Technological change

Number 01 slide

Technological change
Technology may be defined as a systematic application of scientific knowledge to practical task. Basic feature of it is change. Technological change leads to new product and process, and destroy the existing order or status quo. It is creative destruction. Technological changes include both innovation and diffusion. Innovation brings in new ideas in the forms of product and process that invariably replace existing ones. Diffusion takes place when a firm adopts new ideas from others. It abandons the existing way of doing things in favor of new the ideas, the practice and the tools that it has borrowed from its environment. Technologies changes produce four consequences:-

 New products represent arguably the most visible battleground in the market place. Product improvements through incremental and modular innovations, architectural innovation that open up new market segments, the of radically new products that render existing product obsolete. Product improvements have helped firms extend the market of their products. Industries sin the mature stage can often be revived by an infusion of newer technologies into their products. Mechanical watch is converted into digital watch is an example.

 Architectural innovations: They provide opportunities to serve previously untapped market segments and enable firms to change their competitive positions. Technological innovation: Technological innovation sometimes generate totally new products.
Technology integration: Technology integration or the opportunity to develop new products and process by synthesizing a set of existing technologies often leads to convergence. For example, convergence is now taking place in the computer. Telecommunication and entertainment business.

 Technological changes enable firms to reconfigure their value chains, thus influencing the cost and speed of doing business. There are two ways in which value chain are transformed-

 Automation: Automation refers to the replacement of labor with less expensive capital intensive technologies. Capital intensive machineries replace blue collar job in the developed countries. Information technology helps firms to reduce layers of management. Superior processes: Firms reconfigure their value chains by introducing superior process into their operations. Superior processes may evolve from technology progression or technology evolution. Some of the processes are TQM, Lean production systems, JIT,etc.

Value constellation of firms are upset by technological development in three ways:

Shifting Balance of Power Potential for Outsourcing Different Ways of Managing Value Constellation

Change in Value Constellation..

Shifting balance of power: Technological developments shift balance of power between firms and their suppliers and distributors. Potential for outsourcing: As a result of market forces and the standardization o production processes, firms are discovering the opportunities to outsource many activities that had previously conducted in-house.

Different ways of managing value constellation: Widespread adoption of IT is enabling firms to better plan and manage their supplier and distributors relationship.

 Products and processes innovation are two means by which the competitive game is played and won. These innovations enable firms to erect entry barriers to competitors, to bring about product and process substitutions and to redefine the rule of competition. Barriers to entry may include patents, economies of scale, brand loyalty, etc. Product and process substitution. Technological change may contribute to product substitution and product differentiation. Word processor has replaced typewriters. Process innovation in raw ,materials may enable firm to enhance its competitive position. CAD, automation have reduced cost and quality advantage of many firms.

Number 2: slide

Role of 'Transnational Corporations (TNCs) in Transferring Technology to Developing Countries: An Overview And The Role of technology parks in Facilitating technology transfer

INTRODUCTION

Technology is the master key for economic development. It is a tool for deriving benefits from nature as well as giving Competitive edge to a nation Ayres (1991) has referred to technology as the "wealth of nations". Transfer of technology (TV) can take place within the national Boundaries and also internationally
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INTRODUCTION

In every case there must be a transferor, a transferee and some vehicle for transfer Many direct and indirect linkage have been used to transfer technology from the developed to developing countries . TNCs are the real owners of modern technologies.

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INTRODUCTION

They have the capital, trained personnel and managerial capability to transfer technology, tap the international money market and to integrate the developing countries into the world economic structure.

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TNC's and Developing Countries

The attitudes of governments of the developing countries towards TNCs have been dramatically changing since 1980s
TNCs as agents of Imperialism or newcolonialism

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TNC's and Developing Countries

Developing countries has increased for two reasons: First they have gained the experience of how to deal with TNCs Second, with the reindustrialization of Europe and Japan, there are many more TNCs competing in each industry than they were used to be when American TNCs dominated the international economy

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Motivation for Transfer of Technology By TNC

Increasing return on R&D investment Obtaining additional earnings from technologies whose period of competitive advantage in primary home market is over. Taking advantage of lower cost of production in developing countries and thereby maintaining competitiveness in world markets.

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Motivation for Transfer of Technology By TNC

Gaining access to market with projectionist barrier. Reinforcing technological dependency. Avoiding the economic risk associated with operations in unknown environment in a foreign country and taking advantage of a local firm knowledge of market condition

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Motivation for Technology Transfer by Developing Countries

Technology is a tool for national development Most developing countries face tremendous hard currency shortage from servicing their foreign debt Bangladesh spends 22% of its national income for the payment of interest of foreign debt
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Motivation for Technology Transfer by Developing Countries

The TNCs are providing new technologies, management skills and marketing knowledge. TNCs help the developing counties in enhancing their export performance They can avoid R&D cost TNCs can solve the unemployment problem of developing countries.

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Effectiveness of technology Transfer through TNCs

The Process of effective technology transfer does not end with the acquisition of technologies. Additionally it implies the assimilation and diffusion of technologies in host countries as well as the development of local capacities for adaptation and innovation. An evaluation of the effectiveness of technology transfer through direct foreign investment (FDI) and via non-equity forms
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Foreign Direct Investment and Technology Transfer

Technology transfer through FDI concerns the transfer of skill- training program Investment in new enterprises TNCs undertake programs which include courses and training workshops on management techniques, quality control, engineering and computer application

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Foreign Direct Investment and Technology Transfer

R&D activities are undertaken by TNCs in the host country. TNCs do some R&D activities for adapting products to local market conditions and controlling quality. Primarily taste, different standard, and sometimes government requirements are the main factors which led to local modification
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The channels of international technology transfer

The first is a direct transfer of technology via international licensing agreements Second is a foreign direct investment Third channel of technology transfer is through international trade, in particular imports of intermediate products and capital equipment
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Sources of Technology Transfer in the Global Economy

Kokko (1992) identifies at least four ways that technology might be diffused from foreign investment enterprise (FIE) to other firms in the economy: (1) demonstration imitation effect, (2) competition effect, (3) foreign linkage effect, and (4) training effect.

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Sources of Technology Transfer in the Global Economy

R&D can be thought of as having two complementary effects on firm's productivity growth (Cohen and Levinthal 1989). First, R&D directly expands firm's technology level by new innovations, which is called innovation effect. On the other hand, it increases firm's absorptive capacity ability to identify, assimilate and exploit outside knowledge, which is usually called learning or absorption effect.

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Non-Equity form of Technology Transfer

A licensing agreement often is a prerequisite for obtaining the necessary manufacturing and problem facilities from the parent company Licensing arrangement have excellent possibilities when the license (developing country) has achieved a certain level of industrial experience and sophistication, when local infrastructure is adequate, and when the available markets are large enough to recover investment

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Non-Equity form of Technology Transfer

Due to severe imperfection in technology market, the supplier TNCs often seeks to impose a lot of restrictions in order to maintain oligopolistic power and to limit the scope for assimilation and diffusion of technologies within the host countries

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 THE ROLE OF TECHNILOGY PARKS IN FACILITATING TECHNOLOGY TRANSFER

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What is Technology Park? What is technology transfer? How technology is transferred? How technology is transferred through technology parks? Concluding remarks and suggestions?

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Technology Park
The idea for a Technology Park in Create dates back to 1988, when it was first nurtured by key individuals in FORTH (Foundation for Research and Technology- Hellas), one of the most respectable research institutes of the country, well known all over Europe in the scientific circles.

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Technology Park
Technology Park is a landscaped development usually comprising of high specification office space as well as residential and retail developments, designed to encourage localization of high technology companies such as information technology, software development etc., thereby giving each the benefit of economies of scale.

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Technology Park
Technology Park is to carry out the innovation process and location advantages to commercialize the innovation purpose. The phases of innovation process are as below: Basic research Industrial research Product and process development Early proto type or pilot plan Interim manufacture Full manufacture Commercialization.

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Technology Park
Furthermore, a technology park provides the services to carry out the innovative activities such as: Education and training Information Patenting and licensing Entrepreneurial services Commercial promotion Financing and venture capital.

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Relationship and Differences of Technology Park or Science Park, Innovation center and Business Incubation

R E S E A R C H
D E V E L O P M E N T

Science park

Innovation center
M Business incubation L H L
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M
BUSINESS DEVELOPMENT

A science park is a property based initiative which:

Has formal and operational links with a University or other higher educational and research institutions (HEI). Is designed to encourage the formation and growth of knowledge based and other organizations normally resident on side. Has a Management function which is actively engaged in the transfer of technology and business skills to the organizations on site.

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There are two principal forms of academic science park link at the level of the individual park enterprise (quoted from Quntas 1992) such as: The establishment of spin-off firms, formed by academic staff taking research out of the laboratory and into the science park, starting their own commercial enterprise. The occurrence of research links facilitating technology and knowledge transfers.
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Research oriented technology parks include:

Science parks Technology parks/technopoles Innovation center Re4search center Innovation plaza

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Business oriented technology parks include:

Business incubators Business parks Industrial parks

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Distinguishing between knowledge transfer and technology transfer

. Knowledge transfer implies a broader, more inclusive construct that is directed more toward understanding the "whys" for change. In contrast, technology transfer is a narrower and more targeted construct that usually embodies certain tools for changing the environment.
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Distinguishing between knowledge transfer and technology transfer

. Specifically, firms with more mechanistic structures and more stable direction-oriented cultures were associated with higher levels of knowledge transfer. Conversely, firms with more organic structures, more flexible changeoriented cultures, and more customized university policies for IPR, patent ownership, and licensing were associated with higher levels of technology transfer
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Technology transfer

Technology Transferor

Technology

Technology Transferee

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Technology Transfer Basics

Protection is key to technology transfer By generating licensing and royalty revenues Commercialization The aim of technology transfer is to provide the educational, advisory, and financial resources to help you in this regard

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Intellectual Property Protection

The two most common forms of intellectual property protection are patents and copyrights . Patents are used to protect devices, materials, processes, and improvements to any of these. Copyrights are exclusive rights granted by a government for a limited time to protect the particular form, way or manner in which an idea or information is expressed.

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Intellectual Property Protection

To transfer intellectual property through royalty bearing licenses, rather than patent title assignment The two major factors determining the licensing decision are: (1) what kind of licensing is most likely to lead to rapid commercialization; and (2) what kind of licensing is in the public interest
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Mechanisms of technology transfer

Ramanathans (1995) classification seems to be more appropriate. He classified this mechanism into two types- 1. Pure external acquisition mechanism and 2. Alliance based acquisition mechanisms. Later (1997) he classified it into two categories such as Market oriented mechanism and Non-market oriented mechanisms
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Market Oriented Mechanisms:

Purchase of plant, equipment and products Direct foreign investment Joint ventures Technical collaboration: 1. Licensing, 2. Technical agreement, 3. engineering and construction agreements. Subcontracting Turnkey contracts Product-in-hand contracts Management contracts Product sharing Joint research ventures Expert services

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Non Market Oriented Mechanisms:

Books, academic journals, business magazines etc. Sales literature Technical information services Industrial fairs and exhibitions Informal personal contracts Participation in conferences, seminars and workshops Training

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How technology is transferred through Technology Park?

The following section will be discussing various activities/particulars of various types of technology parks and the way/means by which technology may be transferred. Business oriented technology park Business incubator Activities/Particulars:-To help (business support services) small business to start up in the most favorable environment. Business development is priorityMinimum entry capital is requiredIs useful with the priority of business development while research applications are secondaryGrowing infant companies are housed here Technology transferred through:-Employment/creation of jobsTrainingClerical & administrative helpBusiness assistanceInformation gathering

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Business oriented technology park Business Park Activities/Particulars: Growing companies are housed here, Focus is on good environment of office light manufacturing & business support services Technology transferred through: Business support services, Interactions,Information exchange

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Business oriented technology park Industrial Park Activities/Particulars: Mature & declining companies are housed here, Associated with traditional production service & distribution system, Not well suited to a wide range of high technology activities. Technology transferred through: Support services, Information exchange & interactions.
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Conclusion.
The above analysis shows that technology park is useful in transferring technology. The study also shows that technology parks are only useful for small and medium sized enterprises. Due to enough technological capabilities, big companies are not interested to establish business ventures in these parks. TP is very much helpful for the start-up companies. Due to the differences in the nature of parks, the services provided there, are also different. Technology parks may be classified into two types such as business oriented technology parks and research oriented technology parks.

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