Technological upgrade along GVCs in the digital era: the case of the automotive sector in South Africa

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Résumé:

Purpose
During the past decade the interest towards technological change, the opportunities it generates, and the impacts it may have on society, contributed to a flourishing field of studies. Specifically, there has been a great attention to the opportunities that digital production technologies (e.g., advanced robotics and automation technologies) offer firms to increase productivity (Andreoni et al., 2020; Sturgeon, 2021). However, there are also a series of challenges and pressures to comply with high standards and production process reorganisation (Masood and Sonntag, 2020; Andreoni et al., 2021a), aspects that are particularly critical for small and medium enterprises (SMEs) especially in emerging economies, where it is more difficult to capture the digital divide (Rauch et al., 2018; Moeuf et al., 2018; Sturgeon, 2021; Lee et al., 2020).

There is a well-established literature on the role that MNCs have for local technological upgrading, and the importance to have productive and learning capabilities to absorb new technologies and adapt them to the local ecosystem (Morrison et al., 2008; Saliola and Zanfei, 2009; Pietrobelli and Rabellotti, 2011). This line of research is even more critical when the focus shifts towards recent digital production technologies, which are a bundle of complex and interrelated systems that require technical and organisational capabilities as a precondition (Strange and Zucchella, 2017; Delera et al., 2022; Anzolin et al., 2022; Ferraz et al., 2020). A crucial, underestimated, field is the one related to the determinants, as well as the challenges, of technology adoption.

Methodology
Studies in this field are limited, mainly due to the low availability of reliable data and the difficulties in collecting primary data through case studies. Also, the high degree of heterogeneity at the firm, sector and country level makes general assumptions and conclusions hardly suitable for this type of study. We tried to fill some of these gaps with this paper, which is the result of a three-year mix methods projects on the study of technology adoption in the automotive sector. This paper complements the first part of the study building on hypotheses discussed in the econometric work by Anzolin et al., 2022 – i.e., countries’ local ecosystems are a crucial factor for the adoption of advanced technologies – and it shed further light on technology adoption mechanisms that are hard to capture through quantitative methods. The long in-depth interviews and the numerous plant visits proved to be indispensable to understand the process that characterise technology adoption of firms inserted in a highly dynamic GVCs like the automotive one. The research design consists of a holistic multiple case study that features a replication logic and data triangulation (Yin, 2009). The focus is on the main technology adoption determinants – as well as the challenges - that characterise firms at different segments of the automotive value chain, and how their insertion in GVCs shape this process.

Findings
Our findings suggest that i) there are specific drivers according to which firms adopt new technologies; ii) lead multinational firms tend to push for technology adoption along the value chain, yet suppliers adopt technologies and can make efficient use of them only if both stable demand and technical standard on the supply side are provided. Collecting findings at different segment of the value chain allowed us to unpack the high degree of heterogeneity that characterise technological change, which is a country, sector, and firm specific process.

Practical and theoretical contributions
This paper advances theoretical and empirical contributions to the ways in which GVCs integration and technological change interact. Specifically, our study confirms the strong role that MNCs, both OEMs and to a lesser extent international Tier 1 suppliers, have. Power relations are very visible in the sense that they influence the demand and supply drivers mentioned above. The configuration of this dynamic reinforces the evidence on the challenges about GVC integration and it forces policy makers to focus on the local promotion of capabilities and upgrading, which could in some cases contrast with the interest and the power of lead firms. For these reasons, countries like South Africa needs to actively engage with MNCs and to address gaps in the country’s productive and organizational capabilities, which are essential to the local ecosystem scale up.