Technology Acquisition & Transfer

By Dr. Vijay Kr. Khurana

Technology Transfer is the process by which technology is disseminated. It involves communication of relevant knowledge by the Transferor to the Recipient. It is in the form of technology transfer transaction which way or may not be a legally binding contract.

What is Technology Transfer ?

Twoterms technology transfer and technology are normally used interchangeably. The verb Acquire means To come into possesion of; get as ones own To gain for oneself through ones actions or efforts Technology Acquisition is the process of acquiring a new technology, new product, process or service ; by efforts of an individual or an enterprise or any other macro entity. This process can be conducted either internally or externally to the enterprise.

What is Technology Acquisition ?

Scientific Knowledge Transfer, Direct Technology Transfer, Spin-off Technology Transfer Informal Technology Transfer & Formal Technology Transfer Internal Technology Transfer & External Technology Transfer

Types of Technology Transfer

Internal Technology Transfer refer to such technology transfers / investments where control on the ownership & usage of technology resides with the transferor. It is a complex process involving following decisions: Timing : When to introduce new technology / products in the market? Location : Where to transfer new technology / products? Multi-functional teams --Which staff members should be involved in transfer process ? Communication methods & procedures What type of Communication methods & procedures be adopted to facilitate transfer ?

Internal Technology Transfer

 R & D goals are not known to Production Department. Difficulties in stopping current production to test new products / processes R&D Department does not understand needs & capability of Production Department. In general, Production Department is resistant to innovation and is bound by routine. Non-linkage of new technologies to marketing / customer needs.

Barriers to Internal Technology Transfer

 Top management support and participation in the transfer process Providing supportive organizational culture Use of multi-functional teams in the transfer process Ensuring effective communication in the organization Bringing R&D closer to production. Rotation of few person between R&D and production Linking & participation of marketing elements in the transfer process.

Overcoming Barriers to Internal Technology Transfer

1. Planning new products / services / processes to be offered planning must incorporate voice of the customer & user needs 2. Screening new products, processes or services only viable / feasible items be offered as only one out of 4/5 becomes a commercial success. 3. Initiating development process must be properly designed and carried out so that it facilitates success. Enterprises should a. Consist of temporary system capable of adapting to dymanics of change b. Organize the systems around problem solving

Steps in Internal Technology Acquisition by a firm

c. Have flexible management system & replace rigid management system d. Use multi-functional teams. e. Proper integration between R&D, Production & Marketing sub-systems f. Ensure effective communication 4. Carrying out trial production on small scale and test marketing 5. Improving design & production processes based on experiences / feedback 6. Commercialization i.e. mass production & sales

Steps in Internal Technology Acquisition by a firm

 In these transfers, control on the ownership & usage of technology usually does not remain with transferor and it passes on to the recipient, like joint venture with local control, licensing agreement etc.

External Technology Transfer

Successful external technology transfer depends upon following factors: Type of the technology being transferred Complexity of the technology being transferred Transfer mechanism selected Relationships between the parties building of mutual trust Core competencies of the parties & compatibilty thereof Organizational culture of the parties & mutual understanding thereof

External Technology Transfer

Methods of External Technology Transfer

Co-operative & collaborative ventures / strategic alliances Licensing agreements Contracting agreements Enterprise acquisition.

 Technology already developed saves time & efforts Sometimes Growth objectives or competitive goals cannot be reached through internal development Lack of risk taking ability for innovations Lack of internal resources (physical & human) for innovation Firm does not have core competencies to deal with complex technological developments. Need to keep up with competitors Need to cope up with acceleration of technological change As a part of firm strategy --- let other firms take big risks & it will purchase technology developed by them.

Why External Technology Transfer

 Associated costs usually high prices are required to be paid in the form of royalities, technical & knowhow fees etc over medium to long term period Appropriatesness of technology i.e. its suitability to core competencies and market needs is always a point of discussion and investigation Heavy reliances on foreign technology- may make transferee / recipient technologically dependent on external technology providers / transferors even for small issues Lack of mutual trust between two parties may hinder full & timely transfer

Barriers to External Technology Transfer

 There is risk of loss of control over technology and the transferee / recipient may use technology in an arbitrary manner Transfer may render existing technology & its related products / services / processes obsolete Transferee may turn a potential competitor in future. Mismatch in core competencies of the transferor & transferee may create difficulties in transfer Different organisation cultures may create difficulties in transfer Lack of effective communication between the parties may also create difficulties in transfer

Barriers to External Technology Transfer

 Proper & well defined technology transfer agreement should be signed Proper assessment / evaluation of appropriateness of technology Proper assessment / evaluation of compatability of core competencies of the parties Building pre-agreement relationships so as to develop mutual trust and so as to understand culture of opposite parties Seeking cross cultural training Ensuring effective communication Anticipating problems and adopting measures for facilitating transfer

Overcoming Barriers to External Technology Transfer

1. 2. 3.

Steps in External Technology Acquisition by a firm

4. 5. 6. 7.

8.

Identification of Need Developing list of suitable technology providers Short listing / selecting suitable technology providers on the basis . Cultural compatibility, compatibility of core competences, appropriateness of technology, technical feasibility etc Negotiation Agreement Payments as per agreement Transfer of specifications, blueprints, designs, documents, CDs to purchaser Training of technical personnel of purchaser

Lumpsum payment or periodical instalments Royalities as a %age of sales over next few years Cross-licensing agreements Contracted supply of output Issue of equity shares in lieu of technology transferred

Modes of Payment for Technology Transfer

 What factors influence acquisition decision? What are national strategies for technology acquisition? Methods of technology acquisition by a nation

Acquisition of Technology By Nation

Methods of Technology Acquisition By Nation

Attracting TNCs / MNCs Through direct measures viz. making a positive list of industries open to FDI Through indirect measures - viz by offering incentives & subsidies Attracting TNCs / MNCs into natural resource processing & inducing greater value additions Using TNCs / MNCs to attract / encourage their overseas suppliers to invest into country Improving skills & training of local technologists by involving TNCs / MNCs

Methods of Technology Acquisition By Nation

Developing industrial parks / technology parks to attract high technology investors Offering incentives to existing investors to move to more complex technologies and to increase or upgrade technological R& D base Changing competitive environment and existing incentive structure to encourage world class technology & management Improving technological access for local firms for outsourcing / technology transfer Collecting, organising & disseminating information about technology development

 The regulation is undertaken in two directions: Regulation of import of technology / technology inflows Regulation of export of technology / technology outflows & Setting up of Joint Ventures (JV) and Wholly Owned Subsidiaries (WOS) Abroad Why regulation of import of technology? What are advantages & disadvantages of import of technology? What are Guidelines on import of Foreign Technology into India? Why regulation of export of technology? What are advantages & disadvantages of export of technology? What are Guidelines on Export of Technology & Setting up Joint Venture & Wholly Owned subsidiary abroad?

Regulation of Technology Transfer By Nation

Technology Acquisition & Transfer

By Dr. Vijay Kr. Khurana