Successes and Failures of Sri Lanka Railways in International Technology Transfer

This paper analyzes successes and failures of two foreign funded international technology transfer (ITT) projects carried out for Sri Lanka Railways (SLR) using an integrated conceptual model which is a combination of the concepts of technology capability enhancement, polytrophic components of technology, Stage-Gate model and Seven factor model. The results show that the project implemented in 1959 was successful due to the selection of appropriate technology, suitable technology supplier and high level of commitment of the transferee. However the recent ITT project implemented in 1997 was a failure since the transferee was unable to enhance the technological capabilities to the required levels. Poor acquisition process, lack of knowledge & capabilities in modern technologies and low level of commitment of the transferee were the major contributory factors for the failure in ITT. Due consideration in selecting the technologies and getting all components transferred at appropriate levels was found to be vital for effective technology transfer, since the "State of the art technology of the transferor need not always be the most appropriate technology for the transferee". Present regulations and the guidelines enforced for the procurement of goods and services do not focus on the technological aspects to guide successful technology transfer. Therefore the public sector needs a more "comprehensive check list" to evaluate and select appropriate technology suppliers and a "Steering Committee" to effectively implement international technology transfer projects in addition to the usual Technical Evaluation Committees and the Tender Boards.


Introduction
Sri Lanka Railways (SLR) has been playing a major role in land transport in Sri Lanka since its inception in 1864. It has been operating profitably until about 1945 except for a brief period from 1935 to 1940. Since then SLR has been making operating losses and now the operating losses have exceeded 150%. Further, its market share has reduced due to competition from road transport. However, it has to continue its role in fulfilling the social, economic and political needs and expectations.
Rail transport systems mainly consist of Infrastructure, Motive Power and Rolling Stock and Operation & Commercial activities. Therefore, various technologies of all major engineering disciplines have been used to achieve the business objectives of SLR. Since such technologies connected with infrastructure, motive power and rolling stock have not been developed in Sri Lanka, International Technology Transfer (ITT) is a vital factor for SLR, in its survival and development.
Existing procedures for purchasing of equipment have not been able to guide the ITT projects in SLR, in order to meet the needs and expectations. Therefore, the absence of a formalized criteria and guidelines has caused the technology transfer to be incomplete and inappropriate in some recent ITT projects thus preventing the technological capability enhancement and making the investment unjustifiable.
For example, one of the factors which has contributed adversely on the performance of SLR, besides the road competition and disturbances, is "excessively varied and some times 'ill advised' equipment purchasing policies driven by foreign assistance where the technology choice has imposed an impossible maintenance burden and inventory requirement on the SLR" [I].
The problems of SLR have been accumulated in the past due to purchasing of plant and equipment based on the availability of credit lines rather than justifying them economically or operationally [1].
Also, SLR has not been able to provide a satisfactory passenger and freight service even after spending huge sums on infrastructure, motive power and rolling stock [2]. It is extremely important to give due consideration to ITT when making heavy investments since the influence of technological capability on the long term objectives is critical.
Therefore, identifying the drawbacks of the previous ITT projects and formation of guidelines will help in solving one of the biggest problems in the SLR.
With the above background a research project was implemented to review successes and failures of International Technology Transfer Projects carried out by the SLR, to identify the factors that affected the ITT of Signalling technology and to develop better guidelines for successful ITT in the future.
This paper provides the key findings of this investigation together with the broad guidelines developed. The same guidelines can be used for other public sector organizations as well.

Technological Capabilities and
Technology Transfer

Understanding Effective Technology Transfer
Technology Transfer is an important business strategy today because the technology provides the competitive advantage for a firm or a nation in producing goods and services.
Technology Transfer (TT) can be referred to as technology flows or diffusion of technology which implies movements of technology from one entity to another. Further, it states that if the receiver does not understand and use the technology effectively, the transfer is considered to be incomplete [3]. However, the introduction of technologies effectively into the organization and reaping the benefits is more complex [4].
The term 'international technology transfer' is used as the equivalent of the acquisition of the technological mastery from the foreign sources.
Although there are several ways to look at technology it may be defined as knowledge and methods, which are necessary for the implementation and improvement of the existing ways of production of goods and services. It follows that technological capabilities refer to the ability to comprehend, utilize, adapt, modify and develop technology. Thus technological mastery is achieved when technology recipients have built up technological capabilities [5], to use local labour force of the recipient country to effectively utilize, adapt and modify the transferred technology. In such situations the imported technology is fully absorbed by the local workforce [5].

Assessment of Technological Capabilities as a Measure of Successful TT
Technological capability enhancement can be considered as a measure of determining the success of an ITT project and, hence, it is important to consider what specific capabilities are required for a particular firm to succeed.
Even though a firm can purchase technology resources, technological capability has to be gradually acquired by self-learning, because it is not an item tradable in the market. It is also important to mention that 'self learning' which is an outcome of commitment, plays a vital role in enhancement of technological capabilities. Therefore the recipient's commitment is essential in successful TT [6].
The TT capabilities required for a productive enterprise can be considered as follows: It should be stated that every business does not require all these capabilities at the highest level. Even though the capabilities have been specified for the productive sector, they can be applied to the technologies related to the infrastructure and service sectors as well.
In order to have successful transfer of technology, the recipient firm should identify the technological capabilities that should be enhanced and their minimum levels, The capabilities described above are analyzed further and modified to suit the infrastructure sector.

Review of Technology Components as a Measure of Technology Transfer
Purchasing hardware alone is not sufficient to gain the types of capabilities described above, but different levels of capabilities need different technology components at different levels. Enhancement of technological capability levels of a recipient also depends on his needs and capabilities.
The knowledge required for modifying and refining the technology is much more than the knowledge required for operation and maintenance of the technology [7]. However, the different levels of the knowledge required will have to be decided by the receiver, according to his capabilities and expectations.
The definition of Tolytrophic components' of manufacturing technology identified as Technoware, Humanware, Orgaware and Inforware can facilitate better management of the technology transfer process [4].
Technologies in the service sector and infrastructure sector also have hardware (tehnoware) with controlling devices; operating and maintenance personnel; information related with operation, maintenance and modifications; and the organizational work.
Therefore polytrophic components can be applied with little modifications for the analysis of the components of the signalling technology too, as mentioned below.

Technology Transfer Process
Skillful management of the technology transfer process is important in order to harness the maximum benefits from the technology transfer because the technology does not transfer automatically once a transfer channel has been sought. Negotiating capability and knowledge of the receiving party can improve or worsen the terms and conditions of the transfer [5].
Stage-Gate model has been used successfully by Jagoda and Ramanathan [8] for TT projects.
The same model has been modified by Ramanathan [9] for the application of TT in the private sector; therefore the Stage-Gate model can be further modified to suit the TT process in the public sector. Table 1 shows the modified Stage -Gate model to suit the TT process in SLR.

Other Relevant Factors Influencing the International Technology Transfer
As discussed earlier, the process plays an important role in successful TT in order to ensure the acquisition and assimilation of all relevant technological components which lead to the enhancement of technological capabilities to the required level.
The seven factor model describes seven major factors affecting TT [10] irrespective of the type of project, whether manufacturing, infrastructure or service because these factors are common to any sector.
These seven elements are as follows:

Mechanism^'
The success of any TT depends on the selection and manipulation of the aforementioned factors. A Diagrammatic form of the Seven Factor model is shown in Figure 1.

Integrated Conceptual Model for Successful Technology Transfer
Based on the above discussion, successful TT can be conceptualized as shown in Figure 2.

Research Design and Implementation
Success of a Technology Transfer (TT) project depends on the level of technology capability enhancement of a firm after acquiring the technology. The transferred technology components and their levels are vital factors in gaining the expected technological capabilities. Even though the expected levels of the above requirements are at higher levels, the TT process and the influence of the relevant factors can affect the end results greatly.
Therefore it is necessary to have an integrated approach in analyzing the ITT projects. As such this study used a research design consisting of four steps as shown in Figure 3.

Data Collection and Analysis
Necessary data were collected on the following ITT projects carried out under foreign assistance.
• Introduction of Colour Light Signalling in suburban railways -1959 • Rehabilitation of Signalling on the Coastal line-1997 The following documents were used for data collection.
• Project proposals, relevant correspondence, evaluation reports and the contract agreement.
• Annual reports, Standing orders and fortnightly notices issued by the SLR.
• Minutes of the operational review meetings.
Further information was collected to supplement the above data by interviewing twenty three persons at various levels in the relevant sub departments in SLR and six persons retired from SLR. Out of the twenty nine personnel, seven were senior executives, eleven were middle level executives and the balance were operating level officers.
The following Tools and Models were used to analyze the data found in the above projects related to Signalling technology in the SLR.

Assessment of the technological capability enhancement
Technology Capability Assessment Score method given in [6] was used to assess the technological capability enhancement after the ITT.

Assessment of the transferred components of technology
Polytrophic components described by Ramanathan [4] were used along with a suitable marking scheme for meeting the requirements of the SLR.

Analysis of the processes followed by SLR for ITT
Stage-Gate Model given by Ramanathan [9], which is a modified version of Jagoda and Ramanathan model [8] was used, to analyze the process followed by the SLR.

Analysis of all relevant factors involved in ITT
Analysis was carried out using Seven Factor Model considering the entire scenario [10]. Table 2 shows the summarized results of the assessment of transferred technology components after implementation of the TT project.   Table 3 shows the results of the assessment of the capability enhancement after implementation of the TT project.

Conclusions
This research concludes that: 1. The first project carried out in 1959 was successful in international technology transfer since the technological capabilities were enhanced to a higher level.
The following major contributed for its success. The second project carried out in 1997 was a failure in international technology transfer since the technological capabilities were not enhanced to the expected level, because: (a) The decisions on technology were not objectively oriented; (b) A systematic and proper process in acquisition of international technology has not been followed; (c) Implementation has not been skillfully managed; (d) Due considerations for the technological capability of the local staff has not been given; (e) Negligence of local capabilities and the techno-economic aspects of technology transfer projects have resulted in inflow of inappropriate technology to SLR; and (f) Very low level of commitment of the transferee.
3. The major factors that affected international technology transfer of SLR are identified as:

Recommendations
Based on the findings of the research the following guidelines are recommended for consideration for successful ITT in the SLR.

Improvements to International Technology Transfer Process
Amend the Guidelines on Government Tender Procedure in order to ensure effective technology transfer in ITT projects by carrying out the following.

(a) Creation of a Steering committee
Create provisions for the appointment of a Steering Committee (SC), for implementation of technology transfer projects and the SC shall be responsible for: • Pre negotiation activities (See Exhibit 1) • Assist TEC in negotiations • Implementation of ITT project • Post TT impact assessment • Documentation of Lessons learned.

(b) Pre-qualification of Technology Suppliers
The process of pre-qualification of technology suppliers of all tenders related to technology transfers should be essential and a pre-condition.

(c) Use of Stage-Gate Model
Transferee to follow the Stage-Gate model shown in Table 1 in order to ensure the right process of ITT.

Improvements to Capabilities
In order to improve the technology transfer capabilities of SLR the following support systems and tools for decision making are recommended.
(a) Sample checklist of technology components given in Exhibit 2 could be used for this purpose.

Improvement in the Levels of Commitment
Exhibit the highest level of commitment by top management in any project involving technology with priority to methodology and modalities in place for successful and effective transfer of technology rather than confining themselves to adherence to procedures and government regulations.
Since the decision on purchasing of technology taken at a higher level on the recommendations of the transferee, the top management of the transferee should not simply take technology decisions just as a solution to an existing problem or for solving a long standing problem, because of the availability of a foreign funded technology proposal or credit facilities. All efforts should be taken to study the long-term effects of the proposed technology on the business and it is essential to consider the local capabilities.