Factors in the Transfer of Technology

edited by William H. Gruber & Donald G. Marquis

Technology in industry

This paper might have as a subtitle "The Economic Factor in the Transfer of Technology" because industrial activity in the United States is primarily an economic activity. Companies decide to invest in research and development (R and D); they allocate marketing resources in attempts to achieve the transfer of technology that is embodied in their products; and they purchase new equipment which frequently involves the acceptance of new technology. All these decisions are based upon the economic return expected as a result of innovations that they have adopted.

The focus of this paper will be the critical economic forces that appear to determine the willingness and ability of companies to invest in (1) the development of new technology; (2) the utilization through marketing efforts of the new technology that they develop; and (3) the new technology available for utilization in their own operations that has been developed in other companies.

Three determinants of the willingness and ability of companies to undertake these forms of technological development and utilization will be analyzed: (1) competitive pressure, (2) size of market (need) and profitability, and (3) size of firm. These are not mutually exclusive forces, and their interrelationship will be part of the analysis that follows. As their effect on the development and utilization of technology in industry is sometimes negative, both positive and negative examples will be given in the discussion of their impact; and a balanced presentation of their effect will be attempted. Because of the interrelationship among the factors, and because the factors have varied (both positive and negative) consequences in different industries, a summary section will provide an integration of the three factors in the overall process of development and utilization of technology in industry.

In order to make manifest the relationship between the human factor and economic forces in the development and utilization of technology, the steel industry will be used as an example in the analysis of each of the three economic determinants of the willingness and ability of companies to develop, utilize, or achieve the utilization of new technology.

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This concluding chapter in the proceedings of the M.I.T. Conference on the Human Factor in the Transfer of Technology’ summarizes and integrates the findings of the papers presented at the conference. The disparity between the current state of knowledge about the human factor in technology transfer and a preferred state is specified in a series of questions that were raised at the conference. The research frontier is described; definitions of terms are suggested for further research efforts; and models that specify the critical problems for further investigation are presented.

The summary of the current state of knowledge indicates that better understanding of the technology transfer process has the potential for a significant increase in the economic value of technical knowledge, due to the observed phenomenon that technical advance is based largely on readily available technical knowledge. The process of fusion of "demand recognition" (defined as a perceived disparity between an actual and a preferred technological capability) and "technical feasibility recognition" (defined as the perception that technical progress can be achieved) is described, and the role of this fusion (defined as "design concept") in the process of technical advance is analyzed.

The human factor determinants of the ability/willingness necessary for the development and utilization of technology are summarized under the following categories of effect: (I) training and experience, (2) individual personality characteristics, (3) communication patterns, (4) organizational effects, (5) mission orientation, (6) motivation. The findings that have been presented are then used to study the science-technology relationship.

Technology may be defined as the means or capacity to perform a particular activity. The transfer of technology must then mean the utilization of an existing technique in an instance where it has not previously been used. This transfer may be merely the acceptance by a user of a practice common elsewhere, or it may be a different application of a given technique designed originally for another use.

The acceptance by a user of a common practice is called "adoption," and the spread of such adoptions the "diffusion of technology." The application of technology in a new way is properly labeled an "innovation."² A transfer of technology occurs in both adoption and innovation in the sense that a decision is made to use a form of technology where it has not previously been utilized.

Note that a form of use occurs in both cases. If technical elements are brought together in a new way and a new technology results, this would be called an "invention" until it is used to satisfy a demand, at which point an "innovation" occurs. Research on the transfer of technology thus focuses on "innovation" and "diffusion" because the word "technology" connotes a method of achieving a practical purpose or "use."

"Use" requires at least one user in the broad economic meaning of the word. A product must be sold, a piece of equipment must be used, or a unit of military weaponry must be put into production in order to qualify as examples of transferred technology. The economic meaning of "use," therefore, connotes utilization to satisfy a demand or need for a product or service.

Morton (1967, p. 153) has described the millimeter wave transmission project in Bell Telephone Laboratories as a "serious failure" because the economic need had not yet appeared despite the technical progress made in the project’s life span of 30 years. It is possible to have "technical advance" without economic use, as illustrated in Figure 1, a four-stage diagram of technical advance. Figure 1 demonstrates that at a given point in time (t = 0) there exists a state-of-the-art situation or inventory of technical knowledge. This technical knowledge is embodied in various economic uses, and these uses may be tabulated at a given point in time (stage I, t = 0).

The first step in the process of utilization of technology is demand recognition. This is in harmony with the idea expressed by Pounds (1965) that the solution to a problem is conditional on problem identification. Some precise definitional considerations are necessary before the basic concept of demand recognition can be used.

A more common expression is need recognition. Needs are infinite. There must be a willingness to act, to allocate resources to meet a given need, before need is translated into demand. For example, Galbraith (1958), in The Affluent Society, expressed the opinion that there was a need for public sector services that was not being met because of the values of those who influence resource allocations between public and private sectors. At the time of Galbraith’s book, these needs were not expressed as demands, and funds were not supplied for such activities as air pollution control, education of the poor, and health services for the aced. Everyone has a need for something more than he has; demand represents the choices that are made, given a funding constraint.

A critical factor in technology transfer is, therefore, the recognition of demands that are not being satisfied by the technology currently in use. A second factor is the recognition of technical feasibility. Technical feasibility recognition is defined as the discovery that available technical information (with perceived modifications) would provide a new technical capability. This does not indicate that a potential use (i.e., demand recognition) has been identified. Large expenditures are made in fields such as high energy particle physics and lasers because of technical feasibility recognition despite the failure to link the expected advances in technical capabilities with specified uses that are based upon demand recognition.

Innovation is most likely to be initiated when recognition of a demand and a feasible technical solution for the specified demand are fused and a satisfactory technical response to a user requirement becomes available. Figure 2 diagrams this process of fusion, occurring before search and inventive activity have been undertaken. Other diagrams would be necessary to illustrate situations where demand and technical feasibility recognition were not simultaneous as indicated in Figure 2. Demand recognition may result in the initiation of inventive behavior without technical feasibility recognition (e.g., the national cancer research effort). And, as indicated in the example of the high energy particle research program, technical feasibility recognition may result in the funding of inventive effort without a perceived economic demand for the results of the expected technical progress.

The demand-technical feasibility fusion phenomenon as illustrated in the micromodel of technical advance presented in Figure 2 may result in two further stages of action. Further search, adaptation, and inventive activity (noted as I) may be necessary, or a solution may be conceived without a significant input into further search and inventive effort (diagrammed in flow II of Figure 2). If demand-technical feasibility fusion occurs successfully (i.e., the perceptions of demand and technical feasibility are accurate), then innovation and diffusion of innovation will occur.⁹

Demand recognition results from an awareness of a desired state that is superior to the actual state for the satisfaction of a specified demand. In order to make the concept of demand recognition or the concept of fusion into design concept operational, it is necessary to specify how such actions occur. Take, for example, Goldmark’s invention of the long-play microgroove record. It has been reported that Goldmark experienced demand recognition when he was listening to Horowitz playing Brahms and was annoyed when his pleasure ended with a dick of the 78 r.p.m. record at an inopportune time. Goldmark then invented the 33 r.p.m. record (Edson 1967, p. 82). It is probable that there were many music lovers before Goldmark who were enraged by the limitations of the 78 r.p.m. record system. But Goldmark did something about the problem, and he is credited with demand-technical, feasibility recognition leading to invention.

A perception rated as demand recognition clearly requires some effort¹⁰ or response to the perceived demand. The person credited with demand recognition must initiate action to move toward a perceived preferred state. Design concept also requires action in order to bring an improvement based upon demand and technical feasibility to some observable level of technical realization closer to an innovation than existed previously." Ability/willingness to take action, as defined at the M.I.T. Conference, is thus an indispensable factor in the process of technology transfer into utilization (stages Ill and IV of Figure 1).

The combination of design concept and ability/willingness to take action is described by Morison (1966, chapter 2) in his "Gunfire at Sea" example. It is probable that the inaccuracy of naval gunfire had been recognized previously.’¹² But it was Sir Percy Scott who invented continuous-aim firing. The example illustrates two ideas. First, all of the technology needed for continuous-aim firing (telescope, elevating gear, the gun) was readily available. Second, the combination of fusion into design concept and ability/willingness to respond had to exist. Examples cited earlier show that there can be design concept fusion resulting in invention without the ability/willingness to respond to demand by achieving innovation and its diffusion.

The micro process in Figure 2 may be related to the structure of the process of technical advance presented in Figure 1. The current state of technical knowledge and its use is the same concept in both cases. Naturally, interest at the micro level in Figure 2 is with a specific subset of the total as presented in Figure 1. A movement from stage I to stage III as diagrammed in Figure 1 is similar to the case II situation in Figure 2, because in both instances the needed technical knowledge is available. The relationship between Figures 1 and 2 permits the integration of most of the available research on the process of technical advance and technology transfer.

The process of technical advance vis-à-vis the utilization of the inventory of available technical knowledge is a function of (1) demand recognition, (2) technical feasibility recognition, and (3) the ability/willingness to achieve utilization provided by recognition and subsequent development of a solution. What are the determinants of these three factors in the transfer of technology into new uses? How do the determinants vary by level of organization? These two questions are presented in Table 1, where the determinants of recognition and ability/willingness are related to the level of organization under investigation. The specified cells in the table have been left empty because of the paucity of information currently available on the problem.

The work of future research on these questions may well be conceived in terms of completing the gaps that are structured by Table 1. The present low level of understanding of the process leading to the utilization of new technology has serious consequences. It is possible to cite innumerable examples of failures or lost opportunities that have resulted from the fact that these most basic elements in the transfer of technology are, in practice, almost a random process.’¹³

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