IMPROVING ACCESS TO FOREIGN TECHNOLOGY
IMPROVING ACCESS
TO FOREIGN TECHNOLOGY
In most of the aforementioned operational forms (licensing, franchising, management contracts, turnkey operations, and other contractual arrangements) an organization in one country may gain access to scientific or managerial technology from an organization in another country. By gaining these assets a firm may be in a much better position to compete domestically and internationally. Because of the competitive implications, it is not surprising that many firms are establishing mechanisms whereby they may increase the likelihood of gaining advantages before their competitors.
One of the most commonly used mechanisms is to establish company units to monitor journals and technical conferences. This is not sufficient because very few patent descriptions ever appear in other than the voluminous patent-office publications from each different country; therefore, firms must
government increased its ownership share of Aramco, it still needed management and exploration assistance, which was traded for commitments of preferred status for oil sales. On the basis of this precedent, several other oil-producing countries have made arrangements whereby the oil firms take all exploration and development risks in exchange for a share of the oil produced.
One of the fastest growth areas for contract arrangements has been for projects that are too large for any single company to handle. This has been apparent in the development of new aircraft and weapons systems. From the inception of a project, companies from different countries frequently agree to take on the high cost and high risk of developmental work for different components needed in the final product; afterward a lead company buys the components from the firms that did a part of the developmental work.
The major aluminum producers have developed swap contracts whereby they can save transport costs. They are all vertically integrated firms, but not in each country where they operate. Alcan might give Pechiney semipro-cessed alumina in Canada in exchange for the same amount of semiprocessed alumina delivered to Alcan in France.
Many contracts have developed among airlines in different countries that lack routes, resources, or enough customers to handle expansion independently. For example, Pan Am and Aeroflot shared a route between New York and Moscow, with each company supplying part of the crew. US Air and Air France have agreed to allocate space to each other on certain international flights, to do some joint advertising and promotion, and to share some terminal facilities. The airlines of the Cook Islands and Western Samoa share aircraft by painting the Cook Islands' colors on one side and Polynesia's on the other.36
familiarize themselves with these publications as well. There are now firms that sell data bases of information they clip from thousands of periodicals in multiple languages.37 This combined monitoring helps assure that the company learns of new developments, thereby enabling decision makers to decide whether to ignore the innovations, to try to counteract them through in-house developments, or to establish an operational link with the individuals or organizations that are apparently leading the field. A second mechanism is to develop formal links with academic and other research organizations at home and abroad so as to determine possible breakthroughs before they are publicized in professional journals. A third means is to increase visibility through participation in trade fairs, the distribution of brochures, and contacts with technical acquisition consultants. This visibility may encourage innovators to think of a particular firm rather than another when they seek out clients. A fourth means is to establish cooperative research projects with foreign firms, thereby gaining scale benefits and the use of personnel from other organizations. Finally, a company may set up part of its R&D activities in foreign countries in order to utilize foreign talent that would not likely emigrate to the company's home country.38
TO FOREIGN TECHNOLOGY
In most of the aforementioned operational forms (licensing, franchising, management contracts, turnkey operations, and other contractual arrangements) an organization in one country may gain access to scientific or managerial technology from an organization in another country. By gaining these assets a firm may be in a much better position to compete domestically and internationally. Because of the competitive implications, it is not surprising that many firms are establishing mechanisms whereby they may increase the likelihood of gaining advantages before their competitors.
One of the most commonly used mechanisms is to establish company units to monitor journals and technical conferences. This is not sufficient because very few patent descriptions ever appear in other than the voluminous patent-office publications from each different country; therefore, firms must
government increased its ownership share of Aramco, it still needed management and exploration assistance, which was traded for commitments of preferred status for oil sales. On the basis of this precedent, several other oil-producing countries have made arrangements whereby the oil firms take all exploration and development risks in exchange for a share of the oil produced.
One of the fastest growth areas for contract arrangements has been for projects that are too large for any single company to handle. This has been apparent in the development of new aircraft and weapons systems. From the inception of a project, companies from different countries frequently agree to take on the high cost and high risk of developmental work for different components needed in the final product; afterward a lead company buys the components from the firms that did a part of the developmental work.
The major aluminum producers have developed swap contracts whereby they can save transport costs. They are all vertically integrated firms, but not in each country where they operate. Alcan might give Pechiney semipro-cessed alumina in Canada in exchange for the same amount of semiprocessed alumina delivered to Alcan in France.
Many contracts have developed among airlines in different countries that lack routes, resources, or enough customers to handle expansion independently. For example, Pan Am and Aeroflot shared a route between New York and Moscow, with each company supplying part of the crew. US Air and Air France have agreed to allocate space to each other on certain international flights, to do some joint advertising and promotion, and to share some terminal facilities. The airlines of the Cook Islands and Western Samoa share aircraft by painting the Cook Islands' colors on one side and Polynesia's on the other.36
familiarize themselves with these publications as well. There are now firms that sell data bases of information they clip from thousands of periodicals in multiple languages.37 This combined monitoring helps assure that the company learns of new developments, thereby enabling decision makers to decide whether to ignore the innovations, to try to counteract them through in-house developments, or to establish an operational link with the individuals or organizations that are apparently leading the field. A second mechanism is to develop formal links with academic and other research organizations at home and abroad so as to determine possible breakthroughs before they are publicized in professional journals. A third means is to increase visibility through participation in trade fairs, the distribution of brochures, and contacts with technical acquisition consultants. This visibility may encourage innovators to think of a particular firm rather than another when they seek out clients. A fourth means is to establish cooperative research projects with foreign firms, thereby gaining scale benefits and the use of personnel from other organizations. Finally, a company may set up part of its R&D activities in foreign countries in order to utilize foreign talent that would not likely emigrate to the company's home country.38
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