Academic journal article South Asian Journal of Management

Impediments to the Diffusion of Technology in India: A Critical Analysis

Academic journal article South Asian Journal of Management

Impediments to the Diffusion of Technology in India: A Critical Analysis

Article excerpt


The ultimate objective of an invention-innovation-diffusion effort is not fulfilled if it is not finally diffused to commercial use with a desired speed. Diffusion is the aggregate process of product penetration into the market. Technology diffusion can be explained as the process by which the technology is accepted by the consumer, leading to its wider use. Technology diffusion is important for economic development because it determines the pace at which the technology frontier can expand over time.

The paper examines the various sources of impediments to the diffusion of technology in India. It analyzes various internal and external sources of impediments. Some of the external sources that encountered impediments are the Foreign Direct Investment (FDI), openness to trade, foreign patents, royalty and license fee payments, and import of high-tech goods. Some of the internal sources facing impediments are the domestic investment, domestic Research and Development (R&D), domestic patents, Science and Technology (S&T) personnel, and education. The study has been carried out over a spread of various parameters/indicators like Technology Achievement Index (TAI), technology readiness and innovation, patents, technological absorptive capacity, R&D manpower, scientific and technical journal articles, usage of older technologies, and penetration of newer technologies, through detailed literature review and subsequent qualitative and quantitative analysis. While there is vast literature describing the reasons for the slow economic progress of India, the present study specifically highlights the causal effects of inadequate diffusion of technology impeding the technological competitiveness of the country. At the end, suggested measures have been given to minimize the impediments to the diffusion of technology, which is an important and crucial determinant to bolster the technological competitiveness of India.


Though the diffusion of technology is being discussed for several decades, till 1990s it did not get the due attention as an important tool for attaining competitiveness. Gatignon and Robertson (1989, pp. 35) mentioned that "It seems anomalous that marketing scholars have paid so little attention to organizational adoption and diffusion, given the reasonably robust literature on consumer adoption and diffusion...". While analyzing international technology diffusion through empirical investigation using data from 57 countries from 1988 to 2001, Ciruelos and Wang (2005) observed that both FDI and trade serve as important channels of international technology diffusion. The dynamics generated by the diffusion of technology is significant in the achievement of sustainable economic and social goals, both at local and global level (Barreto, 2003).

Xu (2000) investigated the phenomenon that multinational enterprises of developed nations are an important channel for international technology diffusion. The author mentioned that developing countries need to reach a minimum human capital threshold level for efficient technology transfer from developed nations. Xu has empirically studied this phenomenon by using data of US-affiliated multinational manufacturing enterprises in 40 countries covering a period 1966-1994. It was opined that many developing countries do not meet the threshold requirement.

Reddy (2017) mentioned that the economic liberalization has opened up the protected domestic markets of many countries and made competition a global issue. The author mentioned that the emergence of new technologies due to the economic liberalization acts both as a driving force and an enabling factor for globalization. While some developing countries are able to integrate themselves with the global economy and catch up with the developed nations, many others are not able to cope with the challenge.

In the context of technology diffusion in developing countries, The World Bank (2008) report on 'Technology and Technological Diffusion in Developing Countries' mentions that the speed with which technology spreads within a country matters most for technological achievement, and the technological progress in one sector can create new economic opportunities in other sectors. …

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