TECHNOLOGY TRANSFER: AN OVERVIEW

1. DR. MD. RAZIB ARSHAD FACULTY OF MANAGEMENT UNIVERSITI TEKNOLOGI MALAYSIA TECHNOLOGY TRANSFER: AN OVERVIEW

2. EXTERNAL ENVIRONMENT Economic forces TASK ENVIRONMENT Technological forces Competitors Customers Shareholders Communities INTERNAL ENVIRONMENT Resources Structure Knowledge Generation Development Application Exploitation Dissemination Capabilities Culture Governments Suppliers Creditors Labor Unions Interest Groups Socio-Cultural Forces Legal & Political Forces BUSINESS ADMINISTRATION DESCIPLINES SCIENCE & ENGINEERING DESCIPLINES OTHER/ SUPPORTING DESCIPINES MOT R & D Management;Technology Forecast & Planning; Technology Innovation; Technology Transfer; Technology Product/ Process Life Cycle; Technology & Economic Analysis; Technology Risk & Assessment; Technology Audit; MOT in Manufacturing, MOT in Services; S &T Policy; Information Technology and Other Emerging Technologies; Training & Education Issue in MOT; Technology Strategy; Technology Entrepreneur & Ventures, Financing Technology & Financial Decision Making; Management of Technical Projects; Quality & Productivity Issues; Eco-efficiency and Environmental Sustainability, Technology Commercialization and etc. DR. RAZIB ARSHAD

3. Critical MOT issues among others: 1. How to integrate technology into the overall strategic objectives of the firm. 2. How to get into and out of technologies faster and more efficiently. 3. How to assess/evaluate technology more effectively. 4. How to best accomplish technology transfer. 5. How to reduce new product development time. 6. How to manage large, complex and interdisciplinary or inter-organizational projects/systems. 7. How to manage the organization’s internal use of technology. 8. How to leverage the effectiveness of technical professionals

5. Technology assets are intangible and often unrecognized and underutilized. A clear understanding of the techniques and approaches can serve to increase its value. Captive use of technology can co-exist with technology transfer.

6. Technology Transfer • Various models have been used and are non-conclusive. Each definition has its own context and therefore creates a different concept leading to different conclusions. • Variations are mainly on the definition of term *‘technology’ and not on term ‘transfer’. • The concept of technology transfer is rarely clearly defined. • Theories on technology transfer were established by the pioneering work of mainly economic models (see for example Vernon (1966) and Arrow (1969)). • Only recently that more attention is paid to taking an integrative view of the transfer-transferee relationship and that models for technology transfer are constructed on organisational theory. • It is now more generally accepted that technology is a process of human activities, which make its analysis more complex. • It is complex as it encompasses many dimensions. And some may work against each other. • Social values and cultures become an integral part of technology and its transfer. Read Chapter 2 of Watkins, W. M. (1990), Business Aspects of Technology Transfer DR. RAZIB ARSHAD

7. DR. RAZIB ARSHAD

8. Technology Transfer: Defined “A process whereby knowledge in some form changes hands from a person or organization who possesses it (the transferor) to another individual who arranges to receive it (the transferee)”. Ditcher et al., (1988) Read Chapter 2 of Watkins, W. M. (1990), Business Aspects of Technology Transfer DR. RAZIB ARSHAD

9. Vertical Vs. Horizontal Technology Transfer • Technology Transfer Vs. Difussion Please read: Ramanathan, K., An Overview of Technology Transfer and Technology Transfer Models

10. The Bar-Zakay Model • The Behrman and Wallender Model • The Dahlman and Westphal Model • The Schlie, Radnor, and Wad Model Please read: Ramanathan, K., An Overview of Technology Transfer and Technology Transfer Models

11. The Basic Model of Technology Transfer • Samli (1985) suggested a basic model, which covers broad and general elements in technology transfer i.e.: Sender; technology; receiver; aftermath; and assessment of technology (see figure 1.1) • The way components interact with each other does influence the success of the technology transfer. • Accordingly as senders attempt to reconcile between their needs and their willingness to transfer, and as receivers attempt to balance their needs and readiness to absorb technology, they both transact in a manner influenced by their experience of prior technology transfer. • The technology transfer model as presented above implies that technology is ‘moved’ from somewhere to someone. DR. RAZIB ARSHAD

12. Figure 1.1: Basic Model of Technology Transfer (Samli, 1985) Sender caused barrier Needs/ Purpose Needs/ Purpose Receiver’s background: - markets - raw Materials - labor - know-how - willingness - ability INTERMEDIARIES SENDER RECEIVER TECHNOLOGY After-math Sender’s knowledge of receiver’s background Readiness Receiver caused barrier Assessment of the technology DR. RAZIB ARSHAD

13. Business Aspects of Technology Transfer • Most Technology transfers are commercial transactions. • Business enterprise as a vehicle to introduce technology to society with a set of objectives. • As a complementary arrangement between two (or more) firms with business experience technology transfer is generally being transferred through commercial transactions. • Each party involves in technology transfer should stand to benefit from the transfer and thus should have a stake in its success. • Technology transfer is one of several strategies available to business that wishes to retain or expand market for its products. DR. RAZIB ARSHAD

14. Changing Business Attitudes/ Approaches towards Technology Transfer • 1920s and 1930s – prevalent belief that technology was most valuable when carefully guarded and applied only to captive application. • Transition from overemphasized ‘trade secret’ mentality to the acceptance of technology transfer as an element of business strategy. There is an increasing recognition that active technology transfer program and captive application of technology can co-exist for maximum yield. • Willingness to apply marketing strength and resources to technology transfer effort with the growing trend of internationalization with well managed, vigorous licensing organizations and recognition of technology transfer as an effective instrument of corporate strategy. DR. RAZIB ARSHAD

15. Changing trend from ‘not invented here syndrome’ to a more receptive attitude towards technology developed abroad. • Changing trend from watch and see and reactive attitude towards a more aggressive proactive search for technology mentality. • Technology transfer becomes globally oriented and will continue to be so with the free movement of technological assets and information sharing across national borders and improving protection of intellectual property in many parts of the world. • Growing number of Reverse Technology Transfer. DR. RAZIB ARSHAD

16. Technology and business strategy • Why is technology being developed by business enterprise? • How do companies utilize technology? • Which business uses technology for what purpose? • However, very few companies have organized their technology transfer efforts systematically enough for commercial purposes. • Only recently attention has been paid by businesses to allow a retrospective presentation of how TT works, what corporate source is required, what cost and where it benefits the corporation. DR. RAZIB ARSHAD

17. Technology transfer as a business strategy • Technology transfer is an economic activity undertaken for the purpose of furthering firm’s commercial objectives. • Generally business becomes actively involved in technology transfer for two reasons: 1) Opportunity 2) Necessity - Retaining or expanding market due to competition – extending technology/ product lifecycle. - Cost reduction – taking advantage of lower cost in other location - Regulatory requirement/ reasons - Taking advantage of incentives - Efficiency - Advantage of incentives - Poor in-house capability - Competitive pressure to keep abreast with the latest technology - Better access to technological information with improved ICT. DR. RAZIB ARSHAD

18. Why must technology transfer be considered as a business strategy? • the rate of change in technological development – shorter product lifecycle. • rise in competition • changes in the cost of labor and other factors of production • slow down in economic growth and diluted local market • It is important to recognize technology transfer as a long-term business strategy rather than one-off economic activity. • Like many other seriously considered strategy, technology transfer requires an investment of time and other resources to plan and execute. DR. RAZIB ARSHAD

19. Technology Transfer Process BACKGROUND • Technology transfer itself will not lead to growth. • Ability to maintain and utilise the appropriate technology is what required bringing growth. THE PROCESS/ EFFORT?

20. RECAP ON TT SIMPLE MODEL TRANSFEROR/ OWNER/ SUPPLIER/ SENDER INTERMEDIARIES AND LINKING MECHANISMS TRANSFEREE/ ACQUIRER/ BUYER/ RECIPIENT Robinson, R. D (1991)

23. Basic issue in technology transfer for the transferor (technology owner): Should one use valuable self-developed technology to achieve competitive advantage in one own facility or should one actively market the right to use one technology as a co-product of the commodity itself ?

25. Areas to be addressed by transferor: • Deciding to market technology • Technology market research • Packaging the technology • Pricing the technology • Promoting the technology • Negotiating and the agreement • Service and support

26. TYPES OF TECHNOLOGY TRANSFER ARRANGEMENT: • TURN-KEY • LICENSING • JOINT VENTURE • Patent (Out Right Sales) • KNOW-HOW OR TECHNICAL ASSISTANCE • SUB-CONTRACTING • FRANCHISING • WHOLLY-OWNED SUBSIDIARY/ FDI

27. Technology Transfer Mechanism • Turn Key • Donor constructs facility for recipient and once completed the latter will turn the key to get the facility functioning. • Advantages: • Acquisition of tested and state-of-the-art-technology • Allow recipient to obtain modern facility even lacking of expertise • Generate income and contribute to economic growth • Disadvantages: • Costly • Minimal acquisition of technology DR. RAZIB ARSHAD

28. Licensing • An agreement, which allow recipient to use donor’s technology with certain conditions. • Usually involves payment – fee / royalty for the use of technology • Advantage: reduce duplication of effort • Disadvantage: technology transfer is limited to terms stated in the agreement. • Joint Ventures • When two or more business entity form a third entity with the aim of producing goods or services jointly • Sharing of skill and cost • Technology transfer is carried out in various and sometimes unlimited ways • Advantage: better access • Disadvantage: conflict of interest DR. RAZIB ARSHAD

29. Patent (Out Right Sales) • The transfer of donor’s patent right to recipient • Advantage: faster and straight forward and cheaper • Disadvantage: require a good technological absorptive capability • Know-How and Technical Assistance • Contract Manufacturing • Enterprise Acquisition/ Merger DR. RAZIB ARSHAD

30. FDI • Foreign company’s (donor) having production facility in the recipient country • In house and ‘Spill-over’ • Advantage: cheaper (in terms of capital outlay) • Disadvantages: limited transfer • Emulation of Product and Process • Recipient copies (legally or illegally) technology which is developed elsewhere • Need high level of scientific and technological capabilities • E.g.: Re-engineering – finished product is examined and taken apart. - Industrial espionage- illegal spying • Advantage: stimulate innovative activity, reduce duplication • Disadvantage: High degree of risk, low degree of success

31. Factors Affecting the Exploitation of Technology

32. SUCCESFUL TECHNOLOGY TRANSFER • Technology transfer have occurred where the technology recipients have effectively acquired, learned, absorbed, and applied such knowledge to production activities and management techniques, and reached similarly to the original economic organizations. • Is the above good enough? • The efficiency of technology transfer concept based on Mansfield et al.(1982), Lin (2007), consist of acquiring technological knowledge from a partner, enhancing the application of knowledge, increasing the motivation for further study, and improving the innovative capacity of processes and product quality.

33. SUCCESFUL TECHNOLOGY TRANSFER • When the transacting parties achieve their respective organizational objectives of entering into the TT agreement. • Transferee Objectives? Growth, to keep abreast with competitors, improve efficiency, building competitive advantage, to support/compliment the utilisation of other technology, other specific objectives. • Transferor Objectives? Market expansion, Growth, Maximization of return on investment, Optimising resources, and other specific objectives including social services.

34. Characteristics of the technology transferor (e.g., desorptivecapacity; Lichtenthaler & Lichtenthaler, 2009), • The technology transferee (e.g., absorptive capacity; Cohen & Levinthal, 1990), • The transfer object (e.g., complexity, novelty; Tatikonda & Stock, 2003). In addition, previous studies emphasize that the interaction between transfer partners is a key issue in ITT (e.g., Trott, Cordey-Hayes, & Seaton, 1995; Van de Ven & Ferry, 1980). Drivers of Technology Transfer Success: Leischnig, A., Geigenmueller, A., and Lohmann, S. (2014), O n t h e r o l e o f al l i an c e m an a g e m e n t c ap ab i li t y , o r g a n iz a t i o na l c o m p a t i b i l it y , a n d i n t e r ac t i o n q u a li t y i n i n t e r o r g a n i za t i o n al t e c h n o l o g y t r a n s f e r, Journal of Business Research 67 (2014) 1049–1057

35. TECHNOLOGY TRANSFER BARRIERS Recap: Technology Transfer - An active process, during which technology is carried across the border of two entities. - It is intentional goal-oriented between two or more social entities, during which the pool of technology knowledge remains stable or increase through the transfer of one or more component of technology (Autio and Laamanen, 1995). BARRIERS • i.e. what hinders technology transfer from taking place or effectively executed. • The nature and importance of each barrier vary according to national, organisation and individual circumstances. 1. Legal barriers • Legislation can promote technology transfer but also may hinder them. • Variation in the legislation in different countries. DR. RAZIB ARSHAD

36. 2. Financial barriers • Lack of alternative source of funding • Capital outlay • Working capital • Foreign currency and exchange rates 3. Organisational Barrier • Relate to type of technology transfer arrangement. • Poor coordination and control. 4. Manpower barriers • Poor indigenous capability due to poor education, technical obsolescence of personnel (i.e. ageing labour force, inadequate labour productivity and deterioration of human capital) and physical outflow of best people (domestic outflow to other areas and external brain drain). DR. RAZIB ARSHAD

37. TECHNOLOGY TRANSFER BARRIERS ……continued 5. Communication barriers • Poor channel. • Language. • Third party. 6. Cultural barriers • Differences in values. • ‘Not invented here’ syndrome. 7. Ancillary barriers • Non-availability or poor supply of materials and equipment. • Physically and technologically ageing equipment. • Poor quality of sub-components and supplementary parts. • Poor existing suppliers and uncertainty with new suppliers. Please read the assigned supporting material: Ramanathan , K, An Overview of Technology Transfer and Technology Transfer Models. ..\..\SHAD4033-E-learning Articles Sem II 16-17\TT-Barrier-Barriers to technology transfer at R&D.pdf ..\..\SHAD4033-E-learning Articles Sem II 16-17\TT-Barrier-Identify and Rank the Barriers to Technology Transfer (1).pdf DR. RAZIB ARSHAD

38. Interaction between transfer partners Leischnig, A., Geigenmueller, A., and Lohmann, S. (2014), O n t h e r o l e o f al l i an c e m an a g e m e n t c ap ab i li t y , o r g a n iz a t i o na l c o m p a t i b i l it y , a n d i n t e r ac t i o n q u a li t y i n i n t e r o r g a n i za t i o n al t e c h n o l o g y t r a n s f e r, Journal of Business Research 67 (2014) 1049–1057

39. University Technology Transfer Model Bradley, S. R., Hayter, C. S., and Link, A. N., (2013), Models and Methods of University Technology Transfer Department of Economics Working Paper Series http://attp.info/ http://www.autm.net/ https://www.youtube.com/watch?v=ygX5zcU5vdg

40. Bradley, S. R., Hayter, C. S., and Link, A. N., (2013), Models and Methods of University Technology Transfer Department of Economics Working Paper Series

41. Deciding to market technology • Technology market research • Packaging, pricing, promoting and advertising technology • Technology transfer agreement • Services and support DR. RAZIB ARSHAD