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 ?

Two terms technology transfer and technology are normally used

interchangeably.
The verb “Acquire” means
• To come into possesion of; get as one’s own
• To gain for oneself through one’s 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 TechnologyTransfer Formal
Technology Transfer &
• Internal Technology External
Technology Transfer 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 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

• Have flexible management system & replace rigid management system

• Use multi-functional teams.
• Proper integration between R&D, Production & Marketing sub-systems
• Ensure effective communication
• Carrying out trial production on small scale and test marketing
• Improving design & production processes based on experiences / feedback
• 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
• As a part of firm’ strategy --- let other firms take big 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. Identification of Need
2. Developing list of suitable technology providers
3. Short listing / selecting suitable technology
providers on the basis …. Cultural compatibility,
compatibility of core competences, appropriateness
of technology, technical feasibility etc
4. Negotiation
5. Agreement
6. Payments as per agreement
7. Transfer of specifications, blueprints, designs,
documents, CDs to purchaser
8. 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
In this session, we have discussed about