Technological environment

Innovation

• In the business context, innovation may be defined as Technical, industrial, and commercial steps which lead to the marketing of new manufactured products and to commercial use of new technical processes and equipment.

Radical innovation

• A basic technological innovation that establishes a new functionality.

• Eg: steam engine

Incremental innovation

• A change in an existing technology system that does not alter functionality but incrementally improves performance, features, safety or quality or lowers cost.

• Eg: governor on a steam engine

Next-generation technology innovation

• A change in an existing technology system that does not alter functionality but dramatically improves performance, features, safety or quality or lowers cost and opens up new applications.

• Eg: substitution of jet propulsion for propellers on airplanes.

Product and process innovations

Technological leadership and followership

• Technological leadership – “a firm seeks to be the first to introduce technological changes that support its generic strategy. Leadership can be established in technologies employed in any value activity.

• Technological followership refers to a conscious and active strategy in which a firm chooses not to be the first on innovations.

Technology and competitive advantage

• Technological change lowers cost so that the firm’s technology lead is sustainable

• Technological change makes uniquenesse in favour of a firm

• First mover advantage• Improves overall industry structure

Sources of technological dynamics• Innovative drive of the company• Customer needs and expectations• Demand conditions• Supplier’s offerings• Competitive dynamics• Substitutes• Social forces• Research organisations/technical facility• Government policy

Technology transfer

• Technology transfer is the process by which commercial technology is disseminated. The transaction may or may not be a legally binding contract, but it will involve the communication, by the transferor of the relevant knowledge to the recipient.

Forms of TT

• Internalised form – refers to investment associated TT, where control resides with the technology transferor. The transferor normally holding the majority or full equity ownership.

• Externalised form – refers to all other forms such as joint ventures with local control, licensing, strategic alliances etc.

Methods of TT

• Training or employment of technical expert• Contracts for supply of machinery and

equipment• Licensing agreements• Turnkey projects

Features of TT

• Principal instrument of TT – MNCs• Foreign exchange policies of the developing

countries – rely much on import substitution.

Appropriate technology

• The technology suitable in one environment may not be appropriate in a different environment due to several reasons. The latest or highly sophisticated technology may not be appropriate in several environments. Intermediate technology, which often means a technology which combine elements of traditional technology with elements of modern technology, gained importance in the developing countries.