Technology transfer is a complex process. The first question is appropriateness of a particular technology to a specific location. A technology may be unacceptable due to cultural, legal, social, physical and market-related conditions.
Second question is how to transfer (channels to be used). Third is about shifting of R&D operation to foreign locations. Next is how to maintain a technology-based competitive advantage over time. Another question is pricing.
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There is no standard pricing model and the price shall depend upon the bargaining strength of the buyer and the seller. An effective global market would encourage different prices in different countries. Many factors affect the technology transfer process. These can be classified into two categories as shown in Table 8.3.
Table 8.3: The Technology Transfer Environment:
| External Factors | Internal Factors |
| Economic Factors | Shortage of skilled personnel |
| Political Factors | Weak communication strategies |
| Infrastructural Factors | Lack of long-term planning |
| Cultural Factors | Inadequate feedback mechanisms |
External factors comprise of all the constraints of a nation’s business environment. Economic factors include demand and supply, competition, and general economic conditions. For underdeveloped countries an appropriate technology is the one with low initial cost, simple to operate and with minimum maintenance needs. Political factors include turbulence (the speed of change – rapid or radical), degree of predictability, and regulations (which may impede or encourage the transfer).
Infrastructural factors may include the availability of support systems (financial institutions, government departments and communication systems), the availability of skilled manpower, and diffusion systems (to link various parts of technological infrastructures). Cultural factors include the values and attitudes which may affect appropriateness of a technology, the learning process and above all the desire and degree of change.
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Internal factors affect the process of technology transfer internally. Professional managers, researchers and trained technicians are essential for adapting new technologies for local use. The extent of awareness about new technologies and their impact varies among developing countries. For example in bio-technology, public and media are both ill-informed of the genetically modified organisms.
A good number of firms do not have corporate strategy and hence, executives focus only on short-term survival. “Technology is fundamental to the three elements of strategic visioning. It provides the essence for developing insights into the products and processes of the future and it forms the basis for many of the company’s core capabilities (and hence competencies).”
The cost involved in acquiring and utilizing new technology requires resources. Lack of resources means to continue with the old technology and inefficiencies. But once acquired, the firm will always be ready to exploit opportunities for further technological transfer.
Technology is ultimately put to use not in laboratories, but in homes and schools, on farms and factories. A user’s ability to follow safety procedures determines whether the benefits of technology can be reaped or will be lost. But mechanisms for providing information to and gathering feedback from users may not be well developed.