Transfer of Technology

Technology and Transfer Mechanisms

The concept of technology transfer involves complexity and dynamism. Technology embodies machinery, tools, equipment, skills, and knowledge of personnel, technical information, organizational processes, and management practices. The interrelationships of these aspects of technology and the symbiotic integration of technology and the social, cultural, informational, and economic aspects of the organization are imperative for an effective transfer. Aggregated to the national level, the realization of the benefits of TOT is critical for economic development and international competitiveness.

Effectiveness of TOT is dependent on numerous factors, and technology is the central element of the framework. The technology life cycle model depicts technological performance trajectory as an S-curve, its logic related to the concept of technological paradigms, with theoretically defined limits of capabilities. A phenomenon that contradicts this theory was observed when mature technologies improved beyond the S-curve trajectory in response to the emergence of a new and better technology. Theory of learning and knowledge acquisition, such as stages of knowledge from art to science, in the context of process control, is relevant here. The emerging, progressing, and maturing stages are characterized by the evolution in the nature of the technology on the continua of codification, from tacit to codified; ambiguity, from high to low; and uncertainty, from high to low. Economists use the concept of stickiness of information or knowledge, and mature technologies are less sticky. Consequently, mature technologies are easier to assess, learn, integrate, and transfer. A basic principle is that transfer mechanism must fit the nature of the technology, from informal flow of uncodified know-how among individuals all the way to turnkey plants and complex equipment. A related theory of industrial evolution, on which the product life cycle model hinges, identifies the shift in the patterns of innovation from product focused to process focused.

TOT mechanisms are the nature of interaction between the technology provider and the recipient. Empirical studies suggest that noncodified parts of technology are not often traded because such firm-specific knowledge is of less importance in the perception of many technology recipients deterring the utilization of technology. The arms-length market mechanisms, such as licensing and subcontracting, are suited more for mature technologies, and progressing or emerging technologies are more inclined toward internalized mechanisms, such as foreign direct investment or strategic alliances. Both competitive and noncompetitive mechanisms carry the potential for yielding favorable benefits for partnering entities. The policy environment such as foreign investment and foreign exchange controls can dictate the choice between licensing and foreign direct investment mechanisms in international TOT.

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