Learning and capability building in firms of a developing economy: A study of Ludhiana machine tools manufacturing cluster

Abstract

Frontier and laggard firms are always engaged in the process of building capabilities through continuous ‘learning’ to compete in the technologically driven world. Firms focus on ‘learning by Doing, Using and Interacting’ (DUI) and/ or ‘learning by Science, Technology, and Innovation’ (STI) modes. Usually, in the initial stages, firms learn through the DUI mode; subsequently they upgrade through combining DUI with the STI mode of learning, followed with an advanced stage where they increasingly invest in the STI mode of learning. In this context, it is important to determine how ‘learning’ happens within the clustered firms in a developing economy. Therefore, we have taken the case of machine-tools firms located in the district of Ludhiana in the north Indian state of Punjab. We draw data through self-structured questionnaires from 101 machine-tools manufacturing firms and employed exploratory factor analysis to identify the factors through which the industrial advances are ‘learned’ by the firms. It was found that in the sample firms the five important factors that affect ‘learning’ are ‘networking’, ‘imitation’, ‘industrial institutions’, ‘customer feedback’ and ‘codified knowledge’, in that order of the importance. It was observed that the firms are mainly, ‘technology adopters’ and ‘technology modifiers’ rather than ‘technology developers’.