Technology Transfer

Concept of Technology Transfer Technology transfer is a principle means of industrialization for underdeveloped nations. The transfer of technology from developed to developing country has grown considerably in last few decades. Acquisition of technology cannot be regarded as a neutral phenomenon . It is closely bound by the economic policy at both national & international level.

The irreducible constraints The irreducible set of constraints on the transfer of technology from R&D to product environment are: Performance Efficiency Frequency of operations Volume & weight Bandwidth, power dissipation Reliability Reliability is the maintenance of functionality(performance specification) over the life cycle. Cost Cost is calculated in terms of functionality i.e. cost per unit of performance.

Application Space In the R&D environment we talk of trade off between cost, performance & reliability. In the product environment the specification of cost, performance & reliability is determined by, and mapped onto, an application. This mapping process defines an “application space” having three independent axes(orthogonal). For a given application there is a minimum performance specification , minimum reliability specification and maximum allowable cost, this set constitutes a point inn the application space. The total market them is then the collection of all points in the application space. Any trade-off will define at best a new appilation ,at worst product will not match any existing application.

The experience Curve The experience curve reflects the evolution of unit cost with cumulative production volume. The experience curve, or cost-volume( C-V) curve, teaches that, unit cost declines with increase in cumulative volume.

Return on Investment To estimate return on investment we need to superimpose price on the C-V curve as shown below.

Return on Investment Initial price determined by market force is lower than cost. As producer moves down cost dips below price, profitability starts rising. A price reduction as shown in the figure may be due to competition or adaption of technology. Hashed line is for stable market.

Necessity for Technology Transfer First changing competitive environment To have competitive advantage. To be in a favorable situation than competitors. Strategies in business area are established in consideration with some fundamental factors and required conditions.

Technology Outsourcing Subjects of technology outsourcing

Technology Outsourcing Management environment factors that promotes technology outsourcing

Characteristic of Technology Assets that have economic value largely can be divided into tangible assets which have specific form . Intangible assets which does not have any specific form Technology to be transferred can be included in the intangible category. In wider sense it means entire intellectual property which has economic value. Planning and executing business strategies based on understanding of various characteristics of intellectual property is a short cut to business success.

Characteristics of Intellectual Property. Not visible and does not have any physical form. Recovery value is relatively high because of the limitation in creation and production due to the high level of intellectual origin. Evaluation and valuation is very difficult,and transfer price and conditions are determined by negotiations rather than market force. Life cycle is relatively short.

Motive of Technology Transfer In case where owner of the patent does not have the capability to execute and there are no problem in licensing to third party. Problem in developing a basic patent into a commercial product. Disposed for early recovery of R&D cost. Difficult to produce the finished good based on partial patent. Sales by specialized technology development Individual inventor raises research & invention funds.

Payment method of the sales price for Patents Methods where the sales price and the patents rights registration are exchanged. Methods of payment and receipt simultaneously with the notification of the completion of transfer. 3rd party such as banks.

Modes of transfer According to the International Code of Conduct on the transfer of technology(UN 1980) ,a number of distinct operationns may be identified, as follows: Assigning or granting of industrial rights. Handing over technical or non-technical know how in the form of documents,plans,diagrams and so on. The communication of technical or other know how in the form of supply of services. Providing technical services related to the selling or leasing of machinery

Modes of transfer According to Adeboye(1977) who bases his schema on UNCTAD(1975),wherein the transfer of technology can take place through one or more of the following means: Transfer of published material. Purchase of machinery, equipment and other intermediately goods. Transfer of data and personnel. Granting and licenses and trademarks. Direct foreign investment by transnational co operations. Technologists’ mobility Technological entrepreneurship Interpersonal communication.

Modes of transfer Baranson (1975) classifies these mechanisms into three principle modes licensing subcontracting Supply of equipments and materials.. Goulet adds consultant to the list proposed by Baranson.

Modes of transfer transferor transferee Linkage According to M.Sharif(1986) technology transfer is described as consisting of three elements transferor transferee Linkage Direct The operations of transnational companies Licensing arrangements Hiring of experts and contractors Training of technical staff abroad. Indirect Purchase of machinery , equipments, components Exchange of information Flow of books,journals Exhibition and trade fairs.

Modes of transfer UNCTC(1987) classifies technology transfer as Commercial FDI Joint venture Licensing Franchising Contracts(marketing , technical service) Non-commercial Review of technical publications Training of foreign students

Modes of transfer Two more mode of transfer identified as Conventional Non-conventional Reverse engineering(product imitation) Reverse brain drain FDI in industrialized countries Adopted by NICs

Transfer from advanced/industrialized economy Approach Cultural Difference Equipment Specification Team approach Planning Program focus and execution

Product/Processes Transfer Transfer Procedure Discovery of technology Technology valuation and demand selection Negotiation and contracting Packaging Marketing Post managment

Product/Processes Transfer Licensing Methods Exclusive license Non-exclusive license Sublicense Cross Licensing Package Licensing

Cost of Technology Transfer Direct Cost Indirect cost