Management of in-house technology development and transfer: a process study in the Indian pharmaceutical and chemical industries

Abstract

Technology development has played a central role in the growth and diversification of many industries and firms in the advanced economies. However the same cannot be said of the Indian industry. On the contrary there has been considerable concern expressed by scientists and policy makers about the inadequacy of investment in R&D activities by industrial firms in India. However, the process of liberalization is exposing the Indian industrial firms to increased technological competition. To meet this challenge, Indian firms would need to place greater emphasis on in-house R&D. Therefore, in the Indian context, management of in-house technology development is likely to become a major concern for managers.

The objective of this research was to obtain an in-depth understanding of the process by which Indian firms develop technology through in-house R&D and transfer the same to manufacturing.

The case study methodology was considered suitable to capture the complexity as well as answer ‘how’ and ‘why’ questions. Four technologically dynamic firms in the pharmaceutical and chemical industries were chosen for the study because of their above average R&D intensity as compared to the rest of the Indian industry. Within these firms, longitudinal study of seven completed in-house R&D projects were carried out to describe the overall process from initiation to implementation in the plant. The projects were selected on their significance to the firm. Data collection involved semi-structured interviews with executives from different levels in the managerial hierarchy who were involved in the management of projects at different stages. The data collection also involved study of archival data and on-site observations.

A five stage descriptive model of the process of technology development and its transfer from R&D to manufacturing has been developed on the basis of the case studies. These stages are Idea Conception, Technology Selection Development in R&D Laboratory, Up scaling for Commercialization and Implementation. The stages differ from each other in terms of the emphasis on managerial activities and their objectives, the structural arrangements, the management systems, and the type of people and skill utilized.

All the seven projects passed through the five stages sequentially. However different projects took different lengths of time over the different stages. This was influenced by the organizational and contextual factors related to the projects which are explored in the findings of the study as

1. The conceptualization of the idea was facilitated faster in those projects where availability of critical information inputs from expert sources supported the firm’s assumption regarding market feasibility. 2. In four of the projects, where organizational mechanisms did not exist to provide support for market feasibility assessment, the initiator’s background, credibility, motivation and personal contacts played a critical role in the conceptualization of the project idea. On the contrary, in the other cases where organizational support existed, the initiator’s role was not as critical in the idea conception stage. 3. In five projects, top management intervention influenced the process of idea conception with greater emphasis being attached to market feasibility. On the contrary in the other two projects, the lack of top management intervention led to less emphasis being attached to market feasibility assessment. This top management intervention facilitated the subsequent development of the project. 4. Different organizational processes were used by firms to ensure the fit of the in house R&D project with the corporate strategy. In the case of the firm being headed by the technical entrepreneur in the idea conception. Where the emphasis was more on linkage with existing technology, this fit was achieved through the structure that allowed greater integration between R&D and production. 5. When firms went for technology selection laying greater emphasis on technical considerations, the technology selected had to be modified to incorporate market realities. 6. In projects where there was greater application of existing internal technical capabilities compared to externally acquired technical capabilities compared to externally acquired technical capabilities in the areas related to technology development, the technology development period was comparatively faster. 7. The technology transfer from the R&D laboratory to manufacturing plant was smoother with less difficulties in those projects where there was greater use of organic linkage between the transferor and the transferee.

The major implications arising out of this study are a) Firms can benefit by networking with technical experts. Access to expert information through such networking facilities conceptualization of in-house R&D projects. b) Development of internal technological capabilities should be given considerable importance by firms as the study seems to indicate that are able to apply internal technical capabilities tend to develop R&D projects faster than others. c) Formal organizational mechanisms can facilitate better idea conception. Organizational arrangements that may help include a marketing network for accessing market information, co-ordination mechanisms between marketing and technical wings & business planning systems. d) An organic linkage between a firm’s research laboratory and pilot plant group can greatly aid in effective technology transfer.