Strategic Management: Formulation and Implementation

Transfer Of Technology

Success in the international business for the most industries depends on effective transfer of technology. There may be several different ways in which technology can be transferred from one country to another. These modes vary, along a spectrum, from arm's length sales of technology to independent purchasers through a range of cooperative alliances to equity investment. The degree to which to which the transfer is thorough depends upon factors such as:

The absorptive capacity of the recipient
If his technical skills are very good, he may be able to understand the technology through reverse engineering and avoid dealing with donor.
The recipient's bargaining skills
If the recipient is thoroughly conversant with the target and related technologies, the donor's position regarding sales of its technology, et cetera, his bargaining position can be considerably improved.
The recipient's purchasing clout
The recipient who has ample hard currency reserves available to him for the purchase of technology is in a far better position to obtain concessions on substantial transfers of knowhow than the recipient with a shaky credit standing who requires longterm financing in order to purchase the technology.
The recipient's market
If the technology recipient operates in a market where there is a strong demand for his products, this fact can be used to extract concessions from the donor.
The position of donor's competitors
The donor who has competitors who are able to supply technology that is similar to its own is more likely to make substantive technologytransfer concessions than the one who has complete monopolistic control over its technology.

Copeland and Griggs (1985) identified the following obstacles to transferring technology from the United States, particularly to the developing countries: