Professional Documents
Culture Documents
Structure
7.1 Introduction
Objectives
7.2 Technology Adoption
7.3 Technology Diffusion
Importance of Technology Diffusion
Different Perspectives of Innovation Diffusion Process
Technology Diffusion Curve
7.5
7.6
7.7
7.8
7.9
7.10
Caselet
Then and Now
Scenario in 2004: Even as the global shift to emerging technologies like
LCD, PDP and projection TVs was picking up speed, Vice President,
Convergent Marketing Group, Digital Media Network Business, Samsung
Electronics, felt that the adoption would not be very slow in the Indian market
either. According to him, the shift to flat panel technology in India could be
much faster than what people anticipate. There was reason to be optimistic
about the scope of the market, if one could drive down costs. Developing
software strengths would lead to more applications in CTV and home
entertainment.
Flat Panel technologies include Liquid Crystal Display (LCD), Projection
and Plasma Display Panel (PDP) TVs. Already Flat CRT (Cathode Ray
Tube) TVs were witnessing almost 100 per cent growth in the Indian market
and projections were that by the next two years, half the CRT market would
Technology Management
Unit 7
move towards flat TVs. Samsung, in keeping with its global philosophy,
would try to drive the LCD and plasma technology market through a twin
strategy of striving for affordable prices and communicating the benefits of
the new technology, as a focus on price alone would not achieve market
growth.
Scenario in 2013: It is the technology of LED that has been absorbed
successfully and as overpowered all others!
Source: http://www.financialexpress.com/news/driving-flat-tv-technologyabsorption-in-the-indian-market/88123 (Accessed on 14 March 2013)
7.1 Introduction
In the previous unit, you studied technology strategy and its importance.
Without proper management, no technology can be absorbed. In this unit
you will learn about technology adoption, diffusion and absorption which helps in
creating and acquiring new technologies. You will also learn about the technology
adoption plan that is needed for the implementation of the technology plan. It
focuses on the technology absorption, constraints in technology absorption, the
issues related to technology absorption and the experience of India in technology
absorption.
Objectives
After studying this unit, you should be able to:
explain the concept of technology adoption
discuss the concept of technology diffusion
describe technology absorption
explain the stages of the technology life cycle
Technology Management
Unit 7
Adoption
Adoption is the process under which the various features of technology, which
is the subject of transfer, are suitably modified, changed or altered keeping in
view the needs of the buyer.
Adaptation
This phase comes after technology has been adopted and put into use for
production activities. In this stage a number of alterations and modifications are
made to suit the conditions.
Absorption
Technology is said to be absorbed if it is fully understood, so that it is in a position
to be further optimized and upgraded. It involves know-why exercises and basic
investigations into the product or process.
Optimization
Optimization of technology involves removing of rough edges through R&D and
value engineering to bring about savings in the use of material and energy
consumption both in product and processes.
Improvement and Upgradation
Technology absorption and optimizing capabilities can lead to further exercises
in improving the existing products and processes by R&D efforts of industry
and other associated research organizations. Technology upgradation exercises
lead to industry efforts in extending its know-why capability to a higher range of
products.
Of late, the concept of technology adoption has attracted much more
attention due to the explosive growth of new technologies such as internet,
wireless communications and broad band communications.
Technology adoption means the successful implementation of technology,
and deriving the full potential of technology. The adoption is relatively easy in a
new enterprise as compared to an ongoing firm, because there is no existing
system in new enterprises while in an ongoing enterprise, the prevailing systems
have to be modified and the existing work processes, working environment and
culture may have to be changed, which makes it more difficult.
Technology adoption requires gearing up of all the resources such as
internal and external infrastructure, human resources, raw materials, and
marketing. It has been observed that many technologies that were transferred
Sikkim Manipal University
Technology Management
Unit 7
Technology Management
Unit 7
Technology Management
Unit 7
compatibility, trial ability, and observability and the less complex the perceptions
of an innovation are, the faster the rate of adoption.
Diffusion occurs within a social system, and the social system constitutes
a boundary within which an innovation is diffused. The social system has
structure, giving stability and regularity to individual behaviour in a system. The
change agent also needs to understand the social system for planning the
diffusion process effectively and efficiently.
In the diffusion process of innovations, information exchange occurs
through a variety of communication channels, such as mass media,
interpersonal channels, or interactive communication. Diffusion can be more
effective when two or more individuals are similar in nature, the degree to which
two or more individuals are different in certain attributes, is usually present in
communication about innovations.
Technology Management
Unit 7
Technology Management
Unit 7
When consumers valuing the product at more than its cost of production,
generally signaled by the diffusion curve passing the point of critical mass,
induce new producers to enter the market, ultimately leading to increase in
quantity and fall in prices, in turn resulting in purchase by individuals with
increasingly lower valuations of the product, the upward-sloping curve becomes
steeper.
When more than 50% of the potential market has purchased the product,
the market begins maturing. The curve becomes less steep, as only those with
low valuations are left to purchase which is termed as late adopters.
The flattening at the top right in the curve shows that price stabilizes at
long-run marginal cost; the very last purchasers are those with the lowest
valuations of the product called as laggards. The market is saturated, as there
are no more potential consumers valuing it more highly than the price prevailing
at that point in time.
When the curve is steep, the duration of the diffusion is shorter. If the
product offers very high consumer benefits relative to price, the duration is
Technology Management
Unit 7
typically short. Lesser valued or more expensive technologies tend to have longer
durations and flatter curves.
Technology Management
Project
Formulation
Project
Execution
Unit 7
Prefeasibility Report
Technical Negotiations
Approval/Clearances with
Government
Foreign Collaboration Agencies
Funds from Financial Institutions
Land Acquisition
Clearances from state govt. and
other bodies for power
Technology Transfer
Design/Know-how, Experts Training
Use of Indian Consultants
Procurement of equipments,
components and training
Project Implementation
Technology
Adaptation
Trail runs
Debottlenecking
Production based on selective
imports of components
Adjust product/process to suit local
conditions
Technology
Absorption
Technology Management
Unit 7
Know-Why
of
Product
Process
Material
Production Equipments
Systems
Requires
Unpackage
Technology
Formulate
Projects
Prototype/Pilot Scale
Development and Trails
Identify
Unknown
Elements
Set up Strong
R&D Group
Findings and
Recommendation
Investigate 'Why'
of Elements
Upgrade if
Required
Technology Management
Unit 7
Technology Management
Unit 7
Technology Management
Unit 7
Technology Management
Unit 7
Technology Management
Unit 7
less discerning customer also joins the broadening customer base. This
customer wants the advantages of the newest technology but does not
want to develop his own technical expertise to appreciate the technology.
At this stage, professional marketing of the technology becomes a
necessity, since the exclusivity of one or few producers is negated and
many players jump into the fray. This situation brings in a complete market
revamp, customer segmentation and more standardization. If a company
manages to survive this upheaval, it indicates the companys solidity and
efficiency. It is during this stage only that the company may automate
some parts of its process, specify roles based on expertise, or conversely,
go through organizational restructuring. Many companies also face
financial and administrative crises at this time.
4. Mainstream/Mature: Once the technology comes to this stage, there is
little scope left for more product innovations and most firms concentrate
only on improving existing product technology. However, eventually that
scope is also exhausted because the process is near-perfect by now. As
a result, product differentiation becomes almost impossible. Now
companies start working on strategies to make production processes more
economical and efficient. This is done usually through outsourcing to thirdworld nations. Once this area has been exhausted as well and does not
offer an edge over competition, the game becomes centered on quality of
customer service. For this stage, professionally qualified and experienced
managers are better than entrepreneurs with no little capital backing or
experience. By this time, the organization has gone beyond non-standard,
play-by-ear method of operation and requires considerably standardized
structures, communications and systems.
5. Decline: In this stage, there is little or no scope for improving the technology
any further. Moreover, even the smallest improvement costs a lot.
Eventually the technology is replaced by a new generation technology.
However, the new technology will not wipe out the older technology
immediately and abruptly. Also, the stages of the TLC are not so distinctly
visible either and seem to happen seamlessly and gradually rather than
with abrupt distinctions.
Technology Management
Unit 7
10. _______ stage represents the birth of a new product, material or process
resulting from R&D activities.
Activity 2
Identify the technology life cycle of any two products of a company and
compare them.
7.6 Summary
Let us recapitulate the important concepts discussed in this unit:
Technology adoption is the process of successful implementation of
technology and taking full control of the technology.
Before adopting the technology, we need to plan the process of adopting.
Planning for the implementation of the new technology should be thorough
and should encompass a relatively long time horizon to assure the stability
of the new system.
Technology diffusion includes the process of adopting new products in
the market place. The barriers indicate the volumes of diffusion.
Diffusion plays a pivotal role in helping the adopters to fully take advantage
of an innovation and to modify that innovation. It consists of four key
elements: Innovation, Communication channels, Time, and Social system.
Technology absorption plays an important role in technology acquisition
when we acquire technology from outside and within the company also.
We observe that improved productivity and quality, as well as the reduced
costs are leading to high efficiency in industrial operations
Technology and its implication is an ongoing process; it is more convenient
to consider it as a series of discrete stages for the purpose of better
understanding and analysis. A technology typically evolves through the
stages in its life cycle.
7.7 Glossary
Diffusion: The term diffusion refers to the spread of new idea which can
be product, technology, service or method from the time of its invention to
creation of its ultimate adoption by an increasing number of users in different
circumstances.
Sikkim Manipal University
Technology Management
Unit 7
7.9 Answers
Self Assessment Questions
1. Adaptation
2. Technology adoption
3. True
4. Innovation, communication channels, time, and social system
5. Traditional Approach of Diffusion
6. S-shaped
7. Technology Absorption and Adaptation Scheme (TAAS)
Sikkim Manipal University
Technology Management
Unit 7
8. True
9. Cutting edge, state of art, advanced, mainstream/mature, decline
10. Cutting edge
Terminal Questions
1. Technology adoption means the successful implementation of technology,
and deriving the full potential of the technology. For more details, refer
section 7.2.
2. The term diffusion refers to the spread of new idea which can be product,
technology, service or method from the time of its invention to creation of
its ultimate adoption by an increasing number of users in different
circumstances. For more details, refer section 7.3.
3. Technology diffusion is an essential component of technological progress
and thus an important source of economic growth. A major channel through
which technology diffusion occurs is investment in technology-embodied
machinery and equipment. For more details, refer section 7.3.2.
4. In 1997, Greenwood and Yorukoglu studied that a technology diffuses
through an economy over a period of time in an S-shaped pattern. For
more details, refer section 7.3.3.
5. To acquire the technology, it can be obtained from the sources within or
outside the country, once it is imported, it is required to be absorbed
accordance with the requirements. For more details, refer section 7.4.
6. Indian government, over the years has directed the industry to take
necessary steps to set up R&D units for upgradation and absorption of
imported technology. For more details refer section 7.4.4.
7. Technology and its implications are an ongoing process. For more details,
refer section 7.5.
Technology Management
Unit 7
Technology Management
Unit 7
References
A. Rao, Technology Absorption: An Overview, Department of Scientific
and Industrial Research, Ministry of Science and Technology, Government
of India.
Dr. Prakash Sai L, Management Science II Lecture Notes, Indian Institute
of Technology -Madras (IIT-Madras).
Hee Jun Choi, Technology Transfer Issues and a New Technology Transfer
Model, The Journal of Technology Studies.
E-References
http://www.buzzle.com/articles/why-is-technology-so-important-today.html
(Retrieved on 10th March 2013)
http://www.techmotivator.iitm.ac.in/TechCase.htm (Retrieved on 10th
March 2013)
http://www.articleonlinedirectory.com/128143/the-negative-effects-ofadvancing-technology-on-society.html (Retrieved on 10th March 2013)