Information Technology (IT) as a capability: A Technological Capability (TC) Approach

Author´s name Carlos Arturo Torres Gastelú

Telephone number 52-(229)-9241185

Mailing Address Calle Josefina del Río de Melo Núm. 830 Fracc. Villa Rica

C.P. 91810 Veracruz, Ver. México

e-mail Address carlos_tr66@yahoo.com ctorres@uv.mx

Affiliated institutions UNAM

Department Facultad de Contaduría y Administración

Topic Technology and Productivity

Key words: IT, Technological Capabilities, Information Technology

Abstract

This paper explores preliminary research results realized in a large Mexican firm in order to

identify and examine technological capabilities (TC) of information technology and their

implications in the following dimensions: individual and organization. It is proposed to make a

research of the possible relation between capability accumulation for a specific type of

information technology (IT): employees´ portal (EP) with the technological capability that can be

achieved in a specific firm. In order to do that closed related factors have been identified

(organizational behaviour, technology integration, individuals skills, social interaction and

technological infrastructure). These factors are involved in the knowledge1 codification-

transmission processes for employees´ portal capabilities generation, with the purpose to

identify how influence in the different administrative ways for processes and taking decisions that

affects in a direct or indirect way for the technological incorporation of IT, such as personnel

training policies, personnel recruiting, technological investment rate, modernization strategies,

corporative philosophy, communication policies, and so on.

1 For this study the knowledge typology proposed by Lundvall (1996) will be used, due the research focus for this study will analyze technological knowledge based in experience, skills and others variables. The knowledge typology is integrated by four elements: know what, know why, know how and know who. Know-what refers to knowledge about "facts". How many people live in Mexico city is an example of this kind of knowledge. Know-why refers to knowledge about principles and laws of motion in nature, in the human mind and in society. Know-how refers to skills - i.e. the capability to do something. Know-who involves information about who knows what and who knows to do what. But especially it involves the social capability to establish relationships to specialised groups in order to draw upon their expertise (Lundvall, 1996).

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Introduction Several authors (Terceiro & Matías, 2001; Seely Brown & Duguid, 2001) have discussed

the importance of technology as a factor of the change in the social relations, production

ways and economical structures; also about the impact that have been affecting the

society due to the afectations in these matters; specially IT has been an interest subject

attending their difussion and explotation (Moelbjerg, 1998) and also some theories have

been developed trying to explain this phenomeno, however few has been studied about

in which way successful technology incorporation (in specific IT in developing countries)

could be spread in one or more industries in order to increase region development or

national development. In the case of Mexico, as a developing country it has at least two

realities for firms, in one side it can be found few strong large mexican firms (LMF) that

are getting stronger with the time and have reached international markets fighting with

major world firms leagues, and in the other side most of the small and medium mexican

firms face day by day the tremendous challenge of survival, and some of them compete

in local, regional or even national markets.

It is convenient to analyze what is happening in each one of this firms sectors for

technological capabilities (TC) development, in order to have a better understanding

about reality, and in that way try to answer to the main question of this research: How IT

is been positionated in TC conformation in LMF?; in order to answer that it is proposed

the following specific questions: Which factors affect IT capabilities accumulation? Are

IT capabilities related with TC conformation in LMF? How those factors have been

affecting individual´s and organizational´s dimensions IT capabilities accumulation in

LMF? How IT (employees´s portal) capabilities are being codified and transmitted?

The purpose of this investigation is to try to explain the possible positioning of IT and its

implications in the following dimensions: Individual and organization. It is intended to

establish possible relation that exist in the accumulation of capabilities of IT regarding

the total accumulation of technological capabilities that they may develop at a given firm.

For that, an analysis of knowledge-codification and knowledge-transmission will be

intended to take for the generation of capabilities for the incorporation of Internet

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technology specifically to employees' portals, with the purpose of identifying how IT

influences the different administrative aspects such as processes and taking decisions

(the personnel's qualification, the personnel's recruitment, etc.). Under this perspective it

is intended to establish IT influence examining TC accumulation taking in consideration

two dimensions: the individual and the organization contrasting them with the group of

TC that could be detected in the interviews with the firm's executives

A case of study in a Mexican corporation that has been characterized for a great

sustained growth and also for an increasing technological incorporation has been

selected: that firm is CEMEX, which is been constituted as a mature enterprise so much

for the productive sector that it takes care of, as for the grade of technology

compenetration, which it has been the result of a learning technological process joined

to a continued innovative process disseminated in the various levels of the firm (Costa &

Robles, 2002).

This Mexican corporation is the third productive worldwide- cement plant, the fifth most

important firm of the country and occupies the nineteenth place at all the Latin American

continent, so CEMEX has developed its own corporate philosophy (the “CEMEX Way”)

that implicates the adoption of new technology and the strict imposition of standards of

worldwide control, as much as its technology as well as management techniques done

“at home”.

It's probable that the adoption, adaptation and development processes utilized by

CEMEX may do assets brought in for a best understanding of the forms as it has been

adopted successfully and “in the Mexican way” the use and exploitation of IT. It is

important to mention that of the broad range that conforms the IT, it is only intended to

examine the participation of employees' portals in the conformation of the TC in the

LMF, however the present document coverage includes preliminary results due that

investigation has not been concluded.

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Technological capabilities conceptualization One of the researchers that has deeply penetrated in the technological capabilities

conceptualization is Lall; this author has assumed that the TC are circumscribed as the

skills, knowledge and experience demanded in order that a firm attain the technological

change in different levels (Lall, 2000a). He has highlighted the fact that the TC are

acquired and accumulated by long periods of time through technological efforts, which

are carried through by the firm. Such technological accumulation is named learning

process, which as it is simultaneous to the technological change.

Accumulated capability type, as well as the technological change reached depend on

how explicit and decided the efforts are. While more explicit and decided the

technological efforts are, the deepest and the most complexes will be the accumulated

capabilities and the technological change reached (Lall, 2000a). A little bit different

perspective of Lall (2001) in posterior publications emphasizes that technological

capabilities are defined as “ the skills - techniques, administrative or organizational - that

are necessary to permit the firms to efficiently utilize the hardware (team) and software

(information) of the technology”. Such capabilities are necessarily specific of the firm,

institutional knowledge composed of individual skills and all the accumulated experience

in the course of time” (Lall, 2001). Where he develops an important argument regarding

the “synergetic element” that appears as a product of the individuals's interaction, which

is different to the very literal sum of the individuals's capabilities.

In the same way Ernst & Kim (2001) have supported that the organizational learning is

not the simple sum of individual learnings. Only the effective institutions can translate

the individual learning and the capabilities in organizational learning and capabilities.

Lall (2001) and Hedberg (1981) affirm that the construction of capabilities requires

individual and organizational learning. The individuals are the main actors in the learning

and in the creation of knowledge. They constitute local capabilities that can be combined

in the level of organization. Therefore technology simply cannot be transferred to a

developing country like a physical product, due that effective implantation has to include

important capabilities building elements: Simply providing equipment and directions of

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operation, patents, designs or the drawing of execution does not secure that technology

will be used efectively.

Regarding technological capabilities development in the processes of industrialization,

Cimoli (2000), argued that it is related with the capability to acquire technology and with

the capability to absorb and to adapt the local environment. In the same direction,

Figueiredo (2002b), define the technological capability as the necessary resources to

generate and manage improvements in processes and production organization,

products, equipment and engineering projects. Agreeing with Bell and Pavitt (1995)

whereon technological capabilities are accumulated and developed by the individuals

(skills, knowledge and experience) and in the organizational systems. Also Gonsen

(1998), has ratified it when he has addressed that the fundamental components of

technological capabilities are the individuals (which possess skills and technical

knowledge), the organization (institution that assemble different accomplishments and

the “know how”), and a common objective (combination of efforts of technical skills in a

common direction) (Gonsen,1998).

Empiric case studies have analyzed the technological capabilities in three levels: Level

of the firm or microlevel, in the level of industrial sector and in a national level. Given

that the large Mexican companies are the nature of sign of study, it is considered

adequate level of the firm or microlevel.

In the level of the firm, the empiric evidence reveals that some firms, that initially were

dependent or else were importing technology, they developed (through the effort and

time) technological capabilities that they permitted catching up with international level

high standards of efficiency and competitiveness, by means of the development of

strategies for the acquisition of knowledge, adaptation and development (Gonsen,

1998).

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For the purpose of this investigation it is considered that technological capabilities are

related to a technological learning processes that imply the acquisition of additional

knowledge and technical skills by individuals and organizations, this learning process

implies acquisition processes and knowledge-codification processes, that is how they

acquire and transmit the knowledge in the firms by the accumulation of experience

acquired by the qualification or specialized training, by the transmission of tacit

knowledge or else for the practice of daily realization.

In the recent literature (Figueiredo, 2002a, 2002b) TC have been studied in the firm's

level (microlevel) aspects related with the organization, process and production or else

centered in the product, investment or equipment, it is proposed to take IT to

accomplish a contribution that imply the explanation of the conformation of technological

capabilities turning to a production's element of investment as IT, in order to identify its

possible relation with the firm's total capabilities. In other words, I propose the assets

brought in of this study in the theoretic frame of TC to group them on the basis of the

types of selected dimensions. As to individual's dimension, I consider that the type of

knowledge is different for the incorporation of information technology that for the rest of

the technological capabilities, for example for the production processes regarding the

design and maintenance of a web portal; It means it´s not the same type of knowledge

and therefore their knowledge-codification processes and transmission processes will be

different. Regarding to the dimension of the organization, I propose a relation of

recognition by the executive staff and also most of the employees of the LMF expressed

in the affectations in the culture, behavior and ways to do things, which as they consider

the accumulation of technological capabilities of information technology belonging to the

total TC of the firm in study.

Methodology Although final reach of this study will permit explaining the participation of IT in the

conformation of TC of the firm, preliminary results materialized in this document permit

validating in a preliminary manner some factors proposed in IT incorporation. The

research instruments occupied in the two first months that extends throughout this report

have been the documentary work, the interviews and the observation. In posterior

phases questionnaires will be also included.

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Documental work performed was divides in two phases, in the first one TC bibliography

revision and analysis and the second one review of available documentation at the

public portal of the firm. What I got from bibliography analysis was proposed factors for

this research, while the available documentation checked at public portal of the firm

relating to the origin, development and evolution of the firm, articles and publications

that implicate the use of IT with the aim of knowing the story and evolution of the firm, as

well as the manner to regulate the realization of processes at the firm, for the objective

of detecting and build manner whereon is implicated the participation of IT. The valuable

resource of interviews as much to the executive, management and operating staff has

provided relevant information for the understanding on the forms about how to do things,

the organizational behavior and the culture adopted for the firm for the IT incorporation

in its processes.

Observation work in the working spaces joined to the formal and informal interviews with

the IT personnel of the firm has permitted compiling information to understand how the

conformation of technological transference of processes and products, the assimilation

and development of specialized skills, the schemes of diffusion and appropriation are

accomplished.

Research work intends to be ended up in an additional time limit of 6 to 8 months in the

missing period in addition to the instruments mentioned, it is intended to make use of

questionnaires, which will be designed in order to procure the skills and knowledge of

personnel sign to employees' portal, permitting to know the group of techniques

acquired, the knowledge acquired of processes, labor experience; as well as the

networks that they conform for the dissemination and acquisition of intervening

knowledge the get-together with associates and bosses, the formation of supportive

internal networks as well as his forms of interaction. Besides it will enable the

compilation of valuable information relating to the mechanisms, grade and forms of

qualification and training, as well as the forms applied for the personnel's recruitment.

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Finally to conform TC of the firm, I will make use of the information compiled by another

researchers joined with the information compiled at work field (documentary revision,

interviews, questionnaires and observation), once shaped will proceed to compare the

TC of the firm with the executives staff using a partial results presentation, however the

presentation of general final results will have to wait until end of the investigation.

Preliminary Results

The factors (see table 1) that affect the participation of IT in the conformation of TC are:

Organizational behavior, technology integration, individual skills, social interaction and

technological infrastructure.

Table 1. Definition of the factors involved in IT incorporation

Factor Definition

Organizacional

Behavior

This factor is related with culture and ways to do things in the

organization. Regarding to culture is important to know which are

corporative values related with IT incorporation and also IT role

and what IT represents to employees. Ways to do things are

defined in terms of operating practices, politics and procedures, so

it means how IT is related with management routines.

Technology

Integration

Conformation of this factor involves several elements: mechanisms

to integrate knowledge, firm strategies for skills development into

the organization, employees and organizational systems flexibility

to change adaptation and finally standards adoption such as

technological as organizational that allow spread acquired

technological knowledge.

Individual Skills

This factor is integrated by organizational and technical skills that

an individual can develop in a organization, as basic and

specialized knowledge acquired by several ways and finally

accumulated experience by performance in daily routine activities

expressed in terms of acquired values and behavior tacit norms

developed for daily problems management.

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Social

Interaction

Social Interaction constitute a medium for individual TC

transformation into organizational TC. It is integrated by utilized

electronics communication forms, by IT recognition and positioning

in daily activities, by different ways of electronic socialization that

works as an informal knowledge transmission mechanism and

finally by the team spirit generated in team daily activities caused

by information interchange.

Technological

Infrastructure

This factor constitute a basic requirement for information

technology TC conformation. It is related with firm technological

resources, human resources that can be able to understand,

manipulate, use, modify and even create with acquired technology

and also R&D intensity realized in IT.

Source: Own elaboration based on research.

It is important to mention that all factors are strongly related, so I suggest total factors

participation to TC conformation in a firm working as a system.

The preliminary results obtained in CEMEX turn up developed according to these

proposed factors.

Organizational behavior. Technological adoption has been reflected in the philosophy of the ´CEMEX Way´,

which has been backed up and fomented for the firm's directive levels, standards were

able to generate a model that includes processes and operating practices backed up to

a large extent for the IT, permitting to generate capabilities of replication in the different

plants and countries that conform to this mexican group. This is perhaps the best

example of the form whereon CEMEX has been able to get constituted as an innovative,

mature firm in the incorporation of IT in its processes and best operating practices, but

above all in the capability of adaptation to the change, in the proliferation of incentives

mechanisms of creativity, as well as the international level standardization of common

forms to get the things done.

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The ´CEMEX Way´ represent a technological capability that cannot be transferred with a

low cost neither in a fast way with the equipments, drawings of execution and user´s

manuals. It has to be built with ´technological efforts´ with a purpose: Investments in

time and resources for the assimilation, adaptation and improvement of known

technologies, and the creation of new technologies ´made at home´ (Romijn &

Albaladejo,2002) (Lall,2001). This technology ´made at home´ proposal for CEMEX is

the result of a group of capabilities developed and properly integrated to get the

established goal: Standardization and replication of processes and best operating

practices by means of information technology.

CEMEX created a selected group joining high IT executives level with high business

areas executives and with a solid and stable IT platform generating a technological

capability through the creation, improvement and maintenance of a model to do the

things (CEMEX Way). Besides of a solid technological infrastructure and a corporative

governance, it was backed for a high tools and applications adoption grade, generating

a modification in the organizational culture where several mechanisms emerged to

propitiate the gestation, depuration, development and implementation of the creative

ideas that happen within the pale of the entrepreneurial space without distinction of

levels or else through the interaction with the technological partners. These modification

processes accomplish themselves by means of learning internal processes, generating

its own individual patterns of technological and organizational capabilities and its

technological trajectories (Bachmann and Astrid, 1998)

Technology Integration. A distinctive characteristic of CEMEX with regard to the generation of capabilities has

been the grade of existing fusion among the IT personnel and the business areas

personnel, expressed in the permanent human resource allocation for the tracking,

monitoring and business processes understanding analysis.

In the same direction related to the business personnel areas there is a significant

technological assimilation due to the participation of expert elements as much in the

areas of business as well as in the information-technology application. This fusion of

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skills developed so much for the technological personnel, executive, strategic and

operational has permitted to generate knowledge-codification and knowledge-

transmission mechanisms through informal networks for the get-together routinist either

for electronic ways (e-mail, forums, chat, etc) or traditional ( face to face, telephone, fax).

CEMEX's technological race, has permitted a high grade of participation from all the

employees in several ways: suggesting changes, improvements in the diverse

intervening applications by a strong and intimate electronic communication (making use

of mail, forums or chats) or when proposing technological alternatives, which can result

in the creation of new projects financed by the firm. However, the organizational

learning, is not the simple sum of individual learnings. Only the effective institutions like

CEMEX can translate the individual learning and the capabilities in organizational

learning and capabilities (Ernst and Kim, 2001) (Dosi, Nelson and Winter, 2001).

Individual skills. Evidence has been found of a broad recognition of individuals skills in the participation

as a detonating factor in the cultural change, expressed in the selection, recruitment and

utilization of highly human resources qualified in technical and organizational aspects;

this process of recruitment has been made in an international level permitting culture

shock and the gestation of new culture, producing improvements of the best operating

practices and the enrichment of diverse forms to think and ways of doing things. This

interchange of highly human resources qualified in various levels of organization

(executive, related to management and operating) has propitiated the networks

strengthening, skills development as much as in the individual level as in the

correspondent dissemination and proliferation of skills into the organization, and as a

consequence in TC generation (OECD, 1997) (Lall, 2001).

TC individuals's gestation regarding to the development of skills has been considered in

CEMEX using various mechanisms; one of them is the permanent program of

qualification which permits the development of capabilities and certification for

employees, converting the individuals in the main stars in the learning and in the

creation of knowledge (Hedberg,1981), considering with a lot of on-line available

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resources using corporative Intranet. By means of the online resource there are also

manuals, instructions books and operating practice available.

Another mechanism for skills development is receiving qualification through the different

technological suppliers, among the ones is NEORIS as a principal technological supplier

being a part of firm's chain that support CEMEX´s technological growth. One skill

diffusion mechanism has been the internal training when the firm reply processes or

plants using the internal personnel in charge of spreading out knowledge and the way

how to get things done in terms of processes, policies and operating practices where

there is an important IT tools and aplications involved.

Social interaction. It is considered that technological capability also can be expressed by the diverse

aspects of social interaction among the members of organization (Mehra & Dhawan,

2003). A rooted electronic interaction exists in CEMEX working as an official way and

also as an informal communication mean. It emerged from a strong electronic

interchange by e-mail through Lotus Notus and it has evolved even to generate inserted

forms of collaboration at the portal that the firm named ´CEMEX Plaza´.

CEMEX Plaza's concept includes much more than employees' portal, it is considered to

become everybody´s space of work of the personnel at CEMEX, attending to three

dominions the relation of employee and firm, an inherent relation between all different

jobs and the third dimension taking care of the information necessities of the person.

Through this portal all employees have access from anywhere, counting with a

personalized view according to their information needs, safety environment and access

to the applications and more frequent contents

IT incorporation in CEMEX through the portal is a form to foment the informal knowledge

networks using the collaboration mechanisms in terms of portal´s tools and propitious

generation of ´communities´ (personnel that labors in a same business area conformed

by all of the countries that CEMEX has presence in).

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Social interaction capability is fomented in the context of creation of the communities

because creates informal networks and propitious a way to spread knowledge in the

firm, also when IT people try to find the way to deliver a value to the community. This

capability has created communication bridges among the divisional barriers of countries

supported by a strong and solid communication and information platform, all this is

possible because all firm´s employees have gotten a technological madurity level

expressed in IT communication tools mastery but specially in a capacity to expand their

work area in a world wide context.

The portal represents in CEMEX a midway that propitiates the spaces of collaboration

generating mechanisms for the knowledge-codification and knowledge-transmission in

the projects, in the operational basic routines, and still in the workpeople's same informal

get-together. The portal has propitiated the consolidation and formation of capabilities

when the content of different sources is integrating in just one place, propitiating an

increment of the capabilities to collaborate in a structured manner and optimizing how

talkings are being coordinated, specially in projects management.

Technological infrastructure CEMEX has been characterized for a great IT technological race owed to a great extent

to the directive vision that has believed in the adoption of the technological tool as a

strength of firm core competences; for that reason CEMEX has now a solid and stable

platform in IT. This firm has maintained an uplifted level of IT integration (Feeny &

Willcocks,1998) including all of the main processes, propitiating high computer density

where almost all employee has one PC. Referring information-technology growth

strategy, CEMEX does not develop, it is supported on the solutions and developments

generated by its technological partners. Main technological partner emanated from

CEMEX when it got constituted as an affiliated enterprise named NEORIS which is in

charge of making offer itself so much to CEMEX as well as to others firms, services of

development and consultancy in integral solutions.

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Conclusions Any technology type, including IT does not show for itself, no value as such for the firm.

The way in which the firm is able to incorporate in its processes, operating practices,

procedures, policies molding an IT organizational culture in the realization of daily

activities is what speaks us of IT presence. The individual skills expressed in terms of

experience and knowledge, the strengthening of capabilities in the social interaction, in

the integrative elements of technology and the form to get things done; they constitute

even more relevant elements in this cultural change process that propitiates the

accumulation of technological capabilities

Proposed factors were obtained through bibliography analysis of TC and shaped with

fieldwork information, it is important to mention that although this paper does not include

how they rise and how they consolidate, there must be clear that TC possible

conformation is present for the relations that become established among these factors

and no for the presence itself or develop of some of them, in other words factors they

operate like a system that propitiates knowledge (Dutrénit,2000) and firm skills

(capabilities). It is pending to analyze individual acquired knowledge processes and

how to spread into the organization, in spite of it a contribution that this document offers

is factors definition as well as the development of the different features applied for

CEMEX's case.

Table 2 shows factors that intervene in IT incorporation under a perspective of TC

approach, some of them have been developed at preliminary results section, in the

understood that investigation continues in process and due space limitations not all the

details were exposed.

Technological capabilities are not able to be described entirely in terms of the hardware,

or technological infrastructure sophistication, the synergy (Lall, 2001) among the factors

proposed, that is the capability to combine all like an organization is what it propitiates

that IT converts to a technological capability, no for the participation of the technological

element by itself, but for these amalgam of factors in where the evolution, performance

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and accumulation of capabilities delivered through the time (Figueiredo,2002b) play an

important role.

Table 2. IT incorporation factors

Factor CEMEX´s features

Organizational

Behaviour

• IT importance recognition of employees expressed in values.

• Worry for technological update in various levels of organization

• Constant participation of employees in the emission of

technological proposals

• Complex and innovator IT structures

• IT worldwide functional diversification responsibilities

• Mastery in business areas by IT personnel

• Fusion between business areas operating practices and IT

• Technological decisions taken by corporative centralization

Technology

integration

• Stressed capability for change adaptation

• Operating practices standarization

• Best operating practices identification capability

• Flexibility in the personnel's mobility

• Definition of worldwide standards for hardware and software

platforms

• Close relation and common knowledge sharing between

business areas, IT area and corporative area.

• Technological partners close relation

• High technological project management capability

Individuals

skills

o International human resources utilization

o High processes knowledge by IT personnel

o Internal training program with skills development and

certification for employees

o Permanent support to evolution and invention spirit

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o Human resource technological profiles definitions for

recruitment

o Specific training through technological suppliers

o Diffusion of documents through corporative Intranet

o Internal training for plants and processes replication

Social

interaction

• Electronic communication broad diffusion

• High utilization and dependence of IT in the daily activities

• Use of mechanisms incentives of creativity

• Flexible and opened communication channels

• Communication and coordination using informal technological

collaboration networks

Technological

Infrastructure

• Solid and stable IT platform

• Multiple technological platforms strong integration

• High IT integration level covering all main processes

• High PC density by employee

• Documentary regulation in development, implementation and

operation

• IT development by technological partners

Source: Own elaboration based on research.

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