Economic perspectives on firms' technological capability enhancement and performance

Abstract

Competitive pressures and demanding business environments emphasise the importance of a firm's technological capabilities as a source of sustainable competitive advantage. Firms are increasingly looking at better ways of managing their technological resources over the long-term through the enhancement of their technological capabilities. The first objective of this paper is to propose an implicit logic between technological capability enhancement and the growth of economic performance. Second, the paper describes how a firm's technological capabilities might be accumulated by using four components: humanware, organware, technoware, and inforware. An economic cybernetic model is adopted to explore the interactive function between capability accumulation and economic performance. Thirdly, the case of Hangzhou Machine Tool from China is briefly used to analyse the economic perspective of technological capability enhancement.