Technological Capabilities with Different Degree of Coherence: A Comparative Study of Domestic-Oriented vs. Export-Driven Bulgarian Software Companies

The paper makes an attempt to examine systematically the capabilities for software production in a latecomer context and to propose an approach for analysing the technological capabilities (TC) in a latecomer software industry. Taking the analysis one step further than identifying capabilities, the study introduces the notion of coherence of TC and suggests that in analysing the TC the analysis needs to take into account also the coherence among the capabilities. The analysis of the accumulation of individual TC in the Bulgarian software industry reveals that significant differences emerge between the TC of domestic-oriented vs. the export-driven companies. The analysis of the coherence of TC proves capable of disentangling the deeper disparities in the accumulation of capabilities and it reveals that strong coherence occurs only in ‘export’ TC. The paper concludes by bringing back the discussion about the prospects and the entry strategies for developing latecomer software industries. Based on the results the study contests the ‘walking on two legs’ hypothesis and also points that the optimistic forecasts about the possibilities for leapfrogging by the latecomer countries by developing indigenous software industries have been overestimated.

Keywords: technological capabilities, software industry, leapfrogging.

JEL codes: O14, O32.

ISSN 1871-9872