Knowledge Transfer between Users and Producers in the Accumulation of Technological Capability

This study reveals that the user industry has a limited role in being a source of technological capability in the case of the machine tool industry in Korea where the user industry is relatively more advanced than other capital goods industries. This study examines the sources of technological capability in terms of migration of workforces and flow of product development knowledge. Although the capital goods sector is generally regarded as being the sector where user-producer interaction is important, the user industry is not the seed-bed of technological capability for machine development. Users and producers interact in terms of expressing 'needs', mainly in the form of specifications. As a result of receiving unique specifications from users, the producer learns to react by making specific customised special purpose machines. The user's specification could include information o the imported machine originally used. When confronted with technical problems in developing a new machine, the producer accesses foreign sources of knowledge. This study's finding reveals that users of special purpose machines have a significantly clearer role in providing specifications than do users of general purpose machine tools. Most intensive interactive learning between users and producers in the production process is found in special purpose machine tools. From the empirical findings, policy implications are discussed.