Mathematical and Computer Modelling Manuscript Draft Manuscript Number: MCM-D-09-00747 Title: Modeling the technology transfer process

in petroleum industry: evidence from Libya Article Type: Regular Article Keywords: technology transfer, petroleum industry, Libya, structural equation model Abstract: The purpose of this study was to propose a conceptual model for Technology Transfer (TT) that houses the several factors. These factors believed to influence the processes effectiveness and guided TT performance. In addition, to explore TT performance and the relationship between TT government support, infrastructure, TT environment, and TT learning capability. The Oil production in Libya is dependent on the foreign technology transferred into the country by foreign multinational petroleum companies. During the eighties, the Libyan government launched a program of development "Libyanazation" in the Libyan petroleum industry in effort to create an absorptive capacity to acquire petroleum technology dominated by foreign companies. This study evaluates the level of technical change because of technology transfer programs and the impact on knowledge and competitiveness performance of Libyan petroleum industry. A questionnaire survey was administered to companies in the Libyan petroleum industry. There were 201 responses from industry professionals in the Libyan petroleum industry that were analyzed using structural equation modeling (SEM) exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). In addition, the significant of direct and indirect interrelationships between model factors was determined through (SEM). A path model was estimated and specified to include three process enablers, namely government support, host characteristics, and learning technology capability, and one outcome factor named TT performance. The results suggested that government support factor (government support, laws and regulations, petroleum industry strategy, international quality standards, and information technology) and technology learning capability factor (i.e. supervision, adoption, teamwork, absorption, training, technology complexity, and industry knowledge) were determined to be the key predictor of TT performance to the host petroleum industry.

Figure

45

Percentage of respondents _

40 35 30 25 20 15 10 5 0 0-5 6-10 11-15 16-20 21+ Petroleum industry experience

Figure 2: Respondents petroleum experience

Figure

70

Percentage of respondents _

60 50 40 30 20 10 0 1-2 3-4 5-6 7-8 9+ Past participation in TT processes

Figure 3: Respondents previous involvement in TT processes

Figure

Percentage of respondents _
40 35 30 25 20 15 10 5 0

M Pr oj ec Su pe rin te Pr oj ec nt te ng in e er nd e tm an ag er an a ge r

Su pe rv is o r En gi Te ne e ch ni c Ot h

Respondents positions

Figure 4: Positions of respondents.

r al er s

Figure

5 4.5 4
TT success rate

3.93

3.78

3.92

3.87

3.84

3.5 3 2.5 2 1.5 1 UK Germany Italy

Nationality

Austria

Others

Figure 5: Nationality success rate

Figure

Technical process 80 70 60 50 40 30 20 10 0

Training

Advanced technology

Petroleum project

Study abroad

1990-1994

1995-1999

2000-2004

2005-2009

Figure 6: TT process description and year completed

Figure

UK 70

Italy

Germany

Austria

Others

TT total processes _

60 50 40 30 20 10 0 1990-1994 1995-1999 2000-2004 2005-2009 Year completeted

Figure 7: TT processes count and nationality

Figure

1
e1

NOC strategy

1
e2

Standards and quality

1
e3

1
Laws and regulations

GS

1
e4

Government TT plan

1
e5

Information technology

1
e6

Communications

1
e7

Research and development

HC

1
e8

Sub-contractors

1
e9

Supervision

1
e10

Attitude

1
e11

Teamwork

1
e12

Capability

TLC

1
e13

Training

1
e14

Technology complexity

1
e15

Knowledge base

1
e16

Overall performance

1
e17

Industry konwledge

1
e18

Skill base

TTP
1

1
e19

Schedule performance

1
e20

Competitiveness

1
e21

Financial performance

Figure 8: Confirmatory factor analysis (CFA) design

Figure

Government Support

0.42 (0.43) ***

TT Performance

Host Characteristics

Figure 9: Path model for TT in petroleum industry*

Note: Value in parentheses are unstandardized path coefficients, values not in parentheses are standardized path coefficients, ***p < 0.001.

0.68 (0.72) *** 0.45 (0.44) ***

Technology Learning Capability

0.36 (0.34) ***

Figure

Government Support

0.46 (0.46) ***

TT Performance

Host Characteristics

Figure 10: Respecified path model for TT in petroleum industry.

Note: Value in parentheses are unstandardized path coefficients, values not in parentheses are standardized path coefficients, ***p < 0.001

0.68 (0.72) *** 0.45 (0.44) ***

Technology Learning Capability

0.40 (0.39) ***

Figure

Technology Transfer Infrastructure

Technology Transfer Support

Petroleum Industry Learning Capability

Technology Transfer Performance

Technology Transfer Environment

Figure 1: Conceptual model for Technology Transfer in Libyan petroleum industry

Manuscript Click here to view linked References

Modeling the technology transfer process in petroleum industry: evidence from Libya
1 4

A.S. Mohamed, 2S.M. Sapuan, 3M.M.H. Megat Ahmad, A.M.S. Hamouda and 2B.T. Hang Tuah Bin Baharudin

1 2

Institute of Advanced Technology, University Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia Faculty of Engineering, University Putra Malaysia, 43400 UPM Serdang, Selangor, Malaysia 3 Faculty of Engineering, University Pertahanan Nasional Malaysia, 57000 UPNM, Kem Sungai Besi, Kuala Lumpur, Malaysia 4 Mechanical and Industry Systems Engineering Qatar University, P.O.Box 2713, Doha, Qatar.

Abstract The purpose of this study was to propose a conceptual model for Technology Transfer (TT) that houses the several factors. These factors believed to influence the processes effectiveness and guided TT performance. In addition, to explore TT performance and the relationship between TT government support, infrastructure, TT environment, and TT learning capability. The Oil production in Libya is dependent on the foreign technology transferred into the country by foreign multinational petroleum companies. During the eighties, the Libyan government launched a program of development Libyanazation in the Libyan petroleum industry in effort to create an absorptive capacity to acquire petroleum technology dominated by foreign companies. This study evaluates the level of technical change because of technology transfer programs and the impact on knowledge and competitiveness performance of Libyan petroleum industry. A questionnaire survey was administered to companies in the Libyan petroleum industry. There were 201 responses from industry professionals in the Libyan petroleum industry that were analyzed using structural equation modeling (SEM) exploratory factor analysis (EFA) and confirmatory factor analysis (CFA). In addition, the significant of direct and indirect interrelationships between model factors was determined through (SEM). A path model was estimated and specified to include three process enablers, namely government support, host characteristics, and learning technology capability, and one outcome factor named TT performance. The results suggested that government support factor (government support, laws and regulations, petroleum industry strategy, international quality standards, and information technology) and technology learning capability factor (i.e. supervision, adoption, teamwork, absorption, training, technology complexity, and industry knowledge) were determined to be the key predictor of TT performance to the host petroleum industry. Keywords: technology transfer, petroleum industry, Libya, structural equation model 1. Introduction In the developing countries, technology transfer is the solution to the improvement of industrial and economic sectors. However, the success of any transfer depends on the proper choice of the proper technology from the right provider as well as the absorptive capacity of the technology. Evaluating technology transfer effect in the petroleum industry is crucial to any petroleum company. More than ever as the price of petroleum products and the cost of oil production were increased dramatically in recent years.

Although, most petroleum-producing countries were committed to develop its petroleum industries so become competitive, compatible, and reliable. This often involves setting up technology transfer infrastructure considered necessary for the petroleum industry. Nevertheless, most of these countries lack the managerial and technical expertise to manage such large projects. On the other hand, the petroleum industry was slow to accept and adopt new technologies. When oil was discovered in Libya 1959, and oil exports began in 1961, the country then had very little human resources to manage and operate a sizable modern petroleum industry. The foreign oil companies not to mention a very weak government then played major role in establishing the conditions for the establishment of linkage and minor change capabilities, especially in developing human resources for the petroleum industry. Technology Transfer (TT) continues to be a key energizer to industrialization and economic expansion in developing countries, mostly in the fast growing oil producing countries such as Libya, Algeria, Nigeria, etc. 2. Literature Review In the study of TT, numerous models had been developed to analyze or the TT process [1-4]. None of these studies concentrated on the petroleum industry. Nevertheless, measuring the impact of transferred technology changes researchers and evaluators. In addition, not all TT studies models were backed by strong observed data analysis. In many models, finding out the meaning of TT effectiveness was intimidating. The researchers had tried to define the TT term in a different ways because of their individual areas of study. Chacko [5] came up with a definition of TT in a scientific manner as converting physical or mental matter or energy into direct usable alternate form. Williams and Gibson [6] defined TT as the shared responsibility between the source and the destination by ensuring the technology was accepted, or at least understood, by a user who owns the required knowledge and the resources to apply the technology. In the construction sector, Simkoko [7] tried to model on this definition by identifying individual construction resources, as either materials or permanent equipment (e.g. steel beam, elevators, material) or construction-applied resources (e.g. information, skill). According to Waroonkun and Stewart [8] TT has been defined as when all types of knowledge about the construction field (e.g. design, construction process, material use, equipment utilization, etc.) are transferred from a foreign party (transferor) to a host party (transferee) that arranges to receive it. For the purpose of this study, TT process in petroleum industry has been defined as when some form of knowledge, material, or equipments are transferred from one foreign party such as person or organization to another local party as a person or organization that arrange to receive it. Explicitly, the host industry refers only to Libya petroleum companies fully owned by National oil association (NOC) or joint ventures and the foreign refers to the foreign company or organization working with Libyan petroleum companies to acquire projects or perform TT process. As expected, most foreign companies had origins in developed nations such as the United States, United Kingdom, Italy, Germany, France, Australia, etc. In this study, we developed and empirically tested a model that related to several antecedents factors to transfer of foreign developed technology by petroleum companies in Libya. The model, shown in Fig.1, was based on extensive literature in TT processes and literature on technology transfer. The TT model was specifically designed to be applied to the study of technology transfer from developed countries to the Libyan petroleum industry. The TT process was not been tried before, and we seek evidence

supporting the relationship identified in our model via exploratory and confirmatory factor analysis. We believe in the importance and the uniqueness of the Libyan petroleum industry TT processes. The exploratory test of our model was conducted considering the factors adopted from previous studies. Libya is arguably one of the most prominent petroleum producing countries in the world today. Libya's petroleum industry is currently undergoing rapid expansion, and technology transfer for petroleum industry development is likely to be an important engine for economic developments in Libya. We used a convince sample of respondent representing over 30 petroleum companies across several petroleum industries in Libya: oil production, oil exploration, petroleum technology, oil refining, and petroleum marketing. The specific behavior being modeled was the transfer of foreign developed technology by Libyan petroleum employees in the industry. Calantone et al., [9] model consisted mainly of five components that capture TT process, which was constructed based on Boddewyns [10] study on comparative marketing research. Measuring TT process feedback was the main objective of the model. However, the model failed to include TT process performance indicators. Furthermore, the complex design model was not been empirically verified. Elements of the model would be suitable to be adapted to the petroleum industry TT model. Simkoko [7] focused on TT in the construction industry of developing countries. Based on case studies of 12 international construction projects in developing countries of Africa, South America, and Asia in 1987 and 1988, the study was performed. Data collection was conducted into two schedules. One involved examination of project files and two involved site visits and further interviews project participants. The objective of this study was to examine the impact of TT programs and other internal and external environment factors on construction project performance. This study is now old considering the development of more advanced TT mechanisms. This study was only investigates the development of technological and management, rather than attempting to model the TT process. Kumar et al., [11] identified key elements that affect the ability of firms in developing countries. The paper studied the Indonesian manufacturing sector and it developments in recent decades, which has become the largest segment of the economy and is growing by nearly 10% annually. Kumar et al., [11] study was concentrating on small scale manufacturing industry which considered a major hinder as petroleum industry in most cases involves large scale technological changes. Nevertheless, some of the learning capability model is suitable to be incorporated in the petroleum industry proposed TT model; these factors namely are government role and sub factors in the learning capability that include training and R&D. Lin and Berg [2] carried out an exploratory study into the effects of cultural difference on TT projects. The aim of this study was to provide empirical evidence that confirms the conceptual models developed by other researchers in the field of TT. The Lin and Berg study focused on TT projects involving Taiwanese manufacturing companies. Three groups of factors, previously examined in conceptual studies were investigated: nature of technology; previous international experience, and the cultural difference between the technology provider and receiver. An important conclusion made in their study was that TT study investigations should not be limited to only examining the direct effects of identified factors and associated variables. It was also important to examine causal interactions between factors to achieve an accurate representation of the TT process. Many of the factors and associated variables identified in this investigation were utilized to develop the conceptual model for TT in petroleum industry described later. However,

important influences such as government policy, mode of transfer, to name a few, have been neglected. The study does not adequately address all aspects of cultural difference leaving the framework somewhat incomplete. Another model was developed by Malik [3] concentrated on intra-firm TT. Because the model was tested only on one manufacturing company, the supporting empirical evidence might be having some biased testing. It should be noted that Maliks model was useful in developing the conceptual model for TT in petroleum industry projects in terms of identifying the interactive nature of the communication process. The study of Wang et al., [12] followed from extensive previous research in the field of TT. His paper is primarily concerned with the transfer of knowledge from a multinational company to a subsidiary. The Wang et al., [12] model was developed from semistructured interviews with 62 multinational companies operating in China. However, the model was also limited by the scope of the TT process that was examined. Scope was confined to the amount of knowledge that a subsidiary of a multinational company acquires because of the transferor and transferee characteristics. The model was not successful to examine other influential factors such as government influence; technology characteristics, etc. economic advancement, and competitiveness were factors to be adopted in the model for TT for the petroleum industry. Waroonkun and Stewart [8] model attempted to estimate performance rates of TT in developing countries, the study proposed a conceptual model for TT that accommodates the several factors thought to impact on the processes effectiveness and derived outcomes. In their study, the transferee refers only to Thai Architectural, Engineering, and Construction (AEC) firms and the transferor refers to the foreign AEC firms working with Thai firms to secure projects. The model depended on the maturity level of technology of the host nation. Justifiably, the model was designed for construction industry and may not be accurate to other industries. However, some variables of their model were adopted in this study. 3. Conceptual model of technology transfer in petroleum industry The development of conceptual model for TT in the petroleum industry has been pointed toward the capture all of the significant factors that influence the effectiveness of the TT process and the resulting performance. These relevant factors have been adapted from the examined leading studies into the TT phenomenon with the objective to develop a model, which explains the TT process in petroleum industry. Through a process of categorizing variables taken from the previous studies and conceptualizing their relationship with one another in the petroleum industry context a number of factors were identified. The factors identified were classified as enabling and TT outcome factors. The classification of variables into their relevant factors; namely, TT support, TT infrastructure, TT environment, TT learning capability, and TT performance has not been solely based on other studies but rather is a conceptualization based on understanding of TT and the petroleum industry. The structure and links between the model constructs have also been conceptualized based on some empirical understanding and therefore require testing to confirm their appropriateness and validity. Figure 1 illustrates the conceptual model on how the developed enabling factors interact to create value for the host petroleum industry. The four main TT enabling factors are shown at the left and middle of the model as the constructs TT support, TT infrastructure, TT environment, and TT learning capability. The outcome factor, TT performance, has been presented at the right of the

model. The arrows represent the hypothesized causal paths between each enabling and the outcome factor. Each of these causal paths described in the following paragraphs. INSERT > [Figure 1: Conceptual model for Technology Transfer in Libyan oil industry] The variables contained in the TT support factor were found to have direct impact on those variables contained within the TT Infrastructure factor. Therefore, the link from TT Support to TT Infrastructure was constructed in Fig.1. Similarly, the literature provided some evidence that the following causal relationships also existed: TT support TT environment; TT Support, petroleum industry learning capability; TT Infrastructure TT environment; TT infrastructure TT performance; TT infrastructure TT petroleum industry learning capability; TT environment petroleum industry learning capability; TT Environment TT performance; and petroleum industry learning capability TT Performance. Although these links were said to have been described in past literature, this does not mean that every variable contained in each factor impacts on every variable in another, rather that the factor when considered as a whole has impact on another. The three links from TT Support to TT infrastructure, TT environment, and petroleum industry learning capability were insufficiently supported in the literature and therefore their validity was closely examined. Many enablers have been identified as having potential to impact on the effectiveness of the TT process and have been divided into four main categories in this study: transfer support, transfer infrastructure, transfer environment, and petroleum industry learning capability. The following sections describe the persuasion for including each variable in the aforementioned enabling and outcome factors. 3.1 TT Support This factor was predominately concerned with the impact of government related influence on the TT process[13]. According to Kwon and Zmud [14] , The availability of financial resources for the petroleum manufacturing industry technology must be considered during the TT process. The financial sub factor has been recognized in several studies as an influential factor that impacts on the effectiveness of TT process [15]. The organizations strategy towards the technology to be transferred affects the efficiency and interaction pattern between the holding and its sub companies during TT process [2]. The business strategy is concerned with the overall purpose and long term direction of the parent organization and its financial viability [16]. A TT process supported by government can decrease the technological gap between local and foreign companies by establishing innovation system and policies that encourage technology research and developments (R&D) [17]. There is also a direct link between the level of government support to the industry R&D and training to apply TT process. The government must plan ahead of time in global petroleum industry to make the industry competitive and investor friendly in the world [18]. Government support of petroleum industry technology has been identified as an important consideration in the success of a TT process as it has impact on several other influential factors. The study adopted four variables for this factor (laws and regulations, government TT plan, NOC strategy, and NOC reward system) from previous studies, which had been incorporated into the conceptual model. 3.2 TT Infrastructure

The information technology (IT) and its impact on the TT process is unquestioned a major concern when managing TT process[19]. The innovative use of a variety of IT tools maybe provide benefits to facilitate TT process [20]. According to Nazmun et al., [21] IT can increase capacity as well as decrease expenditure of information handling which will in turn enhances the success of TT process. Local industry should have an interaction with local R&D centers and universities[22, 23]. However, The TT may not be materialized if technology gap between foreign company and local is too large, its generally believed that local participation with foreign firms reveals the proprietary knowledge in that way facilitate TT to domestic industry [24]. Notwithstanding, training is important component of TT process. TT through training could be in the form of practical training where local employees are exposed to working methods and required to work at highly developed industry environment to adopt new skills and techniques [25]. Growing attention has been turned to the possible role of TT agreements as part of the architecture of TT process [26]. The foreign company shall take all viable steps to promote, facilitate, and finance as appropriate the transfer or access of sound technologies and know-how to local industry [27]. Management as an important sub factor can take actions to develop an infrastructure that is supportive of TT process. Management approach would significantly contribute to low or high TT process performance[28]. The six variables of this factor (IT, R&D, Sub-contractor, training, standards and quality, and management practice) had been incorporated in the conceptual model from the previous studies. 3.3 TT Environment A major concerns of managing TT is the environment in which the interaction between the foreign technology provider and the host industry and its effect on the success of TT process performance [2, 29]. Williams and Gibson [6] suggested that TT should be conceptualized as communication process where gaps between foreign and local environment will affect efficiency of inter firm communication and the overall effectiveness of TT process. Wei [30] reported that prior international technology experience on international operations is helpful for the host to gather relevant information during TT process . On the contrary, Lin [2] suggested that previous foreign experience of the host can increase its capability to preserve core technology from the foreign and eventually resulting in the host becoming a serious competitor of the foreign company. Actually, among all the resources of a firm, knowledge is the most strategically important resource [31]. Knowledge provides the capacity for organizational action and new knowledge provides the capacity for organizational renewal [32]. Nonaka [33] for instance argues that tacit knowledge accounts for three quarters of all knowledge used by firms. A complex system or technology may need a longer time, more technical people, and higher capital investment to be transferred. Madeuf [34] therefore suggests that nature of technology will affect TT effectiveness and need to be carefully investigated in managing a TT process. Most technologies are very difficult to transfer because they include a large portion of tacit knowledge. According to Nanoka [16] tacit knowledge is not easily visible; not easily expressible; highly personal; hard to formalize; and difficult to communicate. Several dimensions are proposed to characterize the nature of a technology to describe its transferability [35]. Robinson [36] proposes that the skill and education level required to adopt a technology by the technology receiving team is an

indicator of the complexity of a technology. Therefore, a TT process to transfer a complex technology is likely to have a lower success rate. Achieving success in TT process will require the information to be conveyed clearly and effectively in a total error free communication setting. Successful TT process requires many factors in particular a high level of commitment to shared goals. Saunders [37] provided a model that is characterized by frequent communication both formally and informally, open sharing of information. Carolynn et al., [38] indicated that effective communications was given a very high rating by all categories and by both organizations involved in the process. Zeller [39] describes the introduction of cross functional teams as part of the reorganizing of R&D activities within pharmaceutical companies in response the increasing globalization of R&D. More recently, Michie and Sheehan [40] considered firms with high levels of participation in teamwork as part of their examination of the impact of alternative systems TT process. The five factor variables (experience, knowledge base, technology complexity, communications, and teamwork) had been adopted from several studies to be used for the conceptual model. 3.4 TT Learning Capability The learning capability is concerned with the affects of the sub-factors that facilitate the technology that being transferred between host and local companies. The issue of culture in TT process has been studied by Kedia [41] and concluded that if foreign and host companies did not emphasis the issue of culture, the result maybe unproductive TT process. The importance of recognizing the apparent and hidden components of the host country culture involved in TT process depends on several factors such as attitude towards foreigners and the company reputation [42]. The cultural traits of the two parties can have a significant impact on the effectiveness and hence the success of TT process [43]. A TT process where cultural gap between host and foreign is high is expected to result in unsuccessful TT process [2]. Adoption of new technology requires some modification to fit with changes in the working environment by controlling the working environment variables or making an adjustment to synchronize between host and foreign company policies [44]. The importance of adoption is crucial because maybe the inputs from host is not the same as for those the equipments was designed. The ability of any company to absorb the advanced technology depends on the organizational and technical capabilities of the company [45, 46]. Structural systems should adopt the measure of quality, performance and promote learning within the company [47]. The company's current absorption capacity will be determined to what extent their ability to participate in the transfer of technology [30, 48, 49]. Recent research by Escribano et al., [50] suggested that the capacity for absorption is in fact a source of competitiveness. In TT process, exposure occurs when employees become informed and educated about the technical and manufacturing systems and their applications that was not diffused or applied in their industry environment previously. In their research, Arbose [51] argues that many of the users who have an earlier exposure to technology have a greater capacity to accept TT process. Recently, Liu [52] suggested that employees of technological knowledge had not been exposed to external expertise will need to expose to foreign knowledge. Respectively, the company, which had been exposed to foreign expertise, will develop methods for local R&D, meanwhile the company, which has not been exposed, has to depend and more foreign expertise. More recently, Feldman and Bercovitz [53] in their study on in university technology transfer using data on individual

researchers from the medical schools of Duke University and Johns Hopkins University. They found that a high percentage of supporters of TT process and new organizational strategic initiatives were the more recently trained the staff members, the more likely encountered an environment supportive of commercialization activity. There is little information on the role and impact of the supervisory in the TT process. However, Miles [54] suggested that one of the reasons for the failure of TT process is incautious choice of the supervisors for the TT process, without considering the required knowledge for TT process. Susan E. Cromwell [55] suggested that supervisors who did not have the proper setup and their management support and has participated previously in TT processes would excel in future TT process. In contradiction, supervisors who reported less participation and did not have time and enough support in previous TT processes would be considered a real barriers to TT process. Five variables of this construct (culture, attitude, capability, exposure, and supervision) were combined based on several studies and applied in the conceptual model. 3.5 TT Performance Performance of TT process could be examined from numerous attributes in the literature. From the viewpoint of efficiency, Teece [56] tried to measure the effectiveness of TT process through the calculation of the cost of TT. Viewing From the perspective of TT process within the organization, Schwarz [57] defined by the effectiveness of TT as an adequate R&D in the local organization. Similar foundations evident in the work by Alam [58]. Zakaria [59] discussed the transfer of technology to the petroleum industry on the bearing capacity of the country to purchase or lease of the best technological equipment. Manson [60] determined that the effective transfer of technology must be measured if it facilitates to develop the methods and the acquisition of new skills. Mytelka [49] suggested that the incorporation of technology is the best and only way to possibly modify, improve and extend it later. One of the leading motivations for developing countries to adopt and apply TT programs is the expectation that TT would enhance the standard of living [61, 62]. Economic development sub-factor is concerned with the extent of competitiveness between the Libyan petroleum industry companies in local markets and global markets. In addition to the economic benefits expected to be obtained by the transfer of technology, the local petroleum industry could also benefit from cognitive development at the level of individual users, as well as at the enterprise level [63, 64]. Preliminary results of TT process are the transfer to the individual employee the tacit knowledge to explicit knowledge [65]. Knowledge gain sub-factor is concerned with the improvement cause by TT process in the knowledge of local industry employees, improvements caused by the TT process and its impact on the methods and technical skills of the employees. The TT process has a number of results at each stage and between stages and at the final stage, which sometimes delayed because of the length of the development process [66]. According to Devapriya and Ganesan [67] the key motivations of the TT process in any industry are: highly effective financial performance, efficient schedule performance, and significant quality operating performance. Enhanced commendable performance must be the key outcome of the TT process. The project performance factor main objective is to measure the impact of TT effectiveness on the industry [68]. In particular, from an evaluation perspective of performance it would be in terms of progress of financial, schedule, and quality assessment. The output of TT

process is measured in comparison with the objectives identified in advance with most emphasis on time, cost and quality [7]. The variables (competitiveness, performance, working practice, skill base, financial performance, and schedule performance) of the TT performance construct were adopted from previous studies. 4. Research methods 4.1 Data Collection Data collection for this study was undertaken with Libyan petroleum professionals in the fourth quarter of 2008. The target group of respondents technicals, engineers, supervisors, managers of departments of the Libyan petroleum industry and have relationship to TT process in their companies. This study only solicited the perceptions of local petroleum professionals (Libyans) since TT initiatives are ultimately undertaken for the purpose of improving knowledge levels and enhancing the industry capacity of local participants. Accordingly, individuals from host nation were considered the best respondents to evaluate the importance and effectiveness of variables pertaining to the TT process and the outcomes it can potentially generate. As expected, it was difficult to determine the adequate number of sample participants for this study. However, this process made use of available statistics on the NOC and statistics of the Libyan petroleum companies available [69]. Furthermore, counseling with professional academics in the relevant statistical research. The total petroleum employees in Libya, according to NOC statistics are 45000 employees. The approximate number of employees in TT related past and present petroleum processes were about 5000 employees. In the total number of 300 were distributed a questionnaire were received 205 completed survey questionnaire responses, a rate of 68%. Statistical methods used to analyze the data shown below. The statistical package (SPSS ver. 11) was utilized to this research due to its accuracy and effectiveness, which is suitable for quantitative analysis. The survey questionnaire survey for the study compiled mainly of three parts and included 63 questions in total, 26 questions were used for analysis, 26 were utilized for descriptive analysis, and 11 questions for background of the respondents. To confirm that data was obtained from reliable source; the background section contained questions about the participant years of work experience, position held, and education degree, and sex, number of TT projects involved with. The definition of each part and factor of the questionnaire survey was offered. In addition, a translated copy of the questionnaire into Arabic language has been prepared in order for participants to understand the questionnaire correctly. The questionnaire survey was prepared based on two key indicators. First, by picking out the answer, the participant would provide his opinion on the effectiveness and success of a factor in the TT process. Subsequently, the participants would rate the impact of this factor on TT process. The choices of the questionnaire answer was designed on a five-point Likert scale ranges from "strongly agree" to "strongly disagree" at the first part, while impact assessment of the answer rages from strongly positive" to strongly negative. Moreover, they enabled causal links between variables to be established. In summary, the data set obtained was utilized to ensure that variables were perceived to be sufficiently important to be considered as essential TT enabler and outcome variables, examined the successfulness effectiveness of such TT variables, and was utilized for evaluation purpose, formulating TT constructs and determining causal paths. Statistical techniques including exploratory factor analysis

(EFA), confirmatory factor analysis (CFA), and structural equation modeling (SEM) were implemented for this purpose. A complete description of each of these stages provided. 4.2 Data Screening Data screening is a vital precaution before proceeding with data analysis to ensure the data accurately reflect the responses made by participants of the study. To check if some of the data is missing and if there is a pattern to the missing data. In addition, to look for extreme responses present in data set that may distort the understanding under study. Moreover, to ensure that multivariate statistical assumptions are met, and what to do if violations are there. Data cleaning were performed used (SPSS ver. 11) based on visual inspection of the box plot, distribution diagnosis, frequency tables, histograms, bar graphs, scatter matrices, and outliers cases. Additionally, data screening applied to detect multivariate outliers and validate multivariate assumptions (normality, linearity, homoscedasticity). Data screening of data set indicated four unusual cases attributes code violation that was eliminated after inspecting each case. On the other hand, two variables violated the multivariate assumptions (experience, culture) were removed from the data set due to extreme scores that resulted in a measure of central tendency that does not really represent the majority of the scores. Additionally, analysis of variance (ANOVA) was performed to ensure that respondents having different positions (e.g. supervisor, superintendent, engineer, etc.) and from different specializations of petroleum companies (production, exploration, etc.) could be considered as a single sample. ANOVA confirmed that correspondent between position types at the 0.05 level of significance. A careful examination of data, variance was not widespread and only resulted in two combinations the data was treated as one useable sample. After critically examining the quality of data collected to prepare it to data analysis, resulted in retaining 201 cases after deleting 4 cases and 24 questions after the removal of two violating variables. 5. Descriptive Statistics 5.1 Respondent Profile The acknowledged number of valid respondents involved in the questionnaire survey was 201 respondents. Determining the experience of process participants was critical for ensuring the validity of results. The greater the experience of the respondent in the petroleum industry means greater understanding of process outcomes and influences. The highest frequency of respondents had 11-15 years experience as shown in (Fig. 2). This group accounted for almost 39.3% of the 201 respondents; the lowest group was the 0-5 years of experience with 1.5%. However, there was a fairly well distributed frequency of respondents in each category of experience. This spread of respondent years of experience should provide a balanced view on how the TT process was perceived by the actual Libyan petroleum industry. INSERT > [Figure 2: Respondents petroleum experience] Respondents were requested to detail the number of processes they have been involved with where TT was incorporated (Fig. 3). Almost 65% of the questionnaire participants

have been involved with at least three past processes involving TT. 1.5 % of the sample has been involved in more than seven TT processes. These provide a good basis for evaluating the importance and success of individual TT processes and outcome variables. Advantageously, there was relatively low frequency of respondents that had been involved with only two past TT processes (5.5%). As a result, this may not bound their understanding of the TT process; they may still have a good understanding of process success. As expected, a very few (about 0.5%) participated in more than nine TT processes. INSERT > [Figure 3: Respondents previous involvement in TT processes] Table 1 details a break down of respondent experience verse the number of TT processes involvements. Obviously, the analysis determined that the experience of respondents and the amount of past TT processes they were involved in were to some extent related. Table 1: Experience and number of TT previous processes
Experience (Years) 0-5 6-10 11-15 16-20 20 + No of TT processes 1-2 3-4 2 0 4 36 1 56 2 31 2 6

5-6 1 1 20 25 10

7-8 0 0 1 1 1

9+ 0 0 1 0 0

Most participants with experience on only (1, 2) TT processes have between 6-10 years experience. Respondents with experience on (3, 4) TT processes generally had about (11, 15) years of experience. Obviously, employees with more than 10 years of experience would involve in more than (3) TT processes. Very few respondents had more than (15) years experience in addition had been involved with more than (7) TT processes. These respondents are likely to have an excellent understanding of process outcomes and influences, consequently, their opinions are of great value to this study. The position held by respondents in their respective organization was detailed in Fig. 4. It is essential to evaluate the position held by the respondents not only to give credibility to the results but also to understand the perspective from which the survey questions have been interpreted. This will prove to be valuable when examining the factor analysis results and should make grouping of factors and rating of factor importance easier. There were 33.7% of respondents for these studies were supervisors, followed by engineers with 30.2%. These respondents will have an informed perspective of all daily operations. Thus, they would be able to critically evaluate all process issues especially those concerning the enablers like teamwork, understanding, and communication. There were also relatively moderate proportions of project engineers 21%. Other positions like project manager, superintendent, technicians, and others accounted for about 16% per cent of the respondents each (approximately 31 employee). INSERT > [Figure 4: Positions of respondents.] Evaluating education levels was necessary to demonstrate that the respondents were sufficiently educated to develop a professional opinion about the petroleum industry.

Obviously, the petroleum industry in Libya was dominated by male gender (100%). As shown in Table 2, if for example, there were a high frequency of respondents with only a high school education, the results obtained may carry questionable authority and may not be accommodating as an accurate and valid interpretation of the TT process. Table 2: Respondents personal characteristics
Item Gender Personal characteristics Male Female >30 31-40 41-50 51 + Diploma Bachelor Degree Master Degree Doctorate Degree Others No. of respondents 201 0 3 88 103 7 23 148 27 2 1 Percentage 100 0 1.5 43.8 51.2 3.5 11.4 73.6 13.4 1.0 0.5

Age

Education

Fortunately, the highest frequency of respondents had a bachelor degree (73.6%). Masters degree qualified respondents were also quite common (13.4%), followed by diploma qualifications (11.4%) and doctoral degree (1.0%). Unexpectedly, very few respondents had less than high diploma in the petroleum field (0.5%). 4.2 TT project profile Survey participants were requested to detail the number of processes they have been involved with where TT was incorporated. More than 80% of the questionnaire participants have been involved with at least three past projects involving TT. Less than 5% of the sample has been involved in just one TT project. This gave them a good basis for evaluating the importance and success of individual TT process and outcome variables. Understandably, very few respondents (about 2%) participated in more than eight TT projects, since planned TT was a relatively new concept in the Libyan petroleum industry. Respondents were requested to provide a range of information on the last three petroleum processes they have been involved in where TT from a foreign partner was integrated. In total, the respondents provided detailed information on 302 processes performed. The information collected for the processes included year completed, process description, foreign nationality, skills transferred, mode of transfer, and a general rating on the success of the process. A descriptive summary for each of these items was provided. The primary mode of transfer for processes in the petroleum industry where TT was implemented was management contracting (38.7%), turnkey (26.8%); closely followed by joint venture (25.2%), followed by other modes of transfer (9.3%). This drift confirms the remarks made by Hill [70] that turn key projects are common in petrochemical plants and oil refineries. Also, this will reinforce other studies reported in the literature [1].

Additionally, the nationality of the technology transferor (i.e. foreigner) for each of the 302 listed processes was requested. United Kingdom (UK) were involved in the highest numbers of processes (35.1%), followed by Germany (16.2%), Italy (15.6%), Austria (5%), and other countries (23.5%), Other transferor nationalities included Canadian, French, Spanish, Korean, and Irish, to name a few (Table 3). Table 3: TT transfer mode and nationality
Nationality 1. United Kingdom 2. Germany 3. Italy 4. Austria 5. others Total Mode of transfer Joint venture Turnkey 25 7 20 4 20 76 25 19 10 6 21 81 Management agreement 46 19 14 4 34 117 Other modes 10 4 3 1 10 28 Count 106 49 47 15 85 302

This result support the information published recently by Otman and Karlberg [71] that the United Kingdom is by far the largest source of foreign direct investments in Libya. Not surprisingly, Germany and Italy, two countries which have played a major role in Libyas petroleum industry during the sanction period [72]. Table 4 shows that there were four groupings of skills transferred during the TT process. The skills included management, technical, new technology and other. Technical skills were predominately transferred (44%), followed by technical and new technology skills, both being transferred on 27.8% of the processes. Skill types other than those previously mentioned (e.g. research and development) were transferred on only 2% of the processes. Most processes examined transferred more than three types of skill. Table 4: TT transfer mode and nationality
Skill Transferred 1 2 Management Technical Skill 5 50 1 21 2 14 0 7 10 31 18 133 3 New Technology 11 12 6 0 9 38 Skills 1+2 6 2 8 2 5 23 2+3 0 3 1 0 2 6 1+2+3 34 10 16 6 24 84 Count 106 49 47 15 85 302

Nationality UK Germany Italy Austria Others Total

To realize a general how successful the TT process on individual processes, the respondents were requested to rate each process on scale from very low to very high. A total of (270) process represents the majority of processes were rated as having either moderate or high success. However, only (2.65%) indicated a low or very low success rating combined (Table 5).

Table 5: TT transfer mode and nationality

Nationality UK Germany 0 0 1 4 15 6 80 37 10 2 Total 3 5 46 224 24 Percentage 1% 1.65% 15.23% 74.17% 7.95%

Rating Very Low Low Moderate High Very High

Italy 1 0 6 35 5

Austria 0 0 2 13 0

Others 2 1 17 59 7

Excusably, it was difficult to indicate particular country transferred technology better than other country given that the sample size for each country is unequal. Notwithstanding, evaluating the mean of the rating provided insight to the TT process (Fig. 5), the United Kingdom received the highest score of (3.93) and Italy followed at (3.92) while others somewhat received lower rates. INSERT > [Figure 5: Nationality success rate] Respondents provided a list of process completion dates which grouped into 5-year categories from 1990 until 2009. Obviously, from Table 6, the years period (2000 2004), have a high number of technologies related processes were performed in Libyan petroleum industry. This highlights that most petroleum technology in Libyan industry was transferred on the large-scale recently due to the full lifting of sanctions, along with possible changes to Libya's 1955 hydrocarbons legislation. Table 6: TT process description and year completed
Year 1990-1994 1995-1999 2000-2004 2005-2009 Total Technical process 2 21 69 12 104 Training 4 11 39 10 64 Advanced technology 0 7 28 5 40 Petroleum project 7 14 52 11 84 Study abroad 0 5 2 3 10 Total 13 58 190 41 302

Sanctions had caused delays in a number of field development and Enhanced Oil Recovery (EOR) projects, and had deterred foreign capital investment to a significant extent [73]. This study found that petroleum technology was rarely transferred during the sanction years (1990-2000) Fig. 6. The reason for this low performance was that many international companies having the advanced petroleum technologies, many of which they owned under patent were not allowed to participate in Libyan petroleum industry. INSERT > [Figure6: TT process description and year completed] However, Libya is seeking foreign company help to increase the country's oil production capacity from 1.60 million bbl/d at present to 2 million bbl/d by 2008-2010, and to 3 million bbl/d by 2015[73]. In order to achieve this goal, and to upgrade its oil infrastructure in general, Libya is seeking as much as $30 billion in foreign investment

over that period. The last period years (2005-2009) showed lower than expected because data for years 2008 and 2009 were not available. The main study provided some indications that United Kingdom has been the most common transferor of technology in Libyan petroleum processes over the past 20 years (Fig. 7). Italy and the Germany also have a strong representation in the field of TT in Libyas petroleum industry. Austria has had a relatively low TT involvement over the past 20 years. The Other nationality group included Canada, Korea, and Spain. INSERT > [Figure 7: TT processes count and nationality] Respondents were asked whether they knew if TT was planned prior to the beginning of the process (Table 7). This will help to develop a better understanding of the respondents perception of the TT process and how completion planned could improve skills. Table 7: TT process planning count and year completed
Year 1990-1994 1995-1999 2000-2004 2005-2009 Percentage Yes 13 54 180 37 94.04% No 0 1 5 3 2.98% Dont know 0 3 5 1 2.98% Total 13 58 190 41 302

For the 302 listed projects where TT was integrated almost 6% of the respondents acknowledged that TT was either not planned or that do not know. Thus, the majority of respondents knew whether TT was proactively planned prior to the project execution phase over the past 20 years. During the 1990-1994 period, it had been found that technology had been slowly transferred into petroleum industry in Libya. In the 19951999 period technology had been transferred at almost 17.9%, meanwhile the percentage in the years 2000-2004 period improved to 59.6% of the total processes surveyed. Thus, it appears that Libya is not only undertaking a massive upgrade its petroleum infrastructure in general in recent years but also utilizing what was considered a highly attractive petroleum state due to its low cost of oil recovery. Consequently, TT programs were utilized to improve the skillfulness of petroleum employees. 6. Data analysis and results 6.1 Rating TT variables As previously described, the questionnaire respondent rated the impact for the retained 24 items on a 5-point Likert scale for the success or effectiveness of TT process. Table 8 details the mean and standard deviation value for each variable in the conceptual model. The significant outcomes of this analysis are summarized below: TT environment mean (4.05) was considered the most important TT process enabler followed by learning capability (4.04). However, TT infrastructure (3.92) and the TT support construct (3.90) were not considered as important as the others were. Possibly, due to respondents limited understanding on the impact of macro factors on the TT process.

Industry knowledge (4.14) was considered the most important variable. Surprisingly, involving sub-contractors in the TT process (3.82) and the construction mode of transfer (3.86) were considered the least important enabling variables. Most of the TT outcome variables were deemed highly and equally important. Respondents perceived that the implementation of TT programs was essential for improving schedule performance (4.11). Since schedule performance in developing countries is generally perceived to be quite low this result is not surprising. However, the importance of TT for improving financial performance (3.93) and competitiveness (3.92) of host companies was notably lower than the other outcome variables. Table 8: TT process planning count and year completed
Code Enablers A A2.1 A2.2 A2.3 A2.4 B B2.1 B2.2 B2.3 B2.4 B2.5 B2.6 C C2.2 C2.3 C2.4 C2.5 D D2.2 D2.3 D2.4 D2.5 TT outcome A4.1 A4.2 B4.2 B4.3 C4.1 C4.2 Description TT support Laws and regulations Government TT plan NOC strategy NOC reward system TT infrastructure Information technology Research and development Sub-contractors Training Standards and quality Management practice TT environment Knowledge base Technology complexity Communications Teamwork TT learning capability Attitude Capability Exposure Supervision Economic performance Competitiveness Performance Knowledge performance Working practice Skill base Project performance Financial performance Schedule performance Mean 3.90 3.87 3.99 3.85 3.92 3.92 3.91 4.03 3.82 3.93 3.86 3.98 4.05 4.14 3.96 4.05 4.05 4.04 4.05 4.00 4.09 4.02 4.01 3.92 4.09 4.01 4.00 4.01 4.02 3.93 4.11 Std. Deviation 0.622 0.688 0.845 0.807 0.865 0.600 0.729 0.854 0.799 0.761 0.913 0.869 0.645 0.796 0.896 0.756 0.870 0.669 0.882 0.815 0.798 0.827 0.693 0.760 0.834 0.721 0.809 0.803 0.657 0.803 0.747

The variables within all constructs were considered important (i.e. >3), therefore, 24 variables of impact perspective was used for the initial factor analysis computation.

6.2 Exploratory Factor Analysis EFA using principal component analysis (PCA), with varimax rotation, was conducted to condense the information contained in the original 24 variables into a smaller set of factors with a minimum loss of information [74, 75]. Specifically, the aim was to search for and define the fundamental constructs assumed to underlie the original variables. The ratio of data sample observation to variable (8.3:1) was deemed adequate for factor analysis, exceeding recommended by Hair [74]. Moreover, the value for the KaiserMeyer-Olkin (KMO) measure of sampling adequacy was 0.95, exceeding the recommended threshold level of 0.5 [76]. EFA retained a 21 variable solution, removing three variables A2.4 (reward system), B2.6 (management), and D2.4 (exposure). Two of the removed variables (i.e. management and reward system) had very high loadings within their own individual constructs. These factors could be argued as being essential enablers in the TT process; however, they were removed because there were factors, which consisted of only one generic variable. Five factors best represented the data in terms of variance explained (64%) and grouping of variables. These factors included government support; host infrastructure; technology learning capability; host characteristics; and TT performance. Table 9 details the factor loading, explained variance, Eigen values, and Cronbachs alpha for the five-factor solution. All factor loadings exceeded the 0.5 threshold level with loadings ranging from 0.733 to 0.859. Additionally, Cronbachs alpha results ranged from 0.625 to 0.883 indicating that the scale used was reliable [77, 78]. The results underline that the technology learning capability factor is the key enabler of the TT process explaining almost half (46.65%) of the total variance in the data set (64%). The combined explained variance for the TT process enablers (i.e. government support, host characteristics, technology learning capability and local characteristics) equates to more than two-thirds (58.7%) of the total variance (64%). unquestionably, these factors need to be carefully managed to ensure that the TT process derives the most value for the host country. Table 9: Varimax rotated factor loading for the four-factor solution
Factor 1. Government support Variance=4.675% Eigen Value= 4.675 Cronbachs Alpha=0.720 2. Host Infrastructure Variance=3.850% Eigen Value= 0.924 Cronbachs Alpha=0.742 3. Technology Learning Capability Variance=46.65% Eigen Value= 11.2 Cronbachs Alpha=0.883 Items (identifying Questions) v (63.937%) explained Loadin g 0.814 0.807 0.780 0.843 0.814 0.779

Government TT plan NOC strategy Standards and quality Communications Research and development Sub-contractors

Supervision Attitude Teamwork Capability Training Technology complexity Knowledge base

0.806 0.797 0.768 0.759 0.755 0.741 0.738

4.Local Characteristics

Variance=3.476% Eigen Value= 0.834 Cronbachs Alpha=0.625 5. TT Performance Variance=5.291% Eigen Value= 0.1.270 Cronbachs Alpha=0.870

Information technology Laws and regulations

0.859 0.859 0.826 0.818 0.799 0.760 0.736 0.733

Overall performance Industry knowledge Skill base Schedule performance Competitiveness Financial performance

Factors 1 and 4 are related to the TT support required for TT, and factor 4 contained only two variables. These two factors would be better represented as one broader enabling factor, as originally perceived in the conceptual model (Fig. 1). To substantiate this model, factor analysis was performed on these combined two factors (5 variables) as shown in Table 10. Table 10: Varimax rotated factor loading for the single outcome factor solution
Factor 1. Government support Variance=53.341% Eigen Value= 2.67 Cronbachs Alpha=0.778 Items (identifying Questions) NOC strategy Standards and quality Laws and regulations Government TT plan Information technology Loading 0.758 0.739 0.731 0.721 0.701

As suspected, only one factor resulted, explaining (55.064%) of the variance and all loadings exceeded 0.7 as shown in Table 11. Thus, factor analysis produced a TT model consisting of four factors, including, three enablers: Government Support (GS), Host Characteristics (HC), Technology Learning Capability (TLC), and one outcome factor: TT Performance (TTP). The following stage of analysis utilizes SEM to confirm the model structure and causal paths between factors. 6.3 Structural Equation Modeling (SEM) SEM using AMOS 4 software was performed to test the study model and interrelationships between factors. SEM is an effective technique for conceptualizing a theoretical model, confirming relationships between variables and gaining insight into the causal nature and strength of identified relationships [79]. However, SEM is a structural technique requiring large samples with a minimum sample size of 15 cases per measured variable. Since factor analysis reduced the number of variables to four factors, a satisfactory ratio of 50:1 cases per measured variable was achieved [80]. Moreover, the developed model needs to satisfy conditions for a number of fit indices. A rule-of-thethumb is that Comparative Fit Index (CFI) and other incremental indexes with values greater than 0.90 may indicate reasonably good fit of the studys model [81]; Goodness of Fit Index (GFI) is an absolute index and requires values to be above 0.90 as well; TLI is the Tucker-Lewis coefficient, also called the Bentler-Bonett non-normed fit index (NNFI). TLI is not guaranteed to vary from 0 to 1, however, TLI close to 1 indicates a good fit; and the Root Mean Square of Approximation (RMSEA) is a lack of fit index

where a value of zero indicates the best fit and higher values indicate a worse fit. The A rule of thumb is that values less than 0.05 indicate a close approximate fit, values between 0.05 and 0.08 indicate reasonable error of approximation, and values greater than 0.10 indicate a poor fit [82]. For the purpose of this study, SEM was employed for the following two main tasks: confirmatory factor analysis (CFA) was undertaken to corroborate the four constructs established through exploratory factor analysis (i.e. testing the measurement model); and determining significant causal paths between factors. 6.4 Measurement Model Confirmatory Factor Analysis (CFA) was undertaken to substantiate results determined through EFA (Fig. 8).The measurement model for these four constructs (latent variables) had acceptable goodness-of-fit indices: RMSEA= 0.042, GFI = 0.90 ,CFI = 0.97, TLI = 0.96, [79, 83]. Moreover, the results shown in Table 11 indicated that the items used for each factor were representative of that factor (regression weights >0.6, significant t-value at the 0.05 level). In summary, CFA confirmed the EFA analysis and did not suggest the removal of any variable, as a result the same constructs were utilized for path analysis in the following section. Table 11: Measurement model results
Factor variable description Technology learning capability Training Knowledge base Technology complexity Teamwork Attitude Capability Supervision Government support Laws and regulations Government TT plan NOC strategy Standards and quality Information technology Host characteristics Sub contractor Research and developments Communications TT performance Competitiveness Overall performance Industry knowledge Skill base Financial performance Schedule performance Standardized regression weights 0.71 0.70 0.68 0.73 0.75 0.70 0.76 0.61 0.68 0.68 0.65 0.60 0.69 0.71 0.71 0.64 0.78 0.78 0.77 0.66 0.69 t - value * 9.45 9.19 9.84 10.13 9.44 10.23 * 7.41 7.75 7.45 7.00 8.72 * 8.99 * 9.09 9.07 9.02 9.25 8.26 R2 0.50 0.49 0.47 0.54 0.57 0.49 0.58 0.37 0.47 0.47 0.42 0.35 0.47 0.50 0.50 0.41 0.61 0.61 0.59 0.44 0.48

*, fixed for estimation

INSERT > [Figure 8: Confirmatory factor analysis (CFA) design] 6.5 The Path Analysis of the Model Paths analysis was undertaken using the SEM technique to uncover the significant interrelationships between the factors retained from EFA and CFA. From the analysis it was determined that government support was the only exogenous factor in the model. The remaining enablers were considered endogenous factors (Fig. 9). In order to access, what is called a saturated model in the sense of every variable was hypothesized to be related to every other variable. The model allows examining the direct effect of government support and hosting characteristics on TT performance. Nevertheless, it also allows examine some of the indirect effects as well. Not only are government support and host characteristics said to directly affect TT performance, they are also hypnotized to exert an effect through the technology learning capability variable. Technology learning capability takes a mediator role in this model, and it could be said that some of the causal influence of government support and host characteristics is mediated through technology learning capability. Thus, government support and host characteristics are said to influence TT performance in two ways: first by exerting a direct effect on TT performance and secondly by exerting an indirect effect on TT performance by affecting technology-learning capability. INSERT > [Figure 9: Path model for TT in petroleum industry] The model considered recursive. Using the model-fitting method with AMOS, this allows to quickly reviewing the results of the initial model. The standardized regression weights were assigned to the appropriate paths from each analysis. The path coefficients showed that government support and host characteristics are both significant predictors of technology learning capability. Because they exceed the (0.3) criterion, both would be treated as having achieved practical significance as well. However, the path coefficients leading from host characteristics to TT performance (0.09) is insignificant indicating that the host characteristics variable has indirect effect accomplished through the mediator variable of technology learning capability. Only two of the three predictors of TT performance yielded significant coefficients. The average of the residuals between the observed correlation/covariance (RMSEA) from the sample and the expected model estimated from the population. Loehlin [84] proposes the following classifications: (1) less than 0.08 indicate good fit, (2) 0.08 to 0.1 indicates a moderate fit, (3) greater than 0.1 indicates poor fit. The RMSEA in this model is 0.65 indicating a poor fit. 6.6 Respecifying the path model In the model, one of the direct effects in the original did not statistically materialize. Path coefficients from host characteristics failed to achieve a statistical significance there for the path were dropped from the re specified model shown in Fig.10. Moreover, discriminate validity analysis did not uncover any correlated endogenous perspective [85, 86]. Additionally, scatter plots between the four factors were conducted to ensure that a linear trend best represented (i.e. highest R2 fit) their relationship. Fig. 11 presents the formulated path model for international TT in petroleum industry.

[Figure 10: Respecified path model for TT in petroleum industry] This model has the following fit coefficients: CMIN/DF = 1.96 where, the CMIN value shown in AMOS is equal to the chi-square value divided by the degrees of freedom (DF), RMSEA = 0.069, GFI = 0.99, AGFI = 0.95, NFI = 0.99, CFI = 0.99, TLI = 0.98. In total, four structural equations explained the five causal relationships (paths) which exist between the four retained TT enabling and outcome factors. A summary of the developed structural equations, path coefficients, and significance levels was provided in Table 12. The following section discusses the practical implications of each structural equation and its associated predictor variables. Table 12: Standardized path coefficients and structural equations
Paths GS GS GS HC TLC Standardized equation ZHC=0.86*(ZGS) ZTLC=0.40*(ZGS)+0.45*(ZHC) ZTTP=0.46*(ZGS) ZTLC=0.45*(ZHC) ZTTP=0.40*(ZTLC)+ 0.46*(ZGS) Coefficients = 0.68 = 0.40 = 0.46 = 0.45 = 0.40 t 6.75*** 6.75*** 7.43*** 7.49*** 6.55*** R2 0.46 0.61

HC TLC TTP TLC TTP

0.63

*P<0.001 6.7 SEM Discussion SEM allows for the combining of a structural and theoretic model with a measurement model. SEM is an extension of several statistical techniques that have been developed, most notably multiple regression and factor analysis [74]. Utilizing EFA, CFA and path analysis, a four-factor structural model of TT was developed. A discussion on each of the four structural equations detailed in Table 12 will be provided as follows: Host characteristics (ZHC): Government support was determined to be the only predictor of host characteristics. Specifically, if host government creates an environment encouraging TT processes they will be more likely to lay out the regulations that stimulate local sub contractors with the necessary communication skills and organizing a research and development institutes to provide the necessary TT processes challenge setup. Technology learning capability (ZTLC): The results confirm that host characteristics and government support can directly promote enhanced technology learning capability. Achieving success when transferring highly complex technology will be more likely to occur when the host has a positive attitude toward working with foreigners, a strong knowledge base on petroleum technology and their technical and managerial training practices stimulate the technology transfer process. Additionally, the transferee must have a sufficient supervision and capability to utilize available technology. The government regulations of host countries, such as laws governing petroleum industry, tax exemptions, cooperation agreement, etc. could strongly encourage foreign companies to participate in TT process. Moreover, governments may also help to

promote solid relationships by encouraging only those foreign companies that own satisfying TT reputation. Technology transfer performance (ZTTP): The results confirm that government support is essential for achieving outcomes from the TT process. Governments in several developing countries are currently encouraging TT initiatives in an attempt to improve their industries, living standards, and economic prospects. This objective could only be achieved if host employees and professionals perform at a higher level and become more competitive locally within petroleum producing countries and international petroleum market, eventually becoming a competitor of the foreign companies. Host and foreign companies with idealistic characteristics for TT need to be carefully selected to ensure that the host nation has the best chance for receiving the most tacit and implicit knowledge from the process. Moreover, mutual trust developed through effective communication and understanding between the transferee and transferor will greatly enhance the host firms knowledge advancement, working practices and overall performance over the long term. It should be noted that the developed structural equations might not be as accurate when applied in another context (i.e. path coefficients may change when modeling TT initiatives in another countries petroleum industry). Whilst the causal relationships should hold true in these different settings, the strength of the relationship will depend on the maturity of the host nation and its petroleum industry, in relation to the development scale. Nonetheless, the identified path equations can be used as a tool by governments and petroleum companies from developing and newly oil producing countries to monitor the TT process and its generated outcomes for the host sector. Additionally, the core constructs or factors of the model were generically named for easy adaptation and utilization in other industry sectors. With some minor modifications to the derived TT enabling and outcome sub factors presented herein, the developed TT model could be applied to a wide range of industrial settings. The results confirm that appropriate host characteristics are essential for technology learning capability. Foreign companies that have experience working with foreigners, a strong knowledge base and are willing to transfer their knowledge will create robust bonds with local workers, which are based on mutual trust, communication and understanding. 7. Discussion and Conclusions As indicated before, two variables with high factor loadings (i.e. management and reward system) were removed through the EFA process along with two variables (culture and experience) that were removed by data screening. Moreover, CFA did not corroborate the inclusion of variables representing the technology infrastructure and the degree of exposure to technology itself. Future research should address the limitations of this research and include factors, with a number of specific variables, which focus on the impact of technology characteristics, technology infrastructure, degree of exposure, management, and reward system on the TT process and its outcomes. First, it could be argued that if the technology being transferred is significantly more advanced than the current working practices of the host employees they may not properly understand how and why it was implemented and thus will be unlikely to embrace it on future technology acquisitions. Second, the technology infrastructure available for the TT process can

influence the degree to which TT performs. It could be argued that joint ventures are one of the better vehicles for achieving higher rates of technology diffusion to the host sector because they typically imply a shared management approach. Third, having compatible culture may play a role in achieving effective outcomes from the TT process. Considerable cultural differences could potentially have an impact on a transferors willingness to implement TT initiatives, which will in turn, can create barriers to achieving harmonious relationships. Moreover, culturally blind leadership, where no attention was paid to cultural difference and indigenous approaches may cause conflicts resulting in the disintegration of teamwork. Lastly, imbedding training into the project schedule could also be considered as a key enabler in the TT process. Implementing training sessions into TT agreements should not only foster mutual trust, communication and information sharing between the transferor and transferee, but will more rapidly advance local employees knowledge at the operational, functional and management levels. Certainly, TT programs, which were formally planned and managed (i.e. training times allocated, supervision specified, etc.), are more likely to transfer a greater degree of knowledge to the host workers. The implications for petroleum industry in developing countries, government departments and industries, such as petroleum, manufacturing, and construction are gaining benefits and competitive advantages from the successful implementation of TT initiatives. Persuading such TT initiatives is the first step to efficiently and effectively transforming or re-engineering traditional petroleum business processes, and ultimately improving the productivity of the domestic petroleum industry. However, it is not enough to only expect that TT will naturally occur. The processes, which underpin TT, should be continuously evaluated to ensure that knowledge and indigenous workers are seamlessly absorbing skills. This research study has implications for the petroleum industry of developing and newly oil producing countries attempting to develop and promote an effective TT process in petroleum industry. The derived international TT model could be utilized to assist government officers in developing countries to enhance the evaluation of TT performance. Specifically, NOC owned petroleum companies managers would be interested in the significant pathways to achieving value from the TT process. Understanding the dynamics of such pathways will assist them to better structure TT arrangements and concentrate on the most empowering enablers. This study provides evidence that when petroleum industry incorporating TT are established there must be careful selection of both transferee and transferor companies. Companies with appropriate characteristics for TT will form solid bonds that are based on trust, understanding, and communication. Thus, it is essential that a substantial investment is provided for workshops and other technology learning capability activities to create these bonds as early as possible in the petroleum industry. In essence, speeding up the TT process is the key to rapidly enhancing industry capacity and competitiveness. The model is especially important for publicly funded petroleum infrastructure where the government is concerned that advanced technologies are being willingly and effectively transferred to local petroleum employees and professionals. Moreover, the model could assist national economic council for planning, which would want to have tools to better monitor the performance of the TT process when they set up road maps for the country to develop the necessary infrastructure for petroleum industry. One of the primary objectives of these planning councils is to actively encourage domestic industry in developing countries to improve the knowledge levels of their employees as well as

industry capacity; ultimately leading to improved standards of living for all indigenous people. Finally, the authors suggest that government and the petroleum industry companies in developing countries should seriously start to invest funds into further developing acquired petroleum technology and management knowledge. Such funding will ensure that knowledge is perpetually building in domestic companies diminishing the degree of reliance on foreign firms. In conclusion, a path model was created to help both researchers and practitioners to understand the TT process in petroleum industry. The main emphasis of the developed model was to assess TT performance in the petroleum industry. The model provided an evident design on main variables influenced TT issues. The structural model consisted of four factors and five paths, representing the interrelationships between the four enabling and one outcome factor. Positively, EFA and CFA empirically validated that factors referring to technology learning capability, technology characteristics, and technology support could be incorporated to evaluate the transfer performance. However, variables such as degree of exposure, management, and culture were dropped by factor analysis from the model and should be investigated in future research. With suitable assumptions, the findings of this study and the developed TT path model have essential implications for governments, policy makers, and Libyan petroleum companies seeking to enhance rates of transfer. The application of the developed path model to TT in other industries is recommended. Acknowledgments The researchers would like to thank all the respondents who participated in the questioner survey. The authors also thank the Institute of Advanced Technology (ITMA), University Putra Malaysia for their cooperation and the facilities provided. This support is gratefully acknowledged. References
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