Assessment of technology transfer capability and rd capability the case study of vietnamese food enterprises

ASSESSMENT OF TECHNOLOGY TRANSFER CAPABILITY AND R&D CAPABILITY THE CASE STUDY OF VIETNAMESE FOOD AND ENTERPRISES Under the guidance and approval of the committee, and approved by all it

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In INTERNATIONAL BUSINESS

By

Student’s name: Mr: TRAN TAN HOANG VU (MBA03042)

Advisor: PhD NGUYEN QUYNH MAI

International University - Vietnam National University HCMC

Ho Chi Minh, Viet Nam September 2012

ASSESSMENT OF TECHNOLOGY TRANSFER CAPABILITY AND R&D CAPABILITY

THE CASE STUDY OF VIETNAMESE FOOD AND ENTERPRISES

Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree

Approved:

- -

- -

- -

Acknowledge

To complete this thesis, I have been benefited from the following people:

First of all, I would like to express deep gratitude to my advisor, Dr Nguyen Quynh Mai, School of Business, International University, Ho Chi Minh City As the research leader, she gave me a chance to join the research project group, and also gave me great support as effective academic advisory

I would like to thanks Ms An, former BA student, who gave me the foundation and a lot of useful knowledge

I would like to thank Dr Tung, Dr Phuong, Dr Tuan, Mr Quang, Ms An, Mr Vu, the research group members in this phase Without teamworking, I could not get the chance to interact with many people and learn new knowledge

I also thank to the Dr Nguyen Ngoc Hanh, vice president of Chemistry institute; Dr

Le Van Viet Man, Food department of University of Technology; Mr Dang Van Lam, R&D Manager from Cautre; Mr Nguyen Huu Thuy, Technical Manager from ThienHuong JSC; Dr Nguyen Tien Hung, General Director of Vimedimex; Mr Nguyen Anh Linh, R&D expert from Masan Corporation; Mr Kha, R&D Manager

of Bibica These experts gave research group a lot of feedback during our interview

I would like to express my thanks to Mr Toan from Bach Khoa University, Ms Thu from Business Magazine for supporting research group to collect data

Last but not least, thank my family, my parents, my wife who give me encouragement and financial support through the whole course They have supported

me with all the love and patient

Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City

CONTENTS

List of Table ix

List of Figures .x

Abbreviation .xii

Abstract xiii

Chapter One - INTRODUCTION 1

1 Introduction 1

1.1 Current situation of Vietnamese Technology Competitiveness 1

1.2 Vietnamese food industry 3

2 Research problem 6

3 Research objectives 7

4 Scope and limitation 7

5 Implication 8

6 Organization of the study 8

Chapter Two - Literature review 9

1 Introduction 9

2 Definition 9

2.1 Technology: 9

2.2 Technology Transfer 9

2.3 Technology Transfer Capability 10

2.4 R&D Capability 10

3 Role of Technology and Technology Transfer 10

4 Components of Technological Capability 12

5 R&D Capabilities 15

6 Environmental factors 17

7 Effectiveness of Technology Improvement 18

Chapter Three - Research methodology 20

1 Research process 20

2 Research model 21

3 Measurement design 22

3.1 TTC factor measurements 22

3.2 RDC factor measurement 23

3.3 Innovation Environment factor measurement 24

3.4 Effectiveness of Technology Improvement measurements 25

4 Questionnaire design 26

4.1 Semi-structure interview design: 26

4.2 Questionnaire design 26

5 Sample size and data collection method 27

5.1 Population & Sample size 27

5.2 Collection method 27

6 Data analysis method 28

Chapter Four - Data analysis 29

1 Sample demongraphic 29

2 R&D strategy 31

3 Reliability test 34

4 TT Capabilitity description 34

4.1 Ability to Recognize 35

4.2 Ability to Acquire 36

4.3 Ability to Assimilate 37

4.4 Ability to Apply and Adapt 38

5 R&D Capabilities description 39

5.1 Ability to Innovate 39

5.2 Facility capabilities 40

5.3 HR Capabilities 41

6 Performance description 42

7 Innovation environment description 44

7.1 Internal environment 44

7.2 External environment 45

8 Cluster and Scatter chart 47

8.1 Method to define weight: 47

8.2 Trend analysis 48

8.3 Cluster analysis 51

8.4 Radar charts 53

Chapter Five - Conclusion, limitation and Recommendation 56

1 Conclusion 56

2 Limitation & recommendation for further study 57

LIST OF REFERENCES 58

APPENDIX ……… 62

List of Tables

Table 1: Technology Transfer Revenue 2

Table 2: Food CPI - Data & Forecast 5

Table 3: Ability to Recognize 22

Table 4: Ability to Acquire 22

Table 5: Ability to Assimilate 23

Table 6: Ability to Apply and Adapt 23

Table 7: Ability to Innovate 23

Table 8: Facility Capabilities 24

Table 9: Human resource capabilities 24

Table 10: Internal environment 25

Table 11: External environment 25

Table 12: TT and R&D investment Performance 25

Table 13: Business number of employees 29

Table 14: Investment reasons descriptive statistic 32

Table 15: Reliability statistic of measurement factors 34

Table 16: Ability to Recognize descriptive statistic 35

Table 17: Ability to Acquire descriptive statistic 36

Table 18: Questionnaire response on Ability to Acquire 36

Table 19: Ability to Assimilate descriptive statistic 37

Table 20: Ability to Apply and Adapt descriptive statistic 38

Table 21: Ability to Innovate descriptive statistic 39

Table 22: Facility Capabilities descriptive statistic 40

Table 23: HR Capabilities descriptive statistic 41

Table 24: Performance of Technology Improvement descriptive statistic 42

Table 25: Internal Environment descriptive statistic 44

Table 26: Questionnaire response on Internal Environment 44

Table 27: External Environment descriptive statistic 45

List of Figures

Fig 1: The Technology Transfer Effects 1

Fig 2: Gross production of Food Processing Industry in Vietnam compare to 1994 price (source General Statistic Office, 2010) 5

Fig 3: Gross production of Food Processing Industry in HCM compare to 1994 price (source General Statistic Office, 2010) 6

Fig 4: Customer Value Creation through Technological Capability 11

Fig 5: Technological progress trajectory (Source: Guan et al 2006) 12

Fig 6: New mechanism for transferring technology to China – TDAID (Source: Wang and Zhou, 1999) 12

Fig 7: Element divisions as part of the supply chain (Source: Martin L Jackson and Andy Sloane 2007) 13

Fig 8: Components of absorption capacity (Source: Whangthomkum, 2006) 14

Fig 9: R&D as a processing system 16

Fig 10: Research process 20

Fig 11: Hypothesis Model 21

Fig 12: Business ownership types chart 29

Fig 13: Business number of employees chart 30

Fig 14: R&D/revenue expenditure chart 31

Fig 15: Technical transfer plan chart 32

Fig 16: Investment objective – sort by mean 33

Fig 17: Questionnaire response on investment objective 33

Fig 18: Questionnaire response on Ability to Recognize 35

Fig 19: Ability to Recognize – sort by mean 35

Fig 20: Ability to Acquire – sort by mean 36

Fig 21: Questionnaire response on Ability to Assimilate 37

Fig 22: Ability to Assimilate – sort by mean 37

Fig 23: Questionnaire response on Ability to Apply and Adapt 38

Fig 24: Ability to Apply and Adapt – sort by mean 38

Fig 25: Questionnaire response on Ability to Innovate 39

Fig 26: Ability to Innovate – sort by mean 39

Fig 27: Questionnaire response on Facility Capabilities 40

Fig 28: Facility Capabilites sort by mean 40

Fig 29: Questionnaire response on HR Capabilities 41

Fig 30: HR Capabilities – sort by mean 42

Fig 31: Questionnaire response on Performance of Technology Improvement 43

Fig 32: TT and R&D Investment Performance sort by mean 43

Fig 33: Internal Environment – sort by mean 44

Fig 34: Questionnaire response on External Environment 46

Fig 35: External Environment – sort by mean 46

Fig 36: TTC vs RDC 48

Fig 37: TTC vs Performance 49

Fig 38: RDC vs Performance 50

Fig 39: TTC vs RDC Cluster chart 51

Fig 40: TTC vs Performance Cluster chart 52

Fig 41: RDC vs Performance Cluster chart 53

Fig 42: TTC vs business ownership 53

Fig 43: TTC vs business size 54

Fig 45: RDC vs business size 55

Abbreviations ANOVA: Analysis of Variance

BMI: Business Monitor International

EFA: Exploratory Factor Analysis

FFA: Food & Foodstuff Association

FPI: Food Processing Industry

FDI: Foreign Direct Investment

GSO: General Statistic Office

GCR: Global Competitiveness Report

GDP: Gross Domestic Product

HR: Human Resource

IE: Innovation Environment

R&D: Research & Development

RDC: Research & Development Capability

SME: Small and Medium Enterprises

SEM : Structural equation modeling

TT: Technology Transfer

TTC: Technology Transfer Capability

TTE: Technology Transfer Effectiveness, Effectiveness of Technology Improvement TDAID: Transfer - Digestion - Absorption - Innovation - Dissemination

WEF: World Economic Forum

WTO: World Trade Organization

Abstract

Nowaday, Technology Improvement through TT and R&D activities is condition for enterprises in Food Processing Industry (FPI) to compete in open market If enterprises can access their own capability, they can find the suitable strategy to develop and compete in this fierce market

The research result indicates that Technology Transfer Capability and R&D Capability have positive relationship and contributing to Performance of Technology Improvement This research also shows the method to assess Technology Transfer Capability, R&D Capability and Innovation Environment of Vietnamese Food Processing Enterprises in HCM City From these results, Vietnamese enterprises have a lot of missions to improve their Technology level

CHAPTER ONE - INTRODUCTION

1 Introduction

1.1 Current situation of Vietnamese Technology Competitiveness

According to Global Competitiveness Report (GCR) of World Economic Forum (WEF) (2011), technology has increasingly become an important element for the firm to compete and prosper Whether the technology used has or has not been developed within national borders, it is irrelevant for its ability to enhance productivity

In general, technology can be gained in three ways (Jon-Chau Hong, 1994):

- Purchasing production techniques;

- Transferring production techniques;

- Developing one’s own techniques

And the Technology Transfer (TT) effect is as below figure:

Fig 1: The Technology Transfer Effects

From this study, TT cost more, but it takes shortest time On the other hand, purchasing techniques will do little good for industrial upgrading In short, TT is the right strategy for developing Technology Capability in term of time and money

The needs of small and mid-size enterprises (SMEs) in the agricultural and food sectors are continually changing in the global marketplace TT is one means of

changes that are critical to their survival (Michael T Morrissey, Sergio Almonacid, 2004)

GCR (2011) also points out that Vietnam is lowly ranked in the Technological Readiness and Innovation index Particularly, Vietnam is ranked 102

in Availability of latest Technology, 60 in Firm level technology Absorption Considering Innovation Index, Vietnam is ranked 62 in University-industry collaboration in R&D, 87 in Utility patents per million population, and 66 in Availability of scientists and engineers

According to the annual report of Vietnam National University – HCM city, the TT revenue:

Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Revenue

(bil VND)

46.6 54.7 53.4 57.3 63.1 68.3 69.7 99.5 76.3 86.3 84.3

Table 1: Technology Transfer Revenue

This has pointed out that the need in TT (or in a broader view is R&D) is supreme for the manufacturing enterprises Especially, we have joined WTO, and if enterprises cannot compete with foreign products in either cost, quality or model our businesses will be dead and our economy will be doom in the future

These are the reasons that many Vietnamese manufacturing enterprises started to pay attention to investment into TT and R&D Though they have been facing with the problem that there is no previous study on which factors would effect

on the effectiveness of TT and R&D activities in Vietnamese environment so many enterprises are investing unsystematically and ineffectively

From 1998 to 9/2003, there have been 4800 FDI projects approved, registered capital of 52.5 bil USD, and there are still 4100 projects with effective capital of 39.87 bil USD 2170 projects have been operated, and 700 under basic construction Among them, about 70% of the projects related to TT or manufacturing new type of product, but only about 4% Contracted Technology Transfer projects were approved

by law through Ministry of Science and Technology These approved Contracted Technology Transfer Project, about 63% are industry project, 26% are Food Processing project and 11% are in cosmetic (Hoang Van Cuong, Le Danh Ton)

Source: Vietnam National University – HCM city

Le Net (2006) showed that when buying a new technology, enterprises did not have enough information, such as which technology was good, bad or backward For instance, a plastic company wanted to import a new device A Hong Kong company sold that device at two million USD, but then a Korean company sold the same device at six hundred thousand USD How could this plastic company find the precise information in order to buy the device at a good price?

1.2 Vietnamese food industry

Vietnam's FPI is booming After 20 years of renovation, the socio-economic development achievements of the country positively impact on people's daily life The FPI has tremendous opportunities on the market At home, people's demand for processed food is increasing largely and diversely Currently, the food processing industry, seen as priority for development, is competitive advantage, market value, export and resolves labor intensive From 1995 to date, FPI has accounted for the largest

in the industry, delivered more profit and contribution to the national GDP The development of the FPI has also influenced other ancillary and supported other industries’ development such as: packaging printing industry, packaging industry, frozen industry, food preservation, animal packaging materials industry, and plastic processing industry slaughter by-products In addition, the development of the FPI also supports growth of agriculture (crops, livestock), transportation, mechanical manufacturing, and trade and services (distributors such as supermarkets, shops, etc.)

FPI’s products include raw food, processed food and refined food In particular, refined FPI benefits and contributes to the economy more In Vietnam, due to the level of technology is limited, refined food is still in small number, mainly used for domestic demand Exporting to the world market in majority is the crude product

According to Foodtexvietnam, Vietnam's FPI comprises around 260 processing plants (the country is a major exporter), with an annual production capacity of 250,000 tons, 24 slaughter houses and meat-processing plants, 160 beverage plants, 65 fruit- and vegetable-processing plants, manufacturing instant noodles and 23 confectionery manufacturers Despite a significant proportion of processed food being imported, consumption of imported produce remains fairly low

seafood-in the country – although it has seafood-increased seafood-in the maseafood-in population centers of Ho Chi

In recent data, Vietnam is an agricultural country with abundant agricultural raw materials but equipment, agro-processing technologies are capable of manufacturing exports This food industry brings high economic effectiveness because it has the biggest proportion in gross output of industry, for example, the proportion of food industry in 2010 is 14.17% (Tran Sinh, 2011) Moreover, the development of this industry helps to develop agriculture Therefore, FPI is the priority industry in the growth of Vietnam economy

According to the Organization of Business Monitor International (BMI), total food consumption in the Vietnamese market in the period 2009-2014 will increase 67.3% Especially in 2014, this consumption estimated at 426,997 billion Average per capita consumption is estimated at 56.4% (equivalent to 4,537,628) in 2014

BMI has studied the food consumption data of Vietnam in the second quarter

of 2008, along with data on the expenditure of households of the General Statistics Office (GSO) These figures reflect spending on food and drinks; however, BMI is also wary on forecasts by reporting data may have eliminated the low figures reported by several groups of consumer’s capacity in rural areas BMI will continue

to check the comparison made by the GSO data with other sources of information to

be the most accurate assessment of the prospects of food consumption in Vietnam during the period from 2005 to 2014

Table 2: Food CPI - Data & Forecast

Gross production of FPI increases steadily in recent years, and accounting for around 24% gross production of Processing Industry (Figure 2) Even the percentage contribution by FPI is declined, it still accounts for nearly 25% gross production of Processing Industry This means FPI still plays important role in Vietnam economic

Fig 2: Gross production of Food Processing Industry in Vietnam compare to

1994 price (source General Statistic Office, 2010)

In HCM City, gross production of FDI also increases in value but the contribution to Processing Industry has been declined from 17.48% (2005) to 16.25% (2010) (Figure 3) Market for the majority of the industry's products (except seafood processing industry) mainly domestic, export markets have not been developed, present only in the form of the potential The markets of Southeast Asia, Northeast Asia is the market that the business involved more than any other export markets

Processing industry Food processing industry Contributed weight of FPI

Excluding drink expense

*: forecasting value – Source: General Statistics Office of Vietnam, BMI

of Vietnam do not fully meet the strict regulations on quality, hygiene and food safety of these countries

Fig 3: Gross production of Food Processing Industry in HCM compare to

1994 price (source General Statistic Office, 2010)

2 Research problem

There are many theoretical frameworks all over the world that measure the Technology Transfer Effectiveness (TTE) and each of them focuses different factors There are also journals and a few of research about TT and R&D in Vietnam

However, none of them study about the acquiring Technology Transfer Capability (TTC) of small and medium enterprise and R&D performance in Vietnam food industry That means there is no research about how transferee’s technology capability or effectiveness improves after TT, which factors affect their improvement and the relationship between TTC and RDC

In previous research phase, TTC was defined as Ability to Recognize, Ability

to Acquire, Ability to Assimilate, Ability to Apply and Adapt, Ability to Innovate R&D Capability (RDC) was defined as Facility Capability, Human Resource Capability, and Investment Capability However, Technology Capability and RDC have the relationship and overlapped

Also from this study, the assessment of TTC and RDC, food enterprises are willingness to adopt new technology These enterprises agreed TT is the quickest way to expand their business

However, previous research has not found out how TTC, RDC effect on Business performance It has not analyzed the Environment (or the Throughput in some other research) factor either More important, on each factor, it has not developed the measurement scale for each factor

So that, the purpose of this research is to assess TTC and RDC of Vietnamese food enterprises If they can measure their capabilities, they can improve it

3 Research objectives

For these reason, the objectives of this research are:

- Develop measurements for TTC, RDC, and Innovation Environment

(IE) factors, Effectiveness of Technology Improvement (TTE)

- Use these measurements to evaluate TTC, RDC and TTE of Food

companies in HCM, and Vietnamese IE

- Explore the relationship between TTC; RDC and TTE

- Suggest the solutions for Vietnamese food Enterprise so they can

improve the TTE

4 Scope and limitation

This research is conducted from July 2012 to January 2012, in Ho Chi Minh City This research will only focus on Effectiveness of TT and R&D in Food industries enterprises The enterprises ownership modes include state own, joint venture, joint stock, private, limited liability SMEs

The acquired sample population is small compare to the number of question due to the number of business operating in this industry in this region, the time to collect data (the period business focusing in manufacturing for new year occasion) and the respondent’s requirement The list of Vietnamese food enterprises in HCM city only consists of around 200, and many of them were shut down due to the economic crisis That makes the effective list is only around 160

Besides, many enterprises consider technology as sensitive topic, and they refused to take part in the survey These make sample size small, and many statistic techniques cannot be used to assess the relationship between factors Instead, this research will use descriptive statistic to explore these relationships

In addition, the questionnaire design uses Likert-scale, and the study is quite new for respondent, so the respond may be bias

5 Implication

Firstly, it is expected to find out which factors will be influenced on the TTE from this research By exploring these factors, the research can be used for academic purpose or providing suggestions to the enterprises, which want to invest more into

TT and R&D

Secondly, from this research, enterprises can assess their TTC and RDC Combining their business strategic and these value, they can have they can have the plan to improve their capabilities

Thirdly, the finding may provide a good method to evaluate TTE Vietnamese businesses can use these to build a KPI system to assess their investment, and do the research on their own companies to improve based on their environment

Lastly, by exploring the difficulties of IE, enterprises can work together to suggest the change in government policy to make us more competitive on our home ground and supply the domestic demand

6 Organization of the study

This research is structured and organized in five (5) chapters as follows:

Chapter 1 – Introduction: Introduce the thesis topic and a brief background

about it, followed by the rationale, problem statement, research objectives, research scope and limitations, significance of the research

Chapter 2 – Literature Review: presenting the related secondary literature

concerning the TTC, RDC, IE, and the TTE

Chapter 3 – Research methodology provides detail instrument of the

research process such as Measurement and Question design, Sample, Collecting data method, Data analysis method: Design the framework; and the procedure and method for collecting the data used to conduct the research

Chapter 4 – Discussions and Findings: Analyze collected data and interpret

into initial findings of the research

Chapter 5 – Draw out conclusion and make recommendation, suggestion for

academic and enterprises

CHAPTER TWO - LITERATURE REVIEW

1 Introduction

It is important to understand the crucial role of Technology, TT and R&D in businesses The investment into TT and R&D will result as the performance of business This review is based on relevant published researches on Technology, Technology Capability and RDC; IE; and the method to evaluate TTE

2 Definition

2.1 Technology:

Technology: is the application of science or knowledge to commerce and industry Technology is, simply, the application of knowledge to solve the problem

or invent useful tools

Generally speaking, technology can be gained in three ways

(1) Purchasing production techniques;

(2) Transferring production techniques;

(3) Developing one’s own techniques

2.2 Technology Transfer

Technology transfer: According to business dictionary, technology transfer is: (1) the assignment of technological intellectual property, developed and generated in one place, to another through legal means such as technology licensing or franchising; (2) the process of converting scientific and technological advance into marketable goods

or service

TT can also be defined as a process of transferring skills, knowledge, technologies, method of manufacturing, samples of manufacturing and facilities among identities to ensure scientific and technological developments are accessible

to a wider range of users who can then further develop and exploit the technology into product, processes, applications, materials or services

TT implies the movement of physical structure, knowledge, skills, organization, values, and capital from the site of generation to the receiving site (Mittleman &

2.3 Technology Transfer Capability

According to enterprise-architecture’s definition: Technology capabilities are Conceptual View that defines WHAT technology can do These often have quite abstract names but it is important that they do not imply any particular class of technology or products

Technology Capability is one of the sources of company competitive advantage

In paper “The Role of Technological Capabilities in Determining Performance: The Case of the Upstream Petroleum Industry”, technological capabilities are defined here as the knowledge and skills required to identify, appraise, utilize and develop technologies and techniques relevant

2.4 R&D Capability

RDC is the set of organizing processes and principles that a firm uses to deploy its resources to develop new products and improve manufacturing processes in response to the change in external environment (Kogut and Zander, 1992; Grant, 2002)

3 Role of Technology and Technology Transfer

Technology plays a crucial role in economic development According to Garfield (1988), in the late 1950s, Robert Solow, the 1987 Nobel Prize in Economic Sciences, formulated theory of economic growth that emphasized the importance of technology He stated that technology-broadly defined as the application of new knowledge to the production process-is chiefly responsible for expanding an economy over the long term, even more so than increases in capital or labor Technological knowledge is the understanding of the best ways to produce goods and services (Mankiw, 2003)

The concept of TT has gained much attention and been variously defined by many scholars and researchers In 2000, Tarek Khalil defined TT as a process which permits the flow of technology from a source to a receiver It means that the source is the owner or holder of the knowledge, while the recipient is the beneficiary of such knowledge TT also mean the transfer of technology know how and expertise

Transferring technology is important to economic transformation because it turns the intellectual value of knowledge into commercial value Firms can then exploit his – commercial value and produce high value-added outputs (Ministry of Research Science and Technology of New Zealand, 2001)

TT is indicated as “the activity leading to the adoption of a new-to-the-user product or procedure by any user or group of users” by Harder and Benke (2005) New-to-the-user means any improvement over existing technologies or processes and not only a recent invention of research result

Ramanathan (2001) mentioned that all enterprises whether they are large or SMEs can compete effectively only on the basis of “customer value creation” His framework has implied how a firm acquires and deploys technology to create customer value The effectiveness of these activities would be determined by the firm core technological and supportive capability (Panda and Ramanathan, 1997, 1998; Ramanathan, 1998, 2001)

Fig 4: Customer Value Creation through Technological Capability

In this framework, these capabilities are generic and supportive to other capabilities:

 Capability to plan and manage TT (specify, identify, assess, negotiate, and finalize the purchase or sale of product, process, and peripheral technologies from global technology suppliers)

 Capability to continuously develop and refine human skills (human resources development – HRD)

4 Components of Technological Capability

Guan et al (2006) presented a technological progress trajectory for the catch-up countries from imitation to innovation that is comprised of acquisition, assimilation and improvement of technology Wang and Zhou (1999) considered the role of foreign enterprises and created a model of “transfer-digestion-absorption-innovation-dissemination” (TDAID) in China’s perspective for increasing involvement in international production and trade activities within a global market

Fig 5: Technological progress trajectory (Source: Guan et al 2006)

Fig 6: New mechanism for transferring technology to China – TDAID

(Source: Wang and Zhou, 1999)

Martin L Jackson and Andy Sloane (2007) in research “A model for analyzing the success of adopting new technologies focuses on electronic commerce”, the four key elements which are vital to any successful adoption are: process, management, human resource, and organizational culture A model were created, showing how these four elements are totally interactive with one another and in themselves construct organization, which in turn is part of supply chain as below figure:

Transfer Digestion Absorption Innovation Dissemination

Fig 7: Element divisions as part of the supply chain (Source: Martin L

Jackson and Andy Sloane 2007)

Fransman (1984) identified the following elements:

 Capability to search and select the most appropriate technology for importation

 Capability to master imported technology and successfully use it for the transformation of inputs into outputs

 Capability to adapt imported technology in order to suit local production conditions and further develop the adapted technology as a result of local incremental innovation

 Capability to institutionalize the search for more important innovations and breakthroughs

Technology capability is divided into five abilities, which are the ability of learning by searching and acquiring strategy by learning from employees, the ability

of learning from practicing, the ability of learning from performance feedback, the ability of learning from changes, and the ability of learning by training (Bell, 1984) Thailand Development Research Institute conducted a study on the technological capability of Thai industry (Kritayakirana et al., 1989) The industry was graded on four capabilities:

 Acquisitive capability: refers to the firm's ability to search, assess, negotiate and procure relevant technologies as well as to install and start

up production facilities

Supply

chain

Supply chain

Organizational culture

Processes

Human Resources

Management Organization

 Operational capability: includes the efficient operation of process and machinery, including its maintenance

 Adaptive capability: comprises knowledge acquisition, technology digestion, and minor product and process modifications

 Innovative capability: involves carrying out research and development activities and making radical or major product and process modifications

In 1990, the concept of TTC or Absorptive Capacity was first defined as a firm's

"ability to recognize the value of new information, assimilate it, and apply it to commercial ends" by Cohen and Levinthal

Recently, Whangthomkum (2006) studied empirically components of absorption capacity The figure below illustrates his conceptual model

Fig 8: Components of absorption capacity (Source: Whangthomkum, 2006)

 Ability to recognize value of new technology: Firms need to be able to identify and translate external knowledge inflows into tangible benefits,

as well as a means of achieving superior innovation and time-lagged financial performance (Kostopoulos et al., 2010) This ability is measured according to two components, “basic knowledge” and “specialized knowledge”

 Ability to acquire new technology: The acquisition process determines which technologies the firm needs, which vendors have the technology that it wants to obtain, and what resources should be prepared before buying the new technology (Lin et al.,2002) The most frequently used measures in the literature to determine the acquisition ability is: number

of 15 years having experience in in-house R&D and the amount of R&D investment

 Ability to assimilate the new technology: Assimilation of technology is the process through which firms bring new technology components into use Assimilation ability can be measured through various processes and outputs, such as functional interfacing, knowledge sharing, and communication; knowledge processing system, compensation practices and firm structure; and the number of cross-firm patent citations or citations made in a firms’ publications about research developed with other firms

 Ability to apply & adapt new technology: A successful knowledge transfer is effective only when the knowledge transferred is retained for use and to be retained for use, the knowledge acquired and communicated must be applied This ability can be measured through current knowledge learned from the foreign parent, international joint-venture strategies and training and development competence; the number of external research communities in which the firm participates; the number of patents, new product announcements or length of product development cycles New products and new applications using assimilated technology, finding alternative use for the assimilated technology, and fusing assimilated technology with other technologies

5 R&D Capabilities

 According to Brown and Svenson (1988), R&D includes several phases that contain several subjects for the measurement of performance They have created the model as Fig.9

Fig 9: R&D as a processing system

In this model:

 Inputs are for instance people, information, ideas, equipment, requests and funds needed for activities

 The processing system is normally the R&D lab

 The outputs of processing systems are e.g publications, new products or processes, knowledge and patents

 Finally, the outcomes, can be for instance cost reductions, sales, or

product improvements

 The study of Lee (1996) presents evaluation criteria and their operationalization in following R&D system phases: Input, Throughput, Output and Outcome A measurement scheme with 15 criteria has been validated empirically by respondents from 28 industrial firms

System phases Evaluation criteria

Input Enough R&D investments

Enough R&D facilities Degree of professionalization Skill level of R&D personnel Throughput Feasibility of R&D plans

Adequate education/training Validity of selected R&D topics

Collaboration between R&D and Production/Marketing Effort to strictly follow plans

Adequate information management Expansion and diversification of research areas Output Degree of goal achievement

Usefulness of developed technology Outcome Expected profit increment

Effects on general management improvement

In this research, Input, Processing (Brown and Svenson) or Input and Throughput (Lee) are used as the Resources factor impacting on TT and R&D effectiveness

6 Environmental factors

According to Liu and Jiang (2001), PRIs are the major sources of technological innovation and transfer in China Their missions are mainly to serve the ministerial departments and enterprises within their industry Due to the legacy of centrally planned economy structure, technology development and transfer activities in these institutes were managed by vertical administration from the government departments

According to Leong Chan and Tugrul U Daim (2011), at a macro level, literature findings show that there are many environmental factors promoting international TT, which include national policy, economy growth, and market trend For example, TT needs appropriate legislation on intellectual property protection It is also directly influenced by market need and investment International TT and acquisition should align with national goal in technology development Macro level regulations and incentives can have major impacts on the efficiency of TT process

Many researchers in China have done research on topic TT One of these topics states that government support, the constitution of the R&D performers, and the regional industry-specific IE are significant determinants of innovation efficiency (Li, 2009)

Leong Chan and Tugrul U Daim (2011) also state that domestic SMEs, which cannot afford to do so, should increase early-stage technology collaborations by sharing R&D resources, and consolidating upstream/downstream resources

Considering that every enterprise having their own organizational culture, the study of Shabbir Hussain (1998) on TT models across cultures: Brunei-Japan joint ventures can be applied In this study, desired cultural change necessary towards the success of TT, could be achieved through:

 A strong commitment by the CEO;

 The replacement of staff with those who are more receptive to technology;

 Appropriate training and education of the staff (including visits and on the-job training);

 Performance-based and quality-linked re-vamp of the structure of the organization

7 Effectiveness of Technology Improvement

 There are many methods to measure or evaluate the result of R&D In many studies, they’ve grouped these method based on the purposes of R&D performance measurements, suggested or reported measurement level, types

of R&D as measurement subject, perspective of measurement, and the phase

of R&D ( Ville Ojanen and Olli Vuola, 2003)

 The fact that R&D investments often compete with other investments in the company has changed the thinking R&D as the “black box”, isolated function before that They have to prove that R&D brings the productivity and profit to the company

 There are numbers of measures or evaluation method indicating R&D performances have been reported in the literature during the last decades The final set of measures and evaluation method will be utilized depends

on a number of factors and its specific type of organization

 Cooper and Kleinschmidt (1996) did a benchmarking study of 161 business units includes ten performance metrics, which capture how well the business unit’s total new product effort performs The metrics are listed below:

 Success rate: The proportion of development projects that became commercial success

 Percentage of sales by new products (introduced within the last three years)

 Profitability relative to spending

 Technical success rating

 Sales impact

 Profit impact

 Meeting sales objectives

 Meeting profit objectives

 Profitability versus competitors

 Overall success

 Tipping et al (1995) presented to 11 metrics out of 33 metrics in their

“technology value pyramid” as assessed by 165 industrial companies The model provides a top-down perspective that is output-oriented The top 11 metrics are listed below:

 Financial return to the business

 Strategic alignment with the business

 Projected value of R&D pipeline

 Sales or Gross profits from new products

 Accomplishment of project milestones

 Portfolio distribution of R&D projects

 Customer satisfaction surveys

 Market share

 Development of cycle time

 Product quality & reliability

 Gross profit margin

CHAPTER THREE - RESEARCH METHODOLOGY

1 Research process

Fig 10: Research process

In this phase of research, it will be divided to four steps:

Step 1: Review literature, theory, model to create the model and questionnaire

Step 2: conduct qualitative research by in-deep interview with expertise, to refine the model and questionnaire

Step 3: Pilot test and perfect the questionnaire for the survey

Step 4: Conduct survey and analyze data

- Check validity of question

- Test theoretical model and hypotheses

- Make suggestion for the full scale survey

- Initial Findings Initial finding

2 Research model

After a lot of discussion, the research group has developed the following model

Fig 11: Hypothesis Model

With the limitation of sample, the research model above is used to develop the

measurements and variables only

- Process and product performance

- Business performance

3 Measurement design

Measurement was based on literature review of previous researches and structure interview For Absorption Capability or TTC in this research, measurements were referred to following authors Cohen & Levinthal (1990), Lyles and Salk (1996), Lane and Lubatkin (1998), Welsch et al (2001), Lin et al (2002), Zahra and George (2002)

semi-For RDC in this research, measurements were referred to following authors: M Lee; B Son & H.Lee (1996), Wong et al (1999), Abu Bakar (2004), Escribano et al (2008) for RDC;

For IE factor, knowledge from authors Leong Chan and Tugrul U Daim (2011) are referred;

Cooper and Kleinschmidt (1996), Wong et al (1999), Kerssens-van Drongelen and Bilderbeek (1999) knowledge were referred to build TTE measurements

3.1 TTC factor measurements

Variable Measurement Description Author/source

A2RE01 Recognizing market need Company foresees or catch

up with the market need

Cohen &

Levinthal (1990) A2RE02 Basic knowledge Company has basic

knowledge of technology

Lane and Lubatkin, 1998 A2RE03 Advance knowledge Company has advance

knowledge of technology

Lane and Lubatkin, 1998

Table 3: Ability to Recognize

Variable Measurement Description Author/source

A2AC01 Technology need Define required Technology

to transfer

Lin et al., 2002

A2AC03 Technology evaluation Evaluate Technology Lin et al., 2002 A2AC04 Supplier evaluation Evaluate supplier Narrative

A2AC05 Technology transfer

management

Plan and manage Technology transfer project

Wang et al, 2001 A2AC06 Negotiation and contract Independently negotiate and

contract to supplier

Narrative

Table 4: Ability to Acquire

Variable Measurement Description Author/source

A2AS01 Installation Understand procedure to

install and operate of transferred technology

Zahra and George, 2002 A2AS02 Information sharing Share information among

project group

Welsch et al.,

2001 A2AS03 Planning ability Planning, assigning

specifically in project group

Zahra and George, 2002 A2AS04 Accepting and learning new

technology

Ready to learn spirit Lane and

Lubatkin, 1998 A2AS05 Learning ability Can fully understand from

instructor

Lane and Lubatkin, 1998 A2AS06 Finding out problem, unfit During technology testing,

can find unfit problem in equipment

Narrative

Table 5: Ability to Assimilate

Variable Measurement Description Author/source

A2AA01 Training ability Train operating employee Lyles and Salk

(1996) A2AA02 Operating ability Operate and achieve the

target objectives

Lyles and Salk (1996) A2AA03 Integration ability Integrate small part into

whole system

Lin et al., 2002 A2AA04 Ability to fix small problem Fix small problem Lyles and Salk

(1996) A2AA05 Maintenance ability Maintain new technology Lyles and Salk

(1996) A2AA06 Evaluating ability Evaluate efficiency of new

technology

Narrative

Table 6: Ability to Apply and Adapt

3.2 RDC factor measurement

Variable Measurement Description Author/source

A2IN01 Ability to apply transferred

technology

Generate new application by using transferred technology

Wong et al., 1999 A2IN02 Ability to generate new

product

Generate new product by using transferred technology

Wong et al., 1999 A2IN03 Ability to generate new

tech

Research to create new technology

Lin et al., 2002 A2IN04 Ability to create new

Variable Measurement Description Author/source

RDIN01 Training schedule R&D employees get

frequent training

Lee et al (1996) RDIN02 Satisfaction of R&D

equipment

R&D equipment satisfy company’s needs Lee et al (1996) RDIN03 Modernity of R&D

investment, information

Government policy encourage business to invest

in R&D, and gives good information

Narrative

Table 8: Facility Capabilities

Variable Measurement Description Author/source

RDCAP01 R&D employee's creativity R&D employee's creativity M Lee; B Son &

H.Lee, (1996) RDCAP02 R&D employee's problem

implementation skill

R&D employee's implementation skill

M Lee; B Son & H.Lee, (1996) RDCAP05 R&D employee's research

RDCAP08 R&D employee's planning

collaboration skill

R&D employee's collaboration skill

Lee (1996)

Table 9: Human resource capabilities

3.3 Innovation Environment factor measurement

Variable Measurement Description Author/source

InEn01 Company's QA system Company has good QA

system

Narrative InEn02 Company's goal &

strategy

Company has long term goal/ strategy

Narrative InEn03 Company's working

condition

Working environment encourage improvement idea

Kerssens-Van Drongelen and Cook (1997)

InEn04 Company's policy Company policy (finance

or non-finance) encourage technical improvement

Kerssens-Van Drongelen and Cook (1997)

InEn05 Company's empower

Kerssens-Van Drongelen and Cook (1997)

InEn08 Company's training

system

Training policy to R&D employee

Narrative InEn09 Company's culture Company’s culture make

employees enjoy the change

Kerssens-Van Drongelen and Cook (1997)

Table 10: Internal environment

Variable Measurement Description Author/source

ExEn01 Government Tax policy Government tax policy

encourage R&D

Leong Chan and Tugrul U Daim (2011) + narrative ExEn02 Government investment Government have fund to

help TT development

Leong Chan and Tugrul U Daim (2011) + narrative ExEn03 Information support

system/capability

Government organization support information consulting

Narrative

ExEn04 Human resource market Human resource supply Narrative

ExEn05 Safety, hygiene procedure Clear procedure, policy

about safety, hygiene

Narrative ExEn06 IP policy Intellectual Property is

protected by law

Leong Chan and Tugrul U Daim (2011)

Tugrul U Daim (2011)

Table 11: External environment

3.4 Effectiveness of Technology Improvement measurements

Variable Measurement Description Author/source

Per01 Outcome vs plan Create product as planned Wong et al (1999) Per02 Sustainable product New product has profit in long

term

Narrative Per03 Product's quality Product has high and stable

quality

Narrative Per04 Plant's efficiency Increase plant’s efficiency Narrative

Per05 Patent Generate research patent Kerssens-van

Drongelen and Bilderbeek (1999) Per06 Product's

4 Questionnaire design

4.1 Semi-structure interview design:

By combining the definition of TTC, RDC, IE and Performance with the knowledge from other research, research group created a semi-structure interview as Appendix A The semi-structure interview was conducted to:

- Confirm interviewee’s understanding on the definition from used term;

- Get interviewee’ agreement with the measurements used in the semi-structure interview;

- Which scale should be used for the survey questionnaire;

- Which items should be added for each factor

The semi-structure interview was conducted to 5 experts: Mr Thuy, Mr Lam,

Ms Hanh, Mr Hung, Mr Man, in which 3 from enterprises, and 2 from University/Institure

The result of the semi-structure interview as below:

- Some items were merged into one

- Some new items were added

- Term/Words were modified for easy to understanding

- Some items were rearranged into the better factor

- Scale: Unimportant -> Important for Investment reasons; Totally Disagree -> Totally Agree for other factors

4.2 Questionnaire design

The questionnaires are designed to match with objectives of the study and conceptual framework The questionnaires are designed based on 3 dimensions of independent variable and 1 dimension of dependent relating manufacturing performance Six-point Likert scale, ranged from 1 (very low/very unimportant) to 6 (very high/very important) is used, to avoid neutral answer The higher the rating scale the higher the result of statement

The questionnaire were created based on the liturature knowledge, and the feedback from the semi-structure interview The questionnaire went through the pilot

test of 4 experts (Mr Lam, Mr Thuy, Mr Linh, Mr Kha) to confirm the reliability After receiving the feedback of these experts, the questionnaire was refined again by research group The words were modified to be more friendly, and some redundant questions were removed to reduce the length of questionnaire

Based on the items of constructs, and to avoid the language barrier the initial Vietnamese draft of questionnaire was designed Then the questionnaires are translated into English for the report The translation is reviewed by Supervisor See Appendix B & Appendix C for Vietnamese and English versions of Questionnaire

5 Sample size and data collection method

5.1 Population & Sample size

The population: Businesses operating in food industry in Ho Chi Minh City and nearby province The database of these enterprises was created by a group of students It was referred to the existed data of research group (from professor Tuan), and research from Internet, Yellow page, Vietnam high quality products group, Food and Foodstuff Association (FFA) list … The database consists of the name of the enterprise, the address, phone number and especially some enterprises with contact details of people working in these enterprise

After removing very small enterprises and duplication, the list was finalized at

200 enterprises

Questionnaire survey, in introduction, may be answered by R&D or Technical officer, but due to the required data and information, most of questionnaires are answer by the manager level or with the assist of the department manager Based on the resource (human resource and time), the sample size of 60 was targeted