MODULARITY, ABSORPTIVE CAPACITY AND TECHNOLOGICAL CAPABILITIES: A STUDY OF ELECTRONIC INDUSTRY IN PENANG, MALAYSIA

摘要

This study empirically examines the notion of modularity and technological capabilities. Based on the resource-based theory, the study develops its conceptual framework and tests empirically the role of modularity for technological capabilities, technological linkages and technological opportunity. The result of the study indicates that industrial strategy namely modularity plays an important role in technological capabilities upgrading in developing countries specifically in the electronics sectors of Malaysia. The study highlights the role of absorptive capacity in maximizing the returns of modularity in technological upgrading. Strong evidence was found to support the claim of the importance of the overall human capital development in firms that is far more crucial than any single improvements in one of the dimensions of human capital. It shows that developing only the employees' skills are not as important as having better human resource practices that allow flexibility, mobility and sharing. More importantly, firms adopting modular strategy need the complementive effects of human resources to improve its technological capabilities especially, the product technological capabilities. Firms in modular setting were also found to have better linkages and technological opportunities. The framework adopted in this study and the identification of the moderating role of absorptive capacity is a major contribution of this study to the extant literature on technology innovation and management while the suggested policy implications are an added contribution.