Capabilities of local
technicians and engineers improved, then further incremental innovations were made
ii.
Applied to different
products, combined together or advanced through applied research
iii.
Simplified comparison of
the technological trajectories taken in the West with those of the NIEs
h)
NIEs reach the stage
where in some industries R&D activity
i.
Lead to advanced
technologies being produced locally
ii.
NIE are heading in the future to produce leading-edge technology
based on radical innovation
iii.
Engaging in the type of
fundamental research that developed countries have
initiated in the past
iv.
Faced by the NIEs in the
early stages of industrialization
v.
Provide the reader with
insights to how early efforts in innovation might be managed by
developing-country firms
8.
NIE governments
a)
Played a significant role
in technological advancement in the region through involvement in and support
of research activities
b)
Early R&D efforts
concentrated on applied research and developmental activities that established fledgling
industries
c)
Korea Institute for
Science and Technology (KIST) develop capabilities to absorb foreign technology
d)
Industrial Technology
Research Institute (ITRI) has contributed to the development
of electronics and semiconductor
technology and capability in Taiwanese fims, which collaborated with
foreign high-technology firms
i.
Initiating leading-edge
research and help entrepreneurs start up technology based businesses
ii.
Government encourages the
return to this talent to help boost local research and innovation
e)
R&D is much lower
than in the other two NIEs
i.
Government efforts to
attract high-technology foreign firms and encourage the development of local firms include science parks, tax
incentives
ii.
Providing financial or
developmental support for companies to carry out research
iii.
The government-run Institute of Molecular Singapore
f)
R&D concentrated on
developmental work applied to specific technologies, products and industries in
HK
i.
Laissez-faire approach to
industrial policy that business
entrepreneurs and large companies should decide the direction of new technologies, products and industries
ii.
Government has taken a
minor role in development activities
iii.
Provided some backup for
fledgling entrepreneurs, include education and training
g)
Industrially-funded or
private R&D is growing much faster than government-funded R&D
i.
Deliberate and
concentrated effort to raise the technological capabilities in the NIEs
ii.
Establishment of Science
parks, attraction of foreign MNEs in high-tech industries and collaboration, high technology firms are all helping to further this objective
iii.
Japan’s largest firms
dominate research involve fundamental new technologies and products, against
each other for market share. Fujifilm as example
iv.
Korea
(1)
Research directed to
incremental innovation, assimilation and adaptation of existing technology
(2)
Focusing on radical
innovation and fundamental research
h)
Research efforts and
government incentives seem to be working
i.
Shifting select R&D
activities to Singapore
ii.
Government funding helped
establish R&D facilities for Sony’s precision engineering unit and Lucent Technologies’ business communications R&D centre
iii.
Dramatic transformation
from an island state heavily dependent on basic manufacturing
iv.
Allows the local firms to
compete at the leading edge of technology in small niche areas
9.
HK’s R&D directed towards
product development and design and process improvement
a)
Small and limited
resources to conduct independent R&D and tend to rely on OEM arrangement with large MNEs or collaborative
ventures with others smaller firms
b)
Kong Wah Group as example, have established their own R&D department that are responsible for product design and development in line with market requirements, improving the quality of
products and adaptation
and upgrading of production processes and equipment
c)
Taiwanese firms have considerable progress in
terms of rapid and flexible
product design and development
despite their limitations in terms of size and resources
i.
Relied on ‘clusters of
innovation’ formed by many small firms in a specific industry or in conjunction with foreign MNEs
ii.
Strong design and
development capacity, technical assistance and education or training become innovators in certain products, such as PCs
10.
NIEs direct research
expenditure towards catching up on market development
a)
Conducting independent
research in marketing and severing traditional ties with foreign multinationals
b)
Product were re-labelled and sold under internationally recognized
brand names, using standardized packaging
c)
Now, become quite well
recognized in the West
d)
Considerable resources
into the establishment of these brands, direct advertising to customers and direct selling channels
e)
Firms hope to finally
capture not only the returns on product and process innovation, also returns from their
own branded products
11.
Reading
a)
Korean electronic firms
caught up with the West in terms of technology-based output and market share in
selected product categories
b)
Use of alternative external sourcing strategies such as OEM to
upgrade capabilities
c)
Faced to due to their
specific approach towards industrialization
d)
Based around the
governement-supported Chaebol led to high debt, sticky specialization and narrow knowledge base
12.
Fundamental problems
facing the Chaebol that arisen as a result of Korea
a)
Heavy reliance of credit,
high debt to equity ratios and lower margins, which
mean less capacity to service and repay
this debt
b)
Over-reliance on
price-sensitive, lower-end consumer goods and standard components and subsequent loss of
developed country market share that goods are cheaper
c)
Concentrated industry
structure, dominated by larger firms competing against each other with few opportunities for
developmental linkages with smaller local firms
d)
Narrow knowledge-based
and over-specialization. Over-reliance on unrelated diversification into different sectors or area of technology
e)
Chaebols potentially have less capability to upgrade
to high-value-based, differentiated
products and more flexible production
13.
Solution is major shift
towards Technology diversification
a)
Strategies of the
Japanese Kaisha that build on existing knowledge
b)
Strengths in a single or
a few selected industries
c)
Focused on developing
core competencies through the innovation process
VI. Technological change in the Asia-Pacific region
(A)
Flying Geese Model
1.
Explanation of the region’s interdependent economic and
technological growth
2.
Geese fly in a V formation with a single goose in the lead and rest
of geese making use of the up-draughts created by those flapping in front
3.
The V formation reflects the degree of sophistication of the factors
of production, such as capital, labour and other resources (technology and raw
materials)
4.
Japanese economy grew
a)
Workers more skilled and wage levels rose along with the cost of
land, rents and other resources
b)
Outward investment and subcontracting by the Japanese into the NIEs
helped to counter these rising cost by relocated production where labour and
land were cheaper
c)
Rising Yen and Japanese goods were more expensive to buy oversea,
was easier to make direct investments aboard
5.
The logical step was to relocate labour-intensive production
offshore
a)
Accompanying the equity capital investment made by Japanese MNEs
buddle of tangible and intangible assets
b)
Including product specifications, production technology, machinery
and parts and technical assistance and human capital
c)
Manufacture to the same specifications and level of quality required
by the Japanese buyers
6.
Transfer of technology and knowledge helped raise the technological
capabilities in NIEs
a)
Undermined their ability to provide the low-cost production required
by Japanese MNEs
b)
The source of competitiveness in the NIEs was slowly shifting
towards technological competences as workers became more skilled
c)
Economic growth to make their own investments abroad, set up their
own companies and invest in innovatory activities
d)
NIEs directed their labour-intensive investments to the third-tier
countries, such as Malaysia Thailand Indonesia China
7.
Half of development equation involved trade
a)
Exporting of local products through establishment of Japanese
subsidiaries or joint ventures between Japanese and local firms or through
subcontracting
b)
Imports of technology opened export markets through use of
established marketing infrastructure
c)
Exports of technology came from Japan and later the NIEs and raw
materials and natural resources form ASEAN
d)
Semi-finished products, key components and other inputs flowed from
the more developed to the less developed countries
e)
Product exports which were responsible for generating revenue for
the producing country, went to meet the demand of consumers in the developed
countries of Japan, the US and Europe
8.
Economies make complementary contributions to both economics and
technological upgrading
a)
Japan
b)
China
c)
NIEs graduated to higher-skilled tasks such as design, complex
component manufacture
d)
Retained much of the most sophisticated research and development
work
9.
The region as a whole has worked together
a)
Differences in the culture, polities, business and technological
environments between the countries of Japan
b)
Pooled its diverse set of resources in order to achieve economic
progress
c)
The model reflects the dynamic process of upgrading in the region
d)
Changes to the business coupled with the changes in technological
capability, prompted an upward spiral of competence building
i.
When efficient, low-cost light manufacturing was no longer
sustainable, firms were process of upskilling their employees and upgrading
their technology
ii.
Perform higher-value-added tasks such as design, complex component
manufacturing
10.
“Flying Geese” omits several important influences on development in
the region
a)
Both Japan the US
b)
Technology came from Western sources rather than Japan
c)
Chinese businesses networks were instrumental to the development of
Taiwan, HK and Singapore
(B)
Overseas Chinese business network
1.
‘Flying Geese’ model fails to recognize that these networks have
played a significant role in technological development in Asia
a)
Taiwan
b)
Able to compete on the basis of their ability to make deals, remain
flexible and respond quickly to opportunities and changes in the marketplace
c)
Guanxi support networks have supplemented the limited resources of
the small business, such as information about markets, business opportunities,
technology and knowledge
d)
Taiwanese firms as example, established and maintained connections
in the technological centers
e)
Being closer to centers of research and consumer markets, the firms
can keep up-to-date with emerging product or technological innovation and
changes in market trends
f)
Proximity to China
2.
Dynamism of the Chinese business networks
a)
Technological upgrading and economic growth can be attributed to
both the autonomous efforts by these smaller, family businesses and the
influence of Japanese and US MNEs
b)
Taiwan and HK, smaller family-owned firms characterize the business
system
c)
Singapore
d)
Korea
(C)
Role of government policy
1.
Focused primarily on the process of technological capability
building in selected Asian countries
a)
Economies graduated from poor, agricultural nations to being able to
compete with the technologically advanced developed countries
b)
Being imitators of product abd process technology to innovations in
their own right
c)
Brief explanation of the specific context which learning and
upgrading took place
2.
Technology upgrading does not occur naturally
a)
Changes to the environment, such as education levels, willingness to
work and save, the ability to capture opportunities for growth, government and
entrepreneurial leadership and foresight and the capacity to effectively
utilize and acquire resources
3.
Technological trajectory with only some common elements
a)
Private enterprise have acquired the ability to enable their
capital, human and technological resources and match them to the opportunities
in the marketplace
b)
National system of innovation can be defined as those organizations,
institutions and linkages in a specific country which generate, diffuse and apply
scientific and technological knowledge
4.
Education
a)
National innovation systems in East Asia
was educated workforce
b)
Factory workers and engineers alike trended to work for a lost less
more productive, than their counterparts in the developed countries
c)
Focused on vocational training would be useful to the emerging
manufacturing industries
d)
Emphasized the importance of skilled craftspeople, engineers and
technicians
e)
In Singapore, the government ran apprenticeships for students, provided
training grants and established training institutes in co-operation with
developed countries in Europe and Japan and inward investing MNEs
f)
In Korean government has continually increased its expenditure on
education and training since the 1950s
i.
Government funded institutes (GFIs) and the Ministry of Science and
Technology (MOST) provided industrial training and vocational education
targeted towards a variety of different sectors
g)
In Taiwan
i.
As qualified professional managers and future entrepreneurial
business leaders
5.
Positive attitude towards education taken by individuals and the
family
a)
NIEs were sent overseas by their families to be educated in leading
European and US universities
b)
Take advantage of this trend to try to attract those graduates still
residing overseas back home to work in local companies
6.
Work ethic
a)
The ability to restructure lagging firms and industries
b)
Responsible for many of the smaller, entrepreneurial businesses that
flourished with relatively little external support in Taiwan, HK, Korea and
Singapore
c)
Businesses employ traditional, family-based work practices and
attitudes, with everyone in the family committed to contributing to the success
of the enterprise
d)
Conjunction with this low-cost, skilled labour pool the NIEs
fostered an environment conducive to doing business attractive to MNEs and encouraged
the development of local firms
e)
Central to this business environment were adequate commercial
infrastructure, political stability and government policies that promoted
industrialization to the success of the enterprise
7.
Resources, infrastructure and stability
a)
Attract foreign business and encourage the development of local
business and to encourage the development of local business
b)
Natural resources and labour less tangible benefits such as
geography and culture contributed to the favourable business environment
c)
NIEs benefited from their close geographic proximity to countries
with abundant natural resources, Japan
d)
NIEs were mentally or culturally connected to major investing
countries through past colonization by the British and the Japanese
e)
Helped to overcome some of the barriers to investment and sharing of
technology through employment and joint ventures
8.
Physical and commercial infrastructure
a)
In Singapore
i.
The shipping and transportation infrastructures were well developed
and commercial services, such as finance, insurance and telecommunications were
in place
b)
In Taiwan
c)
In Korea
i.
Included construction of information superhighway, high-speed
fiber-optical links throughout the country and digitization of local exchange
networks
9.
Political and economic stability
a)
Compared to other less-developed counties, encouraged competitive
business and trading environments, high savings ratios, human skills and
capital accumulation
b)
Asian crisis has been to reaffirm economic and political principles
and try to maintain an environment that conductive to doing business
c)
Sound macroeconomic policies create a stable business and investment
environment, where capital flight is lower and investors make direct
investments in productive capacity with more confidence
d)
In Korea
e)
In Taiwan
f)
In Singapore
g)
In HK, stability and low intervention in industry have encouraged
market forces to influence business and investment
10.
Government policy
a)
Aimed to economic growth and the development of technological
capability employed in the NIEs
b)
The government in the NIEs that typically small economies with
limited domestic markets
c)
Export-oriented industrialization
i.
Countries have encouraged firms to focus on exporting activity
ii.
HK and Taiwan benefited from their close proximity to China
iii.
Singapore
iv.
MNEs played a diminishing role as the Chaebols developed
d)
International competitiveness achieved through outward-looking
approach to business
i.
Domestically produced exports had to meet or exceed international
standards of quality and value
ii.
Lack of natural resources in the smaller countries, reinforced the
need to develop on the basis of labour-intensive and technological-based
exports to developed countries
11.
Industry policy
a)
In HK government
i.
Laissez-faire approach to policy that unique in the NIE group
ii.
The government involved itself in industry intervention, such as targeting
of specific industries, incentives for investment, import controls or export
incentives
b)
In Korea
i.
Directly involved itself with the promotion and direction of the
largest firms
ii.
Entailed incentives, subsidies, protection from imports, tax and
credit benefits, technology support and financial support towards selected
industries
iii.
Overcome barriers to entry in established industries
iv.
The Chaebols need to make large investments in plant and equipment
to undertake mass-production
c)
In Taiwan
i.
Maintain flexible market mechanisms and obvious export orientation
ii.
Government was responsible for training, coordination of R&D
efforts and nurturing of emerging industries
iii.
Supported the thrust of local and foreign firms into certain
industries
iv.
Responsible for directing funds and credit towards these industries
and/ or licensing and importing foreign technology
v.
Less direct intervention or support of individual firms than in
other NIEs
d)
Taiwan Singapore
i.
In Singapore
ii.
In Taiwan
12.
Foreign direct investment
a)
Managed to acquire the requisite foreign technology for development
b)
In Korea
i.
Leave or to increase the proportion of local ownership in the
venture
ii.
Local firms made use of imports of foreign technology, usually
embodied in tangible products or equipment
iii.
Imitation through reverse engineering provided an alternative method
of technology absorption to foreign direct investment
c)
In Singapore, allowed a high level of foreign control considered
unacceptable in the other NIEs
i.
Provided incentives, training and infrastructure to attract foreign
firms and their technology
ii.
Investors were able to take advantage of duty-free imports of
equipment and production inputs
iii.
Later policy tried to develop high-technology sectors by targeting
investment incentives to skill-intensive, higher-value-added investments
d)
Outward investment and trade also contributed to the economies
ability to upgrade
i.
Low-end activities were shifted to low-cost labour countries that left
the NIEs to concentrate on advancing their technological capabilities
ii.
HK and Taiwan
13.
Co-operation between government and business
a)
Close business-government relations in Japan
b)
Government assisted fledgling businesses and industries took
responsibility for R&D
i.
Government institutes for research, training and development were
set up in targeted industries
ii.
Contributed to skilled building among workers and firms, and were intended
to encourage further product development and higher-level research in resident
MNEs
iii.
In Korea
c)
NIE government supported the growth of industry by establishing
agencies and ministries to encourage exporting and linkages overseas
i.
Korea for example, where less contract with external sources of
ideas, technology and market channels through foreign investment
d)
Science or industrial parks, such as Batam Industrial Park in Indonesia
i.
Through joint government and private industry efforts
ii.
Designed to exploit the skill base of Singapore Malaysia Indonesia
iii.
Encourage investment by MNEs and Government sponsored business
start-up and the formation of industrial parks
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