BPT 3113 – Management of Technology Technology Transfer BPT 3113 – Management of Technology

Chapter Outline Definition Classification & Categories Significance Elements of Transfer Process Package Modes of Transfer Channels of Technology Flow Effective Technology Transfer Pricing of Technology Transfer Summary

Lesson Outcomes Explain the concept & significance of technology transfer Identify the different types of technology transfer Describe the modes of transfer

Definition A process by which science and technology are transferred from one individual or group to another that incorporates this into new knowledge Technology transfer is defined as the acquisition and use of technology There is no transfer of technology unless and until the technical knowledge is put to use Technology transfer occurs because of existence of ‘buyers’ and ‘sellers’ of technology

Definition It is the process of providing the technology developed for one organization for other potentially useful purposes Technology Transfer is a process that permits the flow of technology from a source to a receiver. Source : the owner or holder of the knowledge that could be an individual, a company or a country Receiver : The beneficiary of such knowledge

Classification Horizontal Implies transfer of technology from one firm to another Such transfers take place generally between the firms located in different countries – due to competition and maturity of technologies Vertical Means transfer of technology from an R&D organization to a firm Such transfers are mostly within the country and the technologies are new and may often require further efforts in terms of establishing commercial viability

Categories International Technology Transfer Transfer is across national boundaries Eg. : industrialized countries to developing countries Regional Technology Transfer Transferred from one region of the country to another Eg.: Florida to Alaska Cross-Industry / Cross-Sector Technology Transfer Transferred from one industrial sector to another Eg.: space program to commercial applications

Inter-firm Technology Transfer Transferred from one firm to another Eg.: transfer of CAD expertise and CAM machines from a machine tool manufacturing firm to a furniture producing firm Intra-firm Technology Transfer Transferred within a firm from one location to another Can also be made from one department to another within the same facility Eg.: one department uses sophisticated computer technology and another relies on manual work

Significance Buyer / Recipient Seller As a solution to someone else’s problem Avoiding ‘reinventing the wheel’ Helps the firm catch up with latest technological and market trends Provides return on investment mode on technology development Builds the image of technopreneur Encourages the innovators to find new areas of application of the technology

Elements of Transfer Process Seller capabilities and motivations Buyer Technology gap Technology package Bridging agencies Operational environment Mechanisms of transfer Mode of transfer Price

Package Technology package consists of 4 principal elements – product design, production technique, service facilities and management systems Categories of technical information or know-how inherent in technological systems are: General knowledge – blueprint reading System specific knowledge – special solutions / procedures acquire from the experience Firm specific knowledge – results from the firm’s overall activities

Modes of Transfer The Passive Mode Also called dissemination mode; published literature is used as form of technology transfer No direct communication or assistance from the originator of the technology to the producer or finished consumer item Technical information Technology base User Primary innovator for application of technology Publications Computerized data base Personal contacts

Modes of Transfer The Semi-Active Mode The technology transfer agent screens available pertinent information for product development The role technology transfer agent is somewhat limited – as an interpreter or communicator not actively participate in the application of the technology Technology base Technical information Technology transfer agent User Secondary innovator for application of technology Primary innovator for application of technology Publications Computerized data base Personal contacts

Modes of Transfer The Active Mode Carries the process through to an actual demonstration The technology transfer agent or consultant will be fully involved and acts as a bridge in technology transfer from technology source to entrepreneur or implementing agency Technology base Technical information Champion and his team User Publications Computerized data base Personal contacts Primary innovator for application of technology Secondary innovator for application of technology

Channels of Technology Flow General Channels Done unintentionally and may proceed without the continued involvement of the source Information is made available in the public domain with limited / no restrictions on its use Information is harnessed by users and applied to their purposes Channels of this type of transfer include education, training, publications, conferences, study missions and exchange of visits.

Channels of Technology Flow Reverse-Engineering Channels No active contribution from a source A host / receiver is capable of breaking the code of a technology and developing the capability to duplicate it in some fashion - no legal violation of property rights Example : a product that is put on the market by company A can be purchased by company B, reverse- engineered and introduced to the market as a competitor to company A’s product Such knowledge is usually gained during the product development process

Channels of Technology Flow Planned Channels Is done intentionally, according to a planned process and with the consent of the technology owner There are several types of agreements that are used to effect planned transfers; they permit access to and use of technological know-how Suppliers Licensing Franchise Joint Venture Turnkey Project Foreign Direct Investment (FDI) Technical Consortium and Joint R&D Project

Effective Technology Transfer To be successful requires the existence of infrastructure including facilities, equipment and personnel and a transfer team Guidelines for setting up a transfer team: Small team members Trust and healthy competition Building teamwork Command and communication channels should be well understood Quality of the people selected to perform the tasks

Pricing of Technology Lump Sum Payment Fees Royalties Appropriate where it is desired to obtain the technology by outright purchase Calculated in advance Agreed sum may be paid in installments Fees The reward for technical and managerial expertise provided by the supplier Technical fee – training, set-up R&D Management fee – any fees payable for the management of the plant Royalties Can be considered a lease payment, not an outright payment May be paid as a percentage of sales value

Summary Transfer of technology is a process essential for the wide application and utilization of technology by one or more users There are nine key factors in technology transfer process Payments for the technology may be divided into 3 broad categories, although in practice an agreement may involve