Beyond the ‘Creation’ Side of Innovation: Outcomes of Innovative Capability Building in Latecomer Process-intensive Industries: Evidence from Brazil’s Pulp and Paper
Author(s)
Figueiredo, Paulo
Gomes, Saulo
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Abstract
Despite the proliferation of studies on the creation of firms’ capabilities (learning) and
on the nature of capabilities (as sources of firms’ competitive advantage), especially
from the early 1990s, there have been only a few studies addressing some of the
‘outcomes’ of learning and capabilities for the improvement in firms’ performance.
Additionally, even in terms of capability studies, especially in the context of emerging
economies, at both macro-level most of them, with a few exceptions, have focused on
innovative capability in firms and industries that are based on ‘high-tech’ and
‘assembled products’ firms and industries. These are deemed as only possible route for
developing countries to achieve international industrial leadership. And most of these
studies focus on capabilities that permit firms to move towards and/or catch up with the
production and/or innovation frontier led by incumbent firms in early industrialised
countries. Thus we know very little about capability building beyond catching-up and
their implications for performance improvement. This paper examines processes of
firm-level capability accumulation in the pulp and paper industries, across policy
regimes in Brazil, during the 1950-2006 period. It goes further to examine the extent to
which the accumulation of technological capability has improved indicators of technical
(including environmental) to economic indicators. The study found a positive
association (not causality) between efforts on innovative capability building and
improvement on different types of process and environment performance indicators in
the researched pulp and paper firms. Improvements on these indicators were associated
with innovation efforts to achieve operational, market and economic performance
improvement. The evidence shows that environment performance improvement was
associated with innovative capability building. As a result, the findings show that the
paths by which latecomers firms can achieve international leadership in process intensive
(and natural resources related industries) by building innovative capability
beyond catching-up to overtake early innovators. On the basis of the building of such
innovative capabilities, firms can improve operational and environment performance
indicators. Thus, it is not possible to design corporate strategies and government
policies for operational and, mainly, environment performance improvement without
understanding and tackling the issue of firm-level innovative capability building,
especially the nature, direction and rate of innovative capability building within firms.
Otherwise, issues like ‘corporate social responsibility’ and ‘environmental
sustainability’ risk being confined to opportunistic rhetoric.
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Date
2008-09
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