How sectoral systems of production promote capability building: insights from the Vietnamese motorcycle industry

Abstract

Despite being one of the latecomers among the Asian countries in launching the development of an automotive industry, Vietnam has experienced rapid growth in its motorcycle industry and a gradual accumulation of its domestic component supply base since the late 1990s. Based on an analysis of major learning milestones experienced by local component suppliers, this paper seeks to provide detailed first-hand accounts of how local firms exploited the emerging sectoral system of production and innovation for the acquisition of new capabilities, and how the sectoral system transformed itself in the course of industrial development.

Keywords:

• capabilities
• knowledge sources
• suppliers
• motorcycle industry
• Vietnam

Acknowledgement

This work was supported by Grant-in-Aid for Scientific Research (C) 20510243 from Japan Society for the Promotion of Science.

Notes

Different authors use different terminologies to refer to technology-using capability and technology-changing capability. Bell and Pavitt (1995) use ‘production capacity’ and ‘technological capability’, while Ariffin (2000) and Figueiredo (2008) use ‘routine production capability’ and ‘innovative technological capability’.

For details of this classification, see Sato and Fujita (2009).

It is also possible for learning to take place for exploring completely new markets, in which case an event may not be associated with specific value chains. However, this was rarely observed among local motorcycle component suppliers in Vietnam. Unstable market and policy conditions made it highly risky for suppliers to engage in medium- to long-term R&D without any market assurance.

This classification is based on the author's previous research (Fujita 2007).

Further details of the findings can be found in Fujita (2011).

Interview with HVN (March 2009).