TECHNOLOGY ACQUISITION THROUGH
COLLABORATION: PRACTICAL INSIGHTS FOR
TECHNOLOGY SUPPLIERS
ABSTRACT
This paper describes the conditions that influence technology acquisition through
collaboration. From the analysis of semi-structured interviews and eleven case
studies, we developed a technology acquisition framework that stresses the supplier
involvement in the process and the factors that influence the outcomes. Based on this
framework, we provide practical insights for suppliers to support their customers in
order to raise the probability of success in collaborative projects. Our results suggest
that effective acquisition of technology by means of collaboration is achieved by the
combination of three conditions: effective partnership management, effective
execution of the co-development project and effective transference of the technology
to the recipient system in the acquiring firm.
Key concepts: technology acquisition, technology partnerships, technology
commercialization, technology collaboration, technology suppliers, partnership
management, co-development, technology transfer.
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INTRODUCTION
Firms have different strategies to develop their technology portfolios, particularly
when establishing new competences for mastering new technologies, at least new to
the firm. Extant literature suggests a number of typologies for different acquisition
strategies (e.g., Birkenmeier, 2003; Granstrand, 2000; Boyens, 1998; Vickery, 1988;
Ford 1988, 1985) that can be summarized as three general options. Depending on a
given context, firms may opt for internal development, collaborative development or
internalization of externally developed technologies. At least in both the latter cases –
on which we focus in this paper - and sometimes even in the first case, the acquisition
project requires technology transactions involving external actors (Tietze, 2012).
Firms may source technologies from different suppliers. These do not only encompass
technology-based firms (being large, medium or small), such as component or service
providers, but also universities or public research institutes. The involvement of
technology suppliers may range from providing specialized technical consultancy
services to fully developed technology concepts and modules, prototypes or even
completely developed production lines.
Getting access to technology by collaborating with technology suppliers brings
advantages in relation to internal development or purchasing technologies externally
developed. Among the benefits are development of technologies/ products tailored to
firm’s needs, reducing development time, as well as sharing development costs and
risks (Littler et al., 1995; Bhaskaran and Krishnan, 2009).
However, getting access to technology through collaboration is risky, particularly
when the firm works with the supplier for the first time (Fraser et al., 2003) or
possesses limited prior experience in collaborations (McCutchen Jr et al., 2008).
Scholars and managers have reported that technology collaborations do not always
meet the original expectations; for instance, some studies report that failure rates are
about 50% to 60% (Duysters et al., 1999).
Sourcing technology through collaboration commonly implies a certain level of
interdependence between the firm and the technology supplier. McGee and Dowling
(1994) argue that prior managerial experience in co-development activities helps to
identify the risks and benefits of engaging in such cooperative activities. Ireland et al.
(2002) stress that the ability to effectively manage collaborations is fundamental for
those firms that need to access key resources possessed by other companies.
The failure (or success) of technology collaborations with external partners depends
on several factors. Previous research has addressed different topics related to
technology collaborations, for example, choice of governance mode (Chiesa and
Manzini, 1998; Van de Vrande et al., 2009; Bhaskaran and Krishnan, 2009; Van de
Vrande et al., 2011), critical success factors (Campione, 2003; Buse and Armonaitis,
2011), technology uncertainty (Steensma and Corley, 2000; Stock and Tatikonda,
2008; Cui et al., 2012) and type of partners (Miotti and Sachwald, 2003; Belderbos et
2
al., 2004) amongst others. Nevertheless, only a few authors have attempted to provide
a comprehensive framework to understand the different factors that affect the
outcomes of technology collaborations (e.g. Mora-Valentin et al., 2004; Emden et al.,
2006; Barnes et al., 2006) and to manage the collaborative process (e.g. Duysters et
al., 1999).
Although the literature has explored how firms acquire technology and the factors that
affect the outcomes of technology collaborations, there is no comprehensive evidence
indicating how the technology acquisition process may change when a partner is
involved and the specific factors that affect technology acquisition (TA) through
collaboration. In this research we address this gap in extant literature.
This research was driven by the need for a comprehensive understanding of the
conditions that affect the effective acquisition of technology through collaboration by
identifying and describing the relationship between the following variables:
a)
b)
Key activities. Sequence of tasks carried out to incorporate a given
technology into the operations of the acquiring firm.
Influential factors. Circumstances that either enable or impede the
effective incorporation of technologies into the operations of the acquiring
firm.
This article is structured as follows. The following section provides a general view of
the research method used to meet the purposes of the inquiry. Next, the results are
presented in three sections: description of how firms acquire technology, involvement
of technology supplier in TA projects and conditions that favor success in TA by
collaboration. Thereafter, results are discussed in terms of the implications for
practice, in particular for technology suppliers who often struggle to commercialize
their technologies. Finally, concluding remarks are presented.
METHODOLOGICAL APPROACH
The framework presented in this paper was developed through an inductive,
qualitative approach from the analysis of 43 semi-structured interviews (Boyce and
Neale, 2006; Turner, 2010). The interviews were undertaken by teleconferences and
face-to-face and pursued two different purposes: 13 interviews explored activities and
factors that affect technology transactions from a practice perspective; the other 30
interviews were focused on 11 TA projects. The research was carried out through four
phases: practice review, framework development, framework refinement, and
framework verification.
First phase – Practice review. In the first step, interviews with 13 managers and CEOs
(see Table 1 for details) provided an initial perspective of the relevance of the topic
and the problematic issues that companies face when acquiring technologies. In this
initial set of interviews, the perspectives of firms that have either acquired or provided
technology or both were included. Discussions aimed to capture the general
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experience of the interviewee about recurrent issues in technology collaborations, key
success factors and examples of the projects carried out by their companies. The
content of the interviews was analyzed following a grounded research approach
(Easterby-Smith et al., 2008).
TABLE 1 PROFILE OF PARTICIPANTS IN THE FIRST PHASE OF THE RESEARCH
Identifier
Industry
Role
Director, Research and Technology
Centre
Director: Petroleum and Geothermal
Research
Perspective
A
P
Expert_01
Chemical products
X
X
Expert_02
Oil & Gas Industry
Expert_03
Oil & Gas Industry
Field development-Subsea systems
Expert_04
Oil & Gas Industry
VP and Managing Executive
X
Expert_05
Chemical products
Business Research Associate
X
Expert_06
Consumer products
Technology and Product Development
Expert_07
Oil & Gas Industry
Vice Manager - Regional Planning
X
Expert_08
Oil & Gas Industry
Vice Manager - Field development
X
Expert_09
Oil & Gas Industry
Research Fellow
X
Expert_10
Industry processes
Group leader
X
Expert_11
Chemical products
Technology and Operations Director
X
Expert_12
Industry processes
Product Technology and Innovation
Manager
X
Expert_13
Oil & Gas Industry
Facilities Team Leader
X
X
X
X
X
X
X
Key: A: Technology acquirer. P: Technology provider.
Second phase – Framework development. The second phase aimed to explore deeper
the acquisition process and to identify the particular factors that may be influential. In
order to achieve these purposes, a set of seven co-development projects was analyzed
following an inductive approach (Easterby-Smith et al., 2008). The units of analysis
were co-development projects from different industries where the driver to collaborate
of one of the partners was to acquire a new technology. Data was collected through
telephone and face-to-face semi-structured interviews. The interviews were
transcribed and subsequently analyzed through two methods: grounded analysis and
cross-case analysis (Yin, 2009). Table 2 presents a summary of the case studies
carried out at this stage of the research.
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TABLE 2 SUMMARY OF THE CASE STUDIES CARRIED OUT
Case No.
Industry
Technology domain
Organizational
form
Previous
relationship
between the
partners
None
Interviewees
perspective
Project objective
(Project status)
Acquiring firm /
Providing firm
Developing a commercial
process to produce cellulosic
ethanol based.
Case 1
Biofuels
Manufacturing
technology
Technology joint
venture
Case 2
Biofuels
Manufacturing
technology
Technology joint
venture
Joint research
programme
Acquiring firm
Developing a commercial
process to produce a biofuel.
Case 3
Oil & Gas production
Information processing
technology
Joint development
agreement
None
Acquiring firm
Developing a tool for
downhole monitoring.
Case 4
Gas transportation
Information processing
technology
Joint development
agreement
Technology
supplier
Acquiring firm /
Providing firm
Developing a system for
monitoring the integrity of
gas pipelines.
Case 5
Petrochemicals
Manufacturing
technology
Strategic
partnership
Technology
supplier
Providing firm
Increasing the range of
polyethylene grades of an
existing commercial
process.
Case 6
Construction industry
Manufacturing
technology
Minor investment
None
Acquiring firm
Scaling up the production of
an insulating material.
Case 7
Paint & Coatings
Product technology
Joint development
agreement
None
Acquiring firm
Developing a new resin
system for high performance
coatings applications.
Third phase – Framework refinement. The objective in the third phase was to verify
whether the activities and factors comprised by the framework drawn in the previous
phase would also be present in a new set of case studies. In this phase four in-depth
case studies (Eisenhardt and Graebner, 2007) were carried out (Table 3). Case studies
were selected following an ease of access approach, which Easterby-Smith et al.
(2008) refers to as convenience sampling, and the fundamental criteria was that more
than one person involved in the co-development project from each partner could be
interviewed. Data was collected through face-to-face semi structured interviews. In
this phase, data was analyzed through two methods: narrative analysis (EasterbySmith et al., 2008) and cross-case analysis (Yin, 2009). At the end of this phase, a
more detailed version of the framework emerged.
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TABLE 3 SUMMARY OF THE CASE STUDIES CARRIED OUT IN THE THIRD PHASE OF THE RESEARCH
Case No.
Partners involved
Industry
Technology domain
Case 8
Firm A/ Firm B
Chemical industry
Manufacturing technology
Government of the relationship
Three different agreements were
signed: 1) an intellectual property
agreement, 2) a brand agreement
and 3) a commercialisation
agreement.
Previous
relationship
between the
partners
None
Project objective
(Project status)
To develop a process
to produce
biodegradable oil.
Case 9
Firm C/ R&D centre I
Tooling manufacturing
Product technology
Three different contracts were
signed: 1) feasibility analysis and
concept development, 2) conceptual
model and specifications of the
thermal cutting module, and 3)
prototype building and testing.
None
To develop a flexible
steel cutting machine.
Case 10
Firm D/ R&D centre II
Oil and Gas production
Product technology
One contract was signed: A service
contract for wells intervention.
Technology
supplier
To test and refine a
downhole tool to
boost gas production.
Case 11
Firm D/ Firm F
Oil and gas production
Manufacturing technology
One contract was signed:
Engineering and equipment
supplying contract.
Technology
supplier
To design and build
an offshore crude oil
dehydration and
desalination plant.
Fourth phase – Framework verification. A focus group session (Morgan, 1997) with
practitioners was performed in order to validate the elements of the refined version of
the framework. The focus group aimed to achieve the following objectives: (1)
identifying possible limitations to the research outcomes, (2) verifying the
terminology utilized to describe the dimensions of the framework; and (3) confirming
practical implications of the outcomes. The six participants at the session were
practitioners with experience in industries such as electronics, printing and chemicals
(see Table 4). The final version of the framework emerged as a result of the feedback
received during the workshop.
TABLE 4 PROFILES OF PARTICIPANTS TO THE FOCUS GROUP
Identifier
Industry
Role
Expert_14
Printing
Strategic Product Director
Expert_15
Electronics
Director
Expert_16
Information technologies
Chief executive officer
Expert_17
Chemicals
Project leader
Expert_18
Industry tooling
Research director
Expert_19
Printing
Industry visiting fellow
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HOW DO FIRMS ACQUIRE TECHNOLOGY?
When firms acquire externally developed technology they can do this through either
formalized or rather informal means (Baines, 2004). Formalized acquisition projects
are often carried out applying a stage-gate type approach using generic project
management practices (Cañez et al., 2007). Informal acquisition projects are
commonly carried out at the discretion of managers who need to accelerate the
incorporation of a technology into their firms. In both cases, the acquired technologies
are usually embedded either into a tangible product or process, where the technology
is meant to meet a set of specific technological and performance requirements of the
recipient operational processes (e.g., manufacturing, services), in order to exploit the
technology’s potential fully.
Whether formally or informally acquired, our results show that TA projects involve a
series of activities that can be divided into two categories. The first category includes
activities that are related to the acquisition process; the second one includes activities
that are related to the development of a common business vision between the
partnering organizations.
ACQUISITION -RELATED ACTIVITIES
Our results indicate six key acquisition-related activities. These activities are
comparable with those covered by new product development literature. They include
the definition of technology requirements, technology scouting, technology concept
selection/development, prototype testing, product development, and implementation
(Figure 1).
FIGURE 1 ACQUISITION RELATED ACTIVITIES
1- D EFINITION OF TECHNOLOGY REQUIREMENTS
TA projects in our sample were triggered by the recognition of an operational
problem, a business need or a business opportunity. At the beginning of the
acquisition project, firms had only a broad idea of the required technology, its
7
functions and the available time for its acquisition. Firms utilized different technology
management planning techniques (such as roadmapping or scenario analysis) to
narrow down their specific technical requirements. In fact, one common challenge at
this early stage was pre-selecting the best available technology to meet their needs.
2- T ECHNOLOGY SCOUTING
Having defined the technology requirements, firms identified relevant technology
alternatives and determined their level of maturity. Firms in our study applied
technology-scouting techniques (such as patent analysis and technology intelligence)
to identify a set of suitable technological alternatives.
At this stage, potential providers of fully developed or ready to purchase technologies
were often explored. The technological solutions that other (competing) firms had
applied to address a similar operational problem or business opportunity were also
evaluated. The scope of intellectual property rights (IPR) protecting existing solutions
was commonly evaluated at this point.
As an outcome of the scouting activities, firms obtained a detailed understanding of
the available technology options with regard to maturity, suitability, legal protection
and scope of relevant IPR. Potential suppliers were identified, as well as other key
organizations (e.g., SMEs, universities) and individuals (e.g., scientists, lead users)
that were engaged in relevant R&D activities and possessing relevant knowledge and
capabilities.
3- T ECHNOLOGY CONCEPT DEVELOPMENT / SELECTION
After evaluating different technology options, acquiring firms chose the technology
that best met their needs. According to our observations, this activity involved
different tasks that largely depend on the maturity level of the technology.
Our results suggest that in cases where the technology is either at a low development
level or when it was not used before to solve the specific or a quite similar problem,
acquiring firms commonly initiate a research program to explore whether the
technology could provide the expected performance. Prototyping is common during
this stage, the design and performance are tested through simulations or laboratory
trials. Thereby, the acquiring firm gains a better estimation of the resources that are
required to integrate the technology into a product or process. In other cases external
suppliers are able to offer suitable technology concepts with a relatively high maturity
level that are available in the form of prototypes or even commercial products.
When firms consider acquiring mature technologies, we found that they tend to
evaluate options in terms of problem solving utility, or an economical and technical
basis. Indeed, we identified five commonly used evaluation criteria. These include the
prospective functional performance, acquisition costs, expected operation costs,
compatibility with existing systems and additional development costs.
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4- P ROTOTYPE TESTING
The subsequent activities aimed at demonstrating the suitability of the selected
technology to solve the particular problem. We observed that firms carried out lab
tests, simulations or field trials in order to demonstrate whether the technology could
provide the required performance under quasi-real conditions. These tests provided
important technical and economic data to define the ultimate characteristics of the
product that would incorporate the technology, as well as the scope, time and
resources required to develop the final product (or process). As a result of these tests,
acquiring firms usually developed a plan to implement the technology into their
operational process1.
5- P RODUCT DEVELOPMENT
Following a positive management decision to proceed with the project, the following
set of activities aimed at embedding the technology into a product or process. We
observed that these activities usually start with a specific definition of the functional
and operational characteristics of the final product. This activity comprised tasks such
as developing of engineering layouts, further pilot tests, field trials and development
of additional components, such as software or peripheral equipment. Our results
indicate that the acquiring firm and the technology supplier closely and frequently
interact during these development activities. Both partners provide particular and
complementary expertise and skills to embed the technology into the final product.
We noted that in successful projects, experts from manufacturing, engineering,
operations, and also end users, cooperated intensively during this stage.
6- IMPLEMENTATION
The purpose of the implementation activities is to transfer the product into the
acquiring firm’s operational processes. In some cases, we observed that
implementation activities ran in parallel to product development activities. For
example, setting up a new company or negotiation of raw materials supply were
carried out in parallel to the development of additional components or field trials.
Other tasks, such as manufacturing scale up, product customization and finding
material suppliers are additional activities in this stage. During implementation, new
operational procedures often need to be defined and documented to train operators.
During these tasks both the acquiring firm and the technology supplier commonly had
to solve emergent operational and technical issues so that the final product performs
according to the predefined requirements. At the end of this stage the technology is
embedded into an operational process that performs as required by the acquiring firm.
BUSINESS-RELATED ACTIVITIES
In addition to the acquisition related activities, our results indicate that TA projects
also involve activities associated with the alignment of business interests between the
1
The recipient operational process may not be located in the internal operations of the acquiring firm. In cases
1,2,3,4,6,8 and 10 the technology was deployed into an external firm, which would offer services or products
based on the technology to the acquiring firm.
9
acquiring firm and the supplier, which we call business-related activities. Businessrelated activities comprised a joint evaluation of potential business benefits and risks.
These activities were frequently carried out in two parallel phases that we label
collaboration assessment and agreement formalization (Figure 2), as described below.
FIGURE 2 BUSINESS RELATED ACTIVITIES
C OLLABORATION ASSESSMENT
Activities related to this phase commonly took place early in the acquisition project
and in parallel to the second, third and fourth acquisition related activities described
above (see Figure 2). During this phase the acquiring firm and the prospective
technology supplier evaluated the benefits that each one could derive from a
collaborative venture and the likelihood of reaching an agreement. The phase started
with initial dialogues between the partners about the possibility of joining forces to
develop a technology to address the acquiring firm’s requirements, while also
satisfying suppliers’ business needs. Conversations included multiple meetings
involving technical staff (e.g., engineers) and visits to each other’s R&D facilities.
During this period, acquiring firms evaluated whether the resources, competences and
capabilities of the technology supplier were suitable to develop and transfer the
technology. When firms decided to collaborate for the first time, compatibility of
culture and business interests seemed to be imperative to nurture mutual trust.
A GREEMENT FORMALIZATION
In the agreement formalization phase, firms and their technology suppliers signed a
cooperation agreement. Formalization activities often took place in parallel with those
activities undertaken for evaluating collaborative opportunities, but in some cases
they followed them. These activities were often initiated at the moment when the
acquiring firm became interested in working with the technology supplier.
10
Our observations suggest that the formalization of the agreement is commonly carried
out in two steps. In the first, initial conversations between the acquiring firm and the
supplier are governed by unilateral contracts. For example, both parties may sign a
non-disclosure agreement or a research service contract in order to exchange technical
information and to conduct exploratory research activities. Thus, the acquiring firm
essentially hires a technology supplier to carry out specific R&D activities, either to
develop or evaluate a technology concept.
In the second step, the acquiring firm and the technology supplier formalize their
relationship through a co-development agreement. Joint development agreements,
technology ventures and joint ventures were common agreement types in our cases.
This step begins when both partners clearly see the benefits of a joint project. Hence,
this step is accompanied by intensive negotiations. We observed that partners
commonly tried to agree on three particular issues: duties, risks and benefits.
Reaching an agreement usually required participation of managers from different
functional areas (such as legal, R&D, manufacturing and marketing) of each party.
INVOLVEMENT OF TECHNOLOGY SUPPLIERS IN TECHNOLOGY
ACQUISITION PROJECTS
After describing the key acquisition activities, we will now explain how suppliers got
involved. In general terms our results indicate that technology suppliers get mostly
involved within the first four stages of the acquisition process (see Figure 1). We
observed two general patterns for supplier involvement (Figure 3). In the first pattern,
the acquiring firm develops the technology in collaboration with the technology
supplier (Path A); while in the second one, the acquiring firm buys a technology
concept (or prototype) completely developed by the supplier (Path B).
When pursuing Path A, suppliers tended to join the acquisition project during any of
the three initial stages. They support the acquiring firms to define needs, select the
most appropriate technology (or technologies) and carry out research activities to
explore whether the technology could provide the required performance to meet the
objectives of the acquisition project. The relationship between the firms usually
continued until the technology was implemented into a product or process in the
recipient’s operational system.
When pursuing Path B, technology suppliers commonly got involved rather late in the
acquisition process. In these cases the supplier independently developed a technology
concept useful for certain purposes. The collaborative work between the supplier and
the acquiring firm started with laboratory or field trials to evaluate whether the
technology could meet the objectives of the acquisition project and to estimate the
resources needed to develop a product or process that fulfills the requirements of the
acquiring firm. Commonly, before starting the development activities, acquiring firms
evaluated whether a commercially available technology could meet the set of
requirements of the acquisition project.
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The path that acquiring firms chose seems to depend upon particular contextual
circumstances, such as relevance of the technology to become a source of competitive
advantage, commercial availability of suitable technology concepts and number of
suppliers. For instance, we observed that where the technology eventually may
become important for the firm’s future competitive advantage, firms involve suppliers
actively during early stages of the acquisition process. Thereby, they understand the
technology better and can control the IPR that might emerge in the acquisition project,
particularly during the development activities. In contrast, when a technology is not
considered as a potential source of competitive advantage, acquiring firms seem to
prefer purchasing a commercially available technology and hence involve suppliers
only in later stages.
FIGURE 3 CO-DEVELOPMENT PATTERNS IN TA PROJECTS
The discussion above indicates that firms involve suppliers at different stages. In
general, technology suppliers seem to get involved in acquisition projects either as
development partners or providers of nearly or fully developed technologies. In both
cases, firms expect technology suppliers to support them in meeting their business
needs with appropriate technologies.
CONDITIONS FOR EFFECTIVE TECHNOLOGY ACQUISITION
Our analysis indicates that there are three key conditions to achieve a successful
transference of technology from technology suppliers to firms’ operations: partnership
stability, effective execution of co-development activities, and effective transference
of the technology to the recipient system.
Partnership stability. A stable partnership seems to be a necessary condition to keep
alive the commitment of participating firms from the beginning of the acquisition
project until the technology is transferred. We identify that factors such as partners’
motivations, lack of a common vision, contract issues, agreement on management of
resulting and existing IPR and mutual trust can ultimately affect the stability of the
relationship.
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Effective execution of co-development activities. The quality and performance of the
co-development outcomes greatly depends on the availability of technical resources
and appropriate communication between the technical teams involved in development
activities. The maturity level of the technologies required to develop the solution that
the acquiring firm needs is also an influential factor; in general, the less mature the
technology is for a given application, the more risky the development project is.
Effective transference of technology to the recipient system. This condition is not
trivial. Transferring technology to operations firstly requires the technology to be
embodied into a product or process compatible with the acquiring firm´s operations,
both technically and economically. Thereafter, the product or process ought to be
implemented into the value chain of the acquiring firm. Usually, transferring
technology to operations faces barriers such as fit of the product or process with the
recipient system, relative relevance of the technology to the acquiring firm, familiarity
of the acquiring firm with the new product or process amongst others. We observed
that the presence of a project champion in the acquiring firm increases the chances of
transferring the technology successfully.
Figure 4 provides a comprehensive perspective of key activities, factors and
conditions that impacts the outcomes of TA by collaboration.
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Partnership stability
Business alignment
Agreement formaliza on
Business-related
ac vi es
Collabora on assessment
Def. of
technology
req.
Technology
scou ng
Technology
concept
development
Selec on of
exis ng technology concepts
Implementa on
Prototype
tes ng
Product
development
Acquisi on-related
ac vi es
Structural match
Development management
Technology uncertainty
Co-development execu on
Implementa on opportunity
Category of factors
Transference
Domain of impact
Contextual factors
FIGURE 4 CONDITIONS THAT AFFECT TECHNOLOGY ACQUISITION THROUGH COLLABORATION
WHAT DO FIRMS EXPECT FROM TECHNOLOGY SUPPLIERS?
The results of the research provide practical insights, in particular for technology
suppliers. Case studies suggest that technology suppliers can help their customers to
successfully manage acquisition projects and maximize their benefits from such
collaborative ventures in different ways. Some relevant aspects are explained below.
Technology suppliers should understand why potential customers need new
technology.
Suppliers can exploit new business opportunities by understanding why firms need
new technology. For instance, when customer firms’ needs are driven by a new
business opportunity or cutting operative costs, it is likely that they look for a supplier
with strong technical capabilities in specific technology areas. Therefore, suppliers
should be ready to highlight their technical expertise and related resources (e.g.
infrastructure, networks and working processes) instead of particular technology
concepts.
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“The reason that we choose CMC, was because CMC has real expertise in this kind
of research and development, particularly around chemicals and also moving
increasingly to biochemicals and biofuels.” (Case 2)
In another scenario, when the technology is needed to upgrade the customer’s
portfolio of products, it is likely that the customer will have a clear definition of the
technical and economic performance of the technology. In these situations, customers
may look for suppliers of technology that meet certain functions and performance
criteria so that the technology could become a source of competitive advantage. In
addition, customer firms may prefer suppliers willing to work in collaboration to
apply their technology for specific needs.
“We choose that company because of three reasons: The first one, most obvious is the
willingness of this particular company to co-operate with us. They expressed a very
strong will to have us as partners. The second thing was the terms and conditions this
company set up for the preparation. The alternative provider of that technology, just
to give you an example, wanted to have 2.5 million Euros as upfront payment. The
third thing was that their technology allows for a much broader variability of different
applications.” (Case 6)
Firms need partners rather than component or service suppliers.
Often, firms search for technology suppliers that work with them beyond a single
project. Firms may prefer technology suppliers that have worked with them in
previous projects instead of looking for new ones. Firms often benefit most from
developing long-term relationships with external technology providers. After just one
or a few projects, firms may be able to realize the expected reduction of development
time, appropriately share risks and cut costs on external components or technical
services amongst other benefits; however these advantages vanish when they work
with a new supplier.
“We have worked together in four or five other projects after that first, they begin to
identify and focus on topics of interest to us. I think that also helps you a lot because
in the end you have more resources and you can see them as an extension of your
technical area because they know your needs and what your strategies are.” (Case 9)
The level of involvement of customer firms on the development of the technology
defines the main criteria to choose a technology partner.
Many firms (particularly medium and small ones) usually do not have a structured
process to manage TA projects. Hence, often they rely on the capabilities of their
technology suppliers to manage that process. Thus, firms use different criteria to
choose suppliers depending on their role in the acquisition project. For instance, if the
customer firm is meant to be involved in the development of the technology, then
criteria related to technology skills, location, capabilities and supplier’s expertise in
managing development projects seems to become critical in the selection of a
technology supplier.
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“We identified 6 of 7 potential companies. A couple were ruled out because of
geographical reasons, and then we looked at the degree of technical expertise and
technology ownership.” (Case 7)
On the other hand, if the firm is acquiring a fully and externally developed
technology, criteria such as willingness of the technology supplier to share the value
and risks of the technology, as well as the functional performance of the technology
concept may become critical.
Often customer firms are not capable of defining their technology needs and selecting
the right technology.
Firms are not always aware of technologies that can meet their business needs, thus
they may need assistance to identify and select the most appropriate technology. Even
more, firms may find it difficult to define their technology needs. Technology
suppliers are often expected to use their expertise to provide their customers with
advice to define these needs. In such cases, vision alignment and understanding of the
customer´s business context are key factors to effectively identify the technology that
the customer firm needs.
“We eventually ended up talking about something entirely different, but same
problem, only more efficiently, and then we started talking about how far it would
go." (Case 4)
Customer firms are concerned about the risks of acquiring new technologies.
From the perspective of acquiring firms, TA projects imply risks, which are greater
when technologies are at an early development stage. Thus, continuous assessment on
the performance of the technology over the acquisition process is critical for the
acquiring firm in order to make timely decisions. Where a new technology is
developed in collaboration, breaking down the scope of the collaborative work in a
series of small contracts may help both parties either to stop or renegotiate the scope
of the relationship in the case that an unexpected event or result affects the progress of
the project. In this way the relationship between both parties may remain unaltered if
the acquiring firm decides to discontinue a project.
“Firstly it’s a joint R&D effort so both sides through the R&D actually contribute
50/50.” (Case 3.)
CONCLUDING REMARKS
This research contributes to technology management (TM) literature that focuses on
technology transactions by providing an integrated framework that suggests that there
are three key conditions to achieve effective acquisition of technology by
collaboration. If one of these three conditions is not achieved, the acquiring firm may
not consider the acquisition project to be a success:
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1.
2.
3.
Partnership stability.
Effective execution of the co-development project.
Effective transference of the collaboration outcome to the recipient system.
In addition, the outcomes of this research contribute to extant literature in two areas.
First, the results provide a comprehensive description of the key activities in TA by
collaboration. It is indicated that TA by collaboration is characterized by a series of
activities that are divided into two types: partnership related activities and TA related
activities. The former comprises activities that define whether the acquiring firm and
the providing firm may achieve a business agreement. The latter comprises the
sequence of activities that are key to developing and implementing the outcome in the
value chain of the acquiring firm. The distinction between these two types of activities
highlights the fact that some activities may run in parallel during the acquisition
process. This distinction has not been explicit in previous literature. Extant literature
seems to suggest that TA is a sequential array of tasks where technology acquisition
related activities are mixed with business related activities (e.g. Baines, 2004).
Second, the results indicate that the acquiring firm may or may not get involved in the
development of the technology concept; therefore, it is possible to observe two
patterns of involvement of industry partners in the acquisition process. In the first
pattern, the acquiring firm is actively involved in the development of the technology
concept and the industry partner mainly provides specific skills or technical resources.
In the second pattern, the acquiring firm is not directly involved in the development of
the technology concept. The industry partner develops the technology concept
independently and consequently the relationship is formalized once it is demonstrated
that the prototype meets the requirements of the acquisition project. These two
patterns have been proposed in previous literature. Existing publications suggest that
firms may acquire technology either as know-how or as technology concepts (e.g.
Chiesa and Manzini, 1998). Nevertheless, these two routes apparently have not been
placed together in the context of a TA process in TM literature. In combination, the
distinctive features of the results described above offer a comprehensive description
of the TA process by collaboration, which is a topic that has been marginally
addressed in TM literature.
The outcomes of this research also offer relevant contributions to practice. Based on
the resulting framework, we highlight five aspects that technology suppliers may want
to consider when approaching new technology customers in order to successfully
manage the acquisition process and maximize benefits for both of them. They should
understand that technology acquisitions generally are driven by firms’ needs for
optimizing their operational performance or increasing revenues by offering new
products or services.
Thus, new technology is a means to cut costs, exploit new business opportunities,
develop strategic options for the future and upgrade existing product portfolios. Firms
can develop technology internally, but acquiring technology from external sources is
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often economically viable when the time to obtain results is limited. By collaborating
with technology suppliers, firms can quickly access the novel technologies they need,
while sharing risks and development costs. Hence, firms have significant incentives to
collaborate with technology suppliers.
Furthermore, technology suppliers can obtain additional revenues and improve their
return on R&D investments from both commercializing proprietary technologies and
offering technical assistance to develop custom-made solutions to firms. In both
cases, technology suppliers not only have to know the technology that their customers
need, but also why and how they acquire it.
We encourage technology-supplying organizations to align their commercialization
strategies to the particular needs of their prospective customers. The framework
proposed in this article can be a starting point to investigate the needs of firms and
what they expect from their technology suppliers in a structured way.
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