Transfer of Technology to Promote Entrepreneurship in Developing Countries: An Integration and Proposed Framework

By Lado, Augustine A.; Vozikis, George S. | Entrepreneurship: Theory and Practice, Winter 1996 | Go to article overview

Transfer of Technology to Promote Entrepreneurship in Developing Countries: An Integration and Proposed Framework


Lado, Augustine A., Vozikis, George S., Entrepreneurship: Theory and Practice


That entrepreneurships is vitally important to the economic development of a nation is indubitable. However, divergent approaches to promoting and fostering entrepreneurial development in the developing countries have been suggested. This paper explores the role of technology transfer to promote entrepreneurship in the LDCs. We argue that entrepreneurial development depends, among other things, on the technology content and context, mode of technology transfer, the recipient country's level of economic development, and the absorptive of local firms. Propositions and implications are offered to guide future research and In international entreprenuership.

That entrepreneurship is a critical factor in social and economic development of a country has been amply documented in the literature in development economics (Baumol. 1968: Harbison, 1956: Harbison & Meyer, 1959; Leibenstein, 1968. 1987; Schumpeter. 1934. 1950), sociology (Cochran, 1971; Etzioni, 1987; Young, 1971), social psychology (McClelland, 1961; Schatz, 1965), and strategic management (Drucker, 1985). For example. Schumpeter (1934) viewed entrepreneurship as the engine of "creative-destruction," involving the carrying out of new combinations, including the introduction of a new product into the market, the introduction of a new method of production, the opening of a new market for outputs, the discovery of a new source of raw materials, and the creation of a new form of industrial organization.

Despite this recognition of the role of entrepreneurship in socioeconomic development, controversy abounds concerning how entrepreneurship in the developing countries is (or should be) promoted. Sociologists maintain that certain cultures are more effective in promoting entrepreneurship (and in fostering socioeconomic progress) than others (Shapero & Sokol, 1982; Young. 1971). They suggest a need for a national program of social enlightenment to promote entrepreneurial values and related sociological qualities. Social psychologists, on the other hand, associate entrepreneurship with certain psychological characteristics and traits that members of a society exhibit. These traits include need for achievement (McClelland, 1961), propensity to take risk, and locus of control (Brockhaus, 1982). Policy implications stemming from this view have emphasized the provision of rigorous training to particular individuals in older to instill the psychological qualities necessary for entrepreneurial success. For example, McClelland (1961) argued that the "urge to achieve" is the single most important psychological factor for entrepreneurial success, and that contrary to the views of other psychologists, this trait could be acquired through education and training. Accordingly, economic development might be achieved through administering training programs that emphasize achievement motivation to individuals in developing countries. However, McClelland's model of entrepreneurial development has come under heavy criticism on theoretical and methodological grounds (see e.g. Brockhaus, 1982; Kilby, 1971).

Other approaches to promoting entrepreneurship in developing countries have been based on the so-called "vicious cycle theory" of economics (Hirschman, 1958; Samli, 1985). Essentially, this theory holds that economic underdevelopment in the less developed countries (LDC) results from and is perpetuated by a configuration of factors, including low levels of income, savings, investment and productivity, and acute shortages of capital. One strategy for breaking the vicious cycle is through the infusion of venture capital to stimulate business startups (Business Week, 1988).

Another strategy is through the transfer of technology, often from the developed countries to the developing economies. Such technology transfer arguably would promote entrepreneurship (Samli, 1985; Samli & Gimpl, 1981) and foster economic development (Baranson, 1969, 1970; Balasubramanyam, 1973; Tuma, 1987). …

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