A Multi-Level Analysis of Innovative Korean SME Activity and Related Innovation Ecosystem

Abstract

Faced with waning exports and returns from innovation, the Korean government has prioritized the facilitation of small and medium-sized enterprise (SME) innovative activity and marketization. But are policies working? This research deploys a multi-level perspective to more holistically examine individual, firm, network, and industry-level factors, to include the regulatory environment, impacting Korean SMEs. Quantitative analyses of data from the 2016 national Korean Innovation Survey delve into 1) firm motivations, costs, and purchases; 2) internal R&D and external cooperation and knowledge sourcing; 3) innovation impacts on domestic and international market positioning and entry; and 4) sources of support for, and impediments to, innovation in order to provide a nuanced understanding of Korea’s innovation ecosystem. In a novel bifurcation, analyses compare firms engaged in new and incremental innovation and those engaged in only incremental innovation. Some key differences between the innovator groups emerge, such as training objectives, spending patterns on external knowledge, collaborate activity, and market positioning. Though there may be room for cautious optimism, perceived challenges to policy would appear to be equal for both groups of innovators, including those related to personnel, financing, and other government support and policy incentives. Implications for Korea’s future are discussed.