strategy

Forming technology development partnerships

Synonyms:
Promoting partnerships in technology development
Forming strategic partnerships among industrial development enterprises
Promoting technology cooperation through research and development
Description:
Seeking strategic technology partnerships with other firms, universities, independent research institutes or government.
Context:
Inter-firm relationships have changed dramatically in recent decades. Industrial firms are finding it necessary to cooperate both vertically with suppliers and customers and horizontally with erstwhile competitors. Three factors in particular account for the emergence of this phenomenon. First, the introduction of new products and processes involved the interaction of several different types of technology; each firm has more knowledge in some areas than in others. Second, the high absolute cost of research and development (R and D) often makes it prudent to share costs among several firms. Third, customer-supplier coordination have become part of product development, marketing and other activities with an R and D component, as the increasingly high costs of R and D can be shared through closer inter-firm technological collaboration.
Implementation:
This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.

Agenda 21 recommends that frameworks should be established and/or strengthened at subregional, regional and international levels for the development, transfer and application of environmentally sound technology and corresponding technical know-how, with a special focus on needs of developing countries, by adding such functions to already existing bodies. Such frameworks would facilitate initiatives from both developing and developed countries to stimulate the research, development and transfer of environmentally sound technology, often through partnerships within and among countries and between the scientific and technological community, industry and governments.

Governments can promote inter-firm collaboration R and D by facilitating transfer of technology between firms and assisting in the formation of national and international strategic alliances, collaboration agreements and/or technological partnerships. Governments can also assist in the establishment of joint ventures, consortia and other types of cooperative links between enterprises and others with the participation of universities and local governments. In Italy, such collaboration has included partnerships with technologically advanced companies for the exploitation of scientific discoveries.

Other means of support for R and D cooperation between firms exist, including the relaxation of regulatory constraints and innovative means of funding. In the Republic of Korea, for example, an R and D fund was set up uniquely to support cooperative R and D projects and only those firms undertaking joint R and D projects were eligible to apply. Another approach involved the use of matching grants, whereby the government provided the initial seed money for certain projects that were later matched (or exceeded) by resources from the private sector. Such mechanisms had frequently been used in the USA and Italy to promote enterprise-based R and D, frequently within universities.

Another mechanism to promote R and D in the enterprise sector consists of levies for R and D. This entails the creation of a fund for R and D by taxing individual private firms, on a consensual basis, for the purpose of supporting a particular R and D venture of particular interest to a given industry or group of industries. The advantage of such schemes is that they made it possible to circumvent the problem of "free-riders", which benefit without investing, while making it possible to finance an activity such as training for R and D without the need for an unduly large investment expenditure by any one party. This type of mechanism has worked well for Kenyan coffee and tea growers and producers, who benefited from the results of an initiative of the Coffee and Tea Research Associations that had been supported by a one percent levy on farmers. In Singapore, the levy system was considered but not applied because the government deemed R and D a general levy would be unfair to firms at disparate levels of technological development.

[Developing countries] Such approaches can be adapted to the situation in developing countries in order to establish long-term technological partnerships between firms from developed and developing countries as well as on a South-South basis. Partnerships of this type appear to be characterized by "two-way relationships" and by a long-term process of learning and partnering through an explicit engagement aimed at the realization of mutual benefits. This may involve technology-related training, the introduction of new management systems, the adaptation of technologies to prevailing circumstances and incremental improvements to product and process technology that increase productivity.

Such initiatives need an enabling environment at the macroeconomic, meso-economic and enterprise levels, including incentives, an adequate legal framework and improved education and qualification of human resources. Such an environment would provide a basis for small and medium-sized companies to establish mutually beneficial linkages through technological partnerships. A better coordinated and comprehensive approach is also required to link up often fragmented policies, such as science and technology and investment policies. A variety of instruments such as incubators, business communication centres, technical service institutions and training programmes should be promoted to induce "would-be-partners" to join forces in the interests of technological capacity-building and of obtaining mutual benefits.

Counter Claim:
It remains unclear what consequences such alliances will have on the general accessibility of any newly generated knowledge, especially with regard to the global distribution of technologies and the ability to mobilize them effectively.
Subjects:
Promotion
Business enterprises
Industry
Research
Technology
Strategy
Development
Type Classification:
E: Emanations of other strategies