CHAPTER 3

DEVELOPMENT OF TECHNOLOGY CAPABILITIES

By
Department of Management and Technology
Faculty of Technology Management and Business
University Tun Hussein Onn Malaysia
 Introduction
• Often owning technology is confused with having
technological capability.
• A firm can buy technology from others; however
capabilities must be develop by the firm itself.

• Capability can be gradually acquired by self learning.

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 Technology Capability

The capability to use a technology so that a firm can

recover investment made in the technology and
generate surplus for further growth.

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 Technology Capability
• Technology by itself is only the means, not the power for competition.
• Technology capability provides the leverage for competition.

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 Technology Capability
Accumulation of technological capabilities is a process of institutional
learning:
• Must reside within a firm.
• Must not diminish when an individual leaves the firm.

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 Technology Capability
To compete, a firm must have the ability to:
• Use the technology it has effectively.
• Buy or sell useful technology at good prices.
• Adapt and improve purchased technology and eventually develop its own
technology.
• Support the development and improvement of the above three abilities.

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 USE TECHNOLOGY

SUPPORT TO DEVELOP AND

EFFECTIVELY

IMPROVE THESE ABILITIES

SELL OR BUY
TECHNOLOGY AT GOOD
PRICES

ADAPT AND IMPROVE

PURCHASED
TECHNOLOGY

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 Technology Capabilities: PROTON
• Proton approached Mitsubishi Motors between 1983
and 1984 for the production of the first Malaysian car.
• Initially a manufacturer of rebadged Mitsubishi
cars in the 1980s to the 1990s.
• Has produced locally engineered models since the
2000s.
• The only company with full R&D capabilities in
SEA.
• Was the ”fastest selling maker of new car ever to enter
the United Kingdom”.

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 Technology Capabilities: PROTON
The result of the collaboration – Proton Saga:
• Launched on 9 July 1985.
• Based on the second generation 1983 Mitsubishi Lancer
Fiore 4-door saloon and powered by a 1.3L Mitsubishi
Orion 4G13 engine.

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 Types of Technological Capabilities
According to World Bank (1985):
1. Operative capability – ability for production management,
production engineering, repair and maintenance.
1. Innovative capability – ability to create and carry out new
technological possibilities.
1. Supportive capability – ability for project management,
project engineering and manpower training.
1. Marketing capability – ability to market production output.

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 Types of Technological Capabilities
According to James (1988):
1. Acquisition capability – ability to spot problem, search, select
and bargain for technology.
1. Operative capability – ability to modify imported equipment
and production procedure.
1. Innovative capability – ability for innovative alteration,
design, and organized R&D.
1. Supportive capability – ability to transfer technology.

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 Types of Technological Capabilities
According to Sharif (1993):
1. Acquisition capability – ability to upgrade all components of technology by
searching, selecting, negotiating, and arranging timely procurement.
1. Operative capability – ability to operate, monitor, and maintain technology
components for transformation and other supporting activities.
2. Innovative capability – ability for defining market driven needs, developing
new products, processes and techniques: building prototype and scaled-up
models for testing: and arranging venture capital fund for implementation and
innovations.
3. Supportive capability – ability for commissioning all physical facilities:
coordinating supply and demand: and mobilization of all resources necessary
for transformation and support activities

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Types of Technological Capabilities
According to Nazrul (2013):
1. Acquiring capabilities
2. Converting capabilities
3. Vending capabilities
4. Modifying capabilities
5. Designing capabilities
6. Generating capabilities
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 Acquiring Capability (sourcing and procuring)

• Refers to acquisition of technology components and other resources.

• Includes capability to:
 Prepare specifications to upgrade existing technological resources.
 Independently identify sources for procurement of required resources.
 Evaluate offers, select & negotiate terms of contracts for procurement.
 Secure favorable funding for upgrading technological resources.
 Minimize project implementation time and cost of business modernization.

Advancement results in greater vitality of enterprise in

undertaking technological change management.

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 Converting Capability (operating & supporting)

• Refers to utilization of available technologies for transformation.

• Includes capability to:
 Operate and control technoware for all transformation activities.
 Use available humanware for production of marketable outputs.
 Provide required inforware to the humanware for effective production.
 Apply techniques for planning and coordination of production operations.
 Undertake preventive maintenance & trouble-shooting.

Advancement means gradual progress towards optimal use on installed technology

components and mobilization of all resources for optimum benefits.

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 Vending Capability (marketing and servicing)

• Refers to distributing, selling and servicing of outputs using technology.

• Includes capability to:
 Sell outputs for optimum use of resources and production capacity.
 Monitor external situation and evaluating performance.
 Identify new markets and promote sales of new products in new markets.
 Provide after-sales services to enhance perceived customer satisfaction.

Advancement in the vending capability may be seen in the

increase in the market segments and increase in market shares of
those segments.

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 Modifying Capability (improvising and improving)

• It implies continuous improvement of all activities and components.

• Includes capability to:
 Commission physical facilities and constructing civil engineering works.
 Duplicate acquired machinery and equipment parts requiring replacement.
 Adapt installed technoware and orgaware for better efficiency.
 Carry out minor, incremental improvement for superior quality outputs.
 Implement human resources development programs for all activities.

Advancement refers to the increased augmentation in mobilizing

resources for optimal benefits through producer cost minimization
and customer value maximization.

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 Designing Capability (conceiving and devising)

• Implies actual utilization of product development technologies.

• Includes capabilities to:
 Undertake product design, redesign and modification for perceived or felt needs.
 Relate product design with producibility (production process) aspects.
 Introduced creativity and aesthetics in designing products.
 Move from imitation to creation of new products for future.

Important to recognize that customer utility is related to product

function and performance and customers value both utility and
convenience.

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 Generating Capability (innovating and commercializing)

• Refers to utilization of process development technologies.

• Includes capability to:
 Carry out research and development work for product-process innovations.
 Derive commercial benefits by patenting useful research results.
 Develop prototype and scale-up facilities for actual production.
 Commercialize in-house or contracted research and development results.

Advancement indicates realization of crucial self-reliance and

control in the supply of critical technology components to
increase competitiveness.

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 Interrelationship between Technology Resources and Technological
Capabilities

•Productivity (resulting in better business performance) can be improved by:

 Upgrading the sophistication of technological resources.

 Increasing core competencies through capability accumulation.

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 Improving Technological Capabilities
• Accumulation of technological capabilities is a process of
institutional learning. It must reside in an enterprise and must not
be diminished if individuals leave the firm.
• Thus, putting in the place necessary mechanisms for fostering
collective learning is very critical for technological capability
development.
• Before trying to improve technological capability, better measure
existing status and benchmark with target leader in order to decide
where and how much to improve.

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Technology Components and Capabilities for Business Activities

TECHNOLOGICAL CAPABILITIES
DESIGNING GENERATING MODIFYING
ACQUIRING CONVERTING VENDING

NATURAL & NEW & PRODUCTION SALES,

SCIENTIFIC KNOWLEDGE
PATENTS & ACCESSIBLE

PRODUCT & COST REDUCTION

OTHER UPGRADED SYSTEM SERVICES &
PROCESS & QUALITY

CUSTOMER NEEDS
RESOURCES RESOURCES BUILDING & MARKET
DESIGN IMPROVEMENT
MOBILIZATION CREATION TESTING PROMOTION

STAGES IN THE VALUE ADDITION CHAIN

ENGINEERING PROCUREMENT DEVELOPMENT INSTALLATION PRODUCTION DISTRIBUTION

THIO THIO THIO THIO THIO THIO

TECHNOLOGY COMPONENTS FOR DIFFERENT FUNCTIONS

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 Acquiring
Converting
Vending
Modifying
Designing
Generating
Acquiring
Converting
Vending Leader
Modifying
Designing

Acquiring
Converting Follower
Vending
Modifying

Acquiring
Exploiter
Converting
Vending

Extender
 Discussion
Study Proton’s technological capabilities.
1. Do you think Proton has all the capabilities suggested by
Nazrul (2013)?
2. If yes, how the capabilities help Proton to compete?
3. If not, how can Proton improve their capabilities?

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THE END.

Thank you.

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 CONTACT ME

+60-0127421076

hadilah@uthm.edu.my

Fb:

Department of Management and Technology,

Faculty of Technology Management and Business
Universiti Tun Hussein Onn Malaysia
THANK YOU
Universiti Tun Hussein Onn Malaysia (UTHM)
86400 Parit Raja, Batu Pahat
Johor, Malaysia

Tel: +607-453 7000

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