Chapter 3

Technology Based New Venture

Formation and Technology Transfer

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Chapter Outline

 Introduction
 Important aspects of Technology in Business
 Formation, development, and growth of
technology-based new enterprises
 Innovation in Technology based Business
Technology Transfer
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 Introduction to Technology and Business
• Technology is a systematic collection of
knowledge, skills, methods and processes for the
manufacturing of a product, or for the
delivering of a service.
• Greek word /techne and logia/= a science of
craft

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 Cont’d
• It is a knowledge that goes into the creation and provision of
the product or service.
• Technology includes not only “knowledge, methods or
process, but also “entrepreneurial expertise and
professional know-how”.
• The latter two elements may often prove to be the essential
competitive advantage possessed by the technology owner.

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 Technology and Business
• Advances in technology are the only source of permanent
increases in quality and productivity.
• Technological changes are basically the results of innovations
which in turn are the outputs of innovative Entrepreneurs.
• Firms become innovative when they are successfully incorporate
a technological change in to a new enterprise as well as in to
the economy, and a change has diffused into the economy.

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 Technology's influence on business
• Technology in past:
• Even the simplest invention , like the plow, had a
huge impact on business.
• Before the plow was invented people had to dig
in the earth with hands.

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 Cont’d
• Because of the plow, more corn could be planted
which meant more corn could be produced.
• Increased corn production meant:
– hiring more people,
– selling more corn ,
– building a corn selling business.

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 Modern Technology

• E-work force
• Digital work flow
• Nanotechnologies
• New jobs
• Virtual business
• E-commerce
• E-tail
• E-ticket
• Man-less automobiles

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 Important aspects of Technology in Business

A. Technology Intelligence for Business

B. Acquisition of technology

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 Technology Intelligence for Business
• It is an activity that enables companies to identify the
technological opportunities and threats.
• It is a technology-related information that is useful
and utilized by firms during strategic decisions.

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 Cont’d
• Technological opportunities like:
– mobile phone technology for Ethio-telecom.
– EMS mailing technology for Ethiopian postal
service(like; DHL and UPS)

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 Cont’d

• Technological Threats like:

– mobile phone technology for Ethiopian postal
service.
– Copying technology for Ethiopian music industry.
– Viber, whats-up and other mobile applications for
Ethiopian telecommunication.
– Mobile internet application for internet
cafes(centers).
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 Intelligence gathering

• May be deployed at the macro level, industry or

business level, and/or at the program or project
level.
• The process of gathering external data and analyzing
it to derive intelligence for major strategic decisions
is referred to as mapping the technology
environment.
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 Cont’d
• Conceptually, this process consists of four
interlinked steps:
1. Scanning the environment,
2. Monitoring specific environmental trends,
3. Forecasting future environmental changes, and
4. Assessing impact environmental changes on
organizational strategy.

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 Acquisition of Technology
• The acquisition of technology can be in both of the following
two ways:
– in-house research and development and
– from external sources by acquisition or strategic alliances.

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 Driver to acquire new technology
•Cost: Technology can cut costs in many ways: reducing material, labor or
distribution costs. .
•Speed of delivery: The key competitive priority may be the speed of delivery, as
measured by lead time required to deliver a product. Example, Automated guidance
vehicle(AGV), Electronic Data Interchange (EDI)

•Quality: Technologies help to improve the quality and reduce the production costs.
• Flexibility and customization: The global market place of 1990s is characterized
by short product lifecycles, increased product variety, and extensive customization.
To retain and increase market share in such competitive environment, firms have to
be more flexible in their operations.
* Increased production volume
*Higher living standards
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 Formation, development, and growth of technology-
based new enterprises
• The innovative capacity of an entrepreneur is a key
determinant of its capability to;
– enhance the economic development and
– upgrade the living standard of a country.
• One of the indicators of this innovative capacity is the
rate of creation of New Technology-Based firms
(NTBF).

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 Cont’d

• Small firms formation and growth has become

increasingly important to
– the health of developed economies and
– to the creation of new innovative industrial sectors.

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 Cont’d

• Technology incubators play a role in accelerating the

commercialization of R&D outputs and the transfer of technology.
• Technology commercialization is the process of introducing a
new product or system into the market using new or improved
techniques or tools.

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 Cont..
• COMMERCIALIZATION is the process by wich a new
product or service is introduced to the general market.
• The process of taking an invention from idea to
business concept and then to market is called
technology commercialization
• It takes into account : the production, distribution,
marketing, sales and customer support required to
achieve commercial success.

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 Group Discussion
• Form a group 3-5 members.
• Take 10 minutes time to discuss and give answers
for the question
• How to form and develop technology based new
ventures by water Engineers in Ethiopia?
• Share your view with the other students in the
class.

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 How to form and develop Technology based ventures?

• Entrepreneurship studies have identified three critical

factors linked to successful creation of technology ventures:

Technology,

Talent

Capital.

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 Cont’d
• The strategic focus of new venture is to:
– Facilitate innovative technology,
– Strengthen talent,
– Acquire Investment capital.

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 Cont’d

• The following are required for the successful development of

technology based ventures:
– Government policies
– Business consulting services
– Technical consulting services
– Financing support activities
– Intellectual property assistance
– International assistance

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 Innovation in Technology based Business
• Innovation refers both to the output and the process of arriving at
a technically feasible solution to a problem triggered by a
technological opportunity or customer need.
• Innovations are new ways to achieve tasks.
• Innovations include:
– Product innovations
– Process innovations
– Service innovation

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 Cont..

 Product innovation: results in new or improved products.

 Process innovation: occurs when the manufacturing

processes are improved to make the production of existing
products cheaper, or when new processes are developed
specifically for making a new or improved product.
 Service innovation: occurs when new ways of delivering
services are developed.

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 Approaches of Innovations
• The approaches of innovations can be classified as Market-pull

and Technology-push innovation:

I. Market-pull innovations: advancement of technology oriented customers
primarily toward a specific market need.
II. Technology-push innovations: Advancement of technology oriented
companies primarily toward increased technical performance.

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 Cont..
a. Market-pull innovations: advancement of technology oriented
primarily toward a specific market need
 Occur when customers are technologically sophisticated
Occur more frequently with older technologies
Tend to be incremental innovations

b. Technology-push innovations: advancement of technology oriented

primarily toward increased technical performance
firm’s scientists, engineers, and inventors have direct experience with users
new and emerging technologies
breakthrough innovations
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 Cont’d

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 Technology Transfer
• A transfer/transformation/transition process
between the technology originator/possessor
and the receiver

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 Technology transfer
• Technology transfer is the process by which existing
knowledge, facilities or capabilities are utilized and marketed
to fulfill public and private needs.

• Technology transfer processes constitutes technology transfer,

technology promotion, technology deployment, technology
innovation, technology development, technology research,
technology assessment, technology information and
communication, technology investment, technology
collaboration and technology commercialization
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 Technology Transfer

• Is the process of transferring scientific findings from one

organization to another.
• It can also defined as the process of bringing technologies into the
market place.
• The process typically includes:
– Identifying new technology.
– Protecting technologies through patent and copy right.
– Forming development and commercialization strategies.

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 Mechanisms of Technology Transfer
• Can occur along three pathways.
1. The direct pathway: results in the exchange of products or
processes, or collaborative research agreements for developing
technologies.
2. The indirect pathway: results in dissemination of knowledge
through such mechanisms as publications, conferences, and seminars.
3. The network pathway: creates networks that may facilitate transfer
through other two pathways.

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 Steps in Technology Transfer
• It has three parallel components that need to be taken into
consideration.
Science and Technology
Marketing:
Financing:

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 Technology Adoption Life Cycle
• Technology Adoption concerns the
psychological processes an individual goes
through to embrace/accept a new technology
completely.

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 Technology Adoption Lifecycle And
Adopters
1. Innovators: Technology enthusiast (2.5%)
2. Early adopters: visionaries (13.5%)
3. Early majority: pragmatics (34%)
4. Late majority: conservatives (34%)
5. Laggards: skeptics (16%)

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 Cont’d

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 1. Innovators: Technology Enthusiasts
• Appreciate technology for its own sake.
• Motivated by idea of being a change agent to change the
world.
• Will tolerate initial problems.
• High risk takers.
• Importance: They are the gatekeeper to the next group of
adopters.
• They love to get their hands on latest gadget/devices/

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 2. Early Adopters: “Visionaries”

• Want to revolutionize competitive rules in their industry.

• More educated, innovative individuals who gain from
technology
• Seek glory and get ahead themselves not really to
change the world.
• Attracted by high-risk/high-reward projects.
• Not necessarily very price sensitive.

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 3. Early Majority: “Pragmatists”

• Comfortable with only evolutionary changes in

business practices.
• Fear of risk
• Want proven applications, reliable service.
• Buy only with a reference from trusted colleague.

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 4. Late Majority: “Conservatives”

• Technology shy/uncomfortable.
• Very price sensitive.
• Require completely pre-assembled, bullet-proof
(reliable performance) solutions.
• Motivated only by need to keep up with competitors
in their industry.

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 5. laggard: “skeptic/ who doubt true”
• Old fashion followers
• Want to maintain status quo/present situation.
• Technology is a hindrance to operations.
• Resist to the technological progress.
• Buy only if all other alternatives worse.

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 Individual Exercise
• Which type of adopters are most of
Ethiopians?
• Why?

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 End of
Chapter
Three
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