TECHNOLOGY TRADING BY AN INDUSTRIAL COMPANY

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MORPHOLOGICAL DEMARCATION

In this chapter the central concepts technology and licensing are defined; the licensing function and technology trading are positioned within management of technology within a company; the concept of techno-economic networks is introduced; and the concept of innovation is defined.

Technology defined

A good starting point to understanding Technology Strategy is to affirm that the core of a company is what it knows and what it can do, rather than the products that it has or the markets it serves. Technology Strategy centres on this knowledge and these abilities. It consists of policies, plans and procedures for acquiring knowledge and ability, managing that knowledge and ability within the company and exploiting them for profit. (Ford, 1988: 85.)
Technology can be and has been defined in various ways, depending amongst other things on the reason a definition is required. Ford is implicitly proposing that a company’s knowledge and abilities form its technology. This is acceptable as an approximation although it lacks the utility aspect as an integral characteristic. In his case utility or profit is an output of the technology strategy.
Van Wyk (1988: 342) in discussing new frameworks for the management of technology alludes to the existence of several different definitions of technology. For the admittedly specific purposes of his discussion he finds the following useful as a starting point:
Technology is created capability: it is manifested in artefacts the purpose of which is to augment human skill. ……. Artefacts are the repositories of capability. They are to the study of technology what organisms are to the study of biology.
He confirms that technology, being created, does not come about by itself and that it is the utile product of deliberate action aimed at augmentation of human skill, or utility.
He also ties technology to an artefact. The New Oxford Illustrated Dictionary (1976) defines artefact as « Object, ….. made by human workmanship ». Interpretation of this definition according to the ordinary meaning of the words would appear to limit Van Wyk’s definition to the concrete or physical. It must be extended to include purely abstract « repositories » such as computer programmes, to retain the validity of the above definition of Van Wyk and to avoid returning to earlier views of technology:
To a very large degree the early studies on technology and organization equated technology with equipment, and so excluded the disembodied knowledge, the spatial forms and materials. (Clark and Staunton, 1989: 213.)
Van Wyk’s contention during discussion of his definition that technology does not come about by itself but is created should also be circumscribed. The discovered – not created – mathematical fact or algorithm, when applied to problem solving, becomes part of an artefact or repository. Its discovery will however have required human action – which added value.
Smith (1990: 156) states that technology can be formally viewed as the collection of knowledge underlying abstract or material tools with which natural capabilities are enhanced.
This description seems encompassing at first glance but it seems to imply that technology is abstract and it does not specifically include the technology that is part of, or is contained in, the material tools mentioned. An iterative process in the creation of the tools is not addressed.
Other views close to Smith’s have been proposed:
The word ‘technology’ is often used as a synonym for a ‘technological artifact’. However, technology is the ‘systematic application of knowledge to practical tasks’ (as defined in the Oxford Advanced Learners Dictionary). As such it is a systems concept which covers the function, process and structure of human behaviour during actions of intent ….. Seen within the context of a systems concept, it is clear that there are close interrelations between the technological environment of an organisation and the other facets of There is confusion regarding the relationship between technology and arte(i)fact. Simplistically stated, one school of thought views artefacts as technology and vice versa, another views artefacts as repositories of technology, yet another defines technology without reference to artefacts as a carrier.
Metcalfe and Boden prefer to follow a dualistic approach, distinguishing technology as knowledge from technology as artefact. They do not focus on selection of artefacts but on selection of performance characteristics embodied in artefacts. Regarding the latter they say:
The artefact dimensions of technology relate directly to the idea of technology as a transformation process in which energy and materials in one form are translated to energy and materials in different forms of a higher economic value. (1992: 56–58.)
In parallel, they see technology as knowledge which they describe as the concepts, theories and actions enabling a transformation process. « This knowledge is necessarily contained in the minds of individuals ….. ». They argue that it is here that the link between technology and the science knowledge data base is found, as well as distinctions between different kinds of technological knowledge.
It transpires that technology consists of both the concrete and the abstract which are used in combination in a useful systems context. Thus metallurgical knowledge turns into metallurgical technology which becomes part of a hardened screw driver which is used as artefact without conscious consideration of its hardened point by applying muscles via an algorithm.
It would be completely unrealistic to expect all South African manufacturing companies to have considered technology as deeply as the learned scholars referred to above. It was however necessary to strive to establish a common understanding of the meaning of technology for purposes of the survey. The following practical definition of technology was therefore used to orientate respondents. Because it is inclusive rather than exclusive some specific exclusions were likewise shared with respondents

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Technology trading by an industrial company

 Definition of licensing

To sell something usually means relinquishing and transferring ownership thereof in exchange for remuneration of some kind. It is obvious that the seller must have ownership before the sale while the buyer has ownership following the sale. Technology can be “sold” outright in this manner. It is even possible to sell technology many times over, as in the student-teacher relationship or the artisan selling his services. The latter two transaction types are excluded from further discussion.
To license means to grant leave or permission: « Licence n. 1. Leave, permission; …. »(The New Oxford Illustrated Dictionary ». 1976). To be able to grant permission means that the grantor must have some authoritative position from which the permission is being granted. In the case of technology the authority mostly subsists in ownership of some kind but can alternatively and perhaps as well, subsist in some derived authority such as a usufruct but mostly a licensed right. In the latter case the terms « sub-licence »(noun) and « sub-license » (verb) arise. The owner of technology becomes a licensor when permission to employ its technology in some way is granted to another who becomes the licensee: the licensor licenses the licensee. Similarly the licensee could grant a sub-licence: the licensee then sub-licenses a further licensee who becomes a sub-licensee A technology licence therefore is in the first place the grant of permission by an owner or proprietor of technology to another to use the owner’s proprietary technology. Even more synoptic, a licence is a right-to-use granted by the proprietor of technology. Ownership is not transferred. Secondly it can be permission granted by a licensee to a further licensee – a sub-licensee. It is abstract and it and the other facts surrounding the licensing transaction form the licence agreement which is usually recorded in writing.
Numerous refinements elaborating on the above definition are possible. These are basically intended to define the scope, technically, commercially and in time and the cost of the right(s) granted.
In return for the right to use, remuneration of some kind is agreed upon, including lump sums upon conclusion or later during the validity of agreements, deferred payment or payment in instalments of lump sums and so-called royalties which usually become payable in proportion to the use taking place.
Remuneration could even partially or fully take the form of a licence regarding some other technology in return. In such cases, involving two or more parties, the concept of cross-licensing arises.
Technology licensing should not be confused with licensing by authorities such as national or local governments although common elements do exist.
Although reference is frequently made to the « selling » of licences such a concept is irreconcilable with the above framework and in fact is nonsensical because at least two parties the licensor and the licensee – are involved in a resultant relationship over time in any one licence. Licences could be offered but not sold. Licences can of course be « sold » in the sense that an existing party to a licence transfers all the granted rights to a third party which takes the selling licensee’s or licensor’s place. Technically the conferred rights rather than the licence are sold.

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1. INTRODUCTION
2. MORPHOLOGICAL DEMARCATION
2.1 TECHNOLOGY DEFINED
2.2 TECHNOLOGY TRADING BY AN INDUSTRIAL COMPANY
2.3 TECHNO-ECONOMIC NETWORKS
2.4 INNOVATION
3. TECHNOLOGY MIGRATION AND TRADE
3.1 TECHNOLOGY IS VALUABLE
3.2 MIGRATION OF TECHNOLOGY IS UNSTOPPABLE
3.3 TRANSFER OF TECHNOLOGY AND LEARNING
3.4 APPROPRIABILITY
4. INTELLECTUAL PROPERTY STRATEGY
4.1 INTELLECTUAL PROPERTY PORTFOLIO
4.2 DEPLOYMENT OF INTELLECTUAL PROPERTY PORTFOLIO
4.3 LICENSING STRATEGY
5. LICENSING MARKET 
5.1 BACKGROUND
5.2 AGREEMENTS
5.3 SOURCES OF TECHNOLOGY
5.4 COST AND VALUATION.
5.5 LICENSING ORGANISATION AND FUNCTIONARIES
6. SOUTH AFRICAN INDUSTRIAL COMPANIES IN CONTEXT
6.1 OVERVIEW
6.2 COMPANY ECONOMIC ETHOS
6.3 COMPANY ACCOUNTING SYSTEM
6.4 REGULATORY AND ENABLING ENVIRONMENT
6.5 SOCIOLOGICAL FACTORS
6.6 AVAILABILITY AND MANAGEMENT OF INFORMATION
6.7 THE FUTURE, TECHNOLOGICAL TRENDS AND FORECASTING
7. METHODOLOGY.
7.1 THREE OBJECTIVES OF THIS RESEARCH
7.2 TYPE OF RESEARCH AND QUESTIONNAIRE
7.3 OVERVIEW OF VALIDITY AND RELIABILITY
8. RESULTS
8.1 COMPANY AND INDUSTRY SECTOR DEMOGRAPHICS – 6.1
8.2 COMPANIES’ PHYSICAL AND PERSONNEL ORGANISATION – 6.5
8.3 TECHNO-ECONOMIC NETWORKS (TENS) – 2.3
8.4 APPROACH TO RISK AND PIONEERING – 6.2
8.5 ACCOUNTING SYSTEMS – 6.3
8.6 REGULATORY ENVIRONMENT – 6.4.
8.7 SENSITIVITY TO THE FUTURE – 6.7.
8.8 INNOVATION LEVELS – 2.4.
8.9 SENSITIVITY TO LEARNING FROM IN-LICENSING – 3.3
8.10 APPROPRIABILITY – 3.4 .
8.11 IP PORTFOLIO’S – 4.1
8.12 DEPLOYMENT OF IP – 4.2
8.13 LICENSING ORGANISATIONS – 5.5
8.14 REASONS FOR LICENSING OR NOT – 4.3
8.15 CONTENT OF AND ADDED VALUE IN LICENCES – 5.2.2
8.16 VALUATION OF LICENSED TECHNOLOGY – 5.4
8.17 SOURCES OF TECHNOLOGY – 5.3
8.18 USE OF INFORMATION AND LICENSING – 6.6
9. CONCLUSION
9.1 SALIENT FINDINGS
9.2 COMPENDIUM OF RECOMMENDATIONS
9.3 PERSPECTIVES.
9.4 GENERAL RECOMMENDATIONS ON RESEARCH.
9.5 FINAL REMARKS
LITERATURE CONSULTED
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