Basically there are two ways of acquiring new technology: develop it or purchase it. The second way of acquiring new technology is commonly called “technology transfer”. The important reasons for purchasing technology are :

(i) it involves little or no R&D investment;

(ii) technology can he used quickly; and

(iii) technical and financial risks are often quite low.

There are also good reasons for selling technology, such as

(i) increasing return on R&D investments;

(ii)technology may not have immediate use; and

(iii) technology has already been utilised upto its limit.

Therefore, technology transfer occurs because of the existence of “buyers” and “sellers”. The sellers are called “transferor” or “licensors” and the buyers are called “transferees” or “licensees” in the technology transfer process.

Transfer, as defined, means the acquiring through purchase and use of technology. Therefore, the definition of technology transfer is the acquisition and use of knowledge. There is no transfer of technology unless and until the technical knowledge is put to use. Technology transfer is not restricted here only to scientific or engineering items.

The manufacturing, marketing, distribution and customer service are among the factors that are included in technology transfer.

The key factors in technology transfer include :

  • Transplantation of technology involves shift from one set of well-defined conditions to another set in which at least one key variable may differ. Secondly, the recipient may apply the technology to a different purpose from that of the supplier.
  • A sense of opportunism prevails in technology transfer, whether justified or not.
  • The transfer process embraces a rich variety of mechanisms and relationships between recipient and donor (supplier of technology). The process can vary from a routine peopleless passive transfer to turnkey contract where the donor takes the full responsibility for all phases of the contract.
  • The nature of the transferred technology and how it is transferred are critical to the success of the technology transfer process.

Technology transfer may begin as a solution to someone else’s problems. Adoption of such “outside solution to solve an `inside’ problem is technology transfer. The advantage lies in avoiding “reinventing the wheel”. 


The following Figures (Source : Mogavexo, L.N., and R. S. Shane, 1982, Technology Transfer and Innovation, Marcel Dekker, New York, pp.2-3) illustrate the models of technology transfer :

Bridging Agencies

Figure-1 : Bridging Agencies

Research n development Diffusion Model

Figure-2 : Research and Development Diffusion Model

Problem Solver Model

Figure-3 : Problem Solver Model

Technology Transfer Summary Model

Figure-4: Technology Transfer Summary Model

Agencies that try to make technology transfers happen include government departments, financial institutions, industries, technology transfer agencies, consultants, venture capital companies, research companies, and R&D organisations, etc. These are the bridging agencies of Figure-1. The users of new technologies comprise private and public sector industries, giant technically oriented agencies such as Indian Space Research Organisation, government departments, Atomic Energy Commission etc. It can be seen that a wide spectrum of participants in the total economy are technology users.

Figure-2 illustrates schematically the diffusion of technology from a mission-oriented agency that supports development of technology for purposes of its mission and then arranges for the technology diffusion to other industries by knowledge transfer. This is usually a slow process. Figure-3 shows the generation and transfer of technology as a companion of problem solving. Figure-4 shows a synthesis of the entire process of technology transfer on a large scale. 


Technology transfer modes have been categorised basically as being passive or active, which refers to the transferor’s role in the application of technology to the solution of the user’s problem. This is illustrated in Figure-5 (Source : Mogavexco, L .N. and R.S. Shane, 1982, Technology Transfer and Innovation, Marcel Dekker, New York, 1982, p. 15). If the transferring mechanism presents the technology to the potential user without assisting the user in its application, namely by a report or oral presentation, then the technology transfer mode is said to be passive, This is actually knowledge transfer. If the transferring activity assists the potential user in the application of technology, then the technology transfer mode is said to be active, In this process, the transferring activity goes beyond mere interpretation of the transmitted data and advises the potential user on how to apply the technology, or demonstrates the applicability of the technology to the perceived use. There could however be an intermediate also, which may be called semi-active mode in which transferring activity is in between the active and passive modes.

Connecting Technolgoy with users

Figure-6 : Connecting Technology with Users

 The three different types. of technology transfer modes are discussed in detail (Source for Figures-6 to 8 : Mogavexco, L.N., and R.S. Shane,1982, Technology Transfer and Innovation, pp. 16-18).

The Passive Mode

The passive mode, also called dissemination mode, is illustrated in Figure-6. The most familiar and widely used form of passive technology transfer is the published literature. There is no direct communication or assistance from the originator of the technology to the producer of finished consumer item. Yet thousands of products are made and consumed from this form of knowledge transfer. Similar forms of passive technology transfer are self-teaching manuals such as television repair manuals and how-to-do-it guides for home repairs.

The Semi-active Mode

In the semi-active mode of technology transfer the role of technology transfer agent (in addition to self-educate on or self-retrieval of elements of technology transfer) is ‘somewhat limited. This is illustrated in Figure-7. The technology transfer agent (consultant or technology expert) screens available pertinent information for product development. Here the role of transfer agent is only that of an interpreter or communicator. He will not actively participate in the application of the technology.

Technology Transfer Modes-passive

Figure-6 : Technology Transfer -Passive mode

Technology Transfer Modes-semi active

Figure-7 : Technology Transfer -Semi active mode

Technology Transfer Modes

Figure-8 : Technology Transfer -Active mode

The Active Mode

The active mode technology transfer carries the process through to an actual demonstration as shown in Figure-8. The figure demonstrates various steps involved in the construction of the model or a product from procurement of material to fabrication and assembly. In this mode the technology transfer agent or consultant will be fully involved and acts as a bridge in technology transfer from technology source to entrepreneur or implementing agency. 

Horizontal and Vertical Technology Transfer

Horizontal Technology Transfer implies transfer of technology from one firm to another: Such transfers ‘take place generally between the firms located in different countries, mainly due to reasons of competition and maturity or near maturity of technologies. Vertical technology transfer means transfer of technology from an R&D organisation to a firm. Such transfers are mostly within the country and the technologies are new, and may often require further efforts in terms of establishing commercial viability. Such a transfer involves considerable risk.


The time and resources required to transfer a given technology depend upon :

  • what is actually transferred
  • the mode of transfer
  • the absorption capabilities of the recipient enterprise
  • the capabilities and motivation of the supplier enterprise and
  • the technology gap between the supplier and the recipient

(Fig. -9′, Source : Asian Productivity Organisation, Tokyo, 1976).

Identification of Technology Gap

Figure-9 : Identification of Technology Gap


The technology package consists of three principal elements namely, product design, production technique and management systems. 

Product design may range from simple items to highly complex (e.g., automotive) parts. Production techniques and plant layout include blueprints and flowcharts, formulas and recipes, process sheets, fabrication instructions, tools and fixture designs, operational procedures and material specifications. Management Systems consist of various plans, layouts and technical control systems (along with related marketing and financial controls); Included are plant design and layout, quality control and testing, material procurement, inventory control, equipment maintenance and repair and machine loading techniques.

The three principal categories of technical information or know-how inherent in technological systems are general knowledge, system-specific and firm-specific knowledge. These various categories of knowledge may be in the form of written materials or may be embodied in technical assistance, on-the-job training or built into fabricating or processing equipment. 

General Knowledge refers to information common to industry such as blueprint reading, tool and fixture design and fabrication, welding techniques etc. 

System Specific Knowledge refers to information and industrial capability within a firm that gives it a competitive advantage over rival firms. This knowledge and know-how may consist of special solutions or procedures to a problem, acquired in the previous manufacturing experience in related product or process fields.

Firm Specific Knowledge differs from system specific in that it cannot be attributed to a particular production item and usually results from the firm’s overall activities in such areas as grey-iron casting or their material fields. This technical knowledge or know-how goes beyond the general level possessed by the industry as a whole. 


The principal routes of enterprise-to-enterprise technology transfer are :

a) Licensing or Franchise

Licensing and Franchise arrangements vary from a complete package of instructions, technical assistance and training to mere permission for the manufacture and sale of a product.

b) Suppliers of Materials and Parts

Suppliers of materials and parts are often willing to provide a full range of technical support, information and manufacturing know-how, and they can be as effective in know-how transfer as in industrial licensing arrangements.

The manufacturing of colour TV sets in India is a classic example of this type. The manufacturers did not have a formal technology transfer agreement but had an understanding with the foreign suppliers of materials and components regarding technical assistance in production.

c) Equipment Supplier

A variety of technical services are provided by equipment suppliers, including operational and maintenance procedures and even processing knowhow (typical in chemical industry). Some technologies are machine based and therefore the know-how is transferred along with supply of plant and equipment.

d) Outright purchase., of turnkey plants or of complete manufacturing and operating specifications, drawings, know-how, performance data and technical assistance.

e) Acquisition of the company or business owning the technology.

f) Joint ventures with the technology owners.

g) Franchising of trademarks and technical, management, and marketing knowhow.

h) Combinations and variations of any of the above. 

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