Does Technology Transfer Help Small and Medium Companies? Empirical Evidence from Korea

Dae-Hwan Kim,Matarr Sambou,Moo-Sup Jung

doi:10.3390/su8111119

Dae-Hwan Kim, Matarr Sambou + Show 1 more

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https://doi.org/10.3390/su8111119

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Journal: Sustainability	Publication Date: Nov 1, 2016
Citations: 25	License type: CC BY 4.0

Affiliation: Dong-A University, University of Calgary

Abstract

We challenge the view that technology transfer from big companies to small and medium (SM) size companies helps SM companies to prosper. With a large dataset of SM companies in Korea, we utilize the stochastic production frontier (SPF) model to examine the productivity of inputs and the generalized linear model (GLM) to compare business performance between two groups of SM companies: SM companies that receive technology transfer and those that do not receive technology transfer from big companies. The empirical results demonstrate that the transfer of technology from big companies to SM companies help SM companies to enjoy productivity of capital. Nonetheless, SM companies receiving technology transfer were found to underperform in terms of labor productivity and profit margin compared to their counterparts. We further investigate the reasons why SM companies receiving technology transfer from big companies underperform relative to their counterparts, and our findings shows that the former do not export much of their product and face more difficulties such as lower price for their products imposed by big companies than the latter. By identifying the negative rather than the conventionally assumed positive effect of technology transfer, this paper contributes to the literature on the relationship between technology transfer and SM companies’ prosperity in the case of Korea. Our findings have important implications for how SM companies should strategize and rethink about the clauses embedded in the transfer of technology that they receive from big companies because technology transfer plays as a barrier to their prosperity.

Highlights

The creation or absorption of new technology has become a vital component for companies to improve or maintain their competitive position in the market place, especially in an environment where technology, competitive position, and customer demands can change frequently [1,2,3]
Combining firms or companies which are either receiving or not receiving technology transfer from big companies, we employ a large dataset of small and medium (SM) companies in Korea to investigate the relationship between technology transfer and firm’s performance by asking: does technology transfer from big companies to SM companies help SM companies? The results suggest that technology transfer, though good for SM companies that do not have to worry about investing in Research and Development (R&D) to bolster production and growth, reduce their labor productivity, profit margin and export share
This shows that, technology transfer has a negative rather than a positive effect on SM companies’ overall performance. This is because SM companies which are receiving the transfer of technology from big companies are faced with some constraints to compete both in the local and international market for their products

Summary

Introduction

The creation or absorption of new technology has become a vital component for companies to improve or maintain their competitive position in the market place, especially in an environment where technology, competitive position, and customer demands can change frequently [1,2,3]. This is not surprising as the need for new technologies has grown in the past few years due to the trend of increased global competition and fast structural changes in the markets. Technological innovation is a crucial element of the competitive strategy of any company, big or small, high-tech or low-tech [8]

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