Technology strategy in developing countries: evolving from comparative to competitive advantage

Abstract

As a result of recent unprecedented technological advances and the current trend of trade liberalisation in the developing countries, businesses today have become truly global. There are no such things as local, protected markets any more, and no business is free from significant international competition. All enterprises, no matter where they are located, are affected in one way or another by global trends in an increasingly competitive world economy. However, this international economic competition is nowadays fought on the basis of acquired technological competencies, rather than locally available factor cost advantage. Thus, technology has emerged as a key resource of profound importance for sustaining corporate profitability. Even the enterprises in developing countries cannot remain isolated from the interdependent and competitive global business system, and have to use technology as a strategic variable for survival and growth. Therefore, this paper attempts to develop a framework for establishing an integrated technology-based competition strategy by enterprises in developing countries in line with the premise that a combination of lower-cost and technological-edge give rise to a real comparative advantage, which is essential for sustaining businesses under free-market competition. Four selected case studies from South Korea and Indonesia are included in the paper to show that, as markets deregulate and trade is liberalised, competition becomes more intense, but at the same time technological competitiveness also gives companies opportunities in the global markets if they are adequately prepared to evolve from factor-cost-based comparative advantage to technology-value based competitive advantage.

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