Abstract The utilization of contract research results in a developing country was analyzed according to the stages of technological innovation and transfer. Three innovation stages such as project contract (proposal success), project solution (technical success), and project implementation (commercial success) are employed in this study, focusing on the identification of significant factors affecting the success in each stage. The factors influencing the successes in the project contract and implementation stages are mostly similar while the factors important in the technical success are somewhat different. The data analyses indicate that only a few factors seemed to significantly affect the successful project contract while more than a score of variables were considered to be important for the successful implementation of the contract research results. This implies that even though the success of the early stage of innovation can be relatively easily accomplished, the success of the final stage cannot be so easily accomplished. According to the findings of the study, there are at least two unique environmental factors for the successful innovation and transfer of indigenous technology in a developing country, Korea: (1) the vulnerability of domestic technology to the foreign technology from advanced countries, and (2) the strong influences of government intervention, whether they are advantageous to the success of innovation. Some methodological as well as theoretical issues for the improved understanding of innovation and technology transfer are discussed.