Rebuilding technologically competitive industries : lessons from Chile's and Argentina's wine industry restructuring

Abstract

The general question motivating this dissertation is how firms that are lagging technologically in newly liberalized economies can catch up to world standards and develop a capacity for continuous learning. Based on the uneven restructuring of the Chilean and Mendozan (Argentina) wine industries this research challenges the conventional views that market institutions and state tutelage automatically supply the kind of knowledge that firms need in order to achieve technological world standards. It hypothesizes that upgrading requires "learning institutions," where members of a professional community can rework and improve through application, received knowledge embodied in new capital equipment, production techniques and market information. The systematic, wide, unprejudiced discussion of tacit knowledge from production and marketing experience is what helps firms discover what works best for them locally, and allows them to map out a set of incremental standards they can aspire to meet to rebuild their competitiveness. This study suggests how learning institutions that generate such a discussion might be created. In Chile and Mendoza two natural experiments show how firms, knowledge professionals, and the state inadvertently are building for a for the discussion of tacit and received knowledge and the formulation of targetable production standards. One is a consortium of wineries with an evaluation committee; the other is a set of broad subregional wine evaluation panels. Both collectively rework and improve received knowledge based on making tacit experience explicit. Both set standards, monitor their members' progress, and recommend improvements. Both avail themselves of private sector knowledge and discrete public programs in coherent ways. Knowledge professionals play an important hand in organizing both initiatives. This does not seem accidental; as knowledge becomes more important to industrial competition the individuals and groups that carry it have grown in importance, especially when they have a strategic understanding of the value chain and of how conception and execution relate to each other. These findings suggest ways in which the state can induce the private sector to provide the kind of assistance firms need most, and in so doing, help reconstitute more competitive firms and promote more constructive interfirm relations and private-public sector relations. Knowledge professionals need not be the direct targets of these initiatives but their inclusion is likely to be crucial to their success.