This document discusses technology transfer and technology acquisition. It begins by defining technology transfer as the process of transferring skills, knowledge, technologies and manufacturing methods between organizations. There are two main types of technology transfer - horizontal transfer between areas/countries, and vertical transfer from research to production. Technology acquisition involves obtaining new technologies internally through R&D or externally through partnerships. Nations regulate technology flows in/out to balance economic development and dependence on external sources.
2. Technology Transfer
• Over the course of time, technology has advanced
at varying rates.
• After the Industrial Revolution, technology began
to advance at a rapid rate.
• Beginning in the Information Age, technology
advancement boomed and plays a large role in the
current rapid advancement of devices such as the
computer.
3. Technology Transfer
• However, in order to protect the interests of
those who create new pieces of technology, an
established method known as technology transfer
was created.
• Technology transfer offers protection for
inventors, while still being able to share the
necessary knowledge that allows the expansion
and advancement of that technology.
4. Technology Transfer
• Technology transfer, also called transfer of
technology (TOT), is the process of transferring
skills, knowledge, technologies, methods of
manufacturing, samples of manufacturing and
facilities among governments or companies or
universities and other institutions to ensure that
scientific and technological developments are
accessible to a wider range of users who can then
further develop and exploit the technology into
new products, processes, applications, materials or
services.
5. Technology Transfer
• Technology transfer is the practice of exchanging
new information on technologies between groups
and companies.
• Technology transfer can occur between both
groups and companies within a country, as well as
between other countries.
• Many groups, such as companies and universities,
have a technology transfer department in which
technology transfer is handled.
• Another common function of these departments
is to find or create a practical purpose for which a
technology is used.
6. Technology Transfer
• Why is Technology Transfer Used?
•Technology transfer is used as a means to
exchange new information of technologies,
expanding knowledge.
• It works in the same way as the ideal that two
heads are better than one.
• One individual or group may discover or create a
new product, while another previously uninvolved
group or individual may find a practical use for that
discovery or product.
7. Technology Transfer
•It also provides groups, such as third-world
countries, with access and knowledge of a
technology, further helping to develop that
economy.
• This then, as previously mentioned, could prove
to further advance the creation or use of a
technology.
8. Technology Transfer
• It is closely related to (and may arguably be
considered a subset of) knowledge transfer.
• Kinds of Technology Transfer:
(1) Horizontal Technology Transfer
(2) Vertical Technology Transfer
• Horizontal transfer is the movement of
technologies from one area to another.
• At present transfer of technology (TOT) is
primarily horizontal.
9. Technology Transfer
• Horizontal Technology Transfer:
• Horizontal Technology Transfer is the transfer of a
commercialized or operational (usually mature)
technology from one organization in a specific
socio-economic context to another organization in
a different socio-economic context, through intra-
firm, cross-industry, or cross-border channels.
• It may be possible to horizontally transfer
technology at any stage of the technology life cycle.
10. Technology Transfer
•Examples: (1) reverse/back engineering(the
reproduction of another manufacturer's product
following detailed examination of its construction
or composition) (considered under non-
commercial channel of International Technology
Transfer/a non-formal channel of HTT) (2)
Technology Licensing, OEMs(manufacturers who
resell another company's product under their own
name and branding) arrangement or
subcontracting (under formal channels of HTT).
11. Technology Transfer
**Note that Technology Licensing is a HTT and not
a VTT, the main reason being that the technology
already has market value. Commercialization in full
scale is HTT. A commercialized product already has
value in the market.
12. Technology Transfer
• Vertical Technology Transfer:
• Vertical Technology Transfer refers to the transfer
of technology from Basic Research to Applied
Research to development and then to production.
• It is a managerial process of passing a technology
from one phase of its life cycle to another.
• It is the transfer of an embryonic technology (i.e.
a pre-commercialized or generic technology) from
an individual or institutional inventor (e.g. a
government or university laboratory) to an
organization that can either commercialize it into a
new product or process or make it publicly
available for the practical solution of a problem in
society.
13. Technology Transfer
• A very usual example of embryonic technology
would be nanotechnology.
• Significant amount of vertical technology transfer
occurs between developed and developing country
firms.
• The tremendous growth of international
outsourcing, which helps the developed-country
firms to buy part or all of the outputs from the
developing countries, certainly creates the need for
considering vertical relationships between the
firms.
14. Technology Transfer
• A large body of empirical evidence shows that
vertical knowledge transfer occurs as firms from
industrialized countries have bought outputs of
firms from Asian newly industrialized countries
• Vertical technology transfers between developed
and developing country firms, we show how patent
protection in the developing country affects
developed-country interest in the presence of
vertical technology transfer.
15. Technology Transfer
• Under vertical technology transfer, a developed
country firm transfers its technology to a
developing country firm, which produces the
product for the developed country firm.
• However, vertical technology transfer may create
competition in the developing country by creating
knowledge spillover, which, in turn, may create
entry in the final goods market.
16. Technology Transfer
• Is the process by which technology is
disseminated.
• It involves communication of relevant
knowledge by the transfer to the recipient.
• …may or may not legally binding.
• TYPES OF TECHNOLOGY TRANSFER
• Scientific Knowledge Transfer
•Direct Technology Transfer
•Spin-off Technology Transfer
17. Technology Transfer
• SCIENTIFIC KNOWLEDGE TRANSFER
• Transmission of knowledge gained through
basic research & development activities.
• Through information exchange and
presentation of technical papers at scientific
meeting.
18. Technology Transfer
• DIRECT TECHNOLOGY TRANSFER
• Usually through formal arrangement between
any of the following
• Enterprise Elements
• Enterprise To Enterprise
• Govt. to Enterprise
• Govt. to Govt….. Indo-Russia agreement on
transfer of defense technology…..Indo- US
agreement on transfer of nuclear technology for
civilian use.
19. Technology Transfer
• SPIN-OFF TECHNOLOGY TRANSFER
•Technology developed by one enterprise in
one technical area, and usually for one
purpose, is applied and used for different
technical area, for different purpose or for
market application other than those foreseen
at the time when R&D is initiated.
20. Technology Transfer
• MODE OF TECHNOLOGY TRANSFER
• Informal & Formal
• Informal Technology Transfer
•…through published matter either in print
media….or electronic media….or scientific
meeting/symposia…individual exchange s
between scientists/researchers
• Process of training scientists in academic
research institutions
• Acquisition of critical technical personnel
21. Technology Transfer
• Formal Technology Transfer
• Outright procurement of technology
through its sale, licensing or acquisition of
the enterprises in which technology is
embedded.
22. Technology Transfer
• Internal Technology Transfer & External
Technology Transfer
•Internal Technology Transfer
• Such technology transfer where control on the
ownership and usage of technology resides with the
transferor.
• Retaining control after transfer.
• Transferor normally holds substantial, majority or
full equity ownership in the transferee or recipient
entity/organization/department.
•…Involves movement of technology from R & D
department to manufacturing units and then to
marketing of products/services in the target
markets.
23. Technology Transfer
• Complex Process Involving Following Decisions:
• Timing….Guided by the objective of preventing
the competitor from gaining any technological
advantage.
• Location…influenced by technological &
marketing skills and capabilities of the
organization , technological relationship and
dependence of suppliers and customers.
• Multifunctional teams
• Communication methods and procedures
24. Technology Transfer
• Barriers To Internal Technology Transfer:
• R & D goal not known to production department
• Stopping current production to test new
processes
• R & D dept. Does not understand need &
capability of the production dept.
• Production dept resists innovation
• New technologies are not linked to
marketing/customer needs
25. Technology Transfer
• Overcoming Barriers To Internal Technology:
• Support of top management
• Supportive organisational culture
• Use of multifunctional teams
• Effective communication in the organisation
• Bridging the gap between R & D and
production
• Rotation of personnel between R & D and
production
• Linking and participation of marketing element
in technology process.
26. Technology Transfer
• External Technology Transfer
• …..Control On The Ownership And Usage Of
Technology Usually Does Not Remain With The
Transferor And It Passes On To The
Recipient..Solely or As Joint Venture
• Successful Transfer Depends Upon The
Following Factors
Type & Complexity of The Technology Being
Transferred
Transfer Mechanism Selected
Relationship Between Parties
Core Competencies of The Parties.
Organizational Culture of The Parties
27. Technology Transfer
• Commonly Used External Technology Transfer
Mechanism:
• Licensing agreement: Software Licensing
• Enterprise acquisition…IBM &
VIVISIMO…..Tata- Jaguar Rand Rover from Ford
Motors….in 2008 Tata’s 80% stake in Italy
based design & engineering company
TRILIX…2010
• Contracting agreement:
28. Technology Transfer
• Co-operative and collaborative ventures /
strategic alliance (technical exchange, cross
licensing agreement, co-production
agreement)….Roche….Swiss Company….AIDS/HIV
medicine…..with the companies of Developing
countries…..2006….2008….
• Marketing Agreement:
• Joint product development….Tata –
Daewoo…jointly developed truck range for SAARC
market…and South Africa….2009
• Joint venture with equity ownership….Tata-
Marcopolo (Brazil)…….2006
29. Technology Transfer
• Factors/Reasons Necessitating External Technology
Transfer:
• Saving time and efforts
• To meet growth objectives or competitive goal
• Lack of risk taking ability for innovations
• Lack of internal resources
• Lack of core competency to deal with
• Need to keep up with competitors
• Need to cope up with acceleration of technological
change
• Complex technological development.
30. Technology Transfer & Technology Acquisition
• Difference between Technology Transfer &
Technology Acquisition:
• It is the process of acquiring new technology,
new product, process or service by the efforts of
an individual, or an enterprise, or any other
macro entity. ….either internally or externally.
31. Technology Transfer & Technology Acquisition
S
N
Technology Transfer Technology Acquisition
1 Slightly wider in scope Slightly lesser in scope
2 Includes both formal &
informal
arrangements/processes
Usually includes formal
arrangements/processes
3 May or may not have
legal boundaries
usually have legal
boundaries
4 Focus on transfer from
transferor to recipient
Focus on the transaction
from the angle of acquirer
32. Technology Acquisition
• Internal Technical Acquisition:
• It is the result of efforts that are initiated
and controlled by the firm itself. It requires
existence of technological capability in the
firm.
• It involves:
• Seizing tacit knowledge
• Promoting internal R& D
33. Technology Acquisition
• Steps/activities involved in internal
acquisition process:
1. Planning new Products/services/processes
to be offered – planning must incorporate
voice of the customer and user needs.
2. Screening new products, processes, or
services to select only viable/feasible items.
3. Initiating development process, which
must be properly designed and carried out
so that it felicitates success…..enterprises
should:
34. Technology Acquisition
• capable of adapting to the dynamics of
change
• organise the system around problem
solving
• have flexible management system…not rigid
one.
• use multifunctional teams
• proper integration between r& d,
production & marketing sub-systems
• ensure effective communication.
35. Technology Acquisition
4. Carrying out trial production on small
scale and test marketing
5. Improving design and production process
based on experiences/feedback
6. Commercialization i.e. Mass production
and sales
36. Technology Acquisition
• Advantage of internal technology
acquisition is that any innovation
becomes the exclusive property of the
firm.
• Resulting technology is tailored to meet
the firms’ needs.
• It creates a culture of self reliance.
37. Technology Acquisition
• Risks/Disadvantages Of Internal Technology
Acquisition:
• May take longer time in internal
development and transfer as compared to
external technology acquisition
• Many a time, it is an expensive process due
to substantial investment and efforts
• Many time, there may be time delay thus
providing competitor an edge due to delays
• There may be failures leading to high costs.
38. Technology Acquisition
• External technology acquisition:
• It is the process of acquiring technology
developed by others for use by the
acquirer enterprise.
• Advantages of external acquisition
process:
• Technology already developed by
others…saves time….efforts….andv firm
can avoid risk.
39. Technology Acquisition
• Disadvantages of external acquisition
process:
• Inappropriateness of technology
• High costs
• Technological dependence
• External technological acquisition can be
accomplished by/through any of following
processes/methods:
1. Outsourcing
2. Strategic alliances
3. Collaborating research and development
4. enterprises acquisition
40. Technology Acquisition
• Outsourcing: purchasing of know-howor
machinery with embedded technology or
both from outside firm.
• Strategic alliance and joint venture:
• Technical exchange and cross licensing
• Co-production and marketing
programmes
• Joint product development programme
• Stand alone joint ventures with equity
partnership.
41. Technology Acquisition
• Collaborating research and development :
• May be carried out by a group of
technologists or group of companies with
common need.
• Enterprise acquisition: it involves
acquiring enterprise having
essential/required technology elements.
42. Technology Acquisition
• ACQUISITION OF TECHNOLOGY BY A NATION:
• Factors affecting technology acquisition by a
nation:
1. Level of economic development of the nation
2. State of technology
3. Appropriateness of the new technology
4. Impact of technology transfer and acquisition on
existing technologies and products/markets
5. Likely technological dependence on external
sources
6. Associated costs involved in the technology
transfer and acquisition likely benefit through
technology diffusion
43. Technology Acquisition
• National strategies for technology acquisition
1. Internationalization oriented strategy
• This strategy aims at seeking technological
development with the objective to become
internally self reliant. Seeking technology transfer
by MNCs via FDI
2. Externalization oriented strategy
• This aims at seeking technological development
with the objective to tap the external market.
Restricted role to be played by MNCs….seeks to
foster/encourage indigenous technology
development ie. Developing domestic technology
capabilities.
44. Technology Acquisition
• Methods/Steps for Technology Acquisition by
a Nation:
1. Attracting TNCs/MNCs through…
• Direct Measures i.e. making a positive list of
industries open to FDI
• Indirect measures i.e. by offering incentives
and subsidies
2. Attracting TNCs/MNCs into natural resource
processing and inducing greater value
additions.
3. Using TNCs/MNCs to attract/encourage their
overseas suppliers to invest into the country
45. Technology Acquisition
4. Improving skills and training of local
technologists by involving TNCs/MNCs
5. Developing industrial parks/technology parks
to attract high technology investors
6. Offering incentives to existing investors to
move to more complex technologies and to
increase or upgrade technological R&D
house
7. Changing the competitive environment and
existing incentive structure to encourage
world class technology and management
46. Technology Acquisition
8. Improving technological access for local
firms for outsourcing/technology transfer
9. Collecting, organizing and disseminating
information about technology
development
47. Technology Acquisition
Regulation of Technology Transfer by
Nations:
It is undertaken in two directions:
1. Regulation of import of
technology/technology inflows
2. Regulation of export of
technology/technology outflows and
setting-up of joint ventures (JV) and
wholly owned subsidiaries (WOS) abroad
48. Technology Acquisition
Advantages of Import of Technology/ Free inflows of
Technology:
1. Often technology transfer is quicker
2. Leads to expansion of production base
3. Acquisition of advanced/latest/emerging
technologies may be facilitated
4. There are benefits through technology absorption
and diffusion like cost-cutting benefits to suppliers
and customers etc.
5. Boost to exports
6. Increase in employment levels
7. Boost to industrialisation of the nation
8. Increase in economic development of the Nation
49. Technology Acquisition
Disadvantages of Import of Technology/ Free
inflows of Technology:
1. Forex outflow through technology transfer
payments
2. Adverse impact on balance of payment
3. Inappropriateness of technology – non-
suitability and non-compability with the
current technological level and
infrastructure. Inappropriate technology may
be transferred.
4. Likely technological dependence on external
sources even for minor technological
problems/issues
50. Technology Acquisition
5. Likely technological discontinuity
/technological obsolescence of existing
technology products, services or
processes etc.
6. Associated costs may be high since the
nation pays not only for the technology
but for the whole package brought by TNC
s/MNCs including its brand names,
finance, skills and management
7. Risk of getting old/out-dated technology
51. Technology Acquisition
• Because of these disadvantages, restrictions and
regulations are often imposed by nations on
technology inflows
• The GoI currently restricts and regulates
technology inflows to certain target sectors in the
following ways…
Technology transfer agreement are subject to
approval as per guidelines issued by Govt.
Payment of royalty/technology as transfer fees is
subject to Govt. policies/approval
The Govt. has laid down sectoral caps for FDI.
These caps influence technology flows as MNCs
transfer technology to their Indian affiliates in
permitted areas subject to sectoral caps.
52. Technology Absorption
• Refers to the acquisition, development,
assimilation and utilization of technological
knowledge and capability by a firm or some
macro entity.
• Between transferring and receiving entities.
• Wider in scope than acquisition.
• Acquired technology may or may not be put in
use.
• It may involve some or no change in parameters
of acquired technology.
• Technological Adoption & Technological
Adaptation
53. Technology Absorption
• Technological Adoption:
• Technology absorbed without changing the
parameters of acquired technology. Is called
Technology Adoption.
• Technological Adaptation:
• Technology absorbed by changing certain
parameters of acquired technology is called
Technology Adaptation.
54. Technology Absorption
• Need for Technological Adaptation:
• Non availability of the supporting infrastructure
• For meeting location/market specific needs
• To make it compatible with existing plant &
machinery
• Non availability of ancillary units for components
• To meet legal requirements (BVO in soft-drink
forced cola companies to change their formulation)
• Pressure from NGOs, environmentalists, human
rights….
55. Technology Absorption
• Technology absorption has two dimensions:
1. Acquiring and absorbing information about
physical phenomena, equipment, machines,
analytical concepts, framework, operating
techniques etc.
2. Affective regarding feelings, attitudes,
understanding required between two parties
to be successful in passing know-how from
one to another.
56. Technology Absorption
• Structure/Components of Technology Absorption:
• Hardware: physical structure…logical lay-out
• Software: know-how to carry out tasks
• Brain-ware: application and justification of hardware,
software, know-how…how…what…when…
• Support net: complex network of physical, informational
1. Acquiring and absorbing information about physical
phenomena, equipment, machines, analytical
concepts, framework, operating techniques etc.
2. Affective regarding feelings, attitudes, understanding
required between two parties to be successful in
passing know-how from one to another.
57. Technology Absorption
• Difference between Technology Acquisition &
Technology Absorption:
• Focus on the same technology
• both may take place simultaneously
• may lead to complete overlap…
• ….sometime time-lag/delay between these two
stages
• …absorption may be delayed because of
different reasons…lack of….. management
support……initiative….supportive organisational
structures….
58. Technology Absorption
•
S.N. Technology Acquisition Technology Absorption
1 Focus is on acquiring
technology i.e. becoming
its owner
Focus is on putting the
acquired technology to use
i.e. reaping the benefits from
technology acquired
2 Leads to firm specific
technological knowledge
and advantage
Leads to market competitive
advantage
3 Requires substantial costs
for acquisition
Involves some costs for
putting the technology to
use and leads to increases in
revenues, improvement in
efficiencies etc.
4 Precedes technology
absorption
Succeeds technology
acquisition
59. Technology Absorption
• Enterprise/organization plan for technology
absorption within reasonable time/planned time as
it provide advantages like early use of acquired
technology and reaping benefits there-from, gaining
technological competitive edge.
•Absorption may be delayed because of different
reasons…
• Lack of- Management Support, Initiative Supportive
Organizational Structures….
• Likely adverse impact on existing
technology/products/services, strong resistance by
existing workforce, requirement of lot of time &
investment to absorb.
60. Technology Absorption
• Steps For Faster Technology Transfer:
1. Developing good technology and mutual trust
between technology transferor and
technology recipient organizations.
2. 6
3. developing time-bound and target oriented
schedule for technology absorption
61. Technology Absorption
4. Top management support
5. Multifunctional team
6. Regular review of absorption progress
7. Installation of effective communication system
8. Seeking workers participation …involving one
and all.
9. Hiring of requisite skilled workforce
10. Actively complying with various govt
directives and requirement on tyechnology
up-gradation and absorption.
62. Technology Absorption
• Govt. Guidelines for Technology Absorption in
India:
• External technology acquisitions Involves
substantial forex outflow and carry substantial
impact on the forex reserve.
• Delay in absorption may have adverse impact on
both, the enterprise and the nation.
• …additional cost and adverse effects for the
technology acquiring enterprise and extra cost to the
nation.
• so govt. encourages and insist on quick use of
acquired technology
63. Technology Absorption
• It benefits as under…
• more efficiency, more productivity
• better quality of national products or services
• stability in sales and profits
• capability to fight foreign competition and thus
retaining control over strategic economic assets
• employment generation and improvement in
standard of living
• growth of national economy
64. Technology Absorption
• while seeking approval from GoI, time bound
schedule is required to submit for technology
absorption.
• board’s report is required to include commitment
for the absorption of technology u/sub-s (e) of the
section 217(1)
• technology diffusion: the spread of
applications/usage of a new technology and its
related products, services or process from one
nation to another; from one entity to another; from
one enterprise to another; from one industry to
another;……from current user to prospective user.