Technological Adaptation

What Is Technology?
The Word technology comes from the Greek word TECHNOLOGIA meaning a
systematic treatment. The Oxford English Dictionary defines it as The study or use of
the mechanical arts and applied sciences. Websters defines as Totality of the
means employed to provide objects necessary for human sustenance and comfort.
Websters Encyclopedia Dictionary of English Language offers the most
elaborate &comprehensive definition of technology It is the branch of knowledge
that deals with the creation and use of technical means and interaction with life,
society and environment, drawing upon such subjects as industrial, arts, engineering,
applied science and pure science.
In the words of Frances Stewart The technology available to a particular
country is all those techniques it knows about (or may with not too much difficulty
obtain knowledge about) and could acquire, while the technology in use is that
subset of techniques it has required.
For a business firm engaged in production, both technology available and
technology in use are important. Technology encompasses knowledge of methods
employed both to carry on & to improve the prevalent system of production and
distribution of goods and services - & entrepreneurial expenses & professional knowhow. Technology is often identified with the knowledge about machines and process.
In a broader sense, it refers to the body of skill-sets, expertise and systems available
to make, use and do useful things. It is one of the essential factors considered by the
World Economic Forum to evaluate competitiveness of nation.
Technology and Development
It is one of the prime motive forces of development. Whether the need is for
more food, better education, improved health care, increased industrial output, or
more efficient transportation and communications, technology plays a decisive role.
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It consists of a system of knowledge, skills, experience & organization that is required

to produce, utilize & control goods & services.
Technology is critical to development because it is a resource and the creator
of new resources. In economic terms, increased use of improved technology can
lead to larger quantities of output for given quantities of capital and labor, better
products; new products; and a larger variety of products. All of these constitute
economic growth.
It is a powerful instrument of social control and affects decision making to
achieve social change. Technology is not neutral; it incorporates; reflects and
perpetuates value system and its transfer thus implies the transfer to structure.
The Contribution of Technology
Technology is one of the important determinants of a firm as well as the
economic and social development of a nation.
Technology is one of the most critical inputs for economic growth. Countries
that process superior technology enable their people to earn enhanced incomes
through high productivity and enjoy high standard of living. On the contrary, people
of poor countries with low technology produce less and earn low incomes and have
low standard of living.
Development is a complex socio-economic process which rests in large part
upon the extent to which internal innovative capability is kindled. One of the major
tasks that developing countries are facing to create, nurture and restructure their
internal capacity to invent and innovate. Indeed the long run, the society is to be
poised to generate its own technology by developing suitable infrastructure.
The answer to such a model of modernization is provided by Japan. The
technology locally developed reflects local conditions, objectives and needs. The
technology so developed is called Appropriate technology.

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Shapes Peoples Lives

Technology, one of the most dramatic forces shaping peoples lives through
the years, has released such wonders as penicillin, open heart surgery and birth
control pill, and such horrors as the hydrogen bomb, nerve gas and the submachine
gun. It has also released such mixed blessings as cell phones and video games.
Every new technology is a force for a creative distraction. Transistors hurt
the vacuum-tube industry, xerography hurt the carbon-paper business, autos hurt
the railroads and television hurt the news paper. Instead of moving into the new
technologies, many old industries fought or ignored them and their business
declined. Yet it is the creative destruction that enables the free-enterprise to be
dynamic and helps the society to move forward towards growth.
Fosters Innovation
Inventions & innovations in one field have a contagious effect on other fields
as well. Countries that have superior technology can produce superior and better
goods and spread beyond national boundaries into the field of international trade.
They try to out-sell their competitors by making available more sophisticated and
technically better goods.
Development of a business as an ongoing process depends on regular
introduction of new technology and its capacity to generate and absorb technical
change.
Innovations that constantly update technology in the western world were
both cost reducing and demand reducing. In fact, both fed upon each other. During
the initial period of the Industrial Revolution, Inventions and Innovations reduced the
cost of production and also brought a breed of new consumer goods to the market.
As more and more consumers sought to purchase the new variety of goods, prices of
which continued to decline with introduction of division of labor that led to
increasing economies of scale, the pressure of demand increased. This encouraged
entrepreneurs to come forward with more and new improved products.
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The rapid economic progress of the west reflects clearly the importance of
technology as a factor promoting business activity. Technology has led to greater
output and reduced working hours, generated a host of skilled jobs in design,
maintenance and engineering.
Progress in technology may be either labor augmenting or capital
augmenting. When technology is labor augmenting, it enables labor improve and
upgrade the quality or skills as for example the use of video conferencing and other
satellite teaching programs. Similarly, capital augmenting technological progress in
the productive use of existing capital goods for example the substitution of steel
from wooden plough in augmenting production.
Affects competitive advantage and Buying Power
Technological change is a major driver of competition. It brings about in
industry structural changes and creates new industries. Many of todays great firms
grew out of technological changes that they were able to exploit. Technological
change is the prominent among the catalyst that change the rules of competition.
As Michael Porter points out his well known book competitive advantage,
technology can alter the nature and basis of rivalry among existing competitors in
several ways. Technology affects competitive advantage if it has a significant role in
determining relative cost position and differentiation. It can also alter the bargaining
power of the suppliers and buyers. Technology, in several instances, is a n entry
barrier.
Acts as a Force Multiplier
Western countries have been using technology for a long time as a force
multiplier on human capital, where one technological growth has led to another
virtual cycle of progress. Technology has the key underpinning of the dramatic
increase in the productivity in western world.

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Displaces Labor
Technology is not an unmixed blessing. It has its own ill effect. The most
dreadful negative effect of technology is that it leads to displacement of labor,
causing unemployment. Man is reduced to a mechanical cog in the wheel of
production. By being subservient to mechanical process in production he loses his
identity and uniqueness of his personality.
Managing Technology for Development
Technology is a composite of techniques, comprising craft skills requiring the
dexterity of hand and eye, and conceptual skills such as operating data, design
engineering, construction, production and maintenance. It is believed that the
systematic application of technology led to the gradual sophistication of economic
activities that caused a great improvement in the standard of living in developed
countries. Technology, apart from being the engine of growth for the national
economy, is also the means for transforming the natural world into a man-made
world. The production system of a country, a by-product of the prevalent technology,
is the key factor in transforming natural resources into produced resources. E.g.:
sunlight is utilized to produce solar energy with the help of technology.
Integrating Technology with Business
Every business today uses technology to the maximum extent to make
worthwhile business decisions, reduce cost and increase productivity. In every
workplace function, we can observe that technological innovations have been
appropriately integrated. We can identify four areas in which firms use technology.
These are as follows:
Communication and information management
Communications and access to information are two of the most easily
observable areas. Electronic messages or e-mails are being effectively used by

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organizations with a view to improving internal communications and even to get in

touch with outside business associates.
Operations as in any production or manufacturing activity
Firms can keep better track of their inventory orders or product schedules
through technologically developed information systems. Also, defects or variations
taking place can easily be identified through automation techniques.
Product Design
Customization is increasingly taking place due to various technological
techniques. This makes it possible to produce products according to customers
needs. It has become possible to design small and more powerful products.
Research and Development
Technology has a large contribution to make in research and development.
Every business has a separate department for research, which is necessary to
develop innovative and creative techniques.
Of the above four areas, Information Technology has developed the business
most and has brought in innumerable benefits for organization in terms of savings in
cost, time and resources. IT can be defined as the technology that is being used for
generation, transmission, storage, organization or management of information. It has
been made possible to increase the speed of processing and transmission, improving
the accuracy and user friendly form of information along with reducing the size of
data to the minimum possible extent. IT has revolutionized many areas of business. It
has enabled speedier growth and has become the core activity of a number of large
industries. It has impacted the lives of almost entire human race.
Benefits of Technology in Business
Cost reduction: Technology enables business to reduce costs. Cost reduction is done
by replacing manual tasks with automation. E.g. when computer was introduced, it
replaced a whole lot of men and women who were typing and maintaining accounts
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and vouchers manually. Such replacements ensured enormous savings and cost
reduction.
Technology has not only helped in large scale production, but also continually
reduced the dimensions of products to make them small, powerful and cost
effective. E.g. the development of Integrated Chip with transistor technology has
followed the famous Moores law according to which the number of transistors in an
IC would double each year. Technology has continually reduced the dimensions of
the transistor to make a small chip more powerful than ever.
Improved product quality: Technology provides the business chances to enhance
quality through the elimination of human error, and making available more
consistent procedures for production. The reduction of errors by increased
automation offers the business opportunities of greater customer confidence and
reduced costs through lower error corrections.
Increased productivity: Technology enables business to make substantial increase in
productivity, which can be defined as the capacity of business to produce output
with a given level of resource. The use of technology makes the business more
efficient; machines can work for longer hours with no tea-breaks or no rest period.
More work output can be produced for the same cost or less than if the work was
performed by men and women.
Shorter turnaround period: Technology can help businesses to accelerate processes.
The more rapid transmission of information coupled with the mechanization of many
tasks means that decisions can be made faster and goods can be produced more
rapidly than previously. Technology facilitates the making of better and more
accurate decisions.
Informed decision making: In businesses, faster and accurate information
transmission has enabled managers to avail the information to make informed
decisions.

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Innovations: Innovative technology combined with worldwide information has been

the catalyst for productivity growth in various industries. E.g. the symbiotic
relationship between IT and banking has reduced costs, increased volumes and
facilitated customized products. This integration which holds the key to the future
success of the banking industry has helped them improve services to their clients,
optimal use of funds and establish management information system for decisionmaking, proper management of assets, liabilities, all of which assist them to improve
their profitability. Internet, wireless technology and worldwide processing of
information have created a transformational change in the banking industry. There
has been plentiful cost savings through electronic and self-delivery system.
Technology in developing countries
The choice of appropriate techniques is an important issue for any developing
country .In India and such other highly populated countries; the basic problem is of
making a choice between labor-intensive and capital-intensive techniques. The
technology used and the techniques of production adopted in developing countries
are backward. They often determine the boundaries of what is possible for business.
The technology used in the production processes is an important factor determining
the rate of economic growth. If the technology is not appropriate to the country then
it will retard rather than accelerate the process of economic development.
Technology acquisition and protection
The patent system plays a significant role in protecting the inventions of an
industrial utility in developing countries. The know-how agreement is the most
important means of acquiring technology for developing countries. Know-how is a
body of information that emerges from the testing of raw materials, operational
sequences, machines, products and market. Know-how is a phase between technical
assistance and patents.

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A trademark is a word or a phrase, logo, sound or package design that helps a

consumer distinguishes between one companys products from another. Trademarks
are some of monopolies over the use of symbols in business.
Technology transfer
In developing countries, the technology transfer provides access to advanced
techniques of production and a means of educating & training its people in use of
technological information as to how to put them on work. The entrepreneurs task is
to choose a technology that will minimize the risks in investment and markets.
The need for technology transfer
Transfer of know-how is a process aimed at creating suitable conditions in
developing countries for the production of goods for industrial and foreign demand.
The transfer of technology of technical know-how and production secrets does not by
itself solve the problem. Before a country takes off in technology, it has to go through
various stages of technical development. This could be categorized into 4 groups.
Borrowing technology
Technical adaptation
Technical maturity
Technical innovation
Multinational corporations are today the most important agencies for transfer
of technologies.
Forms of technology transfer
Exchange of information: Widely practiced on a bilateral and multilateral basis, it
takes different forms, distribution of papers and surveys.
Free use of technology based information: Technical documentations designs
materials etc. and non-patented elements of technology
Transfer of technology with assistance: The form of sending consultants to help the
local specialist to master the new technology and start production
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Technology obtained through agreement: Technology is often handed over on the

basis of agreements on scientific, technical and economic cooperation
Tendering of technical services: This includes different types of short term technical
assistance from foreign companies under contract.
Mixed or joint enterprise: Recent years have been a rapid growth in the number of
mixed or joint enterprises inn many developed countries
Construction of technical assistance in construction of industrial and other
prospects: Developing countries use the technical assistance to developed countries
in construction of industrial and other important projects.
Import of industrial goods: The purchase of industrial goods from abroad is
becoming a method of acquiring new technology.
Technology Adoption Process
The absorption of technology by society has a certain pattern that is generally
observed, it is called a Technology Adoption Lifecycle. Technology adoption
lifecycle model describes the adoption or acceptance of a new product or innovation
according to the demographic and psychological characteristics of defined adopter
groups. In this respect two factors are considered:
1. Adopter Categories
2. Adoption stages
Adopter Categories
Innovators: Innovators are the first individuals to adopt an innovation. These are
people who are willing to take risks, youngest in age, have the highest social class,
have great financial lucidity, very social and have closest contact to scientific sources
and interaction with other innovators. New ideas are created by innovators.
Early Adopters: This is the second fastest category of individuals who adopt an
innovation. These individuals have highest degree of opinion leadership. Early
adopters are typically younger in age, have a higher social status, have more financial
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lucidity, advance education, and are more socially forward. They identify the value of
new ideas and create expansive, imaginative visions of their impact.
Early Majority: These are the people who adopt an innovation after a varying degree
of time. They are more conservative than the early adopters but open to new ideas
and are active in community. Their time of adoption is significantly longer than the
innovators and early adopters. They have above average social status, contact with
early adopters, and show some opinion leadership.
Late Majority: The late majority encompasses people who adopt an innovation after
the average member of the society. They approach an innovation with a higher
degree of skepticism and after the majority of the society has adopted the
innovation. Late Majority are typically skeptical about an innovation, fairly
conservative and less socially active.
Laggards: They are very conservative, are those who are the last to adopt an
innovation. These individuals show little or no opinion leadership. These people
typically have an aversion to change-agents, tend to be focused on tradition, have
lowest social status, lowest financial fluidity, oldest of other adopters and are contact
with only family and closest friends.

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The adoption Process

The diffusion of an innovation is commonly explained as a process that occurs
through a five-step process which happens through a series of communication
channels over a period of time among the members of a similar social system.
Knowledge: This is the stage in which the individual is first exposed to an innovation
but lacks information about the innovation. During this stage of the process, the
individual has not been inspired to find the more information about the innovation.
Persuasion: This refers to the stage in which the individual becomes interested in the
innovation and actively seeks information about the innovation.
Decision: In this stage, the individual takes the concept of innovation and weights
the advantages/disadvantages of using the innovation and decides whether to adopt
or reject the innovation.
Implementation: This is the stage in which the individuals employ the innovation to a
varying degree depending on the situation. During this stage, the individual
determines the usefulness of the innovation and may search for further information
about it.
Confirmation: In this stage, the individual finalize their decision to continue using the
innovation and may use the innovation to its fullest potential.
Time Lags in Technology Absorption
Considerable time lags have been observed between countries in respect of
introduction or absorption of technologies. This time lag is not explainable in terms
of the developed versus developing countries difference alone.
In many developing countries, including India, the T.V. arrived very late.
Although the color T.V. had became very common in the advanced and even in some
developing countries when the telecast started in India, in the early period there was
only black and white telecast. The late introduction and the slow expansion of the

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telecast affected not only the T.V. business but also the advertising industry and
product promotion.
The time lags in the introduction of technologies may even result in some
products not being able to reap the market. The electronic typewriter became
popular in India before the electric typewriter could penetrate the market. The
electronic typewriter could not achieve the growth because of advent of computer.
Challenges of Technological Adaptation
1) Technology reduces the demand for labor: Technology increases casual
employment and underemployment. Casual employment is the practice of
hiring employees on an as-needed basis, either as a replacement for
permanent full-time employees who is out on short- and long-term absences
or to meet employer's additional staffing needs during peak business periods.
Underemployment refers

to

an employment situation

that

is

insufficient in some important way for the worker, relative to a

standard. Examples include holding a part-time job despite desiring full-time
work, and over qualification, where the employee has education, experience,
or skills beyond the requirements of the job.
Another outcome of technology is informal employment. Informal
employment is a significant part of many economies in the developing world.
Some of what accounts for informal employment is familiar even to the
most casual observers: street vending and shoeshine stations in the large
cities of the developing world, for example. Much informal employment,
however, is a less visible feature of an economys landscape, such as homebased garment assembly and industrial waste recycling.
2) Impact of Technology on Environment: Technology leads to speedy developments
and changes. But at the same time technology gobbles up resources very fast. It
means that the depletion of raw materials is also very fast. Let us now take the case
of forests. In olden days cutting of trees was done manually. These days machines
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are used for this purpose. Hundreds of trees can be brought down in a day. Unless
there is a balance between reforestation and felling of trees, there will be no forests
left on this earth, and it will spell doom on the environment. This will play havoc with
the lives of animals including human. Coal and petroleum reserves are the products
of millions of years of natural processing of dead trees and fossils. The manner and
the proportion in which these resources are being used up, we shall be left with
nothing of these in a couple of hundred years.
Whenever we adopt a new technology for our advantage, we have to look
both the sides of the coin, i.e., we also have to find out whether it can indirectly
create a condition or a situation in which man may find himself trapped. One of the
basic questions that we have to ask is: How fast are we converting resources into
non-resources and what will happen if all the resources (for example, coal and
petroleum) are exhausted?
Development of science and technology has no doubt improved living
conditions and saved man from many diseases and calamities. These days people
are not afraid of epidemics like plague, cholera and pox. Their causes have been
determined and control measures have need worked out. Infant, mortality has gone
down because of greater health care measures adopted before and after the birth of
a child. Many life-saving drugs are available. The science of nutrition has helped in
reducing the incidence of ailments. All these things have resulted in the decline of
unnatural and premature death rates, and have increased life expectancy.
Technological Development and Environmental Kuznets Curve
The Environmental Kuznets Curve (EKC) hypothesis states that there is an
inverted U-shaped relationship between environmental degradation and economic
growth. This is due to the fact that the EKC hypothesis implies that pollution
diminishes once a critical threshold level of income is reached. As a consequence,
economic growth is a precondition for environmental improvement. Thus, one of the
main questions we have to address using growth theory is whether the EKC occurs
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automatically in the course of economic growth or whether environmental policy

plays a crucial role in causing the downturn of the EKC. Various theoretical models
have been employed to explain EKC. Demand for better environment increases with
income. One of the reasons is a fact that people fear of incurring irreversible
damage.
Internalization can cause technological progress to move in an environmental
friendly direction. Thus, changing technologies have been crucial for the downturn of
UKC. However when appropriate technology is absent, technological progress may
well be pollution enhancing. Another explanation is related to structural changes of
the economy. Structural change can explain the rising branch of EKC on poor
countries but to cause the downturn, the absolute production level of industry must
shrink. This is also plausible when dirty industries migrate from developed to
developing countries. Thus dirty industries can grow fast in developing countries. It is
also been shown that cross country EKC shift upward with economic growth when
EKC is based on migration.

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