International technology transfer and the dynamics of complementarity: A new approach

•In the catch-up, indigenous & overseas capabilities are not alternative but they complement each other.•The issue cannot be reduced to the study of the type of relationship.•In latecomer firm's catch-up various factors exist (might be beyond the will/power of managers).•These factors should be recognised, understood and dealt with.•The dynamic approach suggests focusing on challenges/factors rather than the type of relationship.

Latecomer firm's catch-up through indigenous R&D and cross-border technology transfer embeds various influencing factors that are present simultaneously - beyond the will or power of managers and policy makers - and that have to be recognised, analysed and taken into account. Despite the increase in literature on substitution/complementary relationship, some ambiguity remains in understanding the complexity of complementing between indigenous and overseas technology sources. Unlike the majority studies on complementarity, this paper suggests the dynamic approach by which scholars are able to reach a deeper understanding of the dynamics, challenges and difficulties of these relationships. This study builds a theoretical framework to being operationalized in the context of Iranian latecomer firm located in gas turbine industry. This paper shows that taking the dynamic approach is able to reveal the strategies by which the latecomer firm deals with the difficulties of acquiring advanced technologies. Although complementary relationship exists, it is a strategic vision to understand how a latecomer firm complements its indigenous efforts with overseas technology sources. Different kinds of insights will be provided in terms of national-, industry- and firm-level factors and the strategies by which a latecomer firm can deal with these factors.