Technology Transfer

As with technology itself, technology transfer plays a critical role in 21st-century international business. Instances of technology transfer have increased manifold with the advance of globalization. It occurs between companies within different countries as well as within firms, such as between subsidiaries of a multinational firm located in different countries. The technology transfer process impacts the major developments in the world today, including outsourcing, cluster formation, the product life cycle, productivity, and competitiveness.

Technology transfer is the process of sharing skills, knowledge, and methods, and creating and applying new products and processes. Technology transfer can occur between industries, companies, organizations, governments, or countries. Technology transfer should be distinguished from the diffusion of technology. Diffusion generally refers to the penetration into an economy of a given product or process without the expectation that the diffusion process will significantly alter the dominant design. The goal for diffusion of technology is to find markets and a distribution system that can deliver the technology to the markets. In contrast, technology transfer generally results in modification or reformulation of a design as a result of the different context into which the technology finds itself.

For example, when the early electrical systems developed in the United States in the late 19th century were transferred over to Europe, adaptations were made to the U.S. design in order to account for the different technical, economic, and social context that applied to the European context. Technology transfer also can refer to the relocation of research and development (R&D) projects and personnel to other companies and geographical locations for the purpose of creating new technology from the knowledge previously created in the home firm.

Reasons to Transfer Technology

The fundamental questions that surface when considering the technology transfer process are (1) What compels technology transfer in the first place, and what organizational instruments exist for effecting the transfer? (2) Can a given technology that thrives in one economic, technical, and social climate take root in another? (3) And if so, what forces determine the modifications to be made in successfully negotiating the transfer?

There are a number of reasons behind a company's decision to transfer technology to other companies and locations. These include the desire to share the costs and risks of innovation with a partner firm; the need to be close to critical raw materials, technical personnel, and specialized or hard-to-access markets; the opportunity to take advantage of subsidies and incentives offered by governments looking to entice foreign firms to settle in their countries; and strategic need to avoid high tariff barriers. Government restrictions and regulations can also slow technology transfer, or even stop it in its tracks; such is the case involving the recent trade dispute between the United States and the European Union (EU) over genetically modified seeds, or when the United States restricts the transfer of certain technologies overseas in the name of national security. Periods of geopolitical or civil instability, such as war, need not put an end to technology transfer (although it often does). It was during the French Revolution that important French chemical innovations found their way to England via dislocated refugees. Similarly, during World War II, European research in atomic energy traveled to the United States through scientist émigrés escaping Nazi persecution, eventually leading to the development of the Manhattan Project and the atomic bomb.

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