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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