Download The Role of Absorptive Capacity in Hi

THE ROLE OF ABSORPTIVE CAPACITY IN HI-TECH ORGANIZATIONS WHILE
TRANSFERRING TECHNOLOGY
Iuan-Yuan Lu1, Ting-Syuan Lin2
1
Vice Chairperson of Asia Network for Quality
Professor, Institute of Business Administration, National Sun Yat-Sen University
No.70, Lien-Hai Road, Kaohsiung 804, Taiwan, R.O.C
[email protected]
2. Ph. D Candidate, Institute of Business Management, National Sun Yat-sen University,
No.70 Lien-Hai Road, Kaohsiung 804, Taiwan, R.O.C
[email protected]
ABSTRACT
The purpose of this article is to highlight the important role of absorptive capacity as a vital element of existence in hi-tech organizations
while transferring technology. This research positions the role of absorptive capacity in technology transfer across the hi-tech
organizational boundary; in short this ‘absorption’ principle is combined with multi-dimensional thinking in the technology and
organization field. The study also sets out to model a framework that focuses on the transfer of technology and its assimilation among
organizations. Based on the above objectives, this study seeks to achieve the following goals: 1. to focus on technology transfer issues,
and to develop measurement indicators and tools. 2. To extract the key factors related to technology transfer and absorptive capacity and
to empirically determine how Technology transfer and absorptive capacity affect the performance of hi-tech firms. 3. To inspect and
analyze intention, behavior and organization support the random samples using multivariate analysis, and then to diagnose the
interactions among the technology transfer, absorptive capacity and performance of hi-tech firms. A number of interviews with
professors and professional managers have been scheduled as expert validity for measurement. By comparing the results of the
profundity interviews, it was found that some of the relevant theories support all of the constructs in each concept. A questionnaire was
used to measure the factors in each construct. 262 copies were valid for analyze. Multivariate method has been utilized for this empirical
research to examine the theoretical construct and moderate effect in this research. The article identifies constructs and provides
implications for further academic research as well as for hi-tech industry.
Keywords: Technology Transfer, Absorptive Capacity, Performance
INTRODUCTION
In the fast-paced changing technology environment, innovative technology becomes increasingly important role at the present time. More
and more organizations endeavor to innovate and update technology. Technology Transfer across organized boundaries has become a
trend in the high-tech industry. While there are relatively few successful cases, still numerous Technology Transfer plans are in operation.
From the perspective of hi-tech firms, hi-tech firms can use technology transfer to help themselves survive and develop within the
industry. Since in the hi-tech industry, the ability of integrating new technology has an essential role in the long-term, this study tries to
build an integrated model of technology transfer by concerning different levels of absorptive capacity in hi-tech firms. Moreover, most
scholars such as Nonaka (1995) and Senge (1997) in the past have only discussed a single dimension or have just been concerned about
key factors. This study combines the absorption with multi-dimensional thinking in the technology and organization field. The study also
sets out to model a frame work that focuses on the transfer of technology and its assimilation among organizations. Based on the above
objectives, this study seeks to achieve the following goals:
1. To focus on Technology transfer issues, and to develop measurement indicators and tools.
2. To extract the key factors related to Technology transfer and absorptive capacity and to empirically determine how Technology
transfer and absorptive capacity affect the performance of hi-tech firms.
3. To inspect and analyze the random samples using multivariate analysis, and to then diagnose the interactions among the
Technology transfer, absorptive capacity and performance of hi-tech firms.
1
LITERATURE REVIEW
Technology
In a general sense, “Technology” has been implicated and defined broadly. Basically, it means any kinds of elements including goods,
labor, knowledge, skills and methods which are related to production, allocation and maintenance of society and economic needs. From a
specific viewpoint, it is a kind of skill for production. For example, it is a unique know-how or method which can be used to solve a
specific problem. In the past, numerous scholars have discussed this issue and have produced statements as follow:
Table 1 Definition of Technology
Scholars
Solow(1957)
Definition
Technology is a kind of method to make use of elements effectively for producing goods or service. It can
be decided whether elements have been effectively used by the technology quality.
Rohit, et al.(1983)
From a technology utility viewpoint, technology can reduce the uncertainty of achieving specific goal.
Adopting new technologies usually accompanies the learning and application risk. Hence, technology
needs to be popularized and learned for diminishing the risk of use and the improvement its diffusion and
effect.
Kast and Rosenzweig (1985)
Technology sub-system must include machine, equipment, computer, tools, device, program, method,
procedure, and information management et al.
Porter(1985)
Value chain is composed of: resources invest, produce, allocate, marketing, after service etc. Each
function of enterprise exists value create technique.
Daft and Lengel(1986)
Generally speaking, technology transfer is a way of transferring the technology into organizational
knowledge, tool or skill output.
Sounnder(1987)
Technology can be different embodiments such as: a product, a concept, a manufacturing process, a
pattern or a mould existing in the world. Technology can be applied, developed or be a based stone to
other inventions.
Sharif(1988)
The main activity is selecting a specific object to invest in resource transfer to outcome that can be called
technology. Hence, technology not only contains tools and facilities needed in the process, but also uses
skills and relative knowledge.
Adler(1989)、Burgelman and From enterprise’s view, technology symbolizes an ability of profiting.
Rosenbloom(1989)、
Steel(1989)
Porter(1983)、Adler(1989)、 Technology is an important resource for the firms to create competitive advantage and gain the benefit,
Ansoff and
profit and growth.
McDonnell(1990)、
Gaynor(1990)
Source of information: Compiled by this study
Economist, Solow (1957) said technology is a kind of method to make use of elements effectively for producing goods or service; that
whether elements have been effectively used is decided by the technology quality. From technology utility viewpoint of Rohit et al.
(1983) he contended that technology can reduce the uncertainty of achieving specific goals. Furthermore, he emphasizes that new
technologies come with learning and applicator risk. Hence, technology needs to be popularized and learned to diminish risk of using it
incorrectly and improve technology diffusion effect.
Kast and Rosenzweig (1985) assert that technology sub-systems must include machine, equipment, computer, tools, device, program,
method, procedure, and information management et al. However, Sharif(1988) believes the main activity is selecting a specific object to
invest in resource transfer to outcome that can be called technology. Hence, technology not only contains tool and facility needed in the
process, but also uses skills and relative knowledge.
For Porter(1985) the value chain is composed of: resource investment, production, allocation, marketing, after service etc. Each
function of enterprise exists value create technique. Daft and Lengel(1986) believe that, generally speaking, technology transfer is a way
of transferring the technology into organizational knowledge, tool or skill output. For Sounnder(1987) technology can be have
embodiments such as: a product, a concept, a manufacturing process, a pattern or a mould existing in the world. Technology can be
applied, developed or be a based stone to other inventions. Hence, technology can be presented with the form of equipment, tool,
machine, handbook, a rule, prescription, patent or a notion etc. Therefore, Sounder said that any kind of knowledge or know-how is
regarded as technology. Moreover, technology has multi-construct characteristic and comply with three principles:
1. It can be used to produce or manufacture new product.
2. It can be used to raise capacity, improve quality of product or reduce produce cost.
2
3. It can be used to improve design, operate and operational skill, or aim other improver.
Adler (1989), Burgelman & Rosenbloom(1989) and Steel(1989) et al., come from an enterprise’s view, they assert that technology
symbolizes an ability of profiting. Porter(1983)、Adler(1989)、Ansoff & McDonnell(1990)、Gaynor(1990) et al. Technology is an
important resource for the firms to create competitive advantage and gain the benefit, profit and growth.
Technology Transfer
Technology transfer is a method in which technologies are transferred by an individual or a group to other individuals or groups. The
technology receiver can use or apply this technology to deal with problems. Many scholars identify and describe technology transfer in
table 2 as the following.
Table 2 Definition of Technology Transfer
Scholars
Brooks(1966)
Definition
Technology transfer is a kind of interpersonal relationship activity, used for science and technique
diffusion process.
Harvey(1966)
From a macro-perspective, technology is a process regarding science and technique diffusion.
Pierre(1974)
Technology is innovated by an organization or a system, and is a process adopted by another system.
Kohler et al. (1973)
Technology transfer between nations means a nation canalizing new technology achievement from other
nations. Therefore, it brings some benefit or duplicate ability.
Mansfield (1975)
Technology transfer is a region, organization or nation technique embedding other region, organization or
nation for use.
Hawthrone (1987)
Technology transfer is a kind of behavior between individuals to individuals or groups to groups. Two or
more parties may role a play to change into or out of the technology.
Katz and Kahn (1978)
From generating an entity of technology transfer with region, technology transfer seems a research
conclusion applied to the society. No matter domestic or overseas.
Baranson(1987)
Technology transfer is a kind of knowledge delivered to aid the receiver to build a basic ability for
manufacturing specific product or service provide.
Harvey(1987)
Advocate technology transfer is a process used to acquire technique to gain more profit.
Ounjian and Carne(1987)
Technology includes software, hardware and other support objects. Technology transfer is a sale
technique process from seller to buyer.
Sounnder(1987)
Technology transfer is a process of transferring from one organization to another one.
Landau(1988)
Technology transfer is a kind of organizational innovation. It can be adopted or used in other organization.
Smilor(1991)
Technology transfer can be identified as a kind of knowledge application. Technology format (an idea or a
product) can be moved between individuals, groups or organizations.
Keller(1991)
Technology transfer process is a specific technique through different organization boundaries. Technology
is embedded by product, machine, process or people. It is a set of machine for the receivers to use.
Usually, that the technology and the operator are transferred at the same time is a better solution to the
operation problem.
Bozeman(1992)
Technology transfer is a visible designing progress, knowledge or relative information that can be moved
to other organizations or units. It includes papers, documents and products.
Chen(1995)
Technology transfer can be defined as a process of experience and know-how moved by economic
benefit.
Hameri(1996)
Technology transfer is an authorizing, external invest, purchase progress, accomplished by aggressive and
ambitious individuals or organizations to reach their goal and then diffuse or acquire knowledge,
experience and relative artifacts.
Source of information: Compiled by this study
According to what the scholars’ above state, basically, ‘Technology Transfer’ is a kind of process, technique, document or service
switch between organizations. Furthermore, we can also summarize all of their statements about ‘Technology Transfer’ as follows:
technology transfer is through human connection providers and receivers; this process also represents their organization, intention,
behavior, and support that enable the transfer of technology efficiently. Furthermore, the innovations in discipline of ‘technology transfer’
have created new skills, progress and greater specification in this field. Finally, the respective scholars also highlight that both sides—the
providers and receivers of technology—are willing to both work together in order to make, in general, organization better.
3
Absorptive Capacity
Since Cohen & Levinthal (1990) introduced the absorptive capacity theory, Kim (1998), Van den Bosh et al., (1999) and
Zahra & George et al. (2002) began to examine the issue carefully. Due to the divergent Research backgrounds, the
definitions differ. Some of the definitions are listed in Table 3 as follows.
Table 3 Definition of Absorptive Capacity
Scholars
March &Herbert (1958)
Definition
Most innovative activities are from borrowing, and not inventions.
Cohen & Levinthal (1990)
Previous studies suggest that organizations that are good at learning can develop
routines that allow them to effectively develop, store, and apply new knowledge on a
View point
Borrow Concept
Learning and
Innovation
systematic basis.
Mowery & Oxley (1995)
Understanding its own tacit technology and transferring to external technology as the Human Resources
skill.
Kim (1998)
Building up problem-solving ability based on leaning capacity.
Knowledge based
Zahra & George(2002)
Absorptive Capacity is a kind of accumulation and flow of organizational knowledge. Dynamic Ability
By cultivating dynamic ability, the competitive advantage of the organization can be
created and maintained. So absorptive capacity can be defined as the process of
knowledge acquisition, assimilation, transformation, and exploitation.
Source of information: Compiled by this study
Zahra & George (2002) classified the process into two parts. One was composed of acquisition and assimilation, which
was referred to as Potential Absorptive Capability (PACAP) while the other, consisted of transformation and exploitation,
which was referred to as Realized Absorptive Capability, (RACAP) focused on how knowledge runs deep in organizations.
However, RACAP placed emphasis on the knowledge integration of operations in organizations.
METHODOLOGY
Research Framework
According to the above literature review, technology is an element which represents a kind of ability or resource through human beings.
Technology is also a vehicle that creates organizational competitive advantage. Organizations achieve their goals by way of the
improvements of technology. However, technology transfer goes along with people. From technology providers’ perspectives, intention,
behavior and organization support can transfer thinkable conditions. But, receivers also need intention, behavior and organization support
to meet the basis absorptive ability requirement. It can be inferred that organization absorptive ability can affect performance. Therefore,
this research develops hypothesis 1 which states that the organizational performance is positively affected by the ability of transferring
technology across the organizational boundaries in hi-tech firms. Identically, technology resembles knowledge that contributes
organization performance to employees, who bring skill or talent into full play.
Zahra and George (2002), on the other hand, regard absorptive capacity as a kind of analysis of knowledge accumulation and flow
processes. Organizations can create and maintain their competitive advantage through training in dynamic ability. Hence, the absorptive
capacity can be defined as the process concerned with acquisition, assimilation, transformation and exploitation of the knowledge or
technology within an organization. If new technology cannot change or develop new behavioral models, it does not constitute a
successful transfer. However, technology transfers may still have the intention of transferring their own technique. Meanwhile, receivers
must possess equal levels of technology base. Most technology transfer processes involve the information interaction, explanation or
learning with receivers. Therefore, Hypothesis 2 states that absorptive capacity is a moderator between Technology Transfer and
performance. According to the two hypotheses, this study establishes the following research framework as figure 1.
Absorptive Capacity
H2
Technology Transfer
H1
Performance
Fig 1 Research Framework
4
Sampling
This research is developed by the Delphi method. The research first scheduled a number of interviews with professors and
professional managers as experts’ validity for measurement. By comparing the results of the interviews, some of the
relevant theories were applied to support all of the constructs in each concept. A questionnaire was used as a tool to
measure the factors in each construct. The study selected a number of technology companies which had technology transfer
experience. 300 questionnaires were sent out. A total of 268 replies were received, of which 262 were valid. To avoid bias
due to the command region variance (CRV) problem, the sampling process was set in such a way so as not to draw more
than 10 samples from an organization. All of the sampled questionnaires were anonymous which protect the private
information of firms.
DISCUSSION
Reliability and Validity
The research used exploratory factor analysis to extract the representative factors to see which factor’s Eigen Value was
over 1, and whose factor’s loadings were bigger than 0.5 (Hair et al., 1995). Under “Technology Transfer,” there were three
key factors extracted that were referred to as “Technology Transfer Intention,” “Technology Transfer Behavior,” and
“Organizational Coordination.” The proportion of cumulative explanatory variables reached 68.023%. In the construct of
“Absorptive Capacity,” four key factors were extracted and named: “Acquisition,” “Assimilation,” “Transformation” and
“Exploitation.” The proportion of cumulative explanation variable reached 76.848%. In “Performance” four key factors
were extracted and referred to as “Internal Process” “Customer Retention” “Financial Indication” and “Learning &
Growth.” The proportion of accumulative explanatory variables reached 72.474%. The reliability analysis of the new
constructs showed that Alpha=0.75, which meant that this measuring tool was reliable.
Empirical Analysis
The research framework consists of a model that uses multi-regression to test the framework empirically. Regression analysis has been
applied to confirm the linear relationships between the concepts. Both Technology Transfer and Absorptive Capacity are significant to
affect performance in hi-tech industries. The results are presented in Table 4.
Table 4 the Relationship between Concepts
Technology Transfer (X2) Absorptive Capacity (M3)
Performance (Y1)
Adj R²
β
Durbin-Watson
P<0.005
0.306
0.556*
1.717
P<0.005
0.147
0.387*
1.667
Technology Transfer (X2) +
Absorptive Capacity (M3)
P<0.005
0.363
0.486* / 0.252*
1.715
Source of information: Compiled by this research
According to the regression analysis result, the increase of Technology Transfer has positive effect on performance. The relationship is
significant to Adj R2 0.306 statistical support. It means that Technology Transfer only influences the performance of the Hi-tech firms for
30.6% between the two constructs. The increase of Absorptive Capacity also has positive effect on performance. The relationship is
significant to Adj R2 0.147 statistical support. It means that Absorptive Capacity only influences the performance of the Hi-tech firms for
14.7% between the two constructs. The combination of Technology Transfer and Absorptive Capacity can have more influence on the
performance (36.3%). That is, the influence of Technology Transfer and Absorptive Capacity provides more contribution to the
performance of these firms than each factor. Furthermore, βvalue in the relationship between Technology Transfer with Performance
has been presented 0.556, whileβvalue in the relationship among Technology Transfer, Absorptive Capacity and Performance has been
presented 0.486. As a result, the result of multi-regression analysis denotes that βvalue in the relationship between Technology Transfer
with Performance is higher than the relationship among Technology Transfer, Absorptive Capacity and Performance. It means that
Absorptive Capacity has the significant partial modulation effect existing between Technology Transfer with Performance in Hi-tech
firms.
CONCLUSION
According to the above analysis, three discoveries have to be confirmed. First of all, three factors of Technology Transfer
in hi-tech organizations have been extracted and been named “Intention,” “Behavior” and “Organization Coordination.”
Secondly, four factors of Absorptive Capacity in hi-tech organizations have been extracted, which are similar to absorptive
factors of traditional organizations. Thirdly, Absorptive Capacity has been empirically verified when having a moderate
effect between technologies with performance. According to the above results, this research suggests that Hi-tech firms
play a role as technology providers. Hi-tech firms need to be well prepared to motivate employees’ intention in order to
5
achieve Technology Transfer Behavior. Otherwise, Hi-tech firms would only play a role as technology receivers. Hi-tech
firms need to cultivate Absorptive Capacity for employees to receive Technology Transfer and to improve Performance.
REFERENCES
Adler, P. S., Burgelman, R. A., and Rosenbloom, R. S., (1989) “Technology strategy: A guide to the literatures,” Technological Innovation Management
and Policy, pp. 25-151.
Ansoff, H. I., and McDonnell, E., (1990) “Implanting Strategic Management,” Prentice Hall Europe Inc.
Baranson, J., (1987) “Technology Transfer: Example from Pakistan”, Multinational Business, Vol.4, No.2, pp.18-26.
Brooks, H., (1996) “National Science Policy and Technology Transfer.” Proceeding or Technology Transfer and Innovation, Washington, D. C., National
Science Foundation.
Burgelman, R.A., and Rosenbloom, R.S., (1989) “Technology Strategy: An Evolutionary Process Perspective” in R.S., Rosenbloom and R.A., Burgelman,
ed., Research on technological Innovation. Management and Policy, Greenwich, Connenticut: JAI PRESS INC. Vol.4, pp.1-23.
Chen, M., (1995) “Technology Transfer to China: Major Rules and Issues” International Journal of Technology Management, Vol.10, No.7/8, pp.747-756.
Cohen, W. M. and Levinthal, D. A., (1990) “Absorptive Capability: A New Perspective on Learning and Innovation,” Administrative Science Quarterly,
Vol.35, pp.128-152.
Daft, R. L., and Lengel, R. H., (1986) “Organizational Information Requirements, Media Richness and Structural Design,” Management Science, Vol.32,
No.5, pp. 554-571.
Davenport, T. H., and Prusak, L., (1998) Working Knowledge. Boston: Harvard Business School Press.
Gaynor, H., (1990) “Selecting Projects,” Research Technology Management, Vol.33, No.4, pp. 43-45.
Hameri, A., (1996) “Technology transfer between basic research and industry,” Technovation, Vol.16, No.2, pp.51-57.
Harvey, L., (1996) “Allocative efficiency vs. X-efficiency.” American Economic Review, Vol. 56, pp. 392-415.
Harvey, I. A., (1987) “Technology Transfer-An International Two-Way Street,” Industrial Management and Data Systems, Vol.7/8, pp. 3-9.
Hawthorne, E. P., (1987) the Management of Technology, McGraw-Hill, P. 65.
Katz, D., and Kahn, R.L., (1978) the social psychology of organization, N.Y.: Wiley and Sons press, P. 22.
Kast, F. E., and Rosenzweig, J. E., (1985) Organization and Management: A System and Contingency Approach, 4thed. New York: McGraw-Hill.
Keller, R. T., and Chinta, R. R., (1991) “International technology transfer: Strategies for success,” Academy of Management Executive.
Kim, L., (1998) “Crisis Construction and Organizational Learning: Capability Building in Catching-up at Hyundai Motor,” Organization Science, Vol. 9,
pp.506-521.
Landau,R., (1988) “Economic Growth,” Scientific American, Vol.258, No.6, pp.44-52.
March, J. G., and Herbert, S. A., (1958) Organizations, New York: John Wiley
Mansfield, E., (1975) “International Technology Transfer: Forms, Resource Requirements and Policies,” American Economic Association, Vol. 68, No.2,
pp. 372-376.
Mansfield, E., (1982) “Technology Transfer, Productivity and Economic Policy,” W. Norton and Company Inc.
Mowery, D. C., Oxley, H. E., and Silverman, B. S., (1996) “Strategic Alliances and Interfirm Knowledge Transfer,” Strategic Management Journal,
Vol.17, pp. 77-91.
Nonaka, I., (1991) “The Knowledge-creating Company,” Harvard Business Review, Nov.-Dec, pp. 96-104.
Nonaka, I., and Konno, N., (1998) “The concept of ‘Ba’: Building a foundation for knowledge creation,” California Management Review, Vol.40, No.3,
pp.30-54.
Nonaka, I., and Takeuchi, H., (1995) “The knowledge-creating company,” Oxford University Press: New York.
Nonaka,I., Toyama, R. and Konno, N. (2000) “SECI, Ba and leadership: A unified model of dynamic knowledge creation,” Long Range Planning,
Vol.33,pp.5-34.
Ounjian, M. L. and Came, E. B., (1987) “A Study of the Factors which Affect Technology Transfer in a Multi-location Multi-business Unit Corporation,”
IEEE Transactions on Engineering Management, Vol.34, No.3, pp.194-201.
Pierre C. R., (1974) “Inducing technological change for economic growth and development,” Applied Measures for Promoting Technological Growth, Vol.
8, No.4, pp.936-941.
Porter, L. W, (1983) “Organizational Influence Processes,” N. J.: Scott, Foreman and Company.
Porter, M. E., (1980) Competitive Strategy: Techniques for Analyzing Industries and Competition, New York: The Free Press.
Porter, M. E., (1985) Competitive Strategy: Techniques for Analyzing Industries and Competitor, Free Press, New York.
Rohit, D. Kerin, R. A., and Levy M., (1983) “Innovation Diffusion: A New Perspective/Diffusion of Innovations/Patterns of Technological Innovation,”
Journal of Marketing Research, Vol.20, No.3, pp.327-334.
Senge,P., (1997) “Sharing Knowledge,” Executive Excellence, Nov, 17-18.
Sharif, M.N., and Islan, M.N., (1980) The Weibull Distribution as A General Model for Forecasting Technological Change, pp.247-256.
6
Sharif, M. N., (1988) “Problems, issues and strategies for S & T policy analysis,” Science and Public Policy, pp.195-216.
Smilor, R. W. and Gibson, D. V., (1991) “Technology Transfer in Multi-organization Environment: The Case Rand Consortia,” IEEE Transactions on
Engineering Management, Vol.38, No.1, pp.3-13.
Solow, R. M., (1957) “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics, Vol.39, pp. 312-320.
Sounder W.E., (1987) “Managing New Product Innovation”, Lexington, MA, D.C., Health and Company.
Steel, L.W., (1989) Managing Technology, New York: McGraw Hill Book Company.
Wijnhoven, F., (1998) “Knowledge logistic in business contexts: Analyzing and diagnosing knowledge sharing by Logistics concepts,” Knowledge and
Process Management, Vol.5, pp.143-157.
Zahra, S. A. and George, G., (2002) “Absorptive Capability: a Review, Re-conceptualization and Extension,” Academy of Management Review, Vol. 27,
No. 2, pp. 185-203.
7