Fostering innovative Firms in Koreaapec-smeic.org/_file/mal/Presentation3(Malaysia).pdf ·...

Fostering innovative Firms in Korea

C.O.Rhee, SWU, Korea, 2010 Copyright

Rhee, Chong Ook

Professor, Department of Economics,Seoul Women‟s University

Visiting Professor, Korea Institute of Small BusinessVisiting Professor, Korea institute of Finance

Former President, Korean Association of Small and Medium Business Studies

*This lecture is being prepared for presentation in Malaysia on Nov. 2010, with the assistance of Professor Jangwoo Lee , president of KASBS.

Contents

1. Korea‟s Concept of Innovative Business in SMEs‟ Growth Path

2. Korea‟s Venture Policy forNew Economic Growth

6. Global Innovative SMEs in Progress

5. Present state and evaluation to foster innovative firms

4. Korea‟s Policy to foster Innovative SMEs

Introduction


3. The Case of Guro Digital Complex

1. Korea’s Policy for Innovative firms in SMEs’ Growth Path


(1) The Growth Path of Innovative SMEs in Korean public policy

General SMEs and Venture firms

Technology-basedinnovativeSMEs

Global InnovativeSMEs


0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

per capta GNI_Dollar

Venture 2.0From 2008

Venture 1.0

August 2001 (Innobiz)


GrowthStages

Category total

technology manpower FinancingAndGuarantee

Infra-structure

Domesticand foreignmarketing

Preliminarystart-up

2 1 10 1 14

Less than 3year

4 5 9

Less than 5year

1 2 1 2 6

Less than 7year

5 4 6 7 2 24

Unlimited 294 141 377 106 545 1,463

Total 301 146 390 129 550 1,516

SMEs‟ Policies by Growth Stages

Source: Small and Medium Business Special Committee (2005)


(2) Laws to Promote Korean SMEs

SME Venture Firm Technology-basedInnovation SME

Management-based InnovationSME

Definition SMEs‟ Basicdefinition

venture financialinstitutions such asstart-up investmentfirms invest,guarantee, andfinance

Companies withgrowth potential orinnovative future

technology that can

lead to growth

Firm that gains from various activities such as Hum

an Resource Man

agement, process

innovation, knowl

edge and informa

tion management,

marketing, etc

BackgroundLaw

SMEs‟FundamentalLaw

Special Measures

for the Promotion of

Venture Business

SMEs’ Innovation

Promotion Act

SMEs’

Innovation

Promotion Act

Implementation Date

Dec. 1966 May 1998 August 2001 July 2006


2. Korea‟s Venture Policy forNew Economic Growth


Financial Institution as Government-supported Venture Capital

- 1974: KTAC (Korea‟s initial venture capital), which is founded to commercialize t0he technology invented by National Research Institutes

- „Financial Business to Commercialize New Technology‟ Act established in 1981 push to set up KTDC ( present KTB), KDIC, KTFC, etc which is supported by the government.

Korea‟s first venture firm was Qunics in 1982

- 1983 : Bit Computer, Mirae Corportation

- 1985: Madison, YG One, Sambo Computer, CAS, etc

Although many government-supported venture capitals are founded up to the early 1980s, the well-developed market to recover the venture investment fund does not exist.


2.1 The Dawn of Korean Venture system

Korea‟s main venture policy starts with establishing “SMEs‟ start-up Assistance Act” on April 1986 and “Financial Assistance to Support New Technology Act” on December 1986

- Two acts become the stimulus to form about 50 Venture Capital firms in the short period up to 1989.

The venture capital firms in the early stage do not play a real role of American style of venture capital, because there are few excellent venture firms, and non-existence market to recover investment fund.

In the absence of recovery market of investment fund, the venture capital firms get low rate of return and hence almost bankrupt, and finally they ask the policy such as opening the third market for their survival.


2.2 The first stage of Korean venture policy

Background of Venture Business in Korea

• R&D

• Knowledge & Information

• Inovation

• Global Competition

• Manufacturing

• Capital & Labor

• Management

• Limited Domestic Competition

Traditional Business

IMF

Industry-Oriented

Society

Knowledge-Oriented

Society

Venture Business


Establishment of KOVA

• Established on Dec. 2, 1995

• First Chairman: Min-hwa Lee

Nurturing of competent medium and

small-sized technology business

Organizational turnover

of traditional business

Upbringing of new

venture business

Venture

Business

Organizational

Turnover

Affiliated

Business


Venture Vision 2005

1,000 6,400 43,000

80,000 100,000 120,000

Year 1996 2000 2005

Upbringing of venture business is the national competition strategy!

• Number of Companies


Venture Vision 2005

Capital MarketMan

Power

Infrastructure

National Innovation System of

Knowledge-Manufacturing Combination

Special Law for Venture Business


Korea‟s Venture Model in 1997 copies American Silicon Valley Model.

- Three factors in Venture ecology are “entrepreneurship,

Venture Capital , Exit market”.


2.3 The First Moment of Korean Venture Policies and Korean Venture boom

(1) Establishment of KOSDAQ

Establishment of KOSDAQ Market

May 17, 1996

The KOSDAQ market has grown along with venture business

as a new market based on knowledge-oriented innovative technology


category Korea USA

Government-supportedVenture Fund

1987 1958 29-year

SMEs divisionOpening

1996(KOSDAQ)

1971(NASDAQ)

25-year

RetirementFunds‟ Venture Investment Allowance

1997(Venture Act)

1979(ERISA Act)

18-year

Source: S. Kim (2008). KOSBI


Development of KOSDAQ

• Number of Companies

331

540

830887 890

369376

244

8

386

1998 2000 2002 2004 2005.8

KOSDAQ Listed Companies

Venture Companies

7.9

29.0

37.4

31.1

47.3

1998 2000 2002 2004 2005.8

Total Market Capitalization(Unit: US$ Trillion)


Stance of KOSDAQ in Worldwide Market

– Growth as a worldwide major stock market

– Leaping as a global investment market – Rapid increase of foreign capital

– Successful New Market - Grant Thornton (May 24, 2004)

21

13

3

2

1

Nasdaq(5,131)Tokyo(3,205)2TSX Toronto(3,580)2

KOSPI(296)KOSPI(285)17Kosdaq(881)13

Kosdaq(87)Kosdaq(23)43KOSPI(672)17

London(3,024)Nasdaq(2,719)3Nasdaq(3,252)3

NYSE(6,778)NYSE(11,428)1Mumbai(4,730)1

Accumulated VolumeTotal Market CapNumber of Listed Companies

2001 2002 2003 2004.8

10.4% 10.5% 14.3% 20.3%

“Even amongst these, only NASDAQ, AIM, KOSDAQ, TSX-V, ..OFEX, can be said to have added any real value to

investors during 2003”

“KOSDAQ was the world’s most liquid new market in 2003..KOSDAQ was the best performer with a growth in

average listing of 55 during the year”

* According to data by World Exchange Federation, July 2004


A number of start-ups have entered high-tech

industries very fast during the past 10 years

Numbers of Governmentally-Enrolled Companies as

High-Tech Ventures

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

cummulative annual

cummulative 2,042 4,934 8,798 11,392 8,778 7,702 7,967 9,732 12,218 14,015 14,079

annual 2,042 2,892 3,864 2,594 -2,614 -1,076 265 1,765 2,486 1,797 64

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

cummulative 2,042 4,934 8,798 11,392 8,778 7,702 7,967 9,732 12,218 14,015 14,079

annual 2,042 2,892 3,864 2,594 -2,614 -1,076 265 1,765 2,486 1,797 64

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008


Type Concrete conditions

Start-up investment association Investment association that specializes in entrepreneur (less than 7 yearlongevity SME ) andVenture firms

Korea Venture Investment association LLC type investment, off-shoreinvestment Association, etc

Exclusive Usefor SME

Firm Reorganization Invests more than 60% of the totalasset in SMEs

Technology sector

Private equityinvestment

The system of start-up investment union was changed into Investment by Fund of Funds in 2004


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10,000.00

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20,000.00

25,000.00

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1955

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1963

1965

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1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009


Venture 2.0From 2008

Venture 1.0

High-value added oriented policy


(2) Korean Venture system under the unique

socio-economic system.

• A Korean Socio-economic System for Venture Industries

• aggressive policies with the formulation of special law

• culture approving the fast changing and favoring the risk-take

Government Policy and Social Legitimacy

• high educated

• young and high level of

need-for-achievement

• R&D experience

Input

• innovation

• Job creation

• new market development

Output

• high-tech sectors

(IT, Bio etc.)

• high level of R&D intensity

• fast moving to the market

Thruput


Korea chose an aggressive intervention of the government: the special law for promoting technological

entrepreneurship

U.S.: natural and spontaneous progress

– A natural evolution for 50 years, starting with Hewlett-Packard

– NASDAQ open in 1971

Korea Promoting Technological Entrepreneurship

Natural and Gradual Growth by the Silicon Valley Model Of U.S.?

Aggressive Governmental Intervention with Legislation of the Special Law

Choice

Intense growth

OR


Establishment of Special Law for Venture Business

• Special Law for Venture Business legislated on May 12, 1997

Capital

• Aid in initial expenditure of business (Corporate finance for medium & small-sized business, R&D etc.)

• Inducing investment by venture capital, angel, institutional and foreign investors

• Special guarantee for venture business, useful for credit guarantee examination

• Allowing R&D man power to be exempted from obligatory military

service to work in designated companies

• Stock options given to qualified man power

• Opening of business in lab (Allowing professors and researchers to establish factories in labs)

• Preferential privileges to venture business located in integrated facilities (Exemption from taxation)

• Support in knowledge complex („venture building‟)

ManPower

Others


However, there exits a contradiction on the effectiveness of the government‟s

intervention.

(+) Positive

⊙ The institutional theories (DiMaggio and Powell, 1983; Orru et

al., 1991)

“The government support is crucial to organizational vitality and

enhance the legitimacy of business actors. The legitimacy contributes them to obtaining critical resources from the external environment”

(-) Negative

⊙ The strategy theorists (Hickson and McMillan, 1981; Donaldson, 1987; Miller, 1988; Zeffane, 1989)

“Strategic choice or adaptation to the changing market is moreessential for firms to succeed”


They have penetrated mainly into high-tech sectors.

Distributions of Korean Venture Firms

Foods&Textiles

15.4

Communication

Equipments

9.9

IT&Components

8.9

Energy,

Medical

Equipments

15.3

Others

9.1

Information

Service

3.8

software

22.8

Machnery&

Autoparts

14.7

(2005 unit = %)


(3) Korean venture firms have achieved many

success cases in the global market.

• a leader in the global set-topbox market

• a winner of MP3 player market

• a technological pioneer incamera phone

• a No.1 market-share in thedigital video recoding market

• one of the world‟s best

on-line game

• a pioneer in digital door lockC.O.Rhee, SWU, Korea, 2010

Copyright

Successful venture firms have shown common characteristics.

• Some Results From My 10 years Research

- Common Business Features of the Most Successful Venture Firms

• Who? (Entrepreneur): Highly-educated, High levels of need-for-achievement

• Where? (Environment): Penetrating into Very Turbulent Market

• What? (Strategy): Executing the Innovative Differentiation Strategy

- Common Success Factors

• High Performances are correlated to

• Innovative differentiation strategy

• time-to-market

• high-quality products

at all growth stages of new ventures


- Common Characteristics of the Most Successful Venture

Firms Which Had Overcome the IMF Financial Crisis

① Entrepreneurs with the high-level of need-for-achievement

② focusing on the innovative differentiation strategy

③ utilizing the governmental support system


(4) KOSDAQ, the Korean capital market for technology -based firms, has also progressed toward the world level.

• Number of Listed Companies & Total Market Capitalization in KOSDAQ

359 399

702

874 91610017.1

98.7 51.837.4

70.9

106

1997 1999 2001 2003 2005 2007

Number of Listed Companies

Market Capitalization (KRW in trillion) (On 9.28)

(On 10.1)


(5) However, they are facing new challenges

these days.

New Challenges

1) Saturation of sales growth rate in the market

2) Serious competition in the global market

3) Shifting of the economic structure from

manufacturing to service-oriented


Summary of Development of Venture Business

Year ~ 1995

First Movement Building Foundation Coordination Leaping

1996 ~ 1999 2000 ~ 2003

Theme Planting trees in desert Venture boom in Korea Corruption & confusion

Contents

• Birth of first generation

venture business

• Establishment of private

capital investment

companies upon Capital

Aid Act (1986)

• Lack of recovery market

• Low recognition of venture

capital

Formation of recovery market (KOSDAQ)

Establishment of environmental systems for upbringing of venture business

Appearance of star players

New driving force of economic development after IMF crisis

Migration of resources to venture business

Criticism toward adverse

effects of governmental aid

Formation of anti-venture

atmosphere

Legal sanction against

false venture business

Post bubble effects

Role of

Gov’tExplorer Initiator Facilitator

2004 ~

Motivation of new

industry development

Recovery of social trust in

venture business

Maturity of market

infrastructure

Building of economic order

based on transparent &

reliable management

Formation of favorable

circulation cycle of venture

capital

Supporter



2.4 The second moment of Korean Venture Policy

Main objective

Job creation of good quality

promoting global competitive SMEs

Main Principles

create market-oriented venture ecology system

restructure venture policies for demander-oriented support


Basic Direction of Policies

(1) To create the vicious cycle of venture firms-venture capital market– retrieval market

-reshaping the certification system of venture firms-reinforcing the function of venture capital- Retrieval market: IPO, vitalization of M&A

(2) To Create cyclical ecology system for knowledge creation among venture firms-university-large firms

(3) To create mature infrastructure in the policy, culture and service to aid venture firms

They want to write the legendary stories continuously on the global market.

from Venture 1.0 to Venture 2.0

(New Hardware) (New Service)

definition Hardware + digital tech Service + digital tech

contents intelligent hardware transferring the emotion

main products

mobile hand-set,

semiconductor

display,

digital set-up box

u-health care service,

digital equipment with emotional services,

on-line service,

mobile games

competitive advantage

speed of product development

imaginationC.O.Rhee, SWU, Korea, 2010

Copyright

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Venture 1.0


3. The Case of Guro Digital Complex


„GURO‟Area:From Labor-intensive Industrial ComplexTo Digital Complex(Past and Present)


Past („70, „80)- textiles

-electronics assembly

- metals- other traditional

industries


GURO Digital Complex(Present)


Changes of Guro Digital Complex

32,95836,564

54,180

85,269

98,261

712 1,343 3,375 6,197 7,517

0

20,000

40,000

60,000

80,000

100,000

120,000

2000 2002 2004 2006 2008.02

Number of employees Number of firms


• In 1997, the Korean government held a ground-breaking ceremony for building the ‘Kicox’ center at the Guro area by showing of example

• The construction of the ‘Kicox’ center was only investment from the government to transform this area toward a high-tech intensive one.


--The Korean government made a designation program about the building construction for new ventures.

* Real estate owners and investors can construct a building for the rental service for new ventures with a designation from the government as a „facility accumulated by new ventures‟ (called as „venture building‟). If they do, they receive tax reduction and exemption from the government.

*This kind of support from the government also enhances their legitimacy and prestige. The enhanced legitimacy and prestige help them induce many potential ventures and increase the intensity of venture accumulation.


4. Korea‟s Policy to foster Innovative SMES



innovativeSMEs


Minimum requirement for Innovative SMEs ?

Position of Innovative SMEs in firm growth

To apply for innovative SMEs, they have to be more than 3 years old.


Why innovative firms have to be more than 3 years old?

-There are SBA’s small and medium fund and venture fund,and regional governments’ fund, for less than 3 years old.


Technology-driven SMEs

- Oslo manual(1992, 1997, 2005)emphasize the innovative firms‟ role as economic growth source

- On August 2001, „SMEs‟ technology innovation Stimulus Act is established to support technology-driven SMEs


Items Technologicalinnovation

Technologyindustrialization

Innovationmanagement

Technologicalinnovationfruitage

Details R&D activity index

Systemic innovation

Innovation

Management

Techology

accumulation ability

Technical analysis

skills

Commoditizationof technology

Production ofTechnology

New marketing

skills

Industrial

management

technology

Innovation

capability

Ability to

respond to

changes

Marketing

management

Changes in

technology and

competitiveness

Business

Performance

Technical

performance

Items to evaluate INNOBIZ


Conditions to be selected as INNOBIZ

More than 3 years old

Total score in certificate items evaluated by KIBOhas to be more than 700 out of 1000.

Scores applied to each item are different from industry to industry

number of evaluation has been decreased from 110 items to 60


Years 2001 2003 2005 2007Evaluationindicators

-Manufacturing(more than 50employees)-Manufacturing(less than 50employees)- S/W

-Manufacturing (more than 50employees)- Manufacturing (less than 50 employees)- S/W- Bio- Environment- Service (Design,Engineering service)

- Manufacturing- Non-manufacturing-Construction-Bio-Environment-S/W-Design

- Manufacturing-Non-manufacturing-Construction-Bio-Environment-S/W-Design-Agriculture

Target Industry Manufacturing Manufacturing All industry All industryNo. of Evaluation

Criteria

110 90 60 60

Specified

period

Semi-annually Quarterly Twice a month Occasional

Evaluation

agencies

KIBO, Korea Development Bank, Korea Technology exchange

KIBO KIBO KIBO

* KIBO = Korea Technology Guarantee Fund

History of INNOBIZ Certification System introduced from 2001.


Management-driven innovation SMEs

- On July 2006, SMEs‟ Management-driven innovation SMEs is inserted in SMEs‟ technology-driven innovation stimulus Act established in 2001.


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1953

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2009


Venture 2.0 Venture 1.0

August 2001 (Innobiz)

High-value added oriented policy


5. Present state and evaluationto foster innovative firms


2001 2002 2003 2004 2005 2006 2007 2008 2009.8

new entrant 1090 766 519 570 808 3804 4686 3507 1802

cancel ofinnovative firm

183 116 75 408 534

cumulative sum 1090 1856 2375 2762 3454 7183 11526 14626 15896

Statistics of INNOBIZ

Overlap Problem of INNOBIZ and Venture firm

Number offirms

Number ofOverlappedfirms

Overlapratio (%)

INNOBIZ 15,898 7,754 48.8%Venture firm 18,478 42.0%

(1) INNOBIZ Trend


LessThan 20

20 -49 50-99 100-199

200- 299

MoreThan 300

Total

Numberof firms

7,081 5,602 2,059 830 244 80 15,896

Ratio (%) 44.5 35.2 13.0 5.2 1.5 0.5 100

Source: Innobiz Association (Aug., 2009)

Innobiz distribution by employee

Less than5 year

6 -10 year 11 – 20 year More than 20 Total

Number offirms

734 6,975 6,128 2,059 15,896

Ratio(%) 4.6 43.9 38.6 13.0 100

Innobiz distribution by longevity

Source: Innobiz Association (Aug, 2009)C.O.Rhee, SWU, Korea, 2010

Copyright

Innobiz distribution by industry

constructionmachinery & metal

bio service fiber food

number of firms

501 4134 407 527 325 401

ratio 3.2 26 2.6 3.3 2 2.5

electric.electronic

information.communication

chemical environment s/w other total

3179 1174 1141 448 1351 2308 1589620 7.4 7.2 2.8 8.5 14.5 100

Source: Innobiz Association (Aug., 2009)


SeoulBusan and

UlsanDaegu and Kyungbuk

Daejunand

Chungnam

Kwangju. Junnam

Kyunggi Incheon

number of firms

3515 933 1521 1037 591 5106 966

ratio 22.1 5.9 9.6 6.5 3.7 32.1 6.1

Kangwon Kyungnam Junbuk Chungbuk Jeju total240 1121 355 462 50 1589361.5 7.1 2.2 2.9 0.3 100

Innobiz by Region

The disparity of Innobiz distribution by region is clearly shown.


less than 5 years

6 - 10 years

11 - 20 yearsmore than20 years

total

number of firms

734 6975 6128 2059 15896

ratio 4.5 43.9 38.6 13 100

Distribution of Innobiz’s Life time

Average life time of Hidden Champion in Germany: ??


(2) Survey on INNOBIZ (2009)

characteristics classification ratio(%)

number of employment

less than 50 28.5

50 -100 25.2

more than 500 39.1

sales

less than 5billion 11.7

5 - 10 billion 17.2

10- 30 billiion 26

more than 30 billion 42.7

establishment Date

prior to 1990 18.5

1990s 36

2000 - 2005 42

after 2005 3.5


less than 5%

5 -10% 10-20% 20-30% 30 - 50%less than 50%

total

ratio 9.5 14.5 29.4 16.7 17.5 12.4 100

Ratio of R&D employee to total employee

less than 1% 1 - 5% 5 -10% 10-20% less than 20% total 24.1 35 23.4 12.8 5.7 100

R&D expenditures to Sales


classification

response and ratio

negative fair positive

sales increase 5 31 64

profit increase 6.5 35.5 58

employment increase 12.8 43.2 44

productivity increase 6.9 38.3 54.7

Impact of Innovation on the business performance

Domestic large firms

domestic SMEs

consumer export other total

45.70% 33.80% 6.00% 11.00% 3.50% 100%

Main buyers


classification Main characteristics and problems

Innovative firms(compared withgeneral firms)

. high registration rate of intellectual property

.high proportion of firms with research center

. high educational background and high ratio of technologyinvention employee

.about 2 times (5.0%) of R&D investment more than general firms‟

. intense investment for new product development

. high level of technology

. holding 2 times of patent more than average firms

.firms holding patent of domestic or international first invention are 2 times more than general firms. the time required for technology invention is 3 months longer. success rate of technology invention is about 60%, and success rate of commercialization after invention about 37%

INNOBIZ firms(compared withgeneral firms)

. high intensity of R&D is about 6%

.R&D employee to total employment is about 30%

. employee with MA and Ph D degree to total employment 13%

. ratio of firms owning research center is 78.8%(general SME 39.2%, Venture 13.8%)

Characteristics of INNOBIZ


Situation of INNOBIZfirms

. rapid increase of INNOBIZ from 2006, andalmost 16,000 firms.

.about 60% INNOBIZ located around Seoul

.ratio of manufacturing is about 73.5%

.machinery and electric. Electronic is about 46%

.half of INNOBIZ has the life time of less than 10 years.

.the ratio of firms with less than 50 employees isabout 80%

.the ratio of export to sales in most firms with exportis less than 20%

. average points of capacity evaluation is the range of700 to 750(perfect score: 1000), and ratio ofthese firms is about 70%.


financing

market

organization

Balanced competitiveness

(3) Main Policy support


Business area Main ContentsR&D support . additional 2 points in the evaluation on technology innovation

development, technology transfer, technology developmentconditional on the purchase, the cooperative technologydevelopment with firms, technology development of start-upfirms.cooperative development of firms and academic institutes,project performed by research centers within universities andcolleges, information technology related with production. additional 2 points on projects to check unlawful outflow oftechnology. 5 points with firms to accept coupon business consulting. 5 points on the acquisition of foreign well-known certification. support on small group of SMEs‟ technology innovation (onlyon firms with INNOBIZ certification)

Financialsupport

.partial guarantee or total guarantee

. increasing the limit of per firm guarantee in implementation,export and import financing, structure and facilities, etc)

: 5billion won (general firms 3 billion won). the decrease of guarantee fee: 0.2%( the maximum 0.4% on firms to get excellent credit rating)

Personalsupport

.firms qualified to employ persons (with professional research,or professional skill )to exempt from army duty


Marketing support(including export)

. priority on the evaluation of qualification to participate inofficial procurement (additional 2 to 3 points in evaluationof reputation area). additional 1.5 points in the evaluation of contractimplementation capacity in the competition among SMEs

. the increase of 10 % more than general firms in theassistance ratio in the participation on the project touse private oversea assistance center. mitigating the qualification evaluation to participate inglobal brand project : more than 200 million dollar forexport(5 million dollar for general firms).Priority in excellent product selected by Agency of PublicProcurement

Other supports .priority evaluation in applying patent


5. Vision of Global Innovative SMEs in Progress


(1) Reshuffling Policies for Innovative SMEs’

Rationale forInnovative SMEs’ support

Market failure in the resourceallocation

To Gainthe competitiveness

Job creation

focus on the technology improvement and market expansion


financing

market

organization

Selective Policy support

financing

market

organization

(Type A) INNOBIZ’s lack of technology

(Type A) INNOBIZ’s lack of financing

financing

market

organizationC.O.Rhee, SWU, Korea, 2010

Copyright

Reshuffling the certification of Innovative firms

Innovative firms

Technology and GrowthCapacity for Venture firms

Existing INNOBIZ

drop maintenance graduation maintenance drop

drop graduation

INNOBIZ’s Technology capacity and Marketability

+

evaluation

evaluationSupport A

Support B

evaluation

dropmaintenancegraduation

Support C

evaluation


German Hidden Champion

Japanese long-lived firms

(2) Patterns of Foreign Global SMES

German SMEs

Japan SMEs

Koyto type of firms


(3) How Korean Government can foster long-lived SMEs

Small

Giants?


innovativeSMEs



The governmental intervention and social legitimacy seem to enhance technological entrepreneurship

“Legitimacy is a global or summary belief among stakeholders that

on organization is good or has a right to continue operating

(Bedeian, 1989)”

(enable the youngfirm to obtain scarceand critical resourcesfrom theexternal environment)

Overcoming Lackof Resource

Boosting TechnologicalEntrepreneurship

Governmental Support

Enhance the Legitimacy

(reduce the potentially harmful effects that Are common during the early stage of a new venture)

(4) Lessons From Korean Experience


However, the effectiveness of the governmental

intervention were different according to the countries

More Effective Less Effective

Korea, Israel, Taiwan, Ireland Japan, European Countries

(common characteristics)

small Dynamism

follower Flexibility

crisis (war, scare resource) Risk-taking

Which factors determine the effectiveness of the government

policy for promoting technological entrepreneurship?


Korea and Malaysia need to cooperate intimately in order to

exploit the global market together in a digital economy.

Korea

• technology

• venturing

spirit

Malaysia

• resource

• south Asia

network


Thank you for your attention.

We wish Malaysia can achieve big economic growththrough SMEs’ entrepreneurship


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