Impact of Technology Diffusion on the Innovation Capacity and Competitiveness of Automotive Components SME’s in South Africa

The automotive industry is an important bellwether for the manufacturing prowess of a country. Key to a globally competitive automotive industry is the presence of innovative, technology driven component manufacturers to provide inputs to the automotive assemblers and manufacturers. In this paper an empirical assessment of the innovative capacity of as well as efficacy of government funded instruments to enhance the innovative capacity of automotive component manufacturers, many of them Small and Medium sized Enterprises in South Africa is presented. The results show that most of the automotive component manufacturers are neither focusing on any in-house research, new to the market innovation activities nor seek assistance from these publicly funded instruments to improve their competitiveness through technology diffusion or intelligence. The long term implications for these firms are that they could lose their place in the automotive supply chain in an industry where rationalization and global sourcing of technology inputs by automotive assemblers and manufacturers are fast becoming strategic imperatives.