Lecture 15, 16, 17

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Technology Management

Lecture 15, 16 & 17

Technology Transfer and Acquisition

Types of Technology Transfer

Internal and External Technology Transfer

Acquisition of Technology by a nation

Regulation of Technology Transfers

Technological Dependence

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Technology Transfer

Technology transfer is the process by

which technology is disseminated.

It involves communication of relevantknowledge by the Transferor to the

Recipient.

It is in the form of technology transfertransaction which may or may not be a

legally binding contract.

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Types of Technology

Transfers

Technology transfer may be categorized

as:

1. Scientific Knowledge Transfer

2. Direct Technology Transfer3. Spin-off Technology Transfer

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Types of Technology

TransfersScientific Knowledge Transfer

is traditionally associated with

transmission of knowledge gainedthrough basic research & development

activities. Knowledge transfer usually

takes place through information

exchange and presentation of technical

papers at scientific meetings and

symposia.

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Types of Technology

TransfersDirect Technology Transfer usually occurs

through formal arrangement between any of

the following:

S Enterprise elements i.e. internal transfer,sharing and dissemination within the same

organization

S Enterprise to EnterpriseS Government to Enterprise

S Government to Government

e.g. Indo-US agreement on transfer of nuclear technology for civilian use

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Types of Technology

TransfersSpin-off Technology Transfer

occurs when technology developed by

one enterprise in one technical area,and usually for one purpose, is applied

and used for a different technical area,

for different purpose or for market

application other than those foreseen at

the time when R&D was initiated.

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Barriers to Technology

Transfer1. Associated costs - usually high prices are

required to be paid in the form of royalties,technical and know-how fees etc overmedium to long-term period

2. Appropriateness of technology i.e. itssuitability to core competencies and marketneeds is always a point of discussion and

investigation3. Heavy reliance on foreign technology may

make the recipient technologicallydependent on external technologyproviders/transferors even for small issues

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Transfer4. Lack of mutual trust between two parties

may hinder full and timely transfer

5. There is risk of loss of control overtechnology and the recipient may usetechnology in an arbitrary manner

6. Transfer may render existing technology,and its related products / services /processes, obsolete

7. Transferee may turn a potential competitorin future

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Transfer8. Mismatch in core competencies of thetransferor and transferee may create

difficulties in transfer

9. Different organization cultures may

create difficulties in transfer

10. Lack of effective communicationbetween the parties may also create

difficulties in transfer

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Overcoming Barriers to

Technology Transfer1. Proper and well defined technology transfer

agreement should be signed

2. There should be proper evaluation ofappropriateness of technology

3. There should be proper evaluation of

compatibility of core competencies of theparties

4. It helps to build pre-agreement relationshipsso as to develop mutual trust andunderstand the culture of opposite parties

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Overcoming Barriers to

Technology Transfer

5. Seeking cross-cultural training may

be helpful

6. It helps to ensure effective

communication

7. Problems need to be anticipated inadvance and adequate measures

adopted to facilitate transfer

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Differences Between Technology

Transfer and Technology

AcquisitionThe verb 'acquire' means:

S To come into possession of; get as one's own

S To gain for oneself through one's actions orefforts

Technology acquisition is the process of

acquiring a new technology, new product,process or service by the efforts of anindividual, or an enterprise, or any othermacro entity. This process can be conductedeither internally or externally to the enterprise.

ff

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AcquisitionThere is a thin line of demarcation

between the two words - technology

transfer and technology acquisition.Sometimes the two are used

interchangeably. Some vague

differences between technologytransfer and technology acquisition are:

Diff B T h l

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AcquisitionSNo Technology Transfer Technology Acquisition

1 Slightly wider in scope Slightly narrow in scope

2Includes both formal and

informal arrangements

Usually includes formal

arrangements

3 May or may not havelegal boundaries

Usually have legalboundaries

4Focus on transfer from

transferor to recipient

Focus on the transaction

from the angle of

acquirer

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Modes of Payment for

Technology TransferConsideration for technology transfer

agreements may be paid in cash or in kind.

Following modes are generally used for

making payment:S Lump-sum payment or periodical installments

S Royalties as a percentage of sales over the

next few yearsS Cross-licensing agreements

S Contracted supply of output

S Issue of e uit shares in lieu of technolo

F t A ti

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Factors A ectingTechnology Acquisition by a

NationA variety of factors affect technologyacquisition by a nation, such as:

S Level of economic development of thenation The current economic position of the

nation affects its capability of technology

acquisition and absorption. Usually the leastdeveloped countries can not afford costlier

and advanced technologies

F t A ti

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NationS State of technology

It affects technology acquisition in the following

ways:

S Underdeveloped countries have usually low

level of technology development and such

countries usually go for medium level

technologies

S Developed countries have high level of

technology development and such

countries usually go for advanced

F t A ti

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NationSAppropriateness of the new technology

This refers to the suitability and compatibility of

the new technology to existing technologiesand environment

S Impact of technology transfer and acquisition

on existing technologies andproducts/markets; There are likely to be

technological discontinuities and

obsolescence

F t A ti

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NationS Likely technological dependence on externalsources in the case of technology acquisitionfrom outside and its implications

SAssociated costs involved in the technologytransfer and acquisition

S

Strategy mix adopted by the nation i.e.proportion of internalization orientedtechnology strategy and externalizationoriented technology strategy

S Likely benefits through technology diffusion

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National Strategies for

Technology AcquisitionA nation can adopt any of the following strategy

options for acquisition of technology:

1. Internalization Oriented Strategy

2. Externalization Oriented Strategy

Nations usually adopt a combination of the

above two strategies as each has its own

advantages and disadvantages

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Regulation of Technology

Transfer by NationsThe regulation is undertaken in two directions:

S Regulation of import of technology /

technology inflowsS Regulation of export of technology /

technology outflows and setting up of joint

ventures (JV) and wholly owned subsidiaries(WOS) abroad

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Regulation of Import of

TechnologyFree inflow of technology has certain

advantages and disadvantages. The

advantages are:

S Frequency of technology transfer is higher

S It leads to expansion of production base

SAcquisition of advanced / latest / emergingtechnologies may be facilitated

S There are benefits through technology

absorption and diffusion like cost-cutting

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TechnologyS Boost to exports

S Increase in employment levels

S Boost to industrialization of the nation

S Increase in economic development of the

nation

Some of the disadvantages of free inflow oftechnology are:

S FOREX outflow through technology transfer

payments

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TechnologySAdverse impact on balance of payments

S Inappropriateness of technology : Non-

suitability and Non-compatibility with thecurrent technological level and infrastructure.Inappropriate technology may be transferred

S Likely technological dependence on externalsources even for minor technological issues

S Likely technological discontinuity /technological obsolescence of existingtechnology products, services or processes

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TechnologySAssociated costs may be high since the

nation pays not only for the technology but for

the whole package brought by TNCs / MNCs

including its brand names, finance, skills and

management

S

Risk of getting old / out-dated technology

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Indo-US Nuclear DealJoint statement on Indo-US nuclear deal was

signed between US President George W.Bush and Indian Prime Minister ManmohanSingh recently. The joint statement calls for

separating civilian and military nuclearreactors in India.

Two third of civilian nuclear reactors will be

identified and placed under internationalsupervision. In return, India shall be assuredof regular supplies of uranium and necessarynuclear technology for meeting its civilian

energy needs.

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Indo-US Nuclear DealThe deal, to become operational, will have to

be ratified by parliament/senate of respectivecountries and nuclear suppliers group (NSG).

The deal met with opposition from day one froma section of Indian political parties, a group ofIndian scientists and a section of populationopposed to USA due to its presence in Iraq

and Afghanistan.A section of Indian politicians think that the

country's independence and prestige have

been sold out.

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Indo-US Nuclear Deal

Some scientists believe that the deal will reduce

Indian freedom to carry out nuclear research

and pursue an independent path.

Some of the important aspects of this deal are

discussed in terms of benefits to US and India

respectively:

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Indo-US Nuclear Deal -

Benefits to USAEconomic Benefits:

A nuclear power plant costs around USD 4billion each.

India will set up 10 large size nuclear powerplants in the next 15 years (as intended byIndia)

Orders worth USD 15-20 billion could be placed

with the US companies in next 6 to 8 yearsRemaining orders may go to France, Germany,

Canada and UK

Further expansion of business dealings on bothsides will follow

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Benefits to USAPolitical Benefits:

A major cold war irritant has been eliminated

from the international scene

A major regional power, India's, help can be

sought to prevent further sliding of the Middle

East into anarchy and in some future military

conflict in the region and ensuring safety of

sea-lanes of the Indian Ocean

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Benefits to USAMilitary benefits:

The US considers India as a major military

power

40 per cent of worlds' oil and commerce passes

through the Indian Ocean sea-lanes. Indian

cooperation will be helpful in keeping the sea-

lanes free.

USAs assessment that India could be a

counterweight to a 'Rising China' in the region

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Benefits to IndiaEconomic Benefits:The deal strengthens the economic partnership

of India with the developed world.

It will further improve sovereign ratings of India

The deal will lead to more capital flows to India

For the enormous growth, India is undergoing,electricity needs will also grow manifold. Asfossil fuels are being depleted at a fast rate,nuclear technology will provide clean and

efficient electricity.

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Benefits to IndiaPolitical Benefits:

After 50 years of isolation, India will have theopportunity to say something in world forums

like UN, WTO and world monetary lendinginstitutions, and be heard.

It is not clearly stated in the deal but it is an

implicit understanding and de-factorecognition of India as a nuclear power.

India to become a permanent UN Security

Council member in the long run

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Benefits to IndiaMilitary Benefits:

Indian military is in need to diversify its sourcing

of military hardware. Russia has been a veryreliable source for the past 40 years. This

source has to be diversified. The deal will

strengthen bilateral relations and will reduce

dependence on Russia.

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Some Key Terms Related to

Technology TransferIntellectual Property

S Invention and patent

S Trade secret

S Copyright

S Know-how

Outsourcing

Strategic Alliances and Joint Ventures

C ll b ti R&D / R&D t t i t hi

Documents

Lecture 15, 16, 17