Paths of technological capability building in complex capital goods: The case of hydro electricity generation systems in Iran

Abstract

This paper investigates the accumulation of technological capability in latecomer suppliers of complex capital goods by exploring the issue in an Iranian supplier of large hydro electricity generation systems. The findings suggest that, contrary to the conventional paths of catch-up in Asian and Latin American mass-producing electronics firms, and instead of starting from early stages of product lifecycle, the technological capabilities in this case were acquired through a non-linear movement within the stages of designing and installing complex capital goods in projects: starting from the middle stage (engineering and realisation of complex goods in projects), moving to the last stage (operation and troubleshooting of complex goods), and eventually coming back to the first stage (conception and design of complex goods). A detailed analysis of learning mechanisms reveals that this path emerged largely due to the nature of “learning by projects” in this industry, engineering intensity of the tasks, and insufficiency of conventional knowledge transfer methods for building design capabilities in complex systems. The paper starts by developing an initial framework of technological capabilities that is then refined through this study and the resulting framework is presented as one of the contributions. Based on the findings, a set of new empirical categories of technological capabilities in complex capital goods is suggested to help future research in this area. Implications of this research are also discussed for global value chains literature. The conclusion touches upon the implications of the study for business strategy and policy.