Technology transactions: networks over markets

Abstract

There is a widespread belief in the business community that firms can rely on the market for buying and selling technological opportunities. The argument is: with so much technology development going on in the world, ‘there must be somebody somewhere who has the technology we need.’ According to this belief, acquiring new technology just boils down to finding the supplier, possibly with the help of a specialized intermediary. Several large firms have indeed developed ambitious mechanisms for acquiring the needed technological know‐how as they proceed to make and market a new product. We contend that this concept of the technology transfer process is erroneous, as it conflicts with actual practice. The very high transaction costs entailed leave considerable room for opportunistic behavior and are more likely to occur when the parties do not know each other. An effective way to reduce transaction costs, therefore, is to limit technology transfers to the firm's partners, i.e. organizations with which the firm has already interacted in the past. Our research provides evidence that successful technology transfers typically take place between suppliers and buyers who had business relationships before considering a technology agreement. In addition, we report findings that companies using intermediaries (technological opportunities catalogues, databases, fairs, etc.) have been disappointed in their attempts to find new technologies from unknown sources. Because of the high risk of opportunistic behavior, it is practically impossible to assess the value of a technology without knowing who sells it. Similarly, the technology transfer capabilities of a company are difficult to appraise without prior knowledge through business interaction. To a certain extent, it may be better to buy any technology from a partner that one knows well than to buy a supposedly good technology from a firm with which one has had no experience. To put it bluntly: the identity of the partner may actually matter more than the technology being traded! Consequently, the relevant framework for technology transfer is built on a ‘network concept’ rather than the ‘market concept’. Firms wishing to acquire new technology should turn first to their network of trusted business partners, looking for available technological opportunities instead of trying to buy technology from unrelated organizations.

The evolving state-of-the-art in technology transfer research: Revisiting the contingent effectiveness model

“…Thus, STHC includes not only the individual human capital endowments traditionally included in labor models (e.g. Becker, 1964;Schultz, 1963), but also the individual scientist's tacit knowledge (Polanyi, 1969;Senker, 1995), craft knowledge, and know-how (Bidault and Fischer, 1994). STHC further includes the social capital (Coleman, 1988) that scientists inevitably draw upon in framing research and technological questions, creating knowledge, and developing social and economic certifications for knowledge (Fountain, 1998;Landry et al, 2002).…”

Outbound open innovation in bio-pharmaceutical out-licensing

“…Formal and informal networks have traditionally played an essential role in compensating for the lack of market transparency (Bidault and Fischer, 1994;Ford and Thomas, 1997). Thus, the commercialization of knowledge assets is fundamentally social in nature (Hoegl and Wagner, 2005;Podolny and Stuart, 1995).…”

The effects of port employees' perceptions of tacit knowledge and transaction cost on knowledge transfer

“…Given that transaction cost is thought of as opportunistic behaviour and seeking self-interest (Osterloh and Frey, 2000;Ke and Wei, 2007), knowledge providers may disguise or distort knowledge transfer to successors (Alaghehband et al, 2011). As a result, knowledge transfer is full of uncertainty because of the risk of opportunistic behaviour (Bidault and Fischer, 1994;Dorward, 1999).…”