Abstract
With the introduction of a wide variety of new technologies during the fourth industrial revolution, companies in Korea have attempted to enhance their innovation activities, which include investment in new technology adoption, technical and non-technical innovation factors, and Research & Development (R&D) activity, to ensure the development and growth of their business performance and sustainability. In particular, IT and business services, two important industries in Korea, have been impacted by the development of new technology and have sought to adopt new technologies as soon as possible to survive in a rapidly changing business environment. The aim of our study is to empirically explore the effect of innovation activities on the performance of Korean IT and business service companies. To achieve this aim, we examine the innovation activities and business performance of 160 companies (80 large companies and 80 small- and medium-sized enterprises (SMEs)) in the IT and business service industries in Korea from 2009 to 2017. This study empirically analyzes panel data using fixed effect and random effect models with Hausman tests. According to our results, an improvement in product innovation has a positive impact on business performance (i.e., revenue and labor productivity) in both large companies and SMEs, as does R&D investment, research resources, and company age. However, an improvement in process innovation only has a positive impact on the business performance of large companies, and R&D cooperation only has a positive impact on the business performance of SMEs. As a result, both large companies and SMEs should concentrate on technological innovations to improve their sustainability and thus ensure their success in the long term.
Highlights
Since Schumpter [1] referred to technological innovation as a key factor in corporate performance, numerous studies have been conducted on this topic
Despite a number of studies showing that technological innovation activity has a positive effect on corporate performance, some statistical research has reported that this activity may not necessarily have a positive effect, depending on the characteristics of the company or when they enter the market [12]
Companies have needed to demonstrate an active response to external changes, such as the emergence of the fourth industrial revolution, low economic growth, and sustainable development
Summary
Since Schumpter [1] referred to technological innovation as a key factor in corporate performance, numerous studies have been conducted on this topic. In terms of product innovation, entering a market with new or re-engineered products is a very important decision-making factor [10] Companies both large and small gain their own benefits and sustainable development in all of its aspects, social, environmental, and economic, in terms of technological innovation; green technology. Despite a number of studies showing that technological innovation activity has a positive effect on corporate performance, some statistical research has reported that this activity may not necessarily have a positive effect, depending on the characteristics of the company or when they enter the market [12].
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