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United States Small Business Administration
Office of Advocacy
RS 162
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Purpose

Ever accelerating technological change has intensified interest in the transfer of technology. Small firms play an important role in converting state-of-the-art technology from federal labs and universities; other small firms need to acquire state-of-the-market technology that is commercially available.

Technology transfer is the translation across organizations of knowledge that can be embodied in a process or a product. The knowledge may be explicit; frequently it is tacit--often called "know-how." Technology transfer includes any knowledge useful in the creation of new products and processes, and also the value of the technology, and principles of operation, management, and utilization.

The aim of this study is to review the literature to ascertain best principles and practices in technology transfer to small manufacturing firms.

Scope and Methodology

This research limits the subject of technology transfer to small manufacturing firms. The study pulls together into a comprehensive framework what has been reported in the literature about the effectiveness of various technology transfer strategies, methods, techniques, and mechanisms. More than 500 books, articles, and papers were reviewed for this study.

A "supply-side" technology transfer mechanism is established and managed by the generator of the technology, and may be more appropriate for the development of new technology. The analysis examines supply-side mechanisms for tech transfer found within federal laboratories, universities, and the private sector.

A "demand-side" mechanism is established and managed by, or on behalf of, the recipients of the technology, and may be more appropriate for diffusion of existing technology. The analysis examines demand-side mechanisms found within two groups, those promoting technology development and those promoting technology diffusion.

Highlights

• Although small high-tech firms deal far more frequently in explicit knowledge, small firms in general depend more on informal learning. The smaller the firm, the more likely that linkages with customers, suppliers, competitors, and experts will influence technology adoption.
• Joint ventures, research and development (R&D) collaborations, and technology-exchange agreements are examples of private-sector-based alliances for promoting technology development. Small firm involvement is most likely in technology-exchange agreements. In such agreements the technology is often transferred from a small firm to a larger firm, in exchange for other technology and nontechnology resources. Licensing is increasingly being used by small firms to obtain new technology.
• The level of technology transfer between federal laboratories and small firms is relatively low because of insufficient marketing to small firms, lack of small firm resources to seek out opportunities, and lab emphasis on tech transfer tools more appropriate to large firms. Cooperative research and development agreements are not as appropriate for small firms because of the sizable investment that is required. Licensing is often targeted by labs to large firms, who are seen as more likely to pay royalties to the lab.
• The firms that seem to be most likely to take advantage of services offered by university technology licensing offices (TLOs) are either well-established firms with some independent development capabilities, or startups or small companies that can attract venture capital to fund development. Principles of successful TLOs include hiring staff with a strong business and marketing orientation, giving them negotiating authority and "cradle-to-grave" responsibility for the intellectual property they manage, and setting commercialization milestones for licensees that must be met if the license is not to revert to the university.
• Because small firms have a limited ability to absorb mistakes in underestimating the costs of switching technology, the availability of good information is especially critical:
• There are limits on the extent to which small firms can rely on equipment vendors as a source of information. Vendors devote more attention to larger customers and the information provided may be more relevant to the vending firm than to the firm buying the equipment.
• Large numbers of manufacturers have established supplier development programs, typically involving 20 percent of a firm's suppliers. The better programs have long-term commitment from the buyer and emphasize training programs and counseling for suppliers. Most programs serve direct or first-level suppliers only, and do not involve second- or third-tier suppliers. Direct suppliers often are quite large themselves.
• Advanced technology centers house advanced manufacturing process technology for demonstration and small product runs. Here small firms become more knowledgeable about the technology and can judge the advantages in acquiring such technology for themselves. These centers are more effective when integrated into a network of technology transfer services.
• Proximity is perhaps the most potent means of enabling the informal linkages that are so valuable. There are a number of geographic concentrations of firms in closely related industries with dense webs of relationships, typically including a substantial number of small firms with a wide variety of specializations. The firms are linked through the trading of goods and services, joint venturing around specific market opportunities, informal sharing of technology and ideas, interfirm flow of skilled labor, and the ready availability to expand if needed. The competitiveness of each firm is significantly enhanced.
• Trade and professional associations are among the oldest and most effective formal mechanisms for technology transfer. Meetings, conferences, and shows include opportunities for both formal learning and the informal building of relationships.
  

Summary

There is a wide variety of types of technology transfer--involving different purposes, different tech transfer institutions, and different tools. Different types of tech transfer are appropriate for different situations.

Much technology transfer concerns tacit knowledge, often called "know-how". Such knowledge is difficult to articulate and is best transferred via people, not paper. Formal and informal approaches can be mutually reinforcing. Small firms in general depend more on informal learning. The smaller the firm, the more likely that linkages with customers, suppliers, competitors, and experts will influence technology adoption. Programs that promote the integration of small firms into a broad and strong set of open-ended and informal relationships can be a low-cost, flexible, and dynamic means of expanding capacity and creativity and making the market more efficient.

The report makes clear that federal R&D laboratories, as well as university licensing and technology transfer offices, could do a better job of transferring technology to small firms. In many cases, increased marketing efforts--possibly through joint ventures--may be necessary.

Ordering Information

The complete report is available from:

National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(800) 553-6847

Order Number: PB96-181029

Cost: A07 (paper); A02 (microfiche)

*Last Modified 6-11-01