The paper utilises data from a survey of plastics firms and six firm case studies to examine the relationships between production and technology changes, and employment. The analysis examines associations between different factors influencing firms in making such changes and firm performance. These factors include trade liberalisation and the export performance of firms. The paper further explores the institutional relationships involved in technology changes, the sources of technologies which are introduced, and the nature of competition in which firms are engaged. In particular, the analysis distinguishes between defensive changes associated with cost minimisation and constructive changes associated with growth in employment and turnover. We find that it is important to consider the development of firm capabilities, and that these are based largely on the domestic market.