Capital Goods Industry Research Articles

World’s Knowledge Spillovers : Beyond Openness and Growth

Capital goods industries, for example, nuclear reactors, steam and vapour turbines, air or gas compressors, filtering or purifying machinery and apparatus are intrinsically heterogeneous in terms of vintages and the level of technological knowledge embodied in their products. Countries decide to import wide range of varieties from different sources, which has a bearing on their growth rates. The present paper analyses the hypothesis that the types of imported capital goods and the sources of their origin matter for growth. We construct a new index that measures the level of knowledge embodied in a country’s import basket of capital goods. Using the instrumental variable method, we find that the high initial value of this index for the year 1995, leads to high growth rate of per capita income in the subsequent years during 1995~2005, that is, 10 percent increase in the value of the index raises growth rate by 2 to 3 percentage points. This paper looks beyond the simple relationship between trade openness and growth.

Innovation and finance: a stock flow consistent analysis of great surges of development

The present work aims at contributing to the recent stream of literature which attempts to link the Neo-Schumpeterian/Evolutionary and the Post-Keynesian theory. The paper adopts the Post-Keynesian Stock Flow Consistent modeling approach to analyze the process of development triggered by the emergence of a new-innovative productive sector into the economic system. The model depicts a multi-sectorial economy composed of consumption and capital goods industries, a banking sector and two households sectors: capitalists and wage earners. Furthermore, it provides an explicit representation of the stock market. In line with the Schumpeterian tradition, our work highlights the cyclical nature of the development process and stresses the relevance of the finance-innovation nexus, analyzing the feed-back effects between the real and financial sides of the economic system. In this way we aim at setting the basis of a comprehensive and coherent framework to study the relationship between technological change, demand and finance along the structural change process triggered by technological innovation.

Produção enxuta e teoria das restrições: proposta de um método para implantação conjunta na Indústria de Bens de Capital sob Encomenda

Ao longo do tempo, a tarefa de desenvolver e gerir sistemas de produção tem se tornado mais complexa e, atualmente, para enfrentar as mudanças de demanda dos clientes e a competição global, os gestores têm a difícil tarefa de combinar a eficiência da produção em massa com a customização da era da produção artesanal pré-industrial. Nesse contexto, as empresas da Indústria de Bens de Capital sob Encomenda (IBCE), expostas a condições de mercado muito adversas, têm buscado estratégias modernas de gestão da produção para melhorar o fluxo de produção e minimizar inconveniências inerentes a seus sistemas de produção. Este artigo estuda a IBCE, em especial os bens de capital de grande porte, também conhecidas como sistemas de produção de grandes montagens, com o objetivo de propor um método de implantação conjunta dos princípios da produção enxuta e da teoria das restrições, com a utilização dos Sistemas de Coordenação de Ordens adequados, para reduzir o lead time de produção e melhorar a pontualidade de entrega.

Providing integrated solutions in the professional printing industry: The case of Océ

This paper aims to contribute to the discussion about the delivery of integrated solutions in the capital goods industry. The paper is based on an in-depth case study and presents a solution delivery framework that can help companies in the professional printing industry devise, deliver and price integrated solutions. The case of Océ suggests that succeeding as a solution provider requires developing the capability to provide highly customised service logic-based solutions while retaining the capability to provide, efficiently, standardised goods logic-based solutions. Hence, it suggests that adopting different delivery approaches to address customers with different types of needs can help achieve such a capability.

Innovation and Finance: An SFC Analysis of Great Surges of Development

Schumpeter, a century ago, argued that boom-and-bust cycles are intrinsically related to the functioning of a capitalistic economy. These cycles, inherent to the rise of innovation, are an unavoidable consequence of the way in which markets evolve and assimilate successive technological revolutions. Furthermore, Schumpeter’s analysis stressed the fundamental role played by finance in fostering innovation, in defining bank credit as the “monetary complement” of innovation. Nevertheless, we feel that the connection between innovation and firm financing has seldom been examined from a theoretical standpoint, not only by economists in general, but even within the Neo-Schumpeterian research line. Our paper aims at analyzing both the long-term structural change process triggered by innovation and the related financial dynamics inside the coherent framework provided by the stock-flow consistent (SFC) approach. The model presents a multisectoral economy composed of consumption and capital goods industries, a banking sector, and two household sectors: capitalists and wage earners. The SFC approach helps us to track the flows of funds resulting from the rise of innovators in the system. The dynamics of prices, employment, and wealth distribution among the different sectors and social groups is analyzed. Above all, the essential role of finance in fostering innovation and its interaction with the real economy is underlined.

Spare parts logistics for the Chinese market

PurposeDespite the proven benefits of high‐performing spare parts logistics, recommendations on how to organize spare parts logistics in China are rather rare. The absence of spare parts logistics concepts for China is surprising, since the spare part business is the profit pool of the capital goods industry: spare parts create about 17 percent of the industry's total revenue. The margins involved in this spare parts revenue are, on average, 25 percent compared to 2‐3 percent of the capital goods. This paper aims to offer recommendations to increase spare parts logistics performance.Design/methodology/approachThe authors conducted an extensive benchmarking project with a variety of firms (focus group and single case study) in order to gain a better understanding of spare parts logistics in China. By reviewing the first benchmarking findings with a single company that struggled to achieve sufficient spare parts logistics performance, additional insight was gained into how spare parts logistics should be organized in China.FindingsThe paper attempts to provide a better understanding of the necessary changes for improving logistics performance in the Chinese market. It analyzes the necessary changes to achieve a cutting‐edge logistics solution, and shows how companies can implement the solution.Research limitations/implicationsResearch limitations come from the qualitative nature of the research.Practical implicationsManagers can use the results obtained in this study to challenge their current logistics practices and develop a project procedure on how to initiate logistics projects that lead to cutting‐edge logistics performance.Originality/valueRather than concentrating on performance benchmarks of the supply chain of spare parts or specific aspects of spare parts management, the paper develops the setting up of a cutting‐edge logistics solution for China and Asia. The cutting‐edge solution is based on two main pillars: companies should try to develop logistics solutions for Asia that consider existing Asian and Chinese constraints instead of taking the logistics practices used in mature markets and trying to adapt them to the Chinese market, and the development of the logistics solution should be in intensive collaboration with the logistics providers.

Customer solutions in the capital goods industry: Examining the impact of the buying center

Based on in-depth interviews with customers, this study explores the customers' view of relevant solution criteria in the capital goods industry. Our research examines (1) whether the initial four-process conceptualization of customer solutions also holds for this industry, or whether it has to be extended and (2) which criteria of the customer solution matter the most for each member of the buying center. This study reveals that customers purchasing solutions in the capital goods industry expect the provider to be excellent in terms of six customer/supplier relational processes, namely (1) customer requirements definition, (2) customization and integration of goods and/or services, (3) their deployment, (4) post-deployment support, (5) signaling activities, and (6) inter-process management. Moreover, we found that the relevance of these processes differs across the most important members of the buying center (users, buyers, and deciders) due to their specific organizational function.

Natural hedging as a risk prophylaxis and supplier financing instrument in automotive supply chains

PurposeSupply chain risks significantly endanger small and medium‐sized enterprise (SME‐) suppliers in different currency areas in purchasing and sales. The purpose of this paper is twofold: to describe the concept of natural hedging in supply chains, and to highlight the potentials of natural hedging as a risk prophylaxis and a supplier financing approach.Design/methodology/approachThe paper uses a brief literature review and a conceptual research design, taking the financial and physical component of natural hedging (in this case between an OEM and its SME‐suppliers in the automotive industry) into consideration.FindingsNatural hedging of currency and commodity price fluctuations can contribute to the reduction of SME‐suppliers' supply chain vulnerability, also benefiting an OEM.Research limitations/implicationsThis research focuses exclusively on relationships between SME‐suppliers and large OEMs in the automotive industry. Studies of other types of companies and industries, such as the capital goods industry, might reveal divergent practices.Practical implicationsWith the natural hedging approach, the paper promotes an innovative concept for better managing risks in supply chains, especially in recessionary times. The concept is a source for supplier financing.Originality/valueThis research shows that a globally active focal firm – an OEM in the automotive industry, for instance – can hedge currency and commodity price risks (financial components), as well as operational supply risks (physical components), by centralizing commodity supply with its SME‐suppliers. It can serve as a basis for future research.

Leading Indicators for the Capital Goods Industry

The goal of this paper is to build leading indicators to predict the capital goods business cycle in Brazil. We propose a probit model with autoregressive dynamics consisting of series with predictive power to anticipate contractions in this sector. The model is especially suitable for this sector as it includes information about the characteristics of cycle phases and their duration in the estimation of recession probability, and adapts well to the high volatility of the capital goods business cycle. The results indicate that the dynamic probit model has a better forecasting performance than the simple probit model in several aspects, both within and out of sample and in real time.

The Implementation af an Organizational Innovation: Examples of Mass Customizing Firms of the Capital Goods Industry

The Implementation af an Organizational Innovation: Examples of Mass Customizing Firms of the Capital Goods Industry

RELAÇÕES DE CAUSALIDADE NO PADRÃO DE CRESCIMENTO INDUSTRIAL NO BRASIL (1975-2003)

O objetivo central do artigo foi identificar as relações de precedência temporal no âmbito da produção industrial no período 1975-2003 por meio de testes de causalidade Granger, em que foi utilizada a classificação por categorias de uso (bens intermediários, não duráveis de consumo, duráveis de consumo e de capital). Em particular, buscou-se verificar se as relações de liderança e defasagem que se apresentaram com clareza durante o “milagre brasileiro” persistiram durante o período em questão. Na ocasião, quando o desaquecimento na demanda por duráveis arrastava os demais setores, a acumulação e a produção corrente na indústria de bens de capital finalmente cresciam. Isso foi interpretado como sendo um problema de realização dinâmica ou demanda efetiva. Os principais resultados do presente estudo emergiram de um modelo de vetores autorregressivos com mecanismo de correção de erro (VEC) e indicaram que a produção na indústria de bens de capital secundou os movimentos em bens de consumo duráveis no período, reproduzindo em larga medida o padrão observado durante o “milagre”. Assim, o consumo conspícuo pareceu conduzir a indústria e a economia em seu conjunto por espasmos de crescimento.

Logistics information systems adoption: an empirical investigation in Brazil

PurposeThe purpose of this paper is to examine whether the level of logistics information systems (LIS) adoption in manufacturing companies is influenced by organizational profile variables, such as the company's size, the nature of its operations and their subsectors.Design/methodology/approachA review of the mainstream literature on LIS was carried out to identify the factors influencing the adoption of such information systems and also some research gaps. The empirical study's strategy is based on a survey research in Brazilian manufacturing firms from the capital goods industry. Data collected were analyzed through Kruskall‐Wallis and Mann Whitney's non‐parametric tests.FindingsThe analysis indicates that characteristics such as the size of companies and the nature of their operations influence the levels of LIS adoption, whilst comparisons regarding the subsectors appeared to be of little influence.Originality/valueThis is the first known study to examine the influence of organizational profiles such as size, nature of operations and subsector on the level of LIS adoption in manufacturing companies. Moreover, it is unique in portraying the Brazilian scenario on this topic and addressing the adoption of seven types of LIS in a single study.

Integrated solutions from a service-centered perspective: Applicability and limitations in the capital goods industry

Although advanced services, or so called integrated solutions, have increasingly received attention in the literature, no coherent body of literature exists, and the relational dimensions and consequences of integrated solutions are not explored in detail. Based on the emerging literature, we develop a framework identifying four different categories of integrated solutions: rental, maintenance, operational and performance offerings. We also compare and contrast the service- and the goods-centered logics with the logic of integrated solutions, and thereby show how the reciprocal interdependencies increase between customers and suppliers. We explore these interdependencies further in three case studies of firms experimenting with integrated solutions, and identify dependencies related to process knowledge, process optimization, and process operations. The paper shows that rather than moving along a linear continuum from goods to services, firms developing integrated solutions need to balance elements of both goods- and service-logics, as well as manage the increased customer–supplier interdependencies that integrated solutions entail.

Implementation challenges in mass customisation: route bus design

The implementation of Mass Customisation (MC) in bus manufacture presents two difficulties in light of current MC theory – the application of MC in a bespoke industry and the creation of capital goods. Bespoke industries are characterised by customer involvement and customised goods; i.e., meeting the needs of customers but not efficient manufacture. MC for capital goods presents differences from needs elicitation methods, and changes the theory surrounding product value, customers and utility. These issues are explored through the specific challenges met in the bus bodywork industry. The research opens the discussion on bespoke manufacturing, finds that bespoke and capital goods industries can benefit from MC, and ultimately uses this contrast to contribute to existing MC theory.

Innovation, imitation and dependence: iron and steel technology in India, 1970-1990

The paper examines the adoption of the innovations of the 'centre' by the Indian integrated steel industry (in the 'periphery') and lack of autonomous technological development, despite the potential, during 1970-1990. Imported technology was not subjected to any significant local adaptation and modification; further, there were hardly any autonomous technological innovations. Local ferrous metallurgical R&D, steel plant design and engineering, and the associated capital goods industry were weak and undeveloped, with tenuous linkages among themselves, and with the integrated steel plants.

Surplus of service-based business models – the integration of multiple perspectives for assessing win-win potentials

Service-based business models are becoming increasingly more important for the capital goods industry. However, manufacturers of plants still hesitate to offer these customer-oriented solutions to their clients, due to existing uncertainties resulting from economic risks. Certainly these business models do not only hold hazards, but unexplored potentials too. This paper shows how to use life cycle costing for the evaluation of service-based business models by presenting an approach, which can be used as management accounting instrument, identifying win-win potentials for the manufacturers and their clients. The practical ability of this method will be shown by means of three case studies taken from the robot industry.

MUDANÇAS NA ESTRUTURA DO COMÉRCIO INTERNACIONAL BRASILEIRO: COMÉRCIO INTERINDÚSTRIA X COMÉRCIO INTRA-INDÚSTRIA

O objetivo do trabalho é analisar as principais mudanças ocorridas na estrutura do comércio internacional brasileiro nas últimas décadas e tecer algumas considerações sobre quais os produtos onde os ajustes internos esperados do processo de abertura comercial serão maiores. Os dados mostram uma queda na participação do comércio interindústria e um aumento do comércio intra-indústria, principalmente nas indústrias de bens de capital (maquinaria e equipamentos de transporte) e bens intermediários (produtos químicos). Em 1967,9% dos manufaturados importados consistiam de produtos de comércio interindústria importadores líquidos. Este tipo de comércio tem caído muito, embora ainda permaneça elevado (41% em 1987). Esperam-se ajustes nas indústrias mais ineficientes deste grupo, porém menores aos que teriam ocorrido no início do período analisado. Os produtos de comércio interindústria exportadores líquidos serão os mais beneficiados com a abertura A participação destes, no total exportado, passou de 40% em 1967 para 66% em 1987.

The structure and competitiveness of the Brazilian capital goods industry

This article analyses changes in the structure and competitiveness of the Brazilian capital goods industry since the early 1990s and proposes a classification within that industry based on the different industrial segments from which the demand for machinery and equipment derives. Although this industry still accounts for a large share of manufacturing sector value added, the production efficiency and international competitiveness of the segments it comprises are quite heterogeneous. The article singles out the segments with the greatest development potential and suggests measures that could be taken in each of them to complement the industrial and technology policy instruments contained in the Production Development Policy officially established in May 2008.

Sectoral Innovation System and a Technological Catch-up: The Case of the Capital Goods Industry in Korea

This paper deals with the question of why making a catch-up is even more difficult in capital goods industries that are usually led by small or middle-sized companies. It relies upon the sectoral systems of innovation as a theoretical framework for analysis. From the findings, the paper has identified three sources of difficulties in the catch-up of the capital goods industry, particularly in machine tools. First, while small firms in the capital goods industry are usually specialized suppliers to big final goods assembly firms in the consumer goods industry or other industries, and thus the tacit knowledge accumulated from the interface between the producer and the customer firms is very important, a serious difficulty lies in the fact that local client firms are reluctant to use locally made capital goods due to their poor quality and low precision level. Second, while a successful catch-up first requires the ability to produce goods of better quality and lower prices than those produced by incumbent firms from advanced countries, a typical difficulty arises because incumbent foreign firms often react by charging predatory prices upon news of the local development of capital goods by latecomers. Third, if the catch-up firms overcome this barrier, then the next strategy used by incumbent firms is to charge latecomers with legal actions for patent violations. Despite these intrinsic difficulties, the Korean economy has achieved a very slow but gradual catch-up in the capital goods industry. The paper has attributed such achievement to several factors, including the strenuous efforts of the government, niche markets in general-purpose machine tools and emerging economies, and finally, the increasing introduction and adoption of information technology (IT) or digital technologies in machine tools. Furthermore, the three sources of barriers to catch-up imply that any latecomer firms that wish to record a successful catch-up should have these barriers in mind from the beginning of the road towards catch-up. We observe that a successful catch-up requires the ability to produce goods of better quality and lower prices than those produced by incumbent firms from advanced countries. After the initial success, they should also be well prepared against eventual or possible attacks by the incumbent firms in the forms of predatory pricing and intellectual property rights (IPR) charges.

Analysis of the Growth of Manufacturing Industries in Bangladesh

In this article, industrial growth of some manufacturing industries in Bangladesh has been studied using Census of Manufacturing Industries (CMI) Data from the years 1981–82 to 1999–2000. Higher increasing growth in value added for some industries in the post-liberalization period (1991–92 to 1999–2000) while for the most important industries, satisfactory growth level in the pre-liberalization period (1981–82 to 1990–91) has been experienced. Highest growth in fixed capital and improved concentration level in employment have been examined. Comparatively, capital goods industries showed highest significant annual growth rate (13.95 per cent). All manufacturing industries registered positive and negative employment elasticities with respect to value added and fixed capital whereas only positive output elasticities with respect to fixed capital and employment for the same.