Summary This paper analyzes the absorptive capacities of automotive component suppliers in South Africa. It shows that some firms design and manufacture innovative products, while others upgrade their technological capability or merely strive to attain execution competence. It suggests that the reason for the differential performance lies in the strategic use of advanced technical skills and the kind of learning about frontier technology engendered by R&D. It further discusses the ways in which foreign-owned technology is internalized more or less easily depending on whether or not it is controlled by multinational firms or by passive investors.