Organizational Factors and the Success of Technology Transfer

Introduction

Technology is one of the most important factors determining the outcome of the industrialization process of developing countries. Technology is the application of scientific discoveries to the production of a better quality of goods and services. Eridilek (1986) defined technology as the expertise or know-how required to manufacture a final product or for processing intermediate inputs. Technology helps to create new products or industrial processes; therefore, it is one of the key competitive' advantages of any organization. Technology plays an important role in the success not only of international firms but also that of domestic ones. In other words, technology can play an important role in economic growth and development. As technology has evolved rapidly, the technology gap between developed and developing countries is said to be widening. The developing countries have weak technological bases and, on top of that, their capacities for research and development activities are limited. Such a situation allows these countries no choice but to rely on foreign investment as a major mechanism for technological acquisition.

The transfer of technology from one organization to another can also be explained by the transaction cost theory. Transaction cost economics is concerned with the underlying theory of organizational arrangement that most efficiently economize on transaction costs (Williamson, 1985). A firm has the option to either internalize a function or to contract it out (make or buy). There are costs and risks associated with either choice. Internalizing a function represents some commitment to it. The firm must create permanent internal components devoted to the activity. Contracting out is essentially establishing an agency relationship, and the firm faces the risk associated with an imperfect agency. Normally, technology transfer occurs when transaction costs related to the transfer is less than developing one's own. Every organization needs to consider cost before involved in the transfer. When an organization is able to transfer technology at a reasonable cost, it means it will provide higher profit and satisfaction. Transfer of technology from one organization to another can also be viewed in terms of the resource dependency theory. Resource dependency theory suggests that one organization is dependent on another for essential resources. This dependency can affect the relationship with other organizations (Kotter, 1979). Dependence exists when the decision-makers perceive that the behavior of particular external organizations imposes contingencies and constraints on organizational behavior and its effectiveness (Lynskey, 1999). An appropriate understanding and application of this theory will enable an organization to choose the right transfer, in turn, will increase the possibilities of successful technology transfer.

In simple form, technology transfer means the process that allows the transfer of technology from one organization to another organization (Bozeman, 2000). Technology transfer can be a source of hardware or specialized technical skills, which are transferred to a target group of receivers, those who do not possess those specialized skills. Technology transfer can also be termed as the transmission of knowledge, which enables the recipient firm to manufacture a certain product or provide a particular service (Tsang, 1997). Typically, technology transfer is a continuous process, and it can occur within the boundaries of an organization (e.g., from HQ to its branches or subsidiaries) or across organizational boundaries, as can be seen in strategic alliances. Similarly, the transfer can be transnational, crossing national boundaries. It should be noted that specific difficulties are encountered when a technology is transferred across international borders. Some of the problems are caused by, for example, the differences in technological infrastructure, language, the level of economic development, culture and attitude between home and host countries, as well as high communication costs (Teece, 1977). Failures of technology transfer are all quite common, especially when both sides face communication problems. Furthermore, failures occur when the developers of technical systems or their users are unwilling or unable to adapt (Leonard-Barton & Sinha, 1993). Despite various origins of failure, one thing is certain that failure in technology transfer poses a threat to organizational success in any country and Malaysia is not an exception. Technology is one of the most important features of modern organizations, and it is playing an important role in the development of this nation as well.