Academic journal article IUP Journal of Applied Economics

The Impact of Globalization on India's Technology Regime: A Quantitative Exploration of India's Organized Manufacturing Industries

Academic journal article IUP Journal of Applied Economics

The Impact of Globalization on India's Technology Regime: A Quantitative Exploration of India's Organized Manufacturing Industries

Article excerpt

(ProQuest: ... denotes formulae omitted.)

Introduction

Globalization, by dint of spectacular success of the Information a nd Communication Technologies (ICTs) and by the wave of dismantling the barriers to free flow of trade, investment, finance, technology, knowledge and information between the countries fostered phenomenal changes in the structure and nature of manufacturing across the globe.

The particular process of production has been split up into two or more processes, which have been undertaken in different locations, leading however to the same final production. Various kinds of agglomeration and industrial clusters have become the order of the day and the firms have been in the process of making decisions such that the upstream boundary set by a single firm consists of purchasing materials or parts from other firms and the downstream boundary is determined by selling its product to other firms (Kimura, 2004).

The mass production feature of the manufacturing firm has been replaced by a flexible multiproduct firm that lays emphasis on quality and quick response to market conditions, while adopting technologically-advanced equipment and new forms of organization (Milgram and Roberts, 1990). Since single-purpose equipment for mass production is being replaced by flexible machine tools and programmable multi-task production equipment and since these new machines can be quickly and cheaply switched from one task to another, their application allows the firms to produce a variety of outputs efficiently in small batches. The study made by Milgram and Roberts showed how flexible equipment and small batch sizes led to shorter product cycles, reduction in work-in-progress and inventories of finished goods. The shortening of product cycles supports quick response to fluctuations in demand and leads to lower back orders. These changes reveal a shift for the manufacturing firms from the industrial systems to post-industrial systems-while the driving force of the former was efficiency, which was rendered capable by hard automation where success depends on quick response to customer demands for customized high-quality products, in the postindustrial environment, success entails a close and careful linkage between the firm's manufacturing strategy and its overall strategy. These changes coupled with the transformation occurred through globalization, call for the consideration of the issue pertaining to 'technology regime'.

Technology regime, a concept invoked by the evolutionary theory in the hands of Nelson and Winter (1982) and Winter (1984) and refined later on by Dosi (1982), Pavit (1984), Malerba and Orsenigo (1993), and others, loomed important in this context. It is defined in terms of an idea of technology as a knowledge-based theory of production. According to Malerba and Orsenigo (1993), technology regimes define "broad prescription and trade-offs which identify the basic dynamic mechanism and viable behavior in terms of basic types of organizations of firms." The technology regime comprises the technological opportunities, appropriability of innovations, cumulativeness of technical advances and properties of knowledge base. Technological opportunity conditions refer to the ambit of possible technical solutions relating to problem-solving activities of firms and the ease with which such solutions can be achieved. Appropriability of innovations summarizes the possibilities of protecting innovations from imitation and of reaping profits from innovative activities. Cumulativeness of technical advances is related to the notion that today's knowledge and innovation form the base on which innovation of tomorrow would build up and that innovative firms today are more likely to innovate in the future in specific technologies and long specific trajectories than non-innovative firms. The property of the knowledge base relates to the nature of knowledge underpinning firms' innovative activities.

The pivotal point of technology regime as originated from the evolutionary theory is 'innovation'. …

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