New Model of Agrobased Technology Transfer from Government Research Institutions to Private Firms in Malaysia

New Model of Agrobased Technology Transfer from Government Research Institutions to Private Firms in Malaysia

Published: 2020.10.06
Accepted: 2020.10.06
14
Former Director
Strategic Planning and Innovation Management Centre, Malaysian Agricultural Research and Development Institute (MARDI)
Universiti Sains Islam Malays ia, Malaysia

ABSTRACT

Technology transfer apparently becomes one of the major aspects of research and development in the government research institutions (GRI) in Malaysia. Technology transfer is a two-way interaction between GRI and private firms. Technologies are transferred from GRI to private firms before it is manufactured, and reach end consumers. However, the process of technology transfer differs depending upon the industry and the motive of the organizations. The process of technology transfer has evolved from a simple and straight forward manner, to complex and comprehensive activities involving both the technology generator from government research institution and technology recipient or entrepreneurs. The accomplishment of technology transfer is determined by the ability of the technology generator to recognize problems faced by industry or consumers; and developed new technological products that can be marketed profitably. The success of technology transfer is also determined by the ability of the entrepreneur to recognize business opportunities created from the new technological products. Opportunity recognition is a construct that linked the technology generator and technology recipient, and leads to the success of the technology transfer. This paper discusses the process of agrobased technology transfer from a government research institution to private firms in Malaysia.

Keywords: Model, technology transfer, government research institutions, private firm

INTRODUCTION

Technology transfer is an important aspect of research and development in government research institutions. It is the focus of all government research institutions to ensure that the outcomes of their research and development reach market acceptance. Nevertheless, the process of technology transfer is considered the most challenging and critical in the development and diffusion of new technologies. The view that technology is assumed to diffuse instantly from a technology generator to technology users has been criticized by industry players. In reality, technology transfer is a complex process of transforming outcomes of research and development by research institutions into the industrial or commercial products by private firms. Moreover, the process and the duration of the technology transfer are difficult to predict. A simple technological innovation may take a shorter time, whereas a complex technology needs longer time to reach completion.

Opportunity recognition has been identified as one of the most important dimensions in the innovation and entrepreneurial process as it is an important precondition for innovation in the industry. Therefore, the dimension is important in the process of technology transfer as it is one type of an innovation process, the objective of which is to commercialize innovation. Being an innovation process, technology transfer encompasses recognition of opportunities. Technology development is initialized by the recognition of opportunities. In this respect, opportunity recognition is the bridge that links the process of technology transfer from government research institutions to private firms. As both constructs are highly interlinked, the absence of opportunity recognition affects the process of technology transfer.

Farsi and Talebi (2009) highlighted three key aspects of the technology transfer process; the opportunity created from the technology, the exploitation process, and the support by the community. They argue that the development of a new technology is initiated by the recognition of opportunity from problems faced by consumers in the markets. Thus, technology transfer means to solve the problem. On the other hand, Pellikka and Pellikka (2011) argue that technology transfer is the game of the technology generators, while technology recipients have less control over the process of technology transfer.

This paper discusses the process of agrobased technology transfer from a government research institution to private firms in Malaysia. It focuses on the role of opportunity recognition as one of the main factors that leads to technology transfer success. In the end, this paper shares a new model of the agrobased technology transfer in Malaysia.

TECHNOLOGY TRANSFER

Technology transfer is not a new concept. It has existed for a long time. However, until now, no particular definition has been universally accepted. The concept of technology transfer and its mechanism remain controversial. Different authors define and look at this concept differently, and it is used for different purposes. For example, Gee (1981) defined technology transfer as the application of technology to a new use or users; a process by which the technology is developed either in a different application or by a new user. On the other hand, Li-Hua (2004) viewed the technology transfer as the acquisition, adaption and use of technological knowledge by an individual, group or society other than the one that developed the technology.     

Powers and McDougall (2005) defined technology transfer as the process by which technology developed by government research institutions is transformed into marketable products. It is a reciprocal activity, by which government research institutions licensed the use of its technology to be developed and marketed elsewhere. There is an interaction between two parties to enable technology transfer to occur. It can be between similar or different types of organizations. For example, in the transfer of technology from a government research institution to private firms, the interaction involves the transfer of technology, information, knowledge and property, and in return the private firm pays the licensing fees and royalties, and manufactures the products agreed upon in the contract. It shows reciprocal activities between the government research institutions and the private firms.

Technology transfer involves two parties: the technology generator and the technology recipient. As technology transfer is a transfer of knowledge, the ability of the recipient to absorb and assimilate the knowledge is critical. If the recipient cannot assimilate technology and knowledge from technology generator, this would result in failure of the transfer. In other words, the recipients must have similar knowledge that can help him understand the technology and knowledge. Hence, on the part of the technology recipients, his human resource capability has been recognized as pivotal to the technology transfer.

The concept of technology transfer lies in two important features—that are a process of change and the involvement of two parties, between either individuals or organizations. It relates to processes that enable technological knowledge to move from one entity to another. Knowledge can be in terms of know-how, skills, information, trade secrets, technical documents, patents or intellectual property rights.

Components of technology transfer

Technology transfer contains two components. The first is the tangible component that includes physical items, such as products, tools, equipment, blueprints and organizations. The second is the intangible component that includes know-how, management, quality control, marketing, skilled labor, contract and agreements. According to Huda (2006), the intangible component is the most important and difficult to manage. It involves sharing of technological knowledge between people or organizations that practice different organizational culture, administrative practices and objectives. Furthermore, the willingness to share information and knowledge is determined by mutual respect and trust between people, and one of the biggest challenges is creating the trust.

Channels for technology transfer

Technology can be transferred directly or indirectly to the users, through several channels. Direct technology transfer can be through published information (such as books, journals, manuals and bulletin), trade exhibitions, conferences and training. Generally, the direct technology transfer is related to information dissemination where the users can adopt the technology with minimal guidance from technology generator. For example, a farmer can read the formulation in the brochure published by the technology generator and make his own organic fertilizer. Indirect technology transfer, on the other hand, refers to the transformation of technology to users through public sector extension agencies or private firms, such as joint ventures of product development, consultancy works, contract research and development, and licensing of intellectual property rights.   

Process of technology transfer

Technological innovation is useless until it benefits the community and society. Thus, a developed technology must be transferred and used by the users. In simple terms, agrobased technology transfer is the process of moving or introducing new agrobased technology to a marketplace. The process of technology transfer is a step-by-step activity starting from the development of a new agrobased technology by the technology generator, until it is developed into new technological products that can be sold in the marketplace.

The process is complex and dynamic. Different technology uses different processes depending on their complexity, the motive of the technology generators transferring their technology, and the government policy on technology transfer. The complexity of the technology refers to how difficult a private firm has to redevelop that technology and how much investment is required to start the business venture. A complex technology generally requires high technological knowledge and large capital investment, while a simple technology can be redeveloped by a simple process. Different technology generators have different motives for developing and transferring technology. Some technology generators aim for financial satisfaction, whereas others will be happy to see their technology being used and that they are beneficial to many people.

The process of agrobased technology transfer, from a reverse perspective, is determined by a private firm’s absorptive capacity and adoption of the technology. It is on the part of a firm to recognize the value of the new technology, and apply it for commercial basis. The ability of a private firm is determined by its owner’s prior knowledge and available assets, such as human resources, financial and technological knowledge. Technological knowledge is the most important and critical among these resources. In other words, the process of agrobased technology transfer will occur more efficiently if the technology generator is willing to share the technological knowledge fully, and the technology recipient is ready to adopt it completely. One of the critical issues in managing the process of agrobased technology transfer is the involvement of a technology generator in all activities, from the beginning of the transfer until the product technology reaches the marketplace. The technology generator is the main actor in the process of technology transfer, and his involvement and commitment are prerequisite for a smooth transfer process. A lack of his involvement in the process of technology transfer seems to contribute to a failure.

MODEL OF TECHNOLOGY TRANSFER

There are many models of technology transfer, depending on the sectors. In the past, the model of technology is very simple, as suggested by Jung (1980). It contains three components that are—source of knowledge or technology, utilization of knowledge or technology and communication system (Figure 1).   

According to Jung (1980), the utilization of knowledge or technology makes the real value of it. People recognize the value of a technology after they used it. The model is very simple and still applicable to the present situation with one condition that the technology is simple and does not require a higher technology capability of the people involved. It is relevant to uncomplicated technology that can be transferred directly.

Souder, Nashar and Padmanabhan (1990) suggested a linear but more complex model of technology transfer. It involves four stages: prospecting, developing, trial and adoption. In the prospecting stage, several activities involved are preliminary analysis, searching and screening. The development stage consists of physical and laboratory activities where the focus is on enhancing, elaborating, embodying and tailoring the selected technology from stage one. The trial stage refers to the testing of the developed technology in the market; and the final stage is adoption that consists of redevelopment, technology modification and the utilization of technology by technology recipient.

Over time, the process of technology transfer has evolved from a simple process to more comprehensive one. It seems that the most current process has addressed the needs of the markets and tries to fulfill the industry requirements. In other words, the technology transfer model is a two-way or reciprocation between the technology generator and technology recipients.

In Malaysia, the process of technology transfer of agrobased technology from a government research institution to private firms is dynamic, complex and structured. A proper management of the process of technology transfer seems to result in a success. The smooth process of a technology transfer is determined by the ability of the technology transfer office in managing the processes effectively. The technology transfer office needs to play a critical role as a project manager to handle the process of technology transfer efficiently and effectively.

In general, technology transfer is the second function of all government research institutions (GRI) in Malaysia. All technologies developed by GRI must be transferred to benefit farmers and society in the country. The technology is useless until it benefits the users. In the context of agricultural research and development, technology transfer is defined as a process to facilitate and expedite the creation and dissemination of technology for adoption of users. In the early establishment of GRI in the 1970s, technologies developed are transferred to government departments such as the Department of Agriculture, and agencies such as Farmers Organization Authority. Only in the early 2000, technologies were transferred to private firms. The model of technology transfer from GRI to clients is presented in Figure 2.

In Malaysia generally, R&D outcomes are not directly transferred from GRI to its stakeholders. The first phase is the transfer of technology to extension agencies such as to the Department of Agriculture (DOA), Farmers Organization Authority (FOA), and Department of Veterinary Services (DVS). It is only after this stage that the technology is transferred to stakeholders or users such as farmers, farmers associations, entrepreneurs and public agencies. In other words, technology is transferred from GRI to the extension system before it finally reached the clientele system or technology users. In this case, private firm refers to micro enterprises or newly established businesses known as guided entrepreneurs. Generally, the technology is transferred free of charge. The enterprise also does not need to pay a royalty to the GRI.

Nowadays, technologies developed by GRI are also commercialized to small and medium enterprises. Technologies are transferred for financial returns. The technology generator shares their technological knowledge in terms of new formulation, trade secrets and intellectual property rights with technology recipients or entrepreneurs. In return, the entrepreneur pays the licensing fee and royalty to GRI. At the same time, the entrepreneur has the right to reproduce or manufacture the technological products and market them for financial profitability.

In the case of the technology transfer of research and development (R&D) outcomes from a government research institution to private firms (small and medium enterprises), the fundamental challenges are the ability of researchers to change their scientist’s working culture to a business lifestyle. On the other side, the challenge is the ability of entrepreneurs or technology recipient to communicate successfully with the scientists. As technology transfer is a transfer of new knowledge, the ability of the recipient to absorb and assimilate the knowledge is critical. If the recipient cannot assimilate technology and knowledge from the technology supplier, this would result in a failure of the transfer. In order to assimilate technology transfer successfully, the recipient must be aware of the compatibility of the technology before it is transferred. In other words, the recipients must have similar knowledge that can help them understand the technology and knowledge. Hence, on the part of the technology recipients, their human-resource capability has been recognized as pivotal to the technology transfer.

Taken together the relationship between the technology generator and technology recipient, and their roles in the recognition of opportunity for successful technology transfer from a government research institution to private firm, a new model of a process of technology is suggested as in Figure 3.

Figure 3 shows a process model for transforming the outcomes of R&D from a government research institution to a private firm. The process involved three phases: agents, opportunity recognition and technology transfer performance. The agents are technology generators of the government research institutions, and technology recipients or business entrepreneur. The opportunity recognition refers to technological opportunity recognized by technology generator and business opportunity recognized by entrepreneurs. The final stage is technology transfer performance, which is measured by the ability of the technology generates profit, and the technology recipient pays royalties to the government research institution.

Phases of the technology transfer process

The explanations of the phases of the process of technology transfer are as follows:

Phase 1: Agents

The process of technology transfer is a person-to-person activity. The people involved are technology generator and technology recipient, and they are called technology transfer agents. Technology generator refers to research officer of a government research institution that is mandated to generate technologies for solving problems faced by consumers in the markets. Technology recipient, on the other hand, is a business entrepreneur who adopts and commercializes new-product technology for business profitability.

The success of technology transfer is influenced greatly by the technology generator and technology recipient. The ability of a technology generator to invent a new technology is dependent upon his educational background, technological knowledge and the industry he works in. The ability of the technology generator to recognize opportunity is also influenced by his entrepreneurial traits that include being innovative, creative and a moderate risk taker. He must have a positive and dedicated attitude toward technology transfer.

Technology recipient, on the other hand, is important in the process of technology transfer in that he has the ability to recognize business opportunity generated from the new agrobased technology developed by the technology generator. An entrepreneur is associated with the ability of a person to recognize opportunities in the market, and exploit it for profitability, always looking forward to profitable business venture and at the same time is a moderate risk taker.

The motives for transferring the technology are different for different people. For example, the motives for the technology generator and technology recipient are personal satisfaction and business profitability, respectively. Agrobased technology transfer is a complex and arduous process. It is capital intensive, time-consuming and involves vast resources from both the technology generator and technology recipient perspective. It requires people who are very passionate about the innovation process and the transfer of technology to other parties. This passion needs to be sustained throughout the process of technology transfer.

Phase 2: Opportunity recognition

In this model, opportunity recognition is classified into two categories: technological opportunity (TO) and business opportunity (BO). TO is made by those who have knowledge and educational background, and work in the related industry. It is defined as the possibilities for transferring R&D outcome into production. In this phase, the technology generator develops a new conceptual design of a technology that can meet the market requirement or solve the problems faced by consumers in the industry. It involves brainstorming activities and a cross-functional team with other experts to develop a viable technology. This phase is important in that the recognition of the technological opportunity, and the development of a new technology is determined whether the product technology will be successfully marketed.

The recognition of technological opportunity is one of the preconditions for the process of technology transfer to happen. On the part of the technology generator, the ability to recognize an opportunity in the market is influenced by his mental process, such as the talent to transform information concerning problems faced by consumers in the industry into an idea for the development of a product technology. The ability to recognize an opportunity is influenced by a person’s entrepreneurial characteristics that enable him to recognize and discover opportunities in the market, and to match them to the entrepreneur’s tasks – i.e. the ability to exploit resources into a profitable business venture. 

The perspectives of the entrepreneur, on the other hand, look at business opportunities for firm profitability. The ability to recognize and develop business opportunities from a newly developed technology is influenced by a person’s mental judgment that can predict the potential profitability by venturing into a business. An entrepreneur who has better mental judgment or imagination of the opportunity created from the technological product is likely to have a better chance to succeed in his business venture than the one who is lacking in business imagination. A successful entrepreneur is a person who always displays his confidence in any venture. The confidence displayed will ensure enhancing the chance to succeed in that venture. A successful entrepreneur is the one who is biased optimistically, is able to regulate his own behavior and be more adept in avoiding various cognitive traps such as sunk costs (Baron, 2004). This perspective suggests that people who have entrepreneurial characteristics, access to information, better social networking, better imagination and emotion can recognize opportunity better than those who are lack in business imagery and confidence.

The recognition of business opportunity has often been regarded as a phenomenon related to entrepreneurship. It appears that some people identify business opportunity faster than others. In this phase, a person who has entrepreneurial attributes recognizes the business potential of that technology and will look for options for commercializing it.

Phase 3: Technology transfer performance

The final phase of the process of technology transfer is its implementation. It is measured not only by the success or failure of the product reaching the market, but also by the extent to which the private firm pays royalties to the government research institution. In some cases, a private firm has successfully manufactured and marketed the products, but royalties have not been paid due to lack of managerial capabilities. The implementation of the agrobased technology transfer is determined by the private firm’s technical, financial and managerial capabilities. Among these, financial and managerial capabilities are the most critical challenges. While the technical capability can be adopted from the technology generator, the private firm has to rely on financial institutions for funding the investment project and for employing capable managers to run the company. The private firm must dedicate sufficient funds, resources and efforts to ensure the accomplishment of technology transfer to benefit all parties. Taking into consideration of all these capability factors will be the key to a successful technology transfer.

In general, the model is not static, but rather is an integrated and dynamic model of the process of technology transfer. The model is a flexible transformation process that takes into consideration issues and challenges of the process of technology transfer. The model presents a systemic, planned, structured and streamlined one. Comprehensiveness is critical in the process of the agrobased technology transfer because it involves new products, system or process that has high degree of uncertainty in a new business venture. This model not only allows the process to be monitored and controlled in each phase, but also provides a check and balance by both parties: the technology generator and the technology recipient.

CONCLUSION

The process of technology transfer from GRI to private firms is dynamic and comprehensive. It is a process of matching the technological opportunity created by the technology generator to business opportunity demanded by the entrepreneur. It begins with opportunity recognition, followed by phases of the transformation of R&D outcomes into industrial or consumer products for the entrepreneur’s profitability and economic development. The structured process is supported by the passion of both technology generator and technology recipients towards technology transfer and their commitment as well as involvement in the entire process.

The accomplishment of the agrobased technology transfer is determined by the ability of a researcher to develop a new product that can be marketed profitably. However, the recognition of opportunity alone did not determine the technology transfer success. It must be supported by other critical success factors that include knowledge sharing, a person with passion towards technology transfer, total involvement and commitment of all people involved in the technology transfer project.

The transfer of new agrobased technology from GRI to private firms is a clear case of how two different organizations with different objectives and culture can work together for the benefit of the people and the nation. It is hoped that the higher the number of technology developed by government research institutions being transferred to private firms will increase the number of new products in the marketplace, and finally enhance the economic development of Malaysia.

REFERENCES

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Gee. 1981. Technology transfer, innovation and International competitiveness. John   Wiley and Sons, New York.

Huda, I. 2006. An approach to the development of infrastructure technology transfer   methodology based on actor-network theory. PhD thesis. Universiti Kebangsaan   Malaysia.

Jung, W. 1980. Basic concept for evalution of technology transfer benefits. Journal of   technology transfer 5(1):37

Pellika, J.T. & Pellika, J.P. 2011. Are commercialization process model beneficial for   small technology firms? International Journal of Technology Transfer and   Commercialization 10(3/4):229-246

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