THE DYNAMICS OF TECHNOLOGY TRANSFER
A Representative Cross-Section of Case Studies

Transnational Research Associates

Art Madsen, M.Ed.

Introduction

The transfer of technology from one entity to another assumes a number of distinctive forms, entails a multiplicity of socio-economic implications and requires that certain identifiable factors be present to achieve optimal levels of performance, profitability and efficiency. It should prove particularly enlightening to analyze the primary components and characteristics of a wide range of internationally based Case Studies the intrinsic nature of which involves some permutation of North-North, North-South, South-South or Internal National or Inter-Corporate transfer patterns. Such an analysis will expose discernable features and configurations from which should emerge certain valid postulations and conclusions as to the inherent risks of managerial options available within the context of such transfers.

The proposed format of this analytical assessment will entail the discussion of ten internationally based technology transfer cases, highlighting the characteristics, salient components and priorities of each. Comparative observations will be offered and some statistical support, where applicable, will be provided .

Several different types of transfer patterns, ranging in scope from Small to Medium Enterprises (SMEs) up to State Monopolies, will be explored, as itemized on Figure I below:

An Illustrative Selection of Transfer Modalities

                             * Internal Industrial Development Model                    

                             * Inter-Corporate Transfer Paradigm                        

                             * State-Enterprise Model                                   

                             * Donor-Nation to LDC Pattern                                                    

                             * LDC to LDC Mode                                          

                             * Regional Developmental Cooperation                       

                             * Total Importation of Technology                          

                             * Internal "First World" Transfers

FIGURE I

The cases selected for analysis will serve to demonstrate the primary characteristics of technology transfer in accordance with well-understood principles pertaining to each of the foregoing models.

Further, an attempt has been made to select case studies which are representative of a cross section of typical transfer patterns practiced widely in today's world of industrial and commercial development. Some of the models portrayed are multifaceted, and possess the characteristics of several basic models. Yet, they, too, provide valuable insight into the ever-evolving field of technology transfer.

A number of the case studies selected have been presented at International Symposia or have been published prominently in major journals. Others have yet to achieve this status within professional circles. Nonetheless, it is the underlying contention of this report that each of the cases examined sheds light on the intricacies of the success-patterns recorded or of the failures documented. By pointing to the strengths of these, and other, cases, mistakes costing millions of dollars can be avoided by managers and executives in responsible decision-making positions.

Case No. 1: Internal Development Model

The first case study encompasses a vast internal development program within the People's Republic of China. Subsequent to the accession to power of Mao-Tse-Tung, Rural Energy Offices, positioned throughout the Chinese countryside, determined that a serious shortage of efficient, affordable cookstoves existed among massive segments of the population. In order to eliminate traditional methods of cutting valuable timber and underbrush for fuel, as well as to provide more efficient use of existing fuels, a national program was developed to equip all rural households in Mainland China with relatively modern stoves. The task, understandably, was of enormous proportions. The cited case, documented jointly by academic staff in Hawaii and Beijing, records the progress made in realizing this goal, the problems encountered and the decisions made to overcome quality control obstacles, supply dilemmas and even consumer reluctance. As Smith and Shuhua dramatically confirm, over one hundred million cookstoves were installed in households over the period discussed. Not only were traditional wood-burning methods superseded by this improved technology, but older, less -efficient and dangerous stoves were also replaced. It is interesting to note that this Gargantuan feat was accomplished within the context of the Communist Revolution in China, and the system used to achieve such a goal was essentially consistent with central planning methods, strategies and priorities. The authors of this case point to primary factors which enabled the principal parties to fulfill their expectations. Among crucial factors were:

FIGURE II

There were two types of stoves distributed to the 129 million homes. Those in the North were not the bio-mass burning stoves distributed in Southern China. They operated on fuel burning principles and were also used as space heaters. This factor led to certain production and distribution complications, all of which were eventually overcome through successful cooperation and logistical expertise.

In summation, the Chinese cookstove experience served as an inspiring model of Internal Development, with little or no dependency on external sources when transferring technology. The "transfer", as such, took place, in this instance, within a monolithic nation, capable of meeting its own needs through efficient organization and planning. According to Smith, only Kenya equaled China's performance of equipping 10% of its homes with new or improved cooking appliances. It may be appropriate to explore another Chinese initiative involving, this time, export of technology to a Third World setting.

Case No. 2: One Less Developed Country Transferring Technology to Another

Although Mainland China is considered an emerging nation, it is still considered to be classified among developing nations, by virtue of its essentially rural character, particularly within the Chinese Interior. It is not unusual, however, given the complex nature of Chinese society, for such a nation to export its expertise in certain areas to even less developed nations such as Liberia. The case under analysis involved the export to Liberia of Chinese rice growing technology. Liberia was an excellent recipient nation, at first glance, inasmuch as it is quite humid, its climate is well adapted to the tropical conditions required for rice-growing, and land is available for large-scale agricultural projects. However, there were a number of barriers to success in this rice-technology transfer program which could not be readily overcome. Brautigam's case analysis speaks eloquently of the events which led to problematic implementation of Chinese plans to demonstrate that success could be achieved.

Due to divergent traditional agricultural practices in Liberia and China (a factor which is certainly not surprising), adaptation was necessary on the part of Liberian recipients in order to achieve optimal results. These results were not always forthcoming, as the case-author from Columbia University illustrates in sections of her article entitled, among others, "Management and Sustainability."

When the project had matured, in spite of earlier complications during the organizational and development stages, the Government of Liberia negotiated an agreement with China whereby a half dozen technical assistants would be provided to sustain the project's viability after the main contingent of technical support "cooperants" departed. This, incidentally, is a fairly typical pattern in the operational phase of most Third World projects. In spite of precautions taken, however, it quickly became obvious during the construction and mechanization stages that China was exporting it's own problems and flawed models to Liberia where the system worked even less effectively. In Liberia, the farm was state-owned and operated, as is generally the case in China. Yet. too much automation and only marginal yields resulted in very mediocre performance of the Liberian farm, the case-author noted. The same types of problems which occasionally develop in China were documented in the West African project, as well. The use of small-scale irrigation technology was particularly unsuccessful in Liberia where natural rainfall alone provides more than enough precipitation for an average rice crop to mature, as is the case in Zaire and many other African nations. On balance, therefore, the Chinese-Liberian Rice Transfer project was only partially successful and encountered a number of economic and logistical problems.

Case No. 3: State-Owned Enterprise and In-Country SME Cooperation

The Third World, and Africa in particular, constitute fertile territory for development projects, such as those in Liberia, Zaire and Nigeria. Whereas most African nations experience only marginal results when cooperating with an external partner, in-country cooperation can yield visible progress and growth. By commercializing local technology, frequently impressive results can be achieved. Surprisingly dynamic and profitable projects, under certain circumstances, have been analyzed in the pages of various case studies, among which appears the Chukwujeku study of Small and Medium Enterprises (SMEs) in Nigeria.

The kaolin processing plant, designed and constructed locally in Nigeria, involved the transfer of externally known technology for adaptation to local conditions. Because foreign capital was in short supply, local entrepreneurs were compelled to devise ways of adjusting their hopes and aspirations to match local conditions and realities. The story of Ebunso's cooperation with its government's parastatal company, The Nigerian Mining Corporation (NMC), and with professional consultants hired by NMC, is an encouraging lesson in the successful mixture of expertise, operation and production.

Chukwujekwu recounts the early struggles of Ebunso to adapt to local Nigerian conditions, after draining and ultimately losing external financing. The company had to survive on the basis of complete self-reliance and locally available technical expertise. Their business was processing kaolin, a mineral found quite abundantly in Nigeria. It is often mixed with quartz as well as other minerals and must be washed, separated from them and sometimes ground into useable particles. The Ebunso plant was designed to process this mineral in these ways, for a variety of large and small scale industrial applications. The success of plant-designers' efforts and Ebunso's cooperation with the parastatal agency form the backbone of this case-study. Key concepts generated by the Ebunso experience included the prioritization of: self-reliance, learning-by-doing, plus acquisition and mastery of local technology, Such a strategic" triad" assisted immeasurably in the success of this SME, which might have otherwise proven considerably less stable and dynamic.

Case No. 4: The Inter-Corporate Technology Transfer Model

The characteristics of this case are worthy of comparison with the Ebunso experience in Nigeria. However, in this case, a fledgling Brazilian aircraft company was sponsored and then supported technically and administratively by a larger firm which had, in turn, been protected and nurtured by the appropriate governmental aeronautical ministry. The case-editor, writing in Fostering Technological Dynamism, labels this story a success in the broad sense of the term, although much protection and encouragement were forthcoming from governmental sources. Under American standards, this firm might have withered and died. This could also be said of Ebunso, of course, and of the cookstove project in China. Whereas in the case of Liberia, it was a combination of two state-based organizations "over-nurturing" the project.

The Brazilian light aircraft industry required stimulation, but could not be created monolithically overnight. The aeronautical ministry attempted, therefore, to foster the growth of coordinated "segments" of this industry so that Brazil, eventually, could begin to manufacture its own aircraft by combining the various domestically built parts into a complete plane. This is something of a simplification of the theory, of course, but a number of SME size operations were the result of this fundamental strategy.

One fairly large public entrepreneur, Osires Silva, sheltered by the government and allowed to prosper, was in a position to assist in the financial and organizational stabilization of a smaller firm, EMBRAER, the object of the case study. The smaller firm formed the nucleus of the Research and Development capability of many related companies.

By avoiding entanglement in bureaucratic complexities, it was able to prosper under private corporate legislation. Decisions were made by the most astute minds in the industry to nurture EMBRAER and provide a healthy climate for survival and growth. This firm, although it had access to the most contemporary Industrial Development Theoretical Models, and excellent R&D personnel, chose to manufacture the simpler parts of an aircraft, such as the fuselage, and specialized in final assembly of each plane produced. The firms's strategy was to concentrate on pleasing clients' customized needs, even though some expensive parts had to be imported. Profits were stable under this approach. On final analysis, the EMBRAER experience was made possible by its two hierarchical partners, the government ministry and its protector-firm from which it derived administrative, technical and logistical assistance at crucial phases of its early and mid-developmental stages.

Case No. 5: An Internal Industrial Development Model

The large state-owned or controlled entities are often cumbersome and inefficient. This SME, located in an "industrial district" of the island of Jamaica, represents an incredible success story that has been widely publicized in the Caribbean. Early in this saga, there were two major competing welding firms on the island, Electric Arc Limited and Welding Industries. Both were languishing. Electric Arc had been a British firm, with start-up technology originally imported from the U.K., but had done poorly due to poor screening and hiring policies. Ultimately, in 1977, the sagging firm was purchased by local entrepreneurs who saw potential in revitalizing its product line. The new management team implemented the following policy approaches:

SYNOPSIS OF JAMAICAN SME'S STRATEGIC DECISIONS

Source: Fostering Technological Dynamism, Division for Science and Technology, loc. cit.

FIGURE III

Not unexpectedly, Electric Arc was able to achieve impressively profitable results. In fact, it improved its market share from an initially poor performance of 29% to 74% of the Jamaican market and exported 14% of its production abroad, to the applause of Government Officials in Kingston. Ultimately, Electric Arc bought out its main competitor which had failed to keep pace with the dynamic new firm.

This example of an SME, located in an industrial district, employing only 28 employees was recognized both at home and abroad as manufacturing quality products, competitively due to its innovative and dynamic management policies. A former "colonial firm" which provides high quality goods, in this case more than 27 varieties of welding rods, carbon arc components and related supplies, to other countries, including Britain, constitutes a clear "commercial triumph", socio-politically as well as economically.

On balance, Electric Arc should be construed as an Internal Industrial Development Model, since most of its innovative strategies occurred within Jamaica.

Case No. 6: Internally Supported State Enterprise Model

Over a lengthy period of time, extending well into the 1980s, a public-sector firm in India grew remarkably and improved competitively through enhanced production and revised personnel policies. This successful firm, identified tentatively as an internally supported state-enterprise model, was able to shrug off the usual image of a monolithic agency and effectively streamlined its operations with a profit and continued growth strategy in mind.

BHEL was a firm, prior to 1978, which was production-oriented, specializing in a pre-established line of electrical equipment. Due to competitive pressure, it improved its operations in 1978 and was able to capture a significant market-share throughout all of India in its area of specialization. Interestingly, because of its huge market, it was able to capitalize on large scale operations, minimizing per unit cost.

So prominent did this firm become that it was ranked among one of the world's 10 top electrical and power equipment firms. Because of this achievement, it is useful to examine some of the theoretical concepts which made BHEL a leader in its field, after a shaky, marginally well-managed, and typically "state-owned" beginning. In fact, as it developed, BHEL began to interact profitably with external sources for some of its product-line and learned to assess and utilize much state-of-the-art equipment, adapting some of it to its own internal needs within the Indian market.

Figure IV, below, illustrates some of the sub-theoretical approaches which, as BHEL improved its position, were implemented with a high degree of success. These models are actually portions of larger paradigms, each with priorities and strategic preferences.

THREE SUB-THEORETICAL ORGANIZATIONAL

AND STRATEGIC MODELS USED SUCCESSFULLY BY BHEL

Managerial Discretion

Autonomy is granted mid and upper
echelon managers to establish
objectives and priorities.

Bureaucratic

Both internal hierarchy and external
authority from bureaucratic sources
heavily influence decisions.

Political Economy

Pragmatic, socio-economic and realistic
considerations dominate the
decision making process.

Source: Adapted from Fostering Technological Dynamism, 19.

Figure IV

By implementing a mix of the managerial discretion model, which features the flexibility to elect options from within mid and upper ranks of the firm itself, without seeking approval from ministerial officials, and the political economy model which incorporates a recognition of the realities of socio-political factors and economics, BHEL was able to perform a delicate and rewarding balancing act which impressed those who analyzed their strategic stance.

Although much discussion seems to be focused on the efficacy of these three approaches, whether mixed or in isolation, BHEL, by applying them wisely, was able not only to sustain its operations, but to expand them to the ultimate advantage of India and consumers worldwide. In summation, within the context of BHEL, of course, technology was transferred from its subcontractors with India, but also -- later in its developmental progression -- from external sources. Although in previous cases it was felt that State-Enterprises are often unwieldy and clumsy in their management approach, in the case of BHEL, which applied a mix of strategies, efficiency and profitability were achieved.

Case No. 7: Developed Nation to LDC Model

There are a number of cases which spring to mind featuring the traditional North-South transfer model. In fact, this model is seen by the lay public as the key model for development projects in the Third World; yet, there are many variations and permutations which distinguish such transfers of technology. The entire area of intermediate technology transfer, for example, seems to be acquiring popularity in the field of development economics. In accordance with the established criteria of this sub-classification of technology transfer, the technology offered to the developing nation must be appropriate, useful and practical. Such transfers should involve the improvement of an existing infrastructure or pre-existing system in such as way as to make a gradual or easily implemented "leap" toward progress. Whether or not intermediate technology is defined adequately for purposes of bankers, economists or international lending institutions is not generally seen as a critical factor in encouraging such technology to be transferred for use on development projects.

The case of Egypt which authorized the use of laser-technology, for example, to level agricultural land is an instance of intermediate technology being applied to a pre-existing system. While modifications were naturally required to maximize the impact of the technology, the laser system was proven to result in substantial savings and was capable of generating new jobs through reinvestment of savings in the cultivation of additional acreage.

This technology might be legitimately categorized intermediate technology, because it bridges the gap between a centuries old animal drawn leveling plow and modern techniques which are perfectly within the reach of the farmer, through his Local Agricultural Coop and Government Assistance Programs. The laser leveling strategy was also a distinctly north-south transfer, in that the equipment was imported from an industrialized-nation. While this may have cost Egypt hard currency expenditures, the benefits outweigh the costs involved, according to Joniah. He found that water and irrigation-related savings, plus the potential to create new jobs, more than compensated for the cost of the laser equipment used by the farmers.

CASE NO. 8: North-North Technology Transfer

Because there has been a preponderance of studies examining the north-south "dialogue', it is often forgotten that industrialized nations also share technology, through elaborate transfer mechanisms, to the ultimate benefit of all. The Artificial Joint Orthotic Project (AJOP) which developed special prosthetic components for handicapped individuals is an enlightening case to examine, because it involves the cooperation of five European nations, who shared their expertise to produce a superior line of products.

Earlier attempts to improve prostheses focused largely on ceramics, but failed. due to the poor mechanical properties of these materials. Complicated designs required varying thicknesses and sharp edges, which led to mechanical failure. The AJOP project, part of the Biomaterials section of the BriteEuram program, conducted research on advanced metalceramic "joining" techniques to optimize certain types of knee prostheses. All cooperating partner-nations have successfully tackled the problem by developing, and sharing among themselves, the technology necessary to produce combined properly designed metallic and ceramic replacement components for a variety of protheses.

AJOP brought together seven partners from five EU Member States Italy, Germany, the Netherlands, Portugal and the UK. The research target was to reduce wear and tear on parts, and consequently double the useful lifetime of the artificial joint, as well as to produce joints which would help the growth of bone. The multi-nation team also designed a prototype and ran a cost analysis on the potential benefits of various approaches and strategies.

Economists, writing in numerous other studies, have noted the success of such combined north-north cooperation in the exchange of expertise, where transfer of knowledge is particularly valuable, for example, in the medical field and in computer technology.

Case No. 9: The Mega-Project in a North-South Transfer

Many north-south transfer projects involve, as has been discussed, the exportation of intermediate technology on a relatively small scale for pilot projects or experimental purposes. However, the 1970s and 1980s saw an increasing number of mega-projects, some of which were ill-advised, emerge on the technology transfer horizon. Among them was the Inga-Shaba High Voltage D.C. Transmission Line Project in the former Republic of Zaire.

This project was ultimately evaluated at more than 1.1 Billion U.S. Dollars, inclusive of cost overruns and an operations and maintenance contract. In a sense, this project could be described as "intermediate technology" since it was designed to supplement an existing electrical network within the Republic of Zaire. However, it utilized state-of-the-art, long distance D.C. Transmission technology designed by ASEA of Sweden, in conjunction with General Electric's telecommunications expertise and Sadelmi-Cogepi's construction and logistical support. Due to the enormous nature of this undertaking, which featured a 1200 mile long power-line linking the mouth of the Congo River with the Shaba Mining Region where the transported electricity was to be used for refining copper and zinc ore.

This project began in 1973 and was completed in 1983, a decade long undertaking. The Consortium which was responsible for the project's completion was comprised of the firms portrayed on Figure V below, each of which contributed, in the ways designated, to ultimate realization of this logistical and engineering feat.

Inga Shaba Transmission Line Consortium Partners

Throughout the course of the project's construction phase, there were a number of technical and political problems which arose. Firstly, this project was deemed unnecessary by the Belgian and French technocrats who had theretofore dominated foreign cooperation projects in Zaire. Their opposition, however, was not taken seriously by the Mobutu Regime which wanted to consolidate its hold on the economy of Shaba Province, a former break-away region known earlier as Katanga.

Under these circumstances, this project could be seen to be basically political, although some of the electricity transported to Shaba was ultimately used by the region's major mining firm, Gecamines. Because of this, the Inga-Shaba Project could be construed as a regional development undertaking, with international implications. Indeed, the power generated at Inga, at the mouh of the Congo River, could now be transported to the Heart of Arica for re-export to neighboring nations such as Zambia, Tanzania or even Zimbabwe.

On the surface, this project succeeded, but cost several times the initial bid submitted and was considered controverrsial by many nations, as well as by many political figures with Zaire itself. Mega-projects have since become less frequent on the development scene. due to IMF, World Bank, International Bank for Reconstruction & Development, and African Development Bank resistance to, among other factors, high risk / low yield projects.

Case No. 10: United Nations Financed Research
and Subsequent Transfer Dilemmas

It would seem advisable to introduce a brief case which raises a series of questions and dilemmas not yet surveyed in previous cases. When a world organization, such as the U.N. and its sub-contracting agencies, namely the National Geological Research Institute (NGRI) case at hand, embark on a major research program resulting in marketable devices or innovative technology, legal problems concerning entitlement to patent, profit and commercialization often result.

Under a research grant from the United Nations, NGRI developed a seismic sensor which was considered effective, accurate and more advanced than any other such device. Private firms began to show an interest in mass-producing this sensor and in distributing it for profit.

Actual proprietary and intellectual rights were not firmly established due to the UN sponsorship of this device's creation. Canada had a vested interest in a similar device, but the legal status of their sensor and the UN sensor was clearly in question due to patent conflicts and other litigious issues.

It can be concluded, for our purposes, that Research and Development laws must be clarified in the international arena to avoid entanglements of this sort which lead to expensive and counterproductive litigation, enriching the legal community, but depriving the developing world, in the interim, of useful technology.

CONCLUSION

Analysis of the foregoing cases reveals certain patterns of transfer which feature common attributes. In all cases, the overriding objective was to promote development of a process, service or technology in locations and economic sectors where a need was discernable.

The types of technology differed considerably, as did the modalities of transfer. In the case of BHEL, for example, much technology and organizational progress came from within the firm; whereas, in the instance of the Inga Shaba Project, technology was exported from a developed nation to a clearly underdeveloped recipient. In this case, as in the case of Liberia, it could be argued that inappropriate technologies were exported, thus violating one of the basic, sometimes unspoken, "principles" of Third World development. A match is critical between what the donor nation is offering and what the recipient really requires.

In other cases, there was considerable success recorded. The Jamaican firm's statistical performance, and the AJOP prosthesis program in Europe, for example, seem worthy of commendation. Many lessons, from a theoretical viewpoint can be learned from these cases.

Careful note should be made of the revised and improved practices and policies of Electric Arc in Jamaica which registered world-class performance quotients during the latter years of its development program. The Brite-Euram model of "inter-national" and "inter-corporate" cooperation is important to highlight, as well, since its results can be applied to other regions of the world, such as to Asia and North America where improvements can be made in locally-based transfer of know-how.

There were also insights to be gained in cases only alluded to briefly in these pages, such as the Egyptian Laser Land Leveling program. Here, an interesting blend of old-world plowing was modernized within a realistic program of laser-based technology. Results, here, were encouraging as in several other cases reviewed in more depth. The Chinese cookstove experience is reassuring, as were the comments of the case-author concerning Kenya's parallel success with cookstoves.

The only abysmal failure among the cases surveyed might be the Liberian experience which was perhaps due to a wide cultural gap between West Africans and the Chinese. The dynamics of South-South transfers are also notably different, and it might be fair to assert that, because of compounding of initially poor technology or badly designed or structured attempts, these combinations of LDC / LDC transfer programs have more than their fair share of failures.

Technology transfer projects must, in this writer's estimation, be appropriate, well-financed, properly designed, and must be consistent with the recipient nation's overall objectives and priorities.

REFERENCES

Bhalla, A.S., editor, Small and Medium Enterprises: Technology Policies and Options, Greenwood Press, Ch. 13, Chukwujrkwu, S., "Development of Design and Manufacturing Capabilities of a Small Nigerian Company", 1994.

Brautigam, D. South-South Technology Transfer: The Case of China's Kpatawee Rice Project in Liberia, World Development, 21:12 1989-2001, 1993..

Brite-Euram Publication Site: http://www.mech.gla.ac.uk/Losec/laserweb/Brite/ry1_pub.htm

James, D. Whatever Happened to Intermediate (or Appropriate) Technology? Is a Resurrection Worthwhile?, University of Texas at El Paso, undated manuscript.

Joniah, J. "Laser Technology for Land-Leveling in Egypt" in Bhalla and James (eds.) New Technologies and Development: Experiences in Technology Blending , Boulder, 1988.

Madsen, A., Corporate Diplomacy in the Third World, Transnational Research Associates, ( publication pending ) Boston, Mass., 1995-96.

Smith, K.R. and Shuhua, Gu et al., One Hundred Million Improved Cookstoves in China: How Was It Done? World Development 21:6, 1993, 941-961.

United Nations Conference on Trade and Development, Fostering Technological Dynamism: Evolution of Thought on Technological Development Processes and Competitiveness: A Review of the Literature, New York and Geneva, 1998.