Technological upgrading in Taiwan's TFT-LCD industry: signs of a deeper absorptive capacity?

Firms from several advanced developing countries have successfully upgraded to higher levels of capability and competitiveness on the international stage. This study explores how leading Taiwanese latecomer firms acquired strong capabilities in the display (thin film transistor-liquid crystal display, TFT-LCD) industry. We identify how these firms acquired the technology base to catch up rapidly and move from one set of advanced products and technologies to another, focusing on both the accumulation of technological capabilities and the underlying absorptive capacity of each firm. Empirically, we distinguish three phases of capability building, namely pre-entry, entry, and innovation and diversification. Theoretically, we suggest that the notion of latecomer' absorptive capacity, centred on engineering and design rather than R&D, might explain both the rapidity of recent technological catch up and the diversification across products and technologies as latecomer firms approach the technology frontier.