Technology strategy and the inward transfer of foreign technology in the UK machine tool industry

The International competitiveness of machine tool manufacturing companies in the UK is in long term relative decline. This is evident in diminishing UK shares of world production and exports, Increasing Import penetration and the higher technical sophistication of Imports over exports. Executives in the Industry tend to explain declining performance by referring to exogenous factors beyond their control, such as adverse currency movements, weak demand and conservatism among users in the domestic market. Rising imports are often explained away as the inevitable consequence of growing specialisation and internationalisation. These claims are not without foundation but they are at a high level of generalisation and do not shed light on the managerial problems of adapting to unprecedented levels of foreign competition and technological change. Most policy prescriptions for restoring competitiveness in the 1980's have highlighted awareness of the international dimension and the contribution of technology in overall strategy development. One strategic option finding increasing interest among executives in machine tool manufacturing companies and receiving substantial encouragement from the UK Government, is that of supplementing indigenous technological capability by increasing the "inward" transfer of foreign technology. This dissertation examines the sourcing of appropriate machine tool technology from overseas via foreign direct Investment, joint ventures and licensing arrangements. The approach is multidisciplinary and focusses on the strategic management of technology at the level of Individual business units, giving due consideration to existing patterns of foreign ownership and collaboration. Particular emphasis is placed on understanding how foreign technology emerges as a strategic option, the conditions under which it is assimilated and the relative merits of the three modes of Inward technology transfer. The research shows that providing a critical mass of Indigenous skills and capital expenditure can be maintained, the inward transfer of foreign technology offers considerable potential for achieving and sustaining a future level of technological capability comparable with that of International best practice. To facilitate effective exploitation of these opportunities, however, the priorities are threefold: firstly, executives must pay greater attention to competitor analysis and monitoring technological developments worldwide; secondly, many companies should use foreign technology to reposition themselves in existing segments and/or redirect their strategies towards growth segments; and finally, there is an urgent need for management/organisatlonal development in machine tool companies to create a balanced Internal environment which Is more receptive to the potential "total" benefits embodied in both Internally generated and foreign technolog