Tambalamin Technology Transfer Global Innovation Final

POLYTECHNIC INSTITUTE OF NYU

Issues in Technology/knowledge

Transfer/ExchangeBetween

Developed and Developing CountriesGlobal Innovation

Tamba Lamin

Telecom and Information Management - Executive Masters Program

“Technology transfer is the process of sharing of skills, knowledge, technologies, methods of manufacturing, samples

of manufacturing and facilities among governments and other institutions to ensure that scientific and technological

developments are accessible to a wider range of users who can then further develop and exploit the technology into

new products, processes, applications, materials or services” Terry Moss, Eskom (South Africa)

Table of Contents

Abstract....................................................................................................................................................................3

POLYTECHNIC INSTITUTE OF NYU – GLOBAL INNOVATION – TELECOM & INFORMATION MANEGEMENT Fall 2009

SECTION I - Summary of key points.....................................................................................................................3

Literature Review................................................................................................................................................4Definitions of Technology...............................................................................................................................4Definitions of Technology Transfer................................................................................................................4Definition of Knowledge.................................................................................................................................4Knowledge Transfer........................................................................................................................................5Methods and channels of Technology Transfer:.............................................................................................5Foreign Direct Investment (FDI).....................................................................................................................6The Multinational Corporation (MNC)...........................................................................................................6Joint Venture....................................................................................................................................................7Licensing Agreement.......................................................................................................................................8

Movement of People............................................................................................................................................8SECTION II - Summary of technology transfer case studies..................................................................................8

Making a contribution to the health sector in Ghana.......................................................................................8Butane Gas Stove in Senegal...........................................................................................................................9Bamboo Fiber Reinforced Cement Board for Carbon Sequestration..............................................................9The Commercial Dissemination of Photovoltaic Systems in Kenya...............................................................9ROK-5 Mangrove Rice Variety in Sierra Leone...........................................................................................10Research, Development and Commercialization of the Kenya Ceramic Jiko (KCJ)....................................11

Summary of lessons learned from the Case studies...........................................................................................11SECTION III.........................................................................................................................................................12

The relationship between technology transfer, R&D and innovation strategies...........................................12The Pros and cons of technology transfer..........................................................................................................13

Implications for firms....................................................................................................................................14Benefits and Challenges of Technology Transfer.............................................................................................16

SECTION IV.........................................................................................................................................................18

Typical Channels of technology tranfer...........................................................................................................18Recommendations to stake holders of developing countries.............................................................................19

Works Cited...........................................................................................................................................................22

Website References...........................................................................................................................................26

Abstract

Successful technology transfer from developed to developing countries can improve the lives of many and spur

economic growth. It is known that technology transfer is a great issue of concern for companies, educational

institutions and governments. Developing countries are in need of new and matured technologies to help them

compete in the global market place but this cannot be accomplished without properly planned knowledge and


technology transfer processes put in place. Over the years developed countries of the world have invested

millions of dollars to achieve technology transfer through government funded research & development (R&D)

projects, universities, private and public companies for commercialization. Developing countries on the other

hand have been busy trying to adopt matured technologies instead of the transfer of technologies to expand and

produce new innovative products and solutions. During my research, I find out that one of the keys to delivering

the most competitive advantage to companies or governments in developing countries pursuing a knowledge or

technology transfer strategy lies in the ability to unlock tacit knowledge from the donating company or

government. “Tacit knowledge is very difficult to quantify but can be transferred if an only if there is

appropriate communication and trust between the parties involve” Li-Hua (2009). Developing countries like

Senegal, Kenya, Colombia, Indonesia and Ghana has been able to successfully transfer technologies through the

migration and development of native skilled workers with industry experience from developed countries,

foreign direct investments, and joint ventures in R&D projects.

The first section of this paper will review literature on technology and knowledge transfer, methods & channels

of transfer. Section two will provide excerpts of successfully technology transfer case studies followed by

section three which will address the relationship of technology transfer to R&D and innovation strategies, the

pros and cons of technology transferthe process of technology transfer between developed and developing

countriesmplications for firms. The final section will suggest methods for a successful technology tranfer

process and make recommendations to stake holders of developing countries.

SECTION I - Summary of key points

Technology and knowledge transfer has been a great challenge for most developing countries especially those

in Africa and this is due in part to the lack of adequate road & transportation networks, poor information and

communications technology infrastructure, limited number of science and technology institutions of learning,

poor relationships between private, public companies and universities, political instability and the inability to

successfully transfer, adapt, and diffuse new and matured technologies from developed countries.

Literature ReviewThe major terms and concepts used in this paper are technology, technology transfer, knowledge and knowledge

transfer. These terms have different definitions but similar meanings to different people working in different

fields of life. I have attempted to put together some of the definitions used by scholars in other papers


Definitions of Technology

(Megantz, 2002), suggested scientists defined technology as the end product of research, inventions and know-

how that may be developable into a commercial product while engineers defined it as a tool or process that can

be employed to build better products. In another definition of technology its viewed as the technique used by

mankind and machine to support daily activities and this technology can be used at work or home. It was also

defined as a collection of theoretical and practical knowledge and skills that are used by firms to develop and

produce goods and services (P.K.De, 2004).

Definitions of Technology Transfer

According some scholars, technology transfer is usually considered the basis for technical innovation and often

it’s the after-effects in a form of innovation diffusion. It can also be defined as an inflow of technical knowledge

to the market where it is sold and bought (Andrzej, 2005). Other scholars and researchers have defined

technology transfer as a process in the following forms. For example, According to (Jasinski, 1999), technology

transfer exists in the following main forms; the sale or purchase of the result of a research & development

(R&D) work, the turnover of licenses and patents, the utility models, know-how, sales and purchase of

production techniques and means of automation, the technological consulting and technical training of staff and

the exchange of technological information.

Definition of Knowledge

Ganesh (2000) defined knowledge as an organized combination of ideas, rules, procedures and information.

Knowledge and information can be mistakenly considered to be the same, but they are different according to my

findings. (Koniger and Janowitz, 1995) argued that information is disorganized, while knowledge is organized.

Knowledge is more meaningful and richer than information and knowledge could be gained when information

is acted upon. Davenport and Prusak defined knowledge as “a fluid of framed experience, values, contextual

information, and expert insight that provides a framework for evaluating and incorporating new experiences and

information”. Within a firm, knowledge is the most valuable resource because it embodies intangible assets,

routines, and creative processes that are difficult to imitate (Grant RM, 1996 & Liebeskind JP 1996). It must

also be noted that experience increases knowledge which can be difficult to transfer. In other words experience

is tacit knowledge and this is why tacit knowledge has been the key interest of knowledge management.


Knowledge can be divided into tacit and explicit knowledge; “Explicit knowledge can be articulated into formal

language, including grammatical statements (words and numbers), mathematical expressions, specifications,

manuals, etc. Explicit knowledge can be readily transmitted to others and easily processed by a computer,

transmitted electronically, or stored in databases” (SOS.NET). “Tacit knowledge on the other hand is personal

knowledge embedded in an individual’s experience and involves intangible factors, such as personal beliefs,

perspectives, and a value system. It’s hard to articulate with formal language but not impossible. It contains

subjective insights, intuitions, and hunches. Tacit knowledge can be easily communicated when it’s converted

into words, models, or numbers that can be read and understood by others. In addition, there are two dimensions

to tacit knowledge: technical and cognitive dimensions” (SOS.NET)

Knowledge Transfer

Knowledge transfer can be defined as the process through which an organizational unit is affected by the

experience of another (Argote and Ingram, 2000). According to (RCUK 2006), knowledge transfer means the

two-way transfer of ideas, research results, expertise or skills between one party and another that enables the

creation of new knowledge and its use in; the development of innovative new products, processes and or

services and the development and implementation of public policy. (Sveiby 1997), argues that two main

perspectives can be adopted in modeling knowledge transfer: knowledge can be viewed either as an object,

which can be directly observed, stored and successively reuses and transferred, or as a process i.e. a flow of

interacting changes taking place in people who learn.

Methods and channels of Technology Transfer:

Technology and knowledge is normally transferred between developed and developing countries through

Foreign Direct Investment (FDI), Joint Ventures, Multi National Corporation (MNC), Licensing Agreement,

and movement of people.

Foreign Direct Investment (FDI)

Base on current statistics, FDI have been a channel for technology transfer approved by many authors

because of its direct impact on economic development and low cost of transfer. But the choice of choosing what

method to channel technology depends on the developing countries market size, market growth, the threat of

imitation, availability of basic infrastructure and the Intellectual Property Rights (IPR). For developing

countries to acquire technology through Foreign Direct Investment there should be lots of skilled and semi-

skilled workers and at least a strong IPR protection to attract investors from developed countries. These basic


necessities will increase the level of tacit knowledge absorption. FDI is actually a measure of foreign ownership

of productive assets; factories, mines and land in a country and can be used as one measure to economic

globalization. It must be noted that the largest flows of Foreign Direct Investments occur between developed

countries; North America, North West Europe and Japan. But flows to developed countries are increasing

gradually as most of them are catching up with technological advancements. Who is a foreign direct investor?

Anyone can become a foreign direct investor. Usually, it’s an individual, a group of related individuals, an

incorporated or unincorporated business, and a public or private company, a group of related enterprises, a

government body, other societal organization, or any combination of the above. FDI can also occur through

mergers and acquisitions and equity joint ventures. Developing countries usually develop strategies to improve

FDI through incentive programs. They may take the following forms; low corporate tax and income tax rates,

tax holidays, preferential tariffs, special economic zones, investment subsidies, soft loans and loan guarantees,

free land or land subsidies, relocation & expatriation subsidies, job training & employment subsidies,

infrastructure subsidies, R&D support, and derogation from regulations for very large projects. Developing

countries can only benefit from FDI is they develop a strategy with incentive programs and market their

incentives using traditional and nontraditional media to gain global attention.

The Multinational Corporation (MNC)

“A MNC or Transnational Corporations has facilities and other assets in more than one country other

than its home country. Such companies have offices and/or factories in different countries and usually have a

centralized head office where they co-ordinate global management. Very large multinationals have budgets that

exceed those of many small countries. Almost all major multinationals are American, Japanese or Western

European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW”. (Investopedia, 2009). Some

advocates of multinationals claimed that they create jobs, wealth and improve technology in developing

countries that are in need of such economic development. But other critics say they can have undue political

influence over governments of developing countries, and hence can exploit these nations as well as create job

losses in their own home countries.

MNC transfer technology and knowledge through expatriates. According to (Dana & Snejina 2004), the

more MNC’s use expatriates for temporary assignments less than a year, the greater the expatriates’ ability to

transfer knowledge while the more the MNC uses expatriate for long-term assignments more than one year, the

greater the willingness to transfer knowledge. (Haris 2002) argued that, expatriates’ with long-term assignments

are critical for skill transfer, management control and management developments while expatriates’ with


temporary assignments are used mainly for skill transfer. For example, IBM a Multinational IT giant has just

opened an Africa Innovation Center in Cape Town to foster the development of information technology and

business skills, and to expand its customers and business partners in the region. This is the second of two

centers in sub Saharan African owned and operated by IBM with goals to help local businesses develop and

deploy new technologies that support key digital infrastructure opportunities in government, banking, insurance,

retail, and travel and transportation industries. The centre is providing local customers, business partners, start-

up companies, independent software vendors, IT professionals and the academic community with access to

training workshops, consulting services, a broad technical infrastructure, and hands-on assistance to help solve

business challenges and bring new technologies to market. (www.southafrica.info). the establishment of these

two centers will improve ICT and its related technology and knowledge transfer in the sub Saharan region of

Africa. Cape Town and Johannesburg where chosen for the centers because they are technological advance in

terms of infrastructure and density of local and foreign skilled workers. If all other developing countries have

similar infrastructure in place, Multinational Corporations will be encouraged to open new branches and centers

to expand their portfolios.

Joint Venture

Joint Venture typically involves less risk than strategic alliances, acquisitions or financing subsidiaries.

And they tend to be more common, as skills, attributes and resources are sought through mutual business

objectives (Czinkota et al, 1994). With joint ventures, companies can pursue common business-related

purposes, use harmonizing technology or research techniques, increase capital and bargaining power, extend the

risk of scale; and surmount entry barriers gaining market share and therefore power (Boyett and Boyett, 2001;

Linklater and Paines, 1990). The expansion of joint venture in any economy leads to Multinational Corporation;

therefore encourages technology and knowledge transfer. (Mowery et al 1996) argued that joint venture is a

superior means to enhance a firm’s positioning through capability learning and knowledge transfer.

Licensing Agreement

A License is a contract which authorizes the use or exploitation of the subject matter of the license for a

specified purpose and period of time with all other right maintained by the owner of the technology (Thomas,

1998). He also argued that companies wishing to expand into the international arena are finding that licensing or

transferring their technology provides a low risk and highly profitable alternative to direct export, establishing a

foreign branch, subsidiary or joint venture. These arguments by Thomas can only benefit the recipient and not

http://www.southafrica.info/


the donor at the long run. The reason for technology transfer is to benefit both parties and at the long run, the

donor should be independent of the technology gained. The motivation for licensing of technology and product

could be for the penetration of the international market. Companies are willing to license their technology to

countries where they do not have penetration through export or direct investment and also selling of their

product. Countries willing to embark on technology transfer through licensing must be sure of the credibility of

the licensors and their willingness to transfer technology.

Movement of People International movement of people associated with nationals studying or working abroad for a limited period and

applying their new knowledge when they return, or the inward movement of foreign nationals into developing

countries is another potential channel for technology transfer. A challenge for developing countries is to

facilitate temporary movement abroad and to encourage returnees to undertake local research and business

development.

SECTION II - Summary of technology transfer case studies

Most of the case studies summarized in this section where selected within 30 case studies included in a

special report titled “Methodological and Technological issues in Technology Transfer” published by

Intergovernmental Panel on Climate Change (IPCC) online.

Making a contribution to the health sector in Ghana

“According to the International Organization for Migration (IOM), Ghana faces a severe brain drain of professional health workers, such as medical doctors and nurses. For this reason, IOM launched the Migration for Development in Africa (MIDA) Ghana Health Project in cooperation with the Ghanaian Ministry of Health and the Dutch Embassy in Accra. “The objective of the project is to contribute to the development of the health sector in Ghana”. They implemented two methods; Ghanaian and other African migrants living and working in the Netherlands, the United Kingdom, Germany and other EU countries transferred knowledge, skills and experiences through temporary assignments in Ghana. On the other hand there is the possibility for Ghanaians to travel for professional training to the Netherlands or the United Kingdom. Ghana I & II phases were successful and hence IOM in April 2008 started MIDA Ghana phase III project. The project aims to contribute to the strengthening of human resource development in the health sector through medical knowledge transfer”

Butane Gas Stove in Senegal

“This case involved the French companies Total, Totalgaz, the government of Senegal, the European Development Fund, about 50 distribution companies, and local communities. The consumption of fuel wood was leading to deforestation and desertification in Senegal. But the introduction of butane as a household fuel with a suitable energy efficient stove helped to turn the tide. Totalgaz was a leader in the Liquefied Petroleum Gas (LPG) market. The Senegalese Government subsi -dized the use of butane gas and waived a levy on bottles or accessories. The European Development Fund financed the


three years Regional Gas Program and also financed the training of workers in the region from 1989 to 1992, with more than US$ 14 million. As a result of this financing, the retail distribution flourished. Butane was selected as the effective fuel because it was cheap and easy to transport. Total designed a new stove, which was simple to use, stable, cheap and met all the cooking requirements. The unit cost in 1993 was the equivalent of US$ 16. This new gas stove, 'Nopale', was a success and is now an everyday part of the Senegalese way of life. This case demonstrates how technology cooperation al-lowed the government of Senegal to diversify energy sources as well as protect the environment through technology trans-fer from France to Senegal. LPG is now widely used as the domestic fuel in place of wood and charcoal, reducing defor -estation. Charcoal consumption of 400,000 tons a year was reduced to about 100,000 tons a year due to the butane pro -gram, saving 20,000 hectares of Senegalese forests. Supply of LPG in the 6 kg bottle became a main activity of Totalgaz in Senegal. Sales of Nopale cooking gas rose from 402 tons in 1983 to more than 22,360 tons in 1994. The bottles and the burners for the Nopale were imported, but stands were made locally to reduce costs. The butane program produced pro-ductive partnerships with local people and led to more job opportunities”.

Bamboo Fiber Reinforced Cement Board for Carbon Sequestration

“Cement board has become a standard construction material in the tropics. The mixing of cement with mineral fibers or synthetic substitutes has evolved into a major industry. Taiheyo Cement, the second largest cement producer in the world, invested in a special research program in association with the Zero Emissions program to substitute the mineral and synthetic fibers with natural ones. This has now been successfully implemented. Researchers identified bamboo-specific fungi that would eliminate all sugars after crushing the bamboo. This process saves water and offers a good quality fiber with no residual sugars. The blending of 50% cement with 50% bamboo fibers reverses the carbon dioxide balance. Since the cement board has an expected life of 30 years, the fast growing species like Bambusa vulgaris offers a unique opportunity for the construction industry to adhere to the Kyoto Protocol. The research was undertaken in Japan, but the first pilot plant was located in Java, Indonesia, just one hour outside Jakarta. The proximity to a cheap and abundant supply of bamboo is critical in the financial viability of the operation. On the basis of this first experience, an improved version of the production technology has been obtained. A second factory is now being planned in Manizales, Colombia, the centre of bamboo forests in Latin America. This permits the fast and pragmatic transfer of technologies developed in Japan to be fine-tuned in Indonesia and then transferred to Latin America”.

The Commercial Dissemination of Photovoltaic Systems in Kenya

“The commercial market for solar photovoltaic (PV) home systems has been active in Kenya for over 10 years. Over 80,000 solar home systems (SHSs) have been sold, providing power to over 1% of the rural population of roughly 25 mil -lion people. The Kenyan PV market evolved without subsidies or significant government or multinational agency support, although the activities of several private and volunteer organizations helped to disseminate information on photovoltaic and provide opportunities. Today dozens of companies are active in the PV industry in east Africa, and annual sales may exceed 20,000 - 30,000 individual systems and over 300 kWp (Msinga et al., 1997). USAID, GTZ, Care and Bellerive foundations were instrumental in the development and dissemination process of cook stoves. A key aspect of the dissemi -nation process for photovoltaic in Kenya is the degree that it has been market driven, and thus the 'approach' taken is best described as 'market realism'. Initially, most systems were relatively large, and, as noted above, either donated or pur -chased by rural elites”.

“A recent survey of over 400 households (Msinga et al., 1997) found that while the mean income was US$108/month, three-fourths of the system owners earned less than US$100/month, which is close to the national average. Recently the average system size had decreased from over 40 WP to about 20 WP; including the sales of large numbers of 12-14 WP packaged systems. Expanding interest in SHSs in the late 1980s and early 1990s was accompanied by a change in the re -tail network and the development of a diverse regional network of assembly, sales, installation, and maintenance busi-nesses. While solar panels are still imported, local companies now manufacture batteries for use in PV systems, and the


'balance-of-system' (electronics, charge controllers, lights and outlets, and other components) is assembled or manufac-tured in Kenya. Local agents now sell over half of all modules, and three-fourths of the PV batteries. Sales of SHSs in Kenya have been increasing at 10 - 18% per year, and this trend is expected to continue.”

“PV systems have had a significant impact in Kenya and East Africa. Surveys indicate that most of the systems (> 60%) were performing well, with the majority of the remaining systems not in use because the battery had no charge (Acker and Kaman, 1996; Msinga et al., 1997). Most users purchased PV for the combined services of lighting, TV, and radio, and were pleased with the systems and would recommend them to others. In many locations the PV systems are simply cheaper than the kerosene, diesel or other alternatives, and in virtually every case the service provided by the SHS is su -perior in quality and reliability to these alternatives. The PV experience in Kenya has also proved to be an important model for SHS introduction efforts in other developing nations (Cabraal et al., 1995), and Kenya as well as a number of other nations is now the target for international aid and development funding to expand the markets for rural PV in devel-oping nations. Kenya has also become the focus for a regional PV market that extends into neighboring nations, as well as to other regions of Africa.”

ROK-5 Mangrove Rice Variety in Sierra Leone

“The development of a new mangrove rice variety in Africa is an important case study of technology development and dif -fusion that relates to the opportunity for agriculture to contribute to increased output of food while at the same time re -ducing the impact of agriculture on global climate change per unit of food produced. This development involved both in-ternational cooperation and a critical commitment of local resources to be successful and has proved itself to be an im -portant contributor to increasing rice production in Sierra Leone with important potential contributions to similar areas in Africa. This project developed and extended a rice variety for mangrove rice production that increased yield per unit of land and per unit of inputs as well as adapting to changes in climate that had already occurred. The diminishing rain for-est resulted in less rainfall and in a reduction of the fresh water available to mangrove rice systems. Thus, a shorter-sea-son variety to capture available seasonal rainfall was a logical potential adaptation. Pest resistance was also added which reduced energy consumption from the use of pesticides. The incentive for this was a national and regional concern over adequate food production. The path used was the development of a new rice variety to improve yields and reduce the level of inputs required. Stakeholders included consumers and farmers in Sierra Leone, Sierra Leone agricultural re-searchers at Rokupr, and the West African Rice Research Development Association (WARDA). Critical to the choice of this path was the farming systems research which had been carried out years earlier. This identified the problem, pro -vided an understanding of mangrove rice farming systems, and described the parameters under which new technology would be successful and successfully transferred. The barriers to technology transfer included a civil war, a collapsed transportation system, no capital for investment, and the lack of government resources to mount a large-scale technology transfer effort.”

“Much of the success of this effort hinged on the accident of a critical mass of researchers at the government rice research station in Rokupr Sierra Leone and the interest of WARDA in this effort. The impact was an increase in rice out-put from mangrove rice production where climate change was beginning to reduce yields from this agricultural resource. This lead to improved conditions for farmers and more rice available beyond farm-family subsistence for distribution and sale to local consumers. This case is replicable, but the key was the existence of local research and development capacity such as the Rokupr rice research station with a critical mass of competent staff. (Due to civil war, this institution is no longer a viable operation.) Its viability was also a result of the willingness of WARDA to give it the marginal resources to do the job that the government of Sierra Leone was unwilling or unable to supply.”


Research, Development and Commercialization of the Kenya Ceramic Jiko (KCJ)

“The Kenya Ceramic Stove, or Jiko (KCJ), is a charcoal-burning stove that is roughly 30% efficient, and if used properly can save 20 - 50% in fuel consumption over simple 'unimproved' stoves or a traditional three-stone fire (Walubengo, 1995). The KCJ was developed after study of a Thai 'bucket' stove that was examined partially through a 'South-South' di-alog over stove characteristics and design. There are now more than 200 businesses, artisans, and micro-enterprise or in-formal sector manufacturers producing over 13,000 stoves each month. There are over 700,000 KCJ's in use in Kenya (Walubengo, 1995). The KCJ is found in over 50% of all urban homes, and roughly 16% of rural homes. Stove models adapted from the KCJ are now being disseminated in many countries across Africa, and wood-burning variants are being introduced and promoted in rural areas as well. The fuel savings of the KCJ have important economic benefits to the users, who in some cases devote a quarter of family income to charcoal purchases (Kammen, 1995).”

“The KCJ is the result of research on stove design, efficiency, and patterns of usage initiated in the 1970's and actively continued through the 1980s (Barnes et al., 1994; Kammen, 1995). A single private sector company, Jerri International, served as the initial manufacturer of the KCJ. Since 1982 the Kenya Energy and Environment Organization (KENGO) has organized promotion and outreach efforts to encourage the use of the KCJ. A number of NGOs and national develop-ment agencies have played important roles in the evolution of the stove and the stove dissemination process, and have worked both within Kenya and across sub-Saharan Africa to promote the manufacture and sales of the KCJ through a network of informal-sector stove entrepreneurs. A decision was made not to directly subsidize commercial stove produc-tion and dissemination. Initially stoves were expensive (~ US$ 15/stove) sales were slow, and quality control has been a significant problem. Continued research and refinement and expanded numbers and types of manufacturers and vendors increased competition, and spurred innovations in materials used and in production methods. The KCJ can now be pur-chased in a variety of sizes and styles. Prices for KCJ models have decreased to roughly US$ 1 - 3 (Walubengo, 1995). This decrease is consistent with the 'learning curve' theory of price reductions through innovations that result from expe-rience gained in the manufacturing, distribution, marketing and sales process. Two architects of the stove program re-ceived an international award for their work, which is an important recognition for the need for research on often unher -alded but important technologies. The ceramic liner of the KCJ degrades over time, and needs to be replaced. Street ven -dors of stoves and many of the larger stove sales outlets take 'used' stoves back, discounting the purchase of a new stove. The liners of the old stove are then removed, the metal cladding is repaired, if needed, and the stove is reassembled, re -painted, and resold. This process has also served to foster wider informal sector stove economy.”

Summary of lessons learned from the Case studies

Support for certain technology or knowledge transfer projects doesn’t need to take the form of direct subsidies.

For successful technology transfer there must be locally-based and supported institutions with a primary stake

in the technology and in its successful transfer. The development of technology also depends upon a degree of

civil order and investment by the local government in technology development and transfer. The key lesson

learned is that if there is an essential need and the technology is good enough agriculture technology can be

transferred by farmers without new formal technology transfer institutions or efforts. In cases like this, interna-

tional resources must involve and contribute to the national program to ensure appropriateness and transfer

based on local ownership and local institutions that are already trusted in technology transfer.


Second, subsidies are not necessarily needed to promote technology transfer, although logistical support, train-

ing courses, and performance standards all have central roles that require policy attention and commitments of

resources. Technology transfer from a developed country partner to developing countries will be successful if

the technology is wanted by the recipient countries.

SECTION III

The relationship between technology transfer, R&D and innovation strategies

R&D generally comprises any creative work undertaken on a systematic basis in order to increase the

stock of knowledge, including knowledge of man, culture, society, and the use of this stock of knowledge to

devise new applications, products, services and solutions for public, private good and commercialization

purposes (www.arc.gov.au/general/glossary.htm). In its simplest form, it can be defined as all research

activities, both basic and applied, and all development activities that are performed by research institutions and

public and private funded research centers (www.fau.edu/research/ocg/procedures/files/sc-definitions.doc).

In developed countries like the Unites States, technology and knowledge is generally transferred from

R&D centers to companies or government for commercialization which results into an end product, service or

solution. The figure below schematizes how technology is transferred from R&D centers to the end users. It

must be noted that over 50% of fortune 500 INCs in the United States and the world have their own R&D

centers. Some of these companies also collaborate with the few top research institutions in research and

development projects. This means technology transfer, R&D and innovation strategies are inter-twinned and

one cannot exist without the other in the company or government pursing this strategy wants to succeed. In

developing countries, the case is different.

Figure 1: The process of technology transfer in developed countries

R&DCommercializa

tion

Production

Deployment/

Diffusion

Developed countries Manufacture

rs

http://www.fau.edu/research/ocg/procedures/files/sc-definitions.doc

http://www.arc.gov.au/general/glossary.htm


In other for developing countries to successfully achieve technology transfer, factors such as good

investment policies, basic infrastructures, good information and communication technology infrastructures, and

support for the establishment of public research and development centers will need to be put in place (Li-Hua

2009). Some developing countries have tried to encourage foreign investment participation in their countries

over the years, but these have been very difficult especially due to the lack of political stability and skilled

labor. Those countries that have succeeded in attracting few foreign investments still lack the successful transfer

of technology from foreign companies to indigenous companies which is due in part to the lack of government’s

participation and partnership with universities and research & development projects. University and R&D

projects are usually not well funded by governments in developing countries and the relationship between

companies and universities is very weak or non-existence. It must also be noted that most developing countries

believe in technology adoption than technology transfer. Very little efforts have been made by companies and

governments to invest in technology transfer projects and this is because; they want a quicker way of gaining

the technology instead of going through the process of transfer which usually takes a little longer to be

achieved. In my opinion, developed countries will be willing to set up manufacturing and R&D facilities in

countries with strong Intellectual Property Rights (IPR) and well advertised investment incentive strategies as

opposed to those without. But in contrary to this, some authors’ belief that weaker patent protection may be

desirable for technology transfer in developing countries and this in their view allow indigenous companies to

produce and compete with foreign companies. (Li-Hua 2009). (Prabuddha 2004) argued that the treatment of

intellectual property among other policy instruments is an important factor on a country’s ability to attract R&D

investment from Multinational Corporations (MNCs)

The Pros and cons of technology transfer

because it’s the opposite of the globalization approach that many industrial-goods manufacturers based in

developed countries have employed for decades (Immelt, Govindarajan, and Trimble 2009).

mplications for firms

Because of the limited size of internal markets and early stages of industrial development most international

firms experience particular difficulties in developing countries. This coupled with forced industrialization and a

general tendency toward economic nationalism policies also make it difficult to invest or transfer technology

into developing countries. Most developing countries also generally lack the full range of skilled human

resource capacity needed to run successful manafacturing operations. It is also very known that some of these


countries insist on national ownership and have strigent staffing requirements which often inhibits even the

interim use of foreign technicians in vital areas of plant operations and in local procurement policies of

protection and high domestic content it also create serious problems. Some scholars argued that most recently,

governments in developing countries have been mandating local manufacturers to produce for export markets,

which places an even heavier burden on technology transfer agents in terms of quality and cost competitiveness.

Exchange controls associated with industrilization policies, remitting equity earnings or royalties and licensing

fees and balance-of-payment difficulties also add to the problem of running plants in developing countries.

Recipient firm’s characteristics

One of the major factores in considering whether to enter into license arrangement as an alternative to direct

investment is the technical absorptive capability of the recipient firm and its potential in competitive markets

For example, licensing arrangements are often preferred with industrially-advanced partners, because of the

ease of transfer coupled with the advantages of cross-licensing. Direct investment is sometimes preferred in

underdeveloped countries because of the uncertainties and added difficulties in imparting technology in those

areas. Donor firms are also more willing to disclose technical know-how to less sophisticated partners in

devoloping countries than they are to industrially-advanced firms, which may eventually become serious

commercial rivals in third markets. Where the donor firm has a strong technological lead and a dynamic R&D

program to maintain that lead, this consideration may be less important (Immelt, Govindarajan, and Trimble

2009).

Donor firm’s characteristics

The transfer capability, financial position, and corporate philosophy of the donor firm are among the decisive

factors influencing licensing-investment decisions. International firms may realize returns on their technological

assets in a variety of ways; dividends on equity investment, sale of components and parts, royalties, licensing

fees , and technical assistance fees. Direct investment involves the commitment of financial and managerial

resources to which there are limits, even for the largest corporations. For example, in the automitive field,

international firms have had to devlop low-cost systems to package and ship components and provide cadres of

managers and technicians to staff overseas assembly and manufacturing operations in newly industrializing

countries. Even straight licensing arrangements often require commitment of managerial resources and the

development of new corporate capabilities, if product standards are to be maintained internationally. Corporate

views on how to maximize long-run profits (cost of developing transfer capabilities as against benefits from


licensing versus direct investment) having a strong bearing upon the chosen transfer mode. Certain firms view

technology as an intgral part of their marketing-manufacturing package and insist on full ownership and control

to maximize international profit (Immelt, Govindarajan, and Trimble 2009).

Conflicting interests over licensing versus investment choices

International firms prefer direct investment to licensing where;

(a) The financial and human resources are available

(b) Control over present and future market development is desirable, particularly with products and

techniques having a longer life circle

(c) The firm fears licensing will result in the give-away of valuable know-how or will threaten its position

in established markets

(d) The transfer involves a broad line of products or is an integrated part of marketing and financial

management

(e) The technology is highly complex or the foreign affiliate lacks industrial sophiscation and the transfer

requires a prolonged and sustained relatioship to effect the transfer or

(f) There is a concern over protecting the product standards or trade name. also, for U.S. firms, transfer to

controlled subsidiaries avoids most antitrust aspects entailed in licensing to third parties

(Immelt, Govindarajan, and Trimble 2009).

Benefits and Challenges of Technology TransferThe challenges of technology and knowledge transfer have over the years been a great concern to researchers.

Because of the closeness between these two elements, their challenges are almost similar. (Samli 1985), model

the pattern of technology transfer into six dimensions: geography, culture, economy, business, people and

government, while (Egbu 2000), looked at knowledge transfer in six dimensional ways; people, content, culture,

process, infrastructure and technology. These shows that the challenges and benefits of technology and

knowledge transfer are similar and that one cannot do without the other. One of the benefits of technology

transfer is globalization of industries. Technology transfer brings the world together as one large market place.

When technology is properly transferred around the world from a developed nation to developing nations,

economic vibrancy will be seen and nations will draw closer to one another making the world look like a large

global market place.

Internationalization of domestic market is also a benefit to technology transfer. Products produced by domestic

markets could compete with large international industries if proper technology is transferred to the domestic


market. This will increase production and also economic growth. Some barriers of technology transfer to

developing countries also exist. These includes; lost of intellectual property, exploitation of indigenous

employees, lack of infrastructure, attitudes of employees, government policies/legal protection, geographical

location, environment, etc.

“Knowledge transfer is an important issue when talking about technology transfer” (Li-Hua 2009).

Technology transfer will only be achievable in developing countries if academic, policy makers/government

and companies are involved in the process of knowledge transfer. Although, it has been proven difficult to

measure the level of technology transfer from foreign companies to local companies, but the measurement of

transfer between foreign companies and local companies involves the observation of human communication and

interactions, attitude, interest and motivation of all participant of the transfer process. Universities in developing

countries have always been involved in the traditional way of teaching without more involvement with

companies for research and innovations. Government should be involve in the development of knowledge-based

economies and increase demand for innovation which has brought about new challenges for universities to

move beyond their traditional role of educational institution and develop more outreach activities in partnership

with companies (Etzkowitz and Leydesdorff, 1997; Etzkowitz and Leydesdorff, 2001; Etzkowitz and De Mello,

2003).

The process of technology transfer by developing countries is one of learning and improving their

technological capability (Barbosa and Vaidya, 1997). This is a complex, long-term process with various levels

of technological competence such as the ability to use the technology, adopt it, stretch it, and eventually to

become more independent by developing, designing and selling it.


SECTION IV

Typical Channels of technology tranfer

Figure: 2 Typical channels of technology transfer

Figure 2 above schematizes the technology development and transfer process in both developed and developing

countries. It must be noted that technological knowledge, experience and equipment can be transferred from the

upper level to the lower level through various channels between them, such as exports, foreign direct

investments, including joint ventures, licensing and imitation. The exports channel is the one being used the

most current because most developing countries prefer to buy the end product at whole sale prices and then

retail to end consumers at prices that will allow them make 100% profit. Most of the large and small enterprises

prefer this method because it’s less costly, less risky and returns are immediate. Taking the time to partner in

joint ventures sometimes takes too much of their time and hence are never interested.

R&DCommercializa

tion

Production

Deployment/

Diffusion

R&DCommercializa

tion

Production

Deployment/

Diffusion

Developed countries

Developing countries

Manufacturers

Manufacturers

In-house development

Technology LicensingFDI & JV Imitation

Technology LicensingFDI & JV Imitation

Export


Recommendations to stake holders of developing countries.

A lot of cases that involve technology transfer between a developed and developing country, result in a failure

because the donor country was either unable or unwilling to transfer tacit knowledge or the recipient country

was incapable of continuing to sponsor the project, or lacked skilled workers with the ability to learn through

experience. Those case there were successful involve the transfer of tacit knowledge. As in the case of Senegal

and Kenya, you will notice that the process was initiated by a multinational corporation operating locally. The

corporations leveraged on their home experience and came up with new ideas to develop a new market. They

got the support of government and the people and hence technology was transferred successfully. Developing

countries can successfully transfer technology and knowledge if a proper, measurable and goal oriented strategy

is put in place. This strategy should include all major stake holders (the government, Educational institutions,

public and private R&D centers and institutions, large, midsized and large private and public companies). If all

this stake holders come together and develop a technology and knowledge transfer strategy, most of the

problems encountered in the past will be avoided.

The government can create partnerships with foreign and national private sector investors to develop the basic

pillars for national development. These are; adequate and efficient road and transportation network to allow free

movement of people and goods within and out of the country, adequate and efficient national information and

communication technology infrastructure with undersea sub-marine fiber used for international backhaul,

development of a solid foundation for the establishment of science and technology educational institutes,

develop strong intellectual property laws and business establishment policies to encourage foreign investments

and joint ventures with multinational enterprises and market the natural resources of the countries and invite

foreign companies to invest. Figure 3 below schematizes my recommendation for a successful knowledge and

technology transfer process.


Figure: 3 – Suggested framework and process for a successful technology/knowledge transfer

(Dougherty 1999) argued that knowledge transfer is about connection not collection. The collection of

knowledge is considered when discussing the adoption of knowledge. This process does not allow the

continuous flow of knowledge from the recipient to the donor. Therefore, a successful technology transfer can

only be implemented when there is continual flow of knowledge transfer between the parties involved. In my

recommended figure above, you will notice that the flow is a continual process with one-to-many, many-to-one

and many-to-many relationships. Knowledge is recognized as a fundamental asset of an organization in this

current competitive global environment (Teece, 1998). Therefore, knowledge transfer is very important when

considering economic strength of a country or company. Knowledge transfer has be defined by authors in

Educational Institutions

Government Compani

esPublic R&D

Centers

Educational Institutions

Government Compani

esPublic R&D

Centers

Legend for the diagram

Red lines = EDINST - allGreen lines = GOVT - allPurple lines = PR&D - allBlue lines = COMP - all

Developed countries

Developing countries

The media of transfer and buffer zone to allow knowledge and technology to be transferred from Developed countries to developing countries and in some cases from developing to developed countries

Suggested framework and process for a successful knowledge and technology transfer between developed and developing countries


different ways, in all the definitions, one thing is very clear and that is, knowledge transfer is a continual flow of

knowledge that leads to innovation for economic development. My recommended approach includes the

following stake holders; Governments, Educational Institutions, Public R&D centers, and companies in both

developed and developing countries. Since developing countries are the once in need of technology/knowledge

the most, they should be taking the lead to create strategic partnerships with one or all of the stake holders

mentioned here in developed countries. For example; Government ‘A’ in developing country ‘a’ can create a

strategic technology/knowledge transfer partnership with Government ‘B’ in developed country ‘b’. This will

be a one to one partnership in which both countries will mutually benefit. In such partnerships, the developing

country government should negotiate terms that will include the transfer of technology between public and

private R&D centers and companies of both countries. The key term or point in the negotiation should be the

transfer of tacit knowledge and not explicit knowledge. How can this be done?

There are many ways but I will recommend one that I know works always. Let’s say Sierra Leone government

is partnering with a USA government company to build a national telecom network. The first step in such

knowledge/technology transfer should include the movement of workers from Sierra Leone to United States and

from United States to Sierra Leone to study and learn more about each other’s company and operations. The

Sierra Leone company workers will learn about the equipments to be used in the process, how they are currently

being used, network management practices, leadership skills and support and customer service processes and

etc while they are in the US. The US team in Sierra Leone will learn the same about Sierra Leone company and

interact directly with customers and other stake holders in the process. This could be done for a period of at

least 6 months prior to contract or project implementation start date. The two teams can then later meet and put

together lessons learnt and make recommendations for a successful knowledge/technology transfer. This

process will continue even while the project is ongoing. It should also be part of the agreement to train Sierra

Leoneans how to maintain, customize, and support the technology to be transferred. Such training should take

place in Sierra Leone. The point that is being stressed here is “on the job training through learning by doing”

and the removal of barriers that will stop the recipient company or government from customizing and improving

the technology being transferred. Such barriers are not good in the process and if they are, technology will be

transferred successfully. A cutoff point for support should also be set because this usually adds on the overall

cost of the technology transfer process. With a cutoff date for support, the recipient country or company will be

obliged to learn and customize the technology for ongoing growth.


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How GE Is Disrupting Itself by Jeffrey R. Immelt, Vijay Govindarajan, and Chris Trimble

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