Dr Richard Li-Hua Salford Business School University of Salford, UK

1. 2010 International Technology Transfer Workshop, School of Economy and Management, Tsinghua University, 1st, December, 2010 • Dr Richard Li-Hua • Salford Business School • University of Salford, UK Opportunities and Challenges in International Technology Transfer

2. Technology Transfer: Hidden Competitive Advantage • Successful technology transfer will translate a firm’s technology strategy into achievable objectives that enable firms to leverage their technology and knowledge to gain sustainable competitive advantage in the global market • It is evident that the major technology management activities in the evolution phases of multinational companies focus on “technology transfer” : • Learning phase • Built-up phase • Internationalization phase • Globalization phase • Global dominant phase

3. Opportunities and Challenges • Technology transfer offers a win-win solution for both the transferor and the transferee; • Globalization affects each country in a different way; • The developed countries can obtain huge marketplace for their surplus producing power by selling goods, transferring technology by setting up joint venture etc, while the developing countries can acquire advanced technology and knowledge by offering new market opportunities and providing human resources and raw material.

4. Opportunities and Challenges (cont’) • Technology-driven industry creates technological changes through disruptive innovation • Four dimensions of innovation: product versus process; radical versus incremental; competence enhancing versus competence destroying; architectural versus component • So countless innovation projects are imitation, absorption, adaptation, improvement, reconfiguration, modification, or re-branding of existing technology, or successful transfer of technology • The power of steady stream of innovative ideas and emerging technologies, in particular, ITT, present considerable opportunities and challenges

5. Technology Transfer in the Current Recession – A Win-win Strategy • The current recession increases the unemployment and panic in the developed countries, such as, US, European countries • To protect its employment rate and safe guard its economy by transferring technology • The emerging economic power, such as, China, India, etc. who are seeking innovation framework, new technology or knowledge for developing new mode for economic growth or system for sustainability • It repeats what happened in 1970 where the developed wanted to sell technology for profit while the developing wanted to buy technology for solving the problem of economic growth

6. Technology Transfer Dilemma between Developed and Developing World Developing countries: • Money was paid to purchase advanced technology, but ended only with second hand equipment and old fashioned technology • Contracts of technology transfer were signed, however, key technology was not secured • Plants were closed due to improper technology transfer or no transfer Developed countries: • Concern on proper protection of Intellectual Property • Uncertainty of IP in the developing countries • IP infringement • Replication is a normal thing

7. Significance of Technology Transfer • A crucial and dynamic factor in social and economic development and a short-cut not only to the developing countries but also to the developed countries; • Close relationship between technology transfer and economic growth and achieving competitive advantage; • International business strategies; • National technology strategy; • Value-added in each process of transfer.

8. Technology Transfer: The Major Issues

9. What Is Technology Transfer? • Flows of technological knowledge to market; • The movement of science and technology from one group to another group; • The transfer of hardware objectives, traditionally; • It often involves information (e.g. a computer software programme or a new idea); “The transfer of systematic knowledge for the manufacture of a product or provision of service.” Work Regulation of United Nations

10. World Bank & Technology Transfer • One of major organizations which are most interested in technology transfer; • A meaningful partnership between foreign and local; • Using international consultancy; • Support setting up joint ventures; • Explicit policy adopted in 1993: no technology transfer, no meaningful partnerships with localcompanies, the result will be no contract; • However, WB has not established mechanisms to ensure real technology transfer

11. Technology Transfer Hurdles: Separation between Technology and Knowledge • Technology transfer has been less attended since 80s, e.g. less funding, less research, less publication • Too much focuses on high-tech or high end product • Overshadowed by innovation • Separation between technology and knowledge threats people in technology transfer practice and keeps researchers away from technology transfer research • Wrong illusion - knowledge management and knowledge transfer seems more popular

12. A Basic Model of Technology Transfer

13. Factors Influencing the Strategies of Technology Transfer • Transferor characteristics: • Form size • Global strategy • Cultural and geographical • distance from receiving • country • Technology characteristics • Age • Sophistication • Receiving country characteristics: • Investment policy • Technical absorptive capacity Mode and strategies of technology transfer

14. Technology S-Curves • Both the rate of a technology’s improvement and its rate of diffusion to the market typically follow an s-shaped curve • Major reference for technology transfer • S-curves in Technological Improvement Technology improves slowly at first because it is poorly understood. Then accelerates as understanding increases. Then tapers off as approaches limits.

15. Challenges and Barriers of Technology Transfer (Cummings and Teng, 2003)

16. From Technology Transfer to Knowledge Transfer Technology transfer Theory and practice Discover that sustainable technology transfer cannot happen without knowledge transfer Discover that explicit knowledge is easy to track but not only part of knowledge transfer Establish importance of tacit knowledge transfer Develop model for improving tacit knowledge transfer as it deliver the most competitive advantage “Technology transfer does not take place without knowledge transfer, as knowledge is the key to control technology as a whole.” (Li-Hua, 2006)

17. Distinction between Technology and Knowledge • What is knowledge? • “Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provide a framework for evaluating and incorporating new experiences and information.” • Truth • Believes • Perspectives • Concepts • Judgments • Expectation • Methodologies • Know-how What is technology? “The combination of human understanding of natural laws and phenomena accumulated since ancient times to make things that fulfil our needs and desires.” • Technique • Knowledge • Organisation • Product (Four closely-linked elements)

18. Forms of Knowledge Explicit • Codified in blueprints, designs, drawings and specifications • Knowledge of rationality (mind) • Sequential knowledge (there and then) • Digital knowledge (theory) Tacit • Uncodified, kept in human brains • Knowledge of experience (body) • Simultaneous knowledge (here and now) • Analogy knowledge (practice) “We know more than we can tell.” Polanyi, M. 1967 Dr Richard Li-Hua@2009

19. Categories of Tacit Knowledge • Hard to pin down skills-”know how” The skills that people need to repeatedly practice and feedback and get the feel for them. • Mental models or schema How we understand cause-effect connections and what meaning we give to events. • Ways of approaching problems Tacit knowledge underlines the decision trees people use. • Organisational routine Routine refers to regular and predictable behaviour patterns, including ways of producing things, ways of hiring and firing personnel, ways of handling inventory, decision-making procedures, advertising policy and R&D procedures, etc.

20. Relationship (notional hypotheses) between knowledge transfer and economic growth Relationship between Knowledge Transfer and Economic Development There are features of knowledge transfer that appear to be associated with levels of economic development. Certain aspects of knowledge transfer is paralleled by the notional line of economic development. Demand for knowledge transfer Jiangsu Henan Economy Xiangjiang

21. Relationship (notional hypotheses) between tacit knowledge transfer and explicit knowledge transfer Relationship between Transfer of Explicit Knowledge and Tacit Knowledge Need for knowledge transfer Need for tacit knowledge There is more demand for tacit knowledge transfer in well developed region while there is more demand for explicit knowledge in less developed region. Need for explicit knowledge Levels of economic development Xinjiang Henan Jiangsu

22. Appropriateness and Effectiveness “Knowledge transfer is not obtainable if there is too big gap in terms of economic development between transferor and transferee.”

23. Result of Intimate Human Interaction in International Joint Ventures Foreigner Local Foreigner Local Work patterns of dyadic interaction Transfer of management know-how, explicit knowledge and tacit knowledge – Xiaolangdi experiences (Li-Hua, 2004)

25. Tacit Knowledge Transfer • Knowledge, in particular tacit knowledge that are the keys often to deliver the sustainable competitive advantage because it is this part that competitors have trouble in replicating. • To provide sustained competitive advantage, one needs tacit knowledge that is difficult for outsiders to copy as well as the ability to rapidly develop new knowledge.

26. Problem Area: Channel Blockage of Tacit Knowledge Transfer Technique Explicit Knowledge No need to convert Technology Knowledge Product Transfer Organization Need to convert Tacit Knowledge Channel blocked? Un-blockage ? IP strategy?

27. Tacit Knowledge Transfer Is Achievable if • At institutional level: A strong IP framework and appropriate IP strategy are essential in achieving tacit knowledge transfer • However at personal level, the following elements are important: • Trust and friendly relationship building • Motivation of knowledge transfer • Share a vision of future and develop a knowledge-sharing culture • Be aware of motivators and barriers • Think globally and act locally • Effective and appropriate communication • Cross-culture team building • Deal with defensive mechanisms

28. Un-blockage of Tacit knowledge Transfer • Our major concern is if technology transfer leverages the innovation capacity building, however the blockage of tacit knowledge transfer has to be properly addressed Strengthening IP framework and appropriate IP strategy will • accelerate the transfer of technology between the developed and the developing and • induce more technological innovation in the global economy • IP Strategy channels smooth technology transfer

29. Conclusion and Implication • Technology transfer presents both opportunities and challenges to the transferor and the transferee • It is not surprising that the channel of technology transfer is blocked due to fear of losing competitive advantage. However IP strategy is a key to un-block the channel • Without a strong IP system, technology transfer is not achievable • IP strategy leverages economic growth and development in both developed and developing countries • It charts the strategic and operational guidance to achieve competitive advantage not only for the transferor but also for the transferee • Appropriate IPR strategy represents a solid foundation on which knowledge economy can be built

30. Bibliography • Bennet, D., Zhao, H.Y., Vaigya, K., and Wang, X.M., 1997, Transferring Manufacturing Technology to China: Supplier Perceptions and Acquirer Expectations, Integrated Manufacturing System, MCB University Press, ISSN 0957-606 • Cummings, J., and Teng, B.S., 2003, Transferring R&D Knowledge: the Key Factors Affecting Knowledge Transfer Success, Journal of Engineering and Technology Management, JET-M, ELSEVIER • Egbu, C., Knowledge Management in Construction SMEs: Coping with the Issues of Structure, Culture, Commitment and Motivation • Hofstede, G., 1980, Culture’s Consequences: international Differences in Work-related Values Beverly Hills, CA:Sage • Jasinski, A. H., 2005, Barriers for Technology Transfer in Transition Economics: Results of Empirical Studies, Conference Proceedings of Economic and Technological Dimension of National Innovation Systems, Warsaw, 2005 • Johnson, G., and Scholes., 1997, Exploring Corporate Strategy - Text and Cases Prentice Hall • Li-Hua, R., 2004, Technology and Knowledge Transfer in China Ashgate Publishing • Li-Hua, R., 2006, Examining the Appropriateness and Effectiveness of Technology Transfer in China, Journal of Technology Transfer in China, Volume 1, Issue 2, Emerald Insight • Lubit, R., 2001, Tacit Knowledge and Knowledge Management: Keys to Sustainable Competitive Advantage • Lynch, R., 2000, Corporate Strategy Financial Times Prentice Hall • McAulay, L., Russell, G., and Sims, J., 1997, Tacit Knowledge for Competitive Advantage Management Accounting (British), Volue 75 No.11 • Polanyi, M., 1967, The Tacit Dimension Routledge & Kegan Paul Ltd • Renzl, B., 2006, Trust in Management and Knowledge Sharing: The Mediating Effects of Fear and Knowledge Documentation, Science Direct, ELSEVIER • Stonehouse, G., Hamill, J., Cambell, D., and Purdie, T., 2000, Global and Transnational Business - Strategy and Management John Wiley & Sons, Ltd • Thompson, A., and Strickland, A., 1998, Strategic Management Concept and Cases, Irwin McGraw-Hill