How technology policy facilitates technology diffusion and improves firm capability: a dynamic survey from a network perspective

Strategic alliances have been regarded as a potent tool of technology policy for the advancement of research and development (R&D) in developing countries. However, the effectiveness of this ‘visible hand’ has not been dynamically understood as a useful means of building up firm capability. To see how strategic alliances help small-sized firms improve their competitive advantage, this research investigates a government-supported strategic alliance for technology development. Using a two-stage model from the network perspective and methodology, the results show that via a government-sponsored strategic alliance, the network factors embedded in the alliance significantly help the firm develop a competitive advantage by facilitating technology diffusion among alliance members and improved firm-level technology capability. Thus, technology policy in the form of strategic alliances appears to serve as a ‘visible hand’ that homogenously upgrades firm technology capability and diffuses technology.