Challenges of Latecomer in Complex Product System: The case study on the Indonesian Aircraft Industry

Abstract

For latecomer, the development of complex product system (CoPS) is challenging from the perspective of inherent disadvantage in the knowledge base and the lack of resources to develop capabilities necessary for catch-up and growth. Specifically, even if Indonesia tried to nurture the aircraft industry for a long period, it achieved very limited growth in the industry. What are the capabilities necessary to nurture the CoPS for latecomers? Why did Indonesia fail to nurture the aircraft industry? Based on the review on the study of latecomers’ catch-up in CoPS, we suggested the four capabilities are necessary conditions for the catch-up, i.e., networking, technology and production, institution and policy leveraging, and market development capability. Interestingly, even if PTDI, Indonesia’s the only state-owned aircraft firm, succeeded to develop networking and institution and policy leveraging capabilities, it failed to acquire technology and production capability in terms of self-reliant design and project management in production. Consequently, due to the challenges in technology and production capability, PTDI could not fully nurture market development capability and achieved limited performance. Our findings contribute to the extension of ‘CoPS’ discussion by achieving analytical generalization of the case study.