“TRANSNATIONAL TECHNOLOGY TRANSFER NETWORKS FOR SMES. A REVIEW OF THE STATE-OF-THE ART AND AN ANALYSIS OF THE EUROPEAN IRC NETWORK” JOSÉ ALBORS G*, EUGENE SWEENEY ** * Univ. Politécnica de Valencia, 46.071 Valencia (Spain) ** Iambic Innovation Ltd, Abingdon, Oxfordshire, United Kingdom
[email protected];
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ABSTRACT This paper will review effectiveness of the network approach to technology transfer. It will consider the current state-of-the-art, and look specifically at the results and status of the latest development of the IRC technology transnational transfer network supported by the European Commission. It will also draw from the practical experiences of Japan to stimulate innovation among SME’s; the experience of other informal networks of technology transfer professionals (e.g. networks of university technology transfer offices, networks of TT brokers); and commercial technology transfer companies. In Europe the IRC Network currently consists of 68 offices covering 31 countries - including the 15 components of the European Union plus 16 other European states. This network was started in 1995 and it is a distinct case of an operating innovation virtual network covering a multi cultural area. How such a network was set up with a top down approach will be discussed as well as the outcome and future of the network in view of a recent review study. Of outmost importance is its focus on SME’s as part of the, up to now, successful policy towards the promotion of cooperative innovation in the SME environment. Its offer focus model will be also analysed and consideration given as to whether this focus versus a demand focus model can be sustained. The influences that the different socio economic environments across Europe have been playing in the network performance will also be discussed. 1.- INTRODUCTION. TECHNOLOGY TRANSFER. STATE OF THE ART AND THE EUROPEAN CONTEXT. 1.1. Key Concepts Autio and Laamanen, (1995) state that "technology comprises the ability to recognise technical problems, the ability to develop new concepts and tangible solutions to technical problems, the concepts and tangibles developed to solve technical problems, and the ability to exploit the concepts and tangibles in an effective way". These authors in their classic article view technology as “knowledge of skills or techniques or a science of skills or techniques”, thus were contemplating the knowledge component and its social environment. The skills aspect, as it will be discussed later, will bear the importance of the tacit component of technology (Howells, 1996). A general definition of technology transfer can be constructed by taking a look at the Latin origins of the word ‘transfer’. In Latin, trans means over, or across the border, and ferre means to carry. The notion of carrying refers to something, which is done actively, on purpose. The word trans suggests that during the process of carrying, a border is crossed. Accordingly, technology transfer can be viewed as an active process, during which technology is carried across the border of two entities. These entities can be countries, companies, or even individuals. "Technology transfer is intentional, goal-oriented interaction between two or more social entities, during which the pool of technological knowledge remains stable or increases through the transfer of one or more components of technology." (Autio and Laamanen 1995). It should be noted that the time dimension is considered in the previous definition. The time factor is very relevant, yet often 1
overlooked, however it must be taken into account that it is the most widely used method to protect innovations. A 63,3 % of European firm managers declared that lead-time is the best means for protecting knowledge (European Commission, 2001). The following figure 1 shows a scheme for the generation and adoption of emerging technologies. It distinguishes among evolutionary and disruptive technologies according to various authors’ description (Bower and Christensen, 1995; Morone, 1993, etc.).
Figure 1. Technology innovation generation and adoption processes. (Adapted by the authors from Walsh and Kirchhoff, 1998). It should be noted that disruptive technologies emerge from a combination of information drawn from a mix of technical disciplines, normally exogenous to the firm. Also, because of their impact in the market with radical or discontinuous innovation they generate resistance at their adoption by prospective buyers. Moore (1991) has described how buyers have to change their behaviour significantly with discontinuous innovation. These authors describe the role of lead users and here coincide with von Hippel (1986). These types of technologies generally conform to a technology push model. Evolutionary or sustaining technologies tend to improve product or process performance causing so-called continuous innovations (Morone, 1995). These technologies do not alter their markets substantially and normally their incorporation follows more demand driven models. From the point of view of the small firm Pilorget (1995) has studied the relationships between the firm and other different economic actors involved and how government programs can contribute to enhance this relationship. Dankbaar has also approached the case of SMEs, which adopt a contingent attitude towards technological change (the case of many automobile component manufacturers firms). Tuominen (2000) has also studied the case of SMEs technology transfer from the point of view of a national support technology agency. Consideration of these concepts will help to understand the problems associated with the diffusion and adoption of exogenous technologies, which will be discussed in the rest of this paper. 1.2. The approach of Japan. It is interesting to consider the situation in Japan. Lessons can be learnt from their experiences. Ishimaru (2001) writes in detail about the Japanese experiences of Technology Transfer and Lebeau (2000) discusses technology transfer within Japanese SMEs.
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In 1985 The Japan Technomart Foundation (JTM) was established by the government in order to create a technology trading market to promote technology interchange among regions, industries and corporations. It did this through the comprehensive collection, management and dissemination of technology information to support technology transfer. It created several on-line databases, and technology “gateways”, and held seminars and matchmaking events. Through this system, in the 15 years to 2000, JTM received 15000 enquiries that led to 600 successful cases of technology transfer (4% success rate). This success rate was viewed as low and one reason mentioned was the lack of licensing specialists. Following the “1995 Unused Patent Information Situational Survey” (Japan Technomart Foundation, 1995), effort was made to encourage the wider use and distribution of patents – the “intellectual stock” of the country. A main finding of this survey was that there was a scarcity of “coordinators” to bridge the gap between technology owners and users. This led to the creation of the network of “patent distribution advisors”, and the development of the “patent distribution database”. In May 1997 the “Action Plan for Economic Structural Reform and Creativity” was adopted by the Japanese Government – a key element of which was “Transfer and Utilization of Research Results”. In August 1998 the “Law for Promoting the Transfer of Technology from Universities” was enacted. This led to the establishment of Technology Licensing Offices approved (and financially supported) by the Government. By the start of 2001 there were 17 TLO’s established, today there are over 25. In September 2000 the “TLO Association” was formed as a cooperative TT network. A comparison of Japanese and European systems was made by in March 2001 (Sweeney, 2001a, b). In relation to the SMEs, apart from those belonging to keiretsus as subcontractors, SMEs have benefited of the experience of the Kohsetsushi networks which had their origin in the 1930s. In 1994 there were 519 centres specialized in different sectors and covering all the territory . These centres employed 7100 workers of which 5400 were engineers or researchers. These were(Shapira, 1992) financed by local government and their services were ample: applied research, information diffusion, consultancy, training, laboratory services and technology diffusion. In general most of their work was subsidised by the government. The Kohsetsushi are very closed to SMEs needs and their workforce are based on stable employment. 1.3. The European Context Certain facts have to be considered in order to understand the European context for technology transfer The EIMS1 report nº 36 (Bosworth, Stoneman, 1996) explains the relationship between innovation activity, information flows and technology transfer. In relation to the information sources for innovative manufacturers in Europe it points out that external sources of technology such as consultants (brokers), research institutes, patents, networks or universities account in general for only 5 % of the information sources for those manufacturers which declare to be R&D performers. Those with informal R&D (non-R&D performers) point out a smaller percentage. In both manufacturing and service sectors, internal sources (around 50%) and clients or customers (around 40%) are the most common suppliers of innovation-related information. According to this survey, commercial relationships – with customers and suppliers, and to a lesser extent with competitors – clearly constitute the dominant form of interaction between firms. However, “non-market interactions” are increasingly common, and increasingly important, especially among innovating firms. For these firms, collaboration can help to lower the costs and risks of innovation, as well as to extract value from new scientific and technical knowledge. Such interactions include formal and informal collaborative arrangements. Innovation networks or 1
European Innovation Monitor Program launched in 1990
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‘clusters’ usually involve both horizontal and vertical inter-firm collaboration – both between companies operating in the same industry and between suppliers and customers along supply chains. The report concludes that information constraints are important but not as important as other barriers to innovation (mainly economic). Inadequate information about markets appears somewhat more of a problem than a lack of technology information. In addition, information appears to be greater for innovators than non-innovators, the former being, in principle, more aware of the problems. The results are different across countries as well as across industries. The same conclusions are reached by the survey “Flash Eurobarometre” (European Commission, 2001) carried out among European firm managers during 2000. A different case is that of new high technology based firms. Although representing a small percentage of the SME population2, the literature points out the relevance of external technical information on their start-up and growth. Oakey (1995) points out that while 68 % of firms less than five years old maintained important external technical links, the proportion for firms in the nine years and over category reduced to 43 %, showing this introspective tendency of the rest of SME’s. A field study on this type of firm (Albors, 1998) also pointed out the importance of a rich information technology environment for the start up and growth of these firms. Innovation collaboration is especially common in the Scandinavian countries. Nearly 60% of Swedish and Danish innovating manufacturers, and fully 70% of Finnish ones, had a collaborative arrangement. In southern Europe, by contrast, only around 20% of Spanish and Portuguese innovators collaborate, and only 10% of Italian ones. In most countries, more innovators in the manufacturing sectors engage in collaboration as part of the innovation process than in the service sector. But in Denmark, Belgium and Portugal, a larger proportion of service sector innovators collaborate. Both in manufacturing and services, the rate of collaboration among innovating firms increases with size. While around 20% of small innovators have collaborative arrangements, approximately 50% of large ones in the manufacturing sectors do so, and around 35% in the service sector. Considering the international scenario, collaboration still occurs mainly between partners in the same country (see figure 4 below). Among collaborating innovators, 84% of manufacturers and 74% of service sector firms work with domestic partners, while 50% of manufacturers and 37% of service sector firms work with partners in other EU countries. Outside the EU, the United States is the most common location for innovation partners - 25% of innovating collaborators in manufacturing, and 28% of those in the service sector, have partners in the US.
Figure 2. Share of European collaborative innovators by partner location, EU, 1996, EIMS Report. 2
The high-tech sectors account for only 3% of all European manufacturing firms, and generate only 9% of total manufacturing sales. But the high and medium-high tech sectors together contribute a disproportionately large share of sales of new and improved products - 70% and 71% respectively
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It should be pointed out that the European R&D Framework Programs (FP) have supported collaborative innovation, especially since the 4th Framework Programme (FP IV, 1994-98) began. Between FP III and FP IV, the SME participation increased from 28 to 32 %, constituting 66 % of all industrial participants. In FP IV, the level of SME participant firms (12.365) more than doubled compared with that for the whole of FP III (5.424) (European Commission, 1998). Thus it could be said that collaborative culture is increasing in Europe opening the way for the diffusion and transfer of technology in a cooperative fashion. During FP V (1998-2002) a number of action lines were launched in order to further support this objective, among others: the EIMs (European Innovation Monitoring) program took care of studying the innovation environment and identifying innovation management good practices; a number of regional actions (RITTS/RIS/RTP) promoted regional technology transfer policies and actions, the Innovation program promoted innovation projects as well as Technology Transfer and Validation Projects in order to promote technology diffusion towards SME’s, another action line took care of assisting SMES in the protection and exploitation of RTD results, and finally the IRC program has promoted a European Technology Transfer Network which will be discussed later. A relevant point to be considered here is that of appropriability of technology. It seems logical that the firm’s own intellectual property is likely to be more valuable to the firm itself if it is able to protect it. The before mentioned EIMS report discusses the fact of innovation copying as a hindrance to innovation. The results show, confirming some reports of academic literature (i.e., Cohen et al, 1996), that this hindrance is slightly significant. A further study shows that innovating firms consider the problem more significant that non-innovators and there are differences among countries and across industries, Copying in some manufacturing industries such as office computers or furniture is more significant. The same occurs with the size of the firm whereby larger firms report the problem as more acute than small firms. From the point of view of the scientific and technological productivity, a recent publication of the European Commission (2002) shows that the ranking of the European countries in terms of patents per capita is slightly lower in the European patent offices, but much lower in the US patent offices3 (see Table 1). The Northern European countries such as Sweden, Finland, Germany, Denmark or the Netherlands exhibit the highest level of patent intensity, much higher than the European mean figure. Another relevant indicator is that of the per capita number of scientific publications. It is interesting to observe that, once again, northern European countries such as Sweden, Denmark, Finland, Netherlands, United Kingdom and Austria are not only above average, but also above the US and Japan. Clearly, and also considering the citation index, the Scandinavian countries show a clear leadership. United States
Europe
Japan
European Patents per mill. Population (1999)
130
125
126
Average annual growth in (1995-99)
12.4
11.7
9.62
US Patents per mill. Population (1999)
312
61
248
Average annual growth in (1995-99)
8.9
9.9
7.6
Scientific publications per mill. Population (1999)
708
613
498
Highly cited papers in % of total (1997-99)
1.27
1.20
0.65
Table 1. Scientific and technological productivity (Europe, US and Japan), European Commission, 2002.
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This shows a change in the previous pattern.
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From the point of view of small and medium sized firms, patent propensity as an innovation protection tool, has been reported to be much lower than larger firms (OECD, 1997). The previously mentioned European survey, (European Commission, 2002), confirms this point.
2.- RELEVANCE OF TECHNOLOGY TRANSFER. THE TECHNOLOGY TRANSFER PROCESS. CRITICAL ELEMENTS IN THE TECHNOLOGY TRANSFER PROCESS. 2.1. The Need Most European research based on innovation surveys (Bosworth et al, 1996) shows a strong correlation among the innovative activity and a number of indicators associated with company competitivity, such as the launching to the market of new products, the increase of the export activity, productivity, etc. A survey carried out among European managers (European Commission, 2001) also shows that the primary driver for innovation among companies is the potential to increase market share and profitability. There is general consensus for the need to enhance technology transfer from technology generators to technology consumers. The process of technology transfer is inherent to the dynamization of the innovation systems. Governments and public bodies implement various sort of programs to promote this transfer. Large research organizations have launched their own programs in the US and Europe and references have been published on them. The European Space Agency has its own technology transfer program focused on the SME environment and the American space agency, NASA, has a technology transfer web network with the same objective. Figure 5 shows schematically the technology generation and transfer process flow, a complex process that takes places in four basic environments: scientific marketing, legal and financial and involves a number of actors. There are a number of critical elements. Intellectual Property Rights (IPR) is of primary importance. IPR, as knowledge explicitation and identification is fundamental to the process of technology transfer. Intellectual Property or Knowledge is the key asset and its profitable exploitation by business will be the key to competitiveness and growth. Whatever it is, competitors will erode that competitive edge if the business does not continue to innovate.
Figure 3. The technology generation and transfer process (adapted from Linton et al (2001). But again, as it has been pointed out in the introduction, managers and company owners in Europe still don’t recognise the importance of IPR, or they place it as a secondary priority (European Commission, 2001). Indeed, access to the most advanced technology (61 % of replies) is embodied through equipment purchasing and cooperation with suppliers and customers (51 % of the replies). However, a geographical analysis of the respondents points out strongly different approaches. Access through disembodied knowledge (contract R&D and licenses) rate high with Northern European countries (Netherlands, Sweden, Germany, Belgium, Finland), Italy being the exception. R&D rates also high with larger and exporting companies. In general company managers declare 6
that actual channel access to advanced technologies is sufficient, although Northern European company managers show a lower conformance and view other countries such as the US as the ideal technology source. This survey shows that there is no clear technology demand recognition from the SME’s side. 2.2. Technology Brokers This absence on technology demand has been reflected in the survey carried out by the European Commission (Carrara et al, 1995) concerning technology brokerage in Europe, which was also reported by Morgan et al (1996). Among the relevant actors in the technology transfer process, comment must be made concerning the broker’s figure. Technology brokers are defined as intermediaries between technology suppliers and technology users who deal with ready to use technologies or patented technologies. A technology broker should be able to assist his client up to the moment of signature of an agreement. The catalogue of services offered by a broker should be among others: assessment on technology needs, evaluation of technologies and inventions, research and innovation management, market research, export development, business plans and project management, etc. The conclusions of this report were rather negative. The technology brokers in Europe didn’t manage to present a clear image for themselves. Technology brokerage was identified as a highly specialized activity requiring a combination of numerous skills. But in spite of the above, of the 336 technology brokers identified in the European countries surveyed, only 25 % are specialised technology brokers - and even then didn’t regard this profession as their sole income. A clear public coordinated support for technology brokerage could not be identified. 2.3. Entrepreneurship Entrepreneurship has been closely identified with technology generation and transfer. It is an important element in this process. Christensen (1997, p.125) attributes a fundamental role to new technology based small firms in the development of disruptive technologies.. These firms, having lower fixed costs and a clearer vision and drive, will have a greater chance of success when it comes to developing and commercialising new technology. For these reasons traditional technology research organisations promote entrepreneurship programs as a core part of their strategy. Best practices manuals (i.e. European Commission, 2000) recognise this dimension in the culture of research organizations. It is the reason for the spin off initiatives created by some research organisations. As an example, in the US, NASA with their TEN program in Silicon Valley4, claims the creation of 50 start ups in seven years with the leverage of $600 million in venture capital equity. In Europe, the European Space Agency (ESA) records two spin off small companies as a consequence of their Technology transfer program (Brisson, 2000). 2.4. Venture Capital Another key element in the technology transfer process is venture capital. It is a relevant hindrance, innovation finance access being graded by respondents in fourth place (see figure 3) in the survey on innovation already cited (Bosworth, Stoneman, 1996). However the firm managers survey (European Commission, 2001) pays less attention to financial resources as an innovation need of the firm. Venture capital availability also ranks differently in accordance with the final industry destination. In the USA venture capital is more readily available (with a 1,52 % of the GDP) for the funding of the high tech business than it is in Europe (with a 0,50 % of the GDP)5. The Global Entrepreneurship Monitor also comes to a similar conclusion when comparing ratios of venture capital investment worldwide (Reynolds, 2001). 4 5
See www.ten-net.org European Commission, (2000), Key figures for Science, Technology and Innovation, Brussels.
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2.5. The SME Finally, the SME population as an adopter and final target end of the technology transfer activity must be considered as a critical element. SMEs are responsible for two thirds of European manpower and SME’s, as it has been pointed out, have certain characteristics, critical for technology management, which have to be taken into account. Financing is a critical issue and access to equity capital is difficult due to their size. SME’s tend to focus on short-term problems rather than long-term strategies. SME’s also tend to be reactive rather than proactive to their environmental changes. In relation to technology, and as Dankbaar (1998) points out, traditional SME’s (as opposed to technology based SME’s) tend to treat technology as a contingency, something that appears suddenly and needs to be dealt with if it cannot be avoided. A major concern is the reluctance of SME managers to face technology problems in a proactive way. This is perhaps one of the reasons for the lack of technology brokerage demand. This fact has to be taken into account by innovation public agencies when promoting technology transfer programs to SME’s. It is also a key success factor for those programs that focus on this problem. The development of the technological capabilities of the SME’s should be then a key accompanying part of any technology transfer promotion program. To this end, the taxonomy proposed by Arnold (1998) is very useful. This author proposes a simple segmentation of firms into four groups: Low technology SME’s; Minimum capability firms; technologically competent; Research performers. The last three are those able to easily learn and change, while the first would need to undergo a radical change to survive.
3.- TECHNOLOGY DIFFUSION AMONG SME’S. 3.1. Technology Transfer networks. SME population constitutes a natural target for technology transfer. These firms have certain advantages such as flexibility, dynamisms and responsiveness, but also a contingent attitude towards technology and limited financial resources. This situation calls for certain public policies. One model, a centre periphery model, has been proposed by Schon (1971) and assumes that technology diffusion takes place from the source towards the SME’s and support will include incentives, provision of resources and training. This is the model followed by University research centres and other agencies such as ESA or NASA (see Linton et al 2001). A number of transfer mechanisms are utilised and efficiency will depend on the available resources, the efficiency of the diffuser, the SME absorptive capacity and the general process support effort. Further diffusion of the technology to other SME’s will depend on the efficiency and cost of the technology as well as the absorptive capacity of the industry environment. This time pattern and speed of the diffusion will follow a bell shaped curve as empirical studies have pointed out (Norris, 1973). Two critical points mark this diffusion: the chasm between innovators and early adopters, and the chasm between the latter and the early majority (Moore, 1991). Overcoming these chasms will be part of the technology marketing and design effort, included in the “Translation and Marketing” phases depicted in figure 5, where a number of communication skills will be required. The “technology transfer networks” concept arises from the fact that cooperative learning effort seems to be more efficient when SME’s are involved. On one hand, as has been pointed out, SME’s lack capacity for technology transfer due to scarce resources and limited technology absorption capacity. But on the other hand many sources of technology – universities, R&D centres, equipment suppliers and consultants, lack experience in bridging the gap to SME’s and understanding their needs. A comprehensive analysis of the literature can be found in Bessant (1995). Networks will offer clear advantages to the SME participants such as the sharing of: technology transfer skills, 8
technological expertise, know how and regulatory issues, complementary service network portfolios, organization and management, etc. 3.2. Taxonomy of Technology Transfer networks Proactive technology transfer takes place in some commercial technology transfer companies such as BTG plc 6 who employ full time people with specialist skills - scientific, commercial, legal, IPR, marketing, etc – operating globally – but focussing on key technology sectors. Some other commercial companies (e.g. Scipher, Accentus) operate in a similar way, also focused on specific sectors. The BTG model has some similarities to Venture Capitalists. BTG does not charge for its services it bears the cost and the risk (i.e. manages and bears all costs associated with IPR and its exploitation), and if successful it shares the rewards. If unsuccessful (usually the case in this very risky business) it writes off the costs with no charge to source of the invention. Like a Venture capitalist - the few winners pay for the many losers. It succeeds by (a) having a very large portfolio, (b) reducing the risk by doing much due diligence, (c) focussing on target sectors where it has technology and market expertise and (d) by being very proactive in seeking and doing the deals. “Passive networks” exist among the many “informal” networks such as trade associations, cooperative groups, associations of technology transfer professionals (AUTM, LES, AURIL, etc). But they are just that – informal groupings who exchange experiences and best practice. In general they do not provide concrete services for technology transfer. Many TT networks operate “shop windows” or databases of “offers” and “demands”. There are also many commercial Internet based systems that do the same (e.g. www.yet2.com, www.patex.com, www.uventures.com, etc). In the UK, the Patent Office together with AURIL (an association of university technology transfer offices) is creating a similar online database. In Japan, the patent office also has a database of technologies available for licence. Most US Universities also publish opportunity databases. Internet/on-line databases may be considered as passive networks. They are in effect just global “shop windows” – useful to raise awareness of demands and offers, but lacking in concrete services to make TT actually happen. A review of the impact of Internet on technology transfer can be found in Sweeney (2000). Technology transfer networks don’t have an ideal size or organizational form. Smaller networks may seem more efficient because of easier communication and more controllable group dynamics but larger networks benefit from a more sizeable pool of resources and a wider portfolio of clients technologies and skills. These can also be classified as “star” type of network, typical of a single research organization, is the simplest concept and there is usually an experienced partner who plays the coordinator and communication role. The “ad hoc” type of network which doesn’t have a formal structure and it is well suited for those networks where partners know each other well, and there is already a natural communication established between partners. In the “nodal linkage network” there are no special privileged relationships and it is well suited for networks of research organizations. Finally, the “networks of regional networks” is a complex one consisting of a multi-tiered structure linking local networks through an international coordinating structure. This complex network will be discussed below since it is the case of the International Relay Centre (IRC) network. Here the nodes will be regional organizations hosting the technology transfer services and coordinating among themselves in a sort of virtual organization. The customer of the nodes will be SME’s. When the network performs well informal channels of communications are established reinforcing the network ties. 6
www.btgplc.com
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Fig. 4. Different types of technology transfer networks (European Commission, 1995). 3.3. Critical Elements of Networks The European experience shows that technology transfer networks are a unique experience for SME’s allowing them to learn collectively in the diffusion of technology. The tacit knowledge, developed over the years that these networks have been operating (initially with the SPRINT EU programme) has been collected in the so-called “Best Practices” (European Commission, 1995). These best practices for the diffusion of technology in the networks include the selection of the type of network, its management, the communication procedures and activities, marketing aspects, financing, end customer segmentation and, last but not least, the selection of the nodal host organization. A crucial aspect in the network performance, as will be discussed later, is the formulation of the technology transfer action. If the primary targets are SME’s, then the considerations discussed previously related to SME characteristics must be taken into account. For those who are looking for new technology, the problem is the sheer volume, and in many cases there is insufficient information to make a selection judgement. For those who have technologies to offer, the problem is how to reach the right target. In many cases the “match” is not obvious – a technology from one sector often brings innovation to a completely different sector. It usually takes an individual to spot the connection – an individual and a “generalist” who understands the activities and skills within the company, and who has a wide view of the technologies available. Someone within a company often cannot make the necessary “Innovative leap”, since they are too immersed in their own business. We see this happening time and again – exemplified by the activities in Japan of the “patent transfer advisors” – some 200 of them. They were distributed throughout Japan, and shared common access to the patent offices database of technologies. They made contact with local companies, usually SME’s, who wished to acquire new technologies. With an understanding of the business it was they, not the SME’s, who browsed the database, and identified and suggested opportunities. They also published business needs around the network. They were the catalysts that made this network work. It has often been said that technology transfer is a “people business”. This is indeed one of the most critical elements. However, the work of technology transfer does not stop when a potential opportunity has been identified, and parties have been introduced. The TT network has a critical role to play in facilitating the deal. They are well placed to do this because of the demands created by differences in culture, language, legal systems, size of parties, and so on. Many potential “deals” fail because of a failure of the two parties to effectively negotiate to a conclusion. The TT Network has a role in facilitating this process. Licensing technology in or out is often new for many SME’s. It is not the same as selling products and help and guidance is needed. TT networks, then, are much more than simply technology brokers – who bring parties together and then let them get on with it! They are an integral part of the process from start to finish.
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To be effective in facilitating the deal, the TT network must have a range of skills – particularly relating to IPR and an understanding of the way deals are structured and made. 3.4. Public Policies for Networks Public policies will have to be coordinated by regional bodies in order to support technology transfer actions between SME. These could be summarised as three basic action lines: (a) raising the awareness of SME’s of the potential of technology transfer to help them to solve their problems and raising awareness about the network support available; (b) specific direct support to individual SME’s in the form of tailored technology consultancy which will help them to overcome their contingent attitude; and (c) specific support during the technology transfer phase. The latter is usually provided by the network node host organization. Experience has shown that some, of these European initiatives, such as MINT or Euromanagement, have proven to be very efficient (Albors, 1998b) supporting cooperative SME’s technology actions. Literature has also reported on specific national programs supporting the European IRC networks in Norway (Jorgen, 2001), Finland (Tuominen, 2000), or Sweden (TBBS Project). 3.5. Concluding remarks Technology transfer is a critical step in the technology innovation and adoption process when SMEs are considered. On one side it involves various environments, scientific, legal, or financial. This is further complicated by the technology contingency of the SME, its reluctance to deal with IPR, and the fact that technology demands are often ignored by the SMEs and thus we are faced with a technology push model. Technology transfer in the SME environment takes place basically as embodied knowledge in equipment or processes. However, the surveys show that, in this respect, cultural environments as well as public policies are varied across Europe. It has also been recognized that technology brokers are still not a recognized demanded figure. Entrepreneurship and venture capital are key elements in this technology push model, especially when disruptive technologies are considered, and national and European policies are increasingly addressing them. The concept of networking to promote technology transfer has been supported worldwide by the US, Japan and Europe where technology transfer networks were recognized as a relevant tool in the European innovation policies from the mid 1990. The network concept requires a proactive approach if an effective technology SME transfer is sought. It means to support the SME across the various environments involved in the technology transfer process, starting with the technology demand identification phases rather than pushing technology to them. Also, understanding the SME culture and their, sometimes limited, view of technology, advising it and activating the network with activities such as seminars, training, workshops, etc. These technology policies have to be supported, not only by the network management but also by the regional innovation agencies which are normally closer to the SMEs and their needs. The last condition has been found critical to explain the differences in the output of some nodes of the European network. 4.- THE EXPERIENCE OF THE EUROPEAN TECHNOLOGY TRANSFER NETWORKS. THE INTERNATIONAL RELAY CENTRES NETWORK (IRCS). 4.1. Evolution The European policy actions related to technology transfer began in the 1980s with the Strategic programme (EEC) for innovation and technology transfer (SPRINT). Its objective was to “promote innovation and technology transfer through the trans national development of a supporting
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cooperative infrastructure… to ensure the economically viable exploitation of inventions7”. These were followed with a programme for the dissemination and utilization of scientific and technological research results (VALUE) in 1989. This programme had a specific objective of “promoting the effective dissemination and utilization of the results of Community Research and Technological Development (RTD) activities and to create, for this purpose, a common integrated computer communications network between European research centres”. With these aims the programme supported a network of centres (Value Relay Centres), which were the predecessors of the current Innovation Relay Centres ( IRC’s). The first Innovation Relay Centres were established in 1995 with the support of the European Commission. The aim was to create a pan-European platform to stimulate transnational technology transfer and promote innovation services. The Innovation Relay Centre network (IRC) mission is defined as “the support of innovation and transnational technological co-operation in Europe”. IRC services are primarily targeted at technology-oriented small and medium-sized enterprises (SME’s), but are also available to large companies, research institutes, universities, technology centres and innovation agencies”. Actually, 68 regional IRC’s span 31 countries - all the EU Member States, the newly associated countries (Bulgaria, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia), Iceland, Israel, Norway and Switzerland. Consortia of qualified regional organisations such as Chambers of Commerce, Regional Development Agencies and university Technology Centres operate most IRC’s. Altogether, almost 250 partner organisations are involved, ensuring wide geographic coverage. 4.2. The IRC network results IRC’s are a world singular initiative of an international technology transfer network. The latest IRC analysis indicates a network client base of more than one million firms. This experience will be discussed below in the light of the experience of the IRC’s last seven years of operation. This analysis is based on the Strategic Analysis carried out by a panel of consultants and the European commission, interviews carried out by the authors with twenty responsible executives of various IRC’s and an unpublished thesis on the Finnish IRC’s. The cited literature refers to certain technology indicators (Autio, 1995) but the technology transfer exchanges dealt in our case don’t comply with those. Basically our analysis of the technology success will have to be based on those measured indicators of which data is available. The objectives identified for the IRC’s nodes are: number of signed (or negotiated) TT contracts; the level of TT services provided and the geographic coverage (although from our point of view should be effective coverage). Table 2 shows the basic data relative to the IRC network. Here, and from the geographic point of view, the IRC’s have been classified in four groups - North, South, Centre and East Europe, the last group being composed of new associated eastern countries. The tables summarizes the information relative to infrastructure, macroeconomic data and also some performance indicators of the first round (1995-99) as well as some of the second round (2000-01). In relation to the host infrastructure strength, the index related to: - capacity to access SME’s with potential for TT, ability to deliver a broad range of products of interest to the SME’s, the support of regional actors, the accessibility to a wide range of experts at regional level and the degree to which the host is independent of the IRC European funding. The survey results relative to the internal strengths of the IRC teams have not been tabulated since the results indicate in general a high level, due probably to the quality control exerted by the EC on the selection and follow up of the IRC’s. 7
From the program internet file. See www.cordis.lu
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In principle the geographic coverage of the IRC’s shows that in centre and east regions the population coverage is higher than in the North and South Regions. However the countries coverage is similar due to the bid conditions. The strength of the technology sector measures for the ratio of % of Gross Expenditure on R&D appears clearly correlated with the general performance and goals of the IRC’s (targets) as well as with the technology transfer balance rate. The index related to the strength of the regional policies support and the regional infrastructure relates to innovation appears correlated with the performance rates. IRC data
Centre
East
North
South
Total
Number of countries covered EU member states Number of IRC’s Average number of IRC’s partners Official unemployment rates GDP per cápita (as per % of EU 15) Experience of IRC partners (years) Host infrastructure strength
8 11 6 0 20 12 3.1 2.8 8.9 12.2 114.5 39.1 High Medium High Med.-Low
6 5 15 2.6 5.9 100.7 High High
6 4 20 3.7 12.3 85.3 Medium Medium
30 15 67 3.1 9.8 89.1
5.8 40
6.2 15
Mill. Population/ IRC Strength of technology sector %Gross Expenditure on RD > 150 % EU I% Index of strength of regional infrastructure and TT Support from Regional Policies Knowledge of the IRC services by local SME’s Ave. Client Base (receiving Technology offers) Ave. Last round TT contracts negotiated Ave. Last round TT contract signed Ave, RTD Proposals accepted for financing TTT contacts as per % of Client Base Total (1000 €) cost per negotiated TTT Performance targets Second Round Ratio of Tech. Requests/ Offers validated
9.1 30
8.8 10
High
Low
Medium
Very Low
2479 61 11 14 9 19.61 High 0.29
1575
Med.Low 0.46
Very High Medium 1025 46 7 21 13 23.35 Very High 0.62
Med.Low Very Low 2261 31 7 3 11 32.23 Medium 0.21
Med.High 7.4 24
1645 38 7 18 10 24.49
0.32
Table 2. IRC Profile (European Commission Strategic Analysis IRC network, 2001). The survey results on the IRC’s visibility to the local regional SME’s indicate the difficulties of the SME market. In spite of the diffusion efforts, these TT activities still reflect a low level of knowledge among SME’s. The SME survey also indicates a willingness to pay for IRC services only when successful, confirming the European technology brokers surveys already mentioned. The SME’s appreciate more the networking effect of the IRC in finding suitable partners for their RTD projects or marketing channels. They also emphasise the inward TT effort more than the outward effort. The SME’s point out the IRC contribution to their awareness of the European R&D programs. The collected data as well as the interviews and related literature references (Tuominen, 2001; Jorgen, 2001) point out to the success and higher activities of the northern IRC’s that are characterised by a focused action, stronger hosts teams and a strong support from regional policies. These experiences point out that the external expertise most widely used has been: support in cooperation opportunities and selection of partners, formulating international strategy, and IPR negotiations and registration. All of these actions are focused on accompanying measures to the SME’s technology management.
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One interesting finding of the report is that when the IRC nodes are examined in terms of their regional economic context, the differences are not very substantial. The evidence concludes that IRC performance is not related directly to external economic factors. However, it is interesting to point out that there is a correlation between higher GDP per capita regions and the strength of host organisations but not to low unemployment rates. IRC’s with strong host organisations have strong political support and tend to have higher performance and higher TT targets as well as lower costs per TT contract or results. Those IRC’s have also an active marketing focus. In relation to TT support regional policies it appears that the system suffers from a lack of co-ordination of these support regional policies – being clearly unbalanced between the different countries that comprise the network The technology transfer balance rate, measured as the relation between technology requests and technology offers seems to be higher in the North and East IRC’s and correlates negatively with the TT target level showing a clear push lead market that only can be overcome by proper SME regional policy orientation actions. The performance indicators (negotiated and signed technology transfer contracts) are insufficient to judge the program performance and its efficiency. Whilst the average costs of a signed TT contract (64.253 €) may seem to be high, it would have to be contemplated in view of the activities carried out around it as well as all the diffusion activities of the network and the awareness of the program among their area of influence (the “social technology transfer marketing” as one IRC manager refers to it). This has been pointed out elsewhere as the synergistic spin off of many innovation policies (Pilorget, 1995). The results of the last round performance indicate a clear improvement of the IRC efficiency (i.e.: from 7,7 to 12,3 technology offers as well as from 2,5 to 3,9 technology requests index validated in the networking activity). Experience in TT appears correlated with a performance improvement. The measurement of effectiveness is in itself an unresolved issue. It cannot be measured simply by the number of TT agreements. The network does much more than just facilitating “deals” – it also has a role in changing and developing culture and attitudes (e.g. a more global and entrepreneurial view), encouraging cross-border collaboration (which may lead to other ventures), encouraging innovation amongst SME’s. Many of these “intangibles” are not easily measured, and perhaps should be the topic of another study. In general certain network weakness were appreciated in the report such as the product client service range, the absence of financial incentives (confirming our previous comments), a more professional approach to the SME needs (related to their technology competencies) and new performance indicators. In general the most acute problem is the identification of a technology SME demand-. As mentioned above the IRC network is spread across Europe. Whilst the geographical coverage is good, it is not possible for each “node” to have the same level of expertise in all areas. This results in patchy effectiveness. Most IRC’s are spread too thinly – it is virtually impossible for an IRC node to be an expert in all industry areas, and provide expert advice on all legal, IPR, commercial and other issues. Some “Thematic Groups” have been established in order to bring together similar industry areas. There is still no shared provider for IPR or legal services – each node must do their best.
5.- CONCLUSIONS TT is a vital phase in the innovation cycle of the SME and there is certainly a demand for "innovation" from companies of all sizes. This is normally encouraged by public policies. The problem is that often the technology demand is hidden. There is too much noise from a large
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number of networks, databases of technologies, etc. Successful networks are therefore proactive identifiers of opportunities (for their clients) and proactive facilitators of the deal. (e.g. some IRC's). Innovation Public policies share different roles in supporting technology transfer networks. Figure 8 shows them situated in the technology flow chain. That figure reflects also how best practices on the technology producers support the technology flow dynamism. These are in many cases identified and supported from the public side.
Figure 5. Public policies roles when supporting technology trasnfer TT needs efficient communication. “Shop windows” of demands and offers can raise awareness of opportunities, but making TT work needs finally face-to-face contact. All the networks which have been created - including IRC's, Internet patent shops, National networks, etc - can be effective as "shop windows" - but only if the right people look at the shop windows - and in most cases they don't! - The seekers of innovation don't usually have time, or they don't know what they are looking for. It usually needs the intervention of someone to act as a catalyst. Successful Network Nodes (including IRC's) usually have a “proactive” individual who understands the needs and business of the SME, has expertise in searching the "shop window", and has an eye for spotting opportunities maybe from a different sector. Specialisation is key – both industry/technical and non-technical (IPR, legal, marketing, etc). Seen as a whole, the network has a large resource, which can cover many things. Individually, each node should not need to spread itself thinly. Effort can and should be consolidated, focussed, and made available across the network. However, most Network nodes - be they IRC's, TLO's, ILO's, etc are far too generalist - they have to manage everything from Biotech to Semiconductors, from bending metal to consumer products. This dilutes their effectiveness. It is noticed that those network nodes who focus and specialise are often more successful. Many Networks only act as brokers - bringing people together - but success can only be measured by deals done. Unfortunately, most network activity does not cover well the "facilitation" role of keeping parties talking and helping to do the deal. Some do - and these are the successful ones. Effectiveness cannot just be measured by agreements signed. Culture and attitude change are equally important “deliverables”. These are especially important in politically driven (rather than commercial) networks. The measurement of this is still unresolved. In summary then, the IRCs experience shows a clear advantage of those networks nodes supported locally with regional policies and adequate staff. Those proactive networks show a much higher efficiency than the rest, and this independently of their industry environment. The data analysed shows also that when sufficient effort is spent in approaching a demand model rather than a technology push model the results are higher. Acknowledgements We would like to thank Jose Manuel Valero from CENEMES and Arturo Menendez from IDETRA for their very valuable information and comments. 15
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