Dr Richard Li-HuaSalford Business School University of Salford, UK

Opportunities and Challenges in International Technology Transfer

2010 International

Technology Transfer Workshop, School of Economy and Management,

Tsinghua University, 1st, December, 2010

Technology Transfer: Hidden Competitive Advantage

Successful technology transfer will translate a firm’s technology strategy into achievable objectives that enable firms to leverage their technology and knowledge to gain sustainable competitive advantage in the global market

It is evident that the major technology management activities in the evolution phases of multinational companies focus on “technology transfer” :

1. Learning phase2. Built-up phase3. Internationalization phase4. Globalization phase5. Global dominant phase

Opportunities and Challenges

Technology transfer offers a win-win solution for both the transferor and the transferee;

Globalization affects each country in a different way; The developed countries can obtain huge marketplace for their

surplus producing power by selling goods, transferring technology by setting up joint venture etc, while the developing countries can acquire advanced technology and knowledge by offering new market opportunities and providing human resources and raw material.

Opportunities and Challenges (cont’)

Technology-driven industry creates technological changes through disruptive innovation

Four dimensions of innovation: product versus process; radical versus incremental; competence enhancing versus competence destroying; architectural versus component

So countless innovation projects are imitation, absorption, adaptation, improvement, reconfiguration, modification, or re-branding of existing technology, or successful transfer of technology

The power of steady stream of innovative ideas and emerging technologies, in particular, ITT, present considerable opportunities and challenges

Technology Transfer in the Current Recession – A Win-win Strategy

The current recession increases the unemployment and panic in the developed countries, such as, US, European countries

To protect its employment rate and safe guard its economy by transferring technology

The emerging economic power, such as, China, India, etc. who are seeking innovation framework, new technology or knowledge for developing new mode for economic growth or system for sustainability

It repeats what happened in 1970 where the developed wanted to sell technology for profit while the developing wanted to buy technology for solving the problem of economic growth

Developed countries: Concern on proper protection

of Intellectual Property Uncertainty of IP in the

developing countries IP infringement Replication is a normal thing

Technology Transfer Dilemma between Developed and Developing World

Developing countries: Money was paid to purchase

advanced technology, but ended only with second hand equipment and old fashioned technology

Contracts of technology transfer were signed, however, key technology was not secured

Plants were closed due to improper technology transfer or no transfer

A crucial and dynamic factor in social and economic development and a short-cut not only to the developing countries but also to the developed countries;

Close relationship between technology transfer and economic growth and achieving competitive advantage;

International business strategies; National technology strategy; Value-added in each process of transfer.

Significance of Technology Transfer

Technology Transfer

What is technology transfer?

What was actually transferred?What needs to

be transferred?

When should technology be transferred?

Why should technology be transferred?

How was technology transferred?

Technology Transfer: The Major Issues

Flows of technological knowledge to market; The movement of science and technology from

one group to another group; The transfer of hardware objectives, traditionally; It often involves information (e.g. a computer

software programme or a new idea);

What Is Technology Transfer?

“The transfer of systematic knowledge for the manufacture of a product or provision of service.”

Work Regulation of United Nations

World Bank & Technology Transfer

One of major organizations which are most interested in technology transfer;

A meaningful partnership between foreign and local; Using international consultancy; Support setting up joint ventures; Explicit policy adopted in 1993: no technology

transfer, no meaningful partnerships with localcompanies, the result will be no contract;

However, WB has not established mechanisms to ensure real technology transfer

Technology Transfer Hurdles: Separation between Technology and Knowledge

Technology transfer has been less attended since 80s, e.g. less funding, less research, less publication

Too much focuses on high-tech or high end product Overshadowed by innovation Separation between technology and knowledge threats people

in technology transfer practice and keeps researchers away from technology transfer research

Wrong illusion - knowledge management and knowledge transfer seems more popular

A Basic Model of Technology Transfer

Factors Influencing the Strategies of Technology Transfer

Transferor characteristics:•Form size•Global strategy•Cultural and geographical distance from receiving country

Technology characteristics•Age•Sophistication

Receiving country characteristics:•Investment policy•Technical absorptive capacity

Mode and strategies of technology transfer

Technology S-Curves

Both the rate of a technology’s improvement and its rate of diffusion to the market typically follow an s-shaped curve

Major reference for technology transfer S-curves in Technological Improvement

Technology improves slowly at first because it is poorly understood.

Then accelerates as understanding increases.

Then tapers off as approaches limits.

Challenges and Barriers of Technology Transfer

(Cummings and Teng, 2003)

From Technology Transfer to Knowledge Transfer

“Technology transfer does not take place without knowledge transfer, as knowledge is the key to control technology as a whole.”

Technology

transfer

Theory and practice

Discover that sustainable technology transfer cannot happen without knowledge transfer

Discover that explicit knowledge is easy to track but not only part of knowledge transfer

Establish importance of tacit knowledge transfer

Develop model for improving tacit knowledge transfer as it deliver the most competitive advantage

(Li-Hua, 2006)

What is technology?“The combination of humanunderstanding of natural laws and

phenomena accumulated since ancient times to make things that fulfil our needs and desires.”

Technique Knowledge Organisation Product (Four closely-linked

elements)

Distinction between Technology and Knowledge

What is knowledge?“Knowledge is a fluid mix of framed experience, values, contextual information, and expert insight that provide a framework for evaluating and incorporating new experiences and information.”

Truth Believes Perspectives Concepts Judgments Expectation Methodologies Know-how

Dr Richard Li-Hua@2009

Forms of Knowledge

Explicit Codified in blueprints, designs,

drawings and specifications Knowledge of rationality (mind) Sequential knowledge (there and

then) Digital knowledge (theory)

Tacit Uncodified, kept in human brains Knowledge of experience (body) Simultaneous knowledge (here and

now) Analogy knowledge (practice)

“We know more than we can tell.”Polanyi, M. 1967

Categories of Tacit Knowledge

Hard to pin down skills-”know how” The skills that people need to repeatedly practice and feedback and get the

feel for them. Mental models or schema How we understand cause-effect connections and what meaning we give to

events. Ways of approaching problems Tacit knowledge underlines the decision trees people use. Organisational routine Routine refers to regular and predictable behaviour patterns, including

ways of producing things, ways of hiring and firing personnel, ways of handling inventory, decision-making procedures, advertising policy and R&D procedures, etc.

Relationship (notional hypotheses) between knowledge transfer and economic growth

Relationship between Knowledge Transfer and Economic Development

Demand for

knowledge transfer

Jiangsu

Henan

Xiangjiang

There are features of knowledge transfer that appear to be associated with levels of economic development. Certain aspects of knowledge transfer is paralleled by the notional line of economic development.

Relationship (notional hypotheses) between tacit knowledge transfer and explicit knowledge transfer

Relationship between Transfer of Explicit Knowledge and Tacit Knowledge

Need for tacit knowledge

Need for explicit knowledge

Levels of economic development

Xinjiang Henan Jiangsu

Need for knowledge transfer

There is more demand for tacit knowledge transfer in well developed region while there is more demand for explicit knowledge in less developed region.

Appropriateness and Effectiveness

“Knowledge transfer is not obtainable if there is too big gap in terms of

economic development between transferor and transferee.”

Result of Intimate Human Interaction in International Joint Ventures

Transfer of management know-how, explicit knowledge and tacit knowledge – Xiaolangdi experiences (Li-Hua, 2004)

Foreigner Local

Foreigner Local

Work patterns of dyadic interaction

Transferor

Knowledge

Explicit Tacit

•Conferences

•Meetings

•Seminars

•Training sessions

•On the job training

•Telephonic communication

•Social occasions

•Chance meetings at work

Explicit Tacit

Knowledge

Transferee

New knowledge is unlikely to deliver its full potential if it remains with the originators in an organization-it needs to be transferred to others.

Channels

Knowledge Transfer Process

Knowledge, in particular tacit knowledge that are the keys often to deliver the sustainable competitive advantage because it is this part that competitors have trouble in replicating.

To provide sustained competitive advantage, one needs tacit knowledge that is difficult for outsiders to copy as well as the ability to rapidly develop new knowledge.

Tacit Knowledge Transfer

Problem Area: Channel Blockage of Tacit Knowledge Transfer

Product

Organization

Technique

Knowledge

Tacit Knowledge

ExplicitKnowledge

No need to convert

Transfer

Need to convert

Technology

Channel blocked?Un-blockage ?IP strategy?

At institutional level: A strong IP framework and appropriate IP strategy are essential in achieving tacit knowledge transfer

However at personal level, the following elements are important:

1. Trust and friendly relationship building

2. Motivation of knowledge transfer

3. Share a vision of future and develop a knowledge-sharing culture

4. Be aware of motivators and barriers

5. Think globally and act locally

6. Effective and appropriate communication

7. Cross-culture team building

8. Deal with defensive mechanisms

Tacit Knowledge Transfer Is Achievable if

Un-blockage of Tacit knowledge Transfer

Our major concern is if technology transfer leverages the innovation capacity building, however the blockage of tacit knowledge transfer has to be properly addressed

Strengthening IP framework and appropriate IP strategy will accelerate the transfer of technology between the

developed and the developing and induce more technological innovation in the global

economy IP Strategy channels smooth technology transfer

Conclusion and Implication

Technology transfer presents both opportunities and challenges to the transferor and the transferee

It is not surprising that the channel of technology transfer is blocked due to fear of losing competitive advantage. However IP strategy is a key to un-block the channel

Without a strong IP system, technology transfer is not achievable IP strategy leverages economic growth and development in both developed

and developing countries It charts the strategic and operational guidance to achieve competitive

advantage not only for the transferor but also for the transferee Appropriate IPR strategy represents a solid foundation on which knowledge

economy can be built

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