Abstract

This study is based on a regional innovation system theory based on Path Dependence Theory and Michael Porter's Cluster Space Theory. Path Dependence Theory explains that innovation clusters benefit from special access, relationships, better information, stronger incentives, and productivity gains that are difficult to connect at a distance (David, 1985; Arthur, 1989, Porter, 1998). Thus, the creation of clusters based on spatial concentration contributes to the creation of external economies through the specialisation of firms, the enhancement of inter-firm communication, and the 'sharing of factors of production' such as human resources and support institutions.
 In order to demonstrate this in a small-scale innovation cluster, this study uses a structural equation model to examine the effects of existing support policies and cluster agglomeration on business performance using 230 representatives of startups operating in the Songdo cluster in Incheon. The results show that the cluster's support system for investment, commercialisation and technology activation positively affects organisational member capabilities and technology development capabilities, but it fails to demonstrate the impact of public programme policies, funding and investment policies on firm profitability through organisational capabilities. This is because, due to the nature of start-ups, organisational capabilities do not immediately translate into firm profitability. Typical commercialisation support programmes often expect sales or hiring of employees in a short period of time, and the findings of this study suggest that this aspect needs to be further examined. On the other hand, the relationship between technology development capacity and profitability of public programme policies and technology development capacity and profitability of technology development policies was statistically significant, confirming their effectiveness. This suggests that there is a need for policy development that focuses on technology development capabilities rather than programmes that address the business pain points of entrepreneurs, such as training and mentoring. Therefore, innovation cluster policies should be conducted from a more long-term perspective, and only if policies for technology revitalisation are prepared in a timely manner will it be possible to achieve the goal of economic growth through startup revitalisation.

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