Transferring Core Manufacturing Technologies in High-Technology Firms

Galbraith C. De Noble A. , “Location Decisions by High Technology Firms: A Comparison of Firm Size, Industry Type, and Institutional Form,” Entrepreneur ship: Theory and Practice, 2 (1988): 31–47.

DeMeyer A. Miller J. Nakane J. Ferdows K. , “Flexibility: The Next Competitive Battle,” Strategic Management Journal (forthcoming).

DeMeza D. Van der Ploeg F. , “Production Flexibility as a Motive for Multi-nationality,” Journal of Industrial Economics, 35 (1987): 343–351.

McDonald A. , “Of Floating Factories and Mating Dinosaurs,” Harvard Business Review (October/November 1986), pp. 82–86.

Kay N. , “Corporate Strategies, Technological Change, and 1992,” Working Paper Series, Standing Commission on the Scottish Economy, Fraser of Allander Institute, University of Strathclyde, Scotland; Cecchini P. , The European Challenge: 1992 (Aldershot, England: Wildwood House, 1988).

We distinguish “manufacturing technology” (often known as ManTech), from core manufacturing technology. ManTech can refer to a single machine, software, or piece of equipment used in manufacturing; core technology refers to an identifiable, relatively “stand alone” process or sequence of activities that a product, or sub-component, is based upon.

The term “flexible manufacturing” in this article simply means the ability of a corporation to quickly shift production between products or between facilities. It should be noted that much of the flexibility achieved in the production of high-technology products is obtained by maintaining a high degree of labor input, or at least, substantial interaction between capital equipment and humans. An good example of this strategic necessity is Apple Computer's 1985 decision to remove over $7 million of automated capital equipment from their Macintosh production line. As such, the usage of flexible manufacturing in this article is somewhat more broadly taken than commonly seen in the production literature which often associates the notion of flexible manufacturing with computerized numerical control technology and manufacturing that deemphasizes labor involvement. See, Primrose P. Leonard R. , “Predicting Future Developments in Flexible Manufacturing Technology,” International Journal of Production Research, 26 (1988): 1065–1072.

Constructing facilities based around core technologies has been a long standing, yet little understood, tactic of Japanese manufacturing strategy. See, Prentice J. , “Competing with the Japanese Approach to Technology,” Long Range Planning, 23 (1986): 23–29. This appears to be an interesting, albeit much larger scale, variation on the idea of “cell-based” factory design.

Hayes R. Wheelwright S. Clark K. , Dynamic Manufacturing (New York, NY: The Free Press, 1988).

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Hayes , op. cit.; Talaysum A. , “Understanding the Diffusion Process for Technology-Intensive Products,” Research Management, 28 (1985): 22–26; Nelson Winter C. , An Evolutionary Theory of Economic Change (Cambridge, MA: Harvard University Press, 1982); Teece D. , “Multinational Enterprise, Internal Governance, and Industrial Organization,” American Economics Review, 75 (1985): 233–238; Teece D. , “The Market for Know-How and the Efficient International Transfer of Technology,” ANNALS, AAPSS, 458 (1981): 81–96.

E.g., Mansfield E. Romeo A. , “Technology Transfer to Overseas Subsidiaries by U.S. Based Firms,” Economica, 46 (1980): 737–750; Teece D. , “Technology Transfer by Multinational Firms: The Resource Costs of Transferring Technological Know-How,” The Economic Journal, 87 (1977): 242–261.

The usual definition of technology transfer refers to the absorption of new technology or “useful know-how” into a particular environment; thus the case of high-technology interplant manufacturing transfer is a special case of horizontal” technology transfer. However, there are some basic differences. For example, in interplant manufacturing transfer: The technology transfer is completely internal and is familiar to at least one facility or plant (and to some extent, corporate staff)—thus all transfer costs are borne internally; the incentive for the transfer is usually in the form of a corporate directive—thus Teece's [(1977), op. cit.] pre-engineering or “search” cost is minimal; the technology is discrete, and usually commercialized; and the transfer is a distinct experience, not a gradual process of diffusion.

Weijo W. , “Strategies for Promoting Technology Transfer to the Private Sector,” Journal of Technology Transfer, 11 (1987): 43–65; Creighton J. Jolly J. Buckles T. , “The Manager's Role in Technology Transfer,” Journal of Technology Transfer, 10 (1985): 65–81.

Schaefer S. , “Technology Application Program Management: An Air Force Logistics Command Strategy for Technology Transition,” IEEE, National Aerospace and Electronics Conference, 4 (1987): 1182–1187; Teece (1981), op. cit.; Mansfield Romeo , op. cit.

Leonard-Barton D. Deschamps I. , “Managerial Influence in the Implementation of New Technology,” Management Science, 34 (1988): 1252–1265; Coombs R. Saviotti P. Walsh V. , Economics and Technological Change (London: MacMillan, 1987); Kimberly J. Evansiko M. , “Organizational Innovation: The Influence of Individual, Organizational, and Contextual Factors on Hospital Adoption of Technological and Administrative Innovations,” Academy of Management Journal, 24 (1981): 689–713.

Because most multinational studies examine well defined low-technology, primarily “process-flow” technologies such as petroleum refining and chemicals, they often minimize or assume to zero some of the problems most critical to high-technology operations such as learning and productivity loss, management problems, and noncodified know-how.

If the transfer occurred before commercial introduction AGE was set to 0.

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Office of Technology Assessment, The Defense Technology Base: A Special Report (Washington, D.C.: Government Printing Office, 1988).

Nelson Winter , op. cit.

Teece (1977), op. cit.

Hayes Clark , op. cit.