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Technological change

Number 01 slide

Technological change
• Technology may be defined as a systematic application of scientific knowledge to practical task. Basic feature of it is change. Technological change leads to new product and process, and destroy the existing order or status quo. It is creative destruction. • Technological changes include both innovation and diffusion. Innovation brings in new ideas in the forms of product and process that invariably replace existing ones. • Diffusion takes place when a firm adopts new ideas from others. It abandons the existing way of doing things in favor of new the ideas, the practice and the tools that it has borrowed from its environment. Technologies changes produce four consequences:-

• New products represent arguably the most visible battleground in the market place. • Product improvements through incremental and modular innovations, architectural innovation that open up new market segments, the of radically new products that render existing product obsolete. • Product improvements have helped firms extend the market of their products. Industries sin the mature stage can often be revived by an infusion of newer technologies into their products. Mechanical watch is converted into digital watch is an example.

• Architectural innovations: They provide opportunities to serve previously untapped market segments and enable firms to change their competitive positions. • Technological innovation: Technological innovation sometimes generate totally new products.
• Technology integration: Technology integration or the opportunity to develop new products and process by synthesizing a set of existing technologies often leads to convergence. For example, convergence is now taking place in the computer. Telecommunication and entertainment business.

• Technological changes enable firms to reconfigure their value chains, thus influencing the cost and speed of doing business. There are two ways in which value chain are transformed-

Capital intensive machineries replace blue collar job in the developed countries.• Automation: Automation refers to the replacement of labor with less expensive capital intensive technologies. Information technology helps firms to reduce layers of management. Lean production systems. • Superior processes: Firms reconfigure their value chains by introducing superior process into their operations. JIT. .etc. Some of the processes are TQM. Superior processes may evolve from technology progression or technology evolution.

Value constellation of firms are upset by technological development in three ways: – Shifting Balance of Power – Potential for Outsourcing – Different Ways of Managing Value Constellation .

. • Different ways of managing value constellation: Widespread adoption of IT is enabling firms to better plan and manage their supplier and distributors relationship. firms are discovering the opportunities to outsource many activities that had previously conducted in-house..Change in Value Constellation…. • Shifting balance of power: Technological developments shift balance of power between firms and their suppliers and distributors. • Potential for outsourcing: As a result of market forces and the standardization o production processes.

• Product and process substitution. CAD. Technological change may contribute to product substitution and product differentiation. etc. to bring about product and process substitutions and to redefine the rule of competition. economies of scale. brand loyalty. Word processor has replaced typewriters.• Products and processes innovation are two means by which the competitive game is played and won. • Barriers to entry may include patents. • Process innovation in raw . . • These innovations enable firms to erect entry barriers to competitors. automation have reduced cost and quality advantage of many firms.materials may enable firm to enhance its competitive position.

Number 2: slide .

Role of 'Transnational Corporations (TNCs) in Transferring Technology to Developing Countries: An Overview And The Role of technology parks in Facilitating technology transfer .

INTRODUCTION  Technology is the master key for economic development. It is a tool for deriving benefits from nature as well as giving Competitive edge to a nation  Ayres (1991) has referred to technology as the "wealth of nations".  Transfer of technology (TV) can take place within the national Boundaries and also internationally 12 .

13 . TNCs are the real owners of modern technologies. a transferee and some vehicle for transfer  Many direct and indirect linkage have been used to transfer technology from the developed to developing countries  .INTRODUCTION  In every case there must be a transferor.

14 .INTRODUCTION  They have the capital. trained personnel and managerial capability to transfer technology. tap the international money market and to integrate the developing countries into the world economic structure.

TNC's and Developing Countries The attitudes of governments of the developing countries towards TNCs have been dramatically changing since 1980s TNCs as agents of Imperialism or newcolonialism 15 .

with the reindustrialization of Europe and Japan.TNC's and Developing Countries Developing countries has increased for two reasons: • First they have gained the experience of how to deal with TNCs • Second. there are many more TNCs competing in each industry than they were used to be when American TNCs dominated the international economy 16 .

17 .Motivation for Transfer of Technology By TNC • Increasing return on R&D investment • Obtaining additional earnings from technologies whose period of competitive advantage in primary home market is over. • Taking advantage of lower cost of production in developing countries and thereby maintaining competitiveness in world markets.

Motivation for Transfer of Technology By TNC • Gaining access to market with projectionist barrier. • Reinforcing technological dependency. • Avoiding the economic risk associated with operations in unknown environment in a foreign country and taking advantage of a local firm knowledge of market condition 18 .

Motivation for Technology Transfer by Developing Countries • Technology is a tool for national development • Most developing countries face tremendous hard currency shortage from servicing their foreign debt • Bangladesh spends 22% of its national income for the payment of interest of foreign debt 19 .

management skills and marketing knowledge. 20 .Motivation for Technology Transfer by Developing Countries • The TNCs are providing new technologies. • TNCs help the developing counties in enhancing their export performance • They can avoid R&D cost • TNCs can solve the unemployment problem of developing countries.

• Additionally it implies the assimilation and diffusion of technologies in host countries as well as the development of local capacities for adaptation and innovation. • An evaluation of the effectiveness of technology transfer through direct foreign investment (FDI) and via non-equity forms 21 .Effectiveness of technology Transfer through TNCs • The Process of effective technology transfer does not end with the acquisition of technologies.

engineering and computer application 22 .training program • Investment in new enterprises • TNCs undertake programs which include courses and training workshops on management techniques. quality control.Foreign Direct Investment and Technology Transfer • Technology transfer through FDI concerns the transfer of skill.

different standard. and sometimes government requirements are the main factors which led to local modification 23 . • TNCs do some R&D activities for adapting products to local market conditions and controlling quality.Foreign Direct Investment and Technology Transfer • R&D activities are undertaken by TNCs in the host country. Primarily taste.

in particular imports of intermediate products and capital equipment 24 .The channels of international technology transfer • The first is a direct transfer of technology via international licensing agreements • Second is a foreign direct investment • Third channel of technology transfer is through international trade.

(3) foreign linkage effect.Sources of Technology Transfer in the Global Economy Kokko (1992) identifies at least four ways that technology might be diffused from foreign investment enterprise (FIE) to other firms in the economy: (1) demonstration – imitation effect. 25 . (2) competition effect. and (4) training effect.

First. On the other hand. which is called innovation effect. which is usually called learning or absorption effect. 26 .Sources of Technology Transfer in the Global Economy R&D can be thought of as having two complementary effects on firm's productivity growth (Cohen and Levinthal 1989). it increases firm's absorptive capacity – ability to identify. assimilate and exploit outside knowledge. R&D directly expands firm's technology level by new innovations.

when local infrastructure is adequate.Non-Equity form of Technology Transfer • A licensing agreement often is a prerequisite for obtaining the necessary manufacturing and problem facilities from the parent company • Licensing arrangement have excellent possibilities when the license (developing country) has achieved a certain level of industrial experience and sophistication. and when the available markets are large enough to recover investment 27 .

the supplier TNCs often seeks to impose a lot of restrictions in order to maintain oligopolistic power and to limit the scope for assimilation and diffusion of technologies within the host countries 28 .Non-Equity form of Technology Transfer • Due to severe imperfection in technology market.

• THE ROLE OF TECHNILOGY PARKS IN FACILITATING TECHNOLOGY TRANSFER 29 .

• • • • What is Technology Park? What is technology transfer? How technology is transferred? How technology is transferred through technology parks? • Concluding remarks and suggestions? 30 .

well known all over Europe in the scientific circles. when it was first nurtured by key individuals in FORTH (Foundation for Research and Technology. one of the most respectable research institutes of the country. 31 .Technology Park • The idea for a Technology Park in Create dates back to 1988.Hellas).

software development etc.Technology Park Technology Park is a landscaped development usually comprising of high specification office space as well as residential and retail developments.. thereby giving each the benefit of economies of scale. 32 . designed to encourage localization of high technology companies such as information technology.

Technology Park • Technology Park is to carry out the innovation process and location advantages to commercialize the innovation purpose. The phases of innovation process are as below: • Basic research • Industrial research • Product and process development • Early proto type or pilot plan • Interim manufacture • Full manufacture • Commercialization. 33 .

Technology Park • Furthermore. a technology park provides the services to carry out the innovative activities such as: • Education and training • Information • Patenting and licensing • Entrepreneurial services • Commercial promotion • Financing and venture capital. 34 .

Innovation center and Business Incubation R E S E A R C H D E V E L O P M E N T H Science park Innovation center M Business incubation L H L 35 M BUSINESS DEVELOPMENT .Relationship and Differences of Technology Park or Science Park.

• Has a Management function which is actively engaged in the transfer of technology and business skills to the organizations on site. 36 . • Is designed to encourage the formation and growth of knowledge based and other organizations normally resident on side.A science park is a property – based initiative which: • Has formal and operational links with a University or other higher educational and research institutions (HEI).

formed by academic staff taking research out of the laboratory and into the science park. starting their own commercial enterprise. 37 . • The occurrence of research links facilitating technology and knowledge transfers.There are two principal forms of academic science park link at the level of the individual park enterprise (quoted from Quntas 1992) such as: • The establishment of spin-off firms.

Research oriented technology parks include: • • • • • Science parks Technology parks/technopoles Innovation center Re4search center Innovation plaza 38 .

Business oriented technology parks include: • Business incubators • Business parks • Industrial parks 39 .

technology transfer is a narrower and more targeted construct that usually embodies certain tools for changing the environment. 40 . In contrast. more inclusive construct that is directed more toward understanding the "whys" for change.Distinguishing between knowledge transfer and technology transfer • . Knowledge transfer implies a broader.

patent ownership. Specifically. more flexible changeoriented cultures.Distinguishing between knowledge transfer and technology transfer • . firms with more mechanistic structures and more stable direction-oriented cultures were associated with higher levels of knowledge transfer. and licensing were associated with higher levels of technology transfer 41 . and more customized university policies for IPR. firms with more organic structures. Conversely.

Technology transfer Technology Transferor Technology Technology Transferee 42 .

and financial resources to help you in this regard 43 . advisory.Technology Transfer Basics • • • • Protection is key to technology transfer By generating licensing and royalty revenues Commercialization The aim of technology transfer is to provide the educational.

and improvements to any of these. 44 . processes.Intellectual Property Protection • The two most common forms of intellectual property protection are patents and copyrights • . materials. • Copyrights are exclusive rights granted by a government for a limited time to protect the particular form. Patents are used to protect devices. way or manner in which an idea or information is expressed.

and (2) what kind of licensing is in the public interest 45 .Intellectual Property Protection • To transfer intellectual property through royalty bearing licenses. rather than patent title assignment • The two major factors determining the licensing decision are: (1) what kind of licensing is most likely to lead to rapid commercialization.

Alliance based acquisition mechanisms. He classified this mechanism into two types.1.Mechanisms of technology transfer • Ramanathan’s (1995) classification seems to be more appropriate. Pure external acquisition mechanism and 2. Later (1997) he classified it into two categories such as Market oriented mechanism and Non-market oriented mechanisms 46 .

Licensing. 2. 3. Technical agreement. Subcontracting Turnkey contracts Product-in-hand contracts Management contracts Product sharing Joint research ventures Expert services – – – – – – – 47 . equipment and products Direct foreign investment Joint ventures Technical collaboration: 1. engineering and construction agreements.Market Oriented Mechanisms: – – – – Purchase of plant.

Non Market Oriented Mechanisms: • • • • • • • Books. seminars and workshops Training 48 . business magazines etc. academic journals. Sales literature Technical information services Industrial fairs and exhibitions Informal personal contracts Participation in conferences.

Business oriented technology park— Business incubator • Activities/Particulars:-To help (business support services) small business to start up in the most favorable environment. Business development is priorityMinimum entry capital is requiredIs useful with the priority of business development while research applications are secondaryGrowing infant companies are housed here • Technology transferred through:-Employment/creation of jobsTrainingClerical & administrative helpBusiness assistanceInformation gathering 49 .How technology is transferred through Technology Park? The following section will be discussing various activities/particulars of various types of technology parks and the way/means by which technology may be transferred.

Information exchange 50 . Focus is on good environment of office light manufacturing & business support services • Technology transferred through: Business support services.Business oriented technology park— Business Park • Activities/Particulars: Growing companies are housed here. Interactions.

51 .Business oriented technology park Industrial Park • Activities/Particulars: Mature & declining companies are housed here. Associated with traditional production service & distribution system. Information exchange & interactions. Not well suited to a wide range of high technology activities. • Technology transferred through: Support services.

TP is very much helpful for the start-up companies. big companies are not interested to establish business ventures in these parks. 52 . The above analysis shows that technology park is useful in transferring technology. Due to enough technological capabilities.Conclusion…. Due to the differences in the nature of parks. the services provided there. Technology parks may be classified into two types such as business oriented technology parks and research oriented technology parks. are also different. The study also shows that technology parks are only useful for small and medium sized enterprises.