The influence of industrial policy and national systems of innovation on emerging economy suppliers’ learning capability

Abstract

This paper links the industrial policy and national systems of innovation literature to the investigation of learning capabilities of suppliers in the context of the automotive parts industry of Pakistan. Drawing data from 50 Pakistani autoparts suppliers, the findings suggest that industrial policy has been helpful in creating a local parts supply base and facilitating the entry of Japanese assemblers in the market. However, the implementation of the policy has been weak, and it is an arduous journey for the local suppliers to develop ambidextrous (exploratory and exploitative) learning capabilities. The findings also indicate that where local training and support from R&D institutions are weak, networking alone with foreign multinationals is not sufficient on its own to develop exploratory learning capabilities of local suppliers. This paper shows the importance of creating national–provincial institutions offering learning and skills development aimed towards innovation.