UNIT – IV

TECHNOLOGY ABSORPTION AND DIFFUSION

Technology Absorption
Technology absorption has a wide range and scope compared to technology acquisition.
Technology absorption is defined as the acquisition, improvement, assimilation and application
of imported technologies effectively. In Technology acquisition the acquired technology may or
may not be utilized by the firm whereas in technology absorption, the acquired technology will
definitely be processed towards further improvement and its application according to their
condition and requirement of the organization Technology absorption includes changes in the
features of acquired technology. Absorption without altering the features of imported technology
is said to be technology adoption whereas the absorption with significant changes in feature is
said to be technology adaptation. Following are the reasons that influence the Technology
adaptation rather than Technology absorption.
1. Lack of sufficient infrastructure to support the acquired technology as it is;
2. To meet the specific requirements of local markets.
3. To fit well with the existing conditions of the firm i.e. plant and equipment
4. Lack of ancillary units
5. To satisfy the legal requirements of the country.

Dimensions of Technology absorption

The two dimensions of Technology absorption are:
(a) Technology absorption is associated with acquiring and absorbing information regarding the
infrastructure machinery, process techniques, etc.
(b) Another dimension is Affective: Absorption influences the relation between the two parties
involved for successful technology transfer and absorption.

Components of Technology Absorption

The structure of Technology absorption constitutes following components:
(a) Hardware: refers to physical component and logical layout that forms the subject of
absorption.
(b) Software: refers to know regarding tasks that can be effectively performed to attain set
objectives.
(c) Brainware: is associated with application of software and hardware, justification it's
development know what and knowledge of technology. In short brainware refers to "what to do,
when to do, how to do, where to do and why to do".
(d) Support Net: is associated with transformation networks with respect to physical,
informative, socio-economic aspects to influence the performance of the imported technology.
Support net networks the above three components (Software, Hardware & Brainware) to achieve
the set objectives effectively.

Technology Package
Software or hardware technology and other associated services can be acquired from other
countries. The adoption may be in the brand name of an entire project or technical requirements
of a project or supporting activities to enhance the production capacity of a plant. Therefore, a
technology package can be explained as a package which includes all the elements or any one of
them such as product design, production or process technology, engineering, information
services, etc.
Technology package combines the software activities which are necessary for automation of
machine engineering processes that are widely used in different sectors of a country. Technology
package need to be configured and one can add other functional areas to them in order to expand
its scope. Technology package can be effectively applied in engineering aspect through slout
command library.
Features or Elements of Technology Package
Technology package constitutes four major elements:
1. Product design
2. Production techniques
3. Service facilities
4. Management systems
1. Product Design
Product design constitutes the following:
(a) Special device designs like pressure vessels, heat exchangers and heating elements.
 (b) Basic uncomplicated to highly complicated items.
(c) Standardization of major components of a machine like machine tools, gear boxes, die
casting, etc.
2. Production Techniques
Production techniques constitute the following:
(a) Material standards and specifications
(b) Formulae on alloys and compounds
(c) Manufacturing and processing methods
(d) Fabrication and employment of fixtures
(e) Jigs, dies and tools
(f) Welding methods
(g) Casting, metallurgical processes and material substitutes.
3. Service Facilities
Service facilities constitute the following:
(a) Treatment of heat
(b) Testing of materials
(c) Calibration of instruments

4. Management Systems
Management Systems constitutes the following:
(a) Many plans and control systems
(b) Design of a plant and its layout
(c) Testing and quality control
(d) Material procurement
(e) Inventory Control
(f) Repair and maintenance of devices
(g) Machine loading methods

Technology dependence
The concept of technology dependence is completely opposite from the concept of self-
reliance. If a country or firms lack proper facilities for in-house development of
technology, then it depends on the other country, firm’s technologies. The adoption of
foreign technology in a country represents its technology dependence. The extent of degree
of technological dependence of a country depends on the source of technology imports. If
the country is adopting/importing all the technologies from only one country then it is said
to be highly technology dependent country.
Nature of Technology Dependence
The nature of technology dependence vary from mutual reliance to subordination i.e.
asymmetry. While assessing the technology dependence, it is necessary to differentiate the
essence of these two aspects. The difference expressions of technology dependences can be
explained as follows:
1. Technology not only considers the application of scientific and practical information but
also include the social and economic aspects of the environment that effects its application.
2. It affects the economy of the nation through influencing production of goods as well as
services to satisfy the user’s requirements.
3. Technology has been affected by the attitudes and values of the users.

Aspects of Technology Dependence

The various aspects associated with the technology dependence of developing countries with
respect to asymmetry are:
a) Asymmetry Regarding Commodity Pattern
It forms the most important aspect of technology dependence. The effect of ‘more’ in highly
advanced countries is reflected by the type of consumer goods of developing countries. The
technology dependence of developing countries meet the consumption by the upper class of the
market results in the reducing the economic options available for them in case of stable political
changes in the nation.
b) Asymmetry Regarding the Production Means
This means of asymmetry represents the difference in the production capacities, need for capital
goods of both developed and developing nations. The productions of capital goods require highly
advanced machinery and thus forms major part of technology adoptions.
c) Asymmetry Regarding Trade Relations
 The technology dependence of developing countries regarding the technology information,
licences, patents, management and finance leads to the dominance of the developed country on
their trade policies.

Major Constraints in Technology Absorption

Following are the major constraints in technology absorption:
1. In India, most of the firms fail to select the technology imports that can meet global standards.
2. As the demand for the products based on latest technology which are scale sensitive (i.e. effected
by scale factors) is not high, the firms are now meeting the demand with the sub optimal units.
The demand factor acts as a constraint which increases the technology gap. In India, many
firms cannot afford such large R&D funds to import sophisticated technology at global
standards. This gap can also be reduced by expanding the scale of operations, productivity and
by incorporating new units.
3. Another constraint is inadequacy of technology absorption. If the industry is not ready for
technology absorption, then the firms again opt for collaborations i.e., renewal of the existing
collaboration contract or entering new collaboration for new products processes. The extensions
of collaboration agreements are cost effective and markets also encourage the Indian industry to
channel the resources that are necessary for absorption and up gradation of technology.

Advantages / Benefits of Technology Absorption

Successful technology absorption yields several benefits / advantages to the firm as given below:
1. Through technology absorption a firm can avoid the repeated collaborative agreements for the
existing products or services.
2. Enables the firm towards speedy acquisition of further technologies.
3. Helps in unpacking the technology
4. Is cost effective, as the absorption makes use of indigenous alternatives.
5. Helps the firm in optimum utilization of the indigenous production facilitation and R&D
6. Helps in building know-why and technology up gradation in order to enhance the performance.
7. Promotes the export of products or processes to the other countries.
8. Providing training in the technology absorption to the members of technical team helps in
reinforcing their technical capabilities and expertise.
9. Enhances the technological self-reliance and competitiveness of the firm.
10. Reduces production and processing costs.
11. Enables the reinforcement of R&D capabilities of the firm.
12. Promotes the sales and profitability of the firms.
13. It is an easy and time effective method of gaining new technologies.
14. Helps an organization save financial and time resources towards developing the technology on
its own.

Technology Import in India

India has been progressing in all sectors. It has made a remarkable growth in industrial sector after
its independence. Indian industry has marked its identity in the production of wide range of goods
i.e., primary, intermediate, consumer and capital goods. A significant growth in the industrial
production is mostly contributed from the small and medium scale organizations. India has marked
rapid growth in the major industries such as power, fertilizers, telecommunication coal etc., More
than 70% of the industrial production has been contributed from the imports of technology,
sophisticated equipment, capital goods etc.
Indian Technology Policy Statement (TPS)
The Indian technology policy statement of 1983 stressed self-reliance and generously identified the
importance of technology imports in India. Thus, the policy statement emphasize on the absorption
of imported technology according to the local conditions.
Policy statement states that the industry sector should maintain sufficient R&D funds to facilitate
adaptation, absorption, improvement and up gradation of the imported technology through
optimum utilization of available resources. This will ensure the self- reliance and effective
technology development. The policy statement also focuses on the initiative measures by the
government to encourage the importers to absorb and adapt the technologies.

The observations found in the imports of technology in India and trends in R&D in different sectors
are:
1. Large number of advanced technologies have been imported from other countries in the major
sectors such as electrical and electronics, machinery and machine tools, transportation equipment
petrochemicals and metallurgical industries.
2. The machinery and systems required for high investment sectors such as railway power,
industrial machinery, construction, and process instrumentation, chemical industries require
continuous imports of technology.
3. The core sectors such as shipping and transport, professional electronics and their ancillary units
require technology acquisition.
4. Industries such as electrical equipment, electronics, transport equipment, drugs and
petrochemicals highly depend on the technology of foreign companies.

Technology Import Policy of India

Technology import policy facilitates the entry of MNCs in Indian industry as they maintain well
defined infrastructure than the local industries. Entry of MNCs had adversely affected the
maintenance and survival of the local and traditional firms in India. The local firms can survive
in the MNC culture only if they maintain high quality and low price than that of MNC
companies. After independence, India had focused more up on technology imports to foster
industrial and economic development.

The Industrial licensing policy committee reported the repetition of collaborations for same
Technologies and the lack of consideration of customer needs while importing technology. Most
technology collaboration contracts are conditional i.e., secrecy regarding the know-how and
avoid changes in basic design. In recent days, Government of India also adopted some measures
(i .e, established Foreign Investment Board and enacted FERA & RTP) to negate the adverse
effects of technology import contracts on its growth and economy. Government should revise the
import policies from time to time according to the changing technology needs of the domestic
and global markets. Industrial policy statement, 1977 listed the industry which does not entered
foreign collaboration contracts. Government of India permits the collaboration for those
industries if their existing technologies become obsolete and to update their existing technology
to meet their customer requirements and to gain competitive edge.

Technology Assessment
In the beginning of the technology era technology development, accelerated the growth of
humans and nation as well. But, with the increased pace of technology development over a limit,
throws several threats to the society in the aspects of safety, employment, health etc. Thus, the
concept of technology assessment emerged to detect the negative impacts of technology
application and development on the society. Technology Assessment concept was first
introduced in USA.
Definition
Technology assessment is defined as the process of generation and gathering comprehensive and
reliable information regarding the effects of technology application m all aspects such as
technical, social, economic, environmental and political in order to assess the effectiveness of the
technology.
Technology assessment focus on the two major activities such as issues regarding technology
policy and the effects of technology application:

Process of Technology Assessment

The process of technology assessment comprises of following steps:
1. Technology gap analysis
2. Technology environment analysis
3. Evaluation criteria and methodology for assessment
1. Technology Gap Analysis
The first step in technology gap analysis is to identify and understand the problem. The problem
may be related to product or process or strategy. Analyze the technology gaps after defining the
problem in order to find a solution to the problem. For the technology based industries it is very
difficult to acquire new technology every tune for problem solving. After conducting gap
analysis the next step is to develop a detailed list of needs and to conduct an internal audit to
identify the internal capabilities. The needs and the internal capabilities of the various firms need
to be compared in order to fill the technology gaps.

2. Environment Analysis (or) Selection of Candidate Technologies

The next step is to identify the candidate’s technologies available in that environment. A
thorough analysis of the traditional and non-traditional technology resource needs to be
performed to identify the range of candidate technologies. While identifying the candidate
technologies firms should avoid the disruptive technology as they adversely affect the firm's
performance.

3. Deciding Evaluation Criteria and Methodology

The final step in technology assessment is deciding the evaluation criteria and methods for
technology assessment. Based on the criteria and information firms determine the model for the
assessment. Decision makers need to consider the following aspects of the technology. They are
grouped under the four heads such as:
 Technological aspects cover constraints on the technology and technology parameters
 Economic aspects cover the financial matters
 Social aspects cover human percepts of technology
 Political aspects cover internal and external business environment
The following figure shows a diagrammatic representation of Technology Assessment Process:

Approaches to Technology Assessment

The concept of Technology assessment underwent several changes since US origination,
according to the changing requirements. There was shift from classical approach to on OTA
(Office of Technology Assessment) and contemporary approach. Following are the various
approaches of Technology Assessment (TA) proposed by Van Sen Ende et al based on historical
perspective.
1. Awareness TA: Awareness (Technology- Assessment) TA forecasts the effects of technology
development and creates awareness regarding the adverse effects of technology developments.
2. Strategic TA: Strategic TA helps the top and middle management in policy or strategy
formulation regarding the technology' development in specific areas.
3. Constructive TA: Scot introduced (CTA) constructive technology assessment approach. It
guides the management in designing the socio friendly technology development through
widening the scope of their decision.
4. Back Casting: It develops scenarios regarding the future developments which forms basis for
future technology generation.
Based on the institutional perspective the technology assessment approach are categorised into 5
types.
1. Academic TA: This approach is associated with basic concepts of technology development
and is implemented by academic researchers. Academic TA is not well developed and organised
approach.
2. Industrial TA: It is also called ‘entrepreneurial planning or Applied TA’. Mostly industries
follow this approach as a tool that supports planning the firm's strategies.
3. Parliamentary TA: OTA and PTA in Europe are the examples of parliamentary TA. In this
approach, parliamentary members set the objectives for technology assessment of projects or
governments projects based on science and technology.
4. Executive Power TA: Government makes use of this approach as a tool to decide on the
formulation and evaluation of their policies
5. Laboratory TA: Researchers while developing the technology conduct TA studies. The
assessment reports forms basis for further development and implementation.
Technology evaluation
“Technology evaluation is defined as a set of principles, methods, techniques and tools used to
appraise the performance and value of the technology in all aspects such as competitiveness,
profitability, efficiency, productivity etc.”
Technology evaluation, like technology forecasting is associated with forecasting and analyzing
the trends in the technological environment thereby assisting the large scale firms and
government organizations in framing their technology planning and financing. During 1950’s
there has been observed negative impact of technology on the society. This resulted in the
emergence of the concept of technology evaluation to assess the performance of the technology
in all possible percepts.
Features/Characteristic of Technology Evaluation
1. Technology evaluation plays a key role in innovation, technology transfer in order to
scrutinize the idea, assess and appraise the innovativeness of the technologies.
2. It provides a warning system to identify, control and directs the required changes and
developments in the technologies for the welfare of society and environment.
3. It provides timely and accurate information regarding the technologies and assists the
organizations in framing their business and technology strategies in time.
4. The factors that should be considered while evaluating a given technology are anticipated
financial benefits, competitiveness value of the products and the effect on business performance.
5. Technology evaluation techniques are widely used for large, medium and small scale firms an
even to high or medium technologies.
6. Objectives of technology evaluation are clear and clarified and are irrespective of the nature
and size of the organization.
7. The evaluation process should be continuous, but with certain time gaps to acquire additional
information for further evaluation.

Various techniques of evaluation

Following are the various techniques, tools used for technology evaluation:
1. Brainstorming
Brainstorming is a group and interactive process developed by Alex Fosbome. It is an
unstructured process which stimulates creativity and innovations. Brainstorming is commonly
used to identify the problems through generating ideas to find alternate solutions to the problems.
2. Delphi Method: Delphi method is a structured process and gathers opinions or ideas or
feedback from the expert’s team. They provide questions repeatedly to the experts for review in
order to attain the final decision or an action plan. This method avoids the domination of some of
the participants.
3. Idea Advocate: Idea advocate is an effective tool used to evaluate the ideas generated by the
experts. Working team asks the experts in the panel to select the best ideas from the given list.
The efficiency of idea selection process depends on the degree of promotion of different ideas.
This technique provides equal chances to all ideas to get selected. It helps in detail evaluation of
all the ideas generated as it emphasizes more on the negative effects of the ideas.
4. Creativity Assessment
Creativity assessment, an evaluation technique used to arrange and rate the ideas generated
through brainstorming. Through this technique one can group the ideas based on specific criteria
given by the team.
5. Venn Diagrams: Venn diagram exhibits logical relations among the activities, process etc.,
they provide graphical representation of the dependence, probability and outcomes of an
experiment. Venn diagram helps in assessing the impact of intersection of the events on
implementation.
6. Cluster Analysis: This evaluation tool is widely used to manage and organize the
information/ data through categorization of the various ideas based on their attributes under
separate topics. It helps in the preparation of identical groups from the provided list of ideas.
Cluster analysis is associated with recognizing the factors that should be considered while
developing problem specification. It helps in identifying the conflicts among the customers,
employees, suppliers, manager etc., with respect to quality and performance aspects.
7. Dendogram: represents the classification, groups of ideas that are to be assessed in the tree
form. It helps in developing all the possible solutions to the problem and to develop improve
product and process designs.
8. Matrix Data Analysis: Matrix data analysis is used to present the data required to conduct
market research and to define the products and services. Required data is presented in the matrix
form to draw the relation between the data variables quickly and effectively using symbols and
numbers.
9. Factor Analysis: Factor analysis is used to identify the organizational factors which require
specific analysis and attention. Like brainstorming tool, factor analysis also rate the products
with the competitors or with the other departments of the same organization to identify their
strengths and weaknesses. It helps in identifying the problems and assign the working team to
solve them.
10. Opportunity Analysis: Opportunity analysis technique is used to evaluate the number of
available opportunities in order to select best suitable one. Like criteria filtering, opportunity
analysis helps in identify and implement the best among the opportunities by rating them based
on the various aspects such as organizational importance, profitability, resource allocation.
Working teams use opportunity analysis as a tool to select dynamic changes.
11. Reverse Brainstorming: Reverse brainstorming is used to determine the practicability of the
ideas generated by the evaluation team. Reverse brainstorming is used at final stages in the
evaluation process to identify the problems and effects during implementation of the idea. It
reduces the risks associate with idea implementation.

Diffusion of Technologies
With the rapid changing business environment, there has been a deep shift in the type and nature
of technologies and management system. Technology plays a key role in fostering economic
growth of a nation. The rate of technology change has been increasing day-by-day which
challenges the businesses to follow the pace. Thus, industries need to enhance their technological
capabilities in order to cope up with the technological changes. Here arises the concept of
diffusion which marked its significance in the dynamic business environment through satisfying
its specific needs according to the technology changes. Industry is required to formulate specific
policies to foster the diffusion in order to reinforce the relations between technology developers
and users and infrastructure to facilitate effective diffusion.

Diffusion Theories
There exists no certain and unified theory to explain the diffusion of technology as the field is
new and there exists number of factors affecting the process of innovations. It is not possible to
deal with the impact of all factors in one theory. General diffusion theory is a combination of a
number of theories, each of which focus upon different factor related to adoption of an
innovation. Roger conducted rigorous study on diffusion and proposed four popular theories of
diffusion.
They are:
1. Innovation Decision Process: Researcher Roger has presented innovation decision process
which states that diffusion process occur over time and include five stages, which includes the
following:
i) Know ledge - Potential users should know the complete information regarding the innovation.
ii) Persuasion - Consider the benefits of the innovation
iii) Decision - Organization should decide to adopt a particular technology or innovation
(iv) Implementation- Implement the innovation
v) Confirmation - Accept or reject the decision regarding adoption of innovation.
This theory is most popular and commonly used to facilitate the process of adoption of
instructional technology.
2. Individual Innovativeness
The second theory proposed by Roger is individual Innovativeness theory which state that the
individual/institutions which are much prone to be innovative will adopt innovation prior to
those institutions that are less prone to innovation.