Title: Collective efficiency and technological capability in small firms: evidence from two foundry clusters in South India

Authors: N.V. Raghavendra, M.H. Bala Subrahmanya

Addresses: Department of Mechanical Engineering, National Institute of Engineering, Manadavadi Road, Mysore 570 008, India. ' Department of Management Studies, Indian Institute of Science Bangalore 560 012, India

Abstract: This study explores the influence of various learning mechanisms on the acquisition of technological capability in small industry clusters through a field study conducted in two foundry clusters in south India. It probes whether the collective efficiency through higher inter-firm linkages and cooperation with firms/agencies within a cluster as well as outside the cluster, leads to higher technological capability. Suitable proxies have been developed to measure technological capability and the learning mechanisms, thus facilitating quantitative analyses. The evidence suggests that collective efficiency, either in the form of horizontal cooperation or vertical cooperation, has a significant influence on technological capability. However, it is the factors like proximity to markets, nature of the cluster – homogeneous or heterogeneous, that appear to reinforce the kind of cooperative efforts, horizontal or vertical, that are more conducive to the acquisition of technological capability in firms. Therefore, the study has certain policy implications for small industry development in India.

Keywords: foundry cluster; technological capability; collective efficiency; joint action; learning; technology level; India; small firms; industry clusters; SMEs.

DOI: 10.1504/IJMED.2005.006565

International Journal of Management and Enterprise Development, 2005 Vol.2 No.3/4, pp.325 - 348

Published online: 21 Mar 2005 *

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