Innovation Dynamics in Catch‐Up Firms: Process, Product and Proprietary Capabilities for Development

Abstract

This paper analyses how firms organize for industrial innovation where they are significantly below being globally competitive. It investigates the dynamics by which catch‐up firms in developing countries (DCs) go beyond the boundaries assigned to them by their national environments and by the world's leading technology‐driven firms. The paper analyses cases of how a range of successful firms managed to break these boundaries to increase competitiveness through innovation. Our key argument concerns the innovation dynamics of catch‐up firms. We argue that aspirant firms approach the frontier differently to leaders. We construct and use a tool, based on resource‐based theory, to map the alternative approaches taken by firms to develop new capabilities. It focuses on the relationship between process and product innovation and the nature of proprietary competencies. This allows the development of approaches to build strategies for innovation in DC catch‐up firms and thereby transform development dynamics.

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