Academic journal article International Management Review

Technology Transfer in Context with Saudi Arabian Small-Medium Enterprises

Academic journal article International Management Review

Technology Transfer in Context with Saudi Arabian Small-Medium Enterprises

Article excerpt

[Abstract]

Technology transfer brings scientific advances to small and medium enterprises (SMEs). It enables them to be innovative and efficient. The objective of this study is to investigate empirically the key barriers that SMEs face when transferring technology in Saudi Arabia. Both descriptive and hypothesis testing have been used for data analysis. This study shows that SMEs in Saudi Arabia face lack of workforce skills, management capabilities, and effective legal and regulatory procedures. More than 56% predicted that the accession to WTO will have a positive impact on their businesses. Furthermore, 41% found licensing is the most preferred type of partnership agreement by SMEs to transfer technology. The study also found that most Saudi SMEs do not know fully the importance of franchising.

[Keywords] technology transfer; small-medium enterprises; key barriers

Introduction

Technology transfer involves the acquisition and absorption of technology in order to introduce inno vati venes s and efficiency to gain competitive advantages. There are several channels through which technologies may be transferred, such as foreign direct investments (FDI), merger, acquisition, licensing, franchising and joint venture agreements. This includes hard and soft technologies associated with the transfer of machinery and capital equipment, production process, management systems, services, and knowledge. However, technology transfer does not necessarily have to occur between developed and developing countries. It may occur among countries with complimentary economic conditions and between countries and companies experienced in different areas of specialization or scales of production. Such mechanisms are aimed to leverage technology transfer; therefore, we must take a look at domestic as well as foreign arrangements and instruments to facilitate the process. The globalization either paves the way or hinders technology transfer.

In recent years, the globalization phenomenon has created many changes on economic, social, technological, cultural and political scenes. The International Monetary Fund has defined economic globalization as "the increasing integration of economies around the world, particularly through trade and financial flows which the result of human innovation and technological progressai]. These economical changes affect large and small enterprises, which are driven by focusing on liberalization of markets for goods, services, and capital in the world's major market economies, as well as, in the developing countries, including Saudi Arabia.

After the accession of Saudi Arabia to the World Trade Organization (WTO), as the 149th member in December 11, 2005, new rules and responsibilities have been established by the multilateral trading system. In addition, regional economic integration agreements have created new requirements for managing and adapting these changes. Since Saudi Arabia has opened its market to foreign investors, it has increased the competitive pressures on large firms and small and medium enterprises (SMEs), in particular. Therefore, SMEs have to adapt and respond to these changed conditions and to meet consumer preferences in the marketplace by improving the productivity and competitiveness to overcome the challenges posed by globalization, by enhancing technology transfer, and by fostering investment in SMEs.

The objective of this study is to empirically identify barriers that face SMEs in the process of transferring various types of technologies in Saudi Arabia. These barriers include workforce skills, management capabilities, industrial infrastructure capabilities, legal and regulatory conditions, financial access, economic conditions, technological levels, costs and risks, marketing capabilities, and information resources. Furthermore, it will examine the perceived impact of SMEs for the Saudi Arabian accession to the WTO.

Literature Review

Extensive surveys carried out by the Council of Saudi Chambers of Commerce and Industry (CSCCI) and the United Nations Industrial Development Organization (UNIDO) documented the main concerns of businessmen: lack of finance and capital, dependence on a foreign workforce, access to technology, limited marketing skills, bureaucratic regulation procedures and legal policies, and limited information on possible markets and clients (Robert Looney, 2004). …

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