Effect of Technology and Organization

It is possible to identify two dimensions which affect companies’ attitudes towards technology acquisition: the characteristics of the technology and the organization’s ‘inheritance’. Together the eight factors determine the knowledge acquisition strategy of a firm. The relevant characteristics of the technology includes:

1)   Competitive significance of the technology;

2)   Complexity of the technology;

3)    How easily the technology is encoded.

4)   Credibility potential or political profile of the technology

An organization’s inheritance includes those characteristics which, at least in the short run, are fixed and therefore represent constraints within which the R&D function develops its strategies for acquiring technology. These include:

*corporate strategy, for example a leadership versus follower position;

*capabilities and existing technical know-how;

*culture of the firm, including receptivity to external knowledge;

*comfort of management within a given technical area.

Without doubt, the competitive significance of the technology is the single most important factor influencing companies’ decisions about how best to acquire a given  technology.

Strategies for acquiring pacing technologies – i.e. those with the potential to become tomorrow’s key technologies – vary. For example some organizations seek to develop and maintain at least in-house expertise in many pacing technologies, so they will not be ‘wrong footed’ if conditions change or unexpected advances occur. In the past, this policy enabled the company to recognize the importance of finite element analysis to its modelling core competence and to acquire the necessary aspects of this technology before its competitors. Other firms, such as Kodak, also recognize the need to monitor developments in a number of pacing technologies but see universities or joint ventures as the most efficient means of achieving this. The company sponsors a large amount of research in leading universities throughout the world and has also set up a number of joint venture programs with firms in complementary industries. Guinness, for example, identified genetic engineering as a pacing technology and seconded a member of staff to work at a leading university for three years. The outcome of this initiative was a new biological product, protected by a confidentiality agreement with the university. Although this genetically engineered species cannot yet be used in food and drink products, the company has successfully internalized the technology understands its potential and is well placed to evaluate new developments in the area, or to take advantage of any changes in legislation and public attitudes.

In the UK, universities are widely used for external source of technology. These relationships range from support for Ph.D.  candidates, research awards for postdoctoral staff to carry out research in a specified area, to more formal contract research and collaborative schemes. Firms use university research for a number of reasons: to access specialist technical support; to extend in-house research; and to provide a window on emerging technologies.

Extensions to existing in-house research typically involve using universities to conduct either fundamental research aimed at gaining a better understanding of an underlying area of science, or more speculative extensions to existing in-house programmes which cannot be justified internally because of their high risk, or because of limited in-house resources. For example, a company has made extensive use of universities to undertake fundamental studies into the molecular biology of plants and the cloning of genes. Although not all key technologies have access to state of the art knowledge which in these areas is vital to support a number of the organization’s core agricultural activities.

University funded research can also be used as windows on emerging or rapidly advancing fields of science and technology. Companies view access to such information as being critical in making good decisions about if or when to internalize a new technology. For example, Akzo launched a series of university funded research programmes in the USA during the late 1980s. During its first three years, these programmes yielded 40 patent applications.

Most companies look to acquire base technologies externally or, in the case of non-competitive technologies, by co-operative efforts. Companies recognize that their base technologies are often the core competencies of other firms. In such cases, the policy is to acquire specific pieces of base technology from these firms, who can almost always provide better technology, at less cost, than could have been obtained from in-house sources. Materials testing, routine analysis and computing services are common examples of technical services now acquired externally.

The increasingly interdisciplinary nature of many of today’s technologies and products means that, in many technical fields, it is not practical for any firm to maintain all necessary skills in-house. This increased complexity is leading many organizations to conclude that, in order to stay at the forefront of their key technologies, they must somehow leverage their in-house competencies with those available externally. For example the need to acquire external technologies appears to increase as the number of component technologies increases. In extreme cases of complexity, networks of specialist developers may emerge which serve companies which specialize in systems integration and customization for end users.

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