Globalisation of innovative capabilities: Evidence from local and foreign firms in the electronics industry in Malaysia and Brazil

Abstract

The focus of this article is to examine the extent to which firms in the electronics industry in Malaysia and Brazil (Manaus) have developed significant levels of innovative technological capabilities (TCs). By examining whether innovative capabilities have spread to these two late-industrialising countries, the article seeks to add new evidence to the debate of globalisation of innovative capabilities and to argue against existing generalisations. It draws on empirical evidence from eighty-two electronics firms - TNC subsidiaries and local firms: fifty-three in Malaysia (twenty-five in Penang and twenty-eight in Klang Valley) and twenty-nine in Manaus (Northern Brazil). Contrary to common generalisations, the study has found that the capabilities of most of the sampled firms in Malaysia and Manaus have been upgraded to carry out diverse types of innovative technological activities. Additionally, these capability-building efforts are strongly associated with higher capabilities for local decision making and control, automation level, and efforts to increase exports. Indeed, the study has found pockets of innovative firms that innovate to be competitive by reducing costs, being more productive, reducing lead time and producing better products - regardless of whether they are in a domestic market-oriented country or in an export-oriented country. Finally, the findings and analysis in this study challenge the relevance of some of the existing perspectives on the globalisation of innovative capabilities to the late-industrialising context.