Catch‐up failure in core IT components: The case of numerical controllers

Abstract

Summary A number of Korean companies as well as the Korean government have invested on manufacturing firms of the numerical controller (NC), an integrated computer that runs the automatic machining process of general purpose machining tools. However, in spite of the 20‐year venture, both the companies and the government have met with failure. In accordance with Bell's suggestion to embark on a detailed empirical study of specific industries in the catching‐up process, this study attempts to determine the characteristics of the general NC industry in terms of technological regimes and convergence. This catch‐up approach also facilitates elucidation of Korean firms’ failure in the above‐mentioned undertaking. It was then found that the regime of the NC knowledge base provides an unfavorable background for (a) access to foreign sources of technology during the product development stage, and (b) development of novel merchandise of reliable performance within an advanced and demanding user environment during the launching stage. Given these unfavorable conditions, the Korean strategy of catching up with the NC technology should be different from the traditional approach of product development by way of simulated foreign overseas technology. Instead, a strategic alternative approach should be employed to cautiously observe the evolution of technology, hence identification of catching‐up opportunities. One such opportunity for late but advanced NC producers is to specialize in emerging niche component technologies and markets (e.g., the shift to PC‐based machine tools). Another is to build leadership capabilities by means of interaction with a significant number of advanced users and investing in R&D activities, allowing expansion to a leadership position on this base of knowledge. Among the candidate technologies for this specialization is the control software technology for the generic machining setting. Considered as one of the technologies of convergence, this needs to be avoided because the incumbents possess the advantage here.