Embedded flexible collaboration and development of local capabilities: a case study of the Indonesian electronics industry

This article draws on an analysis of development of ‘technological capability’ in the Indonesian electronics industry. It presents a theory of industrial organisation. The theory is based on the recognition that economies develop gradually through the cumulative expansion of both production capacity and organisational/institutional structures. Through an empirical survey of the Indonesian electronics industry, six distinct ideal-typical ways in which firms develop capabilities were found. The theory is subsequently applied to understand and assess this observed organisation of the industry. The analysis shows that the forms of organisation, which the theory suggests are ideal, do not occur in the industry at present.