An asset-based view of technology transfer in international joint ventures

T55.4 .W2 ,10.

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<?3

An

Asset-Based

View

of

Technology

Transfer

in

International Joint

Ventures

EricS.

Rebentish

[.*•«",

(^W^

Marco

Ferretti*

February

1993

WP

# 86-93

INTERNATIONAL

CENTER

FOR

RESEARCH

ON

_

HE

MANAGEMENT OF TECHNOLOGY

Massachusetts Institute ofTechnology Sloan School of Management

The

International

Center

for

Research

on

the

Management

of

Technology

An

Asset-Based

View

of

Technology

Transfer in International

Joint

Ventures

EricS.

Rebentish

[/wC,

fceUf^

Marco

Ferretti*

February

1993

WP

#

86-93

Sloan

WP#3537-93

*STOA', Ercolano(Na), Italia

1993 MassachusettsInstitute of

Technology

Sloan Schoolof

Management

MassachusettsInstitute of

Technology

38

Memorial

Drive, E56-390

Acknowledgement

We

would

like to

thank

professors

Thomas

Allen,

Ralph

Katz,

Marcie

Tyre, Jim Utterback,

and

Eleanor

Westney

(inalphabetical order, but not necessarily inthe order of their contribution) for their helpful

comments.

We

would

also like to

acknowledge

the

MIT

International

Center

for

Research

on

the

Management

of

Technology

(ICRMOT)

and

Gruppo

IRI for their

funding

support. Finally,

we

would

like to

acknowledge

the

support

ofthescientists,engineers,

and

managers

ofthe researchsites.

Abstract

An

asset-based

framework

oftechnologytransferisproposed,illustratedby examples

from

studiesoftwointernational joint ventures.

The framework

depicts the organization asacollectionof

embodied knowledge

assets. Differences

between

firms resultfromthe differentcombinations of

embodied

knowledgetypes that areusedtoaccomplishthe

same

ends. Technology transfer is the transfer of

embodied

knowledge

assets

between

organizations.

Four

concepts, Transfer Scope, Transfer

Method,

Knowledge

Architectures,

and

Organizational AdaptiveAbilitydescribeimportantaspectsof the transfer process.Transfer scopedescribes the extent of

embodied

information beingtransferred. Transfer

method

describes theapproaches usedtotransferthe technology.

Knowledge

architecturesdescribe typesof

knowledge

assets the firms possesses,

and

the relationships

between

them.

The

organization'sabilitydescribesitsabilitytochangeitsarchitecturesovertime. Technology transferinvolves selecting thepropertransfer

method

giventhe

demands

ofthe transfer scope,workingwithin the constraints of the existing organization's architectures,

and

its

Increasingly, firms are turning tocooperativeagreements with otherfirms to share knowledge, developproducts, exploitmarkets,orconcentratepower, (Friedman,Berg,et

al.,1979;

Hamel,

Doz,etal., 1989;Harrigan,1988;Kogut, 1988;

Ouchi

and

Bolton, 1987). This trend has

been

acceleratedwith increasing globalcompetition.

With

cooperative

work

inevitably

comes

the necessity to transfer technologies or

knowledge from one

place to another. This is challenging

when

the technologies being transferred are part of the on-going operationsofafirm,suchasproductiontechnologies. Thispaper addressesthe

problem

of

how

to transfer technologies

between

firms with different, yet mature

technological bases.

A

framework

isdeveloped whichexplainsimportantconsiderationsin thetechnologytransferprocess,

and

implications of the

framework

are discussed.

INTRODUCTION

Technology

transfer

from one

organizational unit to another can be broadly

characterized as being either verticalor horizontal in nature(Zander, 1989). Vertical technologytransferoccurs

when

a technology

moves

alongitsnatural

development

lifecycle, forinstance,

from

research

and development

through production within a firm (Cohen, Keller, et al., 1979; Ounjian

and

Came,

1987;

Souder and

Padmanabhan,

1989; White,

1977). Horizontal technologytransferoccurs

when

technology

moves from

a groupin

one

firm toasimilargroupinanotherfirm. Thistypeoftechnologytransferis

most

likelyto be important in

mature

industrial markets, or in markets

where

there is overcapacity becauseofcompetitionfor

market

share. Firms competinginsuch markets

may

merge

as

theindustryconcentrates,orseektostrengthentheirpositionby combining complimentary expertise

from

several players.

An

example

ofsuch a pooling of talentis foundin the

NUMMI

jointventure (JV)

between

General

Motors

(GM)

and

Toyota,

where

GM

is

seekingtodevelop productionexpertiseusing the

Toyota

method.

An

interesting distinction

between

horizontal

and

verticaltechnologytransferisthatwhileverticaltechnologytransfer

must

bridgedifferences

between

units withinafirm,horizontal technologytransfermust

bridgedifferences

between

organizational,

and

possiblynational cultures.

Because

ofthis,

horizontaltechnologytransfer

may

bevery challenging for the firms involved.

For

thepurposes ofthispaper,technologyisconsideredtobe any form, materialor social, inwhich

knowledge

has

been

embodied. Thisincludeshardware,software, products, rules, procedures, organizational structure,

and

know-how

or technical expertise.

The

reasoning hereisthat

knowledge

aboutrepetitiveactionsiscodified intoforms

which

reduce processingeffort orcost in the future.

A

good metaphor

ofthisis the

computer

expert system,

where

the

knowledge

of experts orexperienced workersiscapturedina

program

thatcanbe used repeatedly by non-expertsoreven machines.

The

same

principleapplies

to

many

different forms of knowledge. For instance, a tool might be designed which performs processes

done

previously in several steps orperhaps byskilled craftworkers. Rulesof

thumb

become

operating procedures,

hand

tools

become machine

tools,

and

new

organizationalgroupsarecreatedto

perform

specificfunctions

done

previously

on an

ad hoc

basis. Allofthese formsconstitute

knowledge

thathas

been

codified intoforms which

make

effort

more

efficientorless costly.

A

broaddefinitionof technologyisimportantin discussingtechnologytransferbecause not everythingthatistransferred

between

twofirms

isnecessarilyhardware. Infact,our observations of technologytransferactivities

between

JV

partners suggests that the transferofphysical

hardware

constitutesonlyafractionofall

the differentformsof

embodied

informationthatare shared.

The

differenttypesoftechnologydiscussed

above

are

grouped

ina categorycalled

theTransfer Scope. Transferscope ranges

from

minor

transferslikeexchanging general information, to relatively

more

extensive transfers like implementing

new

operating procedureswhich canultimately influence several different areaswithinthe organization.

The

rangeintransferscope is

meant

tocapturethe variation indifficultyencountered in transferring differenttechnologies

from one

placeto another.

How

atechnologyistransferred

from one

firmtoanotherisalsoimportant.

There

are several richlinesofresearch

from

whichto

draw

guidance.

One

of

them

isthe diffusion literature. Inthis paradigm, technology or information spreads throughapopulationof

potentialadoptersonly after theyhave

somehow come

incontactwithit. Contactwith a

new

technology can take place

when

people function in information- or

enthusiasm-transferring roles such as

champions

or opinion leaders (Chakrabarti and Hauschildt, 1989;Dean,1984;Ounjian

and

Carne,1987;

Souder and Padmanabhan,

1989; Rogers,1983),gatekeepers(Allen, 1977;Allen

and

Cooney,1971),orotherorganizational

roles that facilitatethespreadofinformation (Kazanjian

and

Drazin, 1986;Roberts and Fusfeld, 1981;Jervis,1975). Personneltransferred

from one

sitetoanotherserve asanother

form

of linkage

between

organizational units(Allen

and

Cooney, 1971;Allen,

Hyman,

et

al., 1983;Ettlie,1990;Roberts

and Frohman,

1978). Finally, linkagescanalsobe

formed

bycreating specialtechnologytransfergroups,standingcommittees,or procedures which

facilitate the sharing of technology

between

differentorganizational units (Roberts

and

Frohman,

1978;Roberts,1979).

The methods and

activitiesusedinthe transferprocessare

grouped

ina categorycalledTransfer

Method.

Implicit inthe transfer

method

categoryis

a rangeinthe effort

expended

byusing the variousmethods,since

some methods

naturally require

more

effortthanothers.

Often,the physical relocation ofatechnology

from

one

placetoanother does not necessarily

mean

thatithas

been

successfully transferred.

At

leasttwofactorswill

come

intoplay todetermine

whether

ornot afirmissuccessful intransferring

and

adoptinga

new

technology.

The

first isrelated tothedegreeof similarity

between

thetechnologiesboth currently existing in theadoptingorganization,and those being adopted. Thisfactor relates

totheinherentcompatibilityofthe

new

technology withthe

Knowledge

Architecturesof the adoptingorganization.

Complex

technologiesare oftenaggregated systems of smallersub-components.

The

way

the sub-components are organized

and

interact with

one

another defines the

architecture of thesystem(Clark, 1985;

Henderson and

Clark, 1990).

Knowledge

thatis

embodied

in various forms constitute the

knowledge

architectures of the organization.

These

architecturesinclude the technologies,operatingprocedures,social

and

organizational

structuralqualities. Architecturesarelikeassetsbecausethey are the firm's inventories of

embodied

knowledge. Architectures are structural because the all the systems in the

organizationareinterdependent.

The

organization'svarious systemsinteractlikeajig-saw puzzle

and

determinethe specific(and perhapstell-tale) approachituses to solvedesign problems, interactwith acertaintype ofcustomer,or produce aspecific product.

The

organization's

knowledge

architectures

assume

their distinctive patternsover time asthe organizationmeets

new

challengesinthemarket, develops

new

products orproceduresto

cope, oradaptstochangingconditions(Kogut

and

Zander, 1992;Orlikowski, 1992).

Such

knowledge

architecturesare

sometimes

referred to as organizational routines

(March and

Simon, 1958;Nelson

and

Winter, 1982),

and

inthecontext of

an

organization'sabilityto

implement

new

technologies,the organization'sabsorptive capacity

(Cohen and

Levinthal,

1990).

The

importance of

knowledge

architectures totechnologytransfer

becomes

apparent

when

an organizationtriesto

implement

a

new

technology. Likesubstituting

one

pieceof ajig-saw puzzle with a piece

from

another puzzle, trying to substitute a radical

new

technologyintothe existing architectureofan organization often

meets

withfailurebecause thenecessaryrelationshipsare challenged, or

do

notexistatall

(Tushman and

Anderson, 1986;

Henderson and

Clark, 1991).

A

common

explanationforthisisthattheorganization has too

much

inertia inthecurrentsystemsthatdefine

and

supportitscurrenttechnology

(Nelson

and

Winter,1982).

More

specifically,however, afirmdevelops problem-solving techniquesover timethatallowittobe

more

effective(Tyre, 1991; Orlikowski, 1992)or

more

ineffective(Katz

and

Allen,1982)atacquiring certaintechnologies(see also

Cohen

and

Levinthal, 1990).

An

organization'sproblem-solvingapproaches

may

be areflectionof

theemphasisitplaces

on

specificareas ofexpertise initsstaff

members.

Organizationsalso haveculturalphilosophiesthat influence theirabilitytoadopt

new

technologies(Kedia

and

Bhagat, 1988;Tezuka,1991;Aoki,1990). Finally,every

new

technology implementationis

subject toapoliticalprocesswhichaffectsthe decisions

and outcomes

ofefforts

(Thomas,

1991;

Dean,

1989; Barley,1986)

and

contributes toordetracts

from

anorganization'sability

to successfullyadopt

new

technologies. Allof theseelementsconstitutethe architectures withwhich any

new

technology mustinteractinthe organization.

The

adoption of a

new

technologyusually requires that

some

modifications or

adaptations take place to both the adopting organization and the

new

technology (Leonard-Barton,1988;Pelz

and

Munson,

1982;Rice

and

Rogers,1980).

The

secondfactor

affectinganorganization'sabilityto

implement

new

technologies relates to theabilityof the adopting organizationtomarshall resourcesto

make

adaptations asa

new

technologyis

adopted. Thissecondfactorisconnectedwith theOrganizational AdaptiveAbilityof the adoptingorganization.

An

importantdistinctionshouldbe

drawn between

the organization's

adaptiveability

and

theorganization's

knowledge

architectures.

Knowledge

architectures are relativelystaticstructuralrelationshipsintheorganization(intheshortterm,at least).

The

organization's adaptive ability is its ability to use its resources to change those architectures. For instance, a

new

technology

may

not interact wellwith the existing architectures in an organization, but the organization

may

be able to re-deploy its

engineering or productionstafftoengageinengineering problem-solving

and

adaptation. In essence,it

may

nothavethe architecturesnecessarytosupportthe

new

technology,but

ithastheresourcesavailable to create

new

architectures. Thisisadifferentconcept than that argued by

Cohen

and

Levinthal (1990)

where

anorganization's pre-existing set of abilities

do

notchange duringthetimescaleelapsing in theadoption of a

new

technology,

and

therefore determine

whether

or not itwill be successful at implementing the

new

technology.

While

itis importanttorecognizethat

an

organizationcanonlychangeso

much

inthe shortterm,itisalsoimportanttorecognizethatitcanstillchange somewhat.

Severalelementsdetermine anorganization's adaptiveability.

As was mentioned

previously, if

an

organization has relatively

more

people than are required for normal operations (admittedly a rare occurrence these days), they can be redeployed for

problem-solvingorimplementing

new

technology. Perhaps

more

importantthanjustbeing able to assignpeopleto

work on

new

technology adoptionistheabilityto direct the specific skillsthatare requiredto solvingtheproblem. Thisisnotreferring directly to theskillmix

ofanorganization'semployees, perse (that

would

be considered

more

ofaninventory of

abilitiesinthe short term, soit

would

bebetterclassifiedas

an

elementof the organization's architecture),butto the

way

thatpeoplearedeployedforproblem-solving. Forinstance, an organization might haveexperts in a certain technological area,butiftheyareengaged

in

new

productdevelopment, they might be oflittlehelpin

new

process implementation. Finally,firms thatexperiencestrongproductionpressures

may

nothavethe resources available to

implement

new

processtechnologies(Souder

and

Padmanabhan,

1989;Tyre, 1991).

The problem

is that an organization

may

be unable tostopits production long

enough

to introduce

new

technology because itsproductioncapacity

may

beclose to or

exceeded byits

commitments

tocustomers.

On

theotherhand,

an

organizationwithexcess productioncapacityisable to stopproduction

from

timetotimefor

equipment

replacement,

modifications,experimentation, ortrialruns.

The

four categories just discussed are

summarized

inTableI.

A

elaborationof each, along with supportingdata, follows.

TableI

Framework

Categories

and

Descriptions

including interviews, archival data, and longitudinalsurvey data.

Two

partnerships are

currentlybeinginvestigated.

One

isanewly-formedjointventure(JV),Polychem,involving three

companies

inachemical-relatedindustry.

The

product manufactured bythe partners

issold to technically-sophisticated industrial customers

who

process theproduct further beforeitgoestofinalconsumers.

The

companiesarelocatedin

Germany,

Japan,

and

the U.S.

The

German

and

American

partnershad

been

involvedinmutual technologytransfer prior totheformationof thepresentjointventure.

The

objective ofthisjointventureisto establishregionalmanufacturingcapability for potentiallyallof theproducttypescurrently offeredby eachpartner.

Each

sitewillalsomaintainan

R&D

centerof excellencewhich willbe aleadresearch centerinthe

JV

forcertainareasofproduct

and

processtechnology. Partofthe presenteffort includes the creation ofa

new

productionlinein

Germany

to supportboth

German

and

Japanese product lines.

The

second partnership has

been

in place for

much

longer,

and

isacollaboration

between

twosteelcompanies,onelocatedin Italy (Italsteel)

and

the other in

Japan

(Japan Steel

and

Foundry, or JSF). In this agreement,

JSF

has provided processtechnology

and

organizational expertise toItalsteel.

The

data

were

collectedthroughinterviews

and

visitstositesintheUnitedStates,

Germany, and

Italy.

The

interviews

were open-ended and

lasted

between one and

four hours. Informants

were

interviewed ifthey

were

involved or

had been

involved inthe transferoftechnology or information

from one

sitetoanother.

For

the

Polychem

project, Fourteenengineers,scientists,or

managers were

interviewedin

Germany,

includingtwo

from

the Japanese partner

and one from

the

American

partner. Nineteenengineers,

scientists, or

managers

were

interviewed at the

American

site. Sixteen engineers or

managers were

interviewedatItalsteelinItaly. Severalof thepeople have

been

interviewed

more

than once overaperiod of

more

than ayear.

OBSERVATIONS

The

four categoriesdefinedintheintroduction are furtherdescribedusing thedata

TransferScope

The

scope oftechnologytransferisdetermined by

how much

and

what

type ofa

technology afirm seeksto acquire

from

anothersource.

The

"whattype oftechnology" portion oftransferscopeisreally the

form

inwhich

knowledge

has

been

embodied.

The

"how much"

portion of transfer scope is

how much

information is

embodied

in the

technology.

The

twoare actually related since a

form

oftechnologysuch asapiece of manufacturing

equipment

willalmost always

embody

more

informationthan could a fax communication. Transfer scopeitself

may

be influenced byfactorssuchasafirm's strategic oroperational choices,the extentofitsresources

and

assets,orthe relative

power

of the variousstakeholdersinvolved in the transfer process.

These

relationships willbediscussed

in greater detail

on

othersections,however.

The

purpose ofthissectionisto define the differentcategoriesof transfer scope,whichareexplainedbelow.

General

Knowledge

The most

simple

form

of

knowledge

transferred

between

organizations

isgeneral

knowledge

about atechnology, process,orcapability.

The

transferofa general awareness of anotherpartner's capability

would

notallowthe recipient toreproducefor

itselfitspartner's capability,butit

would

allowittodetermine

whether

ornot a cooperative relationship

would

be appropriate,or

what

type oftechnology is available for transfer.

Typicalquestionsthatmight

be

askedtoacquire general

knowledge

mightbe:

"What

type oftechnology

do

you usetoaccomplishthistask?",

"How

effectiveisit?",or

"How

doesit

compare

withthetechnologythat

we

use?".

Acquiring general

knowledge

about apartner'stechnological capabilitiesisoften the

firststep in transferringatechnology

from one

sitetoanother.

For

instance, the effort to createa

new

Polychem

productionline in

Germany

was

started

when

theJapanese partner

wanted

tobeginproducing

some

ofitsproductsinEurope.

An

investigation of the

German

operationsrevealedthatanexistingproductionlinethere didnot havesufficient capacity or capabilities toproduce both the

German

and

Japanese productlines.

Based on

that knowledge,it

was

decidedto constructa

new

linethere.

Much

more

detailed analyseshave sincetakenplaceinthedesign process

and

severaltechnologieshave

been

transferred into

thatproductionline. Inothercases,gaining ageneral

knowledge

of a partner's capabilities incertainareashas

showed

thatlittle

would

be gained bytrying to

implement

onepartner's technologyatthe other'ssite.

Specific

Knowledge

The

transferof detailed or specific

knowledge

isthe

most

frequent formof transferobservedatthe firms. Specific

knowledge

isthat

knowledge

which provides a firm theabilitytoreproduce (although perhaps with

some

effort) another'scapabilities. Specific

knowledge

is an accurate codification, to the extent that it is possible, of the

knowledge

underlyingthetechnologyinquestion.

The

goal of thedesignofa

new

Polychem

productionlinein

Germany

isto

employ

the best of the partners'technologiesateachstep intheproductionprocess,so extensiveeffortshave

been

made

tounderstand

who

hasthe superior technology. Inthe process,

volumes

of detaileddrawings

and

production data have

been

exchanged throughthemailbyfax transmission,

and

compared and

contrastedin joint meetings. Detailedanalysisoftheexchanged data produced a hybrid of two ofthe partner's

technologies.

General

knowledge

of the types ofprocessesusedateachlocation,

and

their gross

performance

characteristics

was

notsufficient forthisstageof the

equipment

design process. In instances involvingvery

complex

technologies, specific

knowledge

whichinvolves detailed specificationis the only

way

toaccurately assess the capabilitiesofa particular technology. In

most

cases,however,the transfer of specificinformationisthe

backbone

of

atechnologytransfereffort.

Hardware

Hardware

is

knowledge

orexperienceinproduction or productsthathas

been

embodied

intoatangibleartifact. Thisincludes

machine

sub-components,parts,software, themachines themselves,products,

and

entireproductionlinesorplants.

The

transferof hardware has

an

advantage over other forms of

knowledge

in that hardware can be physically re-located

and

itsoperatingcharacteristicsgenerally

remain

the

same

indifferent environments(unless

some

modificationis

made

bythe recipient).

Transfers ofhardware

may

be

accompanied

by

manuals

or operating procedures, but

they arenot covered inthis category.

The

reason forthisis that arecipientfirm

may

already have that operating knowledge, gained through its

own

operations,

and

is

transferring hardware merelyto parallel a partner's capability. Conversely, a firm

may

alreadyhave hardwaresimilar to that ofitspartner,

and

justseekstoadopt

new

operating procedures withoutalso transferringhardware.

There

are severalexamplesofhardwaretransferinboththe

Polychem and

Italsteel JVs.

The

firststage of the collaboration

between

Italsteel

and

JSF

involvedtransferring plant technology

from Japan

to Italy. Since

many

of the

hardware

designs

were

tobe identical ateachsite,exactcopies ofmachinery could be shipped

from Japan

toItalyfor installation. Incases

where

alocalproducer couldfabricatetheequipment,only the designs

were

shipped. In either case,littleor

no

modificationtothe

hardware

was

made

sincethe twoplants

were

designed tobesimilar.

At

Polychem,

where

thereare

somewhat

larger

differences

between

the technologies in place ateachsite,physical

hardware

istransferred

lessfrequently. Incases

where

physicalhardware has

been

transferred, for instance

from

Japan

to

Germany,

some

modifications have

been

necessarytoadaptto existingproduction

lines. Often, however, attempts are

made

topreserve as

much

ofthe originaldesign as possible.

Behaviors Behaviors represent

knowledge

that is

embodied

in people's actions

and

interactions.

Many

of thesitesstudied areveryenthusiastic to transferbehaviorsbecause they are seen as a potential source of significant

improvement

in manufacturing performance.

One

American Polychem manager

estimatedthatfiftypercent ofthe potential

improvement

inhisproductionyieldscouldresultbytransferringoperator behaviors

from

theJapanesepartner.

For

instance,ittakes theoperatorsattheJapanese

Polychem

facility about

one

halfthetimetostart

up

a productionlineasitdoestheir

American

counterparts. Italsteelistrying to transferTotal Quality

Management

(TQM)

problem-solvingexpertise

from

its Japanese partner. It transferred several engineers to

Japan

withthe express

purpose oflearning

TQM

problem-solving techniquesso that they could teach

them

to colleagues

and

subordinates

upon

returning toItaly.

Transfer

Method

There

are three basicapproaches to transferring information.

They

are through

communication

invarious forms, the physical transfer of

embodied

knowledge,andtheuse of organizational integratingmechanisms.

The

physical transfer of

embodied knowledge

amounts

to little

more

than shippingan item

from

one place to another, soitwon't be

discussed atlength.

The

communication methods

willbediscussedundertheheadingsof Direct/Indirect

Communication,

and

PersonnelTransfers. Integrating

mechanisms

willbe discussedundertheheadingsofRoles

and

Bridges.

The

selectionofaspecifictransfer

method

willofcoursebedetermined by avariety offactors,including thescopeof the transfer, thenatureofthetechnologyinvolved,

and

the relativeexpertise

and

resourcesof the organizations involved in the transfer.

The

influence of these factorswillbediscussed after theyhave

been

introduced

more

formally. Direct/Indirect

Communication

Directandindirect

communication

encompassesthe

most

basic types of

communication

behaviors, which include telephone conversation, mail correspondence, video conferences,

and

electronic mail

and

fax transmissions. Direct

communication

uses the

spoken

medium

and

may

includetelephone conversationsorvideo

conferences. Direct

communication

occursinrealtime

and

allows for

immediate

feedback

between

the participants so thatunderstandingofconceptscan beassessed. Unfortunately,

direct

communication

islimited inthe

amount

ofinformationitcancommunicate. Indirect communication,

on

the other hand, takes place through the written word, graphic

representation, oramaterial object. Itis able to transfera lotofinformation(its

one

"picture is worth a thousand words" of direct communication), but has

no immediate

feedbacktoindicate

whether

ornotthe receiverunderstands

what

isbeing communicated. Indirect

communication

isespeciallyuseful inconveying information which measuresor quantifies identifying characteristics of a technology. Using written language to

communicate

alsoishelpful

where

thereisa difference oflanguage.

Many

engineersread

asecond languagebetterthantheyspeakit,especially

when

theyaren't

under

pressureto respond in real time. Direct

communication

is

somewhat

better than indirect

communication

atbuilding interpersonal relationshipsand conveying enthusiasm

between

people,althoughitisstill

an

arm'slength relationship thatisbeingencouraged.

At

the

Polychem

joint venture,

much

of the technicalinformationflows

between

the

sitesbydirect/indirect

communication

methods.

Once

twopartners have agreedtoan exchange

around

aspecifictechnology, detailedlistsof questionsaboutthetechnologyare exchanged

between

the partners.

The

respective expertsateachfacilityprovide answersto these questions for their overseas colleagues.

The

detailed answers are traded,

and

follow-up questionsarethenasked, usuallybyfaxormail. Allofthisactivity

may

culminate inavisittoapartner'ssitefor intense discussionaboutthetechnology(at

which

time

some

informationistransferredthroughtheexchangeofhardware,products,ormaterialssamples,

and

byjointproblem-solving).

However,

a large

amount

ofpreparatory

communication

takesplaceprior to

one

of thesevisits.

For

example,for

one

tripby a delegation

from

the

American Polychem

to the Japanese site, the equivalent of a large

notebook

full of

documents was

exchanged byfax

between

each partner beforehand.

The

faxhas

become

a preferred

method

of

communication

at

Polychem

becauseof

the three differentlanguagesspoken bythe partners.

Another

important advantageof using faxtransmissionsisthatthey canbesentatallhours ofthedayor nightwithout regardfor the local time of the destination.

The

advantageofferedby the faxis that textcan be replacedby

numbers and

figures,which haveuniversal interpretability tothose

who

speak the

common

technical language.

The

Polychem

partnership is beginningto use video conferencetechnology,whichpotentially offersallthe advantages oftheshort-termvisit (including awalk throughthe plantwith a portablecamera) butatafractionof thecost.

One

American manager

is very excited about the potential ofthe systemto facilitate inexpensive technologytransfer.

However,

a

German

scientistis

somewhat

lesssanguine.

He

says thatavideo conferenceisprobablybetter for

managers

thanfor specialistslike

him

becausethe characteristicsofthesystem allow

one

tocoverissueswithbreadth

much

better than withdepth.

Personnel Transfers

When

using direct or indirect

communication

methods, one must choose

between

having feedbackorbeingable to

communicate

alarge

volume

of precise

of information. Transferring people

from

onesitetoanother

overcomes

that tradeoff, albeit ata greatercost. Site visitsallowface-to-face interaction with others

and

directcontactwith several differentformsof information. Forinstance,an engineer

may

discuss theoperating characteristicsof a pieceof machinerywithanotherengineer, inspect

documents

detailing

itsperformancecharacteristics,

and

observeitinoperationallatthe

same

time. Face-to-face interactionatmeetingslike thisisalso associatedwiththe

development

of interpersonal relationshipswhich canfacilitatefuture interaction

(De

Meyer, 1991). Short-termvisits

may

range

from

afew daysto a few weeks,

and

they are oriented towards accomplishinga specific goal.

On

theotherhand,along-termtransfer

may

lastseveral

months

or years

and

the goals are lesswell-defined.

Partnersinthe

Polychem

JV

have foundthatengineeringteamstransferred toother sites for

between

a

week and

a

month

can bevery effective at learningabout apartner's technology. First,theseteamsareveryfocusedintheirobjectives

and

generally quiteabit ofpreparation has

gone

intothevisitto

maximize

thelearningduringtheirstay.

They

can observealsothetechnologyatalevelofdetailimpossibleusing arm's-length

communication

methods. Thisisespeciallyimportantbecauseifthe partnershavesimilar capabilities to

beginwith,theadvantagesgained by cooperationwillbe foundinthe detailsofoperations.

More

importantly,whilethere the

teams

can observethetechnologyinthecontext inwhich

itoperates,

and

itsinteractionwithother systemsintheorganization. Thisisimportantif

thetechnologymust be modified beforeitcan be

implemented

backatthe

home

site(there willbe

more

discussionofthisinalater section).

The

teamsareable to

work

closelywith theircolleaguesattheothersite

on

specifictechnicalproblems, with

immediate

feedback

on

resultsso that effortscan bere-appliedinotherareasifnecessary. This

method

also helps to

form

relationships

between

technical experts,

and

transferenthusiasmfor specific technologies across boundaries. Since this

method

is generally less expensive than longer-termtransfers (lastingayearor

more)

of a single expert,

more

ofthepeople

who

work

with thetechnology

on

a day-to-daybasis can experienceitfirst-hand in the other

setting,andtheycangaina

more

in-depth

and

objectiveunderstanding ofitsstrengths

and

weaknesses.

The

Japanese

Polychem

partner

was

able to transfer

some

ofits

polymer

formulation

expertise toits

German

partnerthrough short-termvisits

and

indirectcommunication.

The

knowledge

itself

was

embodied

mostlyinchemical formulae

and

processparameters,

and

was

transferred readily.

However,

the directinteractiongained throughsite visitsallowed the Japanese partners to emphasize cleanliness in the production environment rather

forcefully. In

one

case,

one

Japanese engineer foundthatit

was

necessarytospend an entireday demonstrating toemployees at the

German

site thecleaning ofthepolymer handling

equipment

and

the levels of cleanliness required in the process.

Such

demonstrations

would

bedifficultto

communicate

byfax,

and

theworkingconditions

would

probablyhave

gone

undetected

had

theJapanese engineer not

been

there toobserve them.

Long

term transfersare defined here to occur

when

an

employee

is transferred

abroad foran extended period to learnaboutanother's operations. Sending a student abroadaccurately describes theengineeror

manager on

a long-termtransfer. Often, long-termtransfersare a step in the

management development

or training process.

For

instance,

the

American and

German

Polychem

partnershave

had

apolicy thatall

R&D

managers

have tospendat leastayearabroadin other operationsinthe

company.

The

Italsteel engineers

who

were

sentabroad

were

carefullyselected

and

identified ashigh-performers,

to be given operations

manager

positions

on

their return. This approach allows the

managers

to learnabout apartner'sor subsidiary'soperationsabroadso that therecan be

more

coordinationofefforts,aswell asallowing

them

tobeinaposition to

implement

that

knowledge

in their

home

operations. People working togetherforan extended periodalso

are able to

form

personal, trusting relationships.

One

Italsteelengineerfoundthat

where

therestofhiscolleagues

were

deniedaccess to certaininformation orplantoperationsat JSF,he

was

able to gain access to thatinformation

and

those areasbecauseofhispersonal friendshipwithone Japanese engineerthere. Personalrelationships alsoleadtocontinued

communication

oncethe transferassignmentiscompleted(seeAllen, 1979).

One

American

Polychem

manager

who

spent one

and

a half yearsin

Germany

still maintains regular contactwithhiscolleagues there

and

stillhasaconsiderable

amount

of influence thereeven though he returnedtothe U.S.

some

timeago.

One

disadvantage oflong-termtransfers isthat they are expensive. Additionally,

arrangements must be

made

with foreigngovernmentsfor

work

permits,

and

meaningful

work

must be foundfortheperson beingtransferred atthe

new

site. Housing, language training,

and

assigning a "guardianangel" (a local

employee

entrusted with helping the

newcomer)

tohelpthatperson adapttoa

new

cultureall

add

tothecosts.

There

isanother potentialdisadvantage with long-termtransfers.

That

isintrying to repatriate the

employee

and

capture benefits

from

the learningexperience back at

home

operations. In cases

involving both

Polychem and

Italsteel, sending

managers

abroad has not resulted in significant technology transfers back to the sending organization.

Managers

have complained aboutreturning

from

an assignment abroad withideas about

how

their

own

operations could be improved, but

were

unableto

make

changes. Several reasonswere givenforthis. First,

some

could nottransfertheenthusiasmthey

had

for

new

technologies to others,becausethey

were

theonlyonestohave seen them. Or,the typesofchangesthey

recommended

were

too radical for the existing organization to accept. Finally, the

responsibilities

from

their

new

jobsleft

them

withlittletimetoworry about implementing

new

technologies.

The

lattertwo points will be discussed in depth later.

One

final disadvantage with long-termtransfersis that the technicalexperience oftheengineeror

scientistis

sometimes

lostas they are

promoted

into

management

positions.

For

instance, the

German

partnerin

Polychem

islosingitsforemost

R&D

expertise inaspecificproduct area becauseithastransferreditskeyscientist inthatareatoJapan,

and

on

returninghe will

assume

a

management

position in the corporate offices.

The

same

has already

happened

toan

American

engineer

who

was

transferred to

Germany. Even

when

returning

engineersare not

promoted

into

management

positions,thetechnologyat their

home

site

will likelyhave evolvedintheirabsence,

and

it

may

take

some

timefor

them

to

become

currentwithitagain.

A

potential solution to the

problem

ofcapturingbenefit

from

long-termtransferswas observed byItalsteelengineersatJSF.

They

notedthat

JSF

has a dual careerladder, with tracks forline

managers and

the technicalstaff. Line

managers

are primarily responsible formeeting production

demands,

whilestaffengineersactas internalprocess engineering consultants

and

areconcernedprimarilywith process improvement.

At

JSF,thestaffcareer ladder hasahigherstatusthan doestheline

management

ladder. Engineers

who

have

been

sentabroadto learn arerewarded by being assignedto thestaffcareer ladder

when

they return. This

way

the

knowledge

theygaininotherorganizationsisnotlostby

them

having todivert their attention to meeting production

demands.

Nevertheless, at Italsteelthe majority ofengineerssentabroad have

been promoted

toline

management-type

positions. Roles

An

employee

functions ina technologytransfer roleifany ofthe transfer

methods

described here are partofhis or her designated

work

routine. People employingthose transfer

methods on

an ad hocbasis

would

notbe consideredtobefunctioningexplicitly in atechnology transferrole.

These

roles

form

links

between

organizationsorgroupsand facilitatetheflowoftechnologyorotherforms ofinformation,

and

so they areconsidered tobe

an

integrating

mechanism.

The most

common

transfer role observed isthatofthe

communication node

or

gatekeeper. Gatekeepersare the focal points for

much

of the

communication

thatflows

between

the sites. Factors which determine

whether

or not

someone

functions as a gatekeeperinclude managerial orproject responsibilities,technical expertise,orsuperior languageabilities.

The

latterfactorisespeciallycogentin

communications

to

and from

the Japanesesites. Engineersin

Japan

who

speakthe best english are often thenodes through which

most

of the

communication

flows.

The

secondroleobserved is

what

isreferred toat

Polychem

asa bridgehead.

A

bridgehead is

someone

who

is transferred abroad for an extended period (a long-term transfer) to serve as the eyes

and

ears of the

home

organization abroad, toserve asa

gatekeeperforcommunicationsflows, to engage inengineering problem-solving,and to assistteams

from

the

home

organization duringtheirshort-termvisits.

The

bridgeheadrole

isdistinguished

from

thelong-termtransferinthatthese responsibilities areaspecific part of the objective of the transfer, rather thanjustlearning abouttheother organization's operationsordevelopingfuture

management

abilities.

A

bridgeheadisa

more

active link

between

twoorganizationsthanisthe "student"inthelong-termtransfer.

All of the engineers transferred

away from

their

home

operations in both the

Polychem and

Italsteel cases reported that they functioned as communications nodes

between

the organizations.

They

alsoserve asfilterstocommunication. Forinstance,at

Polychem

in

Germany,

Japanese engineers workingthereusetheir

own

knowledge

of the

Japanese operationsto answer questionsbefore they are sent

on

toJapan.

Even

ifthe questioncan'tbe answeredcompletely,itcan be reducedtoitsessentialelements

and

posed properly. In the past, the

German

engineers

and

scientists reported having problems framing questions properlyso that they

and

theirJapanesecolleagues

were

working withthe

same

understanding. This isnot atrivialproblem.

One

Polychem

engineernotedthat behaviorshe

and

hiscolleagues originally attributed tobeing astrong case of "notinvented heresyndrome"orrigidity

on

the partoftheirpartner

was

infact

due

inpart to different (and

somewhat

incompatible)stylesof interacting

and

sharing information.

Since bridgeheads take anactive role in the

work

at their

new

site,they offer a

window

intothe expertise of the partner. Japanese engineersin

Germany

spendseveral

hours each dayworkingdirectlywith design engineersthere

on

detailed

component and

part designforthe

new

productionline.

The

bridgehead linkstwoorganizationstogetherby transplanting the

knowledge and

understandingof

one

organization(as

embodied

inthe employee)intotheenvironmentof another.

Bridges Bridgesareproceduralor organizational

mechanisms

whichfacilitatethe flow of technology. Like a bridgehead, a bridge places

knowledge

or technology

from

both organizationsina

common

environment. Bridges are

more complex

than a bridgehead because organizational procedures or structures are set

up

to

form

that

common

environment,instead ofsimplytransferring apersontoanothersite. For example,

Polychem

hasestablished

common

productquality

measurement

standards

between

allthree partners so that direct yield comparisons can be

made

between

the differentproductionlines

and

process technologies used.

The need

fora

common

performance

measurement

system

became

evidentespeciallyinthe early

Polychem

efforts toimprove outputquality.

While

each partner hassimilarprocess equipment, they havedifferent ideasabout

what

factors

influenceproductquality. Consequently,they alsohavedifferentprocess

measurements

at eachsitewhich

impedes

troubleshootingefforts.In

some

traits,productionlinesareunique.

Comparing one

withanother

sometimes

requires thatchemicalfeedstocksbetransferred to

anothersitetobe processed allowing theoutput of the different lines to be compared.

These

integrating procedures ensure that a

common

language is

spoken

between

the

partners

and

a

common

basis forcomparison

and

evaluationexists.

Italsteelengineersobservedthat

JSF

engineers haveregularmeetingsinwhichthey describe their solutions to problems they have encountered.

They

use a standardized engineeringreportingsystemto

form

a bridge

between

the differentengineeringgroups. Init,engineeringreportsfollow astandard formatthatemphasizesbrevity, conciseness,

and

thegraphicdisplayofdata.

These

reports are collected

and

cataloguedinacentralized

library, so that engineers

from

throughout the organization can access

them

iffuture problemsarise. Thisisoppositeto thesystemusedatItalsteel,

where

engineering problem-solving is often not well-documented or

becomes

lost in someone's files, so that the informationis notavailable if

problem

arise again.

Even

when

reportsareavailable to

others, theItalsteelreportingformat producesreports thatareverylong

and

difficulttoread (and

seldom

read).

Importantbridges are the organizationalgroups

whose

express roleisto integrate

information

from

many

sources

and

re-routeit

where

appropriate. Forinstance,

Polychem

has standingcommittees

composed

of

members

from

allthreesitesthatcoordinatestrategic planning

and

R&D

work on

aglobalbasis.

The

committees

meet

regularly toreview

and

coordinateproduct

development

efforts,withthe goal of trying tospreadthe benefits of

research

done

ateach site to theother sites ifpossible. Individual partners also have standing technical councils in specific areas, that integrate information

from

different functional disciplines,businessunits,orsites. Inthislattercase,thecommitteesfunction as a gateway through which information

from

the other partners can flow into the organization

and

be routed to appropriate functional disciplines or business units.

The

American Polychem

partner also recently

formed

a committee specifically to integrate

informationthathas

been

collectedthroughseveral differentefforts,so thatitcanbebetter coordinated

and

disseminatedwithin the organization.

Many

of thepeopleattending the

firstmeetingof thetechnologytransfer

committee

knew

thatseveral efforts

were underway

tolearnaboutpartners'technologies,butthey

were

amazed

atthe extentof the learning thusfar,

and

the potential for spillover benefits to differentoperatinggroups. This

was

becausethere

had

previously

been no

common

forum

forsharing that information.

Knowledge

Architectures

One

of theJapanese

Polychem

engineersworkingin

Germany commented

thatit

was

difficultto transfertechnology

from Japan

to

Germany

becausetheapproachtoproduction in

Japan

isdesigned

around

Japanese workers withtheirparticular

work

behaviors

and

attitudes.

He

found the

German

Polychem

workers

were

sufficiently different

from

Japanese workersthattechnologycouldn'tbetransferredwithout

some

modifications. This

is

an example

of theinterdependenciesthatexist

between

differentorganizationalsystems (which

we

refer to as

knowledge

architectures),which affectthe transfer oftechnology.

Architecturesare theforms

and

functional relationships

between

the structures

and

artifacts inwhich

knowledge

has

been

embodied

inthe organization.

They

are

knowledge

thathas

been

codified into technology, rules

and

procedures,or organizational structures.

Architectureshave a dualnature,onestock-like,theotherstructural. Architectures are stock-likebecause they are the firm's inventories of

embodied knowledge and

reflect definite quantities orlevels relative to other firms. For instance, afirm might havea technological capability inacertainmanufacturingarea, asrepresentedbyitsproduction

performance levels. Architectures are structural because the all the systems in the organizationareinterdependent.

For

instance,afirm'sproductionperformancelevelsare closely linked to that firm's approach to hiring

and

training, job design, the types of technologies used,

and

its pastexperience in that area.

Technology

transfer inevitably changes afirm's architecturesbecauseitchanges boththe inventoriesof

knowledge and

the

relationshipswith othersystems. In essence,the physical transfer ofa piece ofhardware

may

bestraightforward,butitsultimate success

depends

on

its fitwiththe restof the firm's

systems. Severalof a firm's architecturescaninfluencetechnologytransfer,'ourofwhich willbe covered below.

Hardware

The

more

similarities inthe hardware at each site, the easier itwill be to transfertechnology

between

sites. Technologytransfer at

Polychem

has

been

made much

easierbythefactthatallthe partners areworking with a

mature

technology

and

thateach partner'stechnologyshares a

common

technical ancestry.

The

similarity

means

thatteams

from one

sitecanvisitanotherfacilityfora period of justa few days

and

gainafairly detailedunderstanding of

what

technologies arebeingused

and

how

theyaffectproduct

characteristics. Rather than having to describe the technology in detail, details about

equipment and

processes can be describedintermsof differences

between

them. Forthe

same

reason, hardware can be transferred readily

and

may

only

amount

to replacing

components

in a pieceof

equipment

or a

segment

inaline. Finally, ifthehardware is

similar,then

more

effortcanbe putintolearningabout apartner'soperating procedures orproblem-solvingbehaviors.

An

extremecase of compatibility oroverlap

between

sites

would

be foundinthecase ofa cloneplant.

The

Italsteelplant

was

designedtobe asisterplant to

one

operatedby JSF.

During

itsinitialconstruction,

much

of thetechnology

was

either transferred physically

from Japan

inthe

form

ofhardware, or

was produced

locally

under

license. In thelatter case, thetechnology

was

transferred using blueprints

and

technical specifications,with

some

short-termvisits

and

long-termtransfers

from

JSF

engineers. SincetheItalsteelplantis

now

nearly identical to thatoperated by JSF,

many

of theproblemsthatdevelopat the Italian

works can besolvedbytelephoneor fax

communication

with engineersattheJapanesesite,

usuallywithouttheneedfortravel.

The

oppositeistrue for

some

technologiesatPolychem.

The

German

and Japanese polymer productiontechnologies are similar toeachother,but

quite different from the system used by the

American

partner.

Many

of the other productiontechnologieshave

been

designedaroundthe specific core

polymer

production technologies usedat eachsite. This

means

that

some

of the suggestions thatJapanese engineers have

made

to the

Americans on

how

toimprove productquality

depend

indirectly

to their

own

type of

polymer

productionsystem.

To

usethatadvice

would

requirechanging several systems in the production line, atgreat expense. Consequently, the

American

partneris limitedinthe type of assistance itcanreceive

from

theotherpartners inthis specificareaoftechnology.

Procedures Proceduresare theformalorinformalrulesofoperationsthatdefine the

way

routine effort takes place in

and

iscoordinated throughout anorganization.

They

can be a sourceof significantcompetitiveadvantageifthey

make

the interactions

between

people

and

technology, for instance,

more

efficient. Forthisreason,allof thesitesvisitedso far have

been

trying to transferprocedures

from

theirpartners. But proceduresalsohavean

architecturalnaturebecausethey are often closely related to the technologies,

worker

skills,

or other architectures that differ

from

organization to organization.

For

this reason, procedures beingtransferred

from

anothersite

may

conflictwiththe

new

organizational environment unless either the organizationor the procedures themselves (orboth)are

modified. For example, anItalsteelengineer

who

had

been

transferred to

JSF

commented

thathe

had

troubleimplementing

JSF

TQM

proceduresatItalsteelbecause of fundamental differences

between

the two organizations.

He

said that the people at

JSF

view their organizationasan information generating and processingstructure,

where

peopleatevery step intheoperationsproduce

and

processinformation,

and

thenfurnishitto others in the organization. Productionemployeesat Italsteeldon'thavesimilarproceduresor training forproducing

and

usinginformation. Furthermore, informationthatis

produced

oftenisn't shared withothers,noris itsoughtafter

when

itis

produced

elsewhereinthe firm. Inthis

case, the

JSF

procedures

were

indirect conflict withexistingprocedures,theexperience base,

and

the

power

structure ofItalsteel.

Italsteelengineersalsoobservedthat

JSF

workers

were

involvedintheformulation

and

writingof theiroperating procedures.

The

Japanese

Polychem

partneruses the

same

approach. Inbothcases, engineers from othersitesobserved thatthere

was

adramatic difference

between

theJapanese procedures

and

their

own

(whichtypicallyare writtenby engineers).

The

procedureswrittenbytheworkers

were

short,concise,

and

includedonly relevant information.

They were

clearly written tobeused.

But

they

were

alsowrittenby experienced users.

The

Japanese

Polychem

partnerreliesheavily

on worker

expertise to attain quality

and

outputtargetsinthe productionprocess, so theworkers have alotof expertise thatisrelevant for writingprocedures.

On

theother hand,at the

American and

German

Polychem

operations, relatively

more

emphasis has

been

placed

on

the role of

technologyto attain quality

and

outputtargets,

and

less

on employee

skills. Therefore,at thesesites,workers haverelativelylessexpertise to contribute toprocedureformulation.

Adopting

a

new

procedure

may mean

making

changes to existing architectures in

what

can be adifficult

and

time-consumingprocess. Italsteelengineersadopted a

JSF

data logsheettorecordproduction processdata.

The JSF

logsheets

were

noticeably clearer

and

easier touse thantheones usedpreviouslybyItalsteel.

Even

so,theItalsteelworkers

were

notusedtologgingprocessdata

on

a regularbasis.

For

thespace ofa few months,

an

Italsteel

manager had

tostrictlyenforcethatworkersfillinthe log sheets in

an

accurate

and

consistentmanner, beforetheworkersfinally

began

tocomply.

The

same

thing

happened

at theU.S.

Polychem

site

when

a

new

product qualitydatabase

was

implemented.

One

manager

had

to conduct several workshops with operators

and

rejected incorrectly completed log sheets for several

months

before operators

began

tocomply. Sometimes, operating routines are too engrained in existing employees.

For

instance, the only

significantsuccess thatItalsteelengineershave

had

inimplementing

TQM

procedures at Italsteelhas

been

among

newly-hiredinterns

from

atechnical

program

thatteachesthose

techniques. Ineachof these cases, existingproceduresand

employee

experience have had

tobe modifiedto successfullyadopt

new

procedures.

Experience Base

An

organization'sexperience base can have a strong influence

on

the

transfer

and

adoptionof

new

technologies. In

some

casesan experienced workforce can be anasset,

and

inothercasesaliability.

At

Italsteel,a

downturn

inthesteelindustry required that the

company

downsizedramatically.

The

union

agreement

stipulated thatlayoffshad tobegin withthe

most

seniorworkers and proceed thoughtothe

more

juniorworkers. In one swift move, Italsteel lost its

most

experienced workers. This has

meant

that sophisticatedprocesscontrolautomation

equipment had

tobeinstalled to

compensate

for the lack ofoperatingexperience. Thislackofexperience

becomes

a

burden

when

operators must diagnose

and

solveproblems,orassistinintegrating

new

technologies into the existing technologies. Ironically, as the Italsteel engineers

who

worked

at

JSF

have tried to

implement

quality

and

statisticalprocesscontrolproceduresbackatthe Italian plant, they have

met

withresistance

from

allbutthe newest employees. Thisisbecause theolder employees have operating experience-experience operatingina

manner

verydifferentfrom

thatatJSF.

The

U.S.

Polychem

partnerhasa similar

problem

withcontinuityofexperience,in that frequently,

when

people demonstrate

competence

or skill in theirwork, they are

promoted

to a higher position in the firm and they are not in position to apply that experience

where

itcanbebestused.

Polychem

in

Germany

and Japan

relies

more on

a seniority-basedsystem

where

experiencedworkersarestillinvolved with production. This ensuresthatexperts are available todiagnose problems,

and

thatyounger,less-experienced workersare taught thenuancesof theproduction process by knowledgeable mentors. This

also

means

that differentproduction approachesareusedateachsite.

For

instance, with asteady

and

knowledgeable workforce,theJapanese

Polychem

partnerreliesrelatively

more

on

human- and

experience-based problem-solving.

The American

partner,

on

the other

hand, withitsless-experiencedworkforce has

come

to rely relatively

more on automated

production technology (the

same

parallel could be

drawn between

JSF and

Italsteel,

respectively). That

means

thatthe U.S.

Polychem

partner has verysophisticatedprocess

control technology, relative to the Japanese partner.

The

implications for technology transfer are interesting, however.

The

U.S.technology

and

hardware can betransferred relativelyeasily toJapan,

whereas

theJapanese experience baseis

much

more

difficultto transfer tothe U.S.

Another problem posed

byorganizationalexperiencetotechnologytransferisthat

there

sometimes

is

no

overlapin

some

areas of theexperience base of the cooperating organizations. Thiscreatesa

dilemma

inthata solution toa

problem

at

one

site

may

exist atanother,butthe potential recipient

may

be unabletorecognizethatthe solutionexists. Or,the potential recipient

may

nothavethe expertise to

implement

thatsolution inits

own

operations.

For

instance, the

Polychem

partners hold semi-annual

R&D

coordination meetingsto apprise partnersofeachother's

work and

to exploitsynergies

between

research

projects ateachsite.

While

itdoes

keep

them up

todate

on

research

done

elsewhere,

some

oftheresearchers have

commented

thatthemeetings

seldom

serve asa sourceof

new

ideas becausetheir

own

research

and

thatoftheircolleagues are so different that they

seldom

finda

common

basis for discussion. Researchprojectssponsoredatonesiteby anotherin

Polychem

may

be a

way

of integrating theexperiencebase,assumingthatunderstandingof

capabilities, communication,

and

cooperation remain at high levels. Experience thatis

available at

one

sitemight alsobe"lent" toanother

where

itislacking.

For

instance,a piece of

new

technology

was

developedin

Germany,

but

was

transferred to the

American

partner

when

itsoriginaluse

was

made

unnecessarybyachangein

market

strategy. Inthis case, a temporary overlap in expertise

was

created

when

the expert involved with the

development

of thetechnologytravelled with thehardware foritsinstallation

and

stayed throughthe start-uptrials.

The

technology

was

transferred successfully

and

isstillinuse today.

Power

structure

One

finalelementinthisdiscussionofarchitectureisthe organization's

power

structure,

and

how

itrelates totechnology.

Changes

intechnologycan

prompt

shifts inthe relative

power

ofgroupswithinanorganization. Thiscan have twoeffects

on

the

technologytransfer process,depending

on

how

the differentgroupsinthe organization are affected,

and

how much

power

theyhaveto interveneinthe process. First,affectedgroups canfilterinformationaboutthe potentialof technologiesatothersitesbyfocussing

on

or "turning a blind eye" tothem. Thisisa concernfor

R&D

managers

at

Polychem

who may

be faced with havingtosponsor product

development

researchatanothersite,especiallyif

theproductisclearlyoutof themarketsinwhichtheother partner competes. Inanother case, the influence of agroupat

Polychem

was

weakened

becauseofchanges

mandated

by theformation oftheJV. In interviewswith people

from

thisgroup,several

were

initially very cautiousabouttheiracceptingpartners' technologies,or

were

skeptical that theirfirm

would

would

ultimatelybenefitfromthe partnership.

The

second

way

thatchangesinthe

power

structureof the organizationcanaffect

technologytransferisbyactivelyintervening to facilitateor interferewith the transfer of specifictechnologies.

One

groupat

Polychem had been

heavily involved in the unsuccessful transferof apiece oftechnology

some

timeprior to theestablishmentof thepresentJV.

A

similarpieceoftechnologyisbeingtransferred again,butthistime, thegroup hasonly

been

allowed to participate

on

themargins because ofitsprevious failure. In general,

Polychem

groups

who

saw immediate

payoffs

from

technologytransferwithpartners

were

much

more

enthusiastic to begin transfer at the beginning of the JV.

The

Japanese

Polychem

partnerexperienced a"halo effect"at thebeginning because of demonstrable strengths in certainproductiontechnologies. Thisallowedittogaintheupper

hand

in

some

negotiations earlyintheJV,especially relating todetermining

whose

technologies

would

be usedatthe differentsites.

Over

time,the relative

power

positionshave changed,especially asthe true capabilities ofeach partner has

become more

clear.

However,

the relative

power

positions of the groups

mentioned

in the previous examples clearly affects

what

technologies

were

tobetransferred,

and

by

whom.

Individual incentivesprovideafinalpoignant

example

of

power

balancesaffecting technologytransfer. Informationisseenasasourceof

power and

a

way

toadvanceinthe organizationby

some managers

and hourly employeesat Italsteel,soitisoftennot shared

with others.

Managers

who

demonstrate the greatest knowledge,

and

have the highest

individualperformance (which

may

simply

mean

notdoingaspoorlyaspeers) receive the promotions.

On

theother hand, promotionsintheJapaneseorganizations inthisstudy are based

on

tenure,so the incentive to distinguish oneselfisweak. Infact,the social

norms

thatencourage employeestobe apartof thegroupare

much

stronger. This

means

the incentiveistoshareinformation, so that the group'sperformanceisimproved.

Because

of such differences in the

power

associated with possessing information, implementing

technologieswhich rely

on

the sharing ofinformationat Italsteelor theother

Western

organizationsisdifficult

and sometimes

evenresisted.

OrganizationalAdaptiveAbility

Knowledge

Architectures are things that can't be

changed

in the short term.

Organizational adaptiveabilityrefers to the thingsan organization can

do

inthe shortterm toincreaseitsabilitytoadopt

new

technologies. Ineffect,adaptiveabilityisa

measure

of

an

organization's ability to "pushthe envelope" to act outside ofthe boundaries ofits

existing architectures. Adaptiveabilityisseparatedinto staffingflexibility

and

production flexibility

Staffing Flexibility

An

organizationthathasstaffing inexcessofthatrequiredfor

normal

operationscaneasilyre-deploy peopleto

work on

technologytransfer

and

implementation.

However,

firms

seldom

have excess people waiting to be re-assigned. In fact, staffing pressures

were

cited repeatedly by

managers

as a hinderance to technology transfer. Engineers at Italsteel complained that they

were

too busytoact astechnology transfer agentsoncetheyreturned

from

JSF

becauseof the

demands

oftheirdaily responsibilities.

Two

problems were

cited. First, they

had

no

timeto trainother peopleinthebehaviors they

had

learnedat

JSF

becauseofpressures tokeepthe existingproduction system

up and

running. Second,they didn'thave anyextrapeopleto trainevenifthey didhavethe time.

One German

Polychem manager

made

similar

comments, and added

that because of

shortagesofpersonnelin hisorganization,he could not evenafford to transferany people

toothersitesso theycould learnaboutdifferent technologies.

One

solution thatisbeing tried atItalsteelassigns recently-hired internsto

managers

for training.

Those

assigned to the

managers

who

worked

at

JSF

arebeingtrainedinthe

JSF

statisticalprocesscontroland Total Qualitytechniques.

People thatare available can sometimes be used

more

effectivelythrough job re-design. Inthe short run, effortcan be focused

on

certainareas ofproduction byshifting people

from

otherareas temporarily. Thisispossibleonlyifworkersare cross-trainedin multipleskills.

Polychem

in

Japan

usesaboutthe

same

number

ofpeople workingattheir facilities,butlineworkersare able to

move

fromlinetoline

and

position to position so that effortcanbe concentratedat critical

moments

(forinstance,

when

aproductionlineisbeing started,itishelpful totemporarilyhave

more

workers

on hand

thanare

needed

forroutine operations). This flexibility saves production time that can be used for technology implementation. Furthermore,sincetheJapanese

Polychem

operatorsare relatively skilled

they are able to

assume

some

of the responsibilities thatmight otherwise be assignedtoa productionengineer. Finally, the factthat the operationsthere are relatively smooth-running

means

thatlesseffort hastobespent

on

routineproblem-solvingandthat

more

effortcanbe devotedtotechnologyimplementationor transfer.

Longer-term deploymentsofpeople

and

expertise to specific areascanincrease the

likelihood that technologieswillbetransferredthere successfully. Forinstance,ifthemost technology transferoccursinprocesstechnology areas, thenexpertise shouldbe

massed

thereifpossible. Forinstance,theJapanese

Polychem

partner has aboutthe

same number

ofengineersworkinginitsoperationsas

do

the

German

or

American

partners. Butof those engineers,alargerproportionare process engineers.

The

engineersnot assignedto the production are assigned to

R&D

groups

where

they are engaged in product development. That

menas

that

more

engineersare availableattheJapanesesiteforprocess technologyimprovement. Becauserelativelyfewer engineersareassigned toproductionin

Germany,

theproductiongroup

sometimes

has to

make

formalrequests of the

R&D

group togetproblem-solvinghelp. Associatedwiththisprocessaredelaysandpotentialconflicts