The global perspective model of technology transfer and innovation process in developing countries including Korea was developed by Lee et al.(1988) and has been proved by other consecutive researches. These researches are mostly concerned with the mechanism of technology internalization at a national or an industrial level. Understanding the dynamic process of a firm's technological internalization is essential since technological change is localized at the firm level. Particularly, Korean firms have expedited technological internalization by acquiring foreign technology. This paper focuses on the specific topics such as the effective mechanisms on the absorption of external technology and the implementation of proper learning strategy with the dynamics of decision making.
This paper conducted a preliminary case study of central research lab of a leading electronic company in Korea and as a result, divided the internalization stage to three detailed stages such as reverse engineering stage, peripheral technology internalization stage and core technology internalization stage. Furthermore, several meaningful implications were found for development of the main research frameworks. Then the author investigates 16 technology development projects of a leading electronic company in Korea based on a case analysis methodology. According to these results of observational analysis, this paper proposes two research models and several propositions. Firstly, the performance of technology internalization depends on characteristics of target technology such as technology complexity and technology availability, its selected internalization mode, and its learning strategy.
The typology of internalization is made according to the level of technology complexity and the availability of outsourcing technology, i.e., HCHA (High Complexity, High Availability), HCLA (High Complexity, Low Availability), LCHA(Low Complexity, High Availability), LCLA(Low Complexity, Low Availability). Also, mode of technology internalization matrix is classified into four cells - core technology buy mode with mid-entry strategy, full-scale in-house R&D, effective reverse engineering mode, and focused in-house R&D mode along two dimensions of the mode of technology internalization. After appropriate mode of technology internalization is selected, then effective learning strategy fits to its mode of technology internalization is crucial to performance of technology internalization. We investigated learning mass, learning diversity, and initiative of top management and project leader in 16 technology development projects each other. These three learning factors differentiate the effective learning strategy for each internalization mode. The learning strategy fit to mid-entry strategy mode is named as top initiated rapid learning. The learning strategy fit to full-scale in-house R&D mode is named as aggregate exploration learning. The learning strategy fit to effective reverse engineering mode is named as rapid apprentice learning. The learning strategy fit to focused in-house R&D mode is named as creative team learning.
Secondly, we introduce internalization path model by using premise of three detailed internalization stage classification. Mixing impact of technology characteristics, market and industrial competition structure and firm's capability determines firm's decision making and internalization process from the view of learning characteristics, we propose three types of path such as gradual internalization path (reverse engineering stage->peripheral stage->core stage), compressed internalization type (reverse engineering/peripheral stage->core stage) and leapfrog internalization type (jump to core stage). The learning characteristics for each path have been depicted and tabulated.
Based on these research findings, the author gives decision-making process like an expert system and some practical implications. The essence of technology internalization strategy as organizer of technology management is to design the path and the structure of learning to link "buy some" for speedy learning to "make lot" to leapfrog to generation stage. Another point is that the firm's technological capability influences the characteristics of target technology to be developed in the future - perceived level of technological complexity and technological availability.
