Developed and developing countries: Global innovation


Successful technology transfer from developed to developing countries can improve the lives of many and spur economic growth. It is known that technology transfer is a great issue of concern for researchers, companies, and governments. Developing countries are in need of new and matured technologies to help local companies compete in the global market place but this cannot be accomplished without properly planned knowledge and technology transfer processes put in place. Over the years developed countries of the world have invested millions of dollars to achieve technology transfer through government funded research & development (R&D) projects, universities, private and public companies for commercialization. Developing countries on the other hand have been busy trying to adopt matured technologies instead of the transfer of technologies to expand and produce new innovative products and solutions. During my research, I find out that one of the keys to delivering the most competitive advantage to companies or governments in developing countries pursuing a knowledge or technology transfer strategy lies in its ability to unlock tacit knowledge from the donating company or government. "Tacit knowledge is very difficult to quantify but can be transferred if an only if there is appropriate communication and trust between the parties involve" Li-Hua (2009). Developing countries like Senegal, Kenya, Colombia, Indonesia and Ghana has been able to successfully transfer technologies through the migration and development of native skilled workers with industry experience from developed countries, foreign direct investments, and joint ventures in R&D projects.

The first section of this paper will review literature on technology and knowledge transfer, methods or channels of transfer. Section two will summarize example technology transfer case studies followed by section three which will address the relationship of technology transfer to R&D and innovation strategies, the pros and cons of technology transfer, and the process of technology transfer between developed and developing countries, and its implications for firms. The final section will suggest methods for a successful technology tranfer and make recommendations to stake holders of developing countries.

SECTION I - Summary of key points

Technology and knowledge transfer has been a great challenge for most developing countries especially those in Africa and this is due in part to the lack of adequate road & transportation networks, poor information and communications technology infrastructure, limited number of science and technology institutions of learning, poor relationships between private, public companies and universities, political instability and the inability to successfully transfer, adapt, and diffuse new and matured technologies from developed countries.

Literature Review

The major terms and concepts used in this paper are technology, technology transfer, knowledge and knowledge transfer. These terms have different but similar meanings to different people working in different fields of life. I have attempted to put together some of the definitions used by scholars in other papers

Definitions of Technology

Megantz (2002), claimed scientists defined technology as the end product of research, inventions and know-how that may be developable into a commercial product while engineers defined it as a tool or process that can be employed to build better products. In another definition technology could be viewed as the technique used by mankind and machine to support their daily activities and this technology can be used at work or home. It could also be seen as a collection of theoretical and practical knowledge and skills that are used by firms to develop and produce goods and services (P.K.De, 2004). This term can be used generally or to specific fields. Examples of where the terms can be used to specific fields are; information technology, construction technology, medical technology and etc.

Definitions of Technology Transfer

Technology transfer is usually considered the basis for technical innovation and often it's the after-effects in a form of innovation diffusion. It can also be defined as an inflow of technical knowledge to the market where it is sold and bought Andrzej, (2005). Andrzej also argued that technology transfer flows from one place to another where it can be bought or sold in the form of a product or service. Other scholars and researchers have defined technology transfer as a process in the following forms. For example, According to Jasinski (1999), technology transfer exists in the following main forms; the sales or purchase of the result of a research & development (R&D) work, the turnover of licenses and patents, the utility models, know-how, sales and purchase of production techniques and means of automation, the technological consulting and technical training of staff and the exchange of technological information. A simple and straight forward definition put forward by **** states, "technology transfer is the process of sharing of skills, knowledge, technologies, methods of manufacturing, samples of manufacturing and facilities among governments and other institutions to ensure that scientific and technological developments are accessible to a wider range of users who can then further develop and exploit the technology into new products, processes, applications, materials or services"

Definition of Knowledge

Researchers and academics have defined knowledge in various forms and ways given their different understanding of the meaning of term. Ganesh (2000) defined knowledge as an organized combination of ideas, rules, procedures and information. Knowledge and information are sometimes mistakenly considered to be the same, but they are different. Koniger and Janowitz (1995) argued that information is disorganized, while knowledge is organized. Knowledge is more meaningful and richer than information and knowledge could be gained when information is acted upon. Davenport and Prusak defined knowledge as "a fluid of framed experience, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information". Within a firm, knowledge is the most valuable resource because it embodies intangible assets, routines, and creative processes that are difficult to imitate (Grant RM, (1996) & Liebeskind JP (1996)). It is also noted that experience increases knowledge which might be difficult to transfer. In other words experience can be considered as tacit knowledge. That is why tacit knowledge has been the key interest of knowledge management according to most scholars. Knowledge can be divided into tacit and explicit knowledge; "Explicit knowledge can be articulated into formal language, including grammatical statements (words and numbers), mathematical expressions, specifications, manuals, etc. Explicit knowledge can be readily transmitted to others. Also, it can easily be processed by a computer, transmitted electronically, or stored in databases" (SOS.NET). "Tacit knowledge is personal knowledge embedded in individual experience and involves intangible factors, such as personal beliefs, perspective, and the value system. Tacit knowledge is hard to articulate with formal language (hard, but not impossible). It contains subjective insights, intuitions, and hunches. Before tacit knowledge can be communicated, it must be converted into words, models, or numbers that can be understand. In addition, there are two dimensions to tacit knowledge: technical and cognitive dimensions" (SOS.NET)

Knowledge Transfer

Knowledge transfer can be defined as the process through which an organizational unit is affected by the experience of another (Argote and Ingram, 2000). According to RCUK (2006), knowledge transfer means the two-way transfer of ideas, research results, expertise or skills between one party and another that enables the creation of new knowledge and its use in; the development of innovative new products, processes and or services and the development and implementation of public policy. Sveiby (1997), argues that two main perspective are adopted in modeling knowledge transfer: knowledge can be viewed either as an object, which can be directly observed, stored and successively reuses and transferred, or as a process i.e. a flow of interacting changes taking place in people who learn.

Definitions of Research and Development (R&D)

Three types of R&D may be distinguished:

Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts, without any particular application or use in view.

Applied research is also original investigation undertaken in order to acquire new knowledge. It is, however, directed primarily towards a specific practical aim or objective.

Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience, that is directed to producing new materials, products or devices, installing new processes, systems and services, or improving substantially those already produced or installed.

Methods or channels of Technology Transfer:

Technology and knowledge is transferred through Foreign Direct Investment (FDI), Joint Ventures, Multi National Co-corporation (MNC), Licensing Agreement, and movement of people.

Foreign Direct Investment (FDI)

FDI have been a channel for technology transfer approved by many authors because of its direct impact on economic development and low cost of transfer. But the choice of choosing what method to channel technology depends on the countries market size, market growth, the threat of imitation, and the Intellectual Property Rights (IPR). For developing countries to acquire technology through foreign direct investment there should be abundance of skilled and semi-skilled workers and also a strong IPR protection to attract investors, these will increase the level of tacit knowledge (know-how) absorption.

The multi National Corporation (MNC)

This is media of technology and knowledge transfer involves the use of expatriates. "Expatriates are used for the transfer of knowledge and technology by the MNC. According to Dana & Snejina (2004), the more MNC uses expatriate for temporary assignments less than a year, the greater the expatriates' ability to transfer knowledge while the more the MNC uses expatriate for long-term assignments more than one year, the greater the willingness to transfer knowledge. Haris (2002) argued that, expatriates' with long-term assignments remain critical for skill transfer, management control and management developments while expatriates' with temporary assignment are used mainly for skill transfer.

Joint Venture

Joint Venture typically involves less risk than strategic alliances, acquisitions or financing subsidiaries, they tend to be more common, as skills, attributes and resources are sought through mutual business objectives (Czinkota et al, 1994). With joint ventures companies can pursue common business-related purposes, use harmonizing technology or research techniques, increase capital and bargaining power, extend the risk of scale; and surmount entry barriers gaining market share and therefore power (Boyett and Boyett, 2001; Linklater and Paines, 1990). The expansion of joint venture in any economy leads to Multinational Corporation; therefore encourage technology and knowledge transfer. Mowery et al (1996) argued that joint venture is superior means to enhance a firm's positioning through capability learning and knowledge transfer.

Licensing Agreement

A License is a contract which authorizes the use or exploitation of the subject matter of the license for a specified purpose and period of time with all other right maintained by the owner of the technology (Thomas, 1998). He also argued that companies wishing to expand into the international arena are finding that licensing or transferring their technology provides a low risk and highly profitable alternative to direct export, establishing a foreign branch, subsidiary or joint venture. These arguments by Thomas can only benefit the recipient and not the donor at the long run. The reason for technology transfer is to benefit both parties and at the long run, the donor should be independent of the technology gained. The motivation for licensing of technology and product could be for the penetration of the international market. Companies are willing to license their technology to countries where they do not have penetration through export or direct investment and also selling of their product. Countries willing to embark on technology transfer through licensing must be sure of the credibility of the licensors and their willingness to transfer technology.

Movement of People

Little attention has been given to the role of labor turnover as a channel for international technology transfer (ITT). Some studies have found that intra-national labor turnover from MNCs to local firms is limited. Gershenberg (1987), while others find the opposite (Rhee, 1990). One explanation is Mexico's maquiladora sector as a recent example of vertical ITT. Most maquiladoras began as subsidiaries of US firms that shifted labor-intensive assembly operations to Mexico. However, over time the maquiladoras adopted more sophisticated production techniques, many of which were imported from the US (Saggi, 2002). Similar findings apply to transition economies, see e.g., Smarzynska (2002). In the case of intra-firm ITT the MNC retains proprietary control of the know-how, while in the arm's length case access to these assets must be provided the licensee. That in countries where local firms are not too far behind MNCs in technical terms, labor turnover is more likely. Thus, the ability of local firms to absorb new technologies is a determinant of whether labor turnover is a means of technology diffusion. The feasibility (profitability) of creating new companies is another factor (Saggi, 2002). International movement of people associated with nationals studying or working abroad for a limited period and applying their new knowledge when they return, or the inward movement of foreign nationals into the country is another potential channel for ITT. A challenge for developing countries is to facilitate temporary movement abroad and to encourage returnees to undertake local research and business development.

SECTION II - Summary of technology transfer case studies

Most of the case studies summarized in this section where selected within 30 case studies included in a special report titled "Methodological and Technological issues in Technology Transfer" published by Intergovernmental Panel on Climate Change (IPCC) online.

Making a contribution to the health sector in Ghana

According to the International Organization for Migration (IOM), Ghana faces a severe brain drain of professional health workers, such as medical doctors and nurses. For this reason, IOM launched the Migration for Development in Africa (MIDA) Ghana Health Project in cooperation with the Ghanaian Ministry of Health and the Dutch Embassy in Accra. "The objective of the project is to contribute to the development of the health sector in Ghana". They implemented two methods; Ghanaian and other African migrants living and working in the Netherlands, the United Kingdom, Germany and other EU countries transferred knowledge, skills and experiences through temporary assignments in Ghana. On the other hand there is the possibility for Ghanaians to travel for professional training to the Netherlands or the United Kingdom. Ghana I & II phases were successful and hence IOM in April 2008 started MIDA Ghana phase III project. The project aims to contribute to the strengthening of human resource development in the health sector through medical knowledge transfer

Butane Gas Stove in Senegal

This case involved the French companies Total, Totalgaz, the government of Senegal, the European Development Fund, about 50 distribution companies, and local communities. The consumption of fuel wood was leading to deforestation and desertification in Senegal. But the introduction of butane as a household fuel with a suitable energy efficient stove helped to turn the tide. Totalgaz was a leader in the Liquefied Petroleum Gas (LPG) market. The Senegalese Government subsidized the use of butane gas and waived a levy on bottles or accessories. The European Development Fund financed the three years Regional Gas Program and also financed the training of workers in the region from 1989 to 1992, with more than US$ 14 million. As a result of this financing, the retail distribution flourished. Butane was selected as the effective fuel because it was cheap and easy to transport. Total designed a new stove, which was simple to use, stable, cheap and met all the cooking requirements. The unit cost in 1993 was the equivalent of US$ 16. This new gas stove, 'Nopale', was a success and is now an everyday part of the Senegalese way of life. This case demonstrates how technology cooperation allowed the government of Senegal to diversify energy sources as well as protect the environment through technology transfer from France to Senegal. LPG is now widely used as the domestic fuel in place of wood and charcoal, reducing deforestation. Charcoal consumption of 400,000 tons a year was reduced to about 100,000 tons a year due to the butane program, saving 20,000 hectares of Senegalese forests. Supply of LPG in the 6 kg bottle became a main activity of Totalgaz in Senegal. Sales of Nopale cooking gas rose from 402 tons in 1983 to more than 22,360 tons in 1994. The bottles and the burners for the Nopale were imported, but stands were made locally to reduce costs. The butane program produced productive partnerships with local people and led to more job opportunities.

Bamboo Fiber Reinforced Cement Board for Carbon Sequestration

Cement board has become a standard construction material in the tropics. The mixing of cement with mineral fibers or synthetic substitutes has evolved into a major industry. Taiheyo Cement, the second largest cement producer in the world, invested in a special research program in association with the Zero Emissions program to substitute the mineral and synthetic fibers with natural ones. This has now been successfully implemented. Researchers identified bamboo-specific fungi that would eliminate all sugars after crushing the bamboo. This process saves water and offers a good quality fiber with no residual sugars. The blending of 50% cement with 50% bamboo fibers reverses the carbon dioxide balance. Since the cement board has an expected life of 30 years, the fast growing species like Bambusa vulgaris offers a unique opportunity for the construction industry to adhere to the Kyoto Protocol. The research was undertaken in Japan, but the first pilot plant was located in Java, Indonesia, just one hour outside Jakarta. The proximity to a cheap and abundant supply of bamboo is critical in the financial viability of the operation. On the basis of this first experience, an improved version of the production technology has been obtained. A second factory is now being planned in Manizales, Colombia, the centre of bamboo forests in Latin America. This permits the fast and pragmatic transfer of technologies developed in Japan to be fine-tuned in Indonesia and then transferred to Latin America.

The Commercial Dissemination of Photovoltaic Systems in Kenya

The commercial market for solar photovoltaic (PV) home systems has been active in Kenya for over 10 years. Over 80,000 solar home systems (SHSs) have been sold, providing power to over 1% of the rural population of roughly 25 million people. The Kenyan PV market evolved without subsidies or significant government or multinational agency support, although the activities of several private and volunteer organizations helped to disseminate information on photovoltaic and provide opportunities. Today dozens of companies are active in the PV industry in east Africa, and annual sales may exceed 20,000 - 30,000 individual systems and over 300 kWp (Msinga et al., 1997). USAID, GTZ, Care and Bellerive foundations were instrumental in the development and dissemination process of cook stoves. A key aspect of the dissemination process for photovoltaic in Kenya is the degree that it has been market driven, and thus the 'approach' taken is best described as 'market realism'. Initially, most systems were relatively large, and, as noted above, either donated or purchased by rural elites.

A recent survey of over 400 households (Msinga et al., 1997) found that while the mean income was US$108/month, three-fourths of the system owners earned less than US$100/month, which is close to the national average. Recently the average system size had decreased from over 40 Wp to about 20 Wp, including the sales of large numbers of 12-14 Wp packaged systems. Expanding interest in SHSs in the late 1980s and early 1990s was accompanied by a change in the retail network and the development of a diverse regional network of assembly, sales, installation, and maintenance businesses. While solar panels are still imported, local companies now manufacture batteries for use in PV systems, and the 'balance-of-system' (electronics, charge controllers, lights and outlets, and other components) is assembled or manufactured in Kenya. Local agents now sell over half of all modules, and three-fourths of the PV batteries. Sales of SHSs in Kenya have been increasing at 10 - 18% per year, and this trend is expected to continue.

PV systems have had a significant impact in Kenya and East Africa. Surveys indicate that most of the systems (> 60%) were performing well, with the majority of the remaining systems not in use because the battery had no charge (Acker and Kammen, 1996; Msinga et al., 1997). Most users purchased PV for the combined services of lighting, TV, and radio, and were pleased with the systems and would recommend them to others. In many locations the PV systems are simply cheaper than the kerosene, diesel or other alternatives, and in virtually every case the service provided by the SHS is superior in quality and reliability to these alternatives. The PV experience in Kenya has also proved to be an important model for SHS introduction efforts in other developing nations (Cabraal et al., 1995), and Kenya as well as a number of other nations is now the target for international aid and development funding to expand the markets for rural PV in developing nations. Kenya has also become the focus for a regional PV market that extends into neighboring nations, as well as to other regions of Africa.

ROK-5 Mangrove Rice Variety in Sierra Leone

The development of a new mangrove rice variety in Africa is an important case study of technology development and diffusion that relates to the opportunity for agriculture to contribute to increased output of food while at the same time reducing the impact of agriculture on global climate change per unit of food produced. This development involved both international cooperation and a critical commitment of local resources to be successful and has proved itself to be an important contributor to increasing rice production in Sierra Leone with important potential contributions to similar areas in Africa. This project developed and extended a rice variety for mangrove rice production that increased yield per unit of land and per unit of inputs as well as adapting to changes in climate that had already occurred. The diminishing rain forest resulted in less rainfall and in a reduction of the fresh water available to mangrove rice systems. Thus, a shorter-season variety to capture available seasonal rainfall was a logical potential adaptation. Pest resistance was also added which reduced energy consumption from the use of pesticides. The incentive for this was a national and regional concern over adequate food production. The path used was the development of a new rice variety to improve yields and reduce the level of inputs required. Stakeholders included consumers and farmers in Sierra Leone, Sierra Leone agricultural researchers at Rokupr, and the West African Rice Research Development Association (WARDA). Critical to the choice of this path was the farming systems research which had been carried out years earlier. This identified the problem, provided an understanding of mangrove rice farming systems, and described the parameters under which new technology would be successful and successfully transferred. The barriers to technology transfer included a civil war, a collapsed transportation system, no capital for investment, and the lack of government resources to mount a large-scale technology transfer effort.

Much of the success of this effort hinged on the accident of a critical mass of researchers at the government rice research station in Rokupr Sierra Leone and the interest of WARDA in this effort. The impact was an increase in rice output from mangrove rice production where climate change was beginning to reduce yields from this agricultural resource. This lead to improved conditions for farmers and more rice available beyond farm-family subsistence for distribution and sale to local consumers. This case is replicable, but the key was the existence of local research and development capacity such as the Rokupr rice research station with a critical mass of competent staff. (Due to civil war, this institution is no longer a viable operation.) Its viability was also a result of the willingness of WARDA to give it the marginal resources to do the job that the government of Sierra Leone was unwilling or unable to supply.

Research, Development and Commercialization of the Kenya Ceramic Jiko (KCJ)

The Kenya Ceramic Stove, or Jiko (KCJ), is a charcoal-burning stove that is roughly 30% efficient, and if used properly can save 20 - 50% in fuel consumption over simple 'unimproved' stoves or a traditional three-stone fire (Walubengo, 1995). The KCJ was developed after study of a Thai 'bucket' stove that was examined partially through a 'South-South' dialog over stove characteristics and design. There are now more than 200 businesses, artisans, and micro-enterprise or informal sector manufacturers producing over 13,000 stoves each month. There are over 700,000 KCJ's in use in Kenya (Walubengo, 1995). The KCJ is found in over 50% of all urban homes, and roughly 16% of rural homes. Stove models adapted from the KCJ are now being disseminated in many countries across Africa, and wood-burning variants are being introduced and promoted in rural areas as well. The fuel savings of the KCJ have important economic benefits to the users, who in some cases devote a quarter of family income to charcoal purchases (Kammen, 1995).

The KCJ is the result of research on stove design, efficiency, and patterns of usage initiated in the 1970's and actively continued through the 1980s (Barnes et al., 1994; Kammen, 1995). A single private sector company, Jerri International, served as the initial manufacturer of the KCJ. Since 1982 the Kenya Energy and Environment Organization (KENGO) has organized promotion and outreach efforts to encourage the use of the KCJ. A number of NGOs and national development agencies have played important roles in the evolution of the stove and the stove dissemination process, and have worked both within Kenya and across sub-Saharan Africa to promote the manufacture and sales of the KCJ through a network of informal-sector stove entrepreneurs. A decision was made not to directly subsidize commercial stove production and dissemination. Initially stoves were expensive (~ US$ 15/stove) sales were slow, and quality control has been a significant problem. Continued research and refinement and expanded numbers and types of manufacturers and vendors increased competition, and spurred innovations in materials used and in production methods. The KCJ can now be purchased in a variety of sizes and styles. Prices for KCJ models have decreased to roughly US$ 1 - 3 (Walubengo, 1995). This decrease is consistent with the 'learning curve' theory of price reductions through innovations that result from experience gained in the manufacturing, distribution, marketing and sales process. Two architects of the stove program received an international award for their work, which is an important recognition for the need for research on often unheralded but important technologies. The ceramic liner of the KCJ degrades over time, and needs to be replaced. Street vendors of stoves, and many of the larger stove sales outlets take 'used' stoves back, discounting the purchase of a new stove. The liners of the old stove are then removed, the metal cladding is repaired, if needed, and the stove is reassembled, repainted, and resold. This process has also served to foster wider informal sector stove economy.

Summary of lessons learned from the Case studies

The lessons drawn from the Senegal case shows that while avoiding direct subsidies, a number of organizations provide training, outreach services, publicity, and logistical support for the local commercial industry. This 'soft' subsidy can be particularly effective in facilitating the development and acceptance of a new technology without introducing the price distortions that can be associated with some forms of subsidy.

The lessons for international involvement that can be drawn from the KCJ case include: Support for research both within developing nations and for research collaborations between developing nations can lead to significant innovations in the performance and commercialization of what had been regarded by many as a simple and mature technology.

Extended, stable, program support is invaluable while short-lived, episodic funding can lead to waste and inefficiency. There are significant technical, social, cultural and economic questions that must be addressed even for technologies that may appear simple. Support for stove program need not take the form of direct subsidies. Partnerships between institutional groups, including NGOs and international organizations, involved in R&D, promotion, and training can support commercial producers and sellers if the mechanisms for feedback and cooperation are planned and developed.

For successful technology transfer there must be locally-based and supported institutions with a primary stake in the technology and in its successful transfer. There may also be instances where an international organization can provide marginal resources to get the job done. However, the transfer of the technology by the users themselves depended upon the ease of local adaptability to the technology, the confidence farmers had in their local institution and its products, and effective demonstration of its success. The development of technology also depends upon a degree of civil order and investment by the local government in technology development and transfer. Where there are similar crops and farming systems in different countries there is also a natural opportunity for several countries to combine and pool resources for technology development and transfer.

The key lesson learned is that if there is an essential need and the technology is good enough agriculture technology can be transferred by farmers without new formal technology transfer institutions or efforts. A new effort may assist and speed up the transfer. However, in the case of a variety or practice that does not require new investment and changes in basic skills, farmers will adopt and pass this technology on to their neighbors rapidly. The international community needs to recognize that parachuting in a new technology from the outside often does not work and faces especially severe problems in technology transfer. What is key is how international resources are spent. In cases like this, international resources must involve and contribute to the national program to ensure appropriateness and transfer based on local ownership and local institutions that are already trusted in technology transfer.

A variety of lessons emerge from the Kenya experience. First, a relatively small set of organizations and individuals providing training and support services can provide a critical infrastructure for an emerging technology. Second, subsidies are not necessarily needed to promote technology transfer, although logistical support, training courses, and performance standards all have central roles that require policy attention and commitments of resources. Critical to the sustainability of the PV industry has been the diversity of commercial interests. The role for government and international policy action is also significant, and includes setting policies that promote independent power producers, limit or remove taxes and tariffs on desirable clean energy alternatives, and provide credit or financing to both companies and end-users.

This program demonstrates that there are unexpected opportunities for carbon sequestration. These approaches require innovative biotechnologies such as the effective use of sugar digesting fungi enzymes and the combination of organic and inorganic materials. The program of Taiheyo Cement has demonstrated that this is not only feasible, it is commercially viable. And even better, the consumer has access to a quality product that leaves a beautiful impression.

Technology transfer from a developed country partner to developing countries will be successful if the technology is wanted by the recipient countries. The oil company Total, the main stakeholder, had invested in developing a simple and new energy efficient cooking stove for the local market, which had become a part of every household. The close working relationship between the various stakeholders is an important issue, even if the technology being transferred is a simple one.


The relationship between technology transfer, R&D and innovation strategies

R&D generally comprises any creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture, society, and the use of this stock of knowledge to devise new applications, products, services and solutions for public, private good and commercialization purposes ( In its simplest form, it can be defined as all research activities, both basic and applied, and all development activities that are performed by research institutions and public and private funded research centers ( In developed countries like the Unites States, technology and knowledge is generally transferred from R&D centers to companies or government for commercialization which results into an end product, service or solution. The figure below schematizes how technology is transferred from R&D centers to the end users. It must be noted that over 50% of fortune 500 INCs in the United States and the world have their own R&D centers. Some of these companies also collaborate with the few top research institutions in research and development projects. This means technology transfer, R&D and innovation strategies are inter-twinned and one cannot exist without the other in the company or government pursing this strategy wants to succeed. In developing countries, the case is different.

In other for developing countries to successfully achieve technology transfer, factors such as good investment policy, basic infrastructures, good information and communication technology infrastructures, and support for the establishment of public research and development centers will need to be put in place (Li-Hua (2009). Some developing countries have tried to encourage foreign investment participation in their countries over the years, but these have been very difficult especially due to the lack of political stability and skilled labor in these countries. Those countries that succeeded in attracting few foreign investments still lack the successful transfer of technology from foreign companies to indigenous companies which is due in part to the lack of government's participation and partnership with universities and research & development project. University and R&D projects are usually not well funded by governments in developing countries relationship between companies and universities is very weak or non-existence. Because most developing countries believe in technology adoption than technology transfer, very little efforts are made by companies and governments to invest in technology transfer projects and this is because; they want a quicker way of gaining the technology instead of going through the process of transfer which usually takes a little longer to be achieved. In my opinion, developed countries will be willing to set up manufacturing and R&D facilities in countries with strong Intellectual Property Rights (IPR). But in contrary to this, some authors' belief that weaker patent protection may be desirable for technology transfer in developing countries and this in their view allow indigenous companies to produce and compete with foreign companies. Li-Hua (2009). Prabuddha (2004) argued that the treatment of intellectual property among other policy instruments is an important factor on a country's ability to attract R&D investment from multinational enterprises (MNEs)

The Pros and cons of technology transfer

One may argue that international technology transfer from developed countries to developing countries should be promoted because it's mutually beneficial to both parties especially when the technology involved is matured and help solve the world's social problems like, poverty, child mortality, energy, global warming, food security and etc. The pros and cons of technology transfer rely depends on the type of technology to be transferred and the parties involve. For general pros, some authors claimed that international technology transfer to developing countries will allow enterprises in developed countries to (1) prolong the life circle of products and services that are becoming obsolete in the home market, (2) to find new, growing markets, and (3) to ensure its own survival by relocating. (Baranson, Jack). This in my opinion is true. In an article I read about GE disrupting itself in the process of finding new, growing markets and ensuring its own survival by relocating some of its R&D work to India, I found out that, GE recently developed two products to compete for market share in emerging markets like India and China but due their small size and low cost, the products where considered revolutionary even in the developed markets. Most scholars consider what GE did as reserve innovation and yes it is because it's the opposite of the globalization approach that many industrial-goods manufacturers based in developed countries have employed for decades. Immelt, Govindarajan, and Trimble (2009).

All though it is believed that technology transfer from developed countries benefits governments and companies in developing countries by enabling them to generate and improve products and processes to gain export markets. Yet others on the other hand, argue that these transfers should be restricted to protect national interests because its long-term effect is rather negative. Some opponents in developed countries argue that technology transfer to developing countries has bounce back effects ultimately damaging their own industries and employment. Those opponents in developing countries argue that technology transfer results in an economic and technological dependence of developing countries on developed countries. These arguments can be true or false depending on the situation and the again the parties involve. In Sierra Leone for example, there is no known web or email hosting company. All websites owned and operated by the government are hosted and managed by third party companies in developed countries and this includes website of state owned enterprise like the national telecommunication company. All the technology used in managing telecommunication traffic into and out of the country is also owned, managed and operated by foreign expatriate based in the country with very little involvement of nationals. Sierra Leone need these types of technologies but cannot be transferred to the government or companies due to lack of an adequate ICT infrastructure in the country. Because of these reasons, the country is dependent on developed countries to transfer these technologies on demand but no further research or development is encouraged in these fields to built upon, innovate or diffuse the technologies being transferred into the country. This is a pro for the donor companies and countries and a con for the recipient country.

Implications for firms

Because of the limited size of internal markets and early stages of industrial development most international firms experience particular difficulties in developing countries. This coupled with forced industrialization and a general tendency toward economic nationalism policies also make it difficult to invest or transfer technology into developing countries. Most developing countries also generally lack the full range of skilled human resource capacity needed to run successful manafacturing operations. It is also very known that some of these countries insist on national ownership and have strigent staffing requirements which often inhibits even the interim use of foreign technicians in vital areas of plant operations. In local procurement policies of protection and high domestic content also create serious problems. Some scholars also argue that most recently, Governments in developing countries have been mandating local manufacturers to produce for export markets, which places an even heavier burden on technology transfer agents in terms of quality and cost competitiveness. Exchange controls associated with industrilization policies, remitting equity earnings or royalties and licensing fees and balance-of-payment difficulties also add to the problem of running plants in developing countries.

Recipient firm's characteristics

One of the major factores in considering whether to enter into license arrangement as an alternative to direct investment is the technical absorptive capability of the recipient firm and its potential in competitive markets

For example, licensing arrangements are often preferred with industrially-advanced partners, because of the ease of transfer coupled with the advantages of cross-licensing. Direct investment is sometimes preferred in underdeveloped countries because of the uncertainties and added difficulties in imparting technology in those areas. Donor firms are also more willing to disclose technical know-how to less sophisticated partners in devoping countries than they are to industrially-advanced firms, which may eventually become serious commercial rivals in third markets. Where the donor firm has a strong technological lead and a dynamic R&D program to maintain that lead, this consideration may be less important.

Donor firm's characteristics

The transfer capability, financial position, and corporate philosophy of the donor firm are among the decisive factors influencing licensing-investment decisions. International firms may realize returns on their technological assets in a variety of ways; dividends on equity investment, sale of components and parts, royalties, licensing fees , and technical assistance fees. Direct investment involves the commitment of financial and managerial resources to which there are limits, even for the largest corporations. For example, in the automitive field, international firms have had to devlop low-cost systems to package and ship components and provide cadres of managers and technicians to staff overseas assembly and manufactureing operations in newly industrializing countries. Even straight licensing arrangements often require commitment of manageril resources and the devlopment of new corporate capabilities, if product standards are to be maintained internationally. Corporate views on how to maximize long-run profits (cost of developing transfer apabilities as against benefits from licensing versus direct investment) having a strong bearing upon the chosen transfer mode. Certain firms view technology as an intgral part of their marketing-manufacturing package and insist on full ownership and control to maximize international profit.

Conflicting interests over licensing versus investment choices

International firms prefer direct investment to licensing where;

  1. The financial and human resources are available
  2. Control over present and future market development is desirable, particularly with products and techniques having a longer life circle
  3. The firm fears licensing will result in the give-away of valuable know-how or will threaten its position in established markets
  4. The transfer involves a broad line of products or is an integrated part of marketing and financial management
  5. The technology is highly complex or the foreign affiliate lacks industrial sophiscation and the transfer requires a prolonged and sustained relatioship to effect the transfer or
  6. There is a concern over protecting the product standards or trade name. also, for U.S. firms, transfer to controlled subsidiaries avoids most antitrust aspects entailed in licensing to third parties International corporations favor licensing over investment where;

Benefit and Challenges of Technology Transfer

The challenges of technology and knowledge transfer have over the years been a great concern to researchers. Because of the closeness between these two elements, their challenges are almost similar. Samli (1985), model the pattern of technology transfer into six dimensions: geography, culture, economy, business, people and government, while Egbu (2000), looked at knowledge transfer in six dimensional ways; people, content, culture, process, infrastructure and technology. These shows that the challenges and benefits of technology and knowledge transfer are similar and that one cannot do without the other. One of the benefits of technology transfer is globalization of industries. Technology transfer brings the world together as one large market place. When technology transfer are properly transfer around the world from developed nation to less developed nation, economic vibrancy will be seen and nation will draw closer to one another making the world look like a large global market place.

Internationalization of domestic market is also a benefit to technology transfer. Product produced by domestic market could compete with large international industry if proper technology is transfer to the domestic market. This will increase production and also economic growth. Some of the barriers of technology transfer to developing countries are also great. These includes; lost of intellectual property, exploitation of indigenous employees, lack of infrastructure, employees attitudes, government policy/legal protection, geographical location, environment, etc.

"Knowledge transfer is an important issue when talking about technology transfer" Li-Hua (2009). Technology transfer will only be achievable in developing countries if academic, policy makers and companies are involved in the process of knowledge transfer. Although, it has been proven difficult to measure the level of technology transfer from foreign companies to local companies, but the measurement of transfer between foreign companies and local companies involves the observation of human communication and interactions, attitude, interest and motivation of all participant of the transfer process. Universities in developing countries have always been involved in the traditional way of teaching without more involvement with companies for research and innovations. Developing countries should be involve in the development of knowledge-based economies and increase demand for innovation which has brought about new challenges for universities to move beyond their traditional role of educational institution and develop more outreach activities in partnership with companies (Etzkowitz and Leydesdorff, 1997; Etzkowitz and Leydesdorff, 2001; Etzkowitz and De Mello, 2003).

The process of technology transfer by developing countries is one of learning and improving their technological capability (Barbosa and Vaidya, 1997). This is a complex, long-term process with various levels of technological competence such as the ability to use the technology, adopt it, stretch it, and eventually to become more independent by developing, designing and selling it.

SECTION IV: Channels of technology tranfer

The figure above schematizes the technology development and transfer process in both developed and developing countries. It must be noted that from the figure, technological knowledge, experience and equipment can be transferred from the upper level to the lower level through various channels between them, such as exports, foreign direct investments, including joint ventures and licensing and imitation.

Tacit Knowledge

Tacit knowledge is the brain behind knowledge and technology transfer. According to Richard (2006), tacit knowledge is a key element that delivers the most sustainable advantages, when looking at knowledge transfer between parties. He also argued that this tacit knowledge is blocked between recipient and donor in terms of knowledge transfer. The figure below shows the framework for effective knowledge transfer by Richard (2006); Tacit knowledge is unlocked when experience on the job is totally transferred to the donor. This could only be done through the following ways;

Direct key transfer; Experience is transferable on the job training. This method of transfer is very effective. The trainer/recipient will train the trainees/donors on the job; by teaching them what is knows at the same time providing practical work for them while he shows to make corrections. Trainee are given project tasking for them to practice what they have leant.

Tea-break; Tea-break is an informal way of transferring experience. This method provides a forum were recipients and donor can discus over tea or at break period in a common room. This method develops social relationship between recipient and donor thereby building trust. As we know trust is a major component of knowledge transfer.

Discussion forum; this is a formal way of transferring knowledge. Formal discussion forum should be created were both donors and recipient discus relevant issues relating to the jobs and their problems at the job. This type of forum provides room were question will be asked directly to the recipient. This could also the termed as questions and answers forum.

Intellectual Property; we all know that strong IPR attract investment. With strong IPR, the trust of investment is increased which attracts know-how. With this binding trust between recipient and donor and with propel agreement and negotiation, the culture of know-how will be transformed to show-how. Implementation of IP Strategy is a factor that affects technology transfer apart from infrastructures, trade, location, investment in-flow, policy, culture, etc. to developing countries. Developing countries should strengthen their IP policy to attract foreign investment. A recipient can limit certain type of technology to be transferred to donor, simply because they want to take advantage of competitiveness. Some authors believe that, for technology to be transferred taking IPRs into consideration, patent protection should be tightening and cost of imitation should be raised on the part of the local company, while others believe that technology could be transferred easily if the country's IP policy is not tough on the indigenous companies. IPR encourage innovation by granting inventors monopoly power over their innovations. With strong IPR, technology transfer will be difficult in developing countries, thereby reducing the rate of technology diffusion. According to Rod and Neil (2006), a stronger IPR protection can help reward creativity and risk-taking even in developing economies, while weak IPR protection can make developing countries remain dependent on dynamically inefficient firms that rely on counterfeiting and imitations. Countries with strong R&D will benefit from stronger IPR, while countries with weak R&D will not benefit directly from stronger IPR because of lack of innovation. Company's internal R&D capacity determines the extent of technology transfer. According to Yanying & Yijun (2007), technology outsourcing to some extent is the extension of a firm's internal R&D capacity. They argued that, for technology outsourcing (transfer) to be successful in a firm, the firm needs to have a strong R&D base. Yanying and Yijun also argued that internal R&D capacity is the key for a firm to retain competitive advantage in the long run. For technology transfer to be effective, both internal R&D and technology transferred must coexist.

Recommendations to stake holders of developing countries.

After analyzing several technology transfer cases that involved technology transfer between a developed and developing country, I found out that majoring of them failed because the donor country was either unable or unwilling to transfer tacit knowledge or the recipient country was incapable of continuing to sponsor the project, or lacked skilled workers with the ability to learn through experience. Developing countries can successfully transfer technology and knowledge if a proper, measurable and goal oriented strategy is put in place. This strategy should include all major stake holders, which includes; the government, Educational institutions, public and private R&D centers and institutions, large, midsized and large private and public companies. If all this stake holders come together and develop a technology and knowledge transfer strategy, most of the problems encountered in the past will be avoided.

The government can create partnerships with foreign and national private sector investors to develop the basic pillars for national development. These are; adequate and efficient road and transportation network to allow free movement of people and goods within and out of the country, adequate and efficient national information and communication technology infrastructure with undersea sub-marine fiber used for international backhaul, built a solid foundation for the establishment of science and technology educational institutes, develop strong intellectual property laws and business establishment policies to encourage foreign investments and joint ventures with multinational enterprises and market the natural resources of the countries and invite foreign companies to invest.

Dougherty (1999), argued that knowledge transfer is about connection not collection. The collection of knowledge is considered when discussing the adoption of knowledge. This process does not allow the continuous flow of knowledge from the recipient to the donor. Therefore, a successful technology transfer can only be implemented when there is continual flow of knowledge transfer between the parties involved. Knowledge is recognized as a fundamental asset of an organization in this current competitive global environment (Teece, 1998). Therefore, knowledge transfer is very important when considering economic strength of a country or company. Knowledge transfer has be defined by authors in different ways, in all the definitions, one thing is very clear and that is, knowledge transfer is a continual flow of knowledge that leads to innovation for economic development.

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