IN'I'EH-OH~ANlXA'I'lONAL 'I'ECHHNOLO(iY 'I'HANSFEH

Some Key Factors

Dr G Balaji AsRociate Professor

Management Development Institute, Gurgaon 122 001, 1 N L ) l A .

AD8 t rac t

I I I J Y paper describes a study 01 iiiierorganization technolo- gy L I ' L L I ~ S ~ er( 1 1 > from research L O manuiacture in lndia. rirsi, a model to depict the pr.oc:ess of '1 I' is developed. A n essential feature of the model is the synthesis of recnnoiogy transfer with an overai I non-integrated innova- 1~1o11 process. In order to test L I I ~ moaei a factor analysis OT tile field study data was p r i o r m e d . I'he analysls yleld- e u a list of empiricaily ~ I - I O I ~ J iizea factors. Cr~ticaJ success f a c t o r s for ' I Y in- c * 1 uae: techno-manager ia I caya- D I J I Z Y OT tne licensee, famil- t n t - l iy with t h e technology, usfir rnv0)vement , and mutual 1- t y .

IN I HUUUC'I 10N

'I'echnology transfer has Deen defined as the use of Knowledge. Mors specifically, wnenever systemmatic rational h r m w 1 eage acqu 1 red or de- veloped by one organisation is embodied in a way of doing things by another, i t may be called as technology transfer ( 1 1 ) 1 1 J . In the case of ut 1 I izat ion of indigenous tecririo~ogical capabi 1 i ty, 'IY occurs when technology develop

lne autnor is grateful to his aulae Prof K Fl Krishnaswamy, iisc, Bangalore for his help.

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-ed by a national laboratory is passed on to a manufactur- ing organisation. 'I'his is not an instantaneous event or even a single activity. It is a process that takes root with the recognition of possibili- ties by both the licensor a s well as the licensee for this col laborative venture and culminates with the successful adopt ion of the technology by the licensee organisation in its business operations.

'I'his paper reports the result of a study of the process of IY. 'I'he study aims at identifying the key factors affecting the outcome of a *I''l'. 'lhis aspect of utilization of indigenous research has spe- cial significance for India. Despite huge invesmonts in National H (t I) in India, its effect on lndian industry has not been very significant 121. 'I'his state of affairs has led to a decadence of the institu- tion of indigenous research and to consequent questions about its very necessity.

*Kl' may be vi ewed as a part of the process of techno- 1 og i ca 1 i nnova t ions . 'I'echno- 1 ogi cal innovations, the process by which a technologi- cal idea is converted to a feasible commercial proposi- tion, involves a hoat of activities, actors and phsaes. Under conventional usage, the

term aoes not involve a defi itition 0: the actors in the process. However, in most uppi ications, a single organi- za~ionai entity is implicitly assumed to be the major actor - although the transfer of the non-appropriable stages which t r i p tecnnotogical innovat ions prrsses thrOUgh, may have been across different organiza- tioris. I ' h i s has been referred t o as the integrated innova- flon p r o c e s s L 3 J . In the typp 0 1 I 1 SJtUAtlOJ1S under consid- eration of this Study, there I S an added phase in the proress o f innova t ing the rec*nnoJog)-. lhi s phase is the transfer of legal rights and Inlormation from national i a m r a t o r i e s to manufacturing organizaxions. While trans- i ers across sub-organizat ional groups must be constantly oc:curing when an organization is innovating a technology in- nouse, the issues involved i n transfer across organizations are somewhat different. A numbrr of issues that lie Oenina the organization's u r i i ~ y 01 command, reveal Tanemselves in the interorgani- zational 3'l' process. 'I'h i s payer views 1"l from national l a m r a t o r I ES t o manufacturing as a part of larger non-inte- gratea teChnolOglCa1 innova- tion process. Based on an analysis o f a few cases of '1.1, R theoretical model is pro- posed in !ht f o l lowing s e ~ - t 1011 . A 1 LCHNULWY 'L'HANSYEH MODEL

The process of 'l"1' con- sists of' broadly three phases. l r l e rlrst phase, which may be relerred to as the pre-contact phase of the process, is where the evaluation of the technol- ogy and the donor is per- rormed. ln licensee-initiated

'l'l's, seeking of sui table donors is also a part of the activities. Ln 1 icensor- initiated '1"l's the percept ion of an opportunity, based on information obtained about a technology, is a part of this phase. A number of factors come into play that affect the activities performed at this phase; A firm's familiarity with the market and the tech- nology 1 4 1 , the presence or absence o f B rpsearch function in the firm to tschnjcal l y evaluate the donor and / o r t.echnology 1 4 , 5 J , the use of

forecast effects of t h e tech- nology on the firm, the exist- ence of prior knowledge of the donor organization and scien- tists 151, the presence or absence of a ready market for the products of the technolo- gy, the requirements of a customer or user of the products that could be made available as a result of the ' I T 161, and the competetive- ness of the market L4,71.

managerial t ec hn i ques to

'I'he precontact phase i s followed by the contact phase, where the actual transfer of information and legal rights to exploit a technology is made.. l n '11s from national laboratories to the industry in India, the legal and finan- cial aspects are standardized and w e l l hnown. Bargaining a~id npgot iat ions a r e scldona issues in the failure/succ~ss of adoption. Iechnologies are priced with an initial lumpsum payment followed by a royalty. Except in the case of company- sponsored H & U projects, the clauses of the licensing agreement are laid down by the CSlH or NHDC. 'lhe guidelines include the priping and number of licensees that the labora- tory may have. While the

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pricing is generally low and bcnericial to the licensee, tns number of Licensees has at times led to some serious problems. When markets are small or when the extent of <:omperitinn is high, the optimal number of I icensees tor a technology can become a contentious issue. The grant- ing of exclusive rights is also prevalent but at a higher cost. This is one of the decisions that the firm has to maKe. 'I'he other issues that are a part of the negotiations are consultancy fees, i f any, ana t h e nature of post-1 icens- ing support the laboratories can prov ide .

However , s 1 noe I ega I transfers arid license agree- ments provide only the bottom- line to the information trans- ier, cooperation of the scien- tist and the laboratory are very often crucial issues. Ihe attitudes of the scien- tists, the nature and quality or the relationship between licensor and licensee of the technology, to a great extent inrluences the quality of the information transferred across tne organizations. 'I'he rela- tionships establishec? at this phase contribute to effective aeougging of the technology at the implementation phase 1 5 ) . ine ~ s s u e s that affect rela- tions are: the perception of L I I ~ I irm about the re1 iabi I ity of laborat,ory/scient 1st as a source o f technology, the quantity and quaJity of infor- mation transferred along with the license agreement and the nature of interpersonal rela- t 1 ons between the boundary members of the two organiza- tions.

The final implementation 01 tne technology, or the

post-contact phase, is pri- marily an in-house effort on the part of the recipient firm to debug and productionize the technology. 'I'his phase dif- fers little from the post laboratory stages of an inte- grated innovation process. 'I'he clarity of the goal l H , Y J , the ability of the firm to overcome technical problems 1 4 , 5 J , the urgency of the need for implementation 171, the ability to conce i ve a product/service that conform's to customer requirements l f i l and the changes that this technology will bring about in the organization 151 are the key factors. I'he end result of this phase as of the whole process of technology transfer I S the, rejection/adoption of the technology in the firm's business operations.

While performing the activities outlined above, the efficiency and effectiveness with which they are done has an overriding effect on the outcome of the process. 'the characteristics of the firm (size, organizational Peatures etc.), its decision making capabilities and technological abilities have been found to be significant correlates of successful innovation 17,101.

'I'he model of technology transfer descr i bed above follows a chronological se- quence of activities that might occur in a carefully planned '1"I'. However, these activities are not necessarily sequential in nature. In many cases, contact between the licensor and licensee it? the prime motivator of the Y J ' ; field trials of technology in some cases is done by a poten- tial licensee prior to the

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regal transfer of rights. 'l'nus sequence of activities is caee speciric, but the per- formance of these activities are essential. Since the performance of these activi- ties is a function of the issues listed against each phase, studying thom can, therefore, provide information on their effect on the outcome of the process of technology transfer. The fol lowing section describes the research design.

lne roregoing discussions o n t n e theoretical expecta- tions in the process of '1'1' provide the ground for empiri- cal investigations. .'l'echnolo- gy transfer research has largely been case study-ori- ented - an approach which is par t I cu 1 ar 1 y for generalization. '1'0 be able to test the interrelatiion be- tween variables that form the D I I S J C structure of the model, a Yield study approach was ~ o e n ~ i ~ i e d as the most suit- rit>ie methodology. Hased on inlormation from pub1 ished sources and annual reports of the government laboratories, over 100 cases of techno 1 ogy transfer were identif Sed for the study. A mailed question- naire was sent to each organi- zation and subsequently most or them were visited to obtain detailed information.

unsu i tab 1 e

Inc questionnaire elicited iii1ormrrr.ion on variables drawn J roai L I ~ mode 1 described in L I W previous section. A (:~IISCIOUS efrort was made to ensure tnat the definitions of Lnese variables were compati- ble to those used by earlier stud1 e8. Hef erence 1 1 3 1 aescribes the detailed proce

dure of defining theee varia- bles. A partial l i e t of varia- bles is shown in column 2 of 'lable 1. 'lhe response on each of the items in tho questionnaire was obtained on a Likert-type scale.

The sample for this study consists of 86 cases of tech- nology transfer (33 product innovatjons and 53 process innovations). 'I'he innovations were from several CSlH and lSHO laboratories, and were from a wide cross section of industries (food processing, pesticides, machine tools, electronic instruments, and phermaceu t i ca t s 1 . 'l'he samp I e predominantly consisted of small firms - a feature of the market for indigenous technol- ogy in India.

HESUL'L'S AND DISCUSSIONS

'l'he information obtained on 45 variables that were conceived as characterizing a technology transfer process was subjected to a factor analysis. 'I'he purpose of this analysis was t 0 identify the inter- dependencies that existed in the variables and exploit them to understand the underlying "real" factor that determines the outcomes of I"1'. In order to test the efficacy of the model, a discriminant analysis was conducted using the newly defined factors. 'I'he ability of the discriminant functions to differentiate successful transfers from failed cases w i l l provide information on the suitability of the model.

'I'he results of the factor analysis are shown in Table 1. Eight factors, explaining 83% of the variance, were extract-

eu. ine composition of the factorcl and a name given to C'tipLure t h e meaning of the iucLor are snown in col 2 and t rawpecL1veiy.

in~tors scores for indi- v ~ t i u a i i i cases were estimat- eu . inese scores are esti- m + i L e : y 01 xne score that would riave been obtained by a cecnriology transfer case, if the factor were measurable. using the scores on eight t'ac*tors , tr discriminant func- tion was constructed, to differentiate b e t w e n sucress and raifure oases of 'I ' l ' . 'l'he results are shown i n ' l 'able 2. More than 7 5 % of the cases were correctly classified, by the d iscr iminant funct ion.

While technology and licensor related issues are quite relevant, the techno-manageri- a1 sophistioatlon of the licensee firm has a major say in the final outcome. Experi- ence with the technology, p r i o r innovation experience are all significant variables in the process. While this result may appear obvious, i t provides important empirical support to the thesis that the process of *l"l is a part of a larger non-integrated innova- t ion process. For I icensor organizations that are keen to improve the ut I 1 I zat ion of results, this indicates the need f o r scrrening potent ) a I I icensees - a c:tiangt: i n the current practice of p r o v l d ~ n g

anyone who wishes to buy it. 'I'he absence of R strategic perspective and an adequate technical capability, is more likely an indication of a fa i 1 ed ' l l ' - highly avoidable in an industry which Is still suspicious of Government Lab technology.

I ow-cost technologies to

lnvolvemsnt of the customer in early stagea of the process is strongly indicated. The propensity of the firm to change, and the mutuality between the licensor and licensee are also significant factors. I'hese reiterate, the need for more industry- laboratory interactions, a weak link in the country's H & L) process.

'l'ransfer of technology can occur fit various stages in the 1 nnovat 1 on process. 'I'he sye- cific nature of the Indian indigenous technology market (size, technical strengths etc.) point to the Pact that for success in ' l ' l ' , the tech- nology must have gone into an advanced stage of development. Resource allocation during the time span or an innovation somewhat left skewed.1111. In an non-integrated innovation process where managerial and legal responsibilities and rights are transferred, can be a difficult problem. F o r gov- ernment laboratories there is a great need for development of policies that clearly spell out the nature and quantum of resources that has to be spent on a research project.

CONCLUSlONS

The paper p r e s e n t e d a result of a field study of the proc- ess of inter-organizational t -echo 1 ogy transfer from research to manufacture. 'l'he factors identified (and prior- tized empiric81 ly) indicate the need for controlling certain cr i t ical success factors: techno-managerial sophistication of the licen- see, the stage of development of technology, customer in- volvement, and establishment of clear mechanisms for scien-

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TABLE 1 HESUL'I'S OF 'I'HE FAC'I'OH ANALYSlS Oti VAHIABLES DESCW1L)lNG A

'IECHNOLWY 'I'HANSFEH YHWESS

t; AC'I'OH Composed of the following Xage of V A N 1 AHLES V A K l ANCE

-----------------__---------------------------------------------

---------------------------------------------------------------- Sophistication t.:xtent of f o r m 1 corporate planning. 2 0 . 2 of the licencee hw8reness of modern management technl-

ques

firm

done by the firm

duced by the firm

firm has entered into

manpower by the firm

by the firm

Forecasting of effects of *I'T on the

b.xtent of technological forecasting

Number of technical innovations tntro

Number of technlcal collaborations the

Hecruitment of technically qualified

PIanned increase in H Ct 1) expenditure

S i z e of H dt L) expenditure Extent of formalization of H dt U funot-

ion in the f i r m

rami I iarity Familiarity with the - r a w materials - process of production - market for the products - H dh L) i n the relevant areas

manges Extent in change in Cas a result - product range

o t 1'1 1 - raw material range - equipment range - manpower - organization structure - marketing function

user Customers' involvement in invo 1 vement, - idea generation for the ' 1 1

- location of licensor - selection of technology - redesign and debugging process

1 2 . 3

1 0 . 7

9 . 5

8 . 7 rressures on Offensiveness/Uefensiveness of T'I' tne licensee lmportance of technology in licensee's for Cne I 1 portfolio of products.

Extent of necessity to be the first to introduce the product in the market

..................................................................

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7

mtuai I ty Extent of prior knowledge of the De t ween scientistts) iicensor and Perception of the attitilde of the I icenaee) scientist during '1"I'

Extent of cooperation extended by the scientist and laboratory dur I ng the 'l'l'

stage of The lipensees' perception about the ueve I 6pment of stage of development of the tech- the technology no 1 ogy .

8 . 7

4 . 6

~ompecetition Extent of Competition in the market 4.5

MarKet ing lnnovativeness in marketing requir- 4.5 ed for selling this technology. ....................................................................

N o ~ e s : I. Col 3 does not total to LOO. 'I'he remainder is unex- plained variance.

2. Col 2 includes only those variables that significantly contributed to a factor. Others are not shown.

3. 'I'he names of the Factors in Col 1 are given based on their composition of variables

4. Principal Component method was used for factor extrac- tion. 'l'he variance shown in C o l 3 I S based on the eigenvalues computed after a Varimax rotation

TABLE 2

NULL: 'I'he Mahafanobis D-square was computed to be 53.43; larger than the corresponding tabulated chi-square value of 6.3 for 1 degree of freedom and significance level of 0.05. T h i s conrirms the statistical difference between sudcess and railures in the compounded factor scores. ----------------------------------------------------------------

,3 153

tist-licensee interactions. The field study approach adopted to evaluate the model enables generalization of results to all ‘T’’1‘s of this class. While anecdotal case histories provide rich in - sights into the specificities of individual cases of ‘l“I‘, the References

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1”

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B a l c t j i , t i . , (19861 , Inter- organ1 s a t i o n a l Technology transfer from Hesearch to Manufacturing : A Field Study of Adoption in India, Unpublished Ph. D. Uisser- tation Subreitted to the Department of Management Studies, lndian lnstitute of Science, Bangalore.