Strategic and Operational Technology Absorption: Comparative Evidence from Large Brazilian Firms
This study utilizes a comparative case analysis of two large Brazilian firms to propose the Dual-Mode Technology Absorption Framework (DTAM), demonstrating that organizations with similar scales can develop fundamentally distinct strategic or operational configurations for technology absorption based on their unique governance, culture, and R&D orientations.
Original paper licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). This is an AI-generated explanation of the paper below. It is not written or endorsed by the authors. For technical accuracy, refer to the original paper. Read full disclaimer
In the modern global economy, companies often need to bring in new technology from outside to survive and grow. This process, known as technology transfer, is not simply a matter of buying a machine or downloading a software update. For a company to truly benefit, it must be able to understand the new knowledge, fit it into its own way of working, and eventually improve upon it. This ability to learn and adapt is called absorptive capacity. For decades, experts believed that bigger companies with more money were naturally better at this because they had more resources to throw at the problem. However, a new look at how large firms in Brazil actually handle these transfers suggests that size and money are not the whole story. The real difference often lies in how a company thinks, how it is organized, and whether it treats new technology as a strategic goal or just a routine task.
Researchers Antonio Carlos de Oliveira Cruz Junior, Rogério Augusto Profeta, and Valquíria Miwa Hanai-Yoshida from the Universidade de Sorocaba set out to understand why two massive Brazilian companies, which looked similar on paper, handled technology so differently. They focused on two specific enterprises: EMP306, a large, publicly traded mining conglomerate, and EMP32, a subsidiary of a German motorcycle manufacturer. Both companies were large, both were actively bringing in new technology, and both had previously been rated as highly mature in their ability to absorb new knowledge. Yet, when the researchers dug deeper through interviews with senior managers and an analysis of internal documents, they found that these two firms were operating in fundamentally different ways.
The story of EMP306 is one of active pursuit and deep integration. This mining company does not wait for technology to arrive; it scans the world for new ideas. The researchers found that EMP306 treats culture as a strategic tool. The company created a specific department dedicated to changing its own culture, reporting directly to a Vice President, to help employees become more aware of risks and more open to new ways of thinking. This cultural shift supports a massive research and development budget of approximately R$3 billion annually. This money is not just spent on buying things; it is invested in engineering teams that work to improve processes, reduce waste, and develop new products. When EMP306 needs new technology, it often buys it by acquiring small startups or forming partnerships with universities. The company sees technology as a way to solve big problems, such as decarbonization, and it builds the internal knowledge to design and create these solutions itself.
In stark contrast, the story of EMP32 is one of efficient execution but limited autonomy. As a subsidiary of a German parent company, EMP32 operates with a different set of rules. Its approach to technology is strictly operational. The company receives machines and processes that are already fully developed in Germany. The local team's job is to learn how to assemble these machines and follow the instructions provided by headquarters. The researchers noted that EMP32 has no local research and development department and no formal structure for scanning the market for new ideas. Training at this company is focused on teaching workers how to perform specific tasks correctly, rather than encouraging them to innovate or question how things are done. When challenges arise, such as a shortage of parts during the pandemic, the local management reacts to instructions from Germany rather than devising their own strategic solutions. The technology is transferred as a finished package, and the local team becomes dependent on the parent company for any future improvements.
The researchers used these two stories to propose a new way of thinking about how companies learn, which they call the Dual-Mode Technology Absorption Framework. This framework suggests that there are two distinct paths a large company can take. The first is strategic absorption, seen in EMP306, where the company builds its own internal capacity to create, adapt, and lead. The second is operational absorption, seen in EMP32, where the company is highly skilled at using technology but remains dependent on an outside source for the creation of that technology. The study challenges the old idea that a company's size or financial wealth automatically guarantees it will be good at innovation. Instead, it shows that a company's culture, its leadership's willingness to invest in local research, and its governance structure are the true drivers of whether it becomes a creator of technology or merely a user of it.
The findings suggest that while both companies were successful in their specific roles, they face different long-term risks. EMP306 has built a system that allows it to evolve and adapt to changing markets on its own terms. EMP32, while efficient and competent, carries a structural vulnerability: if the parent company stops sending new technology or changes its strategy, the local branch has no internal engine to keep moving forward. The researchers conclude that for emerging economies like Brazil to develop true technological independence, large firms must move beyond simply installing new equipment. They must build the cultural and organizational foundations that allow them to understand, improve, and eventually generate their own knowledge. This study does not claim that one model is perfect for every situation, but it clearly demonstrates that two companies can look the same from the outside while being built on entirely different internal realities.
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