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Technology
Transfer
by Araba deGraft Hanson
Introduction
This literature review seeks to identify the best practices in technology
transfer. The following are some definitions of technology transfer. Technology
transfer is a process in which knowledge, cost, risk, and benefit are
shared among various economic entities in modern human society (Song,
1998).
Technology “transfer connotes the movement of knowledge, skill,
organization, values and capital from the point of generation to the site
of adaptation and application” (Mittelman & Pasha, 1997, p.
60). Technology transfer typically "refers to the development of
a technology in one setting which is then transferred for use in another
setting"(Markert, 1993, p. 231)
Literature Review
Various views of technology transfer have been developed over the years
to address the different mechanisms for technology transfer. These studies
differ slightly from each other. There is no generally accepted best practice.
Technology transfer may comprise of a physical component (e.g. products
and tools) and an intellectual component (e.g. know-how and skilled labor).
The modes or mechanisms used in technology transfer would depend on the
type of technology being transferred.
Technologies are transferred through various modes, such as direct foreign
investment, joint ventures, licensing, turnkey projects, purchase of capital
goods, and technical agreements and co-operation (Dunning, 1981; Katz,
1985). Within these broad modes of transfer, several transfer mechanisms
can be identified, for example, expert services, information services,
workshops, seminars and exchange of researchers (Dunning, 1981)
Strengths and weaknesses of technology
transfer mechanisms |
| Transfer modes |
Strengths / weaknesses |
| Direct Foreign Investment DFI |
• DFI often helps local companies become aware of new production
possibilities and may improve the production capacity of the local
country
• DFI often leads to higher returns from the host
economy than licensing
• DFI is more appropriate to transfer
new, complex and costly technology
• DFI creates a situation
whereby foreign firms compete with local firms for the most talented
local staff often by offering higher wages and therefore stretching
scarce resources rather than accumulating more human capital |
| Joint Venture JV |
• JV helps recipients secure a long-term production capability
at reduced capital risks and without loosing the competitive edge
in local or external markets
• JV helps to keep local raw
materials out of the monopoly of foreign firms
• JV provides
recipients with needed technology, technological advice, capital,
and market access
• Through JV, recipient companies’
executives may be brought into contact with more diversified sources
of finances and technology |
| Direct Sale |
• Technology suppliers do not retain any significant controls
over the use and re-transfer of the technology
• Purchased
technology produced revenues with a minimum of transaction costs and
other impediments
• Direct sale is most appropriate if the
supplier finds it impractical to impose restrictions on the uses of
the technology |
| Turnkey Projects TP |
• TP provide mainly production capability not investment capability
• Suppliers usually control all technical decisions and installation
of TP
• TP require limited training and opportunities for
learning are minimal
• TP may be more appropriate for mature
technology |
| Licensing |
• Licensors retain significant controls over the dissemination,
use, and protection of proprietary rights
• Licensors may
be subjected to significant inefficiencies if there is no distributor
agent or representative offering warranty or maintenance services
in the recipient country
• Licensing is most appropriate
for products that are intellectual property intensive and when the
need to control purpose, location of use and competition is substantial
• Licensing may provide a relatively low-risk, steady income,
not only from royalties but also from technical fees and margins on
components supplied
• Licensing is a preferable strategy
for companies that may not have sufficient management and financial
resources to make DFI overseas in several countries in which their
products are sold
• MNCs could use licensing as in internal
transfer-pricing device when they license their technology to their
own overseas affiliates
• The benefits of licensing to recipients
largely depends on the ability of recipients to negotiate the conditions
of the agreement. Recipients who are able to ‘unbundle’
their technology requirements and obtain technology licenses from
several suppliers tend to benefit more from licensing
•
Licensing may be more appropriate for less complex technologies |
| Source: Journal of Technology Transfer 24:
81- 96, 1999. |
Combs (1999) supported arms-length, market-exchange arrangement, such
as the licensing of an innovation, or a research contract between firms,
strategic alliances involving bilateral or multilateral contracts to develop
new technology and/or commercialize it or by a potential user acquiring
the firm holding the intellectual property. Some studies recognized communication
as the key element (Johnson, Gatz and Hicks, 1997). The communication
channels that support the transfer process include the printed word (e.g.,
journals, books, and newspapers), personal correspondence (e.g., letters,
conversations), scientific societies, formal instruction (e.g., universities,
research institutions), travel and exploration, mass media (e.g., public
information promotions, demonstration programs such as the model farm),
bureaucratic and institutional reform, and research (e.g., adaptive research,
agricultural research stations).
References
| Combs Kathryn L. (1999), ‘Limited Liability Companies
and Technology Transfer’ Journal of Technology |
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Transfer 24: 25-35, 1999.
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| Dunning, J. H. (1981) ‘Alternative Channels and
Modes of International Resource Transmission’, in T. |
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Sagafi-Nejad, H. Perlmutter, and R. Moxon, Controlling International
Technology Transfer: Issues, Perspectives and Implications, Permagon:
New York. |
| Johnson S. D., Gatz E. F., Hicks D. (1997). Expanding
the Content Base of Technology Education: |
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Journal of Technology Education 2: 35-49, 199. |
| Kumar, V, Kumar U. & Persuad A. (1999) ‘Building
Technological Capability Through Importing |
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Technology: The Case of Indonesian Manufacturing Industry.’
Journal of Technology Transfer 24: 81-96, 1999.
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| Markert, L. R. (1993). Contemporary technology: Innovations,
issues, and perspectives. South |
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Holland, Illinois: Goodheart-Willcox. |
| Mittelman, J. H., & Pasha, M. K. (1997). Out
from underdevelopment revisited: Changing global structures |
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and the remaking of the Third World. New York: St. Martin’s
Press. |
| Song, X. (1998). University technology transfer and
commercialization: A cost and benefit-sharing |
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process. Faculty Bulletin, Northern Illinois University,
62(1),14-19 (Available from Editor, Faculty Bulletin, Holmes Student
Center 230, Northern Illinois University, DeKalb, IL 60115). |
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