Abstract
Although technological innovation is critical for growth and future survival, small and medium scale enterprises (SMEs) are at a disadvantage compared to larger organizations given the resources available. It is important to examine the possible methods for making research and development more efficient. This study analyzes the technological innovation efficiency of SMEs in the manufacturing and service industries in South Korea and determines the factors affecting efficiency. The models of data envelopment analysis and Tobit regression analysis were used. According to the analysis results, the technical and pure technical efficiencies were higher in the service industry than in the manufacturing industry. The factors affecting efficiency were also different between the two industries. This study is significant because it evaluates the innovation activity efficiency of small and medium manufacturing and service companies in South Korea and provides specific criteria and a rationale to improve the efficiency.
Highlights
Innovation refers to new or dramatically improved products or processes of institutional units, including companies, that, when implemented, affect operational performance such as revenue, cost, and quality [1]
Research and development (R&D) activity-based technological innovations are increasingly emphasized for companies in the Fourth Industrial Revolution [2,3,4]
In the market environment of the hyper-connectivity-based fourth industrial revolution era, customers respond to companies that can reflect the needs of individuals while supplying dramatically improved innovative products or services promptly [5]
Summary
Innovation refers to new or dramatically improved products or processes of institutional units, including companies, that, when implemented, affect operational performance such as revenue, cost, and quality [1]. In the second and third industrial revolutions, the success or failure of companies depended on who created and supplied products or services, cheaper and faster, using capital and physical competitiveness. In the market environment of the hyper-connectivity-based fourth industrial revolution era, customers respond to companies that can reflect the needs of individuals while supplying dramatically improved innovative products or services promptly [5]. Such products and services allow companies to gain a competitive advantage in the market, and success in the market further accelerates the company’s technological innovation. In a company’s business activities, technological innovation is no longer a strategic option, but rather an essential factor that determines the success or failure of a company [6]
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