Review of the strategies for technology transfer in manufacturing sector

in developing countries
SHARF ELDIN HAMED AHMED
KHARTOUM DEVELOPING COUNTRIES
Sharafageed@gmai!"m
Keywords: Te!h#"$"g% &ra#'fer( ma#)fa!&)ri#g( &e!h#"$"g% &ra#'fer m"de$'( fa!&"r' effe!&i#g
&e!h#"$"g% &ra#'fer
Abstract. In todays manufacturing business the transfer of technology became the main building
pillar for innovation, efficiency and increased competitiveness, therefore the interest in the
profitable exploitation of a firms technological assets, through technology transfer, has
strengthened. Factors that have enabled international technology transfer in manufacturing sectors
include globalization of business and liberalization of the economic regimes of many countries.
These factors have collectively resulted in commercial transfer of technology becoming an
important element of the international business setting. The topic of technology transfer in the
context of manufacturing companies has been the focus of technology management researchers for
well over the last two decades. This paper will review the technology transfer in manufacturing
sectors in Developing ountries and determine the critical factors that had an impact in successful
transfer of manufacturing technology based on existing facts from literature, including boo!s,
publications, articles and statistics among others.
Introduction
Technology transfer is understood as the reception and application by a country of a technology that
was developed and deployed by another country. Technology transfer is essential in developing
countries, which usually lac! the capabilities and resources to self"sufficiently generate new
technologies.
There have been several effective outcomes from technology transfer in developing countries such
as #outh $orea, Taiwan, %alaysia and #ingapore.
The impact of technology transfer from international organizations on the receiving country is
determined by numerous factors, including the type of activity, existing production levels,
technological capabilities of the receiving country &including absorption capabilities', (uality,
availability of local resources, and the policies and activity of the local government.
Technology transfer is an area of attention not )ust to business, economists, and technologists but
also to other disciplines such as anthropology and sociology &*hao and +eisman, ,--.'.For
economists, as argued by %ansfield &,-/0', the focus is on economic growth and achievement of
economic goals. 1owever, from the perspective of business and technologists the main focus of
technology transfer is to improve the competitive advantage of firms through the enhancement of
customer value &+amanathan, .22,'. It is envisaged that, through the improvement of competitive
advantage, a firm and its partners collaborating in the technology transfer will gain financial and
other strategic benefits.
%anufacturing sector continue to grow, and the technology transfer culture is increasingly
becoming a center of the long"term achievement and competitive advantage &3dler 45undersen,
.226'. 3t the same time, the research on cross"cultural technology transfer has undergone
significant change. 7revious research in this field has exclusively discussed the various
characteristics relating to international technology transfer &e.g., 7a! 47ar!, .2289 :e
4;vangelista, .22/9 #azali, +aduan, <ega!, 41aslinda, .22-', stressing the importance of national
culture in the !nowledge transfer and technology transfer processes &e.g., Davenport 47rusa!,
.2229 1olden, .22.'.
Developing ountries has lately become one of the fastest growing economies in ;ast 3frica. To
reach this situation, the main challenge is how to establish, implement and maintain the great speed
of technological change in a circumstances where the volume for technological investment remains
inade(uate. Developing ountries has focused more attention on attracting direct foreign
investment in last two decade. %oreover, due to the increasing costs of production in Developing
ountries, push the manufacturing sector to invest in technology and technology transfer.
Technology Transfer Definitions
;ven though technology transfer is not a new business fad, the extensive literature on technology
transfer that has emerged over the years agrees that defining technology transfer is difficult due to
the difficulty of the technology transfer process &+obinson ,-669 #pivey et al. ,--/'. The
definitions depend on how the handler explains technology and in what context &hen ,--=9
>ozeman .222'. The term technology transfer can be defined as the process of movement of
technology from one entity to another &#ouder et al. ,--29 +amanathan ,--8'. The transfer may be
said to be successful if the receiving entity, the transferee, can effectively utilise the technology
transferred and eventually assimilate it &+amanathan, ,--8'. The movement may involve physical
assets, !now"how, and technical !nowledge &>ozeman, .222'. Technology transfer in some
circumstances may be confined to transferring and exchanging of personnel &?sman"5ani ,---' or
the movement of a specific set of capabilities &:und(uist .22@'. Technology transfer has also been
used to refer to movements of technology from the laboratory to industry, developed to developing
countries, or from one application to another domain &7hilips .22.'. In a very restrictive sense,
where technology is considered as information, technology transfer is sometimes defined as the
application of information into use &5ibson 4 +ogers ,--8'.
Technology Transfer strategies
>ehrens and 1awrane! &,--,', >ehrman en Aallender &,-/=', Dahlman and Aestphal &,-6,',
hantramon!lasri &,--2' and Teece &,-/=' provide similar process strategies for technology
transfer from industrially developed to industrially developing countries when a new facility is
established. To illustrate the stages in these strategies, >ehrman and Aallenders model &,-/=' will
be discussed. >ehrman and Aallender &,-/=B 0",8' identified seven stages for technology transfer
within developing countries when setting"up new manufacturing plants. The first three stages occur
earlier to start"up of the plant and include &,' initiation of plans for site location and planning of the
operation, &.' ma!ing editions to the product designs, and &@' design and construction of the
facilities. In the fourth stage, start"up activities, industrial engineering and training play an
important role and this re(uires often a substantial number of personnel from the parent. In value
engineering, the fifth stage, the focus of attention is shifted toward improving cost"effectiveness. In
the sixth stage, product development, and the seventh stage, external support, the capabilities of the
facility and its surrounding suppliers are improved. The last three stages of the approach deal with
continuous production management and the technology transfer, establishment of technology at a
new location, can be considered to have finished at stage four. >ehrman and Aallender &,-/=B ,8"
,-' furthermore focus on transferring !nowledge in these stages through mechanisms such as
sharing of documents, standard operating procedures, sessions, visits, and sending of e(uipment.
>ehrman and Aallender provide illustrations to show the amount of effort essential to transfer a
technology. For example, to establish of a Ford plant in #outh 3frica more than 0@ specialists were
directed to #outh 3frica &>ehrman and Aallender, ,-/=B 0.', around ,02 native people were
employed annually for the first couple of years &>ehrman and Aallender, ,-/=B =0' and to train
people for example for a supervisor position too! more than ,0 months due to low education levels
&>ehrman and Aallender, ,-/=B =/'. >ecause of the emphasis chosen, the strategies from >ehrens
and 1awrane! &,--,', >ehrman and Aallender &,-/=', Dahlman and Aestphal &,-6,',
hantramon!lasri &,--2' and Teece &,-/=' are primarily focused on multinational companies who
own and manage overseas operations and are setting"up new facilities. These strategies are not
sufficient to describe the technology transfer process between two existing companies.
$aplins!y &,--2', %iles &,--0' and %oustafa &,--2' use the perspective of an industrially
developing country. Their strategies describe similar stages. %oustafa &,--2' will be used as an
illustration. %oustafa &,--2' identified five stages. In the first stage, choice of technology, the
industrially developing country has to ma!e a choice among different technological options.
3ctions included in this stage are assessing current and future competitiveness of a firm, evaluating
the relative ris! of developing versus ac(uiring technology, assessing the rate of future changes in
technology, estimating potential return on investment in financial as well as in strategic terms on
micro and macro levels, determining economic and financial viability, preparing preliminary
engineering designs, and preparing technical specifications and evaluations. In the second stage a
channel for transferring technology needs to be selected. This can for example beB licensed
production, )oint"venture or wholly"owned subsidiary. 3fter these two stages the technology has to
be adapted to the local conditions in the third stage. During the fourth stage, integration of the
technology, the emphasis is on the manufacturing processes and assimilating the new technology
into the companys internal activities. The aim of the last stage, implementing and managing the
technology, is to see if there is a self"sustaining and successful on"going operation in place and to
manage this system. The strategies from $aplins!y &,--2', %iles &,--0' and %oustafa &,--2' use
the perspective of the receiving company but essentially ignore the sending company.
>ar"*a!ays &,-/.' technology transfer approach describes a structure of technology transfer
activities that precisely combines the technology sender and receiver. The framewor! has four
stagesB search, adaptation, implementation and maintenance. 3fter each stage a )oint"decision has to
be made whether to terminate the pro)ect or carry on. 7olicies and priorities are developed in the
search stage. Two criteria for continuing to the next stage areB compatibility of policies and
priorities, and personal compatibility. The adaptation stage starts with the formulation of a
technology transfer pro)ect or process. 3ctivities to be carried include learning about the
environments and evaluating the cost and feasibility. The ma)or )oint"decision criteria at the end of
this stage areB degree of consensus on feasibility and desirability, and cost effectiveness
commensurate with policies and priorities established in the search stage. The third stage covers the
actual transfer. The sender has to provide training and overcome resistance to change while the
receiver has to provide supporting elements and ensure bureaucratic support. The decision criteria
areB identification of problems that re(uire such changes in the technology transfer pro)ect that a
completely different pilot operation is called for, and identification of problems that cannot be
solved at the maintenance stage without excessive ris! to either recipient or to both. Finally, at the
maintenance stage, when the technology transfer pro)ect is in full"scale operation, the donor should
delegate authority to the recipient. riteria to evaluate the success or failure of the pro)ect areB
original expectations versus current performance, and net benefits.
:egg &,--,' studied potential technical, social and environmental problems that were li!ely to be
encountered during the implementation of a technology transfer agreement. :egg used an in"depth
approach to search for important factors in technology transfer pro)ects between the C$ and hina.
:egg found that the efficiency of a technology transfer process is influenced by technical system
factors &poor (uality of products and production delays', social system factors &for example s!ill
shortages' and external influences &for example government influence'. :egg &,--,B @2' identified
four basic stages in a technology transfer processB preparation for transfer, partner selection,
negotiations and implementation. 5rant &,--/' lin!ed the content and the process of international
transfers of manufacturing using the perspective of the sending company. 5rant differentiated
between host dependent and host independent characteristics of the manufacturing process to
facilitate the assessment of the relationship between manufacturing process and transfer
implementation activities. 5rant &,--/' identified four transfer implementation activitiesB
adaptation9 pac!aging9 resource, competence and capability building9 and support. 5rant and
5regory &,--/a' identified robustness and transferability as constructs to determine the ease of the
technology transfer process. 3 robust process can be transferred to any environment without
adaptation, and will fit the local conditions. The transferability of a process is its innate, host"
independent ability to be adapted, transmitted, and assimilated, within reasonable time and resource
constraints. 5rand and 5regory &,--/a' found that if the process is robust and transferable, it is
ideal for transfer. 3 non"robust and non"transferable process is the most difficult to transfer. It can
be concluded that most studies on technology transfer have focused on one or a few strategic
decision factor or on identifying a range of factors that influence the effectiveness of technology
transfer.
Summary
;ven though amount of studies on the strategies of technology transfer exist, only a limited of them
have combined the actions for both sending and receiving companies. This paper commenced with
an overview of technology transfer and then presented some important approaches and strategies of
technology transfer in manufacturing sector that have been developed over the decades to help firms
plan and manage technology transfer pro)ects.
References
3hamed, Tangir9 Tembach, %ichel >ri!9 Ives, 7aul. >est 7ractices for Technology Transfer of the
>iopharmaceutical %anufacturing 7rocess. Dorth ?lmsted &.2,,'.
>arbosa F and Eaidya $ 5 FDeveloping technological capabilitiesB The case of a >razilian steel
companyF, Technology %anagementB #trategies and 3pplications, ,--= Eol @, Do @, pp .6/".-6.
<agoda, $. and +amanathan, $. ritical #uccess and Failure Factors in 7lanning and Implementing
International Technology TransferB 3 ase #tudy from #ri :an!a, C.#.3 &.220'
Di!zad, +ashid. Transfer of Technology to anadian %anufacturing Industries Through 7atents.
anada &.2,.'
+amanathan, $. The polytrophic components of manufacturing technology. Technological
Forecasting 4 #ocial hange, &,--8'
Termsap Talela!ul. %anufacturing Industries and technology transfer in Thailand &.222'