Management of Technology (OM476) Technology Transfer April 10, 2006 S. Fisher

Agenda  Small group exercise  Variations of tech transfer Small inventor to market – who does the commercialization? Large firm to other firms Global tech transfer  Legal/contractual aspects to consider

Exercise  Review the case study  In small groups, consider the following questions: What is the best way to bring this invention to market? How would you advise the inventor?

Paths of Tech Transfer cc

Multiple Perspectives on Tech Transfer  Who is trying to transfer the technology to others? Why? What is their goal? What are their concerns?  Who wants to acquire the technology? Why do they want it? What are their concerns?

Technology Transfer Package oCore and peripheral technology (know-how and maybe know-why) oPermission or rights oHard goods (capital equipment and hardware) oSoft goods (documentation, computer packages, oral communications)

Modes of Transfer o Across firms – through a variety of purchase or lease mechanisms o Intra-firm transfer: joint venture or wholly owned subsidiary (spin off). o Government directed agreements or exchanges between either public or private enterprises.

Less Formal Modes of Transfer o Education, training, and conferences: dissemination of information is made public for either a general or specialized audience. o Pirating or reverse-engineering: access is gained at the expense of IP rights of the technology owners.

Transfer Goals of Multinational Enterprises (MNEs) o Expansion of markets o Access to strategic resources o Establishing a manufacturing platform for the region o Avoidance of environmental regulations

Transfer Goals of Multinational Enterprises (MNEs) (cont.) o Establishing a world product standard o Minimizing the learning curve o Avoiding tariffs o Preemption of competition

Transfer Goals of Less Developed Countries  Improving the economic, social and political climate of the country  Employment  Tax revenue  Balance of trade  Technology independence  Ticket for entering the international competition arena

Appropriate Technology (AT) oTechnology that reaps the benefits of both modern scientific advances and effective traditional practices Creates solutions that allow people to live comfortably and with a minimum impact on the environment. oAT practices are designed to be environmentally & resource conscious, harmonious with local conditions, promoting self-reliance.

Technology Inappropriateness  Needs/preferences of local markets and consumers not considered  Does not fit availability/skills of local work force  Requires more energy, water and scarce resources Roads Telecommunications Educational services

Technology Inappropriateness (cont.)  Capital equipment requirements cause drain on currency  Cultural variations between countries and culture-based differences of organizations  Technology not scaled to fit local market needs  Air, water and soil pollution

Examples of tech transfer to developing countries  Cell phones  The $100 laptop (One Laptop Per Child - laptop.org)

Other issues with tech transfer…  How to get paid?  Loss of control  Domestic content requirements  Countries want R&D as well  Cultural conflicts

Technology Transfer Contract Provisions  Territorial Coverage & Exportability  Agreement Life  Trademark Rights  Adaptation of the Technology  Grantback Provisions  Tie-in Provisions

Costs of Transferring Technology  Technical Cost (Direct and Overhead)  Legal Costs  Travel & HR Costs  R&D Costs(original and adaptation)  Opportunity Costs

Methods of Reimbursement For Technology Transfer  Front-end lump-sum fees  Royalties  Technical assistance fees  Payment in equity  Payment for supplies  Value of grantbacks  Tax savings

For next class  Last regular case – Siemans AG Team 8 presenting Team 4 – questions All others – exec summary  Second exam on Wed. April 19