Technology Acquisition &

Transfer
By
Dr. Vijay Kr. Khurana

What is Technology Transfer ?

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 Acquisition ?

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.

Types of Technology Transfer

Scientific Knowledge Transfer, Direct Technology

Transfer, Spin-off Technology Transfer
Informal
Technology
Transfer
&
Formal
Technology Transfer
Internal Technology Transfer & External
Technology Transfer

Internal 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 ?

Barriers to 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.

Overcoming 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.

Steps in Internal Technology Acquisition by

a firm

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

External Technology Transfer

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

Methods of External Technology

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

Why External Technology Transfer

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
big
As a part of firm strategy --- let other firms take
risks & it will purchase technology developed by them.

Barriers to 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

Overcoming 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

Steps in External Technology Acquisition by

a firm

1.
2.
3.

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

Modes of Payment for Technology

Transfer

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

Acquisition of Technology By Nation

What factors influence acquisition decision?

What are national strategies for technology
acquisition?
Methods of technology acquisition by a 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

Regulation of Technology Transfer By Nation

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?

Technology Acquisition &

Transfer